AFRICAN DEVELOPMENT FUND

UNITED REPUBLIC OF TANZANIA

TANZANIA RAILWAY CORPORATION REHABILITATION PROJECT
PROJECT COMPLETION REPORT

INFRASTRUCTURE DEPARTMENT
NORTH, SOUTH & EAST REGIONS

ONIN
JULY 2003

TABLE OF CONTENTS
Page No.
Project Log-Frame
Basic Project Data
Executive Summary
1.

INTRODUCTION

2.

PROJECT OBJECTIVE AND FORMULATION

2.1
2.2
2.3

2
2
2

3.

4.

5.

Project Objective
Description of the ADF Component
Formulation, Evaluation and Approval

PROJECT EXECUTION

3.1
3.2
3.3
3.4
3.5
3.6

2
3
3
4
4
5

Effectiveness and Start-up

Modifications and Technical Issues
Implementation Schedule
Reporting
Procurement
Financial Sources and Disbursement

PROJECT PERFORMANCE AND RESULTS

4.1
4.2
4.3
4.4
4.5
4.6
4.7

7
7
7
8
8
9
10

Overall Assessment
Operating Results
Institutional Performance
Performance of Suppliers and Consultant
Conditions/Covenants
Financial Performance
Economic Performance

SOCIAL AND ENVIRONMENTAL SUSTAINABILITY

11

5.1
5.2

11
12

Social Impact
Environmental Impact

6.

PROJECT SUSTAINABILITY

12

7.

PERFORMANCE OF THE BANK AND TRC

13

7.1
7.2

13
13

Performance of the Bank

Performance of TRC

8.

OVERALL PERFORMANCE AND RATING

14

9.

CONCLUSIONS, LESSONS AND RECOMMENDATIONS

14

9.1
9.2
9.3

14
14
15

Conclusions
Lessons learned
Recommendations

This Report was prepared by Messrs B. KAYONGO, Principal Financial Analyst, (Ext. 2481),
and DAWIT GEBREMEDHIN, Transport Economist, (Consultant ONIN 3), following their
mission to Tanzania, from February 18th to February 27th 2003 and was coordinated by Mr. E.
K YAMOAH, Chief Transport Engineer, ONIN 3 (Ext. 2438). Dr. FY ADDO - ABEDI,
Transport Engineer, (Consultant ONIN.3) also contributed to the report. Any inquiries relating
to this report may be referred to either the authors or to Mr. H. NYAME-MENSAH, Acting
Division Manager, ONIN. 3, (Ext. 2652).

EQUIVALENTS AND ABBREVIATIONS

CURRENCY EQUIVALENTS
PCR
1 UA

T Sh 888.339

Appraisal
347.735

WEIGHTS AND MEASURES

1 tonne (t)
1 kilogramme (kg)
1 metre (m)
1 foot (ft)
1 kilometre (km)
1 square kilometre (km2)
1 hectare (ha) = 0.01 km2

=
=
=
=
=
=
=

2,205 lbs
2.205 lbs
3.281 ft
0.305 m
0.621 mile
0.386 square miles
2.471 acres

FISCAL YEAR
July 1 to June 30
ABBREVIATIONS
ADB
ADF
DRC
EIRR
ERP
EU
FE
GOT
ICB
LC
MOCT
NPV
OPSD
PCR
PPF
QPR
RFP
RRP
SFM
SR
TRC
TAZARA
UA
T Sh

=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=

African Development Bank

African Development Fund
Democratic Republic of Congo
Economic Internal Rate of Return
Emergency Recovery Programme
European Union
Foreign Exchange
Government of Tanzania
International Competitive Bidding
Local Currency
Ministry of Communications and Transport
Net Present Value
Private Sector Department
Project Completion Report
Project Preparation Facility
Quarterly Progress Report
Request For Proposal
Railways Rehabilitation Project
Structural Financial Mechanism
Supervision Report
Tanzania Railways Corporation
Tanzania-Zambia Railway Authority
Bank Unit of Account
Tanzanian Shilling

LIST OF ANNEXES

Annex
No.

Titles

No. of
Pages

1.

Project Location Map

2.

Implementation Schedule (Appraisal vs. Actual)

3.

Yearly Disbursement by Source of Funds

4.

Organization Chart During Appraisal and Project

Implementation

5.

Conditions / Covenants

6.

Extracts of Key Financial Figures from the Financial

Statements of TRC

Calculation of Economic Internal Rate of Return for

Overall Project and Coaches Investment

1
2

Performance Rating Scale and Evaluation Criteria

of Bank Performance and Project Outcome

Recommendations and Follow-up Matrix

10

Sources of Information

11

Borrower's PCR

12

Executing Agency's Comments to the Bank's PCR

TANZANIA
TANZANIA RAILWAY CORPORATION REHABILITATION
PROJECT MATRIX
REVISION DATE:
DESIGN TEAM:

JULY 2003
B. KAYONGO / DAWIT GEBREMEDHIN/ FY ADDO-ABEDI

Narrative Summary (NS)

1 Goal
1.1. The sector goal is to improve the
infrastructural weakness of the Tanzanian
economy by supporting the Emergency
Recovery Programme (ERP)

Verifiable Indicators (VI)

Appraisal (1992)
1.1 Restore financial position
and operational performance
of TRC to its 1970s level

Means of
Verification

PCR (1998)
1.1. TRC was not financially
restored and the operational
performance was low.

1.1
1.2

Annual
Performanc
e Audit
Traffic
Statistics.

Assumptions
(Goal to super goal)
1.1 Other productive
sectors implement the
right
policies
to
stimulate
economic
and
social
development.

.
2 Project Objective
2.1 The main objective of the overall project
is to restore TRCs effective capacity to that
of its installed capacity by eliminating
identified constraints on its ability to be
financially self-sustaining.
2.2 The objective of the ADF component of
the project is to ameliorate transportation
services by improving the availability of
rolling stocks through the rehabilitation of
wagons and passenger coaches and the
upgrading of maintenance facilities.

2.1 Annual freight

performance amounted to
approximately 920,000 tones
in 1991and is expected to
reach 2,160,000 tones / year in
1998.

2.2 The annual passenger has

decreased to 0.57 million by
1998

2.2 The number of passenger

is expected to increase from
1.7 million in 1991 to 3
million in 1998.

3 Outputs
3.1 The proposed project consists of (i)
wagon rehabilitation; (ii) passenger coach
rehabilitation and replacement; and (iii)
upgrading of mechanical workshop and
study.

3.1
The rehabilitation of
1000 wagons by March 1996
to catch up with the backlog of
wagons requiring general
repairs

4 Activities

3.2 Procurement of 27 new

economy (third class) coaches
and rehabilitation of 100
coaches by November 1995
and March 1997 respectively.
3.3
Upgrading
of the
mechanical workshop and the
study by November 1995 and
July 1994 respectively.
Input/Resources

4.1 Wagon & Coach rehabilitation:

. Pre qualification of contractors;
. Preparation of tender documents;
. Issue of tenders, receipt;
. Evaluation and award of contract;
. Commencement and completion;
. Rehabilitation works.
4.2 Procurement of New Coaches:
. Pre qualification of contractors;
. Preparation of tender documents;
. Issue of tenders, receipt;
. Evaluation and award of contract;
. Commencement of fabrication of coaches
to the specifications;
. Inspection of coaches;
. Delivery of finished coaches.
4.3 Upgrading of Mechanical Workshop
. Pre qualification of contractors;
. Preparation of tender documents;
. Issue of tenders, receipt;
. Evaluation and award of contract;
. Delivery, installation and commissioning .
4.4 Workshop modernization Study
. Approval of Short list and Request for
Proposal (RFP) .
. Issue and receipt of RFP
. Evaluation and approval of proposals
. Award of consultancy services.
. Commencement of services.

2.1 Annual freight performance

increased to over 955,000
tonnes by 1998.

4 Input
Million UA
4.1 Wagon rehabilitation
.
3.28
4.2 Coach rehabilitation &
replacement
11.51
4.3 Workshop machinery &
equipment
3.52
4.4 Workshop study
0.24
4.5 Contingencies:
- Physical
1.85
- Price
3.36
23.76
Total
4.6 Overall Project Resources
ADF
21.18
GOT
80.70
CIDA
7.51
EU
29.96
IDA
54.32
Other sources
31.93
Total
225.60
4.7.ADF Part
ADF
21.18
GOT
2.58
Total
23.76
4.8 EIRR: Overall project
.
14.72%
Coach investment
19.4%

2.1Annual
railway
performance
statistics
from
Government of
Tanzania (GOT).
2.2.Traffic
statistics on the
railway network

3.1 1000 wagons have been

rehabilitated by September
1997.
3.2 27 new economy (third
class) coaches have been
procured and only 50 coaches
rehabilitated by December
1997.
3.3 The upgrading of the
mechanical workshop and the
study have been completed by
August 1996 and June 1995
respectively.

3.1.
Quarterly
Progress Reports
(QPR).
3.2
Supervision
Reports (SR).
3.3
Project
Completion Report
(PCR)
3.4 Audit Reports

Project objective to
Goal
2.1
Adequate
Government
commitment for the
successful
implementation of the
ERP.
2.2 Co-financiers and
Donors support the
reform programme.
(Outputs to
Project Objective)
3.1 Neighboring land
locked countries to
use the rail service.
3.2 Local customers of
the
railway
to
continue using the
service

(Activity to Output)
4 Input
Mil. UA
4.1 Wagon rehabilitation 2.88
4.2 Coach rehabilitation &
replacement
10.26
4.3 Workshop machinery &
equipment
2.26
4.4 Workshop study
0.21
Total
15.61

4.5 Overall Project Resources

ADF
14.95
GOT
21.34
CIDA
18.49
EU
22.08
IDA
46.11
Other sources
40.65
Total
163.62
4.6.ADF Part
ADF
14..95
GOT
0.66
Total
15.61
4.8 EIRR: Overall project. 3%
Coach investment (115%)

4.1
Appraisal
estimates
4.2
Quarterly
Progress Reports
4.3 Supervision
Reports
4.4 PCR
4.5 Audit Reports
4.6 Disbursement
Records

4.1All procurement
actions
are
on
schedule.
4.2 Payments for
invoices
are
not
delayed.
4.3 GOTs budget and
timely release of
counterpart
local
funds.
4.4
Effective
supervision by the
Bank
and
the
Executing Agency.

BASIC PROJECT DATA

1.
2.
3.
4.
5.
6.

Country
Project
Loan Number
Borrower
Beneficiary
Executing Agency

:
:
:
:
:
:

A.

Loan Details

1.
2.
3.
4.
5.
6.
7.
8.

