Document of The World Bank Report No. 14901-CO STAFF APPRAISAL REPORT COLOMBIA BOGOTA URBAN TRANSPORT PROJECT April 26, 1996 Department IT Environment and Urban Development Division Latin America and the Caribbean Region CURRENCY EQUIVALENTS As of June 21, 1995 Currency Unit = Peso Colombiano (Col$) US$ 1.00 = Col$ 875.59 COL$1 US$0.00114 FISCAL YEAR OF GOVERNMENT OF COLOMBIA January I to December 31 W'EIGHTS AND MEASURES Metric System ACRONYMS AND ABBREVIATIONS CAR Corporaci6n Autonoma Regional de Cundinamarca (Cundinamarca Region, Environmental Agency) DACD Departamento Administrativo de Catastro Distrital (Bogota District, Cadaster Department) DAMA Departamento Administrativo del Medio Ambiente (Bogota District, Department of the Environment) DAPD Departamento Administrativo de Planeaci6n Distrital (Bogota District, Planning Department) DATT Departamento Administrativo de Transporte y Transito (Former District Department of Transport and Traffic) "DISTRICT" Local Government of Santafe de Bogota, Capital District DNP Departamento Nacional de Planeaci6n (National Planning Department) EDTU Empresa Distrital de Transportes Urbanos (District Public Transport Enterprise) FONDATT Fondo de Educaci6n y Seguridad Vial del DATT (Traffic Safety Fund) GOC Government of Colombia IDU Instituto de Desarrollo Urbano (Bogota Urban Development Institute) IGAC Instituto Geografico Agustin Codazzi (National Geographic Institute and Cadaster Agency) INTRA Instituto Nacional del Transporte (National Transport Institute) SOP Secretaria de Obras P[blicas (District Secretariat for Public Works) SHB Secretaria de Hacienda de Bogota (District Finance Secretariat) STT Secretaria de TrAnsito y Transporte (District Secretariat for Traffic and Transport) UNDP United Nations Development Programme COLOMBIA BOGOTA URBAN TRANSPORT PROJECT TABLE OF CONTENTS Page No. LOAN AND PROJECT SUMMARY iii 1. BOGOTA AND THE URBAN TRANSPORT SECTOR .........................................1 A. Urban Development and Transport in Bogota ..........................................I B. Institutional Responsibilities ..........................................5 C. Performance of Sector Agencies ..........................................7 D. Sector Investment Plans ........................................... 10 E. Pricing and Cost Recovery ........................................... 12 F. Issues and Strategy ........................................... 13 G. Bank Experience and Strategy ........................................... 14 2. THE PROJECT ............................................ 15 A. Origin ............................................. 15 B. Rationale for Bank Involvement . ............................. 16 C. Objectives ............................................. 16 D . D escription ............................................ 16 E. Selection and Programming of Investments ............................................ 18 F. Costs and Financing ............................................ . 19 G . Im plem entation ............................................ 21 H. Procurement ........................................ 22 I. Disbursements ............................................. 25 J. Audits, Reports, and Monitoring ............................................ 26 K. Financial Impact ............................................. 26 L. Benefits ............................................. 27 M. Environmental Aspects ............................................ 28 N. Risks .............................................. 29 3. AGREEMENTS AND RECOMMENDATION ............................................ 29 This report is based on the findings of a re-appraisal mission comprising Messrs. Thakoor Persaud (Task Manager), Oscar Alvarado (Financial Analyst) and Mauricio Cuellar (Transport Specialist) which visited Colombia in February, 1995. Kulsum Ahmned assisted in preparation of the report and Caroline van den Berg updated the economic analysis section. Ms. Martha Gonzalez provided secretarial assistance. Initial appraisal was in December 1990 with Messrs. Vincent Gouarne (Sr. Urban Planner), Gideon Hashimshony (Sr. Transport Engineer), Theo Bogaerts (Cadaster Specialist), John Cracknell (Transport Specialist), Alvaro Pachon (Economist), Oscar Alvarado (Economist) and Michel Salem (Research Assistant). Messrs. Slobodan Mitric (Sr. Urban Transport Specialist) and Gerhard Menckhoff (Sr. Transport Specialist) were the peer reviewers at that time. Other updating/reappraisal missions took place in November 1992 and August 1993 under Aurelio Menendez (Transport Economist), Vincent Gouarne (Sr. Urban Planner), and Jose Luis Irigoyen (Highway Engineer). Mr. Eugene McCarthy is the managing Division Chief and Mr. Paul Isennan, the Department Director for the operation. ii TABLE OF CONTENTS (cont'd) TEXT TABLES Page No. 11. 1 - Summary of Costs ........................... 20 11.2 - Financing Plan ........................... 21 11.3 - Procurement Arrangements ........................... 23 1.4 - Estimated Disbursements ........................... 26 ANNEXES 1. Busways ............................... 31 2. Organization of the Sector ............................... 34 3. Studies, Training and Technical Assistance ............................... 38 4. Cost and Investment Schedule ............................... 44 5. Supervision Program ............................... 46 6. Implementation and Monitoring Indicators ............................... 48 7. Disbursements ............................... 53 8. Financial Impact ............................... 55 9. Economic Analysis ............................... 62 10. Selected Documents on Project File ............................... 75 MAP City of Bogota IBRD No. 22937R iii COLOMBIA BOGOTA URBAN TRANSPORT PROJECT LOAN AND PROJECT SUMMARY Borrower: Capital District of Santafe de Bogota Guarantor: Republic of Colombia Beneficiary: Instituto de Desarrollo Urbano (IDU, Bogota Urban Development Institute), Fondo de Seguridad Vial del DA TT (FONDATT, Traffic Safety Fund), Fondo Vial Distrital de la SOP (Public Works Secretariat), Secretaria de Hacienda de Bogota (SHB, District Finance Secretariat), and Departamento Administrativo del Medio Ambiente (DAMA, Bogota's Department of Environment) Poverty Category: Programn of Targeted Interventions: Component A investments widen corridors connecting several poor areas to employment centers and mainly aim to improve bus flows in these corridors. The access road program is targeted at poverty areas, and would provide about 630,000 low-income residents with easier access to the urban transport system. The poor are also expected to benefit from employment generated by project investments (about 5,000 person-years of unskilled labor). Loan Amount: US$65.0 million equivalent (including up toUS$4.OM to be financed retroactively). Terms: 17 years, including four years of grace, at the Bank's standard variable interest rate for currency pool loans. Commitment Fee: 0.75% on undisbursed loan balances, beginning 60 days after signing, less any waiver Financing Plan: See Para 2.18 Environmental Classification: B Economic Rate of Return: The corridor sub-component (about 57% of total investment), has an estimated intemal economic rate of return (IERR) of 20%; the access roads (about 10%/o of total investment) has an IERR of 12% and the maintenance component (about 27% of total investment) has an IERR greater than 50%. Staff Appraisal Report: 14901-CO Project Identification Number: CO-PA-6872 Map: IBRD No. 22937R 1. BOGOTA AND THE URBAN TRANSPORT SECTOR A. Urban Development and Transport in Bogota 1.1 Population and Economic Context. Bogotas 6.5 million residents account for about 16% of Colombia's total population. The high growth rate of the 1960s dropped to about 3% in the 1980s and is projected to average just over 2.5% annually during the 1990s, thus bringing the population to about 8 million by the year 2000. Unlike many other urban areas in the region where growth is from new births of residents, most of Bogota's population growth is fueled by migrants responding to various "push" factors (regional guerrilla violence, climatic problems, land availability, and, more recently violence from drug trafficking in rural areas). At about US$1,700 equivalent, GDP per capita is about 50% higher in Bogota than for Colombia as a whole. At the macro-economic level, Bogota is a major contributor to Colombia's economy, accounting for about 25% of the value added in manufacturing nationwide, 35% of the domestic production of services and about 46% of the employed population among the large urban centers. 1.2 Spatial Development. The city has experienced a steady north-south expansion between the floodplain of the Rio Bogota in the west and mountains in the east. The urbanized area grew from about 25,000 hactares in 1982 to about 35,000 today, with a density of about 18,500 inhabitants per kM2. Currently, the District comprises twenty local administrative entities of which nineteen are urban and one rural. Additionally, there are twelve neighboring urban municipalities with close economic links to the District (See map). 1.3 While local government policies of the 1980s have been somewhat successful in stemming low-density sprawl within the administrative limits of Bogota, encroachment in neighboring municipalities continued to occur. In both Bogota and these outlying areas, population growth was not accompanied by sufficient expansion or strengthening of the infrastructure system so that over the past decade it has been difficult for most municipalities to effectively enforce their land use regulations. One feature which has helped to some extent in Bogota is the practice of identifying and acquiring urban areas ahead of time for future street expansion. In most cases, in spite of widespread squatting, the city has been.generally successful in gaining access to these areas for system expansion. 