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Railway electrification
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Cost-benefit analysis of railway electrification:
case study for Cairo - Alexandria railway line
Fathy El-Sayed Al-Tony ad Abdelkader Lashine
Egypt National Railway trains (passenger and freight) are currently operated with diesel traction, except for
two electrified Metro lines in Cairo of about 55 km in length. An electrified rail system could have a number
of operational and environmental benefits. This paper examines the economic and financial viability of a
proposed electrification scheme for the Cairo-Alexandria railway line. The framework of appraisal
developed identifies the potential direct and indirect benefits of the scheme, and its costs. The evaluation of
different types of costs and benefits included a sequence of analytical steps. The- results showed that the
scheme achieves only about 9 % internal rate of return. However, applying a broader cost- benefit analysis
to include all sources of benefits shows that it is highly desirable on an economic basis. Despite the extreme
difficulty of obtaining the required data. and information, plausible and coherent results were achieved,
which are also seen to be consistent. with other results of electrification schemes in Europe.
Keywords: cost-benefit analysis; railway electrification; Egypt
Dr Fathy EI-Sayed Al-Tony is Assistant Professor; Transport Economics Department, Egyptian National Institute for Trans portation, PO Box 34,
Abbsia, Naser Road, Naser City, Cairo, Egypt;. Tel: +20 2 2604903, Fax: +20 2 2604121; E-mail: [email protected]. Dr Abdelkader Lashine is
Previous Chairman of the Transport PlanningAuthority.

For a Country with the population size and diversified economic structure of Egypt, transport plays a vital role.
It must provide efficient and reliable services, and, given the scarcity of financial resources in the economy; it
must accomplish these objectives at a minimum cost. It is of paramount importance, therefore, to ensure that the
vital production activities of the economy are not hindered by lack of transportation.
Railways can playa critical role in domestic transport. All economies which produce or consume large
amounts of bulk commodities, need an efficient rail service. Railways can also be important in passenger
service: India Railways and China Railways are the world's second and third largest transport carriers; each
carries about 50% more passenger traffic than all of the West European and North American. railways .
combined.

Many developing mega-cities such as Buenos Aires and Bombay are. heavily dependent on rail for urban
transport as well (Thompson, 1992). Railways also play a critical role in a nation's competitiveness. World trade
is increasingly governed by total logistics costs with heavy emphasis on speed, reliability, flexibility, and
real-time information. The cheapest mode can be disadvantageous if it is slow and unrelia151e. Then those
countries with poor rail systems 'cede a logistical advantage to countries whose railways perform better.
Railway investment projects can also help in meeting environmental targets. Rail schemes can have impacts
on localized water, soil quality and :can change the local ecology through induced economic development.
Additionally, railways can handle heavy passenger flows efficiently and with minimal air and noise pollution.

The railway network of the Egyptian National Railway (ENR) is approximately 4430 km long and consists of
about 43 lines. These lines are classified into three classes depending on train speed and/or passing tonnage. In
the first class are 6 lines of 1402 km. In the second class are 11 lines 800 km; and the third class has. 26 lines of
2224 km.
ENR plays a vital role in transporting both passengers and freight in Egypt. It draws its importance from
being one of the earliest railways in the world. ENR is the governmental authority, affiliated to the Ministry of
Transport, in charge of operation, maintenance and upgrading the. railway network and railway services.
Although ENR has a significant role in passenger transportation (carrying about 50% of total passenger traffic)
it has a minor share of freight transport (only about 5%).
The 1996/97 number of rail passengers excluding the Metro was about 771 million representing 52,929
million passenger kilometers; with an average travel distance about 71 km. The annual average growth ratio
during the 90s of the number of rail passengers -and passenger kilometers was 4.1% and 5.8% respectively. The
average travel distance showed a stable increase during the same decade. As for the share ratio by ticket type,
normal tickets are about 63% of the total, season tickets 14-15%, kilometers tickets. (travel cards issued for .
1,000, 2,000... kilometers of rail travel) merely 0.1 %, and conductor tickets (issued on the train by the
conductor) about 22-24%.
The total rail freight transport volume and total tonne kilometers were 12 million and 3,969 million in
1996/97. The major commodities in terms of share ratio of tonnage to the total tonnage during the 90s are iron
ore 20-23%, wheat 10-15%, coal and coke 9-13%, petroleum products 10-17%, phosphate 5-8% and ENR
commodities 17-18%. These commodities amount to about 80% in both tonnage and tonne kilometer of ENR.
The average transport distance is estimated to be about 330 km.
ENR has been suffering from a deficit since 1975 (JICA,1996). The cost-recovery ratio (defined as revenue
divided by expenses) went down to 33-34% in the middle of the 1980s. However, the current deficit. excluding
depreciation has been improved gradually in the 1990s. Consequently, the cost-recovery ratio went up to 107%
in 1994/95. On the other hand, including depreciation in.1994/95, the cost-recovery ratio was still below 100%.
In addition, ENR has not been paying interest cost since 1992/93. If this were included on the income statement