Amount (in UA million)

Commitment Charge
Repayment Period
Grace Period
Loan Negotiation Date
Loan Approval Date
Loan signature Date
Date of Entry into Force

B.

Project Data

1.

Project Cost

Item of Cost
Foreign Exchange (FE) Component
Local Currency (LC) Component
Total Cost
2.

Tanzania
Tanzania Railway Corporation Rehabilitation Project
21001500010005
Government of Tanzania
Tanzania Railways Corporation
Tanzania Railways Corporation
Appraisal
:
:
:
:
:
:
:
:

21.18
0.75%
50 Years
10 Years
xxxxx 199x

14.95
0.75%
50 Years
10 Years
xxxx 199x
th
17 December 1992
26th February 1993
16th June 1994

In UA million
As per Appraisal
Estimate
Actual
21.18
14.95
2.58
0.66
23.76
15.61

Source of Finance

Source of
Finance
ADF
GOT
Total

In UA million
As per Appraisal Estimate
F.E.
L.C.
Total
%
F.E.
21.18
21.18
89.1 14.95
2.58
2.58
10.9
21.18
2.58
23.76
100
14.95
Appraisal

3.
4.
5.
6.
1999

Actual

Effective Date of First Disbursement

Effective Date of Last Disbursement
Commencement of Project
Completion of Project

:
: 31st December 1999
: November 1993
: 31st March 1997

Actual
L.C.
Total
14.95
0.66
0.66
0.66
15.61

%
95.8
4.2
100

Actual
8th July 1994
5th July 1999
16th June 1994
31st
December

ii

C.

Performance Indicators

1.
2.

Cost under utilization

Time Overrun
*
Slippage on Effectiveness (%)
*
Slippage on Completion Date (%)
*
Slippage on Last Disbursement (%)
*
Number of Extensions of Loan Validity Period
Project Implementation Status
List of Verifiable Indicators and Levels of Achievement

3.
4.

: (34.3%)
: 33 months
: 50.0%
: 65.0%
: None
: None
: Completed
:
Score

1.
2.
3.
4.
5.
5.

Evaluation Criterion
Time Overruns
Cost Under utilization
Adherence to Contractual Conditions
Adequacy of Supervision and Reports
Operational Performance
Total Score

Actual
2.0
1.0
2.5
3.0
1.0
9.5

Implementation Performance
*
*
*

6.

Maximum
4
4
4
4
4
20

Institutional Performance
Suppliers Performance
Consultants Performance

: 1.8
: 2.0
: 2.8

Economic Internal Rate of Return (EIRR):

Appraisal : 14.72% for the overall project and 19.42% for coaches
Actual
: 3.0% for the overall project and (115.0%) for coaches

D. Missions*
Project Cycle
1. Identification
2. Preparation
3. Appraisal
4. Supervision

5.PCR

M/Y
N/A
N/A
06/92
xx/95
Oct/96
Nov/97
Dec/97
02/03

Numbers of
Persons

Composition

Man Days

T.E, C.E, T.En

56

1
1
2
3

T. En
F.A
M
F.A,T.En, T.E

2
32
14
36

M Management; C.E. Civil Engineer; F.A. Financial Analyst; T.E - Transport Economist; T. En - Transport
Engineer

The Mission information includes mainly the activities after October 1996.

iii

E.

ADF Loan Bank Disbursements (UA million)

Year
1993
1994
1995
1996
1997
1998
1999
Total
Undisbursed
Balance
Loan Saving

As at Appraisal
Amount
Cum.(%)
10.6%
2.25
53.8%
9.14
90.8%
7.84
98.5%
1.64
100.0%
0.31
21.18

100.0

Actual
Amount

Cum.(%)

2.12
4.36
1.83
4.68
1.94
0.02
14.95

14.2%
43.3%
55.6%
86.9%
99.9%
100.0%
100.0

6.23
6.23

CONTRACTOR

F.

1)

Name
Contract Description
Date Contract Signed
Date Contract Terminated
Contract Duration
Amount (UA Million)

2)

Name
Contract Description

: M/s Henschel Export

: Supply of spare parts and materials for the
rehabilitation of 1000 wagons (partial)
: 18th February 1994
: September 1997
: 43 months
: UA 0.469 million

Date Contract Signed

Date Contract Terminated
Contract Duration
Amount (UA Million)

: M/s ZECO Ltd.

: Supply of spare parts and materials for the
rehabilitation of 1000 wagons (partial)
: 18th February 1994
: September 1997
: 43 months
: UA 2.425 million

3)

Name
Contract Description
Date Contract Signed
Date Contract Terminated
Contract Duration
Amount (UA Million)

: M/s ABB Transportation Ltd..

: Rehabilitation of 79 coaches
: 14th January 1994
: December 1997
: 47 months
: UA 3.715 million

4)

Name
Contract Description
Date Contract Signed
Date Contract Terminated
Contract Duration
Amount (UA Million)

: M/s Bhart Earth Movers Ltd.

: Supply of 27 new coaches
: 26th January 1996
: December 1997
: 23 months
: UA 5.529 million

iv

5)

Name
Contract Description
(partial)
Date Contract Signed
Date Contract Terminated
Contract Duration
Amount (UA Million)

6)

Name
Contract Description
(partial)
Date Contract Signed
Date Contract Terminated
Contract Duration
Amount (UA Million)
7)

Name
Contract Description
(partial)
Date Contract Signed
Date Contract Terminated
Contract Duration
Amount (UA Million)
G.

: M/s Jos Hansen & Soenhe

: Supply of Workshop Machinery & Equipment
:
:
:
:

18th February 1994

August 1996
30 months
UA 2.1 million

: M/s Gemco Engineers

: Supply of Workshop Machinery & Equipment
:
:
:
:

4th March 1994

August 1996
29 months
UA 0.004 million

: M/s Kennedy International

: Supply of Workshop Machinery & Equipment
:
:
:
:

23rd March 1994

August 1996
29 months
UA 0.117 million

:
:
:
:
:
:

M/s CANARAIL
Workshop Modernization Study
15th July 1994
June 1995
11 months
UA 0.17 million

CONSULTANT
Name
Contract Description
Date Contract Signed
Date Contract Terminated
Contract Duration
Amount (UA Million)

EXECUTIVE SUMMARY
1.

INTRODUCTION

1.1. In accordance with the Government of Tanzania (GOT) s overall strategy to shore up
and improve the infrastructural weakness of the Tanzania economy, especially the inadequacy of
its domestic road and rail network, GOT requested the African Development Bank (ADB) to
part finance the restructuring and rehabilitation of the Tanzania Railways Corporation (TRC) in
August 1991. The Railways Rehabilitation Project (RRP) covered all sectors of rail operations
in TRC and was a follow up of the Emergency Recovery Programme (ERP) undertaken by TRC
in 1987. The ERP was a response to the decline in traffic moved by TRC as a result of
operational problems that led to the decline in its effective haul capacity and failure to serve the
central/northern parts of Tanzania, as well as the transit traffic to and from Burundi, Rwanda,
Democratic Republic of Congo (DRC) and Uganda.
1.2. The component of the African Development Fund (ADF) was appraised in June 1992 by
a team of four experts consisting of a transport economist, financial analyst and two civil
engineers. The loan conditions were negotiated and there were no issues of disagreement raised
by the Bank or the Borrower concerning the project. The loan was approved by the Bank on 17th
December 1992 and was signed on 26th February 1993 for an amount of Bank Unit of Account
(UA) 21.18 million.
1.3. This Project Completion Report (PCR) is based on the appraisal report, project files in
the Bank, Borrowers reports and PCR, interviews and site inspection conducted during an ADF
mission to Tanzania in February 2003. The Borrower's PCR is on the file with ONIN 3.
Project Objective and Description
1.4.
The main objective of the overall project was to restore TRCs effective capacity to that
of its installed capacity by eliminating identified constraints on its ability to be financially selfsustaining. The main objective of the ADF component of the project was to ameliorate
transportation services by improving the availability of rolling stocks through the rehabilitation
of wagons and passenger coaches and the upgrading of maintenance facilities. The proposed
project for ADF assistance consisted of wagon rehabilitation; passenger coach rehabilitation and
replacement; upgrading of mechanical workshop and study.
Project Execution
1.5. The GOT has fulfilled the seven conditions precedent to entry into force of the loan
agreement, namely concluding a subsidiary loan agreement for on lending the entire proceeds
of the loan to TRC; assignment of qualified project coordinator; appointment of a new Board
of Directors; implementation of real tariffs; maintaining its account receivable at a level no
greater than 45 days; provision of undertaking to re-evaluate TRCs asset; and ensure to
maintain a 60/40 debt equity ratio. On the other hand, of the seven Other Conditions prior
to entry into force of the loan agreement, the borrower has met all, except condition V that
requires TRC to submit a programme to the Fund to construct fences at village/town level
crossing so as to minimize the danger of accidents. Instead the borrower opted to the
construction of watchmen hut, level crossing signs, introduction of road strips and humps on the
road. In the course of the project implementation, even though it was planned to rehabilitate 100
coaches, only 50 coaches had been rehabilitated due to the contractor underestimation of the
spare parts requirement and delay in the implementation of the project.

vi

Implementation Schedule
1.6. The project was scheduled for completion from November 1993 to March 1997 (40
months), but was actually implemented between June 1994 and December 1999 (66 months).
Hence, the project was completed in about 7.5 years after appraisal. The project was
implemented by 8 contracts and there were problems that had to be resolved during the
implementation that accounted for part of the slippage.
Project Costs
1.7. In 1992 at appraisal, the project was estimated to cost UA 23.76 million of which, UA
2.58 million was local cost. During the execution, the coach rehabilitation of the project was
reduced to 50 (instead of 100). Thus, the actual project cost has reached only UA15.61 million,
UA 14.95 million in foreign exchange (FE) and UA 0.66 million in local currency (LC) in 1998.
Financial Resources
1.8. The project was jointly financed by ADF and GOT. The actual counterpart fund has
decreased from UA 2.58 million at appraisal to UA 0.66 million due to the under utilization of
the fund (mentioned above under 1.7) and delay in the contribution by GOT in the course of the
project implementation. This decrease shows GOTs actual contribution of only 25.6% of the
original estimate.
Overall Assessment
1.9. The overall project financing and activities were redirected from 1998 to 2002 towards
sustaining TRC operations and performance during the transition period into concessioning. The
ADF part of the project, even though completed after a slippage of 33 months (March 1997 at
appraisal and actual December 1999) and overall cost under utilization of 34.3%, most of the
objectives have been met except the rehabilitation of only 50 coaches. Initially, the tender was
floated to rehabilitate 100 coaches. During bid opening, it was learnt that the allotted budget
could be sufficient for the rehabilitation of 79 coaches. The project was delayed due to the late
delivery of material, spare parts and manpower. It has also faced underestimation and poor initial
survey of the required spare parts. Thus there was excessive amount of spare parts that could not
be used for full rehabilitation and only 50 coaches were rehabilitated. The Bank did not accept
the borrowers request for more funds to procure additional materials and spare parts for the
completion of the rehabilitation of the remaining coaches. The Bank gave the reason that the
additional request could increase the original contract sum by almost 30 per cent and was
difficult to determine the balances under the loan at the request stage of TRC.
1.10. The Bank has stopped participating in the donors joint supervision mission beginning
1998. Thus the Bank could not follow up the development in TRC and did not participate in the
concessioning process of TRC.
1.11. In consideration of performance rating based on time, cost, adherence to the contractual
condition and adequacy of supervision and reporting, the overall project execution was
satisfactory. Except the Final Audit Reports, the Government had submitted the other reports.
GOT has not yet submitted the Final Audit Report even though promised to the PCR Mission to
forward to the Bank by 31st May 2003.