1.4 To some degree, as is apparent from the shift out of the old downtown area, congestion and a scarcity of parking space have been important factors in influencing location of settlement and commercial activities. Most of the wealthier residents live in neighborhoods north of the downtown area while the poorer ones live in low-income settlements in the south and northwest. At the same time, manufacturing and commercial activities are located along the main corridors and service jobs have moved or are being created mostly in the north and center uptown area. This spatial incongruency between activity centers and settlements is one of the main causes of the current transport problem which Bogota presently faces. - 2 - 1.5 Poverty. Based on the UN definition of unsatisfied essential needs, an estimated 1.3 million residents of Bogota are poor with about 500,000 living in absolute poverty. The largest low-income settlements are located in the hilly southern outskirts where many basic services (water, sewerage, electricity, etc.) are lacking and many residents spend more than four hours a day commuting to jobs, businesses and other such destinations. Residents rank inadequate transport second only to crime in terms of their concems and priority needs. 1.6 Road Infrastructure Network and Traffic Conditions. Although there are data in various agencies, Bogota does not have a full and complete centralized inventory of the existing infrastructure network in terms of such factors as type, age, physical characteristics, usage, and current condition. It is estimated that it has about 10,190 lane/km of roads. Of this, about 2,250 make up the primary network and 1,320 the secondary network, with the remaining 6,620 being local roads. About 60% of the network system is in good condition and requires routine maintenance, while about 40% requires extensive restoration work. 1.7 About 530,000 vehicles or about 25% of the national fleet, are registered in Bogota with an additional 300,000 being registered in neighboring municipalities. It is estimated that about 90% of the present stock are light vehicles (cars, jeeps, pick-ups), with about 4% buses and microbuses and about 4% trucks. Between 1991 and 1992 the number of newly-registered vehicles grew from just under 14,900 to 20,400; in 1993 and 1994 these figures were 50,600 and 46,400 respectively, mainly because of Government relaxation of import restrictions. While detailed statistics for the entire fleet are not available, it is estimated that the average age of the public transport fleet in Bogota is about twenty years. Even with gasoline price at Col$ 787 (US$ 0.90) per gallon, annual local gasoline sales reached 540 million gallons which was about 30% of the national consumption. Overall, it is estimated that vehicle operating costs amount to about 2% of the GNP. Mobility is estimated at 1.4 daily motorized single trips per capita, 77% of which are made by public transport, mostly buses. Increasing per capita income would most likely continue to result in growth of auto ownership and use. This, combined with rising population and commercial activity, will further strain the capacity of the existing system. 1.8 Even with existing infrastructure and a large number of vehicles, traffic flows are much worse than these figures should indicate. Congestion is acute with peak hours extending to about six hours per day and peak and mid-day flows being indistinguishable in some streets. The record number of buses in Bogota (22,000) is hindered by congestion and contributes to it, partly due to the continuous flow and partly through their "stop-on-demand" style of operations. Traffic management has generally been inadequate. Signals are of an advanced technology but their timing is not optimal, and the layout of many junctions could be improved. Converting some streets to one-way during peak hours improved flows for a while but conditions are once again becoming severely congested. Curb parking interferes with traffic capacity in many busy streets. In 1994, the District signed a parking concession agreement for selected areas of the city. Off- street parking space is scarce and this is not helped by price control (which was only recently abolished) on the limited spaces available. Traffic law enforcement is inconsistent. Accident rates are high and increasing, with an estimated 33,300 occurrences in Bogota between January and November, 1994, a rate of about 45 per 1,000 vehicles. Pedestrians are presented with minimal facilities and accounted for about 9% of the traffic casualties in 1994. - 3 - 1.9 Road Maintenance. Even with an increasingly aging system, maintenance spending has lagged, hovering at around US$6 million per year (in 1992, maintenance spending reached a peak of US$17 million, but subsequently fell), an amount dwarfed by the estimated US$750 million annually spent by users on vehicle operating costs in the city and less than half the recurrent needs for a paved network of about 5,700 lane-km. Street drainage works are poorly maintained, and flooding on rainy days causes traffic gridlocks and damages road structures. In 1990 the local government started a program of pothole patching (by force account and local contractors) on arterials to arrest road decay and postpone extensive repair works. This program has had limited success because of uneven supervision and poor execution standards and the exclusion of many major rehabilitation works for several structurally-damaged road sections. 1.10 Public Transport. About 77% of the trips are taken in public transport facilities. A fleet of about 11,600 buses and 10,300 minibuses (busetas, microbuses, colectivos, camionetas and camperos) operates on 671 routes with about 90% of these trips concentrated in 14 main corridors. All services are privately operated by about 63 companies and while they receive no subsidies, neither do they pay for the right to the routes they service. Comfort and safety are poor with about 50% of the fleet of public buses more than 20 years old. Although the bus system provides extensive coverage of accessible areas at generally affordable fares it is estimated that about 500,000 low-income residents in peripheral areas lack regular and reliable services. Some neighborhoods cannot be reached at all by buses given the hilly characteristics and existing equipment. In many low-income areas, transport services are intermittent and disrupted by rains. Unlicensed pickup trucks or jeeps generally provide some substitution services at high fares reflecting the rough operating conditions. In the central city, congestion results in low service levels, with operating speeds below 10 kph in several corridors. It also affects the profitability of bus operations by raising operating costs and reducing the number of daily round trips a bus can make. Although load factors on individual trips have increased, total daily ridership per bus has dropped 20% in the past decade to about 500 passengers. 1.11 The local government awards route rights to companies which in turn issue these to about 63 companies which are basically groupings of several thousands affiliates who are owners or owner-drivers. In return for a monthly fee, the companies organize route assignments and coverage with the goal of equalizing profitability of their members. In theory, the licensing system controls entry, routes, frequencies and fares. In practice, little enforcement of license terms is performed and companies have no difficulty in creating a new route or withdrawing from existing service. While the system has the appearances of a deregulated one, there is really little competition among companies since each has monopoly rights to its awarded route. The area of competition lies among the drivers and operators who have no job security or social benefits and whose salary depend upon the number of passengers transported, a situation which pushes them to commit many infractions and become involved in many accidents. 1.12 In 1990, bus fares were restructured and raised in real terms to encourage fleet renewal and improve service coverage. There is a flat fare (not related to distance) which is now 120 - 350 pesos (US$0.14-US$0.40). While the fare system has recently been simplified somewhat, it is still very complicated to determine and enforce since there are theoretically over twenty different levels incorporating several factors such as age of vehicle, time, and services offered. In general, higher fares apply for services using newer buses, night operations, and for peripheral routes. 1.13 While the fares of the upmarket "executive" and "super-executive" buses can be changed with relatively little objection from the District (libertad vigilada), the fares for low-income groups are negotiated each year between the operators and the District. The local government tries to reconcile the profit goal of the operators with affordability criteria and the need to (a) maintain flexibility in allowing bus operators to create or adjust services; (b) keep fares at levels encouraging fleet renewal; and (c) enforce more stringent standards for vehicles to phase out aging stock and promote safety with less environmental hazards. 1.14 Past national economic policies have contributed to the aging of the bus fleet. Until recently, trade restrictions resulted in a limited range of obsolete bus models being sold at high prices. Rigidities in the financial system also made long-term credit unavailable to small enterprises, limiting the ability of bus operators to purchase new vehicles. In 1990, the Government dismantled non-tariff barriers on most imports, including vehicles and parts, and took steps to allow the development of a more competitive financial sector. The Transportation Law 105 of 1993 stipulates that, among other things, cars and buses used for hire cannot be more than twenty years old. This would result in a significant number of vehicles being withdrawn between 1995 and 2000. These reforms are expected to improve the underlying conditions and promote long-term development of public transport services, though their full effect may take a few years to materialize. While they have had a positive impact by providing incentives for fleet renewal, the number of vehicles has also increased and added to current traffic and pollution problems. 