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Document of The World Bank
FOR OFFICIAL USE ONLY
Report No: 57022-EG
PROJECT PAPER
ON A
PROPOSED ADDITIONAL LOAN
IN THE AMOUNT OF
US$330 MILLION
TO THE
ARAB REPUBLIC OF EGYPT
FOR THE
EGYPT NATIONAL RAILWAYS RESTRUCTURING PROJECT
November 12, 2010
Sustainable Development Department Middle East and North Africa Region
This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.
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CURRENCY EQUIVALENTS7 (Exchange Rate Effective November 12, 2010)
Currency Unit = Egyptian Pounds Egyptian Pounds 5.75 = US$1.00
FISCAL YEAR
July 1 – June 30
ABBREVIATIONS AND ACRONYMS
AC Air Conditioned Trains IBRD International Bank for Reconstruction and Development
APL Adaptable Program Loan IFI International Financial Institution CBE Central Bank of Egypt IFR Interim Financial Report CFAA Country Financial Accountability
Assessment IFRS International Financing Reporting
Standards CMA Capital Market Authority IRR Internal Rate of Return CPAR Country Procurement Assessment
Review ISA International Standards on Auditing
CPI Consumer Price Index LA Loan Agreement CTC Central Traffic Control MIS Management Information System DA Designated Account MoF Ministry of Finance DPL Development Policy Loan MoI Ministry of Investment EAD Environment Affairs Directorate MoIC Ministry of International Cooperation EAS Egyptian Accounting Standards MoT Ministry of Transport EEAA Egyptian Environment Affairs
Agency NIB National Investment Bank
EIA Environmental Impact Assessment NPV Net Present Value EIRR Economic Internal Rate of Return PFS Project Financial Statements EMP Environmental Management Plan ENR Egyptian National Railways PMU Project Management Unit ENRRP
Egypt National Railways Restructuring Project
PA Project Agreement
ERR Economic Rate of Return PSO Public Service Obligation ESAL Equivalent Standard Axle Load RBPIP Results Based Project Implementation
Plan ESW Economic Sector Work RSRU Railway Safety Regulatory Unit FIDIC ‘Federation Internationale des
Ingenieurs-Conseils’ SBD Standard Bidding Documents
SBU Strategic Business Unit FM Financial Management SC Steering Committee FMR Financial Management Report SIL Specific Investment Loan FMS Financial Management System SLA Subsidiary Loan Agreement FR Financial Reports SOE Statement of Expenditure GDP Gross Domestic Product USAID United States Agency for International
Development GoE Government of Egypt
Vice President: Shamshad Akhtar
Country Director: A. David Craig Sector Director: Laszlo Lovei Sector Manager: Jonathan Walters
Task Team Leader: Michel Bellier
ARAB REPUBLIC OF EGYPT EGYPT NATIONAL RAILWAYS RESTRUCTURING PROJECT
ADDITIONAL FINANCING
PROJECT PAPER
CONTENTS
Project Paper Data Sheet
I. Introduction ............................................................................................................................... 1
II. Background and Rationale for Additional Financing ............................................................... 1
III. Proposed Changes ..................................................................................................................... 3
IV. Appraisal Summary ................................................................................................................... 6
Annex 1: Revised Project Results Framework and monitoring indicators ................................... 13
Annex 2: Operational Risk Assessment Framework (ORAF) ...................................................... 17
Annex 3: Detailed Description of Proposed Project Scale Up ..................................................... 20
Annex 4: Economic Analysis ....................................................................................................... 22
Annex 5: Map ................................................................................................................................ 25
EGYPT, ARAB REPUBLIC OF
EG-EGYPT NATIONAL RAILWAYS RESTRUCTURING ADDITIONAL FINANCING
PROJECT PAPER
MIDDLE EAST AND NORTH AFRICA
MNSSD Basic Information (Original Project)
Project ID: P101103 Project Name: Egypt National Railways Restructuring
Team Leader: Michel Bellier Expected Closing Date: September 30, 2015 Environmental category: Partial Assessment
Lending Instrument: Specific Investment Loan Joint IFC: Joint Level:
Basic Information (Additional Financing)
Date: November 12, 2010 Team Leader: Michel Bellier Country Director: A. David Craig Sector Manager/Director: Jonathan D. Walters
Sectors: Railways (100%) Themes: Infrastructure services for private sector development (67%); Trade facilitation and market access (33%)
Project ID: P117356 Environmental category: Partial Assessment Lending Instrument: Specific Investment Loan Additional Financing Type: Scale Up
Joint IFC: Joint Level:
Project Financing Data [X] Loan [ ] Credit [ ] Grant [ ] Guarantee [ ] Other: For Loans/Credits/Others: Total Bank financing (US$m.): 330.00 Proposed terms: Variable Spread Loan payable in 28.5 years, including 7 years grace period and level repayment.
Financing Plan (US$m) Source Local Foreign Total
Borrower 10.00 0.00 10.00 International Bank for Reconstruction and Development
330.00 0.00 330.00
Total: 340.00 0.00 340.00 Borrower: Government of Egypt Egypt, Arab Republic of Responsible Agency: Egyptian National Railways
Ramses Square PO 11111 Egypt, Arab Republic of Tel: (20-2) 577-1388 Fax: (20-2) 575-0000
Estimated disbursements (Bank FY/US$m) FY 2012 2013 2014 2015 2016 2017 Annual 0.00 40.00 50.00 60.00 100.00 80.00 Cumulative 0.00 40.00 90.00 150.00 250.00 330.00 Project implementation period: Start January 3, 2011 End: December 31, 2016 Expected effectiveness date: July 4, 2011 Expected closing date: March 31, 2017
Does the project require any exceptions from Bank policies? Ref. Section Appraisal of Project Activities Have these been approved by Bank management?
[ ]Yes [X] No [ ]Yes [X] No
Does the project include any critical risks rated “substantial” or “high”? Ref. Section Project Risks and Mitigating Measures [ ]Yes [X] No
Project development objective Ref. Section Bank Response The objective of the proposed scale up activity is the same as the original project, the Egypt National Railways Restructuring Project (ENRRP), which is to assist the Government in improving the reliability, efficiency and safety of the railways' services through signaling and track renewal investments by ENR and the modernization of its management and operating practices in order to enhance the railways' sector responsiveness to economic and social needs and to strengthen the financial viability of the Project Implementing Entity. Project description Ref. Section Bank Response The ENRR Project scale up consists of two sub-components: -Signaling Modernization(US$337 million, of which US$329 million from Bank Financing): will finance the modernization of the signaling system on the line Beni-Suef-Asyut. -Modernization of Management and Operating Practices(US$2 million financed by ENR): will scale up to include additional activities for the modernization of ENR management and operating practices. Which safeguard policies are triggered, if any? Ref. Section Appraisal of Project Activities The project remains classified as Category B according to the World Bank's Operational Policy 4.01 on Environmental Assessment, requiring partial assessment through the preparation of an Environmental and Social Impact Assessment (ESIA) report.