vii
Economic Performance
1.12. The traffic projection at appraisal has been revised taking into account the actual freight
and passenger traffic performance of TRC up to 2002. At appraisal, the freight traffic has been
assumed to increase by 134% while the passenger traffic by 75% between 1992 and 1998 and
then maintain the 1998 level for the remaining twenty years of the project life. But when
comparing the actual performance of 1992 up to 2002 with that of the targeted plan, the actual
performance on the average have decreased by an average of 32% for freight and 62% for
passenger transport services. The actual project costs as well as the benefits emanating from the
revised traffic forecasts formed the basis for re-evaluation of the EIRR. The recalculated EIRR
are 3% and (115%) for the overall project and coaches investments respectively (Annex 7).
These compared with 14.72 % and 19.42% for the overall project and the coaches investment
respectively at appraisal in 1992 are very low, below the 12 % opportunity cost of capital in
Tanzania. The main reason for this variation is due to the poor performance of both the freight
and passenger transport services and over optimism at appraisal.
Conclusions
1.13. The project achieved some of the objectives like management autonomy, concentration
in managing the core commercial railway activity, introduction of commercialization,
improvement in operational management, financial control and improvement in the
infrastructure. However, the overall objectives of the project have not been substantially
achieved. On the other hand, the project has improved the freight and passenger transport
services provided by TRC, and has served the transit traffic to and from Burundi, Rwanda, DRC
and Uganda.
1.14. The performance of the seven suppliers and the consultant in general was satisfactory
while that of the Borrower was not satisfactory. The Bank and the overall assessment of
implementation were found to be satisfactory with a rating of 2.0 out of 4 (maximum).
1.15. The overall project would have failed to achieve its objective had it not been for the
GOTs decision to concession TRC and the donors continuous support after 1998.
1.16. The final project completion cost indicates a cost under utilization of UA 8.15 million
(34.3%) relative to the appraisal estimate and a balance of UA 6.23 million under the ADF
loan, was cancelled because of poor utilization of the fund on time.
1.17. The project has helped TRC to operate an annual average tonnage of 1.19 million and
0.97 million passenger between 1992 and 2002. Despite the investment made, TRCs financial
position has not significantly improved and is unable to sustain itself. It is against this
background that the project concept has been changed from simply a rehabilitation project to
a project that is supporting the concession of TRC to ensure that its profitability is adequate to
meet its maintenance and replacement targets.
Lessons Learned
i. Rehabilitation projects require proper preparation, planning and additional physical
contingencies for spare parts. Due to the uncertainty of required parts during rehabilitation, it
would be safe to have contingency or unallocated fund that could be easily processed with the
consent of the Bank;

viii

ii.
The long-term effect of rehabilitation of very old wagons, coaches and
locomotives requires an in depth investigation / study to determine the pros and cons of
rehabilitation versus buying new. For such study, the borrower could use the Bank's
Project Preparation Facility (PPF);
iii.
The Bank needs to follow up the proper allocation of the counterpart fund by
the Borrower during project implementation in order to maintain the financing plan as
agreed at the initial agreement of the project;
iv.
Regional projects which could be influenced by the political and economical
environment of the region needs to be addressed in regional perspective; and
v.
The Bank needs to follow up the development on its projects by sending
supervision missions even if they are completed. Since the Bank has stopped sending
mission, it did not participate in the concessioning process of TRC.
Recommendations
We recommend as follows:
i.
The Borrower should comply with the loan agreement and submit to the Bank the
Final Audit Report on the project;
ii.
The Bank should continue to monitor TRCs development in general and the
progress on the concession of TRC in particular. GOT also should inform the Bank on its
plan on the concession and the development;
iii.
Review the importance of proper preparation, planning and a component of
additional contingency or unallocated fund, which could immediately be approved by the
Bank for rehabilitation projects that require additional spare part purchase;
iv.
When approached (through the Ministry of Finance), the Bank should consider
providing funding part of the infrastructure facilities of the TRC, including institutional
support where applicable;
v.
OPSD could finance part of the requirements of the private operator that is
expected to be brought into TRC; and
vi.
Review in depth, even with the Banks PPF, the long term advantage of
rehabilitation of very old wagons, coaches and locomotives.

1.

INTRODUCTION

1.1.
The Tanzania transport system consists of five modes of which road is the dominant.
The five modes are (i) a road network of about 115,000 km; (ii) two railway systems totaling
about 3,555 km of track; 2,580 km operated by TRC and 975 km within Tanzania by the
jointly owned Tanzania / Zambia Railway Authority (TAZARA); (iii) an ocean port system
with one dominant and three subsidiary ports and lake ports on Lake Victoria, Tanganyika
and Nyasa; (iv) air transport facilities comprising two international airport and over sixty
smaller airfields; and (v) a pipe line that carries crude oil from Dar es Salaam to Ndola in
Zambia. The Tanzania transport infrastructure also serves as an important transit corridor for
the bilateral trade of Tanzanias land-locked neighbors, namely, Zambia, Burundi, Rwanda,
Uganda, DRC and Malawi.
1.2.
In 1987, GOT invited Transport Sector Donors Conference and presented a draft
National Transport Policy document and a Transport Sector Recovery Programme. The
programme outlined the basic policy, institutional changes and rehabilitation requirements of
the sector in order to reestablish the transport infrastructure and services to cater to the
requirements of the economy. The Bank with other Donors participated in the ERP in 1987.
1.3. The RRP was a follow up of the ERP, in which GOT with the assistance of the World
Bank, including the Bank Group and other six donors were involved. The project covered all
sectors of rail operations in TRC track, locomotives, rolling stock, communications, as well
as substantial support to management and operations through technical assistance and studies.
ADF participated in financing the rehabilitation of 1000 wagons and 50 (initially 100)
coaches, acquisition of 27 new coaches, upgrading of the mechanical engineering workshops
and workshops modernization study.
1.4.
The Bank Group, up to December 2002 had approved 60 loans and 19 grants to
finance 35 projects, 3 industrial lines of credit, 22 studies, 5 policy-based operations and 2
Structural Financial Mechanism (SFM) loans totaling UA 748.74 million in Tanzania.
Transport is the largest recipient of Bank Group financing with a share of approximately
twenty-seven percent. There are currently twenty on going operations in the public utilities,
agriculture, transport, industry, social services and multi-sectoral operations. The Bank at the
moment has five on going transport sector projects, namely, Mutukula Muhutwe Road
Project, Zanzibar Road Studies, El-Nino Road Rehabilitation, Shelui Nzega Road Project
and Road Rehabilitation / Upgrading Project.
1.5.
The RRP component financed by the Bank was appraised in June 1992. The loan
conditions were negotiated and there were no issues of disagreement raised by the Bank or
the Borrower concerning the project. The loan was approved by the Bank on 17th December
1992 and was signed on 26th February 1993 for an amount of UA 21.18 million.
1.6.
This PCR is based on the appraisal report, project files in the Bank, Borrowers
reports and PCR, interviews and site inspection conducted during an ADF mission to
Tanzania in February 2003. The Borrower's PCR is on the file with ONIN 3.

2.

PROJECT OBJECTIVE AND FORMULATION

2.1

Project Objective

2.1.1. The main objective of the overall project was to restore TRCs effective capacity to
that of its installed capacity by eliminating identified constraints on its ability to be
financially self-sustaining. The project consisted of,: (i) rehabilitation of track,
telecommunications systems, locomotives, wagons and coaches; (ii) replacement of obsolete
and unserviceable maintenance equipment, vehicles and coaches; (iii) organizational support
and training to strengthen management systems and staff capacity in all functional areas; and
(iv) support for improvements in the working environment and incentives including
enhanced pensions for the work force.
2.1.2. The main objective of the ADF component of the project was to ameliorate
transportation services by improving the availability of rolling stocks through the
rehabilitation of wagons and passenger coaches and the upgrading of maintenance facilities.
2.2

Description of the ADF Component

The ADF component of the project as designed consisted of: (i) rehabilitation of 1,000
wagon; (ii) rehabilitation of 100 passenger coaches and acquisition of 27 new ones; (iii)
upgrading of the mechanical engineering workshops; and (iv) workshops modernization
study.
2.3

Formulation, Evaluation and Approval

The overall RRP was formulated and prepared by the World Bank and GOT and
supported by seven other donors, inclusive of ADF. The ADF component was appraised in
June 1992 by a team of four experts consisting of a transport economist, a financial analyst
and two civil engineers. The loan conditions were negotiated and there were no issues of
disagreement raised by the Bank or the Borrower concerning the project. The loan was
approved by the ADF on 17th December 1992, and signed on 26th February 1993 for an
amount of UA 21.18 million.
3.

PROJECT EXECUTION

3.1

Effectiveness and Start-up

3.1.1. In accordance with clauses 9.01 and 15.01 of the General Conditions Applicable to Loan
Agreements and Guarantee Agreements of the ADF, there was no slippage after Board approval
for loan signature. The loan became effective on 16th June 1994. There was a slippage of about
10 months from the maximum of 180 days after the date of the loan signature for loan
effectiveness. Overall, there was a slippage of about 6 months before the Bank declared the loan
effective.
3.1.2. The reason for the delay in declaring the loan effective was due to the time spent by the
GOT in meeting the conditions and covenants set prior to entry into force of the loan agreement.

