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Documeat of

The World Bank

FOR OFmFCIAL USE ONLY

Report No. 6163

PROJECT COMPLETION REPORT

THAILAND

FIFTH RAILWAY PROJECT (LOAN 1662-TH)

April 25, 1986

Projects DepartmentEast Asia and Pacific Regional Office

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.

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oMIAM. we OMLYTO* WOILDO BANK

WasOvton. D.C. 20433US.A.

April 25, 1986

MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT

SUBJECT: Project Completion Report on Thailand Fifth Railway Project(Loan 1662-TH)

Attached, for information, is a copy of a report entitled "ProjectCompletion Report on Thailand Fifth Railway Project (Loan 1662-TH)" preparedby the East Asia and Pacific Regional Office. Under the modified system forproject performance auditing, further evaluation of this project by theOperations Evaluation Department has not been made.

Attachment

Thisowmbaha a restrkcte distributo an may be used by rdcipents only in the peoanceIof their officia duties Its conftets may not otherwise be disclose withot Worl Bank authorutio.

FOR OFFICIAL USE ONLY

THAILAND



Table of Contents

Page No.

Preface i

Basic Data Sheet i

Highlights iv

I * INTRODUCTION 1

TI. PROJECT PREPARATION 1

A. Origin of Project 1B. Project Scope and Content 2

ITI. PROJECT IMPLEMENTATION AND COST 3

A. Execution of the Project 3B. Costs and Disbursement 4

IV. TRAFFIC AND OPERATIONS 6

A. Passengers 6B. Freight 6C. Operations 7

V. FINANCIAL PERFORMANCE 8

A. Revenues and Expenses 8B. Tariffs and Costs 11C. Uneconomic Lines and Services 13D. Financial Position 14

VI. ECONOMIC RE-EVALUATION 16

VII. INSTITUTIONAL DEVELOPMENT 17

|This document h s a mettictd distdbution and may be used by moiplonts only In the pwf_ Iaof thdr OMCWl dutbse Its contents may not othOdorwbe dbno dsed without Wofid Bankc aufthotion.|

.~

Table of Contents (cont'd.)

Page No.

ANNEX Compliance with Xajor Loan Covenants 19

TABLES

1. Physical Progress on Project 212. Appraisal Forecast and Final Project Costs 223. SRT Passenger Traffic, 1977-83

(Actuals and Forecast) 234. SRT Freight Traffic by Commodities for

1977-83(Actuals and Forecast) (1,000 tons) 24

5. SRT Freight Traffic by Commodities for1977-83 (million ton-km) 25

6. Operational Performance Compared with Targets 267. SRT Income Statements, 1979-83 278. SRT Balance Sheets, 1979-83 28

i

THAILAND



PREFACE

This Project Completion Report presents a performanceevaluation of the Thailand Fifth Railway Project, for whichLoan 1662-TH for US$16.7 million was approved in 1979. This reporthas been prepared by the East Asia and Pacific Region and focusesmainly on the Bank-financed components of the project.

The PCR is based on data and information supplied by theState Railway of Thailand and on Bank supervision mission reports.

In accordance with the revised project performance reportingprocedures this report has been read in the Operations EvaluationDepartment (OED) but the project was not audited by OED staff. Thedraft Completion Report was sent to the Borrower for comments; however,none were received.

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THAILAND


Project Completion Report

Basic Data Sheet

Actual or Actual asAppraisal estimated Z of appraisal

Key project data estimate actual estimate

Project cost (US$ mln) 100.87 100.00 99Loan amount (US$ mln) 16.70 16.08 96Date of board approval 03/06/79Date of effectiveness 08/22/79 -Date physical components 12/31/81 n.a.completed

Closing date 06/31/82 12/31/83Economic rate of return (X) 17 10Financial rate of return (M) 3.0 (1981)Institutional performance Good Fair

FY79 FY80 FY81 FY82 FY83 FY84Cumulative DisbursementsAppraisal estimate (US$ mln) 1.9 13.0 15.9 16.7 - -

Actual (US$ mln) - 0.8 6.4 8.5 8.6 16.1Actual as X of estimates 0 6 40 51 52 96Date of final disbursement 05/84Principal repaid to 10/31/85 S1.62 million

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THAILAND

FIFTH RAILWAY PROJF,CT (LOAN 1662-TH)

Mission Data

MandaysNo. of in Specialization

Mission Date persons field represented

Identification Jun 15-Jul 4, 1977 4 62 Econoumist, EngineerFinancial Analyst

Preparation - - -

Appraisal Nov 21 - Dec 14 5 110 Financial AnalystSupervision Nov 4-13, 1979 2 18 Engineer, F.A.Supervision April 1980 1 EngineerSupervision Feb 5-20 1981 1 35 Engineer, Econ.Supervision /a Oct 1981 3 - Econ, Eng. & F.A.Supervision Jan-Feb 1982 2 34 Econ., Eng.Supervision Dec 1982 3 30 Econ., Eng., F,A,

Other Project Data

Borrower : State Railway of ThailandExecuting Agency : State Railway of ThailandFiscal Year of Borrower : October 1 - September 30

Name of Currency : Baht (B)Currency Exchange Rate

Appraisal year average(1978) : 20.40Interveaing years' average : 21.75Compleftion year average (1984) : 23.0Follow-on Project : None. A project was appraised and

negotiated but not presented to theProject due to nonfulfilmment of tariffincrease condition.

/a Appraisal of Sixth Project.

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THAILAND



Highlights

i. The Fifth Railway Project was a natural sequel to the Fourth RailwayProject for which the Bank made a laan of US$15 million (Loan 898-TH) in1973. Loan 1662-TH for US$16.7 million was signed in 1979. The Fourth andFifth Projects finan.ed, respectively, time slices of SRT's 1972-76 and1977-81 investment plans.

ii. The main objective of the Fifth Project was to assist the StateRailway of Thailand in improving operational efficiency by replacing obsoleteand worn-out assets and in expanding capacity to serve projected trafficneeds.

iii. :al investments under SRT's 1977-81 Investment Plan were estimatedto exceed oaht 2.0 billion (US$100 million). Of this, the Bank loan provided$16.7 million (US $0.6 million was cancellad), the balance of the funds comingfrom USAID, OECF, Government and commercial banks in France and Germany, andGovernment and commercial banks in Thailand.

iv. The project was substantially completed by December 31, 1983, aftera two-year delay; the original closiixg date was December 31, 1981. The finalproject cost was US$98.6 million compared with the appraisal estimate of aboutUS$100 million. The cost saving was due mainly to a portion of the trackrehabilitation work not being completed due to inadequate supply of sleepersand the devaluation of the Baht which reduced the dollar cost of localexpenditures.

v. SRT's passenger traffic exceeded appraisal forecasts, but freighttraffic declined instead of growing and was 23% below the forecast in 1981.

vi. SRT's operational performance was reflected in the financial per-formance, with the operating loss growing from B 38 million in 1979 to B 413million in 1981.

vii. SRT found it difficult to comply with most of the financial cove-nants in view of the operational and financial situation it found itself inand in the face of lack of Government support even in such matters as closureof uneconomic lines, prompt payment of subsidies for uneconomic services, andso on.

viii. Experience under the Fifth Railway Project confirms that suc-cess in achieving the policy objectives of any project depends entirely on thegovernment's commitment to those objectives. While the physical parts of thisproject were eventually satisfactorily completed, the Government of Thailandis only recently evincing interest in pursuing the overall policy changes thatwere central to its success.