in 1993/94, for example, the cost-recovery ratio would be down to 43%. So ENR is still facing financial deficit,
especially a large burden of capital cost (JICA, 1996).
ENR trains (passenger and freight) are being operated with diesel traction, except two electrified Metro lines
in Cairo of about 55 km in length. An electrified rail system can have a number of operational and
environmental benefits. In terms of operational aspects; it facilitates the use of high-speed, high-powered,
high-acceleration and lower-noise traction motors in comparison with diesel engines. These factors contribute to
a better level of customer service and help to improve competitiveness with other modes of transport. The most
successful passenger railway services in the world (including high-speed and urban rail systems) are electrified.
Table 1 illustrates the ratio of electrified rail track and the amount of traffic using this track in Europe and
Japan.
As shown in Table 1, in most countries, the percentage of traffic using the electrified track is much more than
the percentage of electrified track. This indicates that electric traction in railways facilitates moving heavy
traffic effectively. In addition; it shows that electrified rail routes usually have a high level of traffic density.
Electrification schemes necessitate costly, fixed installations for power supply (sub-stations) and power
transmission (contact wire system) as well as cabling of telecommunication lines alongside the railway line and
reconstruction of some existing buildings. The capital requirements of electrification are thus high. It follows
that routes to be electrified must have a traffic density high enough to justify the initial costs of the scheme.
Electrification is often not profitable on lines with low traffic, and the development of appropriate infrastructure
may result in significant short-term landscape disruption, as well as increased visual disruption from overhead
power lines. All these issues should be examined when making the decision to electrify rail tracks.
In most countries, a minimum level of traffic is required to start examining the feasibility of railway
electrification schemes. Japan Railways identify a minimum "turnout point" of 40 trains per day (JICA, 1979).
The World Bank studies of electrification identify a minimum level of traffic before proceeding with appraisal
(World Bank, 1984). In Europe, most railway electrification proposals have to go through both financial and
economic evaluation, and have to yield sufficient direct and indirect benefits to justify the initial capital
investment of the proposed schemes (DTp, 1984). This can only happened if railway lines have a high level of
traffic demand.
Proposed scheme
The Cairo-Alexandria railway line, 208 km long, is one of the main lines of ENR. It carries about 30% of
ENR passengers. The Master Plan study of the railway (JICA, 1996) identified the daily capacity for the line at
176 passenger trains and 65 freight trains with allowable speed up to 120km/h. The line has the highest
passenger density (214 thousands passenger km/km) of all the ENR lines. Most of the line is flat, gradients are
rare and do not exceed 0.5%. The track gauge is about 1435mm.
The daily number of passenger trains operating on the line is 65 in each direction. Some of these (32) are
express trains (air-conditioned trains; mixed trains, and those that are not air-conditioned) that operate on the
whole, distance between Cairo and Alexandria. Others (33) are local trains that operate between one point and
another on the line. Figure 1 shows a map of Egypts rail network and the proposed line for electrification. A
previous study (JICA; 1979) recommended that the electrification of this line would have enough benefits to
justify the investment.