3.2

Modifications and Technical Issues

3.2.1. In the course of the project implementation, two modifications have been observed.
Even though, it was planned and the tender has been floated to rehabilitate 100 coaches, only
50 coaches had been rehabilitated. At the tender opening stage, the allotted budget was
sufficient to rehabilitate only 79 coaches and the contract was awarded accordingly. During
contract execution, the procured spare parts became sufficient for the rehabilitation of only 50
coaches.
3.2.2. The loan condition required TRC to construct fences at village / town level crossings
so as to minimize the danger of accidents. TRC with the consent of the donors has modified
and implemented watchmen hut, level crossing boom on the railway line, strips and humps on
the road. These have been found to be practicable, safe and effective.
3.3

Implementation Schedule

3.3.1. The project was scheduled for completion from November 1993 to March 1997 (40
months), but was actually implemented from June 1994 to December 1999 (66 months).
Hence, the project was completed in about 7.5 years after appraisal.
3.3.2. The project was implemented by eight contracts. There were problems that had to be
resolved during the implementation that accounted for part of the slippage, like delay of delivery
of spare parts, liquidation of the lowest bidder for the supply of coaches and awarding to the
second lowest evaluated bidder. The implementation of each contract is presented hereunder.
3.3.3. The rehabilitation of 1000 wagons contract was awarded to two contractors, namely,
Messrs. Henschel Export of Germany and ZECO Ltd. of Zimbabwe and were signed on 18th
February 1994. Initially the work was scheduled to commence in November 1993 and to be
completed by March 1996. The rehabilitation started late due the delayed arrival of the spare
parts. Even though the work commenced in August 1995, 240 wagons by April 1996, a total
of 934 wagons by March 1997 and a total of 1000 wagons were rehabilitated by September
1997. In view of the fact that the project was scheduled for completion in March 1996 at
appraisal, there was a slippage of 18 months.
3.3.4. The rehabilitation of 100 passenger coaches evaluation and selection was submitted
to the Bank in July 1993 and the Bank gave No Objection in September 1993. The contract
was signed in January 1994 with Messrs. ABB Transportation Ltd. of Germany. Even though
the commencement date of the work was programmed for February 1994, actual date of
commencement / delivery was in January 1995. The contract was delayed because the loan
had not been effective. In addition the contractor mobilization did not proceed well as there
were delays in delivery of material, spare parts and manpower. During bid opening, it was
learnt that the allotted budget would be sufficient only for the rehabilitation of 79 coaches.
But due to the delay of the project implementation and the non-optimal assessment of spare
parts for the rehabilitation, only 50 coaches were rehabilitated. The actual rehabilitation
started in November 1994, coupled with further problem in November 1995 from the
contractor claiming that the conditions of the coaches have deteriorated since the time of the
bidding. TRC refused to accept the contractors claim, as the contractor did the survey of the
condition of the coaches upon which the bid was based. In view of the fact that the
component was scheduled for completion in March 1997 at appraisal, there was a slippage of
9 months since the component was completed in December 1997.

3.3.5 .
The acquisition of 27 new coaches contract was awarded to Messrs. Bhart
Earth Movers Ltd. of India and was signed in January 1996 with a delivery period of 18 months
after opening of Letter of Credit. All the coaches were commissioned in to service by
December 1997, after the first batch of 12 coaches and the remaining 15 were received in
September and November 1997 respectively. There was a delay in the award of the contract
because of the extension of the bid opening; the re-advertisement due to the technical
irregularity during bid opening; and the liquidation of the lowest evaluated bidder. In view of
the fact that the project was scheduled for completion in November 1995 at appraisal, there
was a slippage of 25 months.
3.3.6. The supply of workshop machinery and equipment for upgrading of the mechanical
engineering workshops were awarded to three suppliers, namely Messrs Jos Hansen &
Soenhe of Germany, Gemco Engineers of Germany and Kennedy International of England
and were signed in February and March 1994. The programmed date of commencement of
delivery was November 1994 but was delivered, installed and commissioned in August 1996.
In view of the fact that the project was scheduled for completion in November 1995 at
appraisal, there was a slippage of 9 months.
3.3.7. The workshops modernization study contract was signed with Messrs. CANARAIL of
Canada in July 1994. The study has been finalized in June 1995 with recommendations
acceptable to TRC and ADF. The study recommendation has not been implemented due to
lack of fund. The timely implementation of the recommendation would have improved the
availability of wagons, coaches and rolling stocks. Initially, the works was scheduled for
completion by July 1994 at appraisal and there was a slippage of 11 months.
3.4

Reporting

3.4.1. Pursuant to the provisions of the General Conditions of the loan agreement on
submission of reports, the GOT had submitted quarterly progress reports and the Borrowers
PCR. The reports captured substantially most of the activities on site, and were hence found
satisfactory. On the other hand, GOT has failed to submit the Final Audit Reports for the
project after promising the PCR Mission to submit the Report by 31st of May 2003.
3.5

Procurement

Procurement of Goods and Equipment Contracts

3.5.1. The process of pre-qualification of suppliers for the rehabilitation of 1000 wagons
was carried out through International Competitive Bidding (ICB) in line with ADFs
Guidelines. GOT sent the names of the pre-qualified suppliers to the Bank in March 1993 and
the Bank gave No Objection in April 1993. Bidding document was issued and the suppliers
submitted their offer in June 1993. GOT submitted the evaluation to the Bank in September
1993 and got Banks No Objection in December 1993. Messrs. Henschel Export and ZECO
Ltd. emerged as the lowest bidder and the contracts were signed in February 1994. The
bidding documents were evaluated and processed in accordance with ADFs Rules of
Procedure for Procurement applicable at that time.
3.5.2. The rehabilitation of 100 passenger coaches was also carried out through ICB in line
with the Bank Guidelines. Messer ABB Transportation Ltd. emerged as the lowest bidder

and the contract was signed in January 1994. The contractor managed to rehabilitate only 50
coaches. The Borrower had requested the Bank in October 1996 for the utilization of more
funds to procure additional materials for the completion of the rehabilitation of the remaining
coaches. The Bank did not accept the borrowers request on the ground that the additional
request could increase the original contract sum by almost 30 per cent and was also difficult
to determine the balances under the loan at that stage, and eventually TRC agreed. In addition
due to the non-optimal estimation of spare parts, there were over stock of some spare parts
that could not be used for general rehabilitation.
3.5.3. The process of pre-qualification of suppliers for the purchase of 27 coaches was
carried out through ICB in line with ADF Guidelines. Bid was invited in February 1993 to be
opened in April 1993. The bid was re-advertised in November 1993 due to technical
irregularity during bid opening. The second bids were submitted in December 1993, the
evaluation was completed in February 1994 and approved by the Bank in October 1994. The
contract was signed in January 1996 with Messrs. Bhart Earth Movers Ltd of India because of
the liquidation of the first lowest evaluated bidder. The procurement of 27 new coaches were
completed and commissioned in December 1997.
3.5.4. The supply of workshop machinery and equipment for upgrading of the mechanical
engineering workshop was also carried out through ICB with pre-qualification of suppliers,
selection of the pre qualified and sending bid document to the Bank. Bids were invited in
April 1993, received in June 1993, and evaluation was completed in September 1993. The
Bank gave No Objection in December 1993 for the three suppliers, namely Messrs. Jos
Hansen & Soenhe of Germany, Gemco Engineers of Germany and Kennedy International of
England.
Consultancy Services
3.5.5. The consultant for the workshop modernization study was selected in line with ADFs
Guidelines for the Use of Consultants. The names of the short-listed international consultants
was sent to the Bank in March 1993 and got approval in April 1993. The short listed
consultants were issued with the Letter of Invitation and Terms of Reference and proposals
were received in June 1993. The evaluated technical and financial proposals for the task
were forwarded to the Bank in February 1994 and GOT received the Banks No Objection
in July 1994 to negotiation with Messrs. CANARAIL of Canada. The services contract was
signed in July 1994.
3.6

Financial Sources and Disbursement

Project Costs
3.6.1. In 1992 at appraisal, the project was estimated to cost UA 23.76 million of which, the
foreign exchange (FE) component was UA 21.18 million and the balance of UA 2.58 million
(T Sh 897.17 million) was the local currency (LC) component. The signed contract project
cost was UA 21.18 million, consisting of UA 2.8 million for wagon rehabilitation, UA 10.51
million for coach rehabilitation and replacement, UA 3.08 million for workshop machinery
and equipment, UA 0.19 million for the study and unallocated amount of UA 4.6 million.

Financial Resources
3.6.2. The ADF component of the project was jointly financed by ADF and GOT. The
project completion cost was UA 15.61 million, utilization of only 65.7% of the total allocated
amount. This represents an underutilization of 34.3% of the fund relative to the appraisal
estimate. GOT has used UA 14.95 million from the ADF fund and UA 0.66 million from its
own fund. ADF contributed 95.8% and GOT 4.2% for the project, which shows a change of
the financing plan (ADF contribution increased from 89.1% to 95.8%). The low GOT
contribution would have been captured from the various progress reports. Thus 70.6% and
25.6% of the ADF and GOT sources respectively have been utilized. The final completion
cost indicated a cost under utilization of UA 8.15 million (34.3%) relative to the appraisal
estimate. The under utilization arose mainly due to the failure of using the unallocated
amount of the ADF loan and failure to avail the counterpart fund by GOT. There was an
undisbursed amount of about UA 6.23 million under the ADF loan, which was eventually
cancelled. The expenditure schedule over the implementation period is presented in Table I.
Table 1
Source of
Finance
ADF
GOT
Total

In UA million
As per Appraisal Estimate
F.E.
L.C.
Total
%
F.E.
21.18
21.18
89.1 14.95
2.58
2.58
10.9
21.18
2.58
23.76
100
14.95

Actual
L.C.
Total
14.95
0.66
0.66
0.66
15.61

%
95.8
4.2
100.0

Disbursement
3.6.3. The loan funds were disbursed by direct method to the suppliers and the consultant.
However, the slippage in the implementation schedule has not affected the disbursement
schedules. At appraisal, the disbursement was planned to commence in 1993 but did not
actually start until 12th July 1994 because of delay in loan effectiveness and award of
contract.
In fact, the first disbursement (advance payment) was made for ABB
Transportation Ltd. on 12th of July 1994. Annex 3 presents the comparison between the
appraisal and actual disbursement profiles. The last disbursement by ADF was made on 5th
July 1999.
3.6.4. In the course of the implementation of the project, 140 payments of the project were
effected by the Bank with an average of 17 days. One hundred thirty disbursements (93% of
the total disbursements) were paid with an average of 13 days, ranging from 3 to 30 days.
This implies that disbursement applications were processed within reasonable time and
overall the loan disbursements were generally satisfactory.

