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FOR OFFICIAL USE ONLYFILE CoPy

Report No. 3056

PROJECT PERFORMANCE AUDIT REPORT

CAMEROON SECOND AND THIRD RAILWAY PROJECTS

(LOAN 1038-CM AND LOAN S4-CM)

June 30, 1980

Operations Evaluation Department

This document has a restricted distribution and may be used by recipients only in the performance oftheir offical duties. Its contents may not otherwise be disclosed without World Bank anthorimation.

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FOR OFFICIAL USE ONLY


CAMEROON SECOND AND THIRD RAILWAY PROJECTS(LOAN 1038-CM AND LOAN S4-CM)

Table of Contents

Page No.

PREFACE iii

PROJECT PERFORMANCE AUDIT BASIC DATA SHEET iv-v

HIGHLIGHTS vi

PROJECT PERFORMANCE AUDIT MEMORANDUM

I. Introduction 1

II. The Project 1III. Project Implementation 3

IV. Points of Special Interest 7

V. Conclusions 12

ATTACHMENT A: COMMENTS FROM THE BORROWER 15

ATTACHMENT B: PROJECT COMPLETION REPORT

Background 211. Second Railway Project 222. Third Railway Project 243. Execution of the Second Railway Project 254. Execution of the Third Railway Project 30

5. Performance of the Projects 35

6. Operations and Maintenance 36

7. Economic Evaluation 39

8. Financial Performance 42

9. The Bank and the Borrower 43

Annexes

1. Actual and Appraisal Estimates of Project Costs

(Second Railway Project - Loan 1038-CM) 47

2. Actual and Appraisal Estimates of Project Costs

(Third Railway Project - Loan S4-CM) 48

3. Freight Traffic 49

4. Income Accounts 50

5. Balance Sheets 516. Sources and Applications of Funds 52

7. Rail Breakages and Derailments Avoided by Track Renewal 53

8. Freight Car Utilization 55

9. Breakdown Crane 60

This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

Page No.

Annexes (continued)

10. Utilization of Locomotives 6311. Selected Operating Statistics, FYs 1974-78 6412. Achievement of the Targets of the Action Plan 6513. Compliance with Covenants 67

Chart

Cameroon Railways - Track Characteristics, Main Line 69

Map

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Preface

This report presents a performance audit of the Cameroon Second

and Third Railway Projects for which Loans 1038-CM and S4-CM (an engineer-ing loan) for US$16.0 million and US$2.3 million equivalent were made

in June 1974 and May 1976, respectively. Loan 1038-CM was closed fullydisbursed in December 1977. Loan S4-CM was closed at June 30, 1979; inJanuary 1980, the outstanding obligation by the Borrower was refinancedunder the Cameroon Fourth Railway Projectl/ approved by the Board on

June 19, 1979. This report consists of a memorandum prepared by the Opera-

tions Evaluation Department (OED) and a Project Completion Report (PCR)prepared by the Bank's Western Africa Regional Office; the substance of the

latter was discussed with Regie des Chemins de Fer du Cameroun (Regifercam)who fully cooperated in its production.

OED has reviewed the PCR against the Appraisal and President'sReports (there was no separate appraisal report for the engineering loan),the legal documents and the transcripts of the Executive Directors' meet-ings which considered the projects. Project files and documents have

also been reviewed and discussions held with Bank operational staff. Nomission was undertaken for these projects by OED staff. The draft audit

was sent to the Government in the normal course, and the comments receivedfrom the Office du Chemin de Fer Transcamerounais and the Regie Nationaledes Chemins de Fer have been noted in the report and are appended in fullas Attachment A.

OED has found that the PCR provides a generally adequate coverage

of the implementation experience of these projects and the reevaluation oftheir justification. However, certain aspects of the projects were notcovered specifically in the PCR or, if mentioned, merit amplification.

They are: (a) problems in physical completion of the project; (b) thedisproportionate effort to maintain passenger services; (c) the weak work-ing capital position; (d) the critical Douala-Yaounde transport corridor:

considerations regarding investment choices and reduction in the railway's

role; (e) the need for sufficient management capacity to make full useof consulting services; and (f) the possible need of the Bank to strengthen

its supervision of projects having a large technical assistance component.

1/ Loan 1734-CM, which became effective in January 1980.

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PROJECT PERFORMANCE AUDIT BASIC DATA SHEET


KEY PROJECT DATA

Loan 1038-CM Loan S4-CMOriginal Actual or Original Actual or

Plan Reestimate Plan Reestimate

Total Project Cost (US$ Million) 22.0 1/ 26.6 2.9 3.1Overrun (%) - 21 - 7

Loan Amount (US$ Million) 16.0 16.0 2.3 2.3Disbursed ) 16.0 16.0 2.3 2.10Cancelled ) As of 4/30/80 - - - 0.2Repaid ) 0.83 - 0.58Borrower's Obligation ) - 17.46 2/ - -

Date Physical Components Completed Mid-1977 12/78 Mid-1978 12/78Proportion Actually Completed by above Date (%) 93 96 55 85Proportion of Time Overrun (%) - 50 - 25Economic Rate of Return (%) 13 10 - -Financial Performance - Below forecast - Below forecastInstitutional Performance - Below forecast - Below forecast

Cumulative Estimated and Actual Disbursements (Loan 1038-CM)(US$ Million)

FY75 FY76 FY77 FY78

(i) Estimated 9.35 14.91 16.00 16.00(ii) Actual 6.65 11.86 15.96 16.00

% of (ii) to (i) 71 80 99.8 100

Cumulative Estimated and Actual Disbursements (Loan S4-CM)(US$ Thousand)

FY77 FY78 FY79 FY80

(i) Estimated 1,360 2,300 2,300 2,300(ii) Actual 432 868 1,610 2,100

% of (ii) to i) 32 38 70 91

OTHER PROJECT DATA

Loan 1038-CM Loan S4-CMOriginal OriginalPlan Revisions Actual Plan Revisions Actual

First Mention in Files - - 4/25/69 - - 10/31/75Negotiations 11/15/73 11/30/73 5/04/74 4/--/76 3/01/76 3/04/76Board Approval 1/15/74 2/26/74 6/27/74 6/--/76 4/15/76 5/04/76Loan Agreement Date - - 9/18/74 - - 6/25/76Effectiveness Date - - 12/18/74 - - 10/05/76Closing Date 12/31/77 - 12/31/77 10/31/78 3/31/79 6/30/79Borrower Regie Nationale des Chemins du Fer du CamerounExecuting Agency Regie Nationale des Chemins du Per du CamerounFiscal Year of Borrower July 1 - June 30Follow-on Project Name Third Railway Project Fourth Railway ProjectLoan/Credit Number Loan S4-CM Loan 1734/Credit 936-CMLoan/Credit Amount (US$ Million) 2.3 27.0/20.0Loan/Credit Agreement Date 6/25/76 8/23/79

1/ Reduced from original appraisal cost of US$23.0 million by transfer of consulting services toThird Railway Project.

2/ Includes US$2.28 million for exchange adjustment.

3/ The outstanding obligation by the Borrower of US$1.82 million, which included US$0.3 millionfor exchange adjustments, was refinanced under Loan 1734-CM.

v

MISSION DATA

Loan 1038-CM Loan S4-CMMonth/ No. of No. of Date of Month/ No. of No. of Date ofYear Weeks Persons Man-weeks Report Year Weeks Persons Man-weeks Report

Identification 6/72 1 1/2 2 3 6/29/72Preparation 11/72 2 3 6 12/01/72

Appraisal 3 1 1 10 6/13/74 11/75 3 2 6 4/16/76

Sub-Total 7 1/2 19 3 6

Supervision I 1/75 1 1 1 1/31/75 12/76 2 1/2 2 5 1/11/77Supervision II 5/75 2 1/2 3 7 1/2 8/18/75 6/77 2 1/2 2 5 7/31/77Supervision III 11/75 1/2 2 1 2/23/76 11/77 3 3 9 1/19/78Supervision IV 12/76 2 1/2 1/ 2 5 1/ 2/28/77Supervision V 6/77 2 1/2 1/ 2 5 1/ 7/31/77Supervision VI 11/77 3 1/ 3 9 1/ 1/19/78Completion 6/78 2 1/2 1/ 2 5 1/ 2/28/79 2/ 6/78 2 1/2 2 5 2/28/79

Sub-Total 14 1/2 33 1/2 10 1/2 24 3/

Total 2252 1/2 13 1/2 30

COUNTRY EXCHANGE RATES

Name of Currency (Abbreviation) Franc CFA (CFAF)Rate Used in Appraisal Report (Loan 1038-CM) Exchange Rate: US$1 = CFAF 250Rate Used in Appraisal Report (Loan S4-CM) US$1 - CFAF 225Intervening Years Average

1974 US$1 - CFAF 240.501975 US$1 - CFAF 214.321976 US$1 = CFAF 238.981977 US$1 - CFAF 245.671978 US$1 = CFAF 225.64

1/ Covering also supervision of Loan S4-CM.

2/ Partial revision 10/23/79

3/ Covering also supervision of Loan 1038-CM

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Highlights

The purpose of the projects was to continue the rehabilitationof Cameroon Railways, thus reducing transport costs and avoiding majorinterruptions of rail service. This was to be achieved through replacement

of a major bridge; track renewal; procurement of locomotives and rollingstock: and technical assistance. The projects were satisfactorily imple-mented but because of cost overruns, the technical assistance was trans-ferred from the Second to the Third Project.

The projects' purpose was largely achieved, but they are now

expected to have an economic return of only 10% against 13% estimated atappraisal. Main reasons for this are the shorter useful life of trackrenewal works and lower than expected productivity of rolling stock (PCR,paras 7.05-7.10). Most of the loan covenants were complied with (PCR,Annex 13) but the financial targets were not fully met because of rapidlyrising costs and lower than expected traffic (paras 10, 12).

Points of particular interest are:

- delays and cost increases caused by bridge

foundation problems (para. 20);

- communications between the Government andthe Bank on railway realignment decisions

were unsatisfactory (paras 19, 21);

- Regifercam's weak working capital position(para. 25); and

- institutional weaknesses of the Borrower andweaknesses in the Bank's appraisal and super-

vision led to late identification of certain

technical problems and less than optimal use

of consulting services (paras 22, 28-30).

PROJECT PERFORMANCE AUDIT MEMORANDUM


I. Introduction

1. Cameroon, with a population of 7.8 million (1977), is situatedslightly north of the equator on the west coast of Africa and covers anarea of 475,000 km2 , almost as great as that of France. Neighboringcountries are Nigeria to the west and landlocked Chad and the CentralAfrican Republic to the north and east; Congo, Gabon and Equatorial Guinealie to the south. Cameroon's natural resources are considerable, but notalways easily accessible: there are large forest areas, good conditions for

a wide range of agricultural crops, potential for livestock developmentand offshore oil and gas which have so far given modest yields. Transporta-tion is of crucial importance to all ongoing and potential developments and,recognizing this, the Bank Group, together with other development institu-tions, has substantially aided the development of adequate transport facil-ities in Cameroon, with the added benefit of providing transit servicesto landlocked neighboring countries. Up till now, the Bank Group's commit-ments in Cameroon for all purposes amount to US$496 million, covering 32projects. Ten of these projects, for an amount of US$240 million, have beenin the transportation sector (four highways, four railways and two ports).

II. The Project

2. The Regie Nationale des Chemins de Fer du Cameroun (Regifercam)is a system of about 1,150 km of meter gauge track. It provides two maintransport services: one, it carries most of the freight and a substantialproportion of passenger traffic in the country's central transport corridor

(some 290 km in length) between the two largest cities, the port of Douala,handling 90% of the country's import and export traffic, and Yaounde, theadministrative capital; and, two, it extends some 620 km northeast beyondYaounde, a new construction completed in 1974 through an area sparselyserved by roads, to Ngaoundere where it joins with the national road sys-tem to provide connections to the sea, not only for the whole of the north-east of the country but also for landlocked Chad and CAR.

3. The First Railway Project/ (Loan 687-CM of 1970) was designedto help with the long-run rehabilitation of the system and meet growingtraffic requirements through (a) the replacement of old locomotives androlling stock and (b) renewals and replacements of fixed installationson the older part of the system between Douala-Yaounde. It also containedprovision for an economic study of the possible major realigment of thisolder section to higher design standards (comparable to the new construc-tion beyond Yaounde to Ngaoundere).

4. The Second Railway Project, for which the Board approved a Bankloan of US$16 million equivalent on June 27, 1974, was essentially a con-tinuation of the first. It included: the replacement of a major bridgein the Douala-Yaounde corridor deferred from the first project as a result

1/ PPAR No. 1633 of June 15, 1977.

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of further engineering studies; provision for more track renewal; furtherpurchases of locomotives and rolling stock to meet traffic requirementsthrough 1976/77; and provided for consulting services, including a furtherstudy of the transport corridor problem under revised terms of reference.

5. The Third Railway Project in turn grew out of the Second Project.Cost overruns, the subject of later comment, and adverse currency exchangemovements which could only be partially offset by further contributionsfrom the Borrower and by a suppliers credit, led the Bank and the Govern-ment to the view that consulting services under the Second Project shouldbe transferred to a third Bank railway project. At the same time, itwas agreed that a feasibility and engineering study for enlarged railwayterminal facilities in Douala should be carried out. This work had beenan item in the First Railway Project but was held over pending the Govern-ment making suitable financing provision. This had not proved possible.All consulting studies were now included in a Third Railway Project forwhich the Board approved a loan of US$2.3 million equivalent on May 4,1976.

6. Appraisal estimates of the project costs and actual costs (PCR,Annexes 1 and 2) and figures of loans allocated and disbursed were:

(All Figures US$ Million)Project Loans

Appraisal Est. Actualof Cost Cost Allocated Disbursed

Loan 1038-CM

Japoma bridge 4.85 7.69 3.23 3.55Track renewal 3.55 3.96 3.24 3.24Motive power 5.29 5.991/ 0 0Rolling stock

and spares 7.50 8.26 7.22 7.17Miscellaneous 0.82 0.75 0.68 0.60Consulting

services 0.99 0 2/ 0 0

23.00 26.65

Interest andcharges 1.44 1.44

Unallocated 0.19 0

16.00 16.00

Loan S4-CM

Consultingservices 2.892 3.085 2.3 2.10

1/ Financed by Caisse Centrale de Cooperation Economique (CCCE).

2/ Transferred to Loan S4-CM.

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III. Project Implementation

7. The project had as its main objective to maintain and improvethe operational efficiency and financial viability of Regifercam (a) byphysical investment to meet priority needs and (b) by consulting servicesto help Regifercam improve maintenance, operational and management services.

Important consulting studies were to determine the optimum mix of possiblefuture transport investments in the vital Douala-Yaounde transport corridor;

and to determine the most economic size and optimal design and locationof marshalling and other railway facilities within the Douala area.

8. The physical components of the project (Loan 1038-CM) were com-pleted in December 1978, which was 18 months or 50% behind appraisal sched-ule, with a cost overrun of about 21%. The consulting services (Loan

S4-CM) were substantially completed by December 1978, but loan closure didnot take place until June 1979, when financing of the remaining consultingservices was transferred to the Fourth Railway Project (Loan 1734/Credit936-CM). The projects were implemented and supervised concurrently and arereviewed together as one project in this audit.

Physical Completion

9. Physical completion of the project encountered difficulties:(i) the construction of the new (Japoma) bridge begun in October 1974 wasdelayed; (ii) the track renewal program came into conflict with a Govern-ment decision to provide, earlier than anticipated, a completely new align-ment for the section of Yaounde-Otele (60 km) scheduled to be renewed under

the project. This is further discussed in para. 17 below; and (iii) themaintenance and rehabilitation of assets was found to be unsatisfactory inseveral areas, and where this was so, the terms of reference of consultingservices under the loans were framed to give technical assistance. In the

area of track maintenance, consultants' recommendations for dealing withthe alarming number of rail breakages (334 in FY78; PCR, para. 6.04) werecalled for but not submitted with their final report. Items (i), (ii)and (iii) are all the subject of further comments under "Points of SpecialInterest".