This research paper is concerned with examining the financial and economic viability of electrification of the
Cairo-Alexandria railway line. The paper develops a framework of appraisal that identifies the direct and
indirect potential sources of benefits of the proposed scheme and uses that framework to estimate these benefits
over the project life. The appraisal framework and procedures consider passenger operation only, leaving aside
freight operations.1

Financial and economic appraisal

At the most general level, the techniques for assessing investment in the transport sector are financial
appraisal (FA), economic appraisal (EA), and multicriteria decision-making techniques. This section describes
the first two techniques and highlights how they vary in assessing investment schemes.
Financial appraisal .
Financial appraisal (FA) is a method by which the effects of an investment on a particular industry, firm or
private investor can be measured. The primary facet of FA is that it considers only the direct impacts of the
project on the entrepreneur (railway operator) on a cash basis. Any direct or indirect impacts on other parties are
not included.
The second facet is that it accepts actual prices in the market (at the time of evaluation). The rate of return on
the investment is estimated by market conditions, whether competitive or imperfect. The external impacts of the
project on the rest of the community or direct impacts on the consumers of the service provided and resource
cost adjustments (shadow pricing) are all irrelevant in the FA technique.
In the transport sector, many investment projects, such as railway electrification, have impacts other than on
the entrepreneur (railway operator), such as benefits to users (improvements in service quality) and benefits or
costs to society (reduction in external costs of road. transport such as congestion relief and accident reduction).
These impacts are not included in the FA framework.
Economic appraisal .
Cost-benefit analysis (CBA) is the most popular technique for carrying out economic appraisal for transport
investment projects. It is defined as:
a particular way of assessing the desirability of projects, where it is important to take a
long view (in the sense of looking at repercussions in the further as well as the nearer
future) and a wide view (in the sense of allowing for side effects of many kinds on many
persons, industries, regions etc.), that is, it implies the enumeration and evaluation of all
the relevant costs and benefits." (Prest and Turvey, 1965)
CBA is the usual method for testing the soundness of proposed schemes. It involves an estimation of the
value of the resources to be employed- the costs -which is compared with the value of the goods or services
to be produced- the benefits. In contrast with financial appraisal, CBA measures the effects of an investment
to society as a whole.
Thus, CBA is a comprehensive technique measuring the expected real impacts of a transport investment
scheme on a society. These impacts could be direct (revenue. or profit to the operator) or indirect (benefits to
users of the. transport facility or to the community such as improvements in service quality, reduction in road
congestion time delays, road accident costs, air and noise pollution), tangible (measurable) or intangible.
Appraisal framework and procedures .
Since the Cairo-Alexandria railway line is currently being operated by diesel traction, the method used for
appraisal of the electrification scheme is based on comparing the with electrification situation to the
without (that is continuing operations by diesel traction).

Figure 2 illustrates the appraisal framework developed for identifying and estimating different types of .
cost and benefit of the-electrification scheme.
The following sections explain the procedures for measuring different types of benefit and cost..
Benefit algorithm
The appraisal framework of the electrification proposal in. this study identifies four potential sources of
benefit from the scheme that would be included in the appraisal process. These are:
railway financial benefits.(producer surplus);
railway user benefits (consumer surplus);
road user and environmental benefits;
community benefits.
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Cost-benefit analysis is a comprehensive technique measuring the

expected real impacts, both direct (revenue or profit to operator) and
indirect (improvements in service quality, reduction in road congestion),
of a transport investment scheme
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This section, with the help of Figures 3 and 4, illustrates how, these benefits are incorporated in the benefit
algorithm.
Railway financial benefits refer to the net profit (sometimes called producer surplus) that the railway authority
gains as a result of the electrification scheme. As shown in Figure 3, when rail investment shifts. the marginal
cost curve uniformly downward, the area GC2BM2-GC,AMI will represent the operators profit. Equation (1)
represents this type of benefit in mathematical form.