4.
4.1

PROJECT PERFORMANCE AND RESULTS

Overall Assessment

4.1.1. The main objective of the ADF component of the project was to ameliorate
transportation services by improving the availability of rolling stocks through the
rehabilitation of wagons and passenger coaches and the upgrading of maintenance facilities.
4.1.2. Overall the objective of the project has not been substantially achieved and there was a
slippage of about 33 months during the project implementation due to various mobilization
delays. The project achieved some of the objectives like management autonomy, concentration
in managing the core commercial railway activity, introduction of commercialization,
improvement in operational management, financial control and improvement in the
infrastructure. GOT decided to concession TRC and thus donors continued supporting TRC after
1998, helped for its operational continuity.
4.1.3. In consideration of performance rating based on time, cost, adherence to the contractual
condition, adequacy of supervision and reporting, the overall project execution was satisfactory.
4.2

Operating Results

Even though TRC has attained only 68% of the freight and 38% of the passenger traffic of
the average target of 1992 to 2002, the implementation of RRP and extended donors support has
helped TRC to continue rendering freight and passenger service in the country and to the
neighboring land locked countries of Rwanda, Burundi, DRC and Uganda. These countries have
also the alternative route, the Northern Corridor (Mombassa Port using Kenyan Railways
Corporation or the road transport). With this competition, TRC has managed to render transit
traffic service of an annual average of 408,026 tonnes from 1992 to 2002. In addition, the
unstable political and economical situations in DRC, Rwanda and Burundi has also effect on the
operational activities of TRC, since the project has regional features.
4.3

Institutional Performance

4.3.1. The project was appraised and implemented under the Ministry of Communications and
Transport (MOCT). There was no change in the Ministry but TRC organizational structure at
appraisal has been changed during implementation (Annex 4). The institutional change was
aimed at developing and implementing a commercial oriented strategy. This structural change
has helped TRC in the implementation of the project. TRC had also a plan to undergo a major
organizational change and drew a program for the period 19911995, aimed at developing a
responsible and accountable management style, with one of the key elements being the zonal
management of the railways at Dar Es Salaam, Tanga and Tabora. The zone was to operate as a
cost / profit centre with its own budget. But TRC did not implement the zonal management of
railways because of the nature of the traffic movement in the country, since almost all freights
originate from Dar Es Salaam.
4.3.2. TRC has reduced the number of staff from 12,393 in 1992 at the start of the project to
8,769 by the end of 2002. TRC recognizes the potential for further reduction to an effective
number of around 5000. This has however been hampered by the issue of severance pay, which
is yet to be effectively tackled.

4.3.3. The project has been executed by TRC, by designating a qualified project coordinator.
TRC had sufficient experience and capacity to execute the project. All technical units of the
TRC are staffed by qualified Tanzanians.
4.4

Performance of Suppliers and Consultant

Suppliers
4.4.1. The performance of the seven suppliers was in general satisfactory despite the following
problems:
(i)

The suppliers of the spare parts and materials for the rehabilitation of 1000
wagons, were delayed due to the late delivery of the spare parts and materials
by the main external supplier;

(ii)

The supplier of spare parts and materials for the rehabilitation of 79 coaches
from the start of the project was not good as the work was delayed by the
supplier in the delivery of material, spare parts and manpower. Only 50 out of
100 coaches were rehabilitated and it was unsatisfactory;

(iii)

The supplier of the rehabilitation of the coaches raised claims due to the nonoptimal and poor initial survey of the required spare parts. There were
excessive amount of spare parts that could be used for partial rehabilitation
instead of full rehabilitation;

(iv)

The supplier of the 27 new coaches performance on technical and contractual

matters was very satisfactory. The supplier has delivered and commissioned
the coaches as per the agreed schedule; and

(v)

The three suppliers selected for the supply of machinery and equipment have
delivered, installed and commissioned the equipment and machinery with 9
months delay.

Consultant
4.4.2. Overall the performance of the consultant was satisfactory in terms of
technical output. All deliverables were delivered on time and the recommendations
were commendable. There were only delays on some critical issues on the part of the
Executive Agency when reviewing the reports.

4.5

Conditions / Covenants

4.5.1. All the seven conditions (Annex 5) that were set prior to entry into force of the
loan agreement have been met by GOT.

4.5.2. The Other Conditions were fulfilled except condition (v) which states not later than
one year of loan effectiveness cause TRC to submit a programme to the Fund to construct fences
at village / town level crossings so as to minimize the danger of accidents. But, almost at the
time of the project completion, TRC with the consent of the donors has modified and
implemented watchmen hut, level crossing boom on the railway line, strips and humps on the
road. These have been found to be practical, safe and effective method.
4.6

Financial Performance

4.6.1. The main objective of the ADF component of the project was to restore TRCs effective
capacity to that of its installed capacity by eliminating identified constraints on its ability to be
financially self sustaining. TRCs financial position has not improved much and there is little
result that the project will be sustainable, as TRC has no financial resources to renew its aged
wagon and coach fleet.
4.6.2. The project achieved a number of objectives, including management autonomy;
concentration in managing the core commercial railway activity; the introduction of
commercialisation; improvement in operational management, financial control and
improvement in the infrastructure. The project has also helped to improve the debt collection,
which has decreased from 172 days in 1991 to 39 days in 2001. On the other hand the
Tanzanian Shilling has been devaluated by over 150% between the appraisal and project
completion period. Up to January 2001, TRC has increased freight tariffs by a compounded
rate of 430 to 640 percent and passenger tariffs by 305 to 420 per cent in nominal terms.
Despite the increase in traffic and the investments made, TRCs overall financial objective of
the project has not been substantially achieved (Annex 6). But the project has helped TRC to
operate an annual average tonnage of 1.19 million and 0.97 million passengers from 1992 to
2002. TRC has achieved an average of 68 % and 38 % of its freight and passenger targets for
1992 to 2002. The project has also helped regional integration by supporting the landlocked
countries to get access to the port.
4.6.3. In spite of the above-mentioned achievements, however, TRCs financial position has
not improved much and there is no sign that the project will become sustainable in future. The
major problem is that TRC is not generating sufficient revenues to meet its operating
expenses and at the same time renew its aged wagon and coach fleet. At the end of the project
completion, TRC was expected to have become self-sustaining. However, despite the increase
in traffic and the investments made, TRC's financial position has not improved much since
the project started. Thus, the Corporation is not likely to achieve the financial targets set at
appraisal and it is not anyway near self-sustainability than at the beginning of the project
4.6.4. It must be noted, however, that TRC is generating enough revenue to meet its
operation costs, but not adequate surpluses for maintenance and replacements as well as
meeting its debt obligations. Since TRC is not generating sufficient revenues to renew its
wagons, the fleet has been reduced from 1250 wagons in 1999 to 1090 by end of 2001. TRC
revenues were also affected negatively during 1997/98 El-Nino rainfalls, which led to
cutbacks on all expenditure other than payment of wages and emergency civil works. Infact
the rehabilitated wagons and new coaches have been affected by the continuing loss of
coaches and wagons through accidents.

10

4.6.5. As the project was failing to achieve its objectives, GOT opted in 1998 to bring in
private sector participation through concession of operations of TRC. The process of
recruiting a private operator through concession is ongoing and is expected to be completed
by the end of the year. The precarious issue of retrenching staff is being discussed between
GOT, TRC and the Presidential Parastatal Reform Commission. The infrastructure facilities
will remain in the hands of Government.
4.7

Economic Performance

4.7.1. At appraisal, the investments of the overall rehabilitation project in general and the
coaches investment separately were evaluated by comparing with and without project
scenarios. The analysis was conducted assuming that the overall project would start in 1992
and be completed in 1998, while the coaches investment would be carried out between 1993
and 1997. A twenty-year analysis period and no residual value by the end of 2018 have been
assumed. In the without the project case, it was assumed that the railway system will be able
to sustain its actual capacity with some investments under the ERP and the incremental traffic
projected for TRC with the project would be diverted to road transport. At appraisal, based
on the economic costs and railway benefits, the internal rate of return (EIRR) of the
rehabilitation of the overall project was estimated at 14.72% while the coaches investment
yielded returns of 19.42%, using a 10% discount rate.
4.7.2. At appraisal, for the projection of traffic, the major commodities carried by TRC in
1991 were considered and the general pattern of movement for major commodities was
assumed to be stable for the future. TRCs transport capacity in 1991 was 0.9 million
tonnes/year. As soon as the different actions included in the rehabilitation project were
implemented, this capacity was expected to increase annually, and reach 2.16 million tonnes
per year at the completion of the project in 1998. TRC passengers were expected to increase
from 1.7 million in 1991 to 3 million in 1998, due to the increase in coach and locomotive
availability and the purchase of new coaches. These show an increase of 134% for freight and
75% for passenger between 1992 and 1998 and then maintained the 1998 level for the
remaining twenty years of the project life.
4.7.3. During the PCR Mission, the actual performance of TRC from 1992 to 2002, the
anticipated freight and passenger performance with the project have been reviewed with TRC
concerned personnel. The actual freight and passenger traffic data for the year 1992 to 2002
have been found to be very low when compared with the estimation at appraisal. Overall the
actual performances were 68 % of the freight tonnage and 38% of the passenger target. The
main reasons for such performance were over-optimism of the countrys economic growth;
under estimation of the competition from the road sector; over estimation of traffic growth
forecast of some commodities (like cement, maize, grains & fuel); unstable political and
economic situations in DRC, Rwanda and Burundi; stringent control of passenger
overloading after a passenger vessel sunk in 1996; shortage of wagons and coaches; and a one
and half year delay in the implementation of the rehabilitation project. The appraisal forecast
was later down scaled at the Mid Term Review in 1995, a reduction of about 20 % of the
appraisal tonnage of 1995 to 2000. But TRC attained only 73% of the revised Mid Term
Review target of 1995 to 2000. The Mid term Review has not further taken additional
measures or actions regarding the implementation of the project, except the reducing the
expected performance.

11

4.7.4. The PCR analysis was conducted in economic terms, which was derived from the
financial costs by deducting taxes. The actual project economic costs as well as the benefits
emanating from the revised traffic forecast formed the basis for re-evaluation of EIRR. The
estimates of project benefits were based on increase in the effective capacity of TRC and
reduction in its unit variable cost of transport; and savings in transport costs, as a result of
using rail as opposed to road. The economic cost data of long distance truck and bus
operations and rail transport service were reviewed.
4.7.5. Based on the revised recent traffic data, TRC is expected to handle an annual average
traffic of 1.82 million tonnes and 0.65 million passengers as of 2003 up to the end of the
project life. The recalculated EIRR are 3.0 % and (115.0%) for the overall project and
coaches investment respectively (Annex 7). These compared with the 1992 appraisal of
14.72 % and 19.42% for the overall project and coaches respectively are very low. The main
reasons were due to the poor performance of both the freight and passenger transport services
and the over optimistic plan at appraisal. These recalculated EIRR are unfavorable (well
below) the 12 % opportunity cost of capital in Tanzania.
4.7.6. Beside the quantifiable benefits, the project provided opportunities for the Tanzania
economy to benefit directly through lower transport costs for low value and bulky
commodities for long distance movements. In addition the project has helped regional
integration by increasing the capacity of TRC to handle transit traffic reliably and efficiently
for the land locked neighbouring countries of Burundi, Rwanda, DRC and Uganda. Overall
TRC has rendered transit traffic service of an annual average of 408,026 tonnes between 1992
and 2002, with the lowest being 255,004 tonnes in 1997 and the highest, 529,751 tonnes in
2001. Other Benefit includes the reduction of undue damage to the road system and
maintenance costs due to the decrease in the volume of heavy truck and bus movement. Even
though accident is a result of a complex interaction of operating equipment, route,
environmental and human factors, the railway is a safer means of transport relative to road.
5.