Traffic Forecasts and Operations

10. Comparing 1972/73 (the base year at the time of appraisal) with1977/78 (the latest available estimated figures), both passenger and freight

traffic increased. In terms of passenger-km and ton-km, the rates ofincrease were about 3% and 10% per annum, respectively. However, traffic

forecasts failed to be realized: by 1978, passengers were 17% less innumbers and 7% less in passenger-km, and freight was 28% less in tons and22% less in ton-km than forecast. The completion of the new rail extension

beyond Douala to Ngaoundere in 1974 resulted, as foreseen, in longer aver-

age journeys and hauls, but passenger results are said to have been de-pressed by the heavy incidence of ticket-less travel and freight forecastswere adversely affected by a failure of timber traffic to increase dueto a slump in world market conditions. Another reason put forward in the

PCR (para. 7.02) for the lower than forecast figures is a "shortage ofrailway carrying capacity". Annex 3 of the PCR shows that the forecasttraffic needs of Regifercam up to 1976/77, which the project was designed tomeet, will not eventuate until about 1980; theoretically, there should havebeen no shortage of railway capacity until about now. Annexes 11 and 12 ofthe PCR show comparatively poor availability and utilization of locomotives,poor freight car turnaround time and daily mileage, and low staff produc-tivity. Poor performance is therefore the main reason for the shortage ofcarrying capacity.!!

11. Two features of operations as referred to above are disturbing.One is the relative inability of Regifercam in the project period 1974-78to improve its operational performance above low base levels. The secondfeature is that passenger traffic, requiring almost the same number oftrain movements as freight traffic, earns only 14% of all Regifercam'srevenues as against 80% earned by freight. These two features are thesubject of further comment under "Points of Special Interest".

Financial Performance

12. While the Government and Regifercam largely complied with thefinancial covenants of the Guarantee and Loan Agreements of the Secondand Third Railway Projects, albeit sometimes belatedly, Regifercam's finan-cial performance, as measured in cash generated from its operations, hasbeen consistently lower than forecast throughout the project period. ForFY78, the figures were - working ratio 84, financial rate of return -0.3%,debt service coverage 0.9x against forecast figures of 73, 3.5% and 1.6x,respectively. The main reason for this disappointing performance wasthat traffic was lower than anticipated and, while revenues were sustainedat forecast levels (see para. 13(ii) below), expenses were substantiallyhigher, primarily because of lack of efficient cost control and also staffcosts being higher than necessary. Comment is made under "Points of Spe-cial Interest".

13. Satisfactory features of financial performance were: (i) a debt-equity ratio of 44/56; (ii) Regifercam's conscientious application of tariffincreases as agreed with the Bank (so maintaining revenues in line withforecasts although traffic was some 20% less than estimated); and (iii)Regifercam's willingness under the Third Project to accept consultingservices to devise cost control systems and a manpower plan in order toobtain more efficient control of working expenses. (It is also satisfactorythat the approval of a Fourth Railway Project, which contains provisionswhich should help Regifercam to strengthen its management, financial,operational and maintenance services and so make possible limitation of bankoverdrafts and Government subsidies, should have been effected so soon afterthe completion of the Second and Third Projects.)

1/ Regifercam in their comments, which are appended as Attachment A,relates the steps taken to achieve improvements and expands on some

of the operational difficulties.

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Transport Planning and Coordination, with Particular Referenceto the Douala-Yaounde Transport Corridor

14. The first section of Regifercam's system runs from Douala, themain port, to Yaounde, the capital, a distance of 291 km, and was builtbetween 1909 through 1927. The second section from Yaounde to Ngaoundere,built to high technical standards in 1964 through 1974, is 622 km in lengthand presents no operating problems. On the other hand, the track on theDouala-Yaounde section, which carries the main traffic of the countrythrough an area with no competing all-weather roads, was built to low

standards and is too light for safe and efficient operation. The Government

and Regifercam have had to consider whether track relaying would be suffi-cient or that major realignment would be needed.

15. An economic study was initiated under the First Railway Projectwith a view to determining the extent and nature of the investment to bemade in the railway to keep it operating safely and efficiently in theabsence of suitable alternative transport, and also to determine the optimal

economic investment choices in the Douala-Yaounde transport corridor,

particularly as between road and rail. Unfortunately, this was insuffi-ciently comprehensive (PPAR of June 15, 1977) and the study had to be

expanded under the Second/Third Railway Projects. The work done since

then has included (1) the full realignment of 100 km of railway from Yaoundewest towards Douala to Maloume which took about three years and was com-pleted in April 1978. The economic justification of the realignment fromYaounde to Otele (60 km) was made in a consultants' report commissionedby the Government on which further comment is made in para. 18 below.

Economic justification for the remaining 40 km from Otele to Maloume wasmade in the transport corridor study commissioned under the Second RailwayProject. (2) In late 1978, major realignment began of some 80 km of therailway from Douala east (towards Yaounde) to Edea. The economic justifi-cation for this work which is still in progress was also made in the cor-ridor study commissioned under the Second Railway Project. The financingof this work is being met by foreign donors (KfW, FED, CCCE, FAC, CIDAand USAID).1/ The final or middle section, Edea to Maloume, of about

120 km which is through the mountains could be the most expensive section if

fully realigned to the same high standards as the other two. The corridor

transport study found that, at present, a realignment of this section is notjustified. It also found that an acceptable element of any solution tothe problem is the construction of a heavy duty road between Douala andYaounde.

1/ KfW - Kreditanstalt fuer WiederaufbauFED - Fonds Europeen de Developpement

CCCE - Caisse Centrale de Cooperation Economique

FAC - Fonds d'Aide et de Cooperation

CIDA - Canadian International Development Agency

USAID - United States Agency for International Development

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16. The position now is that the Government and the Bank have agreed,under the Fourth Railway Project, to further closer study of all possiblealternatives to full realigment of the third railway section and that

no capital investment on this will be undertaken "unless it has been estab-

lished that such improvement is economically justified" (Loan 1734-CMGuarantee Agreement, Section 3.03). In the meantime (a) Regifercam is usingits own forces and salvaged material to keep the existing rail section in as

good condition as possible, and (b) the Bank has made funds available underthe Cameroon Fourth Highway Project for a study to upgrade the Douala-Yaounderoad to paved, heavy duty standards and this work, if approved and begunwithin a reasonable time, could be completed by 1983. These developmentsare the subject of further discussion under "Points of Special Interest".

17. The Douala-Yaounde transport corridor study in addition to helpingdecision-making and investment choice has been of value in focussing atten-tion in Cameroon on the need for intermodal planning. The other majorconsulting study under the Third Railway Project has also been concernedwith transport sector planning. The feasibility and engineering study todetermine the economic size and optimal design and location of marshallingand other railway facilities within the Douala area took into account notonly the long-term traffic requirements of the railway but also the expand-ing needs of the Port of Douala and the overall needs of industrial andurban development. It has contributed greatly to the Fourth Railway Projectand it is gratifying that the Government has now requested advice and helpfrom the Bank to carry out an overall transport sector study.

Institutional Needs and RelatedConsulting Services/Technical Assistance

18. In addition to the Douala-Yaounde corridor study, the Third Rail-

way Project took over from the Second Project the financing of a management

services study related specifically to improving (a) all aspects of traffic

operation, (b) motive power and rolling stock maintenance, and (c) Regi-fercam's planning and information system. In general, there was a slowstart of the technical assistance effort as related to institutionalneeds. The contract documents for the management services study were

prepared under the Second Railway Project (as were the terms of reference

for the Douala-Yaounde transport corridor study), but consultants' analyses

of needs were not begun until the Third Railway Project (PCR, para. 4.03).Some useful work was done but the results fell short of what was hoped

for; in general, while the analysis and definition of what was required was

done well, the implementation of the plans of action to achieve improvements

was uneven. The PCR (Section 4) advances a number of reasons for this,including inter alia a difference of view between the Bank and one consult-

ing group as to the way to proceed to achieve improvements, a shortage of

qualified counterparts, and inadequate maintenance facilities to permit

carrying out substantial remedial work. Additionally, it became clear

during implementation that there was a limit to Regifercam's absorptive

capacity for consultant studies. Apart from the shortage of counterparts,there is a shortage at the senior level of men who can afford the time to

answer all the questions and discuss matters in detail as they arise inconnection with these studies. To compound the problem, the volume of

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work needed to be done was greater than expected (see reference, e.g., topoor track maintenance and less than satisfactory operational performance inpreceding paras 9 and 11). To deal with this situation, the Bank andRegifercam have agreed to carry over substantial technical assistance workinto the Fourth Railway Project, including an extensive manpower planningand training component focussed on the implementation of planned workimprovements as initiated under the Third Railway Project. Further commenton this matter is made in "Points of Special Interest".

Economics

19. A by-product of the decision to proceed with the full realignmentof the Yaounde-Otele section earlier than anticipated (see para. 15) wasto reduce the economic return on the Second Railway Project. The history ofthe matter is dealt with at length in the PCR (paras 9.05-9.09). Essen-tially, the basis of the decision was the dangerous state of the trackand the availability of financing on concessionary terms which could not beused for other purposes. However, the Bank considered the ERR of about 8%contained in various feasibility studies to be unsatisfactory. In duecourse the Government decided, without prior information to the Bank (asrequired under Section 5.07(a) of the Loan Agreement for the Second RailwayProject), to go ahead with the full realignment. The Bank acquiesced in theGovernment's decision and also that the track renewal on the existingformation, as strongly pressed by Regifercam because of the dangerous stateof the track, should be done. This audit agrees with that decision. Thebenefits of track renewal on the section replaced by the full realignmentwere enjoyed only for some 18 months instead of the five or more yearsanticipated at the time of appraisal. The recovered material has a value ofsome CFA 430 million at 1978 prices (or two-thirds of the original cost) andis being used for spot replacements of weak sections of the Douala-Yaoundecorridor. However, the effect has been to reduce the ERR on track workfrom 12 to 0 and the total project return from an estimated 13 to 10. Therecalculations suggest the costs involved may have been higher than shouldhave been paid, but the issues were complex, involving technical, manage-ment (the running of passenger trains on track known to be dangerous),financial and political considerations (Government and co-donor relation-ships) as well as economic considerations.

IV. Points of Special Interest

Physical Completion

20. (i) The Japoma Bridge is a long (some 300 m) single-track rail-way bridge over a river located 18 km from Douala on the main central Trans-cameroon system and therefore of vital importance to the movement of thebulk of the country's traffic. Its reconstruction or replacement wasincluded in the First Railway Project (1970) because it was becoming unsafeInvestigations into reconstruction proved this difficult and uneconomic so anew site had to be found, involving new earthwork approaches. Extensiveinvestigations and the calling for and examination of competitive bidsled to the item being carried over into the Second Railway Project when itsestimated cost, including physical and price contingencies, was US$4.85

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million. The building of the new bridge was begun in October 1974. As theconstruction contract for the bridge was awarded on the basis of an alter-native design submitted by the contractor, responsibility for the design andbuilding of the bridge rested with the contractor. The design was approvedand checked by consultants who, while appointed by the Borrower, werefinanced for this purpose by the contractor. The contractor contractspecified that the consultants had to be hired for this purpose. The Bankwas at the time under the impression that the consultants were paid by theBorrower, and only became aware of the contractor/consultant associationwhen the foundation problems described below became apparent. These consul-tants were then also employed by the Borrower under a separate contracttogether with a member of the Borrower's staff whose experience was somewhatlimited to supervise the work. By early 1977, construction had run intoserious foundation problems related to poor contractor performance andinadequate supervision. Regifercam refused to pay additional costs fornecessary remedial works, and this decision has not been contested (PCR,para. 3.02).!/ The work was completed by mid-1978 and, following testingunder load (delayed by subsidence of approach embankments), put into servicein January 1979, at a cost of US$7.7 million, which was almost 60% higherthan anticipated. A situation in which the consultant has had responsibil-ity, while in the employ of a contractor, for approving his design and isthen appointed to supervise the work is not quite in line with the indepen-dent contractor/supervising consultant relationship usually thought to bedesirable. In this particular case, one result was the necessity forconsiderable Bank staff input to ensure that satisfactory resolution of theproblem was achieved.

21. (ii) Yaounde-Otele realignment: The Government decision totake advantage of funds made available by other development agencies atconcessionary rates to provide, earlier than anticipated, a completely newalignment for this 60 km section of the mainline scheduled for track relay-ing under the Second Railway Project, points at unsatisfactory communica-tions between the Government and the Bank on an important new work (PCR,paras 9.05-9.09). The Borrower did not consult the Bank on the subject(para. 19) notwithstanding the requirements in the Loan Agreement for theBank's concurrence, while the Bank in spite of its frequent presence inCameroon was apparently somewhat taken by surprise by the decision.

22. (iii) Track renewal: one reason there is such urgent needof track renewal between Douala and Yaounde (as discussed in Section IIIof this audit) is the very heavy incidence of rail breakages, 307 casesin FY77 and 334 in FY78 (PCR, para. 6.04). It is understood most breakagesoccur at the thermit welded joints of old rails, which suggests poor workand management supervision in the field. However, the PCR also states(para. 6.04) that "... about 50% of the rail breakages in 1976-78 occurred

on a 50 km section between Edea and Eseka where the track is fairly new

1/ Regifercam's comments (Attachment A) amplify on the constructionproblems and division of responsibility between the parties involved.

-9-

36 kg rails laid in 1965". This suggests there might be technical prob-lems involved of relieving stress in long welded rails.l/ The question ofthe missing recommendations by consultants (see para. 9(iii)) should receivepriority of attention under the Fourth Railway Project. The audit issurprised that the matter of these breakages did not come 1p for seriousconsideration through Bank supervision until half way into the projectperiod (PCR, Annex 7).

Operational Performance and Passenger Services

23. There may be a tendency in operations, as referred to in SectionIII, to blame "shortages" in capacity for the railway's failure to perform.The correct relationship between actual and potential performance andinvestment needs is of critical importance to Regifercam, as is the needto improve operational performance above present low base levels. Some ofthe important operational targets set under the Second Railway Project arequestionable (PCR, Annex 12). The targets for availability of locomotivesand rolling stock can be accepted, although one or two of the locomotivefigures seem marginally high, but the targets for the utilization of freightcars and for staff productivity suggest deficiencies in appraisal.Z/Thus, the average daily km of freight cars achieved during the projectperiod was nearly always higher than the targets, but the targets were lowerthan might reasonably have been set in view of the low performance at thetime of appraisal and especially because the completion of the new line in1974 (para. 3) was to increase the average haul. With regard to staffproductivity, the PCR makes the comment with which the audit agrees that thetargets set were too low for productivity (FY78 figures: 166,000 unitsachieved per employee; target 154,000 units) and too high for the number ofstaff employed (4,651 actual total; 5,897 target total - both figures forFY78). Utilization of operational stock is, of course, initially dependenton availability. Both the availability and utilization of Regifercam'slocomotives are poor and generally the PCR assigns shared responsibility forpoor operations to the technical departments responsible. The audit notesthat all matters related to operations are scheduled for close attention,linked with technical assistance and training, in the Fourth Railway Project.

24. Both the project Appraisal Report and the PCR are silent onthe position mentioned in para. 11 that passenger traffic, requiring almostthe same number of train movements as freight traffic, earns only 14% of allRegifercam's revenues as against 80% earned by freight. The latest dataprovided by Regifercam (see Attachment A) indicate that 23% of operatingcosts result from passenger traffic. The audit estimates, however, that

1/ Regifercam's comments (Attachment A) provide additional information.

2/ CPS, however, consider that the term 'deficiency' is extreme anddoes not recognize the point that such operational targets have tobe practicable and take the realities of the situation into account.They point out that at appraisal, the improvement in the daily freightcar-km during a four-year period was set at about 40% higher than theactual in fiscal 1973, and took into consideration prevailing circum-stances (including the Trans-cameroon extension).