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I. INTRODUCTION 1. This Project Paper seeks the approval of the Executive Directors to provide an additional loan in the amount of US$330 million to the ongoing Egypt National Railways Restructuring Project (ENRRP). The proposed additional financing will be a scale up to ENRRP and will allow the Egyptian National Railways (ENR) to expand and accelerate the modernization of signaling systems that are critical to the safety of rail services, specifically on the Beni Suef–Assyut section of the rail network, as well as to amplify initiatives for strengthening management and operating practices thereby enhancing the impact of the initial project. II. BACKGROUND AND RATIONALE FOR ADDITIONAL FINANCING 2. Government Railways Strategy. The railway sector plays a significant role in the Egyptian economy and is an essential mode of transport for low-income Egyptians. ENR, a public entity reporting to the Ministry of Transport, is a predominantly passenger railway. The Government of Egypt (GoE) launched in 2006 a restructuring program for ENR to address the very poor performance of the sector, notably the very low safety, the deteriorating quality of services and the significant fiscal liability of the sector. There has been significant progress in the implementation of the restructuring program: ENR was re-organized along strategic business lines in early 2008 (Long-distance Passenger Services, Short-distance Passenger Services, Freight Services, and Infrastructure Services), it is modernizing its working methods with the support of a group of experts seconded by the Italian National Railways and is undertaking large investments to modernize the railway network and increase its transport capacity, financed by a 5 billion EGP budget contribution and Donors. GoE is compensating ENR for the reduced tariffs offered as Public Service Obligation (PSO) and for the loss making local railway services. The current Minister of Transport, appointed in January 2010, has confirmed GOE’s commitment to improve ENR’s performance by giving priority to: (i) improving safety and quality assurance, (ii) developing human resources, (iii) increasing freight transport traffic with an intermodal perspective, (iv) enhancing operational reliability, and (v) modernizing assets and introducing new technologies. 3. Project performance. The ongoing ENRRP is supported by a Bank loan of US$270 million approved on March 17, 2009 (Loan 7656-EG) and effective since June 24, 2010. The ENRRP has three components: (i) signaling modernization between Arab El Raml – Alexandria in the delta, (ii) track renewal, and (iii) modernization of management and operating practices. Approval procedures in Egypt, compounded by the resignation of the Minister of Transport and ENR Chairman in October 2009 followed by the appointment of a new Minister three months later, have contributed to delaying the loan approval by Parliament and thereby project effectiveness. 4. The last rating of the ENRRP progress toward achieving project objectives was Satisfactory, and the overall implementation progress was rated Moderately Satisfactory. Actually, ENR has been moving ahead with the project implementation, particularly in relation to the establishment of the project Steering Committee in October 2009, the creation and staffing of a Project Management Unit (PMU) from May 2009, and the ongoing procurement of works
2
and consultants. Disbursements are expected to start on December 2010 once the first works contract regarding track renewal is signed. 5. Rationale for the Additional Financing. The ENRRP scale up will at first enhance the Bank support to ENR efforts to improve railway safety which remains a major challenge. Poor signaling and infrastructure systems and outdated operational practices which heavily rely on human judgment and interference continue to hinder the safety of railways operations. Human error remains the most common cause of accidents, meaning that both modern and safe equipment and systems have to be implemented to reduce the chance of human interference. An example is the deadly railway accident in October 2009 which resulted in 18 fatalities. 6. Improving safety is therefore a key priority for the Government. During the ENRRP preparation, MoT and ENR had identified a series of priority corridors where signaling systems needed to be modernized, based on a multi-criteria assessment of the railway network (2007) which gave special attention to safety conditions and congestion levels. Following the assessment, the modernization of signaling on the Cairo – Alexandria line, financed by the ENRRP, was identified as the highest priority, followed by the modernization of signaling on the Beni Suef-Asyut line, to be supported by the proposed additional loan, as this line is part of the busiest corridor of the ENR network. 7. With the Bank assistance during the preparation of ENRRP, ENR had carried out studies to assess the technical and safeguards aspects of Beni Suef – Asyut line. Nevertheless, GoE did not follow through with a request for a Bank financing at that time in order to speed up the approval of the operation and intended to seek other financing options. However, these efforts were largely unsuccessful, hence the GoE’s new request for Bank additional assistance in December 2009 for the modernization of the Beni Suef–Asyut signaling system. Meanwhile, during the preparation of the scale up activities, ENR also expressed its wish to expand the scope of the ENRRP component regarding the strengthening of management and operating practices. 8. The Bank’s involvement in the railways sector and its support to the ongoing reforms has been very much appreciated by the counterparts. The increase of Bank assistance to critical investments and the overall strengthening of ENR performance will reinforce the existing dialogue on strategic ENR objectives, safety improvements, the development of the commercially critical freight business, and on complex technical matters and modern management practices. 9. Consistency with the Country Assistance Strategy (CAS). The ENRRP scale up is fully consistent with the CAS priorities. The CAS Progress Report for Egypt identifies enhancing the provision of public services as a key objective to be supported by Bank operations, and identifies a railway sector project as one of the inputs contributing to CAS outcome 2.2 – expanded supply and improved efficiency of infrastructure services. The proposed additional financing would seek to support this strategic objective by improving the performance of the railway sector. 10. Alternatives considered. The main alternative to an additional financing would be to prepare a second project. However, an additional financing is a preferred option because the proposed new investments and the management strengthening initiatives will directly contribute
3
to achieving ENRRP’s development objectives. Furthermore, the ENRRP implementing arrangements, including those related to procurement and financial management, are fully applicable to the additional investment. Moreover, outcome indicators will remain the same to the exception of the addition of an outcome indicator specific to the new investment, and some refinement of the initial data and the original target indicators. Finally, given that the proposed scale up activity had undergone substantial preparation as explained above, an additional financing could be swiftly delivered to the Board, whereas the preparation of a separate project would require more time, thereby delaying the installation of the new signaling system. Speed is the key to the success of this operation as there are economies of scale and cost efficiencies if the ENRRP investment and the new signaling program are implemented in sequence.
III. PROPOSED CHANGES 11. The proposed scale up fully supports the ENRRP’s development objectives which are to assist the Government in improving the reliability, efficiency and safety of railways’ services through signaling and track renewal investments by ENR and the modernization of its management and operating practices in order to enhance the railways’ sector responsiveness to economic and social needs and strengthen the financial viability of the Project Implementing Entity. These objectives remain therefore the same. 12. The proposed additional financing will scale up components 1 and 3 of ENRRP by introducing sub-component 1.2 for the modernization of signaling between Beni Suef and Asyut, and by including additional activities to sub-component 3.3 for the support of the modernization of ENR’s managerial and operational practices. The new activities are detailed below: 13. Sub-Component 1.2 (US$337 million, of which US$329 million from the Bank loan and US$8 million from ENR’s budget) will finance the modernization of the signaling system on the Beni Suef–Asyut line and will comprise the following:
a) Supply and installation of signaling equipment, including a few works, for US$329 million, including contingencies, by a single contractor to be selected under the Bank International Competitive Bidding (ICB) procedures. This will be financed by the Bank loan.
b) Supervision contract estimated at US$8 million, to be undertaken by an engineering firm with a strong expertise in modern automatic signaling systems, selected competitively, and based on terms and conditions satisfactory to the Bank. The contract will be financed by ENR’s own budget.
14. The modernization of the signaling system on the Beni Suef–Asyut line consists of the installation of a new signaling system on the rail line between those cities and a computerized Central Traffic Control system (CTC) for that section. Works will take place on the existing right of way and the system comprises an automatic block signaling system (on open line), electronic interlocking systems (in stations), and a level-crossing protection system. The computerized CTC will offer sophisticated information to railway staff, including: (i) command and monitoring of train circulation, (ii) a presentation-of-train graph, (iii) event recording, and (iv) dispatcher communications.
4
15. Sub-Component 3.3 (US$2 million and financed by ENR) will be scaled up to include additional activities for the modernization of ENR management and operating practices:
a) Support to the modernization of railway maintenance practices, particularly the review
and evaluation of existing maintenance procedures at ENR. The emphasis of the activities is to strengthen the suitability of maintenance spending in the current environment of important investments in track renewal, modernization of signaling systems, and acquisition of new locomotives and wagons.
b) Support to the improvement of operational rules at ENR, allowing the possibility of using the full functionality provided by the new modern signaling equipment to be installed (control of one entire line from only one CTC, telephone system linking all operators and dispatchers and allowing them not to use the radio for communication between signaling boxes, signaling towers and dispatching centre, contra-flow facilities with crossover between upstream and downstream main tracks, automation of level-crossing, etc.).
c) Improvement of project management capacities at ENR. ENR will carry out during the next 10-15 years a large investment program requiring strong implementation capacities of large projects. The activities will be aimed at creating the institutional structures and the skills at ENR for achieving the expected results in planning, evaluating and implementing complex railway projects.
d) Improvement of financial planning and the financial management system at ENR. ENR should acquire adequate financial planning tools and methods to assess and prioritize its investment needs and the time for their implementation based on proper project economic and financial appraisal techniques. Proper financing planning techniques will also allow ENR to identify the various potential sources of financing for its investments (Government, ENR, partnerships with private sector or other public companies) to secure the necessary funds while ensuring ENR’s financial sustainability. In addition, and in the context of the implementation of the SAP system at ENR, a new financial management system, based on commercial operation of activities in each business unit should be envisaged.
