Document of The World Bank FOR OFFICIAL USE ONLY Report No.: 19456 IMPLEMENTATION COMPLETION REPORT THE UNITED MEXICAN STATES FIRST URBAN TRANSPORT PROJECT (LOAN 2824-ME) June 28, 1999 Finance, Private Sector and Infrastructure Sector Management Unit Mexico Country Management Unit Latin America and the Caribbean Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. IMPLEMENTATION CO:MPLETION REPORT MEXICO FIRST URBAN TRANSPORT PROJECT LOAN 2824-ME CURRENCY EQUIVALENTS Currency Unit =Mexican Peso US$1 = 1.612 average of 1986 US$1 = 1.378 average of 1987 US$1 = 2.273 average of 1988 US$1 = 2.461 average of 1989 US$1 = 2.813 average of 1990 US$1 = 3.018 average of 1991 US$1 = 3.095 average of 1992 US$1 = 3.116 average of 1993 US$1 = 3.375 average of 1994 US$1 = 6.419 average of 1995 US$1 = 7.609 average of 1996 US$1 = 7.820 average of 1997 US$1 = 9.500 average of 1998 FISCAL YEAR January 1 to December 31 WEIGHTS AND MEASURES 1 kilometer (km) = 0.62 miles (mi) 1 liter (1) = 0.26 gallons (gal) 1 hectare (ha) = 2.47 acres (ac) 1 metric ton (Mton) = 2205 pounds (lbs) Vice President: Shahid Javed Burki Country Management Director: Olivier Lafourcade Sector Management Director: Danny Leipziger Task Manager: Guillermo Ruan FOR OFFICLIL USE ONLY GLOSSARY OF ACRONYMS AND ABBREVIATIONS AADT Average Annual Daily Traffic ACF Average Cost of Funds (Federal Government Borrowings) