The World Bank Report No: ISR5931 Implementation Status & Results Azerbaijan RAIL TRADE AND TRANSPORT FACILITATION (P083108) Public Disclosure Copy Operation Name: RAIL TRADE AND TRANSPORT FACILITATION (P083108) Project Stage: Implementation Seq.No: 9 Status: ARCHIVED Archive Date: 05-Jul-2011 Country: Azerbaijan Approval FY: 2008 Product Line: IBRD/IDA Region: EUROPE AND CENTRAL ASIA Lending Instrument: Specific Investment Loan Implementing Agency(ies): ADY (Azerbaijan Railways JSC) Key Dates Board Approval Date 27-Mar-2008 Original Closing Date 30-Jun-2012 Planned Mid Term Review Date Last Archived ISR Date 05-Jul-2011 Effectiveness Date 15-Mar-2010 Revised Closing Date 30-Sep-2013 Actual Mid Term Review Date Project Development Objectives Project Development Objective (from Project Appraisal Document) The main project objective is to improve railway services in Azerbaijan, as well as the competitiveness, financial sustainability, operating and cost efficiency, and capacity of the Azerbaijan Railways (ADDY) in particular along the transport corridor toward Georgia (east-west corridor). The project will support the implementation of the first phase of the Government Program covering components, which are most time-sensitive and will most rapidly lead to cash flow generation. The project will focus on: (i) maintaining and growing the railway business (increase revenue from US$219 million today to about US$283 million by 2015) by providing the profitable freight market segment with proper service, infrastructure and locomotive capacity; (ii) transforming the Azeri Railways into a financially self-sustainable operation in freight transportation, covering all its costs (including infrastructure maintenance and traction) from revenues, while improving its operational efficiency; and (iii) improving the transparency of the Railway sector by introducing International Financial Reporting Standards (IFRS) and profit centers (passenger/freight) and by separating on an accounting basis passenger service that could be self-sustained from others. Other parts of the Government Program are expected to be covered through separate projects once the proper financial and technical due diligence has been completed. Has the Project Development Objective been changed since Board Approval of the Project? Yes No Component(s) Component Name Component Cost Public Disclosure Copy Rehab of E-W corridor 440.00 Locomotives 334.00 Modernization 17.00 PRoject Implementation 3.00 Overall Ratings Previous Rating Current Rating Progress towards achievement of PDO Satisfactory Satisfactory Overall Implementation Progress (IP) Satisfactory Moderately Unsatisfactory Page 1 of 7 The World Bank Report No: ISR5931 Previous Rating Current Rating Overall Risk Rating Public Disclosure Copy Implementation Status Overview Overall project implementation will be delayed due the the request for restructuring that led to the cancellation of the locomotive bidding process. This delay will impact overall implementation even though other activities continued to be implemented satisfactorily with planned procurement activities completed as planned. Disbursements remain low, as the major procurement activities have not reached contract award stage. The bid closing date for the implementation of power conversion works is April 30, 2012. Of the four pre-qualified consortia, only one submitted a bid. Bid evaluation is continuing. Continued good progress is made with the implementation of a computerized IFRS-system. The system design is complete and the mission supports the final plan to roll out the system over the next two-three years. To support the IFRS assignment, the ADY PIU has procured the services of a consultant to undertake the asset revaluation of the ADY. The Ministry of Finance, on behalf of the Government of Azerbaijan, requested a restructuring of the loan to cancel the bidding procedure for locomotives, reallocate the total US $333.9 million (US$202 million Bank-financed) from locomotives to infrastructure, clarify the name of ADY in the legal agreements and extend the project closing date. The mission agreed to bid cancellation and is preparing the restructuring paper for senior management approval. Locations Country First Administrative Division Location Planned Actual Azerbaijan Samux Rayonu Zazaly Azerbaijan Yevlax City Yevlax Azerbaijan Yevlax Rayonu Yevlax Rayonu Azerbaijan Yevlax Rayonu Yevlax Rayonu Azerbaijan Ucar Rayonu Ucar Rayonu Azerbaijan Ucar Rayonu Ucar Azerbaijan Tovuz Rayonu Tovuz Azerbaijan Tovuz Rayonu Tovuz Rayonu Azerbaijan Kyurdamirskiy Rayon Sygyrly Public Disclosure Copy Azerbaijan Shamkhorskiy Rayon Shamkhorskiy Rayon Azerbaijan Haciqabul Rayonu Qarasu Azerbaijan Agstafa Rayonu Poylu Azerbaijan Haciqabul Rayonu Navagi Azerbaijan Ucar Rayonu Myusyuslyu Azerbaijan Kyurdamirskiy Rayon Kyurdamirskiy Rayon Page 2 of 7 The World Bank Report No: ISR5931 Country First Administrative Division Location Planned Actual Azerbaijan Kyurdamirskiy Rayon Kyurdamirskiy Rayon Public Disclosure Copy Azerbaijan Kyurdamirskiy Rayon Kyurdarmir Azerbaijan Tovuz Rayonu Qovlar Azerbaijan Xanlar Rayonu Xanlar Rayonu Azerbaijan Kyurdamirskiy Rayon Karrar Azerbaijan Goranboy Rayonu Goranboy Rayonu Azerbaijan Goycay Rayonu Goycay Rayonu Azerbaijan Ganca Sahari Kirowabad Azerbaijan Shamkhorskiy Rayon Star Agozam Azerbaijan Baku Baladzhary Azerbaijan Baku Baku Azerbaijan Agstafa Rayonu Agstafa Azerbaijan Agdas Rayonu Agdas Rayonu Azerbaijan Goranboy Rayonu Goran Azerbaijan Haciqabul Rayonu Mugan Azerbaijan Haciqabul Rayonu Padarqislaq Azerbaijan Agstafa Rayonu Salahli Azerbaijan Haciqabul Rayonu Pirsaat Public Disclosure Copy Azerbaijan Agstafa Rayonu Agstafa Rayonu Azerbaijan Agstafa Rayonu Agstafa Rayonu Azerbaijan Ganca Sahari Ganca Sahari Azerbaijan Ganca Sahari Ganca Sahari Azerbaijan Samux Rayonu Samux Rayonu Azerbaijan Yevlax City Yevlax Sahari Azerbaijan Haciqabul Rayonu Haciqabul Rayonu Page 3 of 7 The World Bank Report No: ISR5931 Azerbaijan Haciqabul Rayonu Haciqabul Rayonu Azerbaijan Baku Eibat Public Disclosure Copy Results Project Development Objective Indicators Indicator Name Core Unit of Measure Baseline Current End Target Locomotive availability (Percentage of fleet Text Value 45% 60% 75% available for service as measured in hours Date 31-Dec-2007 31-Dec-2011 31-Dec-2013 (currently 110 out of 224 available fleet) Comments Electric consumption per transport unit (KWh Text Value 180 195 174 per 10 000 ton or passenger-km) Date 31-Dec-2007 31-Dec-2011 31-Dec-2013 Comments % increase in operating revenues/net ton-km Text Value 0 21% 0% Date 31-Dec-2007 31-Dec-2010 31-Dec-2013 Comments Data for 2011 not yet available, awaiting publication of ADY's audited Financial Statements toward the middle of 2011. % reduction in operating cost/net ton-km (Real Text Value 0% 7.5% 2.5% basis, compared to 2007). Date 31-Dec-2007 31-Dec-2010 31-Dec-2013 Comments Data for 2011 not yet available, awaiting publication of ADY's audited Financial Statements toward the middle of 2011. Train transit time E-W (new locos) Text Value 22 hours 24 hours 12 hours Public Disclosure Copy Date 31-Dec-2007 31-Dec-2011 01-Jul-2013 Comments Net ton-km per locomotive used on E-W line (in Text Value 74,1 108.9 260.0 million per year) Date 31-Dec-2007 31-Dec-2011 31-Dec-2013 Comments Baseline to be adjusted to 117.1 to reflect correct data Page 4 of 7 The World Bank Report No: ISR5931 ADDY working ratio (Operating expenses Text Value 75% 87% 67% (excluding depreciation) divided by total Date 31-Dec-2007 31-Dec-2010 31-Dec-2013 revenues. Based on IFRS reports) Comments Data for 2011 not yet Public Disclosure Copy available, awaiting publication of ADY's audited Financial Statements toward the middle of 2011. Operational cash flow/revenues Text Value 13% 19% 16% Date 31-Dec-2007 31-Dec-2010 31-Dec-2013 Comments Data for 2011 not yet available, awaiting publication of ADY's audited Financial Statements toward the middle of 2011. Volume of transport (million tons) - east-west Text Value 17.4 20.1 23 corridor Date 31-Dec-2007 31-Dec-2011 31-Dec-2013 Comments Baseline need to be corrected from 17.4 to 13.2 based on correct data Volume of transport (million tons) - oil and oil Text Value 13,2 11.4 15.8 products on east-west corridor Date 31-Dec-2007 31-Dec-2011 31-Dec-2013 Comments Client Satisfaction survey for freight services Text Value 100 106 120 (index 100-2009). Date 30-Jun-2009 31-Dec-2011 29-Jun-2013 Comments Intermediate Results Indicators Indicator Name Core Unit of Measure Baseline Current End Target Modernization of Railway Company Text Value ADDY is state economic TOR for strengthening ADDY is JSC with line of Public Disclosure Copy enterprise. business structure to be business structure agreed before selection of consultant. Date 31-Dec-2007 31-May-2012 30-Sep-2013 Comments New, additional activity. Follow up of audit qualifications (annual) Text Value no audit or follow up in 2007 Yes audit and follow up each year Date 31-Dec-2007 06-Apr-2012 31-Dec-2013 Comments Page 5 of 7 The World Bank Report No: ISR5931 Locomotive reliability (Mean distance in Text Value 17000 18.7 100000 kilometers between operational failures) Date 31-Dec-2007 31-Dec-2011 31-Dec-2013 Comments Public Disclosure Copy Number of locomotives able to cross Text Value 0 5 50 Azerbaijan reliably (Number of locomotives Date 31-Dec-2007 31-Dec-2011 31-Dec-2013 able to cross 502 km (i.e. E-W corridor) non- Comments stop) Percentage of track in critical condition on east Text Value 35% 36% 5% west corridor as measured through condition Date 31-Dec-2007 31-Dec-2011 31-Dec-2013 surveys - Track in need of renewal. Comments Percentage of track in critical condition on east Text Value 61% 64% 20% west corridor as measured through condition Date 31-Dec-2007 31-Dec-2011 31-Dec-2013 surveys - Track with speed restriction. Comments Data on Financial Performance (as of 04-Aug-2011) Financial Agreement(s) Key Dates Project Loan No. Status Approval Date Signing Date Effectiveness Date Original Closing Date Revised Closing Date P083108 IBRD-75090 Effective 27-Mar-2008 18-Dec-2009 15-Mar-2010 30-Jun-2012 30-Sep-2013 Disbursements (in Millions) Project Loan No. Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P083108 IBRD-75090 Effective USD 450.00 450.00 0.00 3.88 446.12 1.00 Disbursement Graph Public Disclosure Copy Page 6 of 7 The World Bank Report No: ISR5931 Public Disclosure Copy Key Decisions Regarding Implementation None Restructuring History Level two Approved on 03-Dec-2009 Related Projects There are no related projects. Public Disclosure Copy Page 7 of 7