- 10 -

the percentage of total cost to be attributed to passenger traffic will behigher. These figures suggest the need to take a close look at what Regifer-cam can afford to invest in passenger traffic as against what they mightlike to do for reasons of social service, public relations and prestige. Tohave 45% of all train movements and at least a quarter of total cost concen-trated on earning 14% of revenues suggests that prima facie there is a casenot only for close examination of uneconomic services and offsetting Govern-ment subsidies as required under the Fourth Railway Project but a case alsoto defer, reduce or stop any capital expenditures on passenger rolling stockand on a larger than necessary passenger station at Douala (on favorablefinancial terms or not) as is now being considered by Regifercam, pendingreview of needs under conditions of increased competition with road trans-port as envisaged post-1983.1/ The need for caution in this respect isindicated en passant at various places in the Bank's Appraisal Reports andthe PCR.

Financial Performance

25. As indicated above (para. 12) and in the PCR (Section 8 andAnnexes), Regifercam's cash generation has been below expectations. Asa result, it has left no room for self-financing of capital nor additionsto working capital. So long as the Government is able and willing tomake good operating deficiencies through subsidies (as required under theGuarantee Agreements of the Second and Third Railway Projects), Regifercamis protected. However, Regifercam's position is vulnerable: a weak workingcapital position in railways often results in understocking of spares andequipment and this in turn can result in a reduction of maintenance leadingto a counter-productive loss of operational capacity and the beginning of avicious downward cycle. The stores inventory position in 1978 as reflectedin current assets seems good, and there is no reference in the PCR to thepoor operational figures of Regifercam being linked with shortages of sparesand equipment, but the vulnerability of Regifercam to such a positiondeveloping is evident in the very weak FY78 figure of net working capitalwhich is CFAF 43 million (PCR, Annex 5; the forecast figure had been CFAF2,291 million). As a result, the Railway has to rely on extensive bankoverdrafts to supplement their working capital which is, however, not anexceptional situation in Cameroon.

The Douala-Yaounde Transport Corridor

26. Determination of the optimal economic investment choices inthe Douala-Yaounde transport corridor (see preceding paras 14-16) is themost critical transport problem which has faced the Government and Regifer-cam over the last decade and still faces them as it reaches towards a moreconclusive stage. In dealing with this problem, the Government, the Bankand Regifercam have agreed in two sets of loan documents covering theSecond and the Fourth Railway Projects (respectively Loan Agreement, Section5.07(a) and Guarantee Agreement, Section 3.03) that no capital investment

1/ Regifercam in their comments (Attachment A) reach a differentconclusion.

- 11 -

will be made in the Douala-Yaounde section of the railway unless it isestablished that such investment is "economically justified". It is sug-gested, however, that in future in difficult cases like this involvingrevenue-earning entities, the question also be raised at an early stage withthe Borrow'- as to how a reasonable financial benefit is to be obtained fromthe project. This would alert the management of revenue-earning entitiesto the financial impact and possibly resulting needs for tariff revisionsat an early stage; this awareness tends to be lacking when the projectis justified on economic grounds by government acting largely in isolationfrom management.

27. A decline in railway freight traffic is expected to take placepost-1983 after completion of a paved highway (see preceding para. 16(b)),but to grow slowly thereafter, recovering to the FY83 level by FY87 (PCR:Discussion in Background on the railway's role and in para. 7.03). Aquestion arises whether in these circumstances it may not be beneficialfor Regifercam to prepare and have ready, against the decline in traffic,a new flexible tariff which would allow traffic to move at rates betweenpresent tariffs and short-term marginal costs if need be, assuming otherwiseunderutilized capacity (light running of locomotives and empty running offreight cars). This might find at least a partial commercial solution tothe new competitive situation and reduce the claims on the Government'scentral budget for subsidies.!/ Before introducing marginal pricing,however, a study of price elasticity of demand should be made.

Institutional Performance

28. As stated in preceding para. 18, there is a shortage of seniorlevel manpower in Regifercam. The heavy input of consulting servicesunder this project has accordingly put a strain on management which inturn has led to delays in awarding contracts and in taking decisions re-lated to consultants' proposals (PCR, para. 4.14). The solution in thiscase has been (a) to carry some of the consulting services over into theFourth Railway Project, so spreading the load over a longer period and(b) to change the nature of some of the assistance - personnel doing thejob., not only advising. The training element has also been increasedto give a longer-run benefit to Regifercam in the way of suitable counter-part (and other) staff. It would seem, however, that the Government shouldconsider whether top management (executive and advisory levels) could bestrengthened to provide continuity of review of consultants' work andreduce delays in the decision-making process. For the Bank, the main issueseems to be that it should have given more careful consideration at the timeof project appraisal to the question of the absorptive capacity of theBorrower to make productive use of consulting services/technical assistance.

1/ Regifercam in their comments (Attachment A) suggest that thesesteps can easily be taken.

- 12 -

Supervision

29. The Bank's supervision of the project was not entirely satis-factory, with the strength, duration and frequency of missions sometimesbelow what would have been desirable. Some important events during theproject were apparently overlooked or noticed rather late, such as theunsatisfactory arrangement for hiring supervisory consultants (para. 20)and the rather late recognition of the need for a study on rail breakages(para. 22). With regard to the timing, given the accepted need for ade-quate, systematic supervision, there should be no gap of 13 months inthe middle of a project when there is no mission (mission data in BasicData Sheet). The audit finds that responsibility for the gap betweenNovember 1975 and December 1976 is linked with the institutional weaknessreferred to in para. 28 above. The Third Railway Project (Board approvalMay 1976) saw the beginning of the consultants' diagnostic work which hadreached a stage by mid-summer when supervision would have been useful.However, at this time, July/August, most of Regifercam's resident technicalassistance staff (from France, 37 in number) go on vacation and when theyreturn, the Assistant Director General of Regifercam, who has principalresponsibility for reviewing consultants' proposals, takes vacation inSeptember/ October (PCR, para. 4.14). There could be no useful missionuntil he returned. While it is thought Regifercam should consider strength-ening its top management to provide cover for the situation described, theBank equally may have a parallel responsibility to strengthen its super-vision in projects which have a large technical assistance component demand-ing close liaison between all parties involved.

V. Conclusions

30. The Second and Third Railway Projects made useful contributionsto: maintaining Regifercam's operations at a time of sustained trafficincrease; arresting a deterioration in Regifercam's finances; focussingattention through the Douala-Yaounde transport corridor study on the needfor intermodal transport planning and decision; and, through the provisionof consulting services with terms of reference related to management andoperational needs and weaknesses over a wide field of activity, initiatingsome improvements in management and operations and contributing signifi-cantly to preparation of the Fourth Railway Project.

31. Where the Second and Third Railway Projects may be considered weakwas: overoptimistic traffic forecasts; failure to achieve any marked improve-ment in the availability and utilization of locomotives and rolling stock,the standards of which are low; failure to get earlier management action toinitiate cost, budget and staff control systems to keep working expenses incheck: and inability to achieve the forecast economic rate of return on theproject, reestimated at 10% as against 13%.

32. The above negative issues face Regifercam at a time when itsfavored position in the Douala-Yaounde transport corridor is threatened bythe probability of a competitive paved road post-1983. Considerable manage-

ment effort and correct economic, financial and operating decisions will

- 13 -

be of the essence in dealing with the many problems. Regifercam is atleast fortunate in having the time to prepare for the increased competitivesituation; and it is hoped that the Fourth Railway Project, which hasbeen designed inter alia to reduce weaknesses evinced during the Secondand Third Projects, will also be of major use.

ATTACHMENT A-15 - Page 1

FORM NO. 788(1a74) IBRD LANGUAGE SRVICES DMION

CONTROL No, JPATE: June 12. 1980ORIGINAL LANGUAGEt French (Cameroon)DEPT, OED RNIS LAOR: EMcM:hPb

Office du Chaiin de Fer TranscamerounaiseB.P. 625Yaound6 Yaounde, May 21, 1980

Our ref.: JH/jh No. 288.SP.79/80 The Director General,Operations Evaluation Department

Subject: Project Performance Audit World BankReport on Cameroon Second 1818 H Street, N.W.and Third Railway Projects Washington, D.C. 20433(Loans 1038 CM and S4 M*) U.S.A.

Dear Sir:

I have the honor to acknowledge receipt of your letter of April 18, 1980,

requesting my views on the Project Performance Audit Reports on the Cameroon

Second and Third Railway Projects.

Contrary to what the reports state, the Office du Chemin de Fer

Transcamerounaise is not a decision-making body; its role is, rather, to

implement government decisions Dertaining to railway infrastructure.

For this reason, therefore, any comments that may be made will be sent to

you through the intermediary of the Ministry of Transportation.

Yours, etc.

The Director General

/s/ J. HOUDET

ATTACHMENT A-16 - Page 2

FORM NO. 788 01B LANGUAGE MVICES DISION1-74)

CONTROL No. E-1425780 bATE: June 11. 1980ORIGINAL LANGUAGEt French (Cameroon)DEPT. OED R To:ENMcM:hpb

Rfpublique Unie du CamerounUnited Republic of Cameroon

Regie Nationale des Chemins de FerCameroon National Railway Authority Douala, May 21, 1980

P.O. Box 304 The President and Director GeneralDouala of the Cameroon National Railway

AuthorityNo. 2783/PDG/DGAE to

SUBJECT Mr. Shiv S. KapurProject Performance Audit Report on Director General, OperationsSecond and Third Railway Projects Evaluation Department(Loans 1038-CM and S4-CM) International Bank for Reconstruc-

tion and DevelopmentREFERENCE 1818 H Street, N.W.

Your letter of April 18, 1980 Washington, D.C. 20433U.S.A.

Dear Sir:

I have the honor to acknowledge receipt of your letter of April 18, 1980,

transmitting the Project Performance Audit Report on the Cameroon Second and

Third Railway Projects (Loans 1038-CM and S4-CM).

Examination of this report, particularly those sections dealing with the

railway projects, gives rise to the following comments:

Paragraph 10 (last two sentences): It is indeed true that up to mid-1978 the

figures for locomotive availability were poor. This state of affairs led us

to review the following matters:

- organization of maintenance operations;

- distribution and level of technical assistance;

- vocational training with the aid of your organization and CCCE.

Results obtained since mid-1978, except for limited periods marked by a

high incidence of mechanical or electrical failures, show that our response was

the proper one.

- 17 - ATTACHMENT APage 3

As regards the figures for freight car utilization, a number of factors

were involved here, namely:

- The number of locomotives in service has been inadequate net only because

of poor availability but also as a result of the loss in accidents of two

3,600-hp locomotives and one 2,400-hp locomotive.

- The inadequacy of the terminal facilities in Douala and Yaounde prior to

1978 meant that we did not have enough car handling and sorting tracks

either in Donala (port and other installations) or in Yaounde. The complex

nature of certain services and the almost universal shortage of storage

facilities (both public and private), whether open or covered, resulted in

major delays.

- The inadequate capacity and unreliability of telephone links between

Donala and Yaounde permitted operational communications only one day out

of two on average.

- The number of accidents and incidents affecting traffic between Douala and

Yaounde, particularly:

* Breaks in rail welds due to known causes: (i) extreme wear on certain

rails between Douala and Edea and, prior to renewal, between Otele and

Yaounde, resulting in excessive stresses, since the modulus of torsion

of the rails when new was inadequate in light of the maximum weight per

axle, namely 26 and 30 kg per running meter for 16 tons/axle; (ii) in-

adequate track maintenance to preserve the initial characteristics of

long bars welded in plan and in section, leading to elongation and

fracture or deformation and buckling; (iii) repair welds which are some-

times technically faulty and often made outside the required temperature

range.


* Track deformations resulting from inadequate ballasting or, in certain

arest, the impossibility of obtaining a proper ballast profile without

maintenance of track benches or restoration of the eroded formation

subgrade (the need to carry out such restoration work by hand makes the

operation costly and time-consuming).

* Numerous derailments due to faulty loading of logs. A standing order

was issued in 1972, and it is enforced. But it must be recognized that

the transportation of logs over a winding, narror-gauge track does not

allow for the usual margin of safety. Regardless of how the logs are

loaded, we have never had an accident on our realigned sections of track.

This list of operating difficulties is not exhaustive; if one is to express

an opinion on our operating results, one must be aware of the difficulties we

face. We do not simply accept these problems as unavoidable, and we have tried

to overcome them to the best of our ability, given local conditions.

Paragraph 11 and paragrath 24: In 1978-79, operating costs were assigned as

follows: passenger traffic 22.7%, and freight traffic 77.3%. The text of the

report thus contains an untruth. I would add that this distribution has been

changing only slightly and that passenger revenues roughly cover the marginal

cost.

Paragraph 20: (1) The Japoma Bridge

The report does not mention that the site selected for construction of the

bridge and the left-bank earthwork approaches involved major geological problems,

even though this site was definitely the best available in the area in question.

While it is true that the contractor made two mistakes during emplacement of

the foundations for pier No. 1, it should be noted that this foundation was the


most difficult to execute because of the need to traverse a bed of sandstone.

With the benefit of experience, the project might possibly have been imple-

mented without difficulty if a simpler foundation (the other pier) had been

tackled first.

The text implies, on the basis of a construction problem that is not that

unusual for projects involving major difficulties in implementation, that the

consultant retained by the Railway Authority to supervise the works was not

independent because the engineers in question had earlier been paid by the

contractor to check the technical documents (calculations, designs, construc-

tion procedures, ete.). We never had occasion to observe anything suggesting

that the consultant was dependent on the contractor. In particular, the plan

for strengthening the faulty foundation was prepared extremely well on the

initiative of the consultant in full agreement with the project manager.

The report implies that the initial foundation plans for pier No. 1 were

not properly drawn up, probably reflecting the views of an expert sent by the

World Bank. We would merely point out that, in the opinion of that same expert,

the measures taken to strengthen the foundation were likewise inadequate. We

contested this view, and the subsequent stability of pier No. 1 bas happily

confirmed our opinion.

In point of fact, the main reason for the delay in commissioning the bridge

and for the cost overrun lies in the unusual problems encountered in construct-

ing the left-bank earthwork approaches on top of a 40-a thick bed of unstable

material. Borings made across the embankment show that the fill materials have

penetrated as deep as 25 meters (maximum above-ground height of the ambadment

approx. 10 meters). The virtual stabilization of the earthworks was secured


roughly 18 months after they had been rebuilt, which was roughly one year after

initial emplacement of the embankment.

In any event, we wish to stress that the contractor carried out this work

extremely well and to our satisfaction, and also that the assistance we received

from the consultant was exactly what we had anticipated.

Paragraph 22: (iii) Track Reneal

We feel that we have covered this point in our discussion of paragraph 10.

Paragraph 24: We have reestablished the true situation in our comments on para-

graph 11. We feel, therefore, that the opinion expressed on the future of pas-

senger service and on capital expenditures under this )eading is excessive.

What we seek is to cover our marginal costs properly.

With regard to the desirability of maintaining passenger services and the

suggestion that the new passenger station for Douala is overly large, the Rail-

way Authority believes that these are matters falling within the competence of

the Government.

Paragraph 27: On July 1, 1979, we introduced a new scale of charges based on

prime costs, which will enable us if need be to readily adapt our charges to

meet competitive pressures. These new tariffs were prepared in conjunction

with the consultants responsible for the management and operating studies.

Yours, etc.

/s/ Christian TOBIE KUOK

President and Director GeneralCameroon National Railway Authority

- 21 - ATTACHMENT B

PROJECT COMPLETION REPORT

CAMEROON: SECOND RAILWAY PROJECT (LOAN 1038-CM)

CAMEROON: THIRD RAILWAY PROJECT (LOAN S4-CM)

During the appraisal mission of the proposed Fourth RailwayProject from May 30 to June 14, 1978, Messrs. Apitz and Defalque carriedout the final supervision of the Second and Third Railway Projects.Complementary data were collected during subsequent missions in Octoberand December 1978. Data on economic aspects of these projects werecollected by Mr. Dick during his mission in Cameroon from September 22to 27, 1978.

Background

Cameroon covers a roughly triangular area of 475000 km square witha coastline of about 280 km. It borders on six countries - Nigeria, Chad,Central African Empire (CAE), Congo, Gabon and Equitorial Guinea - and occupiesa strategic position for transit traffic of landlocked Chad and CAE. Thepopulation is about 7.7 million and not only is the density low but thedistribution is uneven. There are four main areas of economic activity: thecoastal/south-western region; along the Douala-Bafoussam corridor; in thecentral region around Yaound6 and in the northern region around Maroua. Thusthe transport system is of paramount importance fulfilling an important rolein unifying the country both economically and politically and in providingcommunication with neighboring countries.

The transport system has been developed extensively in recent years,and expenditure on it accounted for more than half public sector investmentunder the third plan (FYs 1972 to 76) and is expected to account for 35% ofthe CFAF 176 bii1ion fourth plan expenditure. The system basically radiatesfrom Douala, the commercial capital and major port with one branch servingwestern Cameroon and the other (the Transcameroonais system) through Yaound6the administrative capital via Ngaoundere to the north and Chad.

While the western line now plays a minor economic role followingextensive development of the highway system, the Transcameroonais is a criticallink with north Cameroon. It provides the only existing all-weather surfacelink from Douala to Yaoundg and the only direct surface link from Yaound6 toNgaoundere where it links up with the paved road system. In FY 1979, freighttraffic totalled about 600 m tkm of which timber 131 m, other agriculturalproducts 138 m, petroleum 77 m and general freight 239 m. Passengers totalled246 m pkm. The average freight haul was 425 km and average passengersdistance 145 km.

- 22 -

Investment in the railway has been of two forms: (i) infrastructureinvestment comprising the extension of the line from Yaound6 to Ngaounderecompleted in 1974 and realignment investment on the old Douala-Yaound6line, in mither of which the Bank participated; (ii) investment in rollingstock, track, machinery and equipment which the Bank has substantially helpedto finance. The First railway project comprised some track renewal, rollingstock and initial expenditure on construction of the Japoma Bridge. TheSecond and Third projects continued to contribute to improve operationalefficiency of the railway through further track renewal and consulting servicesand to increasing capacity by the provision of rolling stock (in parallel withFAC financing of locomotives). Additionally further financing for the JapomaBridge was included and funds for the feasibility and engineering studies fora new marshalling yard at Douala were provided. Thus with the assistance of theBank and other aid organisations, the railway has over the project periodcontinued to increase its operational capacity and to handle a growing volumeof traffic, particularly freight (freight tkm increased by 70% between FYs1972 and 1978). In the future the railway is likely to become increasinglyconcentrating on long haul traffic partly as a result of improved communicationsenabling Chad/CAE traffic to feed into the Transcameroonais system but moreimportantly because construction of a paved highway between Douala and Yaound6is likely to reduce the railway's role over this section of the system.

1. Second Railway Project

Description

1.01 The project, designed to meet the railway's most urgent require-ments through 1976, comprised:

(a) the construction of a new Japoma bridge;

(b) the completion of the track renewal program on 42 km;

(c) the purchase and installation of 50 new single turnouts;

(d) the purchase and installation of a radio link between Doualaand Ngaoundere and of telecommunication equipment in theDouala area (shunting locomotives);

(e) the purchase of 100 flat cars, 25 boxcars, 100 freight-carbogies, a breakdown crane and spare parts for locomotivesand rolling stock;

(f) the purchase of 4 mainline locomotives and 3 shuntinglocomotives; and

(g) the provision of consulting services.

Concurrently the expansion of the Training Center under FAC financing andthe construction of a new Douala passenger station under Afdb financingwere planned.

- 23 -

1.02 The total project cost was estimated at US$23.0 million equivalentwith a foreign exchange cost of US$20.7 million equivalent. The Bank loanof US$16.0 million was intended to finance the foreign exchange cost ofthe construction of the Japoma bridge, the track renewal on 42 km, theprocurement and installation of 50 turnouts, the purchase and installationof radio equipment, the purchase of the freight cars, bogies, breakdowncrane and spare parts for locomotives and rolling stock, and the consultingservices. The construction of the Japoma bridge was to be financed in partby the US$0.87 million remaining funds under the First Railway Project(Loan 687-CM, US$5.2 million, 1970). An amount of US$1.44 million was alsoincluded in the loan to cover interest during construction.

1.03 The mainline locomotives and shunters included in the project werefinanced by CCCE (US$5.29 million including contingencies). Regifercam'scontribution amounted to US$2.28 million equivalent for local expenditures.

1.04 The financing plan was as follows:

US$ million equivalent

Remaining funds of Loan 687-CM 0.87Loan 1038-CM 14.56CCCE 5.29Regifercam 2.28

Subtotal 23.00Interest during construction (Loan

1038-CM) 1.44Grand Total 24.44

1.05 The principal objectives of the project were to:

(a) improve the operating efficiency of Regifercam;

(b) increase the capacity of the railway to meet the most urgenttraffic requirements;

(c) help the railway to rehabilitate existing installations; and

(d) assist the railway management in achieving its main operationaland financial targets.

1.06 All Bank-financed items have been procured, installed and putinto service. However, the consulting services, consisting of (i) aManagement Study designed to assist the railway in improving its operationsand management methods and (ii) the Douala-Yaoundg Transport CorridorStudy, were transferred to the Third Railway Project (Loan S4-CM). Thiswas necessary because of cost overruns due to currency realignments (13%)and because the construction of the new Japoma bridge, expected to costabout CFAF 1,212 million at appraisal (Second Railway Project), includingcontingencies, eventually amounted to about CFAF 1,700 million.

- 24 -

2. Third Railway Project

Description

2.01 Designed to assist Regifercam in preparing feasibility andengineering studies for new traffic-handling facilities to be constructedin the Douala area and in improving its operations and management, theThird Railway Project comprised:

(a) a feasibility study for the new Douala station;

(b) final engineering of the new Douala station and marshallingyard; and

(c) consulting services transferred from the Second RailwayProject, namely a Douala-Yaound6 Transport Corridor Studyand an operations and management improvement study.

2.02 The total project cost was estimated at US$2.9 million equivalentwith a foreign exchange component of US$2.3 million equivalent entirelyfinanced by the Bank.

2.03 The feasibility study for the new Douala station was completedand the draft final report of the consultants was received in June 1977.The final report was received in August 1977. The final engineering forthe new Douala station (excluding the passenger station building and itsrelated facilities) was completed in December 1978 fur the main civil works.For the signaling and communication systems, adjustments are still requiredand are being discussed by the railway and its consultantsThe Douala-Yaound6 Transport Corridor Study was completed inJune 1977. The major part of the management study of the three technicaldepartments (Operations, Mechanical and Permanent Way) was also completedin August 1978. The draft final report of the consultants for this study,dated October 1978, was received recently by the Bank and is being reviewed.

2.04 In April 1978 at Regifercam's request, the description of theproject was changed and the Loan Agreement amended to permit the allocationof remaining funds to the following:

(a) extension of the management study for the strengtheningof the office of the Deputy General Manager for Studies,who is responsible for planning and budgeting, technical,economic and financial studies, statistics and computerization;

(b) engineering of the workshop expansion to be included in theproposed Fourth Railway Project now in preparation; and

(c) preparation of a training component for the proposed FourthRailway Project, based on a manpower plan prepared by consultantsdesigned to reduce overstaffing and to ensure a bettermatching of job requirements and staff qualifications.

- 25 -

3. Execution of the Second Railway Project

Allocation of Funds from Loan 1038-CM

3.01 (a) Original project (Bank-financed items)

The allocation of funds as provided under the project

was as follows:

Categories US$ million

I Track renewal (42 km) 2.80

II 50 turnouts 0.36

III, IV, VI Railway equipment (freight cars, bogies,breakdown crane) and spare parts 7.45

V Japoma Bridge 1.71

VII Radio equipment 0.30

VIII Consulting services 0.69

IX Interest and charges 1.44

X Contingencies 1.25

Total 16.00

(b) Reallocation of funds

In March 1976, during the negotiation of Loan S4-CM(Third Railway Project), it was agreed to transfer the consulting servicesto the Third Railway Project. Regifercam arranged to obtain a supplier'scredit to finance the cost overruns due to currency realignments andpossible cost increases on the construction of the new Japoma Bridge,which at that time was still expected to cost CFAF 1.2 billion (US$5.5million equivalent). The final allocation of the funds and actualdisbursements are shown below.

- 26 -

AllocatedCategories funds Disbursed

I Track renewal 3.24 3.24

II 50 turnouts 0.40 0.39

III, IV, VI Railway equipment 7.22 7.17

V Japoma Bridge 3.23 3.55

VII Radio link 0.28 0.21

VIII Consulting services 0 0

IX Interest and charges 1.44 1.44

X Unallocated 0.19 0

Total 16.00 16.00

Physical Execution of the Project

3.02 The project was executed by Regifercam. The construction of thenew Japoma Bridge started in mid-October 1974 after a considerable delaydue to major technical difficulties in selecting a suitable site anddesign for the bridge. During construction, excessive settlement ofpier no. 1 under the dead weight of the superstructure was recorded inJuly-August 1976, due most probably to poor piling procedure and insuffi-cient length of the piles. It was then decided to drive eight additionalpiles, linked to the pier by a prestressed concrete ring beam; this workwas executed between December 1976 and April 1977. Since then, nosignificant subsidence of pier no. 1 has been recorded. The bridge waseventually tested under load and put into service on January 22, 1979,following the completion of the access embankment on the left bank of theriver. This embankment, located in a marshy area, settled during construc-tion by more than 60 cm and the fill collapsed in several spots. Thisexplains the delay between bridge completion in mid-1978 and under-load

testing. Regifercam attributed the serious foundation problemsencountered on pier no. 1 to poor execution of the piling and laxsupervision by the consulting engineer. Consequently, Regifercam refusedto pay the additional cost incurred for the reinforcement of this pier,with no objection on the part of the contractor. The cost of theworks was re-estimated in August 1979 by Regifercam and, due mainlyto the considerable increase on earthwork volume for the left embankment(183%), a cost overrun of CFAF 461 million was forecast at this time.The final cost overrun on this item is estimated at CFAF 486 million.

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3.03 Delivery of some locomotive spare parts was very late. In the caseof the traction motors for shunters, delivery was more than six months late.

3.04 Delivery of the four 4B-3600 mainline locomotives under CCCEfinancing was slightly behind schedule (September-December 1975). Thethree new heavy shunters BB900, also financed by CCCE, were deliveredbetween mid-December 1976 and the end of January 1977, with a delay ofmore than one year.

Quality of the track renewal execution

3.05 The works were carried out without properly repairing thesubgrade, and there are still numerous spots where the stability of thetrack is jeopardized by ballast falling into the drainage ditches. Thiswas noted by the mission during the final supervision of the First Projectin November 1976 but, at that time, track renewal under the Second RailwayProject had been virtually completed.

Project Cost

3.06 The total project cost estimated on the basis of availabledata is shown below with the appraisal forecasts and indicationof the source of the fundS. The cost overruns on the construction of theJapoma Bridge (CFAF 486 mi.llion) and the lack of funds due to fluctuationsin exchange rates (CFAF 450 million) were compensated by the supplier'scredit (CFAF 200 million), the use of the funds allocated to the consultingservices transferred to the Third Railway Project (CFAF 247 million), anincrease of the contribution of Regifercam (CFAF 384 million) and somereductions on other project items (CFAF 105 million). A detailed comparisonof cost estimates in local cost (CFAF) and foreign cost (US$ equivalent)is given in Annex 1.

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Appraisal FRtimated actuial costLocal Foreign Total Bank CCCE Suppliers Regi- Total

credit fercam

(CFAF million)

(a) Japoma bridge(i) Loan 687-CM 202 -- -- 202

(ii) Loan 1038-CM 814 -- -- 1496Subtotal 1016 682 1698

1/(b) Track renewal 188 700 888 669 -- -- 206- 875

(c) 50 turnouts 15 90 105 86 -- 161/ 102

(d) Radio link and tele-communications 15 85 100 50 -- -- 131 63

(e) Motive power (CCCE) -- 1323 1323 -- 1323 -- -- 1323

(E) Spares for locomotives -- 95 95 90 -- -- 4 94

(g) Freight cars and bogies -- 1650 1650 1362 -- 200 33 1595

(h) Breakdown crane -- 130 130 134 -- -- -- 134

(i) Consultin services - 48 199 247 -- -- -- --

Total 570 5180 5750 3407 1323 200 9543/ 5884

US$ million equivalent atexchange rate at appraisal(CFAF 250 = $1.00) 2.3 20.7 23.0

US$ million equivalent ataverage exchange rate duringexecution of the project(CFAF 220.8 = US$1.00) 2.6 23.4 26.0 15.4 6.0 0.9 4.3 26.6

1/ Estimated. No accurate records of the cost of the works performed by Regifercam on

force account.2/ Transferred to the Third Railway Project (Loan S4-CM).3/ Including CFAF 258 million of equivalent foreign cost for the construction of the newJapoma bridge.

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3.07 The actual disbursements were made according to the table belowwhich compares them with the forecasts.

IBRD fiscal year and Cumulative disbursements Actual disbursementsquarter ending at end of quarter (US$ million) as a percentage of

Appraisal Actual appraisal estimate

1974-75

September 30, 1974 1.02December 31, 1974 4.49March 31, 1975 5.52 5.61 102June 30, 1975 9.35 6.65 71

1975-76

September 30, 1975 12.88 8.49 66December 31, 1975 13.66 10.03 73March 31, 1976 14.06 10.90 78June 30, 1976 14.91 11.86 80

1976-77

September 30, 1976 15.29 13.71 90December 31, 1976 16.00 14.82 93March 31, 1977 16.00 15.56 97June 30, 1977 16.00 15.96 99.8

1977-78

September 30, 1977 16.00 16.00 100

Project Progress Reports

3.08 Bank supervision missions visited Cameroon in January 1975, May1975, November 1975, December 1976, June 1977, November 1977 and June 1978.The missions were provided with all the information necessary for effectiveproject supervision. However, little useful data on project progress andrailway operations were communicated to the Bank by Regifercam in theintervals between the missions. Regifercam's management considers thatits services are not equipped to provide the information requested by theBank. Continuous efforts were made to obtain periodic progress reportsbut with little success, although the Management Study performed under theThird Railway Project was designed to strengthen the offices of the DeputyGeneral Manager for Studies who is responsible for these matters. It wastherefore requested that by March 1, 1979, (before the negotiations of theproposed Fourth Railway Project), Regifercam submit proposals for periodicreports on project progress and railway operations on the basis of draftsprepared by the Bank. This request has been complied with and the proposalsare being discussed with Regifercam.

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4. Execution of the Third Railway Project

Allocation of Funds from Loan S4-CM (US$ 000)

Allocated Appraisal Estimates Paid orThird Railway Reallocation committed

Project April 78 1/ by RegifercamLocal Foreign Total (cf. table 2)

(a) New Douala 35 203 238 135stationfeasibilitystudy

(b) ConsultingServices: 982 1600- Corridor 226

Study 382 1136 1518- Management 1444

Study- Training 167

Study

(c) EngineeringStudies:- New Douala 893 175 961 1136 325 297

Station- Workshop 199Expansion

(d) Unallocated 425 375

TOTAL 2300 592 2300 2892 2300 2468

1/ To permit preparation of the Fourth Railway Project.

The total exceeds the funds of Loan S4-CM by US$168,000. This is due to theexecution of a training study to prepare the proposed Fourth Railway Projectand to the extension of the management study as explained below (para. 4.03).

Project Execution

Corridor Study

4.01 The contract was awarded to consultants on April 21, 1976and was executed between April and August 1976. The draft report was

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submitted to Regifercam and the Bank in July 1976. It appeared at this stagethat supplementary investigations were necessary: (i) to take into accountreductions in traffic forecasts caused by decreased demand for timber due tothe slump in world economy; and (ii) to assess the economic justification forsubstituting a four-lane autoroute for a two-lane paved road, a possibilitythe Cameroon Government was actively considering at that time. During aco-donors meeting held in Paris in March 1977, dealing with investmentprograms in the transport corridor Douala-Yaoundg for the road and railwayrealignment, it was decided to extend this study to cope with ihe newsituation. The consultants' final report and the supplementary study weremade available in May and June 1977 respectively. These reports, fullysupporting the Bank's position vis-a-vis the investments contemplated in theDouala-Yaound6 transport corridor, concluded that:

(a) realignment of the Douala-Edea section combined with minorimprovements elsewhere was economically acceptable;

(b) the Minka-Maloume realignment was marginally acceptable inextension of the ongoing realignment works being executedbetween Yaoundg and Minka but would not be acceptable inisolation;

(c) a heavy-duty road, with a 10 t/axle capacity was anacceptable element of any solution;

(d) a four-lane autoroute was economically unjustified in anycircumstances at that time; and

(e) the implications of realignment for Regifercam's financeswill require careful study.