16. The Table below summarizes the proposed changes and additions to the financing of the project by the Bank.
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Table 1: Cost Summary (in US$ million)
Activities Original Project ENRRP Additional Financing ENRRPAF
Bank
financing Gvt
financing Total
financing Bank
financing Gvt
financing Total
financing Component 1: Signaling Modernization 197.0 5.0 202.0 310.0 8.0 318.0
Sub -Component 1.1: Signaling Modernization of Cairo - Alexandria 197.0 5.0 202.0 0.0 0.0 0.0
Modernize signaling systems on the Arab El Raml - Alexandria route including CTC
197.0 0.0 197.0 0.0 0.0 0.0
Supervision of works 0.0 5.0 5.0 0.0 0.0 0.0
Sub -Component 1.2: Signaling Modernization of Beni Suef - Asyut 0.0 0.0 0.0 310.0 8.0 318.0
Modernize signaling systems on the Beni Suef - Asyut route including CTC 0.0 0.0 0.0 310.0 0.0 310.0
Supervision of works 0.0 0.0 0.0 0.0 8.0 8.0
Component 2: Renewal of 200 km of track 60.0 20.0 80.0 0.0 0.0 0.0
Renewal works of 200 km of Track 60.0 0.0 60.0 0.0 0.0 0.0 Acquisition of 400 km of Rail 15.0 0.0 15.0 0.0 0.0 0.0 Supervision of works 5.0 0.0 5.0 0.0 0.0 0.0 Component 3: Modernization of Management and Operating Practices
0.0 10.0 10.0 0.0 2.0 2.0
Sub -Component 3.1: Support to the Railway and Transport Academy
0.0 4.0 4.0 0.0 0.0 0.0
Sub -Component 3.2: Support the Reengagement of ENR With International Railways Bodies
0.0 0.0 0.0 0.0 0.0 0.0
Sub -Component 3.3: Support to Modernize Managerial and Operating Practices
0.0 4.0 4.0 0.0 2.0 2.0
Sub –Component 3.4: Business Development Activities
0.0 2.0 2.0 0.0 0.0 0.0
Contingencies and Front-End Fee 13.0 0.0 13.0 20.0 0.0 20.0 Physical Contingencies 6.825 0.0 6.825 10.0 0.0 10.0 Price Contingencies 5.500 0.0 5.500 9.225 0.0 9.225 Front-End Fee 0.675 0.0 0.675 0.775 0.0 0.775
Total Cost (incl. contingencies) 270.0 35.0 305.0 330.0 10.0 340.0 17. ENRRP’s institutional and implementation arrangements and ENRRP’s safeguard and fiduciary procedures, all further described in section E below, will generally apply for the proposed scale up activities. Nevertheless, the overall project implementation schedule will be
6
changed to allow sufficient time for the implementation of the proposed activities. Accordingly, the mid-term review is rescheduled on September 30, 2013 and the project closing date delayed to March 31, 2017. 18. Regarding the monitoring indicators, ENR confirmed that in light of the ongoing transformation plan, it is periodically collecting the necessary data to monitor ENRP’s outcome. Nevertheless, ENR requested that the methodology and measurement method for collecting two indicators for ENRRP, mainly punctuality and locomotive availability, be further harmonized with ENR developed methods. These revisions will facilitate the estimation of the indicators using existing ENR methods and procedures, while not affecting the overall quality and relevance of the indicators. Following the extension of the project’s closing date, target values were also revised accordingly. Monitoring indicators, including revised definitions, baseline figures, and target values are provided in Annex 1. Two new indicators, summarized below, were added to specifically measure the impact of the additional financing.
Table 2: Additional Financing New Indicators New Indicator Baseline
FY08/FY09 Target
FY17/FY18 Long distance passenger traffic on Beni Suef–Asyut (Total annual passenger-km (million))
o AC trains o Non AC long distance trains
2201 3204
3204 4944
Punctuality of AC trains on the line Beni Suef–Asyut (Measured as the total number of AC train arriving 15 minutes late to final destination during one year divided by the total number of AC trains operated in the same time period).
0.42 0.09
IV. APPRAISAL SUMMARY 19. Institutional and Implementation Arrangements. All arrangements agreed upon with ENRRP remain unchanged for the Additional Financing. ENR is the implementing agency, under the oversight of the established Steering Committee comprising representatives of the Ministries of Transport, Finance, and International Cooperation. The current Project Management Unit (PMU), to be maintained throughout the duration of the Project with organization, functions, staff and terms of reference satisfactory to the Bank, will continue coordinating and implementing ENRRP and the scale up activities, including liaising with the Bank. The job descriptions for the main positions at the PMU (specialists in procurement, financial management, environment, and monitoring and evaluation) have been revised to take into account the additional investment. ENR has also revised the terms of reference for the consulting firm, currently being selected, which will provide assistance to the PMU and deliver on-the-job training to staff during the first two years of project implementation. ENR will finance all PMU costs from its own budget.
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20. Economic Analysis. The economic analysis of the proposed additional investments was undertaken as part of the Project appraisal; the investments were found to be economically viable. The analysis generally followed the same methodology and assumptions adopted for the economic analysis of the Cairo Alexandria Signaling under the ENRRP which is greatly detailed and documented in Annex 9 of the ENRR Project Appraisal Document. The results of the analysis are presented in Annex 4. Summaries of the methodology and results are provided below. 21. The economic internal rate of return of the additional financing was estimated by the use of a stylized model that considered the actual and forecast freight and passenger traffic on the Beni Suef–Asyut line, and the impact of the proposed investments on available line capacity in a defined “do-minimum” scenario and a defined “do-something” scenario. 22. The economic analysis considers the following main benefits: (i) time savings to existing and forecasted rail freight and passenger traffic; (ii) directly generated rail traffic which would not have traveled before but travels as a result of the reduction in journey time; (iii) generalized cost savings (including operating cost and time value) for diverted traffic from road to rail resulting from the saturation of the line capacity in the “do-minimum” scenario; (iv) savings in highway maintenance costs through the diversion of freight and bus traffic from road to rail; and (v) generalized cost savings particularly in term of safety improvements. 23. The economic analysis indicates that signaling investments on Beni Suef–Asyut are economically viable, returning a positive NPV of US$323 million. The estimated Benefit/Cost ratio is 2.22 and the Economic Internal Rate of Return (EIRR) is 21.8 percent higher than the 12 percent threshold, therefore confirming the viability of this investment. The economic analysis revealed that most economic benefits are derived from improvements in safety, representing about 57 percent of total discounted benefits. Time savings for existing traffic represent 28 percent of total discounted benefits, whereas savings in maintenance costs of the signaling system are about 7 percent. 24. A sensitivity analysis has been carried out and reveals that the proposed investments are relatively robust to defined variations in key parameters, including: (i) capital costs of the project; (ii) forecasted freight and passenger growth rates; and (iii) delayed construction period. Significant variation in all of these parameters still results in a positive NPV and an EIRR higher than the 12 percent threshold. 25. Technical Aspects. The Beni Suef – Asyut section is part of the Alexandria-Asyut corridor which has the highest rail traffic density in Egypt. The modern signaling system, including electronic interlocking systems in the main stations, and the CTC will increase the safety of traffic and create conditions for better utilization of the line. The section was selected based on the results of several rounds of assessment of the network condition and congestion. The technical option was chosen after a detailed comparison by design consultants of a range of alternative standards used in the world. The preparation of the bidding documents is in advanced phase of elaboration, ENR being assisted by a railways consulting firm with large experience in railway signaling. The design will draw upon lessons from the preparation of similar documents