THAILAND



I. INTRODUCTION

1.01 Over the last two decades, Thailand's transport network has beentransformed from a primarily rail and river-based one to a primarily road-based system. Nevertheless, rail and river transport continue to be importantbecause of their relative advantage for the movement of freight in bulk and insubstantial volumes. The Fifth Railway Project was designed to help financethe last three years of the 1977-81 Investment Plan of the State Railway ofThailand (SRT) and thereby (i) help to improve SRT's operational efficiency byreplacing worn-out and obsolete assets, and (ii) assist SRT in expandingtraffic carrying capacity to meet anticipated traffic growth. A secondary butvery important objective of the project was to introduce a commercial approachto SRT's operations.

1.02 The Bank has made four previous loans to SRT for a total ofUS$52 million. Loan 898-TH for US$15 million was the fourth in the series andwas approved in June 1973. All four projects were completed satisfactorily,although a sum of US$7.5 million of the Third Loan was cancelled as SRT'sprocurement procedures for some equipment did not conform to Bank guidelines.

1.03 This is the completion report on the Fifth Railway Project financedby Loan 1662-TH for US$16.7 million equivalent. The loan was approved onFebruary 22, 1979, and the agreement signed on April 23, 1979. It becameeffective on August 27, 1979. Cofinancing was provided by bilateral agenciesand local currency financing by SRT and the Government.

II. PROJECT PREPARATION

A. Origin of Project

2.01 The Fifth Railway Project was basically a three-year (1979-81) timeslice of the 1977-81 five-year Investment Plan of SRT. The 1977-81 Plan was afollow-on of SRT's 1972-76 Investment Plan which sought to achieve the com-plete dieselization of the locomotive fleet and expand capacity to meettraffic needs; these objectives were largely realized. The 1977-81 Plan wascarefully drawn up by SRT with the aim of further improving operational effi-ciency and was jointly scrutinized by SRT and Bank staff during appraisal.Some modifications were subsequently made (before Board presentation) to takeaccount of proposed changes in SRT's tariff policy and its impact on projectedtraffic.

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B. Pro3ect Scope and Content

2.02 The project as finally agreed consisted of the last three yearx ofBRT's 1977-81 investment plan and included:

(a) acquisition ofs

(i) 30 diesel-electric locomotives of 1,800 hp each, includingspare parts and tools, and

(ii) track maintenance equipment, telecommunications and signallingequipment, and machinery and equipment for rolling stockmaintenance;

(b) manufacture of about 90 passenger coaches and about 100 freightcars;

(c) a program of track and bridge rehabilitation, including renewal ofabout 650 km of rails, with new and reconditioned rail, welding railjoints on 270 km of track with continuous rail between stations,acquisition and installation of about 240,000 concrete sleepers, andrebuilding of about 120 wooden and 60 steel bridges;

(d) modernizing of telecomunmicationo and signalling systems, replacingold with modern, more efficient equipment;

(e) rebuilding of the locomotive overhaul shed at Makkasan and provisionof facilities and equipment at Makkasan and district workshops; and

(f) miscellaneous items, such as level crossing barriers, staff housing,offices, siding extensions etc.

2.03 As part of the project, SRT was to:

(a) complete an analysis of the financial losses incurred on theoperation of each of the uneconomic branch lines;

(b) forward to the Bank a study carried out by NESDB!1 relating touneconomic branch lines, including recommendation of alternativemethods of providing the services; and

(c) carry out a profitability study of its services, for review andcomment by the Bank, and subsequent implementation of mutuallyagreed measures to improve profitability.

i/ National Economic and Social Development Board.

2.04 SRT was responsible for implementing the project, including themanufacture of rolling stock in its workshops, using imported materials.Concrete sleepers would be manufactured by local contractors. The loanagreement included operational targets to be achieved over the years 1979-1981. The project was expected to be completed by December 31, 1981.

10 III. PROJECT IMPLEMENTATION AND COST

A. Execution of the Project

3.01 While a substantial part of the project was carried out in time, thecompletion of some major works was delayed till FY82, or even later in somecases; for example, manufacture of passenger cars, rail renewal, laying ofconcrete sleepers and replacement of steel bridges. At the end of FY81expenditure on the project amounted to only 65% of total estimated cost.

3.02 The main reason for the delay was tho slow progress in procurementof material and equipment. In particular, for Bank financed items: (a) thepreparation of tender documents took up to 11 months longer than estimated;(b) the bid evaluation, which in many cases involved requests for furtherinformation from bidders, took from three to five months; and (c) due to thecomplicated and time-consuming procedures for contract award, there was alapse of up to ten months from the Bank's approval of awards to signing ofcontracts. Although under Section 4.02(c) of the Loan Agreement SRT was toeffect improvements to procurement procedures, little was achieved in thisrespect. As a result, the loan closing date was exteuded from the originalDecember 31, 1981, to December 31, 1983.

3.03 Implementation was good in areas where materials were in stock (formanufacture of some passenger coaches and freight cars), or on diesellocomotives, where negotiations for purchase of 30 Alsthom (French) units werein progress at appraisal, or on part of the rail renewal program, using railbeing provided with government funds.

3.04 The most serious delays occurred in:

(a) acquisition and installation of concrete sleepers due to procurementand design problems. There was delay in the purchase of monoblocksleepers costing about B 90 million when the lowest bidder withdrew,and deliveries were not completed until January 1984;

(b) track and bridge rehabilitation, due to delays in procurement ofsteel for bridges and rail; and

(c) manufacture of passenger coaches using parts and materials financedby the loan, due to slow procurement.

3.05 Specific items uncompleted by the end of the original projectcompletion date were as follows:

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ActualAppraisal Actual to end-

Item Unit estimate FY79-81 1983

Manufacture of passenger cars no. 114/a 91 100Rail renewal - old rails km 193 72 112Laying of concrete sleepers '000 275 90 270Replacement of steel bridges spans 75 46 46

/a Includes construction in progress in 1978.

3.06 Mechanized track maintenance equipment (costing about US$3.2 millionequivalent), included late in the project in order to utilize unspent loanfunds, was not shipped until October-November 1983. Similarly, some signal-ling equipment, costing about US$400,000 equivalent, was not shipped untilOctober/November 1983, and of the two overhead cranes needed for the Makassanworkshops, one was shipped in January 1982, the other in March 1983. Table 1gives detailed physical progress of the project as of the end of 1983, theextended loan closing date, compared with the appraisal expectations.

3.07 A major investment item outside the project was the construction ofthe Chachoengaao-Sattahip line, on which B 1,365 million was spent over theperiod 1979-83, with funding from the Government (part of the B 2,380 millionnoted in para. 5.19).

B. Costs and Disbursement

3.08 The cost estimate of the project at appraisal, ard the final projectcosts, are summarized below. Details are given ir, Table ̂ .

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Appraisalestimate Final cost

Item Foreign Total Foreign Total-------------- (US 000) - …-----

Motive power and rolling stock 40,340 52,280 39,393 54,067Track rehabilitation 16,535 32,566 20,576 32,608Telecommunications and signal-ling improvement 4,687 5,905 2,663 4,821

Workshops improvement 1,760 3,749 1,121 2,418Other items - 6,37' - 4,677

Total 63,322 100,875 63,753 98,591

The above figures (and those of Table 2) have been built up from data providedby SRT, with some amendments in the 'ighi of further explanations from SRT.Data originally provided for a major item, track rehabilitation, producedunduly low cost figures, due largely to SRT's method of accounting for railreplacement. SRT's practice is to regard rail replacement as a maintenancecost, except to the extent that the new rail is better (for instance, ofgreater weight). In this case, SRT calculates the betterment element of cost,which is added to the relevant fixed asset account. The remaining, and muchlarger, cost element is charged to maintenance. The project cost calculationshave been, accordingly, amended to include this cost. In addition, costs ofsuch items as tre-k maintenance equipment, signalling equipment, andacquisition and laying of concrete sleepers, much of which occurred after1983, have been added. The costs of some items, for which the data has beenunavailable, have been estimated from other available data.

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3.09 The original loan allocation for each category of goods to befinanced, and the final agreed allocated amounts, were (in $'000)t

Original FinalAllocation Allocation

1. Components for manufacturingpassenger cars 3,600 2,744

2. Track and bridge rehabilitationmaterial 4,300 8,950

3. Telecommunications and signallingimprovement 4,000 3,160

4. Workshop equipment and facilities 1,500 1,227

Sub-total 13,400 16,082

5. Unallocated 3,300 -16,700 16,082

Cancellation 618Original Loan Amount 16,700

An amount of $618,200 was cancelled on July 2, 1984.

IV. TRAFFIC AND OPERATIONS

A. Passengers

4.01 The appraisal report forecast that, over the project pe 'od,passenger traffic would increase at about 3-4.5% p.a. systemwide.- Actually,from 1979 to 1983, the number of passengers grew by 6% annually, and pass-kmby 8.9% annually, despite a drop in the last quarter of FY81 due to a 35%railway fare increase in June 1981. The average passenger journey increasedfrom 109 km. to 119 km. Thus the forecasts for passenger traffic were easilysurpassed. Table 3 gives details of annual passenger traffic.

B. Freight

4.02 At appraisal it was expected that SRT's freight traffic would expandat about 6.5% p.a. in tons and 4.7% p.a. in ton-km. In fact, freight trafficdeclined over the period 1979-83, with tonnage falling by 4% p.a. and ton-kmby 2.9% p.a. By 1981, actual tonnage was 23% under the forecast and ton-km22% under the forecast. Average haul, per ton, rose slightly, from 441 kr. to466 km.

4.03 From the details given in Tables 4 and 5, it will be seen that thedecline since 1978 was generally widespread over most commodities carried bySRT, with only gypsum, rice, maize, containers, rubber and coconut showingmodest increases. Container traffic reached the forecast level by 1983.

4.04 SRT's explanation for the poor freight business is that the largeincrease in passenger traffic (due mainly to the extremely low fares chargedby SRT), required the use of more locomotives, and consequently the freighttraffic could not always get the motive power it needed. The problem was com-pounded by a general shortage of motive power during peak periods, due tomechanical problems, and many freight trains got cancelled. This did notimprove SRT's ability to compete for and attract freight traffic. There wasalso a sharp drop in traffic after June 1981, when freight tariffs were raisedby 73% on average. (There were some reductions subsequently, bringing thetariff increase to 59%, but this helped SRT only marginally).

C. Operations

4.05 Certain operational targets to be achieved over the years 1977-81were given in Schedule 5 of the Loan Agreement. These are detailed inTable 6, together with the actual achievements over the period FY79-83.

4.06 Availability of main line diesel locomotives (1,800 hp), while notreaching the 1979 and 198Q targets, exceeded the target in 1981 and subse-quently in 1982 and 1983.-' For the remaining main-line diesel locomotives,the availability targets were not achieved, although an improvement was notedin 1983. Availability targets for diesel rail cars were in general achieved,but targets for passenger and freight cars were not achieved. SRT performedwell in reducing freight car turnaround time, exceeding the targets each year.

4.07 Although at appraisal SRT expressed its "aim of reducing majorlocomotive overhaul time from 23 to 18 days," this objective was not achieved,due, according to SRT, to the following factors:

the working area at Makkasan workshop is insufficient,

-- delayed procurement of spares,

-- unit replacement could not adequately be performed, and

-- the heavy incidence of unscheduled and accident repairs sent to thisworkshop.

Any future project should address these problems.

2/ 4.5% p.a. for 1978-79, and 3% p.a. for 1979-81.

3/ The arrival of 30 new locomotives by the end of 1981 contributed tohigher availability.

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4.08 As part of the project, SRT has improved and expanded itscommercial/marketing operations, so as to attract more traffic. By the end ofthe project period, the staff of the marketing department (created in 1975)totalled 74.

V. FINANCIAL PERFORMANCE

A. Revenues and Expenses

5.01 While SRT's total operating revenues exceeded the appraisal fore-casts in each year of the project, operating costs rose sharply in 1980 and in1981, with further steady annual increases thereafter. In consequence,operating deficits were incurred in each of the years 1979-83, and the agreedfinancial rates of return were not achieved. There was a slight improvementin FY82 and FY83 due to the freight and passenger tariff increases of June1981. Detailed income statements are provided in Table 7 and are summarizedbelow:

SUMMARY INCOME STATEMENTS(In Baht million)

1979 1980 1981 1982 1983

Operating revenues 1,867 2,236 2,588 3,071 3,154Working expenses 1,734 2,356 2,798 3,159 3,290Depreciation 171 171 202 213 214Total operating expenses 1,905 2,527 3,000 3,372 3,504Operating income (loss) (38) (291) (412) (301) (350)Loan interest 71 75 77 97 111Other revenues (expenses) 12 107 144 176 79Net deficit (97) (259) (345) (222) (382)Working ratio (X) 93 105 108 103 104Operating ratio (%) 102 113 116 110 111

5.02 Due to passenger traffic rising faster than expected, passengerrevenues were higher than forecast in each year, with the 1981 total ofB 1,545 million being 27% above the forecast for that year. A fare increaseof about 35% (see para. 5.09) in June 1981 helped boost passenger revenues,particularly in subsequent years.

5.03 As noted in para 4.02, freight traffic steadily declined each year(except that total ton-km increased slightly in 1980), thus lowering reve-nues. However, the tariff increases in June 1981 (para. 4.04) enabled freightrevenues to grow in that year, and even more so in 1982, although they fell in1983.