Railway user benefits are gained by railway users in terms of improvements to the quality of services as a result
of the project. In Figure. 3, GC2 and GC1 are the generalized cost of travelling by rail with and without the
scheme. Q2 and Ql are the number of trips with and without the scheme. The area GCIABGC2 represents the
consumer surplus. gained by rail users (stayers and new travellers transferring from road). Equation (2)
illustrates this in mathematical form.

Road user and environmental benefits Generally speaking, the external costs of transport (such as loss by
environmental damage, accidents and congestion delays) of road transport are considerably higher than those
for rail. A European study of the external effects of transport (Rothengatter and Mauch, 1994) shows that in the
17 European countries considered, external costs amounted to 272 billion ECU or an average of 4.6% of GDP
(gross domestic product). Overall, 92% of these costs is attributable to road traffic, with only 1.7% attributable
to railways.
In this context, road user and environmental benefits are the potential net benefits accruing to non-users of
the railway, arising as a result of trips which would otherwise take place on the highway network divert ing to
railway because of electrification. In other words, they are .the external costs of road transport that would have
been accruing to the society in the without case. These types of benefit: include , decongestion on the road
network, and reduction in road accident costs and air pollution.
As shown in Figure 4, the marginal private cost (MPC) of travel by road is below the marginal social cost
(MSC) of travel. This is mainly explained by the fact that there are external costs for road vehicles, in the form
of time delays, and noise, air pollution and accident costs. Road users do not include these externalities in their
travel cost.
When electrification of railways leads to a transfer of some road users to rail, benefits will emerge. These are
the savings in the external costs of road transport of those trips that transfer to railways. In Figure 4, if (q 1q2)
were the number of trips moved to rail; the benefits gained by road users and the community would be the area
OPQR. This benefits could be measured mathematically using Equation (3):
RUEB = 1/2 (ql-q2) (RECwith + RECwithout) (3)
where:
RUEB =

road user and environmental benefits of the electrification in terms of time, accident
and pollution costs which would otherwise be imposed on road users and society
if electrification. did not hap pen (without case)

RECwith+RECwithout = difference between marginal social travel cost of road transport reflecting the external
costs that road users impose on each other and on the rest of society for with and
without situations.
Community benefits A variety of other benefits associated with mode switching are also attributed to the
proposed electrification scheme and have to be included in the economic appraisal benefit algorithm; these are:
reduced road vehicle capital and ownership costs;
reduced road maintenance and capital costs;
reduced fuel consumption on road.
Traffic forecasting,
Estimating future transport flows of passengers and freight can be considered as the most important issue in
transport planning. This can be attributed to their major role in assessing the investment plans and evaluating
different improvement policies to any transport system such as railways.

Rail passenger forecasting To estimate different types of benefit of the scheme as well as capital and
maintenance costs, the number of passengers using the Cairo-Alexandria rail line over the project life in the
with and without situation is required. The methodology used to derive rail passenger forecasts involved a
sequence of analytical steps.
Based on the forecasts of the main study of Egypt rail (JICA,1996), which predicted the number of
passengers using different railway lines for the period 1995-2012 inclusive, and using regression analysis, the
figures for the Cairo-Alexandria line are used to predict the demand of passengers on the line-over the project
life for the without situation. A previous study (JICA,1979) concluded that an electrification scheme would lead
to an extra 9% of normal demand for the Cairo-Alexandria line, which is mainly assumed to be otherwise using
the Cairo-Alexandria agriculture road. Adding this percentage to the demand in the without situation would give
the demand of the line in the with situation.
In fact, there would probably be some extra traffic induced by the electrification, especially as a result of a
potential improvement in the rail service quality with the project. However, this was not estimated in this paper.
It is also appropriate for the forecasts to take into consideration potential technology improvements, both .for
rail and for road. However, given the complexity of this issue, this was not considered.
Road traffic forecasting For the purpose of estimating the benefits associated with mode switching (road user,
environmental and community benefits), traffic flows on the Cairo-Alexandria agriculture road (the direct
alternative substitute)t are required. The base year demand is obtained from the main transportation study of
Egypt (JICA 1993), and a growth factor of 1.5% per annum is used to predict the traffic volume on the road
over the project life for the without situation. This value is chosen according to the general trend of traffic
growth on Egyptian roads similar to the Cairo-Alexandria road (Al-Tony and Al-Maksoud, 1999).