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for the modernization of signaling system on section Arab El Raml-Alexandria. The same consultant has also prepared bidding documents according to the provisions of the World Bank Standard Bidding Document (SBD) “Procurement of Plant Design, Supply, and Installation” and will provide assistance to ENR during the pre-qualification of bidders, evaluation of bids, and contract award. Based on the high interest from firms specialized in rail signaling systems for the Arab El Raml–Alexandria modernization program, it is expected that very strong international consortia will bid. During the execution of works, a consultant with strong expertise in modern signaling systems will supervise the quality of works as the Project Manager according to World Bank rules. ENR will need to modernize the Automatic Train Protection (ATP) system (locomotives and track equipment) at a later stage, under financing arrangements yet to be determined. 26. Procurement. Procurement for the proposed additional investment will be carried out in accordance with the World Bank’s “Guidelines: Procurement under IBRD Loans and IDA Credits” dated May 2004, revised October 2006 and May 2010. ENR will be in charge of carrying out procurement activities, in accordance with the different procurement methods: the need for pre-qualification, estimated costs, prior review requirements, and time frame have been agreed between the Borrower and the Bank. Procurement for installing and modernizing the signaling system will be done using the Bank Standard Bidding Documents for Procurement of Plant Design, Supply, and Installation through International Competitive Bidding. Since prequalification is required for this contract, the Bank Standard Prequalification Documents will be used. The revised ENRRP Procurement Plan to take into account the Beni Suef – Asyut investment will be updated, at least, annually or as required to reflect the actual project implementation needs. 27. ENR experience with World Bank procurement has been reinforced during the preparation of ENRRP. Requirements and procedures for the Beni Suef – Asyut investment were discussed with ENR during appraisal, and are similar to those being undertaken for component 1 of ENRRP (Signaling Modernization of Arab El Raml – Alexandria section). Bidding documents are being finalized. The PMU’s procurement specialist is expected to provide support in procurement related matters. The Bank will continue to strengthen ENR procurement capacity through supervision missions and the organization of additional workshops to the one previously organized in February 24th, 2010. 28. Financial Management (FM). The existing FM as well as disbursement procedures used for the ENRRP will be followed for the additional loan. PMU’s financial management specialist is responsible for all financial management matters, including reporting to the Bank. He will be able to draw on the resources of the consulting firm which will support the PMU during the first two years. 29. The ENRRP project design, from an FM perspective, addressed potential risks identified during project preparation, particularly the fact that ENR had no recent experience in managing Bank projects. Nevertheless, since the project is not yet disbursing, the FM arrangements are yet to be tested. The project’s financial accounting and reporting system are currently being developed and expected to be finalized by end October 2010. Project transactions will be recorded on the system which will also produce the IFR reports. An external auditor, acceptable
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to the Bank, will be hired by ENR to audit the projects annual financial statements which will be submitted to the Bank. In accordance with the Bank revised Policy on Access to Information, following the formal receipt by the Bank of the project and ENR’s audited financial statements, the borrower shall ensure that they are made publicly available in a timely fashion and in a manner acceptable to the Bank. 30. Since the proposed additional financing is similar, at least in terms of fiduciary aspects, to ENRRP component 1, the agreed FM arrangements and risk mitigating measures incorporated in the FM design are assessed to be adequate to have the project and the additional financing operating in a moderate FM risk environment. 31. Disbursement. Disbursement procedures used for ENRRP will also be used for the additional financing. The project’s loan disbursement, including the disbursement of the additional loan, will take place using the direct disbursements and special commitments methods. The Bank loan proceeds with be on-lent by GoE to ENR under an amendment to the Subsidiary Loan Agreement (SLA). Payments to contractors and suppliers will be made directly by the Bank with respect to works and goods, while ENR will finance supervision costs. 32. Environmental Safeguards. The project remains classified as category B according to the World Bank’s Operational Policy 4.01 on Environmental Assessment, requiring partial assessment of the new investment through the preparation of an Environmental and Social Impact Assessment (ESIA) report. An environment consulting firm hired by ENR according to terms of reference cleared by the Bank prepared an ESIA specific to the Beni Suef-Asyut section. The ESIA includes an environmental management plan (EMP), detailing the institutional settings, the mitigation measures, and the monitoring plan for the potential impacts resulting from the project during the construction and operation phases. 33. Stakeholder consultations were carried out during the preparation of ENRRP’s ESIA through: (a) interviews and data collection in public scoping for train users, users of level crossings, and residents in areas adjacent to construction sites (totaling 1,166 individuals representing the different groups); and (b) two public consultation meetings in Minya and Cairo, which were well advertised in a major daily newspaper, and were attended by a total of 184 participants. Information on the project as well as a summary of the findings of the ESIA, were posted on the consulting firm’s website for public review, prior to the consultation meetings. The meetings attracted a pool of stakeholders representing different sectors of society, including various social and economic class, gender, and affiliation. 34. The ESIA report for the proposed scale up was disclosed by ENR in English and Arabic on their website on May 4th 2010 and was approved by the Egyptian Environmental Affairs Agency (EEAA) on May 17th 2010. The ESIA documents were disclosed by the Bank infoshop on June 30, 2010. 35. As agreed during the preparation of ENRRP, ENR will create an Environmental Affairs Directorate (EAD) and will select a specialized environmental consultant to assist the PMU on project environmental matters and for the implementation of the EMP. ENR has made significant
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progress to implementing these requirements and has agreed to establish the EAD by March 31, 2011 with organization, functions, staff and terms of reference satisfactory to the Bank. 36. Social Safeguards. The modernization of Beni Suef–Asyut signaling system does not entail any land acquisition or resettlement as all works will be carried out on existing rights-of-ways. There are likely to be some socio-economic impacts during the implementation of the project related to construction, for example, some delays in train travel along affected corridors, but overall the proposed scale up activities are expected to strengthen the ENRRP’s positive impacts resulting from project investments in signaling through improved rail services and safety on core routes.
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Annex 1: Results Framework and Monitoring EGYPT: Egypt National Railways Restructuring Project
Results Framework
Revisions to the Results Framework Comments/ Rationale for Change
PDO Current (PAD) Proposed
Assist the Government in improving:
a) the reliability;
b) the efficiency; and
c) the safety of railways services.
No Change
(a) Rate of utilization of ENR assets; long distance passenger traffic on Cairo Alexandria (b) PSOs paid; freight traffic (c) Number of fatalities due to rail accidents.
PDO indicators Current (PAD) Proposed change (a) Rate of utilization of ENR assets;
Indicator Revised to: (a) Rate of utilization of ENR assets (new definitions
); (b) long distance passenger traffic on Cairo Alexandria line;
Indicator revised to : Long distance passenger traffic on Cairo Alexandria and Beni Suef – Asyut lines
Include Beni Suef – Asyut Line to reflect impacts of proposed investments under additional financing. .
(c) PSOs paid;
No Change Total annual amount of PSO paid by the government to ENR (expressed in EGP million).
(d) freight traffic; No change Total annual net-ton-km of freight traffic (million)
(e) Number of fatalities due to rail accidents.
No Change Average number of fatalities due to railway accidents on the ENR network
Intermediate Results indicators Current (PAD) Proposed change Punctuality on Cairo-Alexandria Line.
Indicator revised to: Punctuality on Cairo-Alexandria and Beni Suef–Asyut lines.
Include Beni Suef–Asyut Line to reflect impacts of proposed investments under additional financing.
Maintenance costs on renewed tracks.
Indicator revised to: Maintenance costs on sections were tracks are renewed (
To harmonize the collection of necessary information with ENR revised practices. Change in method
12
Revisions to the Results Framework Comments/ Rationale for Change
of calculation and target value) Training time of management.
No Change Average management training time
13
AN
NE
X 1
: RE
VIS
ED
PR
OJE
CT
RE
SUL
TS
FRA
ME
WO
RK
AN
D M
ON
ITO
RIN
G IN
DIC
AT
OR
S
Proj
ect D
evel
opm
ent O
bjec
tive
(PD
O):
No
chan
ge to
the
initi
al P
DO
whi
ch is
to a
ssis
t the
Gov
ernm
ent i
n im
prov
ing
the
relia
bilit
y, e
ffic
ienc
y an
d sa
fety
of t
he ra
ilway
s’ se
rvic
es
thro
ugh
sign
alin
g an
d tra
ck re
new
al in
vest
men
ts b
y EN
R a
nd th
e m
oder
niza
tion
of it
s man
agem
ent a
nd o
pera
ting
prac
tices
in o
rder
to e
nhan
ce th
e ra
ilway
s’ se
ctor
resp
onsi
vene
ss to
ec
onom
ic a
nd so
cial
nee
ds a
nd st
reng
then
the
finan
cial
via
bilit
y of
the
Proj
ect I
mpl
emen
ting
Entit
y.
PDO
Lev
el R
esul
ts In
dica
tors
Core
UO
M
Bas
elin
e O
rigi
nal
Proj
ect
Star
t FY
07/F
Y08
Prog
ress
T
o D
ate
FY08
/09
Tar
get V
alue
s
Freq
uenc
y D
ata
Sour
ce/
Met
hodo
logy
Res
pons
ibili
ty
for
Dat
a C
olle
ctio
n
Com
men
t
FY11
/ 12
FY
13/
15
FY15
/ 16
FY
17/
18
1. (i
.a) L
ocom
otiv
e pr
oduc
tivity
o
Lo
ng D
ista
nce
Pass
enge
r o
Sh
ort D
ista
nce
Pass
enge
r o
Fr
eigh
t o
Al
l act
iviti
es
Ava
ilabi
lity
ratio
of t
he
usef
ul fl
eet [
%],
defin
ed
as th
e nu
mbe
r of d
aily
av
aila
ble
loco
mot
ives
di
vide
d by
the
tota
l nu
mbe
r of a
ssig
ned
loco
mot
ives
for e
ach
SBU
, ave
rage
d on
a
year
ly b
asis
.