The performance of the consultants was good. About 36 man-months werenecessary for these studies, including the supplementary works.

New Douala Station Feasibility Study

4.02 The contract was awarded on March 16, 1977 to consultantsand work started immediately. The draft final report was readyin June 1977 and discussed in the field with the consultants during thesupervision mission of June 1977. The final report was received inAugust 1977 and the design of the marshalling yard was considered generallyappropriate but somewhat over-extensive in the light of the new trafficforecasts adopted by the Bank (para. 4.01). Nevertheless, the resultingdesign contributed effectively to the preparation of the proposed FourthRailway Project and supported the Bank's restrictive position regarding thedesign and the size of the passenger building which Regifercam intendedto build on the new site. The performance of the consultants was good.The study required about 16 man-months.

Management Study

4.03 Aimed at the improvement of railway management and operations,

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this study comprised two separate phases: (i) the preparation ofplans of action for the different railway fields of activity includingpreliminary recommendations; and (ii) the implementation of the agreedplans of action. The contract (85 man-months) was signed on April 28,1976and the interim reports on the first phase were distributed in July-August 1976.

4.04 After review of these documents by the railway and the Bank,a meeting was held at Douala in December 1976, to decide on the scope ofthe implementation phase. It was agreed that emphasis would be put on thecritical areas where weakness in railway operations and management wasevident: (i) the MT Department (Motive Power and Rolling Stock Maintenance);(ii) the Ex Department (Operations); and (iii) the railway's planning andinformation systems including accounting, costing, tariffs, statistics,investment planning, budgeting and control. The railway was to providecounterparts for the experts to implement the consultants' recommendationsafter their initial work was completed. The program included shortfollow-up missions by the experts to supervise this continuation. For theimplementation phase, 96 man-months of consulting services were proposedand accepted (Amendment no. 1, April 1977).

4.05 During execution of the contract, it became apparent that thescope of the consulting services should be extended (i) in the MT Departmentwhere the preparation and definition of maintenance documents and proceduresrequired completion and the local staff charged with putting them intooperation had to be trained; and (ii) in the improvement of planning andinformation systems where the procedures needed to be fundamentally revised.

4.06 Consequently, Regifercam did the following:

(i) awarded a supplementary contract to train the staffin the MT Department under CCCE financing(192 man-months); and

(ii) requested the Bank to extend the management study to befinanced out of the remaining funds of Loan S4-CM(Amendment no. 2, September 1978, supplement of 77 man-months).

4.07 The Bank had no objection to these two proposals. Continuation of thepreparation of maintenance documents and improvement of procedures and trainingof workshop staff under CCCE financing started on May 6, 1978. The extensionof the Management Study is under way and will be continued under the proposedFourth Railway Project.

4.08 The first phase, dealing with the definition of the plansof action after an analysis of the railway's operations and management,was carried out competently by the consultants. The consultants'performance during the implementation phase was satisfactory in theMT Department, the VB Department (track maintenance) and good inimproving planning and information systems, particularly improved accountingand costing systems. The results of the implementation phase werenot as successful as expected. In the Operations Department, the actionswere limited to the imDrovement of existing methods and Procedures,

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in spite of Bank's recommendations to broaden the scope of the analy-tical work in this field. There were not enough qualified counterpartsfrom the railway, the railway faiied to implement promptly feasibleimprovements to the facilities recommended by the consultants, and the motivepower and rolling stock maintenance facilities were inadequate to permitimmediate substantial improvements. It also became clear duringimplementation that, in most fields, the volume of work to be done by theconsultants and their counterparts was much greater than initially expected.Thus, the proposed Fourth Railway Project provides for continuation of thework in all essential areas.

Engineering Studies for the New Douala Station and Marshalling Yard

4.09 The engineering studies for the new Douala station and marshallingyard were entrusted to three consulting firms:

(a) one for the detailed engineering of the earthworks,drainage, roadworks, fixed installations, service buildingsand utility networks;

(b) one for the detailed engineering of the road bridge: and

(c) one for the engineering of the signalling and public address systems.

Because of the specialised nature of the activities, three separateproposals were chosen. These engineering studies have been completed, but someadjustments in the signaling system are still being discussed by the railwayand the consultants.

4.10 The tender documents for the main civil works, incorporatingamendments recommended by the Bank, have been prepared and bids have beenappropriately invited. Public opening is scheduled for May 3, 1979. Theperformance of the engineering consultants is satisfactory.

Training Study

4.11 After review of the railway's training system by the Bank duringthe supervision mission of November 1977, Regifercam appointed consultantswith Bank approval, to design a training component to beincluded in the proposed Fourth Railway Project. These services werefinanced under Loan S4-CM. The consultants began work in April 1978 andfinished in November 1978. An interim report was completed by the end ofMay 1978 and was reviewed and discussed during the June 1978 supervisionmission. This report was sufficiently detailed to assess the scope of thetraining element of the proposed Fourth Railway Project. The draft finalreport was received by the Bank in December 1978, and comments have beenforwarded to Regifercam. The consultants started to prepare a manpowerplan jointly with a Canadian team financed by CIDA. The manpowerplan study will be continued under the proposed Fourth Railway Project.Additionally, consultants will assist Regifercam in implementingagreed recommendations on staff management techniques. The trainingstudy required about 22 man-months. The preparation of a finalmanpower plan to be submitted to the Bank for review by the

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end of 1979 will require about 9 man-months. The implementation of improvedpersonnel management techniques proposed by the consultants and agreed byRegifercam is expected to require 15 man-months of technical assistance.Both of these elements are proposed for retroactive financing under theFourth Railway Project. The performance of the consultants is verysatisfactory and their report has contributed greatly to the preparationof the training component of the proposed project.

Workshop Expansion

4.12 The proposed Fourth Railway Project includes the expansion of themain railway workshops in Douala (Bassa), and the construction of motivepower and rolling stock maintenance facilities at Yaound6. The preparationof these components required engineering studies based on a master planprepared by the railway and approved by the Bank after review by anindependent consultant hired by the Bank (supervision mission of June 1978).The engineering studies for the workshop expansion were awardedin September 1978 in accordance with Bank guidelines.These studies are under way and are expected to be completed shortly,partly financed under the Third Railway Project with the balance retroactivelyfinanced under the Fourth Railway Project.

Project Cost

4.13 The table at the beginning of this chapter shows the funds committedby Regifercam for the different contracts awarded under the Third RailwayProject (foreign component). No detailed figures of the local costs have beenrecorded by the railway. The cost per man-month for consulting services isestimated as folbws (foreign expenditures):

US$

Feasibility studies 8437

Corridor study (1977 -fixed price) 6277

Management study 8347

Training study 7590

Disbursements

4.14 The loan is not yet fully disbursed, although major contractswere awarded immediately after the signing of the loan. Delays in awardingcontracts and in reviewing consultants' proposals are due to the lack ofdelegation in the decision-making process at Regifercam's top managementlevel. The attention of the borrower has been drawn to this point onseveral occasions. The appraisal's forecast schedule of disbursementsis shown compared with actual disbursements:

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Cumulative disbursements ActualIBRD fiscal year and at end of quarter (US$ 000) vs. Fore-

quarter ending Forecast cast (%)at Appraisal Actual

1976-77

September 30, 1976 400 - -December 31, 1976 540 232 43March 31, 1977 820 330 40June 30, 1977 1360 432 32

1977-78

September 30, 1977 1920 687 36December 31, 1977 2090 689 33March 31, 1978 2220 848 41June 30, 1978 2300 868 38

1978-79

September 30, 1978 2300 1181 51December 31, 1978 2300 1263 55

5. Performance of the Projects

Second Railway Project

5.01 The performance under the project has been assessed as follows:

(a) Track Renewal

On the basis of available statistics, the track renewal elementof the project resulted in a considerable reduction in thenumber of breakages. In 1972-73, there were 49 breakages onthe sections to be renewed under this project. In the 1977-78period, after renewal, only 3 breakages were recorded. Inaddition, the number of derailments attributed to track conditionsdeclined sharply, and only three derailments per year occurredin the two years after renewal of track. The section Yaoundg-Maloume was realigned under financing provided by various co-donors (excluding the Bank) earlier than anticipated in April1978. This led to the old route, including two sectionsrecently renewed under the project, being abandoned (para. 7.06).Track from the renewed sections is being salvaged and used onother projects. (Details on this subject are attached as Annex7).

(b) Rolling Stock

The number of boxcars and flat cars included in the project wasadequate to meet the railway's requirements through 1976 in

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accordance with the project's objectives. Details onrolling stock utilization are given in Annex 8.

(c) Breakdown Crane

Due to the reduction in derailments, use of the breakdowncrane purchased under the project was low. However, it is usedby the railway for many other purposes (Annex 9).

(d) Motive Power

An assessment of the productivity of the mainline motive powerfinanced by CCCE is given in Annex 10. The locomotives providedsufficient capacity for the Bank financed freight cars, and inaddition some hauling capacity for Regifercam's existing rollingstock.

(e) Other Project Components

It is not feasible to identify separately the performance ofthe other components of the project, except for the 100 bogieswhich made it possible to avoid the loss of 50 freight cars.

Third Railway Project

5.02 Comments on the performance of the consultants entrusted with thevarious studies comprising this project are given above (Section 4). Ingeneral, the studies executed have contributed significantly to the preparationof the proposed Fourth Railway Project and some improvements in operations andmanagement have been made.

6. Operations and Maintenance

6.01 The table attached as Annex 11 summarized the railway's trafficand operating statistics from FY1974 through FY1978. The followingconclusions can be drawn from these data and from information obtainedduring supervision missions.

Locomotives

6.02 The availability of motive power has improved slightly over thepast three years. However, the indices of utilization remain below theplan of action targets, particularly those concerning the average dailymileage to be achieved, as shown below:

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Average daily mileage (km)Class Plan of Action (FY1977) Actual

FY1977 FY1978

4B-3600 280 189 184

1/CC-2400 150 133 179!-

BB-1200 300 239 265

RAILCARS 300 171 202

The average mileage of motive power combines both technicalavailability and the efficiency of the Operations Department in makinguse of available equipment and this index is therefore more significantthan the availability factor above which is subject to various interpretations.The last three months' statistics - the latest available - show a generaltendency towards improvement.

Freight Cars

6.03 The average load per loaded freight car deteriorated from FY1974through FY1976 but has recovered since then. However, the turnaround time,which was a rather high 9.3 days in FY1976, has continued to deteriorate,reaching nearly 11 days in FY1978. The average daily mileage per freightcar has remained steady at about 54 km per day, which is very low for arailway of more than 1,000 km with long-haul traffic (394 km average).Regifercam has been repeatedly urged to improve its statistics in orderto enable the management to determine more accurately where operationalweaknesses are but the response has so far been limited. Technicalassistance to achieve this objective is included in the proposed FourthRailway Project.

Operations

6.04 Operations are hampered by too many incidents such as derailmentson the mainline and in the stations and sidings, rail breakages, locomotiveand rolling stock failures and breakdowns which cause erratic trains runs.Although the number of derailments on the mainline has been substantiallyreduced over the past fiver years, many still occur in the stations andsidings (359 in FY1977, 280 in FY1978 and 100 in the first 140 days ofFY1979 or 257 on an annual basis). These figures show an improving trendbut are far from satisfactory. The total number of rail breakages recorded inFY1978 was 334 against 307 in FY1977, which indicates that the exponentialgrowth recorded during the period 1970-73 has been stopped. However theavailable statistics for FY1979 (4.5 months) show a sharp increase on thefirst 150 km of the Douala-Yaoundg section (118 instances in 4.5 months).

1/ This figure is not significant. There are only 3 locomotives in thisclass with an average availability of 74% in 1977-78 (55% for the last3 months).

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The situation described above is not expected to improve substantially before1980-81 when the 20 new Canadian locomotives will be operational and thetrack will have been renewed between Douala and Edea (84 km) under the ongoingrealignment project, and station attendants and dispatchers will be bettertrained. In the meantime, the Bank requested that the consultants includein the final report of the Management Study recommendations for controllingrail breakage problems. (About 50% of the rail breakages in 1976-78 occurredon a 50 km section between Edea and Eseka where the track is fairly new -36 kg rails laid in 1965).

Staff Productivity

6.05 On the whole, staff productivity has increased very little over thepast five years (cf. Annex 11). It is expected, however, that untilimplementation of the manpower plan now in preparation, total labor forcewill remain constant and, if traffic forecasts materialize, staff productivitymay reach about 240,000 traffic units per employee (operations and trainees)in 1982 against 163,000 at present.

Workshops

6.06 More than 50% of the time spent by locomotives in the maintenancefacilities is due to unscheduled repairs which indicates poor preventivemaintenance. On the other hand, numerous failures of rolling stock such asaxle breakage, loose brake blocks or other parts, lack of clearance at theside friction blocks occur on the line, causing derailments. The ongoingtraining program undertaken by Regifercam with the assistance of consultantsfinanced by CCCE will take at least two more years before completion. There-fore, this training program combined with the workshop expansion and thetraining component under the proposed Fourth Railway Project are not expectedto produce substantial improvement of this situation before 1980-81.

Track Maintenance

6.07 Much remains to be done to improve the quality of track maintenance.Track renewals undertaken under the previous projects have considerably improvedthe overall condition of the track, as indicated by the reduction in derailmentsand in the rate of increase in rail breakages, but this improvement will not lastif the railway does not pay sufficient attention to track subgrade repairs(erosion, poor drainage, weed control, etc.). Here also staff training, goodwork programming and permanent supervision are essential.

Conclusion

6.08 Observation of Regifercam's performance in operations and maintenanceof its track and equipment has led the Bank missions to conclude that strength-ening the management of the three main technical departments is absolutelynecessary. Consequently a large technical assistance component has been includedin the proposed Fourth Railway Project to assist Regifercam to train its man-agerial staff and to achieve the operational targets of ts future action plan whichwill be part of the loan agreement of this project.

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6.09 Comments on the achievement of the operational targets spelledout in the action plan of the Second Railway Project are made in Annex 12.

7. Economic Evaluation

A. Second Railway Project

Background

7.01 The appraisal report produced a forecast ERR for four projectelements-track renewal, flat cars, boxcars and a breakdown crane. Thecost saving resulting from purchase of bogies compared with the equivalentnumber of new wagons was also assessed. The benefit from the Japomabridge construction was not assessed on the grounds that the railwaywould virtually cease to exist if it were not built. The benefits frommiscellaneous items such as consulting services, turnouts and radioequipment were also not assessed, but their cost was included in theanalysis of total project benefits.

Traffic

7.02 Annex 3 shows Appraisal Report traffic forecasts, actual volumesrecorded up to FY 1978, and revised forecasts from FY 1979 onwards. Timbertraffic has not increased as forecast, mainly as a result of a failure ofthe world market to recover from a sharp slump in FY1975, institutionalproblems within the Cameroon forestry sector, and in the last year or twoa shortage of railway carrying capacity due to the railway's failure toprocure additional equipment for the period after 1976/77, not coveredby the project. Other traffic has grown more slowly than forecast intonnage, but close to forecast in ton-kilometers.

7.03 Revised forecasts call for a recovery in timber traffic andcontinued growth in other traffic until FY1983. A paved road betweenDouala and Yaound6 is expected to be in operation in FY1984 and consequentlyrailway freight traffic is forecast to decline, recovering to FY1983 levelsby FY1987, and continuing to grow slowly thereafter.