_____________________________________________________________________________
The period of evaluation for the electrification scheme is assumed to be 30 years, including
four years of construction work and 26 of operation: this is compatible with the expected
production life of fixed installations and rolling stock
_____________________________________________________________________________
Evaluation of costs and benefits
The evaluation process of costs and. benefits of the scheme included a sequence of analytical steps. Transport
investment schemes are usually evaluated over a period of 25-30 years. The period of evaluation for the
electrification scheme is assumed to be 30 years. This includes four years of construction work and 26 of
operation. This is found to be relevant with the expected production life of fixed installations and rolling stock.
Also- it is consistent with other countries' experience in the evaluation of rail electrification projects (WS
Atkins; 1990; DTp,.1984).
Capital and maintenance costs.
The costs of electrification: of the Cairo-Alexandria rail line consist of the capital costs of fixed installations,
rolling stock and their maintenance cost: Capital costs of fixed installations are estimated at E 816m, which
is expected to be spent equally over four years of construction. Table 2 shows the breakdown of these costs.
The estimated costs are based upon various sources of information and expertise such as Egypt Rail

experience in Cairo underground, previous studies (JICA, 1979; NEDCO, 1981), as well as information
supplied from worldwide companies and consultants.
Rolling stock required for the scheme comprises electric locomotives and coaches. The number of electric
locomotives required for the `with' situation is based on the total number of passengers forecasted, train
capacity and the average daily kilometres the locomotive can do. The latter is estimated based on 16 hours work
per day (allowing for servicing) and average travel speed. Information about the current train operation on the
line helped also in identifying the required number of locomotives. The electrification of the line will lead to
improvement in both travel -speed and train frequency as well as better utilization of locomotives. These issues
are taken into account when estimating the required number of electric locomotives.
This process results in the need for 38, electric locomotives (1850 horsepower) at a total cost of E 272m at
the beginning of operation (year 2007): In addition it is found appropriate to take account of the cost of
additional locomotives over the project life required to cater for the expected annual increase in passenger
demand; this is found to require about one locomotive each year.
Passenger coaches required are estimated only for the 9% extra passengers attracted to the railway line as a
result of the electrification. Considering the extra number of passenger trips; train capacity, load factor, and train
kilometres per day, this results in the need for 110 coaches costing E 418m in the first year of operation. In
addition, there will be about ten coaches required every four years of operation to accommodate the growth of
passenger demand.
Maintenance costs of fixed installations are estimated at E 6.6m annually starting at year 2007. The
maintenance cost of electric locomotives is about half that for diesel locomotives (NEDCO, 1981). For the
`with' situation this is considered as a type of benefit, which will appear in the benefit side of the scheme.
However, it is appropriate to consider the operating and maintenance costs of the extra coaches bought to cater
for the extra demand as a result of electrification. This is estimated based on current maintenance and operating
costs per km obtained from Egypt Rail records and the expected annual kilometres for coaches.
Railway financial benefits
Railway financial benefits comprise the extra revenue gained as a result of the electrification of the line, the
residual value of diesel locomotives currently used on the line and savings in operating and maintenance costs.
Passengers attracted to the line as a result of the electrification benefit from . the reduction in travel

