The World Bank Implementation Status & Results Report Sustainable Croatian Railways in Europe (P147499) Sustainable Croatian Railways in Europe (P147499) EUROPE AND CENTRAL ASIA | Croatia | Transport Global Practice | IBRD/IDA | Investment Project Financing | FY 2015 | Seq No: 7 | ARCHIVED on 24-Jun-2019 | ISR37660 | Implementing Agencies: Republic of Croatia, HZ Infrastructure, Ministry of Sea, Transport and Infrastructure, HZ Cargo, HZ Passenger Transport Key Dates Key Project Dates Bank Approval Date: 30-Apr-2015 Effectiveness Date: 04-Aug-2015 Planned Mid Term Review Date: 31-Dec-2018 Actual Mid-Term Review Date: 12-Feb-2019 Original Closing Date: 31-May-2020 Revised Closing Date: 31-May-2020 pdoTable Project Development Objectives Project Development Objective (from Project Appraisal Document) The Project Development Objective (PDO) is to improve the operational efficiency and the financial sustainability of the public railway sector in Croatia. Has the Project Development Objective been changed since Board Approval of the Project Objective? No Components Table Name Project Coordination and Sector Policy Support:(Cost $5.70 M) Support to HZ Passenger Transport Restructuring:(Cost $65.00 M) Support to HZ Cargo Restructuring:(Cost $53.40 M) Support to HZ Infrastructure Restructuring and Enabling Investment to Increase the System Efficiency:(Cost $93.10 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO Moderately Unsatisfactory Moderately Satisfactory Overall Implementation Progress (IP) Moderately Unsatisfactory Moderately Satisfactory Overall Risk Rating Substantial Substantial Implementation Status and Key Decisions Levels of disbursement, commitments and procurement progress have been substantial (over 50 percent disbursed, and commitments to exceed 90 percent after award of the main ongoing civil works contract). Progress in reaching of the PDO: Current progress is moderately unsatisfactory. However, client has improved supervision both at ministerial and board levels. Most of the actions agreed during mid-term review have been achieved.  The management of HZI is implementing several short-term restructuring measures including reorganization of works in train stations, signalization on Lika railway section and asset management strategy. One of the most important short-term cost cutting measures is the 6/24/2019 Page 1 of 7 The World Bank Implementation Status & Results Report Sustainable Croatian Railways in Europe (P147499) decision on how to restructure its main subsidiary Pruzne Gradjevine, which is still pending. The related decision will be reflected in the sector policy letter. HZI should also be able to start some of the long-agreed restructuring options (e.g. administrative services and warehouses for example) which would allow to start retrenchment program in the following years.  • Implementation of HZPP’s operational restructuring partially depends on upcoming project activities. Signing of the new PSO contract was done on December 21, 2018. The new PSO contract framework provides HZPP and MSTI the tools to monitor subsidies allocation. It should now be used and modified to maximize passenger traffic for the least amount of subsidy, and MOF and MSTI should agree with HZPP on the final level of service corresponding to the PSO amount: the level of service required was increased but cannot be covered by the approved yearly subsidy in the 2019 budget. This means that HZPP should decrease its services or risk a deficit. The PSO should be modified and the activity (under procurement) supporting HZPP management for the company restructuring should help in that.  HZ Cargo’s market shares continue to decrease in the most profitable market segments. Therefore, finding a strategic partner is currently a priority for HZC. Advisory services to support this have been signed and the activity started in February 2019.  Government approval of sector policy letter will provide guidance for overall sector reform and draft letter is currently discussed among relevant parties.  Activity supporting 10-year railway strategy and infrastructure development and management plans, required by EU, is under procurement. Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance Substantial Substantial Substantial Macroeconomic Substantial Substantial Substantial Sector Strategies and Policies Moderate Moderate Moderate Technical Design of Project or Program Moderate Moderate Moderate Institutional Capacity for Implementation and Sustainability Substantial Substantial Substantial Fiduciary Moderate Substantial Substantial Environment and Social Substantial Moderate Moderate Stakeholders Substantial Substantial Substantial Other Moderate Moderate Moderate Overall Substantial Substantial Substantial Results PDO Indicators by Objectives / Outcomes To improve the operational efficiency and the financial sustainability of the public rail sector IN00717392 ►HZP operating expenses per train-km (in HRK) (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target 6/24/2019 Page 2 of 7 The World Bank Implementation Status & Results Report Sustainable Croatian Railways in Europe (P147499) Value 45.00 42.30 42.30 41.40 Date 31-Dec-2014 31-Dec-2018 31-Dec-2018 30-Nov-2021 IN00717393 ►HZI million train-km per track-km (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 9,965.00 8,139.00 8,139.00 8,300.00 Date 01-Jan-2014 31-Dec-2018 31-Dec-2018 30-Nov-2021 IN00717394 ►Number of annual train-km operated per HZI employee (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 4,032.00 