Analytical Approach

7.04 Actual project costs for the elements subject to ERR analysiswere close to appraisal estimates. The approach adopted has thereforebeen to assess both costs and benefits in 1973 prices, as was done in theappraisal, rather than update both costs and benefits to 1978 or 1979 prices.Appraisal estimates which determined that the main cost elements were damageto locomotives and freight cars when derailed have been reviewed, foundreasonable, and retained. For other elements, in particular flat cars andboxcars, where the relative costs of road and rail transport are major

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determinants of benefits, the results of the SOFRERAIL/OCCR Douala-Yaound6corridor study (1977) were adopted, deflating both sets of costs to takeinto consideration inflation between 1973 and 1975, the latter being theSOFRERAIL/OCCR base date. The appraisal report employed the results of anearlier (1973) SOFRERAIL/OCCR study to assess benefits. The benefits, inconstant 1973 prices, obtained on the basis of the 1977 study are notsignificantly different from those based on the 1973 study. To assessrelative transport costs, road costs were adjusted to exclude debt servicingand overheads, equivalent of which are not included in the rail costcalculations. The assumption has also been that a paved road will be openbetween Douala and Yaoundg from FY1984 onwards. The benefit from bogiepurchase, avoidance of wagon purchase, has been included as a negative cost.

Results

7.05 The ERR on project elements and the total project are comparedbelow with appraisal estimates. The reasons for variations are thendescribed.

Second Railway Project ERR (%)

Project itemTrack Flat Box- Breakdown Total 1

cars cars crane project -

Appraisal Estimate 12 13 19 24 13

Revised Estimate 0 13 13 -4 10

Track

7.06 Track was laid in 1976 and will be salvaged in 1979-80 becausethe section on which it was laid was realigned and taken out of use inApril 1978 (para. 5.01). This track will be used elsewhere in the system.A residual value has therefore been attributed to it in 1978, but althoughthis was higher than expected at appraisal (CFAF 430 million againstCFAF 320 juillion forecast for 1981), the operational period was too short togenerate benefits sufficient to do more than equal the loss of value of thematerial (in particular of ballast which cannot readily be re-usedeconomically). In addition benefits from increased capacity included inthe original appraisal analysis have not been retained in the re-evaluationsince the SOFRERAIL/OCCR report concluded that significant line capacityshortages were unlikely.

1/ Including consulting services, etc.

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Flat Cars

7.07 The ERR is virtually identical with appraisal forecasts of13%, even though full capacity utilization was not as rapid as expectedand productivity is lower than the appraisal assessment. However, theappraisal report assessed benefits on the basis of a comparizan of railand paved road costs. In fact a paved road will not be in service untilFY1984 at the earliest, by which time the proportion of timber producedin the Belabo area and carried by rail, not subject to serious roadcompetition, will have increased by about two-thirds. Thus the benefitsresulting from the difference between road and rail transport costs areand will remain higher than forecast.

Boxcars

7.08 The revised ERR is 13% compared with 19%. The productivityassumptions at appraisal have not been realized and are unlikely to be.The cost advantage differentials between unpaved and paved road conditionsfor boxcar traffic assessed by the 1977 SOFRERAIL/OCCR report are greaterthan those estimated at appraisal, thereby reducing the comparativeadvantage of rail transport. These two factors account for the declinein the forecast ERR, which at 13% is still satisfactory.

Breakdown Crane

7.09 Derailments requiring the use of the breakdown crane have beenmany fewer than expected, about 20 against 55. The main effect is thatbenefits from avoidance of line capacity reduction cannot now be realisticallyattributed to the crane, and since the total quantified benefits are less thantotal cost, the ERR is nov expected to be negative. However, becauseReRifercam now has only two breakdown cranes including that purchased, itfollows that if the 80t crane had not been purchased, Regifercam would havebeen in a vulnerable position in the event of malfunctioning of its 60t crane.Furthermore, other benefits have been identified (Annex 9) but quantificationis not possible on the basis of existing information.

Total Project

7.10 Despite the lower than expected ERR on track replacement andthe (insignificant) breakdown crane element, the project should still yielda satisfactory ERR of over 10%.

B. Third Railway Project

Background

7.11 The main component of the Third Railway Project was financingof studies for final engineering of the proposed Douala marshalling yard.The appraisal report economic analysis was accordingly limited to apreliminary assessment of the ERR on the marshalling yard project.

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Result

7.12 The appraisal report estimated that the marshalling yard projectwould yield benefits from wagon productivity improvements, reduced motivepower operational costs (resulting from concentration of facilities) andavoidance of the cost of traffic diversion to road which would occur inthe absence of an increase in marshalling yard capacity. On the basis ofpreliminary cost estimates of CFAF 2.7 billion (1975 prices) and traffic inthe dominant direction (southbound) forecast to reach 1.2 million tons by1985/86, the ERR was expected to be 29% (20% on sensitivity analysis).

7.13 The Fourth Railway Project was appraised in July 1978. Therevised cost estimate in 1978 prices of the marshalling yard element wasCFAF 4.3 billion. The difference in costs of CFAF 1.6 billion was due totwo things, (a) inflation, accounting for about 0.9 billion, and (b) thevery preliminary data employed at appraisal which lead to underestimatingcosts. The scope of the works has not changed significantly. The typesof benefits are also assessed as at appraisal. However, the traffic nowforecast to pass through the marshalling yard is lower than at appraisaldue mainly to the installation of marshalling facilities at Douala port,(under the Second Douala Port Project). The scope of these was uncertainat the time of the Third Railway Project appraisal. However, it is nowestimated that these facilities will enable about one third of log trafficto pass directly to the port and avoid the main marshalling yard. On theother hand, preliminary assumptions of the improvement in wagon productivityresulting from the facilities have been raised, the reduction in turnaroundtime now being estimated as three days rather than two days.

7.14 The ERR on the marshalling yard element of the proposed FourthRailway Project is 25% and on the sensitivity analysis 18%. Neither ERRis significantly below the appraisal ERR of 29 and 20% respectively.

8. Financial Performance

8.01 Regifercam's financial statements for fiscal years 1975 to1978, comparing appraisal forecasts of the Second and Third Railway Projectswith actual figures, are shown in Annexes 4 to 6. Operating revenue developedclosely in line with forecasts, with the less-than-expected increase offreight traffic being largely offset by additional tariff increases. FY1978staff costs, while high, were also very close to forecasts, but otherworking expenses were substantially above forecasts. This latter excess costand higher-than-necessary staff costs were essentially due to the lack ofefficient cost control and little cost-consciousness of most of Regifercam'smanagers and its board of directors which seems to accept with little criticismmanagement's explanations for cost overruns in executing the operating budget.

8.02 Bank supervision missions have consistently brought to Regifercam'sattention the need for more cost-effective management, but this has had littleeffect in an environment where cost overruns do not constitute a major threatto management. Only in the wake of rapidly increasing operating costs duringFY1978 has management shown greater concern about costs. Regifercam agreed,

- 43 -

therefore, in the context of the proposed Fourth Railway Project to:

(a) implement a manpower plan, prepared in draft form byconsultants ORT (Switzerland), aimed at keeping totalstaff numbers virtually constant through FY1983; and

(b) introduce promptly, assisted by Bank-financed consultants(SOFRERAIL, France), a budget control system for alloperating expenses giving a monthly comparison of actualversus budgeted expenses per type of expense and departmentand establishing rules for dealing with budget overruns.

8.03 Assisted by tariff increases implemented under the auspices ofthe Third Railway Project, Regifercam's financial situation improvedsignificantly from FY1976 to FY1977, but did not improve further there-after, due to excessive increases in operating costs. The FY1978 workingratio was thus substantially above the target ratio of the Third RailwayProject, 84% versus 72%. Future improvement of Regifercam's financialratios must, more than in the past, rely on improved cost effectiveness,since the potential for tariff increases is limited by present andexpected road competition and since the pressure on management to improvecost control should not be alleviated through the ease of obtainingmassive tariff increases.

8.04 Cash generation obviously remained below forecast levels, andas the debt service grew as expected, the debt service coverage rationever exceeded 1.0, leaving no room for self-financing of capitalinvestment and additions to working capital. The current and liquidratios remained unsatisfactory and bank overdrafts and Government subsi-dization of operations became a current feature. With the exception ofthese bank overdrafts, Regifercam's balance sheets developed essentiallyas forecast. Details on Regifercam's compliance with individual covenantsare contained in Annex 13.

8.05 In summary, the two projects were instrumental in stoppingthe deterioration of Regifercam's finances and bringing about someimprovement, albeit mostly through tariff increases, but not to thedegree expected at appraisal. Funds, available under the Third Project,were used adequately to deal with the emerging problem of weak costcontrol by financing consultants to devise cost control systems anda manpower plan. Because of the difficulties expected in implementingthese new tools, measurable progress may not be apparent for some timeto come.

9. The Bank and the Borrower

Performance of the Bank

9.01 The Bank has in general identified in time the critical areaswhere the railway might encounter capacity constraints or where it showedparticular weaknesses, and the two projects have been well designed tocope with the identified needs. The Second Railway Project gave relatively

- 44 -

little attention to training as there was already in existence a trainingscheme under bilateral aid (FAC-OFERMAT). The need for a major input intraining was not obvious at that time and was only later identified.

9.02 The Bank consistently insisted on the importance of tariffincreases and operational improvements, and its interventions were quitesuccessful with regard to tariff increases. The difficulties in achievingoperational improvements may have been underestimated by both the Bankand the railway, but even a more realistic appreciation of these diffi-culties would probably not have changed the scope of the projects andtheir impact on the railway, since the technical assistance providedby the projects already stretched to the limits Regifercam's capacityto absorb this assistance, as evidenced by the railway's inability toprovide qualified counterparts.

9.03 The two project elements for which the economic benefits weresignificantly less than expected were track renewal and the breakdowncrane. The lower ERR on track renewal resulted from appraisal estimatesof the time during which the relaid track would remain in use not beingfulfilled. This in turn was partly due to weaknesses in the Bank'srelationship with the borrower and the complexities of determining uponrealignment timing (see paras. 9.05-9.09). As for the breakdown crane,benefits did not meet expectations because (a) line capacity exceededexpectations and (b) traffic grew less rapidly than anticipated. Theco-incidence of these two factors, neither of which was readily predictableat appraisal, caused the significant deviation between appraisal and revisedforecasts of the ERR.

9.04 The Bank's supervision of the projects was in general adequateand missions of sufficient frequency and duration were undertaken todeal satisfactorily with matters relating to physical project implemen-tation, financial and economic issues. The allocated time was, however,not always sufficient to deal in depth with operational problems andmeasures to alleviate them. This is true in particular where consultants'performance was less than good despite the high reputation of the firm,which resulted in more analytical work being done by Bank staff. Toovercome this problem of consultants failing to meet expectations whichmay not be unique to Cameroon railways, the time allocated to engineersfor project supervision would need to be substantially increased.

Relations with the Borrower

9.05 In assessing the strength and weaknesses in the relationshipbetween the Bank and the Borrower, two crucial factors have to be takeninto account:

(a) The Borrower (Regifercam) is not responsible in the finalanalysis for decisions. The responsibility regardingline construction lies with the Government, while theOffice du Chemin de Fer Transcamerounais (OCFT), whichwas set up by the presidency to undertake responsibilityfor the construction of the Transcamerounais system be-tween Yaounde and Ngaoundere, implements the decisions;1/

1/ See also comments by the Office du Chemin de Fer Transcamerounais(Attachment A).

- 45 -

(b) The optimum timing of the continuation of the Transcamerounaiswestwards by realignment of the Yaound6-Douala line was verysensitive to assumptions regarding the growth of traffic andthe factors determining line capacity.

9.06 The divided authority between Regifercam and OCFT meant in effectthat while the Bank was lending to one agency, Regifercam, critical decisionson investment were also being made by OCFT and the Government. This was reflectedin the Loan Agreement Covenant which states (Section 5.07 (a) "the Borrowershall not carry out,or cause to be carried out,or incur any debt in respectof,the realignment of the Douala to Yaoundg main-line unless the Guarantorafter consultation with the Bank shall have confirmed to the Bank that theGuarantor is satisfied that such works are economically and technically sound".This covenant clearly lacked strength and did not permit the Bank to exerteffective control over the timing of realignment.

9.07 The second aspect has a bearing in particular upon the decision tofinance track relaying between Yaoundg and Otele. The consultant'sstudy on realignment concluded that line capacity on critical sections wouldnot be reached until the early 1980's and the Bank concluded that the relaidtrack would be in operation for about four or five years. However, Regifercamtraffic grew quite rapidly to 1973/4 as a result of a boom in timber exports.This together with the prospective availability of machinery for track layingupon completion of the Yaoundg-Ngaoundere section coupled with disagreementbetween Regifercam and their consultants with respect to line saturation criteriapersuaded several co-donors to agree to finance Transcamerounais' constructionfrom Yaound6 to Otele. The Bank pointed out that the ERR at about 8% wasunsatisfactory, but the counterargument was produced that financing was onconcessionary terms and the financial costs were thus low.

9.08 At that stage, the decision to finance track relaying could havebeen reconsidered. However, ordering of track material was already in handand as a matter of practicality the main question was whether the track shouldbe immediately laid on the old alignment, or reserved for realignment use.Regifercam pressed strongly for its immediate use, arguing that alleviationof rail breakages and the resultant service interruptions was an urgent problemwhich could not await realignment for its solution. Track laying commencedin the second quarter of 1975.

9.09 We conclude therefore that with the benefit of hindsight, it mighthave been anticipated that there would be strong pressure to continue realignmentas soon as the Yaoundg-Ngaoundere line was complete, that the Bank would beunable to exert much control over events and therefore the duration and thusthe extent of benefits from track relaying were very uncertain. However, oncethe track was ordered the choice was between usefully employing the rails onthe existing alignment .or utilizing them under Regifercams normal replacementprogram over a period of two to three years. The alternative of employing themon the realigned section was not available as Canadian financing of those railshad already been secured. Employing the Bank financed rails on the existingYaound6-0tele section seemed, a priori, the best solution, although a

- 46 -

detailed economic analysis was not carried out. It is clear that track relayingdid reduce the number of rail breakages and the psychological effects onRegifercam's customers from reduced service interruptions thoughunquantifiable were certainly beneficial.

Critical Steps in Realignment/Track relaying

Date ----Realignment------------ ---------Relaying--------------

Jan 74 OCCR/SOFRERAIL Study -Final Report received

Jan 74 Rail, etc. bid documentsto Bank

May 74 Rail II negotiationsJune 74 Rail II Board PresentationJune 74 Rail II Rail bids receivedJuly 3, 74 Bank accepted bids

July 74 Co-donor meeting - expressioncf interest by several parti-cipants in financing Yaoundg-Otele realignment. Bank takespcsition realignment not

Sept 74 justified Regifercam strongly expressedwish to use rails on existingYaoundf-Otele track - Bank agreed

Jan 75 Invitation to review biddocuments - Yaound6-Otele(first formal notificationof decision to realign)

May 75 Rail relaying commenced

Nov 76 Rail relaying finished

April 78 Realigned Yaoundg-Oteleopened

Preparation of Completion Report

9.10 The substance of this report has been discussed with Regifercamwho have fully cooperated in its production.


CAMEROON: SECOND RAILWAY PROJECT (LOAN 1038-CM)

Actual and Appraisal Estimates of Project Costs

Actual cost I/ Appraisal estimate of cost l/ Actual cost

Major works or components Local 2/ Foreign Total Local Foreign Total a proportion % imple-CFAF US$ US$ million CFAF US$ US$ million mentedestimate ofmillion million equivalent million million equivalent e o

cost (%

1. Japoma bridge 424 5.77 7.69 304 3.63 4.85 159 100

2. Track renewal 206 3.03 3.96 188 2.80 3.55 112 100-

3. 50 turnouts 16 0.39 0.46 15 0.36 0.42 110 100

4. Radio equipment 13 0.23 0.29 15 0.34 0.40 73 100

5. Motive power (CCCE) - 5.99 5.99 - 5.29 5.29 113 100

6. Spare parts for locomotives 4 0.41 0.43 - 0.38 0.38 113 100

7. Freight car bogies 33 7.07 7.22 - 6.60 6.60 109 100

S. Breakdown crane - 0.61 0.61 - 0.52 0.52 117 100

9. Consulting services - - - 48 0.80 0.99 0 0

Total 696 23.50 26.65 570 20.72 23.00 116

1/ Using an exchange rate of US$1 = CFAF 220.8 for actual costs and US$1 CFAF 250 for appraisal estimate of costs.2/ Excluding CFAF 258 million, the estimated foreign component of the additional contribution made by the borrowerto finance the cost overrun on the construction of the Japoma bridge. Actual local costs are estimated. No accuraterecords for these costs are available.3/ Transferred to S4-CM (Third Railway Project).