SOCIAL AND ENVIRONMENTAL SUSTAINABILITY

5.1

Social Impact

5.1.1. The rehabilitation project of TRC has supported social and economic recovery
programme by contributing to the continuation of TRCs operation. The project has also been
basic in poverty alleviation for the inhabitants of the districts traversed by the rail, in terms of
transporting agricultural products and access to urban centres, especially to Dar Es Salaam
and Tanga. The project has also helped to sustain the existing railway job opportunities.
5.1.2. The number of women employed in TRC has increased by 5 % from 439 in 1992 to
463 in 2002 due to the project and the TRCs corporate policy, even though the number of
employees in the payroll of TRC has significantly reduced. The number of women employees
in management position has increased from 11 to 21 during the same period.

12

5.2

Environmental Impact

5.2.1. At appraisal there were no environmental studies done. Besides, the rehabilitation works
were confined solely to the existing alignment, and has no major physical intervention on the
human and natural environment. TRC has several locations that experience frequent flooding,
like the valley of the Luiche River, near Kigoma, between Godegode and Gulwe. Using funds
provided by KfW, TRC has raised the realignment in such areas eliminating the incidence of
flooding with the resulting positive environment impact.
5.2.2. With the implementation of the project, rail accidents reduced initially. However, the
number of accidents started rising again towards the completion of the project. The major
accidents are attributed to rolling stock and track defects. Level crossing accidents have
reduced considerably with the interventions carried out under the project. With recent
intensification of programmed track maintenance, the realignment of curves in accident-prone
areas, and the retraining of staff, the number of accidents has started going down again.
6.

PROJECT SUSTAINABILITY

6.1.
TRC is directly responsible for most of the local cost of track rehabilitation and has
the liability to repay much of the donor assistance for track rehabilitation. TRC still has a
problem of maintaining the tracks due to the deffered maintenance. GOT has not substantially
compensated TRC for the losses on branch line operation as agreed in the Memorandum of
Understanding between GOT and TRC.
6.2. TRCs financial position has not improved much and there is little chance that the
project will be sustainable in the long run, as TRC has no financial resources to renew its
aged wagon and coach fleets. TRC revenue were reduced during 1998 El-Nino rainfalls,
which led to cutbacks on all expenditure other than payment of wages and emergency civil
works. In fact the rehabilitated wagons and new coaches have been offsetted by the
continuing loss of coaches and wagons through accidents. The number of major accidents fell
from nearly 300 in early 1990s to about 130 in the mid-1990s, but rising back to almost 300
in 2000. Even though wagons turnaround days have decreased from 19 days in 1991 to 12
days in 2001, TRC considers that additional wagons are required to provide the necessary
capacity for traffic, additional to the levels currently moved. Thus, TRC has started the repair
of 200 wagons, which would be completed by April 2004. Major customers have also offered
to rehabilitate wagons in return for discounts on rates and / or wagon allocation. The proposal
has not been accepted as it could likely complicate concessioning agreement and negotiations.
As the project was failing to achieve its objectives, GOT opted in 1998 to bring in private
sector participation through concession of operations of TRC. From 1998 to 2002, financing
and activities were redirected toward sustaining TRC operations and performance during the
transition period to concessioning.
6.3.
The GOT is bringing a private operator to manage only the operations and not the
infrastructure facilities. The Bank could participate in financing the infrastructure facilities,
which will continue to be Government controlled. One project that has been mentioned is the
Tabora railway line to Lake Tanganyika. This project addresses the issues of poverty (rural
development, transportation of agriculture products and regional integration linking
landlocked Great Lake countries to Dar Es Salaam port). The private operator could be
financed through the Bank's private sector window. Grants could also be provided for
institutional support related to infrastructure facilities.

13

7.
7.1

PERFORMANCE OF THE BANK AND TRC

Performance of the Bank

7.1.1. During the project implementation, the Bank supervised the project by sending missions
including experts from different departments of the Bank. Initially and up to 1997, the Bank
supervision was adequate. But as the project progressed, ADB supervision mission decreased
partly due to several changes in Task Managers due to restructuring of the Bank and partly
due to the fact that the ADF's components were completed by December 1997. The Bank did
not send any supervision mission since 1999. Thus the Bank could not keep an eye on TRCs
developments as the project progressed and has not been involved in the on-going process of
bringing a private operator into TRC through concession. Even though the PCR of other
donors were not available, other donors continued to assist GOT in its plan to concession
TRC. Their support was very important and valuable for the operational continuity of TRC.
7.1.2. The Bank responded promptly to solve issues arising from the project execution. The
Bank did not support and fund the Borrowers request in October 1996 for the utilization of
additional funds to procure materials for the completion of the rehabilitation of the remaining
coaches, since 50 coaches were rehabilitated from this component. The Bank did not accept
the borrowers request on the ground that the additional request could increase the original
contract sum by almost 30%.
7.1.3. Most of the 140 applications for disbursement were effected with out delay. The first
disbursement of the project , the advance payment of ABB Transportation Ltd. has been
effected with in 68 days. Ninety-three percent of the disbursements were paid within the
range of 3 to 30 days, average of 13 days. Thus overall the Bank performance is rated
satisfactory.
7.1.4. The overall project was justified economically at appraisal. However, the appraisal
identified main risks, (i) the physical implementation, operational and the likelihood of not
achieving the business targets in traffic to be carried; (ii) delays or cost over-runs, due to the
high volume of civil works and many multifaceted procurement of equipment, etc envisaged
in the overall project; and (iii) the likelihood that the traffic envisaged to be produced under
the project may be less. However, as stated in 3.6.2 and 4.7.3 above, TRC could not achieve
the anticipated business targets in traffic and utilization of the allotted fund. There was no
significant delay in project implementation. Thus the disbursement of the proceeds of the loan
by the Bank was not affected.
7.2

Performance of TRC

The performance of the Borrower, particularly TRC was not satisfactory due to the
following reasons:
(i)

Failure to contribute the planned counterpart fund as estimated at appraisal;

(ii)

Failure to utilize the entire loan fund on time that resulted in the cancellation
of UA6.23 million; and

(iii) Failure to submit Final Audit Reports on the project.

14

8.

OVERALL PERFORMANCE AND RATING

In accordance with the performance rating scale and evaluation criteria (Annex 7), the
overall assessment of implementation performance and project outcome was satisfactory with a
rating of 2.0 out of 4 maximum. The rating for the Bank's performance was 2.75 out of 4
maximum indicating satisfactory.
9.

CONCLUSIONS, LESSONS LEARNED AND RECOMMENDATIONS

9.1

Conclusions

9.1.1. The overall project was financed by eight donors. However, the overall objective of the
project has not been substantially achieved since TRC could not attain the targeted freight and
passenger traffic. The project achieved some of the objectives like management autonomy,
concentration in managing the core commercial railway activity, introduction of
commercialization, improvement in operational management, financial control and improvement
in the infrastructure. On the other hand, the project has improved the freight and passenger
transport services and has thus contributed to regional integration between Tanzania and the land
locked neighboring countries of Rwanda, Burundi, DRC and Uganda to get access to the port.
9.1.2. There was a fund under utilization of UA 8.15 million (34.3%) relative to the appraisal
estimate and a change in the financing plan of ADF from 89.1% at appraisal to 95.8% actual.
The under-utilization arose mainly due to the failure of using the unallocated amount of the ADF
loan and low contribution of the counterpart fund by GOT. Thus the loan balance of UA 6.23
million has been cancelled.
9.1.3. The performance of the seven suppliers and the consultant was fairly satisfactory while
the Borrower was not satisfactory. The Bank and the overall assessment of implementation were
found to be satisfactory with a rating of 2.0 out of 4 (maximum).
9.1.4. The project would have been a complete failure had it not been for the GOT decision to
concession TRC, and donors have continued supporting TRC even after completion of the
project from 1998 up to 2002.
9.1.5. The project has helped TRC to operate an annual average tonnage of 1.19 million and
0.97 million passenger between 1992 and 2002. Despite the investment made, TRCs financial
position has not significantly improved and is unable to sustain itself fully as a going concern. It
is against this background that the project concept has been changed from simply a rehabilitation
project to a project that is supporting the concession of TRC, to ensure that its profitability is
adequate to meet its maintenance and replacement targets.
9.2

Lessons Learned

Lessons from the project are:

Rehabilitation projects require proper preparation, planning and additional

physical contingencies for spare parts. Due to the uncertainty of required parts
during rehabilitation, it would be safe to have proper preparation, planning and
contingency or unallocated fund that could be easily processed with the
consent of the Bank;

15

The long-term effect of rehabilitation of very old wagons, coaches and

locomotives requires an in depth investigation / study to determine the pros
and cons of rehabilitation versus buying new. For such study, the borrower
could use the Banks PPF;

The Bank needs to follow up the proper allocation of the counterpart fund by
the Borrower during project implementation in order to maintain the financing
plan as agreed at the initial agreement of the project;

Regional projects which could be influenced by the political and economical

environment of the region needs to be addressed in regional perspective; and

The Bank needs to follow up the development on its projects by sending

supervision missions even if they are completed. Since the Bank has stopped
sending mission, it did not participate in the concessioning process of TRC.

9.3

Recommendations

We recommend as follows:

The Borrower should comply with the loan agreement and submit to the Bank
the Final Audit Report on the project;

The Bank should continue to monitor TRCs development in general and

the progress on the concession of TRC in particular. GOT also should
inform the Bank on its plan on the concession and the development;

Review the importance of proper preparation, planning and a component of

additional contingency or unallocated fund, which could immediately be
approved by the Bank for rehabilitation projects that require additional spare
part purchase;

When approached (through the Ministry of Finance), the Bank should

consider providing funding part of the infrastructure facilities of the TRC,
including institutional support where applicable;

OPSD could finance part of the requirements of the private operator that is
expected to be brought into TRC; and

Review in depth, even with the Banks PPF, the long term advantage of
rehabilitation of very old wagons, coaches and locomotives.

A matrix of recommendations is presented in Annex 9.