Assuming that whole-distance travellers are served by first and second class air-conditioned trains, and considering the average fare being applied, the total extra revenue is estimated. In fact, one might argue for an
increase in fares after electrification to recoup for service improvement. This would improve the financial
benefits of the scheme even further.
The electrification of the line would lead to an amount of `avoidable capital cost' in terms of reuse (on other
lines) of the diesel locomotives currently running on the line. This is estimated as a residual value of the diesel
locomotives allocated for the Cairo-Alexandria line. Information about the number, models and age of these
locomotives as well as the price is obtained from Egypt Rail records. Then the amount of avoidable capital cost
is estimated based on a 25-year. life for diesel locomotives.
Electrification will also lead to savings in train operating costs, This comprises the difference between the
cost of operating trains by diesel and electricity, , and savings in lubricant and oil costs: The consumption of
electric locomotives in terms of oil and lubricant is only 50% that for diesel , locomotives. In addition, there
would be savings in terms of fuel consumed in power generation cars, which will not be needed with
electrification.
Electrification will also result in some savings in maintenance cost of locomotives which is half that for
diesel. In addition the maintenance of power cars will -be avoided completely.
Railway user benefits
The principal user benefits from the electrification of the Cairo-Alexandra line would be in time savings. As a
result of speed improvement; the potential time saved on the trip from Cairo to Alexandria is 30 minutes. For
the purpose of estimating these benefits, railway users are divided into two -groups: the first is called `stayers',
referring to travellers using the railway line before and after electrification. The gain to them is quite
straightforward: They enjoy the reduction in. travel time. However, some of them are whole-distance travellers,
and others make local trips. Based on the current percentages of whole-distance travellers and local trip makers
obtained from ENR. operation records; the time saved for stayers is measured.
The second group is called `movers'; they transfer from road to rail with electrification: The gain to this group
is less than those who were. already using the line. This reflects the quantitative difference between the two
modes. The travellers using the road before electrification attached some specific value to a feature of it perhaps its relative comfort. The change of trip time by rail induces them to change mode, because the journey
by rail is quicker than it was before, but they-lose the relative comfort for example:
It; could be argued that movers would also have issue in itself would induce switching of passengers to use
the electrified railway line. The total gain to movers is, therefore, somewhat less than the change in
generalised cost. According to Harrison (1974) their gain could be half that for stayers. `The savings are
evaluated for rail travellers (stayers and movers) using the value of time for public passenger mode
recommended by the study of the transportation system in Egypt, which is based on the average earnings per
working hour (JICA, 1993) after updating it to be on the same basis as 1998'prices.
Road user and environmental benefits
In addition to .benefits to people who transfer from road to an improved rail service, there would be benefits to
the remaining road travellers, that is, non-user benefits: These would consist of time and accident cost savings
arising from less congested traffic conditions. Also; increased speeds on the road could marginally reduce the

operating cost of private cars by reducing fuel consumption. However, this benefit is likely to be small and is
not estimated.
To derive an estimate of time benefits accruing to road users, two-way 16-hour annual average daily traffic
flows for `without' the scheme are used to obtain an 'estimate of average speed on the Cairo Alexandria road
using a relevant speed/flow relationship. The diverting passenger trips are converted to vehicle trips by applying
the current vehicle occupancy rates taken from the study of the transportation. system in Egypt (JICA, 1993).
Then the converted trips are deducted from the `without' traffic flows to derive the `with' traffic flows on the
road.
The speed/flow relationship is used to obtain an estimate for average speed on the road with rail
electrification. Knowing the average travel distance along the road (220 km) and average speeds for the `with'
and `without' situations, the' amount of time saved for any vehicular trip on the road can be estimated. Then,
using the values of time for each vehicle category and vehicle category proportions on the road, the amount of
time saved for road users over the project life is evaluated (see Table 3).'.

The diversion of road trips to rail would also reduce the incidence, and hence the cost, of accidents on the
Cairo-Alexandria road. A road accident will incur some or all of the following consequences: people killed;
people seriously 'or slightly injured; damage to vehicles; buildings or other property damaged; costs of policing;
administration; and medical, pain, suffering and grief for relatives of victims. These direct and indirect
consequences imply costs for individuals and society at large. Quinet has estimated the social costs of road
accidents in the UK to be 1.5% of GDP in 1986 (Pearce. 1993).
There were about 27,000 road accidents in Egypt in 1998; in which 5100 people were killed and 22,000 injured (GARB, 1999):. Costing. accident benefits of electrification would require putting a value on the
consequences of road accidents. However, the current research focused on the reduction of the number of
people killed as a result of the electrification scheme.
According to the records of the General Authority of Roads, Bridges and Inland Transport, annually about 15
persons are killed on the Cairo-Alexandria road for each million.. of passenger car units (PCU). This rate is
used, with the potential number of PCUs removed from the road as a result of the electrification, to identify the
reduction in the number of people killed annually. Then, based on a value of life (estimated from the average
annual earnings of potential killed people), the total accident savings are quantified.

