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300 SCHEDULE 2

The Project is a five-year program for the rehabilitation of the physical properties and the improvement of operations, management and administration of the Borrower. The program includes the following:

Part I. Rehabilitation of the Roadway.

This includes the following works and measures:

(a) The replacement of old rails with rails weighing not less than 70 lbs. per yard on approximately 1,400 km. of existing main lines;

(b) The installation of point locking devices on all mainline switches;

(c) The remodelling of station yards, the extension of existing sidings, the construction of new sidings and of facilities for turning locomotives;

(d) The replacement or reinforcement of bridges;

(e) The acquisition of mechanical equipment for trackwork and the acquisition and installation of equipment for the impregnation of ties.

Part II. Acquisition of Operating Equipment.

This includes the acquisition of:

(a) 30 diesel-electric locomotives of approximately 1,000 H.P. and an adequate supply of spare parts;

(b) About 170 coaches and vans and about 850 freight cars;

(c) About 5,800 sets of automatic couplers to be installed in place of the couplers now in use.

Part III. Improvement of Railway Operations.

This includes the following works and measures:

(a) The installation of a telecommunications system to control train movements and dispatching of cars over the entire system and the installation of signalling equipment and block control apparatus;

(b) The acquisition of weigh-bridges and material-handling equipment;

(c) The provision of additional facilities for the Makkasan repair shops;

(d) The organization of a statistical and planning section.

Part IV. Construction of Service Buildings and Housing for Staff.

Part V. Improvement of Management and Administration.

The Borrower has adopted and will continue in force various measures, and will adopt and will continue in force such other measures as shall be agreed upon between the Bank and the Borrower for the strengthening of its management and administration, the improvement of its operating procedures and practices, and the efficient and economic No. 3011