49
.5
74.5
15
.3
49
.5
48
74
26 52
66
77
67 70
73
79
71 75
76
80
75 77
80
80
77 79
Onc
e ev
ery
two
year
s
ENR
st
atis
tics
ENR
Targ
et
valu
es a
re
year
ly a
nd
not
cum
ulat
ive
1. (i
.b)L
ocom
otiv
e pr
oduc
tivity
K
ilom
etra
ge p
er a
vaila
ble
loco
mot
ive:
o
Lo
ng D
ista
nce
Pass
enge
r o
Sh
ort D
ista
nce
Pass
enge
r o
Fr
eigh
t
o
All
activ
ities
Tota
l num
ber o
f km
(0
00s)
run
by a
ll lo
com
otiv
es d
urin
g a
year
div
ided
by
the
aver
age
num
ber o
f ye
arly
ava
ilabl
e lo
com
otiv
es
14
3 68
75
98
13
2 67
28
89
153 80
54
98
15
6 83
62
10
4
16
6 90
72
11
0
17
6 97
85
11
8
Onc
e ev
ery
two
year
s
ENR
st
atis
tics
ENR
Targ
et
valu
es a
re
year
ly a
nd
not
cum
ulat
ive
1. (i
i) Lo
ng d
istan
ce P
asse
nger
tr
affic
on
Cai
ro –
Ale
xand
ria
o
A
C tr
ains
o
no
n-A
C lo
ng d
ista
nce
train
s
To
tal a
nnua
l pas
seng
er-
km (m
illio
n)
85
5 13
23
10
80
1118
1684
22
10
17
55
2304
18
30
2402
19
07
2503
1684
22
10
ENR
st
atis
tics
ENR
Targ
et
valu
es a
re
year
ly a
nd
not
cum
ulat
ive
1. (i
ii) L
ong
dist
ance
Pas
seng
er
traf
fic o
n Be
ni S
uef
- Asy
ut
o
AC
trai
ns
o
non-
AC
long
dis
tanc
e tra
ins
To
tal a
nnua
l pas
seng
er-
km (m
illio
n)
22
45
4239
22
01
3204
2828
43
64
2948
45
50
3073
47
42
3204
49
44
Onc
e ev
ery
two
year
s
ENR
st
atis
tics
ENR
Ta
rget
va
lues
are
ye
arly
and
no
t cu
mul
ativ
e
14
2. P
aym
ent o
f PSO
s: PS
O
com
pens
atio
n fo
r EN
R
Tota
l ann
ual a
mou
nt o
f PS
O p
aid
by th
e go
vern
men
t to
ENR
[e
xpre
ssed
in E
GP
mill
ion]
.
35
7
61
5
80
0
80
0
80
0
80
0 O
nce
ever
y tw
o ye
ars
ENR
ann
ual
acco
unts
EN
R
Targ
et
valu
es a
re
year
ly a
nd
not
cum
ulat
ive
3. (i
) Soc
ial a
nd E
cono
mic
N
eeds
: Ave
rage
num
ber o
f fa
talit
ies d
ue to
railw
ay
acci
dent
s on
the
ENR
net
wor
k1
o T
ypic
al a
ccid
ents
2
o N
on T
ypic
al a
ccid
ents
3
o T
otal
A
vera
ge n
umbe
r of
fata
litie
s
0.
0248
0.
57
0. 5
95
0.
000
1.51
1.
51
0.
34
0.
31
0.
30
0.
30
Onc
e ev
ery
two
year
s
ENR
st
atis
tics
ENR
Targ
et
valu
es a
re
year
ly a
nd
not
cum
ulat
ive
3. (i
i) So
cial
and
Eco
nom
ic
Nee
ds:
Frei
ght t
raff
ic c
arrie
d by
EN
R
To
tal a
nnua
l net
-ton-
km
of fr
eigh
t tra
ffic
(m
illio
n)
2,
020
1,
591
29
45
32
40
35
65
39
18
Onc
e ev
ery
two
year
s
ENR
st
atis
tics
ENR
Targ
et
valu
es a
re
year
ly a
nd
not
cum
ulat
ive
1 C
alcu
late
d as
the
tota
l ann
ual n
umbe
r of v
ictim
s on
ENR
net
wor
k pe
r one
bill
ion
pass
enge
r-km
. EN
R sh
all d
evel
op a
n in
tern
al sy
stem
for c
olle
ctin
g da
ta
conc
erni
ng th
e nu
mbe
r of f
atal
ities
(per
sons
kill
ed in
the
acci
dent
and
dec
ease
d af
ter t
he a
ccid
ent).
Fig
ures
abo
ut th
e to
tal a
nnua
l num
ber o
f fat
aliti
es a
nd th
e to
tal v
olum
e of
pas
seng
er-k
m w
ill b
e pr
esen
ted
for t
he a
nnua
l eva
luat
ion
of th
e in
dica
tor.
2 Acc
iden
ts p
rodu
ced
as a
con
sequ
ence
of r
ailw
ays m
alfu
nctio
ning
or r
ailw
ay st
aff h
uman
err
or.
3 Oth
er a
ccid
ents
invo
lvin
g ra
ilway
s (le
vel c
ross
ing
acci
dent
s ign
orin
g th
e si
gnal
ing
war
ning
s, pe
ople
’s n
eglig
ence
in th
e ra
ilway
are
a, e
tc.).
15
Inte
rmed
iate
Res
ults
and
Indi
cato
rs
Inte
rmed
iate
Res
ults
Indi
cato
rs
Core
Uni
t of M
easu
rem
ent
Bas
elin
e O
rigi
nal
Proj
ect
Star
t FY
07/F
Y08
Prog
ress
T
o D
ate
FY08
/09
Tar
get V
alue
s
Freq
uenc
y D
ata
Sour
ce/
Met
hodo
logy
Res
pons
ibili
ty
for
Dat
a C
olle
ctio
n C
omm
ent
FY11
/ 12
FY
13/
15
FY15
/ 16
FY
17/
18
Inte
rmed
iate
Res
ult 1
: C
ompo
nent
1: P
unct
ualit
y of
AC
trai
ns o
n th
e C
airo
-Ale
xand
ria a
nd B
eni S
uef –
Asy
ut L
ines
1. P
unct
ualit
y of
AC
trai
ns o
n th
e lin
e C
airo
-Ale
xand
ria
Tota
l num
ber o
f AC
tra
in a
rriv
ing
15
min
utes
to fi
nal
dest
inat
ion
late
dur
ing
one
year
div
ided
by
the
tota
l num
ber o
f A
C tr
ains
ope
rate
d in
th
e sa
me
perio
d of
tim
e.
0.
29
0.
31
0.
22
0.
18
0.
13
0.
07
Onc
e ev
ery
two
year
s
ENR
st
atis
tics
ENR
Targ
et
valu
es a
re
year
ly a
nd
not
cum
ulat
ive
2. P
unct
ualit
y of
AC
trai
ns o
n th
e B
eni S
uef-
Asy
ut li
ne
Sa
me
as a
bove
n/a
2.9
0.
29
0.
23
0.
16
0.
09
Onc
e ev
ery
two
year
s
ENR
st
atis
tics
ENR
Targ
et
valu
es a
re
year
ly a
nd
not
cum
ulat
ive
Inte
rmed
iate
Res
ult 2
: C
ompo
nent
2: M
aint
enan
ce c
osts
on
sect
ions
wer
e tra
cks a
re re
new
ed
3. A
nnua
l tot
al c
ost o
f tra
ck
infr
astru
ctur
e m
aint
enan
ce o
n se
ctio
ns re
new
ed u
nder
the
proj
ect.
Mill
ion
EGP4
2.77
2.
96
2.
44
2.
12
0.
94
0.
54
Onc
e ev
ery
two
year
s
ENR
st
atis
tics
ENR
Targ
et
valu
es a
re
year
ly a
nd
not
cum
ulat
ive
Inte
rmed
iate
Res
ult 3
: C
ompo
nent
3: A
vera
ge m
anag
emen
t tra
inin
g tim
e
4. T
he ra
tio b
etw
een
the
num
ber o
f st
aff-
days
allo
cate
d fo
r tra
inin
g du
ring
a ye
ar a
nd th
e av
erag
e
Num
ber s
taff
days
/ave
rage
m
anag
emen
t sta
ff at
n/a
2.9
9 10
12
12
Onc
e ev
ery
two
year
s
ENR
st
atis
tics
ENR
Ta
rget
va
lues
are
4 F
ive
year
rolli
ng a
vera
ge o
f the
cos
t of m
echa
nica
l mai
nten
ance
and
mat
eria
ls’ c
ost f
or th
e Pr
ojec
t sec
tions
.