1.15 The Avenida Caracas Busway. Despite the fact that a majority of residents ride buses, most investments in the past have been dedicated to improving the flow of private automobiles. The first major effort targeted at improving the public transport system was a busway built in 1989-90 in the southern half of the busiest bus corridor in the city, the Avenida Caracas (see Annex 1 and map). Busways improve bus and car flows by providing exclusive tracks for each mode. In the Avenida Caracas, this required only limited changes to the existing street configuration. At a cost of US$ 4 million, it began operation in June 1990 and had such a significant beneficial impact that in 1991, with the initial appraisal of the Bogota Transport project, an 8-km Northern extension of the busway was proposed. Delays in project processing resulted in the District constructing the extension on its own at a cost of US$ 10 million. The busway includes four bus-only lanes and four lateral lanes for cars with left turns prohibited to them. It carries hourly peak flows of over 22,000 passengers per direction and ranks among the highest (for both busway and light rail system) in the world. Rush-hour bus operating speeds have improved by 40%, to around 18 kph. 1.16 The District has been monitoring the impact of the busway. A recent evaluation identifies operational problems stemming from operation and maintenance underfunding and staff allocation to the unit responsible for enforcing vehicle and pedestrian traffic on the busway, and, in the Northern section, from the absence of complementary area-wide traffic management measures. Overall, these deficiencies have prevented the full attainment of the expected performance objectives (in terms of vehicle speeds and passenger-carrying capacity) and produced an increase in local accident rates by 20%. The proposed project would support selective key measures to improve the performance of the busway and the operational unit. 1.17 Bicycle Transport. Recreational cycling is popular in Bogota and enjoys active support from the local government. On Sundays and holidays, about 100 lane-km of major arterials are closed to motorized traffic and used by several hundred thousand cyclists. The scheme, which has virtually no fixed costs and requires little enforcement, has been operating successfully for over five years. On weekdays, however, bicycle use is marginal. In the absence of segregated bikeways or protected crossings, cycling in the chaotic Bogota traffic is dangerous. The current mayor, who came into office in January 1995, is an avid supporter of non-motorized transport alternatives and the proposed project will help finance studies which will examine the feasibility of undertaking investments which would encourage increased use of such transport alternatives. B. Institutional Responsibilities 1.18 The transport system in Colombia has gone through various institutional and policy changes at all levels over the past decades. The current framework is the result of reforms of 1993 aimed at decentralization of the system. Until 1987, urban transport, at the national level, was a responsibility of Colombia's Ministry of Public Works and Transport acting through its National Transport Institute (1NTRA) which licensed and supervised urban bus and taxi services and established their fares. Decrees 80 of 1987 and 1066 of 1988 transferred these responsibilities to local governments and redefined INTRA's role in urban transport as that of a normative entity. During 1993, as part of the reorganization of the transport agencies (Decree 2171), INTRA was disbanded and its responsibilities transferred to the Ministry of Transport which today has the role of a regulatory and normative national entity. 1.19 The Santafe de Bogota District Government (Distrito Capital or the District) now has the primary responsibility for transport in the city (except for inter-municipal routes which is the responsibility of the Transport Ministry). The District of Santafe de Bogota is composed of an agglomeration of twenty entities (localidades) whose residents simultaneously elect their local administrative boards (juntas administradoras), along with 35 representatives for the District (Concejo) and its Mayor (Alcalde Mayor). The Mayor, for his part, appoints the local mayors, who, with their local boards, have responsibility for ensuring compliance with the norms, development plans, etc. for their jurisdictions. Overall responsibilities for the District lie with the legislative branch (Concejo), the executive branch (Alcaldia) and several decentralized agencies. The Concejo legislates by Acuerdos (agreements), which are enacted through mayoral decrees. 1.20 The 1991 Constitution established administrative autonomy for the Capital District of Santafe de BogotA and in line with this, the Government issued a decree in July 1993, which provisions of the Constitution made equivalent to a law - Decree 1421, Statute of BogotA - through which the District enjoys a special status in administrative, organizational, and fiscal terms. This provision enhances the autonomy of the District to manage, finance and implement - 6 - programs and projects within its jurisdiction. Currently, it receives revenues which in the rest of Colombia only accrue to the departmental governments (i.e. states) and its central administration is subdivided in secretariats and departments which operate with funds handled by the District Treasury (Secretaria de Hacienda). Decentralized agencies include Enterprises (Empresas), Institutes (Instiluto*) and Funds (Fondos), all with legal character and separate budgets. 1.21 The District has comprehensive responsibilities for transport, from road construction to traffic police and bus routes. This concentration of authority under one local body is matched in few cities and creates a rare opportunity for an integrated management of the transport system. Unfortunately, the District has made little use in the past of this opportunity and has exercised its sectoral responsibilities through a number of agencies with little communication or coordination among them and no clear overall policy-making entity in place. 1.22 There are three separate District agencies with responsibility for transport. The Urban Development Institute (IDU) builds new roads while The Public Works Secretariat (SOP) maintains public facilities including roads and parks and the Secretariat of Transit and Transport (STT) has responsibility from its predecessor, DATT (the Administrative, Transport and Transit Department) for traffic law enforcement, traffic safety and signs, driver and vehicle licensing, and supervision of public transport. STT's investments are executed through a decentralized fund called FONDATT (Fund for Traffic Safety and Education). Among some other entities having sector responsibilities are the local telephone company which operates the traffic signal system and the DAPD (District Planning Department) which defines the medium and long-term road investment plans. 1 .23 Apart from the office of the Alcalde Mayor to which these agencies report, there has not been any overall sector coordinating or policy entity. During the initial preparation of this project in 1989-90, the Bank mission worked with counterpart District staff to address this problem. As a consequence of this, an administrative reorganization plan was authorized by Acuerdo II of 1990, and was implemented through Decrees 265-267 of May 1991 with the aim of (a) streamlining responsibilities for transport in the District; (b) establishing mechanisms and institutional systems to better plan and integrate sector programs; and (c) strengthening the capacity of the District for traffic management. Among other things, this plan resulted in the elimination of DATT and the creation of STT along with a special planning subsecretariat and a Transport Authority headed by the Mayor. This effort to achieve greater efficiency and coordination has had limited success and a more comprehensive institutional reorganization is currently under consideration. 1.24 Proposed reform of transport sector in the District. Since coming into office in January 1995, the present city administration has been giving consideration to an institutional reform the purpose of which would be to address the aforementioned coordination problems, and to lay the foundation for a new long-term institutional framework for the transport sector in the Capital District, so that the sector's long-term challenges can be tackled more efficiently. The proposed reorganization would likely entail the following: (i) the creation of a single transit authority institution for the Capital District; (ii) the liquidation, or amalgamation into this new institution, of the current sector entities, IDU, FOSOP and STT; and (iii) the review of all current functions and processes within the current sector entities, in order to formulate the functions of the new institution with a strong propensity to contract-out specific functions to the private sector. 1.25 While the concept is still at an early stage, initial steps have been taken by the District, including the appointment of a transport committee, composed of prominent transport specialists, to (a) advise the administration on sector strategy; (b) propose solutions to the transport and transit problems; and (c) assess the appropriateness of the proposed Transit Authority. This committee has concluded that sector planning and coordination needs improvement and it endorses the integration of all sector functions. The District Administration has also included the proposed restructuring of sector entities as part of its Development Plan. The detailed design of the new institution and the overall transformation plan will now be studied in more detail by consultants. The District is in the process of hiring a high-level consultant manager, independent of existing and affected institutions, to coordinate and carry out the reform, including the needed studies and subsequent activities. 1.26 This reform has still to secure the City Council's approval, a step with an uncertain outcome, as it will likely face political resistance because of its implications in sensitive areas, such as the severance of personnel. A fall-back position might limit the reform to strengthening thc coordination and planning capabilities - but within the existing entities. Along with District- Bank dialogue during supervision, the District, in its semi-annual reports, will keep the Bank fully informed about the proposed institutional reform and its implementation, and will allow the Bank to comment on these changes. The Bank has agreed to assist with the institutional reform initiatives within the proposed operation, including relevant studies and future strengthening of the new transport entity, if, and when, it is approved. In the meantime, the existing institutions are capable of implementing the urgent bus corridors, access roads, and street maintenance and rehabilitation investments which need to move ahead. Moreover, the institutional strengthening activities and studies proposed under the project for IDU, SOP and STT would still make a beneficial contribution to the urban transport sector regardless of the outcome of the above mentioned reforms (see Annex 3). C. Performance of Sector Agencies 1.27 The Traffic and Transport Secretariat (STT). As DATT and later, STT, this entity has placed more emphasis on routine enforcement work, licenses and other cash-generating activities than on such areas as sector policies and planning, supervision and control of traffic and transport in the city (see Annex 2). It is split between bloated administrative offices (current staff numbers are 700) and an understaffed traffic police force (currently numbering about 1500) both of which are frequently accused of corruption and related abuses. Labor rigidities exist in the lower echelons, while politically-induced turnover is high at managerial levels and there is virtually no professional career development system in place. The new administration is currently making efforts aimed at raising the level and morale of the traffic police force, as well as its credibility with the public. - 8 - 1.28 The intended effects of the 1991 reorganization were to: (a) establish STT as the lead agency of the District for transport; (b) transfer to STT functions and organizational units previously scattered among other agencies, such as the operation of traffic signals and the supervision of parking lots; (c) assign to STT broad responsibilities for planning and policy formulation, and create within STT a planning department, which will handle FONDATT; (d) create a permanent inter-agency Transport Sector Committee, led by STT, to adopt sector policies, steer the District's programs for transport, and approve annual budgets for traffic management, road development and maintenance; and (e) strengthen FONDATT and expand its scope of activities, enabling it to finance all traffic management investments of the District and to handle technical assistance programs and policy studies for the sector. Though STT has taken some initial steps in sector planning and the inter-agency committee has held regular coordinating meetings, STT has not been able to assume the role envisaged in the 1991 reorganization primarily because of strong resistance from the other sector entities to relinquish any power, inadequate staffing in STT and the location of the Planning Secretariat low within the organizational structure of the system so that it had little power to take actions independently. 1.29 Being an entity within the District's central administration, STT has low pay scales which hinder its ability to recruit and retain competent professionals. Its budgeting and contracting procedures are cumbersome and they are an obstacle to development projects. 1.30 The Traffic Safety Fund (FONDATT). Still named after STT's predecessor agency, DATT, FONDATT was created in 1989 to address some of the above-mentioned deficiencies (see Annex 2). Through it, STT can hire professionals either as long-term consultants or as FONDATT staff under a better pay scale, and use more efficient procedures for project implementation. A task-force of District professionals and consultants was assembled in 1989 to design the Avenida Caracas busway after which it was then kept together to prepare the proposed project. While STT has had some success as a result of the 1991 reorganization, its limited impact on sector activities has been a factor for the current Mayor to seek more basic institutional reforms (paras. 1.24-1.26). 1.31 The Public Works Secretariat (SOP). SOP shares many of the same administrative weaknesses of STT. Its record for road maintenance has been poor. In the past, it has generally executed road repairs through its own mostly unskilled workforce (currently numbering about 2,080). SOP's management and accounting systems lack the capacity to calculate full unit costs which are excessive if overheads are factored in. Little preventive maintenance is performed and its repair programs lack clear priorities with uneven quality of execution. Since 1989, SOP has contracted out major rehabilitation works, and is now using force account only for patching or resurfacing secondary roads. This policy should be continued and supported by a gradual reduction of the workforce. An information system of road sections has been developed by consultants but skilled staff and other resource needs have delayed its adoption and use as a permanent tool for programming, budgeting and monitoring road maintenance. To facilitate the budgeting and contracting of its investments, SOP established in 1990 a decentralized fund called FOSOP, which is a legally independent entity although staffed with SOP personnel. As with the STT fund, this is basically an attempt to use short-term devices to bypass rather than trying to -9- address serious institutional problems. As part of the efforts of the current Mayor to streamline sector institutions, FOSOP was liquidated in December 1995. 1.32 The Urban Development Institute (IDU). IDU was created in 1972 as a revolving fund to execute infrastructure investments, including roads and bridges, and recover their costs through betterment levies. The levies were successfully used in Bogota in the 1970s. Since then, they have declined due to administrative logjams and a reluctance of the City Council to allow IDU to enforce charges. During 1986-89 the city council withheld its approval of the investment plans presented by IDU, disallowing all betterment charges except for an on-going program to pave local streets. 1.33 In November 1990, the Bogota City Council approved a two-year plan of investments and charges, including retroactive charges for roads executed since 1987. The Council also approved a streamlined procedure, called "general benefit", to assess charges for road programs benefiting large areas of the city. However, the new procedure was successfully challenged in a lower administrative court, and was made effective only in September 1991 after its legality was upheld by a decision of the State Council (highest administrative court). The measure was contested by the general public and was subsequently canceled. (The ensuing deterioration of the District's finances was a factor in the Bank's decision to cancel further processing of the project at that time). In November 1992, under a new administration, a revised plan of betterment levies which attempted to reduce disparities with the existing structure of property taxes was approved by the District Council and billing was initiated in August 1993 after the approval of the new Statute for the District. This should allow IDU to resume a more sustainable road development activity. Early signs of the positive results of this trend are seen in the collection of about US$53 million from betterment levies in the 1993-1994 period. 1.34 As a decentralized agency, IDU has more autonomy than STT or SOP (which are municipal ones) in its day-to-day management. It also offers better salaries, and has been able to retain competent professionals (total staff currently numbers about 530). However, IDU's functions have not been critically analyzed for several years; its comparative advantage may not reside in doing such tasks as design or census work in-house, and the number, skills mix and other such aspects of its staff are currently under review within the present municipal administration. 1.35 The District Public Transport Enterprise (EDTU). EDTU was a transport enterprise owned by the District with a fleet of 249 trolleybuses and 103 diesel buses. Most of the trolleybuses were recent (1986-87), but the electricity network was in serious disrepair. Because of poor management, undue political interference, overemployment, uneconomical routes (refused by the private sector), frequent breakdowns and other related problems, fleet utilization dropped to less than 25% by 1989 and EDTU's share of the city's total transit ridership was reduced to only 0.2%. EDTU was placed in receivership by Decree 75 of 1991 and is close to being fully liquidated. Sales of the liquidated assets are still to be finalized as is also payment of a debt which the District owes to the national government for purchase of its buses in the 1970s. This has been a key obstacle to further Bank processing of the loan since 1991 because the national government (at the time) refused to guarantee this loan unless the outstanding debt issue was resolved. This problem is now in its final stages of resolution after both parties agreed to binding arbitration. - 10- D. Sector Investment Plans 1.36 Planning Framework. The Development Plan of the current administration identifies the stultifying effects which an inadequate transport system has had upon the economy and productivity of the city. Time lost in commuting and in shipping products and raw material, down time and repair costs associated with poorly-maintained streets, pollution, losses from accidents and fuel waste due to congested traffic are some of the results of the present situation. As part of the strategy of the new administration to address these problems, it has proposed an approach which emphasizes improved utilization of the existing infrastructure and greater emphasis upon public transport systems. To this end, it is giving priority to mass transit needs in such areas as specialized bus lanes, trunk lines, and expressways. Besides such investments, the administration is also planning to rationalize existing bus routes, manage the assignment of new routes, withdraw old polluting vehicles from circulation and enforce greater discipline in getting public transport vehicles and all users to obey the rules and regulations. Other complementary areas of focus include conservation of the existing transport infrastructure, actions aimed at achieving greater efficiency and responsiveness through such measures as institutional reform, use of the private sector for functions which it can perform more efficiently without impinging upon the District's sovereignty and strengthening of the monitoring, supervision and control functions of public sector entities. 1.37 For various reasons (for example, staff and budgetary constraints, politics, strong unions) IDU, STT and SOP have not had a tradition of systematic short, medium and long term planning; they tend to develop various proposals but their activities reflect a more reactive mode where attention is given to crisis areas in an ad-hoc way. Their existing road development program for street paving, traffic engineering and repair of arterials together amount to about US$250 million. These proposals have yet to be ranked by order of priority or integrated into a coherent medium- termn program. IDU's short-term investments for road development and bridges, worth about US$90 million, are included in a three-year Plan de Obras Viales. 1993-95 approved in 1992 by the city council. Although this plan can be sustained financially, the District's capacity to implement it and the disruptive impact which its construction would have on the city's traffic pattern may force an implementation schedule longer than anticipated. All District investments are cleared with the Planning Department (DAPD) before being entered in the annual budgets. In the past, proposals came to DAPD separately from each agency, without any prior consolidation exercise for the sector and these took the form of wish-lists with the expectation of being reduced significantly during the budgetary approval process. Since the overall sector framework is generally absent and DAPD does not have the resources needed to evaluate these proposals in an integrated way, transport planning has suffered. Some of the studies proposed under the project would complement the proposed institutional reform measures (paras. 1.24-1.26) to address many of these deficiencies. 1.38 Environmental Planning and Impact Assessments. The use of formal environmental impact assessments (EIA) has been introduced only recently for District investments. In 1990 the - I1 - District created a Department of the Environment, DAMA, to: (a) provide guidance to line agencies to carry out EIAs for all major investments proposals in the District; and (b) prepare an environmental management plan for Bogota and provide environmental inputs to DAPD for city planning. At the national level, the recently-created Ministry of Environment (MinAmbiente) has responsibility for environmental planning and it also shares responsibility for some environmental issues in Bogota with DAMA and the Corporaci6n Autdnoma Regional de Cundinamarca (CAR). Because EIAs for the road system are still relatively new, there is no well-developed methodology which the District transport entities could follow. Consequently, there has been little clarity as to what should be done, by whom, and in what manner. This issue is being resolved through discussions among the affected agencies and a system is expected to be in place shortly to assure that appropriate EIAs are carried out and that they would not be an obstacle to project implementation. Assistance is being provided to DAMA by the District to facilitate preparation of EIAs and address transport-related environmental issues. 1.39 The Metro Option. Consideration of a metro system for a city with a current population in excess of 6 million, growing at about 3% annually, and with acute traffic congestion, has been under discussion for more than a decade. In 1987, the national government called for turnkey proposals to design, build and finance a metro system. Discussions were held with one consortium for a route to the southwest but without reliable figures on ridership and demand, no comparison of modal alternatives, and no detailed studies of the operation, fares, or integration with bus services, the response was not positive. Under current conditions, the District as client, and the national government as guarantor, would have to approve any metro contract. Both are aware of the experience of Medellin, where a financing gap due to cost overruns of almost US$1 .8 billion brought construction of the local metro to a halt in 1989 and this project is only now limping to a close after a host of technical, financial and other problems. 1.40 In 1991, the National Planning Department (DNP) carried out a review which found a metro project for Bogota not to be viable at that time. However, with increasing congestion and clamour for a solution to the city's traffic problem, the District, with assistance from the national government, again invited private sector firms to present proposals for a mass transit system to be built and operated through concessions. The invitation was designed to elicit the widest range of response (in terms of systems, routes, equipment, etc.) and the national government contracted Halcrow-Fox to review, together with consultants contracted by the District, the proposals and make its recommendations. This exercise resulted in the development of a strategy of an integrated transport system within which there would be a North-South metro corridor in the future with various feeder systems such as the Avenida Caracas, Calle 80, and Calle 13. As part of the process of initiating the integrated transport system proposed in this plan, in December 1994, the District awarded a contract to Metrobus S.A., a private consortium, to design, build, operate, administer and maintain, a four-line corridor network of about 92 km. with its own bus fleet and support facilities. This bus system could also act as a feeder to the proposed metro. Works are expected to get underway shortly and the service is scheduled to commence in 1998. The International Finance Corporation is monitoring progress in this venture and has maintained contact with Metrobus S.A. - 12 - 1.41 As indicated in the CONPES plan for 1995, the national government has agreed to help the District to develop its integrated transport plan and is offering to finance the study of the North-South metro corridor, along with a commitment to finance a share of the metro cost, after the study is completed. In addition, the Japanese International Cooperation Agency, JICA, under a technical assistance program, began a study in August 1995 entitled the "Master Plan for Urban Transport of Santafe de Bogota." This study would help to formulate a long-term master plan and to establish an integrated sector information system. Meanwhile the new District administration has adopted a cautious posture in committing to any investment in a new metro system without a comprehensive evaluation of the costs involved for the population of Bogota and a clear indication of their willingness and ability to meet the costs of the sizeable investments required for a metro system. No Bank involvement is contemplated under the proposed project, but depending on the findings of the aforementioned metro study, the Bank may be asked to provide technical advice to the District Administration in evaluating possible approaches to financing a metro system, including ones that involve a concession to private investors. E. Pricing and Cost Recovery 1.42 Gasoline Pricing. In agreement with the covenants stipulated under the Third National Highway Sector Loan (3453-CO), the government has instituted gradual increases in real gasoline prices, with the aim of reaching full coverage of road costs through user charges and, at least, achieving parity between the yearly average consumption price and the corresponding average of the respective border prices. Progress on this matter is being monitored in the context of Loan 3453-CO.The consumer price (currently at about US$0.90 per gallon for both gasoline and diesel) is above the border price (US$0.60 for gasoline and US$0.69 for diesel). The tax component in the price of transport fuels is about US$0.36 equivalent per gallon. With other user charges such as road tolls, this has been sufficient to fund the expenditures of the nationally managed highway and rural roads system. 1.43 Local Finance. During the last decade, the District achieved a level of fiscal self-reliance matched by few municipalities in the region. In decreasing order of importance, its main local sources of revenues are taxes on: commerce and industry, property, beer sales, and an annual stamp tax on cars. Transfers from the national government accounted for about 10% of revenues. Current revenues increased in real terms by about 5% per year between 1985 and 1989 to a level of US$217 million equivalent, while current savings grew at 9% per year to US$86 million over the same period. However, this positive trend was not sustained in 1990, an election year, in which savings fell to US$ 60 million, as revenues, though not expenditures, failed to keep pace with high inflation. In 1991, the District took corrective measures to cut costs, including workforce reductions in the solid waste company and disbanding of EDTU, and to improve revenues, mostly through collection of overdue tax payments and the billing of betterment levies. However failure to implement the betterment levies until August 1993 negatively affected the District's financial performance, and further increased the financial deficit in 1992. - 13 - 1.44 In July 1993, the national Government issued a decree establishing a special regime for the District. Decree 1421 (see para. 1.20) reassigned various responsibilities within the District and provided greater executive control to the Mayor. This decree also allowed the District to use a wider range of revenue-raising instruments, such as gasoline surtaxes, road tolls, and betterment levies. In August 1993, upon approval of the Statute, the District implemented various fiscal reform measures such as a self-valuation system for the property tax and bi-monthly billing for the commerce and industry tax. Collection of these taxes was also significantly strengthened by the adoption of a stringent fiscal regime, similar to the National Tax Regime. In addition, in the case of the property tax, a change in the method of computing the declared assessed value, together with the new self-valuation procedures resulted in an increase in the number of taxpayers by 100,000 and an increase in revenue close to twice that of 1993, in real terms. In 1994, the solid waste utility, which was a significant drain on municipal resources, was disbanded and the service was entirely entrusted to the private sector. The combination of the above led to an increase in revenue of nearly 70% in real terms and boosted savings' to US$ 250 million. This positive trend appears to be consolidating as indicated by preliminary results up to mid-1995. A 13% surtax on gasoline (increasing 1% annually to 15% by 1997) which would be primarily used for street maintenance has been approved by the City Council. Encouraged by these results, and based on medium term financial projections, the District has recently approved an ambitious investment plan for 1995-1998. In sum, with the new Statute, the District administration has acquired the legal basis for confronting the deterioration of its financial performance and the backlog in the rehabilitation of the city's infrastructure. While the District is approaching its short, medium, and long-term planning in a rational manner based on appropriate studies and clearly defined financial sources, political pressures could lead to over-commitment of resources for long-term projects such as the metro. 1.45 The District's savings could still be further enhanced by (a) widening the revenue base, especially for the property tax; (b) strengthening financial management, through better fiscal information systems and enhancing the mechanism for financial planning and budget control; (c) reducing evasion and fraud in the collection of taxes and levies; and (d) stemming the growth of current expenditures, mostly by scaling down the District's overdimensioned workforce and allowing the private sector to perform many of the functions now performed by the District. F. Issues and Strategy 1.46 The equivalent of 2% of Colombia's GDP is spent moving people and goods within Bogota in a chaotic and inefficient manner. Congestion exacts a high human and environmental toil and undermines the efficiency of the urban economy. The poor are worse off as they travel longer average distances using less flexible modes. Demands on the street network will increase as the population grows and users shift from buses to cars. Addressing these pressures through I Difference between current revenues and current expenditures plus debt service. - 14 - only network expansion would require larger investments than the city can afford and it promotes a resource-inefficient pattern of urban development which encourages urban sprawl in the environmentally sensitive surroundings of Bogota. A high priority should thus be given to developing an effective high-volume public transport system. 1.47 While a metro system is envisaged as a long-term element in the plan to adequately respond to the needs of residents, the short-term focus upon strategic trunk lines with busways and parallel institutional changes to better manage the sector are key elements in the plan of the current administration. The success of the Avenida Caracas busway (para. 1.15) also attests to the merits of following this strategy within the framework described in this report. 1.48 Transport Strategy. The District's short and medium-term transport strategy is to (a) restructure the institutional framework to make it more accountable and responsive to sector needs; (b) optimize the capacity and use of existing infrastructure facilities through traffic management and focusing on major transit corridors; (c) target new investments toward removal of bottlenecks and improvement of access to low-income areas; (d) promote public transport by giving buses adequate facilities including separating bus and car flows where appropriate; (e) use normative and regulatory powers as tools to promote greater sector efficiency; and (f) promote the participation of the private sector in concessions such as BOTs for the design, construction, operation and maintenance of mass transit projects, parking facilities, and expressways. 1.49 Institutions. Implementing this strategy will require a strong institutional structure and the capacity for great flexibility. The initial steps for a comprehensive restructuring and consolidation of the District's transport agencies have already been taken (paras. 1.24-1.26). As discussed earlier, this may also entail a redistribution of functions, including contracting several of these functions out to the private sector. 1.50 Finance. Bogota is one of few capital cities in the world which finance their infrastructure and local services from local revenues, without major transfers from the central government. This self-reliance should be preserved as it promotes regional equity, avoids a large drain on the national budget, and links the cost of urban programs closely to user charges. However, it calls for a sustained effort of resource mobilization and a tight management of expenditures; and in this regard, there is room for improvement in several areas. The District needs an increased and sustainable resource base to develop, operate and maintain its infrastructure system without neglecting urgent needs in the social sectors. The combined effects of increased property tax collection, concessions, staff restructuring and similar measures should assist to improve the finance and management system. G. Bank Experience and Strategy 1.51 Although the Bank has played a major role in developing the inter-urban transport system in Colombia (lending about US$ 887 million for 12 highway projects), until now, it has financed no urban transport project in the country. It has also invested about US$650 million in urban - 15 - infrastructure projects, including five loans totaling US$306 million for water supply projects in Bogota. While these projects are not directly related to the BogotA Transport project, the lessons of PCRs for the completed projects have been taken into account. The proposed project has been kept simple in its structure to avoid inter-institutional implementational problems. It has also been prepared in such a way to allow for follow-up phases, should the need arise. Similarly, to avoid counterpart funding problems, the loan is relatively small and manageable. The experience of urban transport projects in other Latin American countries was also considered. The proposed project is similar in design to the successful First Urban Transport Project in Brazil (Loan 1563- BR). Lessons from sector experience in the region are that: (a) beneficiary agencies should mobilize resources to adequately fund the operation and maintenance of project facilities; and (b) institutional reforms critical to project objectives should take place early in the project calendar. 1.52 Bank assistance to Colombia aims to enhance the competitiveness of the productive sectors with a greater role for local authorities and the private sector and special efforts to alleviate poverty. In the cities, these objectives can be pursued through projects improving the efficiency and productivity of urban systems and the delivery of basic services to low-income communities. On-going urban infrastructure operations include a Water Supply and Sewerage Sector Project (Loan 2961-CO) and a Municipal Development Project (Loan 3336-CO). Both support a greater financial self-reliance at the municipal level and the development of local institutions capable of efficiently operating municipal services. 2. THE PROJECT A. Origin 2.1 The Public Sector Expenditure Review of 1987 first defined a framework for possible urban transport operations in BogotA and other Colombian cities. Subsequently, the 1993 Country Strategy Paper identified the need to address large-city congestion and included the Project in the FY93-FY96 lending program. The proposed project was initially entered into the Bank's lending program in June 1989, and first appraised in June 1990. A post-appraisal mission was carried out in December 1990 after the District restructured the role of some sector agencies, and negotiations were held in July 1991. After negotiations, the District's failure to implement the proposed betterment levies and its deteriorating financial perfornance led the Bank and the national government to postpone processing the project. In November 1992, the District Council approved a new plan of betterment levies and its implementation was initiated in August 1993. In this new context, the District and the national government requested a re-appraisal of the project and its processing, to which the Bank agreed in light of the commitment to achieve a sound financial performance. Further difficulties in resolving the District's debt to the GOC as well as in obtaining council authorization for the Mayor to sign the loan, led to suspension of loan processing for a second time. It was only in February 1995 that the loan processing resumed after the newly-elected Mayor of Bogota requested this and a re-appraisal mission found that the above issues had been satisfactorily resolved. - 16 - B. Rationale for Bank Involvement 2.2 Transport problems in Bogota are listed by residents as the second most important area of concern (next to crime). While the Bank has made loans to help develop the water supply and power sectors of Bogota, it has not yet provided assistance to address the critical constraints imposed by an inadequate transport system on the city's development and the welfare of its residents, especially the poor. The proposed project would help the District Government to provide basic services in an efficient and sustainable manner. The District has demonstrated its commitment to the sector by the steps that have been taken by the current mayor to carry out an institutional reform program, in order to establish a framework which would be better able to address the long-term investment needs of the city in the urban transport sector. These include initiatives to consolidate and streamline the operations of the various sector entities, privatization of several functions and adoption of a policy aimed at promoting public mass transit modes with strategic investments to help maximize use of existing facilities. 2.3 This operation with a subnational government will not address national transport sector issues such as user charges and gasoline pricing, which are the object of a continuing dialogue between the Bank and the government in the context of the Third National Highway Sector Loan (3453-CO). However, the project is expected to have a significant demonstration effect upon other large municipalities in the country and it could become the first phase in a broader Bank- assisted program in the urban transport sector. C. Objectives 2.4 The project would help finance priority investments in support of the transport strategy and institutional reforms adopted by the District. Its objectives are to (a) improve major transport corridors by rationalizing vehicle flows and upgrading environmental conditions for users (b) promote the use of public transport and of non-motorized transport modes; (c) facilitate public transport access to areas with low income population; (d) extend the life of the road infrastructure; and (e) strengthen the District's institutions in charge of planning, managing and maintaining the transport infrastructure. D. Description 2.5 The project would support selected infrastructure investments. It would include the following components: (A) traffic management and transport corridors (57% of base costs); (B) access roads for low-income settlements (10%); (C) road maintenance (27%); and (D) institutional support measures (6%). - 17 - 2.6 Component A - Traffic Management and Transport Corridors. This component, to be executed by IDU (Part A. 1) and FONDATT (Part A.2), would include: A. 1 Works, equipment, and consultant services to carry out corridor subprojects, consisting of an integrated program of least-cost investments, supported by administrative measures, to improve transport flows (including dedicated lanes for buses, car traffic and non-motorized transport) in major transit corridors and their areas of influence; and A.2 Equipment, training and consultant services to assist the entities to carry out their mandate. The areas of focus would include: (a) a citizens education program; (b) computers, software, equipment and vehicles for FONDATT, STT's planning department and the busways operations unit; (c) training of the traffic police and other transport sector professionals; (d) traffic count and transport surveys; and (e) assistance in transport planning and policy studies covering bottlenecks in existing road design; non-motorized transport; public transport system; parking; traffic signals, and accident reporting and analysis. 2.7 Component B - Access Roads. This component will be executed by IDU and would include: B. 1 Infrastructure Investments comprising: designs, works and supervision to pave and upgrade roads of a total length of about 30 km to improve public transport access into low-income areas; and B.2 Support to IDU aimed at strengthening its overall project execution capabilities and financial planning. 2.8 Component C - Road Maintenance. SOP will execute this component which will include: C. 1 Road Rehabilitation works comprising: designs, civil works and supervision for a program to repair or rebuild about 400 lane-km of arterials and secondary roads used by public transport, including the walkways, bikeways and green areas along the right-of-way of these roads; and C.2 Planning, management and quality control of the rehabilitation program; development and implementation of a pavement information system; and development of standards and manuals for pavement design and maintenance. 2.9 Component D -Institutional Support. This component will be administered by the Finance Secretariat (SHB), and would include: D. I Sectoral Technical Assistance consisting of equipment and consulting services to assist with on-going borrower's transport sectoral reform to (a) reorganize the transport - 18 - authority; (b) define functional organization and participation of the private sector; (c) implement the new sectoral organization; and (d) train borrower's professional staffing, connection with their activities under the new system D.2 Support to DAMA consisting of technical assistance and training to help develop and establish local environmental guidelines for such problems as noise pollution and tire, battery and waste oil disposal in the sector and to design and implement the required regulations. D.3 Support to SHB in the form of equipment and professional services for (a) auditing, monitoring and coordination of the project; (b) development of an information system for investment budgeting and monitoring; and (c) upgrading of the tax collection system; E. Selection and Programming of Investments 2.10 Corridor Subprojects (Part A. 1). About 35% of the total project cost would support investment and traffic management activities to improve traffic flows along the Calle 80 and other corridors which IDU will select before December, 1999, based on the criteria described below. This component includes such measures as widening of street sections, reserving two lanes in each direction of the Calle 80 for bus traffic, signaling, remodeling ofjunctions, one-way traffic systems, parking restrictions, modification of bus-stop systems and changes to bus routes arrangements for traffic diversion during subproject execution. The Calle 80 works would improve the throughput of the street system between Av. Caracas and Carrera 112. The other subprojects would support traffic management activities and minor infrastructure works to improve the operation of the Av. Caracas busway (para. 1.15) and other transport corridors. Feasibility studies for the Calle 80 subproject were reviewed by the Bank during re-appraisal and found to be satisfactory. 2.11 The selection criteria which were used for the Calle 80 and which would also be used for the other corridors to be selected are: (a) the corridors have to support high bus passenger flows (at least 10,000 passengers per hour); (b) each subproject should emphasize improvements of bus and non-motorized transport flows and should have an integrated, least-cost analysis of the corridor and its area of influence; (c) negative environmental impacts, if any, are to be addressed by mitigation measures to be included in the subproject; and (d) the investments should present rates of return (IERR) not less than 12%. In those cases where project works involve land acquisition or displacement of residents and/or street vendors, such actions have to comply with the appropriate Bank environment, resettlement and compensation policies (para 2.43 contains greater details on this topic). 2.12 Access Roads Program (Part B.1). Under this component, existing access roads would be upgraded to improve the accessibility of the low-income population to the public transport system. Acceptance criteria are that each road should: (a) be targeted at improving public transport access into existing low-income settlements; (b) use least-cost designs and pavement - 19 - technologies; (c) include a signed agreement with the community which would undertake to provide routine maintenance (e.g. cleaning debris and weeds) and prevent misuse of the facilities (e.g. for storing materials, constructing structures, etc.); (d) not present substantial risks of inducing urban encroachment in environmentally sensitive areas; and (e), not result in the displacement or resettlement of people. IDU currently has a program to upgrade about sixty access roads. In 1994, it upgraded thirteen of these. The April re-appraisal mission reviewed IDU's design and plans for future access roads and suggested several engineering and administrative measures aimed at making them more accessible and with more systematic maintenance. IDU has incorporated these in the design and it currently has about thirteen-access roads ready for implementation. IDU's access road program was reviewed by the Bank and found to be acceptable based upon the selection criteria listed above. 2.13 Road Maintenance (Part C.1). Part C. I supports a three-year plan of road rehabilitation and reconstruction works. The complete plan was reviewed by the Bank at re-appraisal, and investments were tentatively grouped into annual programs based on road condition, giving special priority to roads used by public transport vehicles. All rehabilitation and reconstruction works would be carried out by private contractors. 2.14 A preliminary computerized inventory of road sections was established for project preparation. Technical assistance will be provided to help SOP develop this inventory into a permanent pavement management system, to be used for programming and budgeting of road maintenance. SOP would present to the Bank each year by March 31, a maintenance program for the following year, based on an updated inventory of road condition. Eligible expenditures under Part C. 1 would only be those related to annual programs approved by the Bank. The first-year programn was reviewed at re-appraisal. Acceptance criteria for subsequent annual programs would be: (i) investment ranking based on economic priority; (ii) consistency with Component A investments; and (iii) efficient packaging for procurement. Priority would also be given to roads used by public transport vehicles. 2.15 Consistency of Sector Investments. The reorganization and consolidation of functions of the sector entities is expected to improve efficiency and greatly improve coordination of sector investments. Under the new structure, investments would be reviewed within a coherent overall program within which clear priorities would be agreed upon and established. 2.16 Availability of Designs. IDU, with the assistance of FONDATT, will complete engineering designs for all of its subprojects under Component A. 1 by the end of 1996 (see Annex 6). F. Costs and Financing 2.17 The total investment cost is estimated at US$141.0 million equivalent, including physical and price contingencies estimated at US$22.8 million equivalent and import duties and VAT estimated at US$16.7 million. Cost tables are presented in Annex 4 and summarized in Table II. 1. - 20 - 2.18 The financing plan is shown in Table 11.2. The proposed Bank loan of US$65 million would cover about 46% of estimated investment costs, equivalent to 100% of foreign currency costs and 14% of local costs. Partial Bank financing of local costs is proposed to maintain a Bank financing presence in the following components with a sizable local cost component (a) the labor- intensive access road program, which has a strong poverty focus; and (b) the institutional development activities, to ensure that they would not be postponed in the possible event of delays in the mobilization of counterpart funds. 