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5.04 The increases in operating costs were largely the result of:

(a) labor cost, which, even though staff numbers remained relativelystable, rose at an annual rate of 15% over the period, with theaverage cost per employee increasing by 75% between 1979 and 1983;

(b) fuel cost, which more than doubled in FY80 and increased by morethan 20X in FY81 (an annual rate of 25Z from 1979 to 1983); and

(c) other material costs which rose by about 85% over the period due toworld inflation.

5.05 The above unsatisfactory results would have been even 4yorse, had SRTcomplied with the intent of Section 5.05 of the Loan Agreement - and chargeddepreciation calculated on revalued fixed assets. Although a revaluation wascarried out in 1980, the results were not reflected in SRT's accounts, becausethe regulations of the Ministry of Finance relating to accounting and financesof State enterprises (B.E. 2520) prohibited the inclusion of asset revaluationdata in published (i.e., official) accounts, unless agreement is reached withthe Ministry of Finance. Thus annual depreciation charges continued to becalculated on the book values, and the real losses undlerstated.

5.06 The asset revaluation done by SRT in FY80 was based on the rise inwholesale price indices (in Thailand for locally procured assets, and incountries from where assets had been procured), using asset book values of1968 as the base. Bank staff disagreed with this methodology, on the groundsthat the increase in the prices of rolling stock (locomotives and passengerand freight cars) in particular far exceeded the general inflation in thecountries of procurement. A more reliable estimate of current asset valueswas made by Bank staff, and annual depreciation charges recalculated on thisbasis are incorporated in the following revised operating results for theperiod FY79-82:

4/ Section 5.05 required SRT to revalue its fixed assets no later thanMarch 31, 1980.

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FY79 FY80 FY81 FY82…(------- tBaht million) -------…

OriginalTotal operating revenues 1,867 2,236 2,588 3,071Total working expenses 1,734 2,356 2,798 3,159Depreciation 171 171 202 213

Total operating expenses 1,905 2,527 3 000 3,372Net operating revenue (loss) (38) (291) (412) (301)Net income (loss) (97) (259) (345) (222)

RestatedDepreciation 750 840 930 1,014

Total operating expenses 2 484 3 196 3,728 4,173Net operating revenue (loss) I6TY) 7) (1,140) (1,102)Net income (loss) (676) (928) (1,073) (1,023)

Operating Ratio (x)Original 102 113 116 110Restated 133 143 144 13t

5.07 The detailed operating revenue and expenditure figures of FY83, asgiven in Table 7, have been deflated to the FY79 level using an averege of theofficial wholesale and consumer price movements over that period, as shownbelow (in million Baht):

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1979 1983Actual Actual Deflated /a

Passenger revenues 1,041 1,964 842Freight revenues 692 969 652Other revenues 134 221 131

Total 1,867 3,154 1,525

Salaries and wages 1,016 1,788 1,058Fuel 290 709 406Materials and other expenses 428 793 453

Total working expenses 1,734 3,29 917

Depreciation 171 214 127

Total operating expenses 1,905 3,504 2,044

/a Also adjusted for traffic.

5.08 The above shows that, using the same traffic levels and despite the1981 tariff increase, passenger revenues declined by 19%, in real terms, andfreight revenues by 6%. Staff costs increased by 4% and fuel cost by 40%,with other material and service costs rising by 6%. Provision fordepreciation declined in real terms by 26%.

B. Tariffs and Costs

5.09 Section 5.06 of the Loan Agreement required SRT to take such action(including adjustments to the level of its tariffs) as would be required toreach the agreed financial targets. With the rise in costs noted inpara. 5.04, tariff increases became urgently necessary, not only to enable SRTto reach its financial targets, but also to help it generate sufficientrevenues to preserve its working capital and general financial condition.

5.10 However, while requests for increases in standard tariffs were madeby SRT, and supported by the Bank, government approval was slow in coming.Although Section 39 of the State Railway of Thailand Act of 1975 vests theauthority for certain standard rate variations in SRT's Board of Commis-sioners, in practice all such tariff changes require the approval of not onlythe Board of Commissioners but also the Minister of Communications, variousgovernment agencies and the Cabinet. This procedure necessarily takes time,and tariffs were not revised substantially until June 1981, except for an 8.9%increase in freight rates in e&rly February 1979, and increases of 30% (July1979) and of 20% (February 1980) in rates for bulk petroleum products.

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However, SRT can negotiate rates with individual shippers, so that now (in1985) most of its freight traffic is being carried at special and contractrates.

5.11 The new tariffs raised standard 5/ first class passenger fares by552, second class by 44X and third class by 322, giving a weighted averagein6 ease of 352. For freight traffic, the standard rates for classes 3 and4 - were raised on average 50-150X and 40-200X respectively, with theincrease being higher with distance. The rates for petroleum were increasedby only about 13%. Rates for special trains, charged at negotiated rates,were also renegotiated upwards. The resulting effective rate incr3ase,weighted iy traffic volumes (ton-km), was 732, on average. Subsequent to theformal rate increases, however, a variety of rebates in the range of 5-29Xwere granted to counter the effect of such a high freight rate increase,which, it was feared, would result in decline in freight traffic. Someconcessions were also made in passenger fares. As a result of these rebates,the effective increase became 312 in passenger fares and 592 in freight rates.

5.12 SRT calculates long-run variable costs (LRVC) on its passenger andfreight traffic. However, despite the asset revaluation of FY80, depreciationcharges were not adjusted to reflect the resulting increased asset values. Asa result, the LRVC's as presently calculated by SRT are considerably under-stated. In FY80, average revenues were B 0.149 per passenger km and B 0.262per ton-km, compared with LRVC's of B 0.145 per pass-km and B 0.291 per ton-km. Thus even by SRT's own calculations, which are based on unrevaluedassets, freight was carried at revenues considerably below LRVC, while passen-gers were carried only marginally above LRVC - a margin quite insufficient tocontribute much towards fixed costs. Restating the costs, using depreciationcalculated on revalued assets, indicates that both passengers and freight werecarriec at substantially below their LRVC's.

5.13 The June 1981 tariff increase improved the relationship betweenrevenues and costs, and most of the traffic items produced revenues at leastmarginally above LRVC's based on revalued assets. However, these revenueswere still far below those required to cover fixed costs, as shown in thefollowing table, using values f3y depreciation that reflect estimated replace-ment costs of assets (in FY81):-

5/ Considerable discounts are given to commuters, armed forces veterans,students, etc.

6/ Classes 1 and 2 cover dangerous goods and less than carload (L.C.L.)traffic.

7/ LRVC calculations for 1983 are: passengers B 0.201 per pass-km, andfreight B 0.444 per ton-km.

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AverageLong-run revenue as Z

Estimated variable cost Full cost of restatedaverage Re- Re- Fullrevenue SRT stated SRT stated LRVC cost----------------- (baht) ----------------- --- (Z) ----

Passengers(per pass-km) 0.191 0.170 0.219 0.213 0.287 87 67

Freight(per ton-km) 0.416 0.338 0.454 0.447 0.630 92 66

To narrow the gap between revenues and costs, among other measures, somefurther tariff increases, to take into account the increase in costs due toinflation, are necessary at regular intervals over the next few years.