ANNEX 1

TANZANIA
TANZANIA RAILWAY CORPORATION REHABILITATION PROOJECT
PROJECT LOCATION MAP

TANZANIA

ANNEX 2

TANZANIA RAILWAY CORPORATION REHABILITATION PROJECT

PROJECT COMPLETION REPORT
IMLEMENTATION SCHEDULE (APPRAISAL vs. ACTUAL)
YEAR

1993

ACTIVITES

1T

2T

3T

1994
4T

1T

2T

3T

1995
4T

1T

2T

3T

1996
4T

1T

2T

3T

1997
4T

1T

2T

3T

4T

REHABILITATION OF 1000 WAGONS

APPRAISAL
ACTUAL
REHBAILTATION OF 100 COACHES
APPRAISAL
ACTUAL
ACQUISITION OF 27 NEW COACHES
APPRAISAL
ACTUAL
SUPPLY OF WORKSHOP MACHINERY
APPRAISAL
ACTUAL
WORKSHOP MODERNIZATION STUDY
APPRAISAL
ACTUAL

1993

YEAR
ACTIVITES

1T

2T

3T

1994
4T

1T

2T

3T

1995
4T

1T

2T

3T

1996
4T

1T

2T

3T

1997
4T

1T

2T

3T

4T

ANNEX 3
TANZANIA
TANZANIA RAILWAY CORPORATION REHABILITATION PROJECT
PROJECT COMPLETION REPORT
YEARLY DISBURSEMENT BY SOURCE OF FUNDS
ADF
Year
1993
1994
1995
1996
1997
1998
1999
Total

As at Appraisal
Actual
Amount Cum.(%) Amount Cum.(%)
2.25
10.6%
9.14
53.8%
2.12
14.2%
7.84
90.8%
4.36
43.3%
1.64
98.5%
1.83
55.6%
0.31
100.0%
4.68
86.9%
1.94
99.9%
0.02
100.0%
21.18
100.0%
14.95
100.0%

Sources: FFCO & TRC

GOT
As at Appraisal
Amount Cum.(%)
0.28
10.9%
1.14
55.0%
1.00
93.8%
0.11
98.1%
0.05
100.0%
2.58

100.0%

TOTAL
Actual
As at Appraisal
Actual
Amount Com.(%) Amount Cum.(%) Amount Cum.(%)
2.53
10.6%
0.01
1.3%
10.28
53.9%
2.13
13.6%
0.35
55.0%
8.84
91.1%
4.71
43.8%
0.06
63.8%
1.75
98.5%
1.89
55.9%
0.15
85.9%
0.36
100.0%
4.83
86.9%
0.09
100.0%
2.03
99.9%
0.02
100.0%
0.66
100.0%
23.76
100.0%
15.61
100.0%

ANNEX 4
Page 1 of 2
TANZANIA RAILWAY CORPORATION REHABILITATION PROJECT
PROJECT COMPLETION REPORT
ORGANIZATION CHART DURING APPRAISAL
Board of Directors

Chief
Internal
A dit

Director General

ADG
Operation

ADG Service

Division
Manager

Public
Relations
Manager

Chief
of
Manpower

Chief of
Traffic
Manager

Development &
Administration

Corporation
Secretary

Chief of
Finance

Chief Civil
Engineer

Chief Supplies

Manager

Chief
Mechanical
Engineer

Chief of
Corporate
Planning &
Management
Services

Hotels and
Catering
Manager

Chief of Road

Services

Line
Relationship

Staff
Relationship

ANNEX 4
Page 2 of 2
TANZANIA RAILWAY CORPORATION REHABILITATION PROJECT
PROJECT COMPLETION REPORT
ORGANIZATION CHART DURING PROJECT IMPLEMENTATION
Board of Directors

Chief Internal

Director General

ADG
Operation

ADG Service

Auditor

Project
Coordinator

Principal
Safety
Manager

Chief
of
Manpower

Chief of
Rail
Transport

Development &
Administration

Chief
Commercial
Manager

Public
Relations
Manager

Chief of
Finance
Principal
Protection
Manager

Chief S & T
Engineer

Chief Supplies
Manager

Chief Civil
Engineer

Computer
Services
Manager

Chief
Corporate
Planning &
Management
Services

Chief
Mechanical
Engineer

Line
Relationship

Staff
Relationship

ANNEX 5
Page 1 of 2
TANZANIA
TANZANIA RAILWAY CORPORATION REHABILITATION PROJECT
PROJECT COMPLETION REPORT
Conditions / Covenants
A - Conditions
(i)

conclude a subsidiary loan agreement for on lending the entire proceeds of the loan to
TRC on the following terms/conditions ; interest of 11 % per annum; repayment
period of 20 years including a grace period of 5 years;

(ii)

cause TRC to appoint a project coordinator whose qualifications and experience shall
be acceptable to the Fund to coordinate the ADF components of the overall project;

(iii)

provide evidence that a new Board of Directors which reflects the public and the
private interests of TRC has been appointed;

(iv)

provide evidence that TRC has commenced the implementation of cumulative tariffs
increases of 80% and thereafter maintain real tariffs;

(v)

provide evidence that TRC maintains its accounts receivables at a level no greater than
45 days of annual revenues until completion of the overall project;

(vi)

give an undertaking to complete the study on the re-evaluation of TRCs assets;

(vii)

give an undertaking to take steps satisfactory to the Fund, to ensure that TRCs debt
equity ratio will be maintained at the maximum of 60/40 after the re-evaluation of the
TRC assets.

B Other Conditions
(i)

ensure that not later than a year after loan effectiveness, TRC introduces a corporate
wide salary structure and incentives scheme for its workforce and to further reduce
manpower;

(ii)

ensure that the results of the staff development programme review would be made
available to ADF and that TRC would, consequent to the review, make appropriate
changes to any or all parts of the programme taking into account the views of the
ADF;

(iii)

cause TRC to prepare and furnish ADF with progress reports on the review and
implementation of TRC training plan and strategy;

ANNEX 5
Page 2 of 2
(iv)

not later than one year of loan effectiveness TRC shall lease its hotels and franchised
its catering and shall complete the transfer of operations, management and financial
responsibility of its road services to an independent operator;

(v)

not later than one year of loan effectiveness cause TRC to submit a programme to the
Fund to construct fences at village / town level crossings so as to minimize the danger
of accidents.

(vi)

submit for review and comments quarterly information on the progress of the study
on the re-evaluation of TRCs assets and the final study report; additionally, it shall
implement the study findings and recommendations prior to the signature of the
supply contracts for the spare parts for rehabilitation of the wagons and coaches;

(vii)

submit for review and comments quarterly progress reports about the debt equity ratio
of TRC.

ANNEX 6

TANZANIA
TANZANIA RAILWAYS CORPORATION REHABILITATION PROJECT
EXTRACT OF KEY FINANCIAL FIGURES FROM FINANCIAL STATEMENTS OF TRC
DESCRIPTION

1991

ASSETS EMPLOYED

1992

1993

1994

1995

7,405,113

26,694,845

39,079,635

47,238,183

53,454,125

CURRENT ASSETS

8,555,691

10,380,580

12,794,197

16,359,340

CURRENT LIABILITIES

6,278,236

5,459,604

7,870,202

NET CURRENT ASSETS

2,277,455

4,920,976

1997

1998

1999

2000

2001

73,296,648

83,734,100

104,361,222

119,495,271

133,400,214

138,861,915

28,655,939

26,264,929

29,959,822

25,311,297

25,398,649

22,371,865

23,197,465

10,955,372

8,472,328

9,756,409

12,846,013

18,499,781

24,508,884

26,025,213

32,318,763

4,923,995

5,403,968

20,183,611

16,508,520

17,113,809

6,811,516

889,765

(3,653,348)

(9,121,298)

17,943,655

31,615,821

44,003,630

52,642,151

73,637,736

89,805,168

100,847,909

111,172,738

120,385,036

129,746,866

129,740,617

TURN OVER

9,968,623

15,896,975

21,388,841

25,614,865

34,481,324

36,087,716

36,400,560

29,600,892

44,703,318

48,467,297

56,609,189

OTHER INCOMES

2,031,603

2,034,877

4,570,185

3,280,791

3,237,641

2,611,133

3,819,211

4,988,219

9,889,848

5,141,204

2,140,850

TOTAL INCOME

12,000,226

17,931,852

25,959,026

28,895,656

37,718,965

38,698,849

40,219,771

34,589,111

54,593,166

53,608,501

58,750,039

OPERATING COSTS

7,801,454

9,913,303

16,503,182

17,710,466

25,465,896

26,949,595

28,065,225

24,632,313

34,802,181

37,666,037

42,241,698

NON OPERATING COSTS

3,504,664

6,160,161

5,266,357

8,445,103

10,286,813

9,813,368

9,898,735

10,162,269

17,189,986

15,055,196

15,497,346

11,306,118

16,073,464

21,769,539

26,155,569

35,752,709

36,762,963

37,963,960

34,794,582

51,992,167

52,721,233

57,739,044

694,108

1,858,388

4,189,487

2,740,087

1,966,256

1,935,886

2,255,811

(205,471)

2,600,999

887,268

1,010,995

FINANNCED BY

TOTAL COSTS
SURPLUS/(DEFICIT)