3,369.00 3,369.00 4,500.00 Date 31-Dec-2014 31-Dec-2018 31-Dec-2018 30-Nov-2021 IN00717395 ►Introduction and signing of the multi-annual infrastructure contract (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No No No Yes Date 08-May-2019 08-May-2019 08-May-2019 31-Dec-2020 IN00717396 ►Completion of a strategic partnership for HZ Cargo (transaction finalized) (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No No No Yes Date 08-May-2019 08-May-2019 08-May-2019 02-Mar-2020 Intermediate Results Indicators by Components Project Coordination and Sector Policy Support IN00717397 ►Percentage of affected workers who participated in the social mitigation programs reporting satisfaction with the programs including gender disaggregated data (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 20.00 Date 31-Dec-2014 31-Dec-2018 31-Dec-2018 30-Nov-2021 IN00717401 ►Percentage of assets with resolved legal titles (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target 6/24/2019 Page 3 of 7 The World Bank Implementation Status & Results Report Sustainable Croatian Railways in Europe (P147499) Value 0.00 0.00 0.00 30.00 Date 31-Dec-2014 15-Mar-2019 15-Mar-2019 30-Nov-2021 Support to HZ Passenger Transport Restructuring IN00717398 ►Number of HZP staff retrenched (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 902.00 902.00 771.00 Date 31-Dec-2014 31-Dec-2018 31-Dec-2018 30-Nov-2021 IN00717402 ►Number of HZP rolling stock rehabilitated (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 12.00 12.00 12.00 Date 31-Dec-2014 31-Dec-2018 31-Dec-2018 31-Dec-2020 IN00717406 DMUs and diesel locomotives (Number, Custom Breakdown) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 4.00 4.00 4.00 Date 31-Dec-2014 15-Mar-2019 15-Mar-2019 30-Dec-2020 IN00717408 EMUs and electric locomotives rehabilitated (Number, Custom Breakdown) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 8.00 8.00 8.00 Date 31-Dec-2014 15-Mar-2019 15-Mar-2019 30-Nov-2021 IN00717410 ►HZP commercial revenues per employee (in HRK) (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.26 0.20 0.20 0.21 Date 31-Dec-2014 31-Dec-2018 31-Dec-2018 30-Nov-2021 IN00717411 ►HZP four new DMU trains (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 4.00 Date 01-Jan-2014 05-Jun-2018 05-Jun-2018 29-May-2020 6/24/2019 Page 4 of 7 The World Bank Implementation Status & Results Report Sustainable Croatian Railways in Europe (P147499) Support to HZ Cargo Restructuring IN00717399 ►Number of HZC staff retrenched (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 326.00 326.00 910.00 Date 31-Dec-2014 31-Dec-2018 31-Dec-2018 30-Nov-2021 IN00717403 ►Number of HZC rolling stock rehabilitated (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 1,210.00 1,210.00 2,161.00 Date 31-Dec-2014 31-Dec-2018 31-Dec-2018 30-Nov-2021 IN00717407 Wagons (Number, Custom Breakdown) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 2,150.00 Date 31-Dec-2014 15-Mar-2019 15-Mar-2019 30-Nov-2021 IN00717409 Locomotives (Number, Custom Breakdown) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 3.00 3.00 11.00 Date 27-Feb-2015 15-Mar-2019 15-Mar-2019 30-Nov-2021 Support to HZ Infrastructure Restructuring IN00717400 ►Number of HZI staff retrenched (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 494.00 494.00 900.00 Date 31-Dec-2015 31-Dec-2018 31-Dec-2018 30-Nov-2021 IN00717404 ►Number of kms of line sections rehabilitated or improved (Kilometers, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 183.96 183.96 306.25 Date 31-Dec-2014 31-Dec-2018 31-Dec-2018 30-Nov-2021 IN00717405 ►Fatalities per 10 million train-km (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target 6/24/2019 Page 5 of 7 The World Bank Implementation Status & Results Report Sustainable Croatian Railways in Europe (P147499) Value 10.00 8.00 8.00 7.00 Date 31-Dec-2014 31-Dec-2018 31-Dec-2018 30-Nov-2021 Overall Comments IR there have been discrepancies in the values in the results framework, especially in sequence 4 and 6 . This is because of a misunderstanding of the data produced by the client and reported in their reports. These affect especially values of rolling stock rehabilitated under the project. some reports from the companies were showing cumulatively items rehabilitated by the companies as part of their overall programs and items rehabilitated under the project. As a result the values (including targets were mistakenly modified including during ISR6). The values in this ISR have been corrected and are consistent with ISR 5 which was done just after the project restructuring. One target (wagons for HZC) was adjusted by a few units after consultation with the borrower). Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P147499 IBRD-85000 Effective USD 88.65 88.65 0.00 33.32 55.07 38% P147499 IBRD-85010 Effective USD 48.20 48.20 0.00 27.45 21.39 56% P147499 IBRD-85020 Effective USD 46.50 46.50 0.00 36.49 10.04 78% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P147499 IBRD-85000 Effective 30-Apr-2015 06-May-2015 04-Aug-2015 31-May-2020 31-May-2020 P147499 IBRD-85010 Effective 30-Apr-2015 06-May-2015 04-Aug-2015 31-May-2020 31-May-2020 P147499 IBRD-85020 Effective 30-Apr-2015 06-May-2015 04-Aug-2015 31-May-2020 31-May-2020 Cumulative Disbursements 6/24/2019 Page 6 of 7 The World Bank Implementation Status & Results Report Sustainable Croatian Railways in Europe (P147499) Restructuring History Level 2 Approved on 27-Jun-2018 ,Level 2 Approved on 11-Jun-2019 Related Project(s) There are no related projects. 6/24/2019 Page 7 of 7