5.14 Under Section 3.06 of the Loan Agreement, SRT undertook to carryout, by December 31, 1979, a profitability study of its services, and, afterreview by the Bank, promptly implement such measures as would be deemedmutually appropriate by SRT and the Bank. A copy of the study was sent to theBank on June 3, 1980. There was no meaningful dialogue between SRT and the Bankon the specific recommendations of the study. However, SRT later informed theBank that the results of the study have been used for: tariff adjustments(both standard and special), selection of more profitable services in cases ofinadequate rail capacity, planning of services, rolling stock procurement, andplanning of increased efficiency and/or reduction in costs on less profitableservices.

C. Uneconomic Lines and Services

5.15 As of mid-1978, SRT operated eight branch lines with a total lengthof 630 km, which had been identified as unprofitable and requiring specificGovernment compensation for the losses incurred on their operation.Section 3.05 of the Loan Agreement required SRT to:

(a) submit to the Bank its analysis of the financial losses incurred asa result of the operation of each of these uneconomic lines;

(b) forward to the Bank for review the study carried out by NESDBrelating to uneconomic branch lines, with NESDB's recommendationswith respect thereto; and

(c) unless and until these lines were discontinued, maintain with theGovernment appropriate and satisfactory arrangements for reimburse-ment of such losses.

- 14 -

5.16 The analysis under (a) above and the NESDB study were forwarded tothe Bank on time. In connection with the latter study, the Ministry ofCommunications had concluded that three branch lines--Hat Yai-Songkla, BanDara junction - Sawankhalok, and Wongwian Yai-Mae Klong--should be closeddown.

5.17 The NESDB in turn stated that only the first two of the above linesshould be closed, and action on the third suspended until further studies hadbeen carried out. The Cabinet approved the NESDB recommendation. However,subsequently a subcommittee of WESDB made another study, and it concluded thatonly the first two lines plus three others should be closed. However, theCabinet decided that only the first two lines should be closed, and compensa-tion paid to SRT for losses on the other lines. The question of promptpayment of the compensation for such losses by the Government was not resolved(see para. 5.18).

D. Financial Situation

(a) Flow of Funds

5.18 The Government provides funds to SRT:

(a) as compensation for specific losses incurred on providing uneconomicpassenger services;

(b) as a subsidy to offset SRT's annual operating deficits;l/ and

(c) as a contribution to equity to finance investments.

SRT experiences some delays in actually receiving items (a) and (b) 91bove(para. 5.21). For instance, the record for item (b) is as followss-

8/ This includes depreciation, loan interest, foreign exchange adjustments,rents, and profits/losses on sale of properties.

9/ 1977 is omitted as SRT earned a profit that year.

- 15 -

1976 1978 1979 1980 1981 1982 1983

Net loss (B million) 50.2 139.9 97.2 258.8 345.0 221.8 382.4Year payment received 1980 1981 1982 1983 1985

Such delays cause considerable problems in maintaining adequate workingcapital (para. 5.20).

5.19 The requirement for funds, and the sources thereof, over theextended project period (1979-1983), are summarized below:

Funds required B million

Capital investment 3,833Debt Service: Loan interest 431

Loan repayment 596Operating deficits (excluding depreciation) 232Working capital (net) 84Other 4

Total Funds Required 5,180

Funds Available

From Government - for investment 2,380for operating deficits 575

Borrowing - IBRD and other 1,296- Short-Term Loans (local) 837

Miscellaneous (Sales of property, etc.) 92

Total Funds Available 5,180

As SRT could not provide any funds from its own resources (and indeed requiredfunds to support its operations), all funds for investment and debt servicehad to come from the Government or from further borrowing. In late 1983, theGovernment transferred B 481 million to SRT's account at the Bank of Thailand,thus improving its bank balance, and enabling SRT to reduce its bankoverdraft.

- 16 -

(ii) Balance Sheets

5.20 Detailed balance sheets (actual and forecast) for the years 1979-83are given in Table 8. The current and liquid ratios, which were quite satis-factory at 3.5 and 1.6 times in 1979, had deteriorated to 1.1 and a veryunsatisfactory 0.2 respectively by 1982, improving slightly to 1.5 and 0.6 in1983, due to the above-mentioned infusion of cash by the Government. Whilecurrent assets increased by 40% from B 1,189 million in 1979 to B 1,594 mil-lion in 1983 (largely due to an increase of B 290 million in inventories),current liabilities have tripled, from B 335 million to B 1,076 million.

5.21 Long-term debt declined Zrom B 1,506 million in 1979 to B 1,237 mil-lion in 1982, increasing slightly to B 1,253 million in 1983. The debt/equityratio, at 18/82 in 1983, down from 21/79 in 1981 and 1982, is reasonable.Short-term loans, in the amount of B 100 million, were obtained in 1983, andSRT also had a bank overdraft of B 252 million in 1982 and B 237 million in1983. This was despite the requirement of (a) para. 3.03 of the GuaranteeAgreement that the Guarantor should provide SRT with such funds as wouldenable it to maintain cash and short-term deposits totalling not less than 8%of its annual combined working expenses and debt service requirements, and(b) para. 3.04 which specifies measures to ensure prompt reimbursement ofannual operating deficits.

VI. ECONOMIC REEVALUATION

6.01 SRT undertook an economic evaluation of the project as completed,analyzing it by its principal components. The results of its evaluation aresummarized below:

(i) Rolling stock- Passenger coaches -7- Wagons

(ii) Track maintenance equipment 32(iii) Concrete sleepers 12(iv) Strengthening of bridges 31(v) Semi-automatic brake block casting plant 50

6.02 The approach taken by SRT in evaluating investments in rolling stockwas based on comparing costs with revenues from their use. But as explainedin Section IV, tariffs were not adjusted to reflect cost increasesperiodically or adequately, ai.d therefore, this approach in this particularinstance is not valid. A comparison with alternative road transport costsindicates that this investment will have a positive return for passengercoaches (and locomotives), as passenger traffic grew substantially between1977 and 1983; the return is estimated at 11%. On the other hand, freighttraffic declined during the period, partly because of SRT's policy of givingpriority to passenger traffic, and the investments in wagon purchases are notlikely to yield any economic return.

- 17 -

6.03 The overall return on the whole project, including portions of theproject for which the economic return could not be calculated, is now estima-ted at 102, compared with the appraisal estimate of 17X.

VII. INSTITUTIONAL DEVELOPMENT AND ROLE OF THE BANK

7.01 SRT was set up in 1951 as a separate organization under the StateRailway of Thailand Act to take over the functions of the Railway Departmentof the Ministry of Communications. A Board of Commissioners appointed by theCouncil of Ministers formulates policy and oversees SRT management. However,a 1959 amendment gave veto power to the Minister of Communications over anyaction by SRT deemed inconsistent with Government policy. Although this powerappears to have been rarely used, it has effectively prevented SRT from becom-ing a commercially-oriented, financially viable organization.