_______________________________________________________________________________
The costing of air pollution benefits of electrification has proved difficult, because of the
difficulty of isolating the damaging health and environmental impacts of transport emissions,
and the impacts cannot easily be converted to monetary values
________________________________________________________________________________
The environmental benefit considered here is the impact of the scheme n air quality: In- this context,
electrification of the Cairo--Alexandria rail line would:
reduce air pollution of the railway as a result of a transfer from diesel to electric traction; and.
reduce air pollution of the road as a result of transfer of transport demand from road to rail.
Given the potential environmental damage of transporting and storing massive volumes of fuel, it might be
argued that electrification would probably lead to a reduction in the amount of disel and oil being transported
and stored. So, some environmental benefits would probably emerge as a result of that. However, given the
difficulty of identifying and estimating these benefits, it was not considered in this paper.
A full analysis would require that these net effects be considered in the context of complete fuel/energy
production and consumption systems. The analysis has to consider not only, say; operational emissions but also
emissions at the point of energy production.
It is widely recognised that rail transport, particularly with electrified track networks, consumes less energy
per unit of transport than any other mode of transportation. In Japan, railways consume only 5% of the total
energy consumption for the transport sector, while the passenger volume accounts for 39% and freight for 5% in
1993 (Ministry of Transport, Japan, 1995). In Switzerland, rail consumes 4% of transport energy for a market
share of 13% passenger km and 42% tonne km (Hubner, 1996).
It follows that rail emissions are much lower than other transport modes; especially road vehicles. According
to Asano (1993), if all freight traffic currently transported by rail. in Sweden were to be transferred by road,
COZ emissions would increase by approximately 70%. Table 4 shows the polluting emissions of road and rail.
The costing bf air pollution benefits of electrifi6ation of the line has proved difficult. This is mainly because
of the difficulty of isolating the damaging health and environmental impacts of transport emissions. In addition,
the impacts -cannot easily, be converted to monetary values. Most environmental studies (OECD; 1988; Walsh,
1990; Schulz, 1989, WHO, 1987) concluded that. the estimates of air pollution damaging costs should be
treated with caution and viewed as minimum estimates.
Based on the emissions per passenger km in Table 4; rail passenger flows and the diverting trips from road to
rail, the amount of emissions reduced as a result of the electrification is estimated. Using the most recent
estimated damage cost of each unit of pollutants, estimated for Britain (Pearce;1993), the benefits in terms of air
pollution reductions are evaluated. It is worth mentioning that the British damage cost per unit of pollutants was
scaled down by a factor of 26 reflecting the per capita income in Egypt compared with that of Britain as a proxy
for the difference in willingness-to-pay between the two countries.

Community benefits
The electrification of the line has some other benefits associated with the number of trips transferred from road
to rail: avoidable capital cost of road vehicles; fuel saved of those trips previously made by road; and reduced
expenditure for road maintenance and construction.
The benefits in terms of avoidable capital cost of road vehicles are derived from the potential number of
passenger trips moved from road to rail, share of road passenger modes (bus, taxi), passenger occupancy rates
on the road, daily kilometres per vehicle and the average economic purchase price of different types of
passenger vehicles. Fuel savings are derived form fuel consumption rates of passenger vehicles, total number of
passenger km moved from road to rail, and fuel price.
As far as saving in expenditure on highway construction and maintenance is concerned, given the strategic
importance and traffic levels on the Cairo-Alexandria agriculture road, it was considered unlikely that
significant benefits of this kind would arise. In addition, given the current growth rate of traffic on Egyptian
Roads (Al-Tony and- Al-Maksoud, 1999), it is unlikely that the switch of traffic from road to rail would yield
any savings in road maintenance and construction costs.