16
Inte
rmed
iate
Res
ults
and
Indi
cato
rs
Inte
rmed
iate
Res
ults
Indi
cato
rs
Core
Uni
t of M
easu
rem
ent
Bas
elin
e O
rigi
nal
Proj
ect
Star
t FY
07/F
Y08
Prog
ress
T
o D
ate
FY08
/09
Tar
get V
alue
s
Freq
uenc
y D
ata
Sour
ce/
Met
hodo
logy
Res
pons
ibili
ty
for
Dat
a C
olle
ctio
n C
omm
ent
FY11
/ 12
FY
13/
15
FY15
/ 16
FY
17/
18
num
ber o
f man
agem
ent s
taff
at
ENR
5EN
R
. ye
arly
and
no
t cu
mul
ativ
e
5 EN
R sh
all c
omm
unic
ate
the
cate
gorie
s of s
taff
con
side
red
as m
anag
emen
t sta
ff (f
irst s
ix le
vels
of m
anag
emen
t).
17
AN
NE
X 2
: OPE
RA
TIO
NA
L R
ISK
ASS
ESS
ME
NT
FR
AM
EW
OR
K (O
RA
F)
Pro
ject
Dev
elop
men
t Ob
ject
ive(
s)
Th
e D
evel
opm
ent o
bjec
tive
of th
e Pr
ojec
t is t
o as
sist
the
Gov
ernm
ent o
f in
impr
ovin
g th
e re
liabi
lity,
eff
icie
ncy
and
safe
ty o
f the
railw
ays’
serv
ices
thro
ugh
sign
alin
g an
d tra
ck re
new
al
inve
stm
ents
by
ENR
and
the
mod
erni
zatio
n of
its m
anag
emen
t and
ope
ratin
g pr
actic
es in
ord
er to
enh
ance
the
railw
ays’
sect
or re
spon
sive
ness
to e
cono
mic
and
soci
al n
eeds
and
st
reng
then
the
finan
cial
via
bilit
y of
the
Proj
ect I
mpl
emen
ting
Entit
y.
PDO
Lev
el R
esul
ts In
dica
tors
: 1.
Lo
com
otiv
e pr
oduc
tivity
2.
Lo
ng d
ista
nce
pass
enge
r tra
ffic
3.
Pa
ymen
t of P
SOs
4.
Yea
rly a
vera
ge n
umbe
r of f
atal
ities
due
to ra
ilway
s acc
iden
ts o
n EN
R n
etw
ork
5.
Frei
ght t
raff
ic c
arrie
d by
EN
R
R
isk
Cat
egor
y
Ris
k
Rat
ing
Ris
k D
escr
ipti
on
Pro
pos
ed M
itig
atio
n M
easu
res
Pro
ject
Sta
keh
old
er R
isk
s
Med
ium
-L
Cou
ntry
Lev
el E
ngag
emen
t with
gov
ernm
ent a
nd st
akeh
olde
rs:
Egyp
t’s e
ngag
emen
t with
the
Ban
k is
ver
y st
rong
. Ove
r the
pas
t fe
w y
ears
, the
Wor
ld B
ank
Gro
up h
as sc
aled
up
its su
ppor
t to
Egyp
t,
with
a c
ompr
ehen
sive
pro
gram
of a
ctiv
ities
by
IBR
D, I
FC, a
nd M
IGA
. Th
is e
ffort
is g
eare
d to
war
ds su
ppor
ting
the
impl
emen
tatio
n of
the
ongo
ing
refo
rm p
rogr
am. T
he G
over
nmen
t see
s the
Ban
k as
a re
liabl
e pa
rtner
and
has
requ
este
d fu
rther
Ban
k su
ppor
t in
a br
oad
rang
e of
sect
ors.
The
Ban
k w
ill c
ontin
ue t
o re
info
rce
the
ongo
ing
dial
ogue
with
key
stak
ehol
ders
in E
gypt
.
Imp
lem
enti
ng
Age
ncy
Ris
ks
Med
ium
-L
Impl
emen
tatio
n ca
paci
ty w
ithin
EN
R is
wea
k, a
lthou
gh im
prov
ing
unde
r th
e co
mpa
ny’s
tran
sfor
mat
ion
and
mod
erni
zatio
n pl
an, d
ue a
mon
g ot
hers
to
out
date
d in
tern
al p
roce
dure
s an
d la
ck o
f ex
perie
nce
wor
king
with
in
tern
atio
nal f
inan
cial
inst
itutio
ns.
As a
con
sequ
ence
of t
he o
ngoi
ng tr
ansf
orm
atio
n pl
an
and
unde
r th
e pr
ojec
t, a
num
ber
of m
easu
res
have
be
en o
r ar
e pl
anne
d to
be
take
n in
to a
ccou
nt t
o m
itiga
te th
e im
plem
enta
tion
risks
. •
The
reor
gani
zatio
n of
EN
R a
long
bus
ines
s uni
ts,
initi
ativ
es to
stre
ngth
en c
apac
ity o
f sta
ff, t
he
intro
duct
ion
of n
ew p
ract
ices
with
the
assi
stan
ce
of e
xper
ienc
ed fo
reig
n ra
ilway
spec
ialis
t are
en
hanc
ing
ENR
cap
acity
ove
r the
boa
rd.
• A
hig
h le
vel s
teer
ing
com
mitt
ee in
volv
ing
the
18
min
istri
es o
f Tra
nspo
rt, In
tern
atio
nal
Coo
pera
tion,
and
Fin
ance
, has
bee
n cr
eate
d to
ov
erse
e th
e im
plem
enta
tion
of th
e Pr
ojec
t. •
A P
MU
has
bee
n es
tabl
ishe
d an
d is
fully
staf
fed.
EN
R is
als
o se
lect
ing
an o
utsi
de c
onsu
lting
firm
to
supp
ort t
he P
MU
in p
roje
ct m
anag
emen
t du
ring
the
first
two
year
of i
mpl
emen
tatio
n an
d to
pr
ovid
e on
-the-
job
train
ing
to P
MU
staf
f.
• Th
roug
hout
dire
ct p
ract
ice
and
train
ing
prov
ided
by
the
Ban
k, E
NR
is b
ecom
ing
mor
e fa
mili
ar
with
safe
guar
d an
d fid
ucia
ry re
quire
men
ts,
parti
cula
rly p
rocu
rem
ent.
Con
stru
ctio
n su
perv
isio
n co
nsul
tant
s will
supp
ort E
NR
with
re
spec
t to
cont
ract
pro
gres
s cer
tific
atio
n.
P
roje
ct R
isk
s
Med
ium
-L
• De
sign
Med
ium
-L
The
prep
arat
ion
of th
e te
chni
cal s
peci
ficat
ions
and
bid
ding
doc
umen
ts fo
r si
gnal
ing
mod
erni
zatio
n re
quire
s de
ep
tech
nica
l sk
ills
and
good
kn
owle
dge
of s
tate
-of-
the-
art
solu
tions
. EN
R la
cks
this
cap
acity
for
the
m
ost p
art.
The
tech
nica
l sp
ecifi
catio
ns a
nd b
iddi
ng d
ocum
ents
fo
r th
e EN
RR
P si
gnal
ing
inve
stm
ent
have
be
en
prep
ared
by
an in
depe
nden
t int
erna
tiona
l con
sulta
nt.
Mor
eove
r, EN
R,
with
the
ass
ista
nce
of t
he s
ame
cons
ultin
g fir
m,
has
alre
ady
prep
ared
si
mila
r te
chni
cal
docu
men
ts f
or t
he B
eni
Suef
– A
syut
op
erat
ion.
Dur
ing
exec
utio
n of
wor
ks,
the
Proj
ect
Man
ager
bei
ng h
ired
by E
NR
for
eac
h co
nstru
ctio
n co
ntra
ct in
acc
orda
nce
with
Ban
k ru
les w
ill su
perv
ise
the
qual
ity o
f wor
ks.
•
Soci
al a
nd E
nvir
onm
enta
l
Med
ium
-L
Envi
ronm
enta
l im
pact
s are
exp
ecte
d m
ostly
dur
ing
cons
truct
ion
phas
e an
d in
clud
e hi
gh n
oise
lev
els,
incr
ease
d le
vels
of
loca
l ai
r po
lluta
nts,
and
deto
urs a
roun
d le
vel c
ross
ings
.
As a
ll pr
ojec
t inv
estm
ents
are
on
exis
ting
rail
right
s-of
-way
. Rai
lway
cor
ridor
has
no
sens
itive
en
viro
nmen
tal h
abita
ts.
ENR
has
pre
pare
d an
Env
ironm
enta
l M
anag
emen
t Pl
an to
add
ress
env
ironm
enta
l and
soc
ial i
mpa
cts.