7.02 Under the Fifth Railway Project, the Bank initiated an attempt tostrengthen SRT as an organization (see paras. 2.03 and 5.15), but this did notimprove the situation very much and SRT continued to be highly dependent onthe Government for subsidies (which were usually paid 2-3 years late) and forapproval of tariff changes and service closures. The Bank, however, acted asa moderating influence in substantially scaling down the ambitious plans ofthe Government and SRT for further large-scale investments under SRT's 1972-86Investment Plan from B 22 billion to under B 10 billion.

7.03 Experience under the Fifth Railway Project confirms that success inachieving the policy objectives of any project depends entirely on thegovernment's commitment to those objectives. While the physical parts of thisproject were eventually satisfactorily completed,the Government of Thailand isonly recently evincing interest in pursuing the overall policy changes thatwere central to its success.

..-- /9

47 ~ ~~~~ /2 9 -, /: 9^7A

- 19 - ANNEX 1

THAILAND



Compliance with Major Loan Covenants

Section Covenant Status

3.05 (a) Analysis of financial losses on Done,.uneconomic branch lines%

(b) Forward review by NESDB of Summary of review and recom-uneconomic branch lines4 mendations sent to Bank.

(c) Prompt reimbursement by guarantor Done.of losses on uneconomic branchlines,

3.06 Carry out profitability study of Study done, but not reviewedservices, submit to Bank for with Bank.review, and promptly implementagreed measures.

4.02 Submit Action Plan to achieve Not done.operational targets.

5.02 Auditing, Done.

5.04 Debt limitations Done

5.05 Asset revaluation. Done, but not consideredsatisfactory by Bank.

5.06 (a) Rate of return. Not achieved.

(b) Review of tariffs in FY79. Done.

(c) Annual review of tariffs. Not done.

5.07 Restriction on investment outside Generally adhered to.plan.

- 21 -Table 1

THAILAND



Physical Progress on Project

QuantitiesProject Items Appraisai ActuIl/a Remarks

Passenger cars - 2nd Class 20 20Passenger cars - 3rd Class 75 80 Includes 9 cars carried over in FY78

- Guards vans 19 19Freight cars - Oil tank 30 25

- Hoppers 73 74- Box cars - 50 Carried over from FY78

Diesel locomotives 30 30Rail Renewal - new 80 lb rail 416 km 416 km

- Recond. 70 lb rail. 40 km 40 km- Recond. 60 lb rail 193 km 72 km

Welding rail joints 270 km 270 kmConcrete sleepers - monoblock 125,000 125,000 Completion Jan. 1984

- two-block 150,000 150,000Bridge Rebuilding - wooden:

no. 118 120spans 533 596

Bridge Rebuilding - steel:no. 60 35

spans 75 46Track maint. equip. - motor trolleys 7 5 }

- trailers 18 1 }- ballast machines - 6 } Shipped Oct/Nov 1983- Track recording car - 1 I

Telecom. equip. - teleprinter sets 51 51- 500 line exchange 1 1- 12 channel carrier 22 sets 21

Signalling equipment - full mechanical 15 stns. 5- tokenless/color 30 stns. 33

Workshop equip. - brake block mfg 1 set I- O/H crane 2 No. 2- other items 23 No. 23

Miscellaneous - siding extensions 17 17- crossing barriers 31 31- staff quarters 26 26

La Precise figures not provided by SRT. These are derived from supervision reports andother data in Bank files.

- 22 -

Table 2

TRAILAND

FIFTr RAILWAY PROJECT (LOAN 1662-TR)


Appraisal Forecast and Final Project Costs

Actual cost Appraisal cost estimateLocal Foreign Total Local Forelg Tota

B million US$'000 US$'000 B million US$'O 00 lus$oon

Motive Power and Rollingt StockDiesel locomotives and spares 76.5 32,938 36,266 127.8 32,696 38,944Passenger cars 164.2 5,726 12,864 97.8 5,720 10,503Freight c..rs 96.8 729 4,937 18.6 1,924 2,833

Subtotal 337.5 39,393 54,067 244.2 40,340 52,280

Track RehabilitationRail replacement, renewal andwelding 50.6 12,396 14,637 112.9 11,503 17,020

Concrete sleeper procurementand laying 86.2 4,340 8,404 41.3 3,825 5,848

Bridge rehabilitation 131.7 908 6,635 162.8 1,207 9,164Equipment for track maintenance - 2,932 2,932 10.9 - 534

Subtotal 268.5 20,576 32,608 327.9 16,535 32,566

Telecommunication and SignallingImprovement

Telecommunication 10.8 1,640 2,111 0.6 3,699 3,730Signalling 38.9 1,023 2,710 24.3 987 2,175

Subtotal 49.7 2.663 4.821 24.9 4,686 5.905

Workshop ImprovementMakkasan and District workshops 29.8 1,121 2,418 40.7 1,760 3.749

Other ItemsSidings, crossing barriers,staff housing, offices, etc. 107.6 - 4,677 130.3 - 6,375

Total cost 793.1 63,753 98,591 768.0 63,322 100,875

TAILAND



SRT Passenger Traffic, 1977-83 (Actuals and Forecast)

Passengers (million) Passenger-km (million)Class 1-2 Class 3 Total Class 1-2 Class 3 Total

Fore- Fore- Fore- Fore- Fore- Fore-cast Actual cast Actual cast Actual cast Actual cast Actual cast Actual

1977 1.3 1.1 56.9 56.9 58.2 58.0 600 621 5,065 5,049 5,686 5,648

1978 1.2 1.2 57.9 57.8 59.1 59.0 650 703 5,450 5,336 6,100 6,039

1979 1.3 1.3 60.5 63.1 61.8 64.4 675 841 5,700 6,188 6,375 7,029

1980 1.3 1.7 62.3 72.6 63.6 74.3 700 1,087 5,870 7,774 6,570 8,861

1981 1.3 1.7 64.2 77.1 65.5 78.8 720 1,116 6,040 8,367 6,760 9,483

1982 - 1.7 - 78.6 83.9 80.3 - 1,058 - 8,173 10,423 9,231

1983 - 1.8 - 79.6 83.9 81.4 - 1,109 - 8,590 9,731 9,699

Note: Forecast for 1978-81 from Staff Appraial Report dated December 1978. Forecast for 1982-83 fromannual budget.