2.19 Counterpart funds would be provided by the District through SIB for all four components. IDU will be the executing agency for components Al and B, FONDATT for component A2, SIB via SOP for component C, and SIB (individually, and through DAMA) for component D. All the institutions would be responsible for non-eligible expenditures including taxes and duties. Table 11.1 - Summary of Costs" (US$ million) %of % Local Foreign Total base cost Foreign A. Traffic Mgt and Corridors 34.4 23.4 57.8 56.9% 40.5% Corridor Subprojects 32.3 21.9 54.2 53.3% 40.4% Inst.Devt. STT/FONDATT 2.1 1.5 3.6 3.5% 41.7% B. Access Roads 6.7 3.7 10.4 10.2% 35.6% Infrastructure Invest. 6.4 3.5 9.9 9.7% 35.4% Support to IDU 0.3 0.1 0.5 0.5% 20.0% C. Road Maintenance 14.9 12.5 27.3 26.9% 45.8% Infrastructure Invest. 14.5 11.9 26.4 26.0% 45.1% Inst.Devt. SOP 0.4 0.5 0.9 0.9% 55.6% D. Institutional Support 3.0 3.1 6.1 6.0% 50.8% Finan. Secretariat 0.7 1.8 2.5 2.5% 72.0% DAMA 0.3 0.2 0.5 0.5% 40.0% Sector. Tech. Asst. 2.0 1.0 3.1 3.1% 32.3% Base Cost 59.0 42.6 101.6 100.0% 41.9% Physical Contingencies 4.3 3.4 7.7 7.6% 44.2% Price Contingencies 8.7 6.3 15.1 14.9% 41.7% Total Project Cost 72.0 52.3 124.3 122.3% 42.1% Import Duties and VAT 16.7 0.0 16.7 16.4% 0.0% Total Investment Cost 88.7 52.3 141.0 138.8% 37.1% Numbers may not exactly add up due to rounding. - 21 - Table 11.2 Financing Plan" -------------------US$ MILLION--------------------- % of Component A B C D Total Total District through IDU 44.1 7.8 51.9 36.8% SOP 21.4 21.4 15.2% FONDATT 1.0 1.0 0.7% Secr.Hacienda 1.9 1.9 1.3% IBRD 34.8 6.8 17.4 6.0 65.0 46.0% Total 79.9 14.6 38.8 7.9 141.0 100% Numbers may not exactly add up due to rounding. G. Implementation 2.20 Agency Responsibilities. The District would be the borrower and SHB would have overall responsibility for project implementation. IDU would execute Part A. 1 and Component B, FONDATT Part A.2, and SOP Component C. The District would execute Component D through its Finance Secretariat (and through DAMA). SHB, which would house the project coordinating unit, would be responsible for the overall administration of the project and loan. Subsidiary agreements would be signed with SHB and the executing agencies to set forth the technical, financial and all other responsibilities relating to implementation of the project. These subsidiary agreements were discussed and agreed at negotiations, and formalization of these agreements would be a condition of effectiveness of the loan. Strengthening measures are included in the project to ensure that these agencies will have sufficient capabilities to discharge their responsibilities under the project. 2.21 Supervision Program (Annexes 3 and 6). To ensure a timely implementation of key project and institutional development tasks, an implementation chart has been agreed upon and updated at project re-appraisal. It sets forth dates to start and complete the various project components, including the studies on institutional reform, sector strengthening, and traffic management. 2.22 Project Coordinating and Monitoring Unit. To assure the timely implementation of the project, a small project coordinating and monitoring unit has been established within SHB (Annex 5). This unit consists of a project coordinator (who was appointed in October 1995), assisted by two experts in project implementation, along with technical/administrative support. It will have - 22 - resources to contract part-time assistance (i.e. specialists on legal, procurement and other support matters when these services are required). TOR's for the two experts have been approved by the Bank and the establishment of the unit (i.e hiring of the experts and other staff) is underway. Maintenance of this unit will be a loan condition. 2.23 Road Maintenance. Within SOP, the planning and overall quality control of the road maintenance program would be handled by a permanent pavement management group supported by technical assistance under the project. This group could later become the core of the road maintenance division in the future reorganized transport authority. 2.24 Technical Assistance. Draft terms of reference for all major studies are in the project files, with summaries presented in Annex 3. Under the new Statute (see para. 1.20) the handling of the technical assistance can be quickly undertaken by the respective District executing agencies with assistance from UNDP, if required, without cumbersome processes involving approvals of the agencies' boards of directors or the District Council. With the support of the project coordinating unit, each institution will contract and manage the technical assistance tasks in accordance with Bank guidelines. H. Procurement 2.25 Procurement would be handled by (a) IDU for Part A. 1 and Component B; (b) FONDATT for Part A.2; (c) SHB through SOP, for Component C; and (d) the District's central administration through its Finance Secretariat (SHB) for Component D (Table II.3). A recent Country Procurement Assessment Review has concluded that Colombia's Law 80 has implications on project executing activities, particularly with respect to the transparency and confidentiality aspects of procurement. In view of this, the Bank's specific provisions for NCB have been incorporated in the Loan Agreement and all procurement aspects were discussed and confirmed at negotiations. Although the implementing agencies have ample experience in procuring the items included in the project, to further ensure the application of the Bank's guidelines and practices and assist the implementing agencies in these matters, the project monitoring and coordinating unit will have resources to contract a procurement specialist (para. 2.22). 2.26 Procurement of goods and services under the proposed project will be in accordance with the Bank Guidelines for Procurement of Goods and Works (January 1995) and Bank Guidelines for the Use of Consultants (August 1981). Project agencies would use standard bidding documents issued by the Bank for procurement of goods and works by International Competitive Bidding (ICB) and the sample forms of contract for consultant services will be used for consultants' contracts. In the case of procurement of goods and works by National Competitive Bidding (NCB), bidding documents that have been agreed in advance with the Bank, would be used. Any modifications to the Bank's standard bidding documents for ICB will require the prior review and approval of the Bank. A breakdown of civil works, goods and services for the project to be procured by ICB, NCB and other methods is presented in Table II.3. - 23 - Table 11.3 - Summary of Proposed Procurement Arrangements (US$ million equivalent) Procurement Method Total Project Element ICB NCB Other N.B.F. Cost 1. Civil Works 1.1 Infrastructure 51.4 23.8 -- -- 75.2 (20.5) (9.5) (30.0) 1.2 Rehabilitation -- 32.9 2.Oa -- 34.9 and Maintenance (13.2) (0.8) -- (14.0) 2. Goods 2.1 Equipment for 2.1 -- 0.8ab 2.9 Data processing (1.0) (0.4) (1.4) 2.2 Communication and -- -- 0.6ab 0.6 Vehicles (0.3) -- (0.3) 3. Consultancies 3.1 Studies, Engineering 9.9c -- 9.9 and Supervision (9.9) (9.9) 3.2 Technical Assistance 8.1 C 8.1 (8.1) -- (8.1) 3.3 Training 1.3c -- 1.3 (1.3) --(1.3) 4. Miscellaneous 4.1 Land acquisition 8.2d 8.2 53.5 56.7 22.7 8.2 141.0 Total (21.5) (22.70) (20.8) (0.0) (65.0) NOTE: Figures in parentheses are the respective amounts financed by the Bank Loan. N.B.F.: Not Bank- financed. (numbers may not exactly add-up due to rounding). a National and International Shopping (goods) and three quotations/lump sum contracts (works). b Limited International Bidding. c Services should be procured in accordance with World Bank, Guidelines: Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency (Washington, D. C., August 198 1). d Items financed from local government funds. - 24 - 2.27 ICB would be used for civil works contracts in excess of US$5 million and for goods contracts above US$250,000. Under ICB for goods, local manufacturers would be granted a margin of preference in accordance with Bank guidelines. NCB procedures acceptable to the Bank would be used for works contracts between US$350,000 and US$5 million, up to an aggregate amount of US$60 million. National shopping (and international shopping for specialized equipment) with at least three quotations would be used for goods contracts with estimated costs less than US$50,000, up to an aggregate amount of US$0.5 million. Small works, estimated to cost less than US$350,000 per contract, up to an aggregate amount of US$2 million, will be procured under lump sum, fixed price contracts awarded on the basis of quotations obtained from three qualified contractors in response to a written invitation. No force account works are included in the project. All the institutions will be responsible for non-eligible expenditures including taxes. 2.28 To ensure economies of scale in execution and wide competition, all civil works under Components A and C would be packaged, to the extent possible, in contracts not lower than US$2 million. This would not apply to Component B (access roads) which involves a number of small investments using labor-intensive technologies suitable for execution by small enterprises. Computers and software would be packaged to the extent possible to allow ICB. Specialized equipment (communications equipment) and vehicles would be packaged into contracts of more than $50,000 and procured through LIB from suppliers with local service and maintenance facilities, up to an aggregate amount of US$1.0 million. 2.29 The Bank's prior review of procurement documentation will cover all major procurement steps (terms of references, bidding documents, evaluation report, award recommendation and contract) and would apply to:
World Bank Group · Staff Appraisal Report
Colombia - Bogota Urban Transport Project
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Organisation
World Bank Group
Document type
Staff Appraisal Report
Country
Colombia
Source
World Bank