It ha
s co
nfirm
ed t
hat
the
impa
cts
of i
nves
tmen
ts a
re
man
agea
ble,
and
agr
eed
upon
miti
gatio
n m
easu
res
durin
g an
d af
ter
cons
truct
ion
are
deta
iled
in a
n en
viro
nmen
tal
mon
itorin
g pl
an a
nd a
n in
stitu
tiona
l ca
paci
ty b
uild
ing
plan
. An
envi
ronm
enta
l con
sulta
nt
19
will
be
se
lect
ed
by
ENR
to
as
sist
on
th
e im
plem
enta
tion
of t
he e
nviro
nmen
tal
man
agem
ent
plan
. Th
e en
viro
nmen
tal
cons
ulta
nt
will
als
o he
lp t
he
esta
blis
hmen
t of
an
En
viro
nmen
tal
Aff
airs
D
irect
orat
e w
ithin
the
EN
R s
truct
ure
to h
elp
the
sust
aina
bilit
y of
man
agin
g th
e en
viro
nmen
tal
and
soci
al a
spec
ts d
urin
g th
e op
erat
ion
phas
e of
the
pr
ojec
t.
• Pr
ogra
m a
nd D
onor
Med
ium
-I
Whi
le t
he p
roje
ct d
esig
n pe
rmits
the
im
plem
enta
tion
of t
he p
roje
ct a
s a
stan
dalo
ne o
pera
tion,
the
full
bene
fits o
f the
pro
ject
can
onl
y m
ater
ializ
e if
ENR
impl
emen
t the
pla
n or
an
equi
vale
nt re
form
pro
gram
.
As m
entio
ned
abov
e, th
e m
oder
niza
tion
of E
NR
is a
n im
porta
nt
Gov
ernm
ent
prio
rity.
Th
e on
goin
g in
itiat
ives
pre
sent
an
impo
rtant
and
wel
l tho
ught
road
m
ap
for
ENR
’s
mod
erni
zatio
n.
Whi
le
som
e m
odifi
catio
ns t
o th
e in
itial
pla
n ha
ve o
ccur
red
as
ENR
pro
gres
ses
in it
s im
plem
enta
tion
and
furth
er to
th
e ap
poin
tmen
t of a
n ne
w M
inis
ter o
f Tra
nspo
rt la
st
Janu
ary,
the
ove
rarc
hing
prin
cipl
es a
nd o
bjec
tives
re
mai
n an
d re
stat
ed p
riorit
ies
com
fort
them
giv
en th
e br
oad
unde
rsta
ndin
g,
espe
cial
ly
at
high
go
vern
men
tal
leve
ls,
for
the
need
of
th
e m
oder
niza
tion
of E
NR
. Th
e B
ank
team
will
con
tinue
ass
essi
ng th
e pr
ogre
ss
of
the
mod
erni
zatio
n of
EN
R
durin
g pr
ojec
t su
perv
isio
n m
issi
ons.
•
Deliv
ery
Qual
ity
M
ediu
m-L
Pr
ojec
t ind
icat
ors a
re c
ompl
ex a
nd d
iffic
ult t
o as
sess
.
In li
ght o
f th
e im
plem
enta
tion
of t
he m
oder
niza
tion
and
stre
ngth
enin
g pl
an,
ENR
is
pe
riodi
cally
co
llect
ing
indi
cato
rs
refle
ctin
g its
ov
eral
l pe
rfor
man
ce.
The
proj
ect
perf
orm
ance
in
dica
tors
w
ere
thor
ough
ly d
iscu
ssed
and
agr
eed
upon
with
EN
R a
nd t
he d
efin
ition
and
met
hods
for
est
imat
ing
thes
e in
dica
tors
wer
e ha
rmon
ized
with
exi
stin
g EN
R
proc
edur
es a
nd m
etho
ds.
O
vera
ll R
isk
Rat
ing
at
Pre
par
atio
n
Ove
rall
Ris
k R
atin
g D
uri
ng
Imp
lem
enta
tion
Co
mm
ents
Med
ium
-L
Med
ium
-L
20
ANNEX 3: DETAILED DESCRIPTION OF PROPOSED PROJECT SCALE UP
A key itinerary, Beni Suef-Asyut, was selected for the modernization of the signaling system. When completed, this section will be the most modern part of the Egyptian railway network in terms of signaling and safety standards. The modernized system could become a model to be replicated throughout the core railway network of ENR. With a length of 250 kilometers, the section Beni Suef–Asyut currently consists of a non-electrified double track line run by diesel electric locomotives hauling mixed traffic (freight and passenger). This section is part of the busiest railway corridor in Egypt, Alexandria – Asyut, and is a bottleneck in terms of transport capacity because of the obsolete signaling system in place:
a) Existing signaling boxes are equipped with old mechanical interlocking of points and signals (some built in 1928 & 1936) ensuring safety of the trains through arrangements of rods that physically prevent conflicting moves being set up.
b) Unidirectional lines that can be operated on the wrong direction only through heavy and time consuming procedures when it is necessary to allow for single working over one track of a two track railway. In such cases, safety is only ensured through procedures applied by signalmen and no technology (through interlocking tables) is providing safety.
c) The mechanical signaling system compels big time intervals between following trains as no train is allowed to enter in an interval before this interval has been freed by the previous train and confirmed by a signalman through mechanical devices.
The modernization of the signaling system will comprise the complete removal of the existing equipment and the installation of state-of-the-art solution. The signaling system to be implemented will mainly comprise an automatic block signaling system (on open line), electronic interlocking systems (in stations), and a level-crossing protection system. All necessary cables and cabling equipment related to the signaling system will be installed, all signaling equipment will be remote controlled, and diagnosis systems for all components will be available. All components of the signaling system, protection systems in level crossings, and train and security brake systems will be in conformity with a train speed of 160 km/hour. The contra-flow facilities with crossover between upstream and downstream main tracks on the whole section of the line and the bi-directional signaling will be installed. Bi-directional signaling provided on the double track will allow traffic to run safely in either direction along a running line improving the safety of traffic in cases of failures of trains or emergency works and allowing track maintenance works more easily. An Operation Control Centre (OCC) that will be working 24/24 and 7/7 will be put in place for the efficient and reliable operation of the railway line. It will organize the traffic on the whole section of the line and it shall deal with running train traffic, according to its priority between
21
Beni Suef and Asyut. The OCC will be equipped with a Centralized Traffic Control (CTC)6
a) Operate by remote control signaling equipment and switches, and to set routes (vehicle route supervision);
System, thus enabling it to:
b) Control forecast traffic, monitor real time traffic at all stations and on all sections of line, and quickly take adequate measures to recover normal operations after interruptions (traffic regulation);
c) Allow works on tracks, either planned or in case of emergency; d) Monitor and manage the use of rolling stock via direct links to depots to provide the best
service (vehicle supervision); e) Help driver in case of engine failure (driver assistance) f) Monitor and manage on-board staff to provide the best service (driver supervision)
CTC functionality will be based on non-proprietary interfaces in order to enable data collection from signaling equipment provided by different suppliers and for data exchange with the local equipment in railway stations. A Local Command Console will be available in the main stations of the section for local command of signals, switches, shunting activities, etc., and for the exchange of information with the CTC. The non-proprietary interface will ensure its interoperability among different components of the signaling system, and enable the extension of traffic controls beyond the initial extent of this particular system as other sections are modernized. The installation of the new systems will offer the opportunity to optimize the operations of the target section through the rationalization of railway stations (unnecessary stations may be closed), remodeling of track layout at stations, and the rationalization – based on traffic needs – of the number of “objects” (points, signals, etc.) controlled by the interlocking systems in each railway station. The power supply for the CTC and the signaling system components will be provided by two independent sources. In the event of an interruption of the main power system, the CTC and the other vital functions would be supplied by an uninterrupted power source over buffer-charged accumulators that can provide steady energy. ENR operation and maintenance staff will be trained for the proper utilization of the new signaling system funded by the Project. So far ENR has not yet decided how and when to modernize the still functional but outdated Automatic Train Protection system (onboard locomotive equipment and related track equipment). A decision is expected soon on a technical option and on the financing of the equipment which is not part of the project.
6 CTC: Centralized Traffic Control consists of a centralized train dispatcher’s office that controls railway switches and signals. The dispatcher is constantly aware of the position of each train as it is electrically reported, and controls the switches and signals remotely. In the dispatcher’s office there is a graphical depiction of the railway, and the dispatchers can keep track of trains’ locations across the territory that the dispatcher controls.
22
ANNEX 4: ECONOMIC ANALYSIS
a) Results of the base case: The results of the economic analysis in terms of the Net Present Value (NPV), the Economic Internal Rate of Return (EIRR), and the Benefit Cost Ratio (B/C) are presented in the following table.