14

0

TUAILAND

FIFTH 8AIIUAY PROJECT (LOAN 166&-TH)


SRT Freight Traffic (CL) by Commodities for 1977-83 (Actuals and Forecast)('000 tons)

1977 1978 1979 1980 1981 1982 1983Fore- Fore- Fore- Fore- Fore- Fore- Fore-cast Actual cast Actual cast Actual cast Actual cast Actual cast Actual cast Actual

Petroleum products 1,267 1,324 1,337 1,430 1,452 1,483 1,542 1,378 1,657 1,434 1,570 1,539 1,595 1,450Crude oil - - - - - - - - - - - - 285 213Cement 1,444 1,456 1,465 1,622 1,784 1,829 1,847 1,614 2,578 1,598 1,638 1,551 1,835 1,462Marl 530 551 553 592 SOO 555 500 565 500 533 60 57 - -Gypsum 160 153 242 263 258 313 267 351 309 363 380 325 400 273Lignite 80 - 15 - - - - - - - - - - -Manganese 50 - 53 - 50 - 50 - 50 - - - - -Fluorspar 100 94 97 94 120 36 120 34 120 32 20 3 20 1Barite 13 12 9 11 13 127 13 89 13 68 80 54 80 23Metalwares 32 - 23 - 36 - 38 - 40 - - - - -Vehicles and parts 17 17 13 13 19 16 20 16 21 12 12 8 12 6Construction materials 86 67 48 52 101 48 109 114 118 112 125 140 150 29Housebold effects 44 39 38 40 48 35 49 38 50 38 30 33 30 21Beverages 23 23 44 50 28 53 31 52 34 47 40 39 40 49Sugar 75 75 85 89 86 65 92 49 98 36 50 39 50 73Rice products 650 569 328 347 563 398 580 506 597 451 490 425 490 367Maize 200 192 104 121 215 132 230 270 245 265 320 330 320 206Lumber and logs 340 369 226 253 240 206 250 198 250 176 115 110 120 112Jute and kenaf 20 - 7 - 20 - 20 - 20 - - - - -Rubber 70 80 73 80 80 62 85 56 90 64 80 88 80 146Coconuts 60 53 49 46 66 _ 49 69 69 72 74 70 65 70 82Garden products 58 54 41 42 64 27 67 14 70 10 10 11 10 8Nuts 17 33 28 31 '9 33 20 33 21 45 45 31 45 22Charcoal 35 - 35 - 35 - 35 - 35 - - - - -Salt 50 48 38 41 56 40 59 66 62 39 30 13 35 4Fertiltzer 50 42 48 51 55 44 55 21 55 18 25 2 30) 3Fish products 53 53 50 52 57 36 59 36 61 31 20 10 25 15Livestock 30 41 47 50 30 41 30 33 30 19 21 21 23 28Military effects 80 63 57 58 93 87 96 69 99 64 65 58 70 62Freight forwarder's goods 253 255 189 206 279 242 293 165 308 205 215 165 215 171Containers - - - 15 - 28 - 61 - 51 55 36 60 63Miscellaneous 248 512 294 512 273 462 287 404 301 336 344 514 350 409

Total 6,135 6,142 5,630 6,161 6,640 6,447 6,940 6,301 7,904 6,121 5,910 5,667 6i440 5,298

Note: Forecast for 1978-81 from Staff Appraisal Report. Forecast for 1982-83 from annual budget.

THAILAND



SRT Freight Traffic (CL) by Commodities. 1977-83 (Actuals and Forecast)(Million ton-kam)

1977 1978 1979 1980 1981 1982 1983Forecast Actual Forecast Actual Forecast Actual Forecast Actual Forecast Actual Forecast Actual Forecast Actual

Petroleum products 616.1 646.8 655.2 708.5 732.2 738.8 779.n 682.0 931.0 690.6 758.3 718.1 770.4 715.5Crude oil - - - - - - - - - - 110.0 82.2Cement 320.9 326.2 295.9 332.7 410.1 371.0 434.1 325.8 445.5 326.0 360.1 289.4 412.7 278.6Marl 58.3 58.8 61.1 66.0 55.0 62.3 55.0 62.6 55.0 57.9 6.5 7.9 - -Gypsum 38.4 38.7 60.7 66.2 61.9 80.2 64.1 93.2 75.2 94.8 101.0 78.0 106.4 69.6Lignite 48.9 - 8.9 - - - - - - - - - -Manganese 37.0 - 40.7 - 37.0 - 37.0 - 37.0 - - - - -Fluorspar 73.5 69.1 63.1 68.1 88.2 27.1 88.2 26.0 88.2 24.9 15.0 2.1 15.0 1.0Barite 8.2 6.5 5.5 6.2 8.1 64.1 8.2 42.5 8.2 32.2 37.8 25.9 37.8 13.2Metalwares 20.6 - 21.6 - 23.2 - 24.5 - 25.8 - - - -Vehicles and parts 11.3 12.5 9.5 9.8 12.6 12.1 13.3 12.0 14.0 9.3 9.6 6.9 9.6 4.8Construction materials 47.3 40.4 32.0 35.6 55.6 31.5 60.0 39.9 64.9 33.0 37.7 27.9 45.3 23.0Household effects 32.6 29.0 25.1 25.8 35.5 23.0 36.3 23.4 37.0 23.2 16.5 19.0 18.5 13.8Beverages 18.4 19.6 31.4 35.5 22.4 37.8 24.8 36.4 27.2 33.9 28.2 27.5 28.2 33.3Sugar 60.0 59.6 71.6 74.5 68.8 60.5 73.6 40.4 78.4 27.9 37.5 25.0 37.6 32.7Rice products 494.0 428.5 258.1 272.9 427.9 303.1 440.8 387.4 453.7 328.4 356.7 330.2 356.7 318.1Maize 152.0 157.0 106.4 127.2 163.4 133.1 174.8 289.5 186.2 230.3 275.5 308.6 275.5 218.8Lumber and logs 199.6 216.9 136.3 154.4 140.9 144.0 146.8 141.0 146.8 129.9 85.0 71.4 88.7 76.0Jute and kenaf 9.3 - 3.4 - 9.3 - 9.3 - 9.3 - - - -Rubber 26.6 31.0 28.6 32.1 32.0 28.8 34.0 31.0 36.0 36.6 44.8 64.1 44.8 115.8Coconuts 49.8 44.1 34.9 37.6 54.8 40.1 57.3 57.7 59.8 63.8 62.5 52.2 62.5 64.2Garden products 57.4 52.4 41.4 43.5 63.4 27.3 66.3 15.4 69.3 10.3 9.5 9.6 9.5 7.6Nuts 17.3 29.7 26.2 29.4 19.4 35.7 20.4 34.3 21.4 45.3 45.6 33.5 45.6 26.0Charcoal 15.4 - 15.5 - 15.4 - 15.4 - 15.4 - - - -Salp 67.0 35.3 27.2 29.6 41.4 29.3 43.7 51.8 45.9 29.6 22.1 10.4 26.7 2.8Fertilizer 25.5 21.0 29.0 30.6 28.1 33.1 28.1 16.6 28.1 15.3 21.3 1.8 25.6 2.5Fish products 40.3 38.2 34.6 34.4 43.8 26.2 44.8 32.1 46.4 3.8 19.7 11.1 24.6 18.7Livestock 9.6 13.2 15.9 16.4 9.6 16.0 9.6 12.6 9.6 8.0 9.0 7.8 9.9 10.6Military effects 32.0 27.1 24.9 25.2 37.2 37.7 38.4 27.6 39.6 25.7 26.1 23.6 28.1 24.5Freight forwarder's goods 197.3 198.3 160.3 174.0 21;.6 209.4 228.5 144.5 240.2 180.2 188.1 150.0 188.1 156.6Containers - - - 11.2 - 17.8 - 34.5 - 36.7 39.0 24.1 42.6 42.8Miscellaneous 171.1 312.1 206.6 343.0 118.4 307.8 198.0 281.8 207.7 207.9 212.6 194.0 216.3 147.6

Total 2,925.7 2,912.( 2,531.5 2,790.4 3,103.2 2,897.8 3,254.1 2,942.0 3,502.6 2,732.1 2,827.7 2,520.1 3,329.1 2,500.3

Note: Forecast for 1978-81 from Staff Appraisal Report. Forecast for 1982-83 from annual budget.