CAMEROON: THIRD RAILWAY PROJECT (LOAN S4-CM)

Actual and Appraisal Estimates of Project Costs

Actual cost 1/ Appraisal estimate of cost 1/ Actual cost as aMajor works or component Local i/ Foreign Total Local Foreign Total proportion of appraisal

CFAF US$(000) US$(000) CFAF US$(000) US$(000) estimate of cost (%) 31million equivalent million equivalent

1. Feasibility study 8 135 169 8 203 238 71

2. Geotechnical and engineeringstudy 28 496 620 39 961 1,136 55 4-

00

3. Consulting services 103 1,837 2,296 86 1,136 1,518 151

Total 139 2,468 3,085 133 2,300 2,892 107

1/ Using an exchange rate of US$1=CFAF 220 for actual costs and US$1=CFAF 225 for appraisal estimate of costs.2/ Estimated. No accurate records are available.3/ Major changes on the scope of the studies were made during project execution.

REGIFERCAM

FREIGHT TRAFFIC

Total Freight Timber Other Traffic

Appraisal Actual and Appraisal Actual and Appraisal Actual andRevised 19791/ Revised 1979.' Revised 19791/ Revised 1979-

Tons Tkm Tons Tkm Tons Tkm Tons Tkm Tons Tkm Tons Tkm(000) (m) (000) (M) (000) (M) (000) (M) (000) (M) (000) (M)

1972/73 1101-2/ 339 1101 326 282 98 298 98 819 241 803 228

1973/74 1198 383 1261 405 345 121 393 143 853 262 868 262

1974/75 1418 492 1168 400 480 179 210 68 938 313 958 332

1975/76 1577 574 1286 438 580 232 318 119 997 342 968 319

1976/77 1733 644 1300 479 691 277 388 133 1042 367 962 346

1977/78 1807 683 1359 555 734 299 326 125 1073 384 1033 430 1

1978/79 2013 775 1395 594 847 354 330 131 1166 421 1065 463

1979/80 2324 931 1520 634 1002 426 366 150 1322 505 1154 484

1980/81 1699 708 406 174 1293 534

1981/82 1836 796 460 200 1376 596

1982/83 1978 935 520 259 1458 676

1983/84 1875 887 546 272 1329 615

1984/85 1933 904 558 275 1375 629

1985/86 1975 934 570 286 1405 648

1986/87 2113 1016 610 318 1503 698

1987/88 2200 1073 539 346 1561 727

1988/87 2302 1150 686 375 1616 775

1/ Figures through 1977/78 are actual.2/ Actual.

-50 - ANNEX 4

REGIPERCAM

Income Accounts

Actuals (A), and Appraisal Forecasts

Second (F2) and Third (F3) Railway Projects

(CFAF million)

Fiscal years ending June 30 1975 1976 1977 1978A F2 A F2 F3 A F2 F3 A F2 F3

Operating Revenue

Passengers 1047 903 1229 1028 1099 1374 1101 1152 1386 1194 1225

Freight 3904 4676 4774 6168 4368 6067 7737 4897 7960 8939 5925

Miscellaneous 388 470 438 485 400 434 500 410 700 515 420

Rate increases (F3 only) - - - - 452 - - 1363 - - 2733

Total Operating Revenue 5339 6049 6441 7681 6319 7875 9338 7822 10046 10648 10303

Operating Expenses

Staff costs 2497 2500 2777 3020 2900 3121 3770 3300 3912 4060 3900

Other costs 2221 2307 2924 2810 2600 3462 3293 3010 4521 3777 3600

Total Working Expenses 4718 4807 5701 5830 5500 6583 7063 6310 8433 7837 7500

Cash generated from 621 1242 740 1851 819 1292 2275 1512 1613 2811 2803operations

Depreciation 1151 1206 1358 1311 1308 1458 1409 1518 1733 1450 1798

Total Operating Expenses 5869 6013 7059 7141 6808 8041 8472 7828 10166 9287 9298

Net operating revenue (530) 36 (618) 540 (489) (166) 866 (6) (120) 1361 1005

Interest charges 394 440 383 653 579 739 828 758 988 888 1022

Subsidies from Government 1182 - 732 - 643 1245 - 224 1553 - -

Adjustments 201 - - - - - - - -

Net Surplus (loss) 57 (404) (269) (113) (425) 340 38 (540) 445 473 (17)

Working ratio (%) 88 79 89 76 87 84 76 81 84 74 73

Operating ratio (%) 110 99 110 93 108 102 91 100 101 87 90

Times interest earned - 0.lx - 0.8x - - 1.Ox - - 1.7x L.Ox

Debt service 836 768 866 1036 962 1260 1306 1236 1857 1664 1798

Debt service coverage 0.7x 1.6x 0.9x 1.8x O.9x 1.Ox 1.7x 1.2x 0.9x 1.7x 1.6x

Net fixed assets in use 34023 35719 35226 37892 38222 36820 39091 44166 38709 40102 50913

Rate of return (%) (1.6) 0.1 (1.8) 1.4 (1.3) (0.5) 2.2 0 (0.3) 3.9 2.0

Targets

Working ratio 81 72

Rate of return 1 2.5 3.5

February 1979

- 51 - ANNEX 5

REGIFERCAM

Balance Sheets

Actuals (A) and Appraisal Forecasts

Second Railway Project (F2)

(CFAF million)

Fiscal Year ending June 30 1975 1976 1977 1978A F2 A F2 A F2 A F2

ASSETS

Current Assets

Cash 371 250 274 302 258 377 370 611Receivables 974 910 1,177 1,150 1,239 1,410 1,173 1,600Stores 1,159 1 1 1,750 220 2,3 2,5

Sub-total Current Assets 2,504 2,600 2,879 3,202 3,517 3,827 4,275 4,561

minus Current Liabilities

Payables 777 1,390 890 1,690 1,278 1,980 1,455 2,270Loan terms 397 - 509 - 831 - 1,416 -Bank overdraft 972 425 l5 380 1,597 193 1,361 -

Sub-total Current Liabilities 2,146 1,815 2,984 2,070 3,706 2,173 4,232 2,270

NET WORKING CAPITAL 358 785 (105) 1,132 (189) 1,654 43 2,291

INVESTMENTS 66 66 67 66 20 66 22 66

Fixed Assets

In use 44,304 47,644 48,375 51,153 50,108 52,761 54,272 53,371minus Depreciation 10,489 10,851 11,739 12,162 13,105 13,571 13,858 15,021Net fixed assets in use 33,815 36,793 36,636 38,991 37,003 39,190 40,414 38,350Work in progress 3,383 1100 1,99 1,300 2, 2,000 2_687 2,800

Total net fixed assets 37,198 37,893 38,628 40,291 39,030 41,190 43,101 41,150

TOTAL ASSETS 37,622 38,744 3 4 3 42,9 4 ___

LIABILITIES

Long-term debt 13,999 14,358 15,137 17,216 15,066 18,599 19,147 18,723Equity 23,623 24,386 23,453 24,273 23,795 24,311 24,019 24 784

TOTAL LIABILITIES 37,622 38,744 38,590 412489 38,861 42,910 43,166 43,507

RATIOS

Current assets/Current liabilities 1.2 1.4 1.0 1.5 0.9 1.8 1.0 2.0Liquid assets/Current liabilities 0.6 0.6 0.5 0.7 0.4 0.8 0.4 1.0Debt to equity 37/63 37/63 39/61 41/59 39/61 43/57 44/56 43/57

REGIFERCAM

Sources and _Applications of Funds

Actuals (A), and Appraisal Forecasts

Second (F2) and Third (F3) Railway Projects

(CFAF million)

Fiscal years ending June 30 1975 1976 1977 1978A F2 A F2 F3 A F2 F3 A F2 F3

I. Sources

Internal Cash Generation 621 1242 740 1851 819 1292 2275 1512 1613 2811 2803

Long-term Borrowing 2777 2806 1621 3241 2150 450 1861 2970 4950 900 4035

Equity Investment 619 118 102 - 2900 40 - 6000 - - 4000

Government Subsidies 1182 - 732 - 643 1245 - 224 1553 - -

Decrease in Working Capital - - 463 - - 84 - - -

Total Sources 5199 4166 3658 5092 6512 3111 4136 10706 8116 3711 10838 1

II. Applications

Capital Investment 4164 3354 2792 3709 5050 1851 2308 8970 6027 1410 8540

Debt Service 836 768 866 1036 962 1260 1306 1236 1857 1664 1798

Increase in Working Capital 199 44 - 347 500 - 522 500 232 637 500

Total Applications 5199 4166 3658 5092 6512 3111 4136 10706 8116 3711 10838

P.M.: Cash at End of Year (601) (175) (1311) (78) (1339) 184 (991) 611(including bank overdraft)

February 1979

- 53 - ANNEX 7Page 1

RAIL BREAKAGES AND DERAILMENTS AVOIDED BY TRACK RENEWAL

Rail Breakages

1. No reliable detailed statistics on rail breakages on the Douala-Yaoundg section are available for the years preceding 1976. From FY1977,Regifercam's statistics indicate that more than 90% of the total number ofrail breakages occurred where the track has not been renewed within the pasteight years. In 1970-71, about 143 km of track between Douala and Yaound6was still equipped with material more than 43 years old. Due to creepage,these rails can be expected to have become highly stressed particularly incurves, and consequently very vulnerable to breakage. It can be assumedthat, between FY1971 and FY1973, more than 90% of the instances occured onthe old track. The table below shows the estimated progression of the annualnumber of rail breakages (N), with the frequency per km.

Average lengthFY of old track N (total) N (90%) Frequency

in service per km

1971 143 44 40 0.281972 126 89 80 0.631973 92 120 108 1.17

The average annual progression is therefore about 2.04 or an increase of104% per year.

2. The annual numbers of rail breakages which presumably occurred onthe sections renewed under the Second Railway Project (42 km) were:

FY N

1971 121972 271973 49

For the following years, assuming a more conservative figure for the progressionof rail breakages, as determined from Regifercam's statistics for the period1971-76 for the sections of the Douala-Yaoundg stretch where the track had notbeen renewed within the eight preceding years (40% annual increase), the numbersof rail breakages on the sections covered by the Second Railway Project wouldhave been:

-54 - ANNEX 7Page 2

Number Number actually Avoidancewithout recorded after of rail

FY renewal project completion breakages

1974 681975 96 -1976 134 - 67 (50%)1977 188 1 1871978 (10 months) 220 2 218

Total 472

3. Conclusion. By renewal of 42 km of track under the Second RailwayProject, more than 470 rail breakages were most probably avoided between com-pletion of the project and the end of April 1978, when the realigned sectionMaloume-Yaounde opened.

Derailments

4. There has been a considerable decrease in the number of derailmentson the Douala-Yaounde section since the period 1971-72 when 105 derailmentsper year were recorded. This is due mostly to the renewal of the track on156 km (more than 50% of the stretch Douala-Yaounde), under the First andSecond Railway Project (55 and 42 km respectively) and by Regifercam on itsown budgets (59 km). In the period 1976-78, 34 derailments per year wererecorded on this section and most of these derailments can be attributed toequipment failures or poor loading of the cars (85%). Between July 1976and the end of June 1978, only three derailments attributed to track conditionwere recorded on the sections renewed under the First Railway Project and theSecond Railway Project. During the same period, on the Second Railway Projectsection, six derailments occurred and only one is attributed to track condi-tion. Assuming that half of the derailments attributed to other causeswere also partly due to track condition, we can estimate that three derail-ments per year occurred on the Second Railway Project section having as oneof their causes the condition of the track, against about 27 per year asforecast at appraisal. Therefore, a reduction of 89% of the derailmentsdue to track condition is the result of the renewal of the track under theSecond Railway Project.

Realignment of the Maloume-Yaounde Section

5. At the end of April 1978 the realigned section Maloume-Yaounde wasput into service. The track laid down under the Second Railway Project onthe old route will be salvaged. The residual value of the track material isestimated at about CFAF 480 million in 1978 prices.

-55 - ANNEX 8Page 1

FREIGHT CAR UTILIZATION

A. Flat Cars (Timber Traffic)

Total Capacity of the Fleet

1. The total capacity in tons of the flat cars used for timber trafficis shown below with an indication of the total ton-kilometers achieved or,for FY1979, forecast.

FY Capacity (tons) Traffic (tkm millions)

1975 18,140 781976 25,150 1191977 25,130 1331978 22,830 1261979 22,830 183 1/

1/ Budget.

Theoretical Productivity (tkm millions)

2. The theoretical productivity of the fleet, on the basis of theaverage daily mileage recorded and the actual average load per flat car(21 tons per 2-bogie flat car and 55 tons per 4-bogie flat car), is shownbelow "with" and "without" project. The excess or lack of transport capacityis also indicated in terms of tkm.

FY Theoretical productivity Traffic Excess (Lack)"With" "Without" "With" "Without"

(tkm million)

1975 - 78 68 - 101976 144 91 119 25 (28)1977 152 96 133 19 (37)1978 137 82 126 11 (44)1979 137 82 183 (46) (101)

These results are shown in the attached graph.


Assuming that no flat cars are written off in the meantime andthat the 150 new Canadian flat cars are put into service early in 1980,the comparison of the theoretical transport capacity (tkm) of the fleetwith Bank's traffic forecasts is shown below:

FY Traffic Transport capacity Excessforecasts Existing New Canadian Total (Lack)

fleet flat cars

(tkm millions)

1980 183 137 40 177 (6)1981 213 137 81 218 51982 298 137 81 218 (80)1983 326 137 81 218 (108)

This indicates that:

(a) the 102 flat cars purchased under the Second Railway Projectwill be fully utilized from FY1979 on, at their yearly normaltransport capacity (55 million tkm for about 144,000 tons); and

(b) Regifercam will need to improve drastically its operations andmost probably purchase about 150 additional flat cars to beput into service in 1981-82.

B. Boxcars

Total Capacity of the Fleet

3. The total capacity of the existing boxcars at the end of each fiscalyear, in tons, is indicated below, with the estimated tonnages 1/ actuallytransported by boxcars and the average theoretical transport capacity providedby the boxcars in the fleet.

1/ Tonnages are taken as reference here, instead of tkm, because the averagedistance indicated in Regifercam's statistics includes all traffics.

CDC j ~ J C

~i11 ii 1

l D,

v. jti I -i ý f fF I * - 4-

'74/'S 2 -6 / '4 7/7 7

-58 - ANNEX 8Page 4

FY Total Estimated tonnage Average Excesscapacity actually theoretical (lack)(tons) transported transport of capacity

by boxcars capacity 1/ (000 tons)(000 tons) (000 tons)

1975 15,820 456 452 (4)1976 16,560 480 467 (13)1977 16,560 492 507 151978 16,115 501 470 (31)1979 (forecast) 22,515 596 550 2 (46)

1/ With turnaround times and average payload per freight car as recordedor,for FY1979, forecast.2/ Includes 160 boxcars financed by CCCE and gradually put into service fromSeptember 1978 on.

(See attached graph.)

These figures show that:

(a) the theoretical capacity is close to the estimated tonnageactually transported by boxcars. The discrepancies are ofthe order of magnitude of the errors of the assessment basedon elementary statistics;

(b) there is however a tendency to a lack of capacity;

(c) diverted or frustrated traffic probably occurred from FY1978on;

(d) the boxcars purchased under the Second Railway Project arefully utilized and their number was probably below that neededto meet traffic demands as already indicated in the CompletionReport of the First Railway Project (Loan 687-CH).