Table 1: Results of the economic appraisal
Indicator Value NPV(@12%) US$323 million
EIRR 21.8% B/C Ratio 2.22
The economic analysis indicates that the signaling component of the proposed project is economically viable, returning a positive NPV of US$323 million, following an investment of US$ 330 million. The EIRR is 21.8% and the estimated B/C ratio is 2.22, which is greater than one and therefore would support a decision to invest in the project.
Year Investment cost In EGP
Time savings for existing traffic
GC savings for diverted traffic
Generated traffic benefits
Savings in highway
maintenance costs
Savings in maintenance costs of the signaling system
Safety benefits Total Benefits in EGP
Total net benefits in EGP
Total in US$
2011 588,500,000 - - - - (588,500,000) (110,000,000)
2012 588,500,000 - - - - (588,500,000) (110,000,000) 2013 588,500,000 - - - - (588,500,000) (110,000,000) 2014 150,954,596 2,959,919 20,099,822 332,042 20,000,000 137,241,144 331,587,523 331,587,523 61,978,976
2015 155,483,234 6,237,272 21,456,813 677,424 20,000,000 156,289,597 360,144,340 360,144,340 67,316,699 2016 160,147,731 9,863,329 22,907,458 1,036,687 20,000,000 176,257,790 390,212,994 390,212,994 72,937,008
2017 164,952,163 13,872,694 24,458,305 1,410,393 20,000,000 197,201,447 421,895,002 421,895,002 78,858,879 2018 169,900,728 18,303,704 26,116,366 1,799,130 20,000,000 219,180,798 455,300,726 455,300,726 85,102,939
2019 174,997,749 23,046,806 27,889,146 2,203,294 20,000,000 241,743,722 489,880,718 489,880,718 91,566,489 2020 180,247,682 28,258,012 29,784,680 2,623,689 20,000,000 265,364,354 526,278,416 526,278,416 98,369,797 2021 185,655,112 33,980,570 31,811,569 3,060,970 20,000,000 290,100,519 564,608,740 564,608,740 105,534,344
2022 191,224,766 40,261,911 33,979,021 3,515,821 20,000,000 316,013,911 604,995,430 604,995,430 113,083,258 2023 196,961,509 47,154,094 36,296,894 3,988,951 20,000,000 343,170,396 647,571,844 647,571,844 121,041,466
2024 202,870,354 54,714,287 38,775,743 4,481,101 20,000,000 371,640,353 692,481,839 692,481,839 129,435,858 2025 208,956,464 63,005,316 41,426,866 4,993,041 20,000,000 401,499,044 739,880,731 739,880,731 138,295,464 2026 215,225,158 72,096,271 44,262,361 5,525,572 20,000,000 432,827,010 789,936,373 789,936,373 147,651,658
2027 221,681,913 82,063,184 47,295,179 6,079,530 20,000,000 465,710,516 842,830,322 842,830,322 157,538,378 2028 228,332,371 92,989,782 50,539,187 6,655,785 20,000,000 500,242,025 898,759,149 898,759,149 167,992,364
2029 235,182,342 90,531,572 54,009,232 5,527,744 20,000,000 463,796,322 869,047,211 869,047,211 162,438,731 2030 242,237,812 92,022,013 57,721,210 5,436,524 20,000,000 459,275,661 876,693,221 876,693,221 163,867,892
2031 249,504,946 93,486,687 61,692,143 5,341,656 20,000,000 454,574,174 884,599,606 884,599,606 165,345,721 2032 256,990,095 94,919,828 65,940,253 5,242,994 20,000,000 449,684,627 892,777,796 892,777,796 166,874,354 2033 264,699,798 96,315,142 70,485,053 5,140,384 20,000,000 444,599,499 901,239,877 901,239,877 168,456,052
2034 272,640,791 97,665,770 75,347,438 5,033,671 20,000,000 439,310,965 909,998,635 909,998,635 170,093,203 2035 280,820,015 98,964,235 80,549,778 4,922,689 20,000,000 433,810,890 919,067,607 919,067,607 171,788,338
2036 289,244,616 100,202,404 86,116,029 4,807,267 20,000,000 428,090,812 928,461,128 928,461,128 173,544,136 2037 297,921,954 101,371,434 92,071,842 4,687,229 20,000,000 422,141,931 938,194,389 938,194,389 175,363,437 2038 306,859,613 102,461,714 98,444,682 4,562,389 20,000,000 415,955,094 948,283,492 948,283,492 177,249,251
2039 316,065,401 103,462,811 105,263,962 4,432,555 20,000,000 409,520,784 958,745,513 958,745,513 179,204,769
23
As reflected in the following table, the majority of economic benefits are derived from improvement in safety level, representing about 57% of total discounted benefits. Time savings for existing traffic represent 28% of total discounted benefits, whereas generated traffic benefits are about 7%.
Table 2: Percentage of different types of benefits relative to the total discounted benefits Type of Benefits Percentage of Total Discounted
Benefits Time Savings for Existing Traffic 27.5% Generated Traffic Benefits 7.1% Reduction in Total GC for Diverted Traffic 5.3% Highway Maintenance Savings 0.6% Savings in Maintenance costs of the signaling system 2.9% Improvement in Safety level 56.6%
b) Sensitivity and Switching Analysis: This section indicates the impact of uncertainty or variation in the key parameters of interest on the economic appraisal of the project. Those key parameters are perceived to be the growth rate of future freight and passenger traffic, the investment costs, the construction period and the discount rate. The impact of defined variation in these parameters is presented in the following table, together with the switching values, the percentage change in the former necessary to make the project unviable.
Table 3: Sensitivity Analysis
Capital Costs -20% Base Case +20% NPV US$376 million US$323 million US$270 million EIRR 25.4% 21.8% 19.2% Freight Traffic Growth -20% Base Case +20% NPV US$318 million US$323 million US$328 million EIRR 21.7% 21.8% 22.0% Passenger Traffic Growth -20% Base Case +20% NPV US$282 million US$323 million US$354 million EIRR 20.7% 21.8% 22.8% Construction Period -One year Base Case +One year NPV US$338 million US$323 million US$306 million EIRR 23.4% 21.8% 20.0% Discount Rate 8% 10% Base Case: 12% NPV US$689 million US$474 million US$323 million B/C Ratio 3.43 2.74 21.8%
Estimated Switching Values Increase in Capital Costs 120%
Reduction in Passenger Traffic Growth 95% Reduction in Freight Traffic Growth 130%
24
The table reveals that the proposed investment is relatively robust to the defined variation in the key parameters of interest, with significant changes in both the capital costs of the project, the forecast growth rates, and a delayed construction period still resulting in a positive NPV and an EIRR at the 12% threshold. The sensitivity analysis also reveals the estimated switching values, with capital costs needing to increase by 120%, passenger traffic growth falling short of the forecast by 95%, and freight traffic growth falling short of the forecast by 130%, before the project becomes unviable.
25
ANNEX 5: MAP
Ras Gharib
El Matariya
El Salhiya
Arab elRaml
El Qasabi
GizaSuez
Benha
Tanta
Damietta
Zagizig
Al Minya
Assiut
Sohag
Qena
Ismailia
Damanhur
Beni Suef
El Fayoum
PortSaid
El Mansura
Alexandria
Shibin el Kom
Kafr elSheikh
CAIRO
SOUTHERNSINAI
NORTHERNSINAI
SUEZ
G I Z A
AL BAHRAL AHMAR
ASSIUT
AL WADI AL JADID
EL FAYOUM
MARSAMATRUH
BENI SUEF
AL MINYA
SOHAG
KAFR EL SHEIKH
MENOUFIYA
SHARGIYAH
QALIUBIYA
ISMAILIA
CAIRO
DAMIETTA
PORTSAIDALEXANDRIA
BEHEIRA
GHARBIYA DAGAHLIYA
QENA
Gulf of Suez
M e d i t e r r a n e a nS e a
30°E 31°E 32°E 33°E
30°N
31°N
29°N
28°N
30°N
31°N
29°N
28°N
30°E 31°E 32°E 33°E
0 25
0 25 50 Miles
50 KilometersIBRD
36063R
NO
VEM
BER 2010
SELECTED CITIES AND TOWNS
GOVERNORATE CAPITALS
NATIONAL CAPITAL
RIVERS
MAIN ROADS
RAILWAYS
GOVERNORATE BOUNDARIES
ARAB REPUBLIC OF EGYPT
EGYPTIAN NATIONAL RAILWAYSRESTRUCTURING PROJECT
ADDITIONAL FINANCING
PROJECT WORKS:
SIGNALLING INVESTMENTS
This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other informationshown on this map do not imply, on the part of The World BankGroup, any judgment on the legal status of any territory, or anyendorsement or acceptance of such boundaries.
ARAB REPUBLICOF EGYPT
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