CL - Full car load traffic.

- 26 -

Table 6

THAILAND



Operational Performance Compared with Targets

Actuals Targets Actuals1977 1979 1980 1981 1979 1980 1981 1982 1983

Average availability (g)1,800 hp main line diesellocomotives 82 83 85 85 79 83 85 1

Other main line diesel } 85 83locomotives 81 82 83 83 78 74 84 }

Diesel rail cars 93 90/a 91/a 93 92 89 86 86 89Passenger cars 87 90 91 93 89 89 90 88 89Freight irs (box & tank cars) 92 93 94 95 90 89 91 92 97

Net ton-km p.a. of availableavailable 1,800 hp freightlocomotive (mln) 65 65 65 65 n.a. n.a. n.a.

Loco-km p.a. per availablelocomotive ('000)Freight service 132 136 140 144 128 115 130Passenger service 242 245 245 245 260 284 270

Net ton-km per train-km,1,800 hp locomotive 400 410 416 422 319 355 348

Passenger car-km per availablepassenger car p.a. ('000) 172 195 200 204 195 174 196

Net ton-km per serviceable boxcar avialable (4-wheeledequivalent) p.a. ('000) 395 405 415 424 n.a. 375 n.a.

Net ton-km per serviceable oiltank car avaialablep.a. ('000) 680 710 750 795 n.a. 655 n.a.

Turnaround of freightcars (days) 7.3 7.1 6.8 6.5 5.4 6.0 6.4 ..

/a Overdue heavy overhauls was to be carried out in 1979-80 with an average of three setsalways under repair; consequently, railcar availability was expected to decrease in thisperiod.

- 27 -Table 7

THAILAND



SRT Income Statements, 1979-83/a(B million)

1979 1980 1981 1982 1983Fore- Fore- Fore- Fore-cast Actual cast Actual cast Actual cast Actual Actual

Operating RevenuePassenger 942 1,041 1,110 1,287 1,216 1,546 1,306 1,826 1,964Freight 728 692 869 813 1,011 881 1,100 1,048 969Other 110 134 120 136 125 161 130 197 221

Total Operating Revenues 1,780 1,867 2,119 2,236 2,352 2,588 2,536 3,071 3,154

Operating ExpensesSalaries and wages 920 1,016 994 1,235 1,073 1,391 1,159 1,609 1,788Fuel 255 290 286 607 324 680 362 715 709Materials and other 390 428 442 513 495 727 547 835 793

Total Working Expenses 1,565 1,734 1,722 2,356 1,892 2,798 2,068 3,159 3,290

Depreciation 188 171 209 171 221 202 228 213 214

Total Operating Expenses 1,753 1,905 1,931 2,527 2,113 3,000 2,296 3,372 3,504

Operating surplus (deficit) 27 (38) 188 (291) 239 (412) 240 (301) (350)Interest on long-term debt 82 71 90 75 96 77 92 97 111

Other Income 15 36 11 85 12 8 20 15 22Income from continuingoperations (40) (73) 109 (281) 155 (481) 168 (383) (439)

Foreign exchange adjustment - (25) - 17 - 136 - 148 45Sale of Assets - I - 5 - 0 - 13 12

Net Profit (loss) (40) (97) 109 (259) 155 (345) 168 (222) (382)

RatiosOperating 98 102 91 113 90 116 91 111 111Times Interest earned 0.3 (0.5) 2.1 (3.9) 2.5 (5.4) 2.6 (3.1) (3.2)

/a As per audited accounts.

- 28 -Table 8

THAILAND



SRT Balance Sheets, 1979-83/a(B million)

1979 1980 1981 1982 1983Fore- Fore- Fore- Fore-cast Actual cast Actual cast Actual cast Actual Actual

ASSETSCurrent AssetsCash and short-term deposits 130 319 143 167 215 56 321 41 454Accounts receivable 146 230 178 198 202 207 220 228 210Inventory 702 640 751 694 792 880 821 1,010 930

Total Current Assets 978 1,189 1,072 1,059 1,209 1,143 1,362 1,279 1,594

Fixed AssetsGross value 9,596 9,002 10,292 9,477 10,521 10,393 10,721 11,207 12,368Less: Accumulated depreciation 2,176 2,088 2,385 2,253 2,606 2,432 2,834 2,610 2,799Net fixed assets in operation 7,420 6,914 7,907 7,224 7,915 7,961 7,887 8,597 9,569

Work in progress 116 54 87 16 87 11 87 10 8

Total Fixed Assets 7,536 6,968 7,994 7,240 8,002 7,972 7,974 8,607 9,577

Investments of special funds 887 915 919 979 951 1,013 983 1,135 1,192

Other assets and deferred charges 87 526 87 389 87 134 87 136 292

TOTAL ASSETS 9,488 9,598 10,072 9,667 10,249 10,262 10,406 11,157 12,655

LIABILITIES AND EQUITYCurrent portion of long-term debt 74 129 72 151 72 93 50 81 96Accounts payable 188 206 207 244 227 515 248 792 643Short-term loans - - - - - - - 81 100Bank overdraft - - - - - 142 - 252 237

Total Current Liabilities 262 335 279 395 299 750 298 1,125 1,076

Long-term debt 1,444 1,506 1,677 1,394 1,625 1,458 1,558 1,237 1,253

Reserves 829 1,185 859 1,288 913 1,360 970 1,555 1,543

Other liabilities 163 387 163 454 163 438 163 552 1,605

EquityGovernment capital 6,766 5,889 6,961 6,052 6,961 6,377 6,961 6,933 7,547Retained income (loss) 24 295 133 84 288 (121) 456 (246) (369)

Total Equity 6,790 6,184 7,094 6,136 7,249 6,256 7,417 6,687 7,178

TOTAL LIABILITIES AND EQUITY 9,488 9,598 10,072 9,667 10,249 10,262 10,406 11,157 12,655

Ratios:Liquid 1.1 1.6 1.2 0.9 1.4 0.4 1.8 0.2 0.6Current 3.7 3.5 3.8 2.6 4.0 1.5 4.6 1.1 1.5Debt/equity 17/83 20/80 19/81 18/82 18/82 21/79 17/83 21/79 18/82

/a As per audited accounts.

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