1996

ANNEX 7
Page 1 of 2
TANZANIA
TANZANIA RAILWAY CORPORATION REHABILITATION PROJECT
Calculation of Economic Rate of Return for the Overall Project (in million)
F R E I G H T
C O A C H E S
Investment W.Project W.Project W.O. Project OP & DTR
W. Project
W. Project W.O.Project OP & DTR Net Benefits
Year Cost (TSh) (Freight) (Tkm Bil) (Tkm in Bil)
Benef.
(Passenger) (Pkmn Bil) (Pkm in Bil)
Benef.
(TSh)
1992
5955
0.924
0.937
0.991
-514.08
1.442
0.661
0.684
-91.84
-6560.92
1993
11351
1.205
1.263
0.991
3358.03
1.442
0.914
0.684
918.39
-7074.58
1994
14885
1.234
1.108
0.991
1393.89
1.747
0.855
0.684
682.80
-12808.30
1995
18759
1.342
1.354
0.991
4207.14
1.251
0.694
0.684
37.84
-14514.02
1996
21972
1.244
1.218
0.991
2575.92
1.007
0.586
0.684
-353.49
-19749.57
1997
21590
1.073
1.108
0.991
1305.20
0.557
0.362
0.684 -1117.34
-21402.14
1998
14339
0.955
0.708
0.991
-3110.94
0.570
0.244
0.684 -1474.00
-18923.94
1999
9073
1.127
1.185
0.991
2458.51
0.615
0.413
0.684 -1027.09
-7641.58
2000
4857
1.165
1.210
0.991
3169.53
0.631
0.428
0.684 -1088.00
-2775.47
2001
8800
1.351
1.380
0.991
6392.33
0.728
0.471
0.684 -1011.75
-3419.42
2002
6808
1.446
1.487
0.991
7203.27
0.685
0.445
0.684
-989.46
-594.19
2003
1.400
1.356
0.991
5300.79
0.800
0.520
0.684
-678.96
4621.83
2004
1.610
1.559
0.991
8248.91
0.800
0.520
0.684
-678.96
7569.95
2005
1.610
1.559
0.991
8248.91
0.800
0.520
0.684
-678.96
7569.95
2006
1.610
1.559
0.991
8248.91
0.800
0.520
0.684
-678.96
7569.95
2007
1.811
1.754
0.991
11080.84
0.600
0.520
0.684
-678.96
10401.88
2008
1.811
1.754
0.991
11080.84
0.600
0.520
0.684
-678.96
10401.88
2009
1.811
1.754
0.991
11080.84
0.600
0.520
0.684
-678.96
10401.88
2010
1.883
1.824
0.991
12097.43
0.600
0.520
0.684
-678.96
11418.47
2011
1.883
1.824
0.991
12097.43
0.600
0.520
0.684
-678.96
11418.47
2012
1.883
1.824
0.991
12097.43
0.600
0.520
0.684
-678.96
11418.47
2013
1.883
1.824
0.991
12097.43
0.600
0.520
0.684
-678.96
11418.47
2014
1.996
1.934
0.991
13694.93
0.600
0.520
0.684
-678.96
13015.97
2015
1.996
1.934
0.991
13694.93
0.600
0.520
0.684
-678.96
13015.97
2016
1.996
1.934
0.991
13694.93
0.600
0.520
0.684
-678.96
13015.97
2017
1.996
1.934
0.991
13694.93
0.600
0.520
0.684
-678.96
13015.97
2018
1.996
1.934
0.991
13694.93
0.600
0.520
0.684
-678.96
13015.97
138389
208593.21
-16377.29
53826.92
Note: W. Project = With Project Freight / Passenger Traffic in million
ERR =
3%
W.O. Project = Without Project Freight / Passenger traffic in Million
NPV=
($47,001.91)
OP & DTR Benef - Operational and diverted traffic benefits, as a result of acquisition
of new coaches and improvement in rail operations

ANNEX 7
Page 2 of 2
TANZANIA
TANZANIA RAILWAY CORPORATION REHABILITATION PROJECT
Calculation of Economic Rate of Return for Coaches Investment (in million)
Investment W. Project
W. Project
W.O.Project
OP & DTR
Net Benefits
Year Cost (TSh) (Passenger)
(Pkm in Bil)
(Pkm in Bil)
Benef.
(TSh)
1992
1.442
0.661
0.684
-91.839
-91.839
1993
1.442
0.914
0.684
918.390
918.390
1994
504
1.747
0.855
0.684
682.803
178.803
1995
1261
1.251
0.694
0.684
37.840
-1223.160
1996
1614
1.007
0.586
0.684
-353.486
-1967.486
1997
4170
0.557
0.362
0.684
-1117.340
-5287.340
1998
1728
0.570
0.244
0.684
-1474.000
-3202.000
1999
20
0.615
0.413
0.684
-1027.090
-1047.090
2000
0.631
0.428
0.684
-1088.000
-1088.000
2001
0.728
0.471
0.684
-1011.750
-1011.750
2002
0.685
0.445
0.684
-989.460
-989.460
2003
0.800
0.520
0.684
-678.960
-678.960
2004
0.800
0.520
0.684
-678.960
-678.960
2005
0.800
0.520
0.684
-678.960
-678.960
2006
0.800
0.520
0.684
-678.960
-678.960
2007
0.600
0.520
0.684
-678.960
-678.960
2008
0.600
0.520
0.684
-678.960
-678.960
2009
0.600
0.520
0.684
-678.960
-678.960
2010
0.600
0.520
0.684
-678.960
-678.960
2011
0.600
0.520
0.684
-678.960
-678.960
2012
0.600
0.520
0.684
-678.960
-678.960
2013
0.600
0.520
0.684
-678.960
-678.960
2014
0.600
0.520
0.684
-678.960
-678.960
2015
0.600
0.520
0.684
-678.960
-678.960
2016
0.600
0.520
0.684
-678.960
-678.960
2017
0.600
0.520
0.684
-678.960
-678.960
2018
0.600
0.520
0.684
-678.960
-678.960
9297
-16377.292
-25674.292
ERR
(115%)
Note: W.Project=With Project passenger traffic
NPV
($8,030.16)
W.O. Project = Without Project passenger traffic
OP & DTR Benef - Operational and diverted traffic benefits, as a result
of acquisition of new coaches and improvement in rail operations

ANNEX 8
Page 1 of 4
TANZANIA
TANZANIA RAILWAY CORPORATION REHABILITATION PROJECT
PROJECT COMPLETION REPORT
Performance Rating Scale and Evaluation Criteria
1.

Rating Scale
X>3

Highly satisfactory

2<X<3

Satisfactory

1<X<2

Unsatisfactory

X<1

Highly unsatisfactory

Where X is the value assigned to a performance variable.

Classification: Implementation performance is considered satisfactory if the average value of
X > 2.
2.

Evaluation Results
Component Indicators
1. Adherence to time schedule
2. Adherence to cost schedule
3. Compliance with covenants

4. Adequacy of monitoring & evaluation and

reporting
5. Satisfactory Operations (if applicable)
TOTAL
Overall Assessment
Performance

Score
Remarks
(1-4)
2
Delay of 33 months
1
Under-utilization of UA 8.5
million.
3
Except
changing
the
construction of fences at
village / town level crossing
by watchmen hut and
other measures.
3
Except audit reports
1

Very low freight and

passenger
traffic
performance.

10
of

Implementation

2.0

Satisfactory

ANNEX 8
Page 2 of 4
TANZANIA
TANZANIA RAILWAY CORPORATION REHABILITATION PROJECT
PROJECT COMPLETION REPORT
FORM BP 1
BANK PERFORMANCE

Component Indicators

Score
(1 to 4)
3

1. At Identification
2. At preparation of project

3. At appraisal

4. At supervision

Overall assessment
Performance

of

Bank

2.75

Remarks
The project was a component of the Railway
Rehabilitation Project financed by 8 donors
The Bank was actively involved in the
preparation of the component it finances
The Bank was actively involved in the appraisal
of the component it finances
Most of the problems were resolved on time
and adequate measures taken. But the Bank did
not send mission since 1999.

ANNEX 8
Page 3 of 4
TANZANIA
TANZANIA RAILWAY CORPORATION REHABILITATION PROJECT
PROJECT COMPLETION REPORT
FORM PO 1
PROJECT OUTCOME
Score
(1 to 4)

No.
1

Component Indicators
Relevance and Achievement of
Objectives*

i)

Macro-economic policy

ii)

Sector Policy

iii)

Physical (incl. Production)

iv)

Financial

v)

Poverty alleviation, social &

gender

vi)

Environment

vii)

Private sector development

viii)

Other (Specify)

Institutional Development (ID)

i)

Institutional framework incl.

Restructuring

ii)

Financial and Management

Information Systems including
Audit Systems

iii)

Transfer of Technology

iv)

Staffing by qualified persons

(incl. Turnover), training &
counter-part staff

Remarks

Annex 8
Page 4 of 4
TANZANIA
TANZANIA RAILWAY CORPORATION REHABILITATION PROJECT
PROJECT COMPLETION REPORT
FORM PO 1
PROJECT OUTCOME

Sustainability

i)

Continued Borrower
Commitment

ii)

Environmental Policy

iii)

Institutional Framework

iv)

Technical Viability and Staffing

v)

Financial viability including cost

recovery systems

vi)

Economic Viability

vii)

Environmental Viability

viii)

O&M facilitation (availability of

recurrent funding, foreign
exchange, spare parts, workshop
facilities etc.)

Economic Internal Rate of Return

TOTAL

40

Overall Assessment of Outcome

2.0

ANNEX 9
TANZANIA
TANZANIA RAILWAY CORPORATION REHABILITATION PROJECT
PROJECT COMPLETION REPORT
RECOMMENDATIONS AND FOLLOW-UP MATRIX
Main Findings & Conclusions
Formulation & Project Rational:

Lessons Learned Recommendations

Follow-up Actions

Responsibility

The project was a component of a

Railway Rehabilitation Project financed
by 8 donors.

The outcome of the project shows that

there was an effective support by ADF and
the other donors, but GOT has failed to
contribute the planned counterpart fund.

GOT should plan for proper financing

allocation as planned during appraisal.

GOT

Proper planning of a project at initial stage,

follow up of fund utilization and allocation
of reserve fund to procure additional spare
parts when the need arises during
rehabilitation.

Minimize start-up delays in project

implementation and plan for allocation
of special fund for additional spare
parts for rehabilitation projects.

GOT / ADF

Project Implementation:
1. Cost under utilization mainly due to
various mobilization delays and
rehabilitation of 50 % of the planned
coaches.
Compliance with Loan Conditions &
Covenants:
1. No final Audit Report.

The Borrower should always comply with The GOT has failed to provide the Final
the Loan Agreement.
Audit Report after promising to the PCR
Mission to submit by May 31st 2003.

GOT

Even though the performance target has not

been met, the project has helped for the
operational continuity of the railway and
also contributed to regional integration by
providing transit traffic service to the
landlocked neighboring countries.

GOT has opted for concessioning of

TRC.

GOT

GOT has decided to concession TRC.

Government should
concession process.

Performance Evaluation & Project

Outcome:
The initial objective has not been
substantially achieved but the overall
project
performance
rating
was
satisfactory.
Sustainability:
TRC financial position has not
significantly improved and TRC could
not be sustainable.

finalize

the

GOT

ANNEX 10
TANZANIA
TANZANIA RAILWAY CORPORATION REHABILITATION PROJECT
PROJECT COMPLETION REPORT
SOURCES OF INFORMATION
1.

Borrower's Project Completion Report on Tanzania Railways Restructuring Project,

TRC, December 2002.

2.

Appraisal Report, Tanzania Railway Corporation Rehabilitation Project. United

Republic of Tanzania, ADF, June 1992.

3.

Project Files.

ANNEX 11
TANZANIA
TANZANIA RAILWAY CORPORATION REHABILITATION PROJECT
PROJECT COMPLETION REPORT
ANNEX 11: BORROWER'S PCR

The Borrower's PCR is on the file with ONIN 3.

ANNEX 12
TANZANIA
EXECUTING AGENCY'S COMMENTS TO THE BANK'S PCR

The comments are expected and will be incorporated upon receipt.