Appraisal results
Table 5 summarises the results of the appraisal.2
Financial appraisal results
As can be seen from Table 5 based on a 10%, discount rate, the scheme financial net present value (NPV) would
be E -73.23m and the financial internal rate of return would be 9.2%. These results are seen to be acceptable
from the analysis point of view and consistent with the results elsewhere for railway electrification schemes.
For instance, the final report of the British Midland Main Railway Line Electrification Study showed that the
electrification scheme achieves about 8% financial internal rate of return (WS Atkins, 1990). However, the
estimation process of the financial benefits of the Cairo-Alexandria rail line are based on the current passenger
tariff; so the financial results could be improved through a slight rise in rail fares, especially since the scheme
would significantly enhance the: quality of service provided.

Economic appraisal results

Evaluation of the electrification scheme on the basis of broader-based socio-economic criteria (CBA) revealed a
stronger case for investment than is apparent from the application of more limited commercial criteria (financial
appraisal) as shown in Table 5. The scheme achieved a. positive economic NPV of E 696.96m or about 16.9%
economic internal rate of return.
Other un- quantified costs and benefits
Construction delays The construction of the fixed installations of electrification may cause some disruption of
rail service prior to the introduction of the scheme, for instance, some late running due to engineering works and
possible cancellation of services. These impacts were not considered in the evaluation framework. However;
construction work could be phased to minimize such inconveniences, and disruptions that do occur tend to betemporary- and in off-peak periods and then could probably be neglected.
Vibration Train movements may result in vibration are not significant (WS Atkins, 1990). Improved
streamlining of trains would reduce air-borne vibration.
Noise Noise from train movements mainly arises from the rail/wheel interface, panel vibration and train
aerodynamics, in the case of diesel locomotive engines. At high speeds, noise from the rail/steel interface will
predominate above diesel engine noise. There is therefore little noise advantage in the electrification of a line
when trains are running at high speed. However, at lower speeds, diesel engine noise will dominate over
rail/wheel noise and there will be localised advantage to. electrification.
Conclusions
Traffic congestion; accidents and air pollution are serious problems in Egypt. Traffic management schemes,
efficient pricing policies, and emission controls on road vehicles are effective instruments for reducing
congestion and air pollution of road transport.. However, they would not provide a complete solution.
Electrification of railways has. many advantages for both the operator and- society. An electrified rail system
can have a number of operational and environmental benefits: In terms of operational aspects, it facilitates the
use of high-speed, high-powered, high-acceleration and lower-noise traction motors in comparison with diesel
engines.
These factors contribute to an improved level of customer service and help to improve competitiveness with
other modes of transport. On the other hand, electrification helps in reducing the external costs of road vehicles
through possible switching between the two modes. Then on social grounds, there will be a number of societal
benefits for electrification schemes.
The application of the appraisal framework developed in this paper for the Cairo-Alexandria railway line
shows that the scheme is marginally not viable on a financial basis. Since the calculations of financial benefits
were based on the current fare being applied on the line, the financial results would be improved through fare
increases based on. the potential. for a significant improvement in the quality of service provided. Examining
the broad social benefits of the scheme proves that the investment is highly desirable. .

Finally, the study may offer some lessons for evaluation procedures. It shows that many social and
environmental costs and benefits can, and should, be included in the economic appraisal: this-brings out the
critical elements in the policy decision within a coherent and consistent framework. True, many assumptions
about externalities were required. However, plausible and coherent results were achieved, despite make
plausible estimates of some social and environmental benefits.
Notes
1. The research reported in this paper was undertaken as part of a research project entitled Electrification of'
the Traction. System of Egypt Rail conducted by Technical Consultation Bureau on behalf of the Organisation
for Energy Planning (TCB,1999),
2. A more detailed analysis is available from the author.
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