The 25 boxcars of the Second Railway Project have a productivity ofabout 10,300,000 tkm per year for 19,000 tons.

CAHEA0oN 山 5どの Nム R らルりAy P40 ）ど c で

―排：:


BREAKDOWN CRANE

Derailments

1. Based on Regifercam's statistics, the number of derailmentsrecorded since July 1976 are shown in the table below:

FY1977 FY1978 FY1979

MainlineDouala-Yaounde 37 33 42 (108)Yaounde-Ngaoundere 10 6 8 (21)Western line 5 4 3 (8)

Total, mainline 52 43 _ 3 _137)

Stations and sidings 361 248 106 (272)

Among these, the derailments with more than one vehicle (freight car orlocomotive) involved were:

FY1977 FY1978 FY1979 l/


Total 16 9 T 8 (W-T)

The derailments involving one locomotive only were:

FY1977 FY1978 FY1979


Total 10 14 YOU (26)

l/ Figures recorded for 142 days. The figures between brackets are extrapolations

for 365 days.


Utilization of the Breakdown Crane for Derailments

2. The derailments in the stations and sidings (65% in the Douala area)affected only one freight car or one shunter each. In the great majority ofthe cases, derailments involving only one freight car do not necessitate theintervention of a breakdown crane. Re-railing of a mainline locomotiverequires a breakdown crane in about 50% of the cases. The number of casesfor which the 80-ton breakdown crane was required can be assessed as follows:

FY1977 FY1978 FY1979

(forecast)

MainlineDouala-Yaounde 15 10 49Yaounde-Ngaoundere 4 4 6Western line 2 2 4

Total 21 16 59

The forecast figures quoted for FY1979 indicate a sharp increase in thenumber of occurrences of derailment due mainly to equipment failures orbad loading of freight cars (85% of the cases) and should not be taken intoconsideration, since remedial actions can certainly be taken to lower thisrate of incidence. Therefore, 20 cases per year which necessitate the inter-vention of the breakdown crane should be considered normal, with an averagedistance of 210 km between Yaounde, where the 80-ton breakdown crane isbased, and the site of the derailment.

Breakdown Cranes Owned by the Railway

3. Two other 30-ton railway cranes purchased in 1954 are obsolete,have been written off and are no longer in operation because spare parts areno longer available. Presently, Regifercam owns two breakdown cranes of acapacity of 60 and 80 tons respectively, the latter having been purchased underthe Second Railway Project.

Other Utilizations

4. The breakdown cranes are not used solely for derailments. Numerousother interventions are performed by this lifting equipment such as: correctionof freight car loadings displaced during the haul along the line, mainlylogs, with a frequency estimated at 80 cases per year; loading and unloadingof heavy or out-of-gauge loads (10 cases per year); replacement of damagedbogies on the line (50 cases per year); and exceptional maintenance operationson weighing bridges and railway bridges.

-62 - ANNEX 9Page 3

Conclusion

5. The actual utilization figures of the breakdown cranes forre-railings of derailed motive power and rolling stock are certainly underthe figures estimated at appraisal. On the other hand, the interventionsof the breakdown cranes for other purposes are much more frequent andtheir annual number undoubtedly justifies the breakdown crane purchasedunder the Second Railway Project. It is not possible, however, to assessthe benefits of such utilization.

- 63 - ANNEX 10

UTILIZATION OF LOCOMOTIVES

1. The four 4B-3600 locomotives purchased under the project withCCCE financing have an annual mileage of about 67,000 km per locomotive inthe fleet. This represents, with a utilization factor of 75% of the availablehauling capacity, an annual productivity per locomotive of

67,000 x 1,100 x 0.75 = 55,275,000 gross ton-kilometers

The hauled rolling stock purchased under the project necessitates a haulingcapacity per year calculated as follows:

G.T. = N x D x 365 x Lwith G.T. = gross ton-kilometers

N = number of vehicles in the fleetD = average daily mileage per vehicle

365 = number of daysL = average gross load per freight car

For the flat cars, assuming a return trip empty:

55 + 30 + 0 + 30G.T. = 102 x 54.3 x 365 x 2

116.24 million gross ton-kilometers or about55.6 million net ton-kilometers or

141,600 tons of logs.

For the boxcars, assuming an average load of 20 tons per boxcar:

G.T. = 25 x 56.5 x 365 x (20 + 15) =

18.04 million gross ton-kilometers or about10.3 million net ton-kilometers or about19,000 tons of up/down general cargo traffic.

The number of locomotives needed to haul the freight cars of the Second RailwayProject can therefore be estimated at:

116.24 + 18.0455.3 2.43 locomotives

The remainder, equivalent to 1.57 locomotives, was devoted to other traffic,presumably timber, with a productivity of

55.3 x 1.57 = 86.83 million gross ton-kilometers

This represents 55 x 86.83 = 41.5 million net ton-kilometers of timber or about

115 105,700 tons of logs.

2. This calculation takes into account the actual operational parametersas obtained from Regifercam's most recent statistics.

- 64 - ANNEX 11



SELECTED OPERATING STATISTICS, FYs 1974-78

FY1974 FY1975 FY1976 FY1977 FY1978

System

Total route (km) (as of June 30) 1,170 1,170 1,170 1,170 1,153Total staff 4,316 4,473 5,009 5,219 5,306

Operations staff 3,953 4,151 4,286 4,483 4,651Others 363 322 723 736 655

Traffic Actual Forecast Actual Forecast Actual Forecast Actual Forecast Actual Forecast

Passenger, total (million) 1.69 1.78 1.97 1.81 1.86 1.78 1.73 1.77 1.50 1.80Passenger-km, total (million) 199.7 211 281.6 223 260.8 229 257.4 235 224.2 241

Average journey (km) 118 118 143 123 140 129 149 134 150 135Net paying tons (million) 1.3 1.2 1.2 1.4 1.3 1.6 1.4 1.7 1.3 1.8Net paying ton-km (million) 406.5 383 400.2 492 437.3 574 486.2 694 533.8 683Average haul (km) 321 322 342 350 341 362 348 373 393.9 386Total gross ton-km (million) 1,069 N.A. 1,035 N.A. 1,155 N.A. 1,170 N.A. 1,267 N.A.Loaded freight car-km (million) 23.3 N.A. 26.7 N.A. 32.0 N.A. 33.6 N.A. 33.3 N.A.Empty freight car-km (million)

Traffic Density Actual Actual Actual Actual Actual

Passenger-km/route-km (000) 171.2 241.3 223.5 220.6 192.1

Freight-net ton-km/route-km (000) 348.3 344.0 375.5 417.3 453.0

Operations

Train-km, passengers (million) 1.8 2.1 2.1 1.9 1.9Train-km, freight (million) 1.3 1.2 1.2 1.3 1.4

Train-km, total (million) 3.1 3.3 3.3 3.2 3.3

Locomotive-km, diesel (million) 2.8 2.8 2.9 2.9 2.9

Operating Efficiency

Gross ton-km/train-km, freight 578 500 602 565 569Net ton-km/train-km, freight 328 255 309 286 306

Car turnaround time (days) 11.7 11.1 9.3 9.5 10.8

Average speed (km/hour) N.A. N.A. N.A. N.A. N.A.Traffic units per employee (000) 140.5 152.4 139.4 142.5 142.9

Availability

4B-3600 65 51 69 71 72

Diesel locomotives (%) CC-2400 48 58 54 57 74

BB-1200 80 69 74 71 74

Freight cars (%) 95 94 94 92 91Passenger cars (%) 93 84 85 86 88

Source: Railway statistics, amended,when appropriate, by the mission.

- 65 - ANNEX 12

Page 1

COMPLETION REPORT


ACHIEVEMENT OF THE TARGETS OF THE ACTION PLAN

1. The following table indicates the comparison between the targets

agreed upon at appraisal and the actual recorded figures for the respective

indices.

Item Actual figures TargetsFY74 FY75 FY76 FY77 FY78 FY74 FY75 FY76 FY77

Availability of motive power (%)4B-3600 65 51 69 71 72 83 83 85 88CC-2400 48 58 54 57 74 53 55 58 60B-12S' 30 <, 74 71 74 75 80 P5 88Pailcars V, 31 41 40 4r 70 75 80 85

Utilization of freight cars (%)Flat cars 95 93 93 88 88 88 88 88 88Boxcars 95 92 93 94 93 90 90 90 91Gondolas 93 93 95 93 83 90 91 91 91

Average daily mileage ofmotive power (kin)48-3600 182 177 143 189 184 280 280 280 280CC-2400 117 107 152 133 179 130 135 140 150BB-1200 222 281 264 239 265 250 270 290 300Railcars 203 185 191 171 202 240 260 280 300

Average load of freight cars(tons) 1/

22 21 ( 60)2/Flat cars 21 21 21(60) 2Boxcars 29.2 26.0 21.5 23.7 25.5 23.8 23.8 23.8 24.1Gondolas 23 24 24 25

Average daily mileage offreight cars (kin)Flat cars 54.3 42.1 51.8 54.9 54.3 40 45 52 55Boxcars 41.6 52.2 61.4 54.9 56.5 40 42 45 48Gondolas 25.1 38.0 31.7 31.1 34.6 22 25 27 29

Productivity of freight cars(000 km per year) 3/Flat cars 220 245 290 320Boxcars N.A. N.A. N.A. N.A. N.A. 200 230 290 270Gondolas 96 107 118 130

Productivity of staffqtaff in operations

(a) Total 3953 4151 4286 4483 4651 4229 4929 5450 5896(b) Total excl. trainees 3845 4039 4163 4376 4557 4107 4797 5308 5717(c) Traffic units(million)4/ 606.2 681.8 698.1 743.6 758.0 594 715 803 879(d) Traffic units per

employee (000) 5/ 158 169 168 170 166 145 149 151 154(e) Traffic units per

employee (total staff-operations) 6/ 153 164 163 166 163

1/ Detailed actual figures not available.2/ New 4-bogie timber cars (actual 55 tons).3/ Separate productivity statistics are not recorded by the railway for each category of freight

cars.

4/ Traffic units = ton-km + passenger-km.5/ (d) - (c)/(b)6/ (e) = (c)/(a)

- 66 - ANNEX12Page 2

2. Comments

Availability and Average Daily Mileage of Motive Power

2.1 The actual figures are recorded regardless of the number of locomotiveswhich are unserviceable for long periods of time as a result of an accident(e.g. collision, fire, etc.). The figures are based on the total number of thelocomotives of each class which the railway owns. Therefore, the actual figuresdo not reflect the efficiency of locomotive maintenance and utilization.Based on the numbers of locomotives which could be utilized for operations,eliminating the units awaiting repairs due to accidents, the Bank supervisionmission of November 1977 found the following results for the availability factorsin 1976-77, as compared with statistical results:

Class Number of Average number Availability(%) Action Plan(%)locomotives of serviceable Actual Recorded

in the fleet locomotives

4B-3600 9 7.6 81.5 71 88

CC-2400 5 4.0 74.0 57 60

BB-1200 12 10.0 81.6 71 88

Railcars 11 6.0 74.1 40 85

These figures indicate that the recorded figures should be accompanied by thetotal fleet numbers and average numbers of locomotives actually in service in

each class during the period under review. This would permit a more preciseassessment of the efficiency of maintenance and utilization of serviceable locomotives.

Average Daily Mileage of Freight Cars

2.2 The targets of the plan of action were set too low. An averagefigure on the order of 80 to 90 km per day would be normal. The figures

recorded indicate that much remains to be done to improve freight car management.This can be achieved by closely monitoring the turnaround time and the detentiontime in the main facilities for each category of freight cars.

Staff

2.3 Total staff numbers did not grow as forecast, and productivity was

better than expected although it is still on the low side. Here too targetswere set too low for productivity and too high for staff numbers.


COMPLIANCE WITH COVENANTS

A. Loan 1038-CM: Loan Agreement

Section 5.01 (Adequate financial records): Complied.

Section 5.02 (Audit): Borrower did not comply due to the Government's andborrower's insistence on using Government-appointed "Commissaires aux Comptes."Borrower agreed to submit to the Bank, before negotiations of the proposedFourth Railway Project, a contract with auditors acceptable to the Bank for theFY1978 audit.

Section 5.03 (Negative pledge): Complied.

Section 5.04 (Revaluation of rolling equipment): Partly complied, i.e. carriedout for most passenger equipment and underway for remaining rolling equipment.Results will not be reflected in balance sheets, due to objection by Ministryof Finance.

Section 5.05 (Costing): Complied in substance: Costing system instituted inFY1976; consultants financed under third project are working on improvement ofsystem to achieve fully satisfactory costing by line and commodity. Improvedsystem, now being implemented, is well designed. Annual tariff adjustments arebeing made with a view to the cost of services.

Sections 5.06 and 5.07 (Investment limitation): Complied. Government consultedBank on realignment of sections Yaounde-Maloume and Douala-Edea and advisedthe Bank verbally that it was satisfied that the proposed works were economicallyand technically sound. Bank concurred with Government regarding realignmentDouala-Edea and expressed some reservations regarding economic justificationof realignment Yaounde-Maloume, since rate of return was below 10% but abovefinancial cost of project.

Section 5.08 (Debt limitation): Complied.

Section 5.09 (Working cash): Complied.

Section 5.10 (Financial targets): Not complied; for reasons see chapter 8,main report; appraisal rate of return target for FY1977 and later was supersededby working ratio targets in supplemental letter No. 1 to loan agreement S4-CM.

Section 5.11 (Reduction of receivables): Complied, but with delay: 16%in FY1977, 12% in FY1978.

B. Loan 1038-CM: Guarantee Agreement

Section 3.02 (Assistance to borrower to comply with financial targets):Complied.

Section 3.03 (Maintenance of technical assistance): Complied.

Section 3.04 (Road-rail competition): Complied.

Section 3.05 (Consultation on Douala-Yaounde realignment): Complied.


Section 3.06 (Radio frequencies): Complied.

C. Loan S4-CM: Loan Agreement

Section 4.02 (Annual review of financial position): Complied.

Supplemental letter No. 1 (working ratio targets): Not complied; for reasonssee chapter 8, main report.

D. Loan S4-CM: Guarantee Agreement

Section 3.02 (Annual review of borrower's financial performance): Complied.

Section 3.03 (Port railway facilities): Complied.

CAMEROON RAILWAYSTRACK CHARACTERISTICS, MAIN LINE

kine 1Number of Ballastkm1 Rail kg Sleepers Sleepers Welding (liters)

per km

Douala-Ngaoundere

0-95 30 Steel 1750 Co)ntinuous 500 Km 913

95-103.7 30 1750 700

103.7--149.3 36 Concrete RS 1357 700

149.3-174 36 Concrete SL 1357 700

174-206 36 Steel 1500 700

206-293 36 Wood 1714 1200-900 Ngaoundal

293-477 30 Steel 1500 900 Km 781

477-710 30 Wood 1500 42m long rail 900

710-913 30 Steel 1500 Continuous 700 710

Douala-Nkongsamba

-Mbitom

0- -11 30 Steel 1500 Velded 500 Km 689

0-115 30 1500 500

115-153 20 1500 N ot Welded 500

153-160 26 1500 500

Belabo

Mbanga-Kumbo Km 584

0-29 27.8 Steel 1500 40m rail 700 47I I I1 .1477

1/ Kilometers adjusted following opening to traffic of the realigned section

Maloume-Yaounde (km 206-km 291).

Nanga-EbokoKm 460

Nkongsamba

Km 160Mbandjock

Km 389

NNioheKm 115

Obala LEGEND Rails Sleepers

Kumba 293 Km 327.5 1 30 kg standard SteelKm 29

Mbanga Km 0 2 20 kg German Steel

65 Ngoumou Yaounde

Km 255 Km 291 3 27.8 kg German Steel

Edea Malourne 4 26 kg French Steel

Km 84 KM206 5 36 kq standard Concrete

Km Km 31 6 36 kg standard Steel11 DualaOtele11 Douala Km 104 Eseka Km 249 7 36 kg standard Wood

Km 0Km 174 8 30 kg standard Wood

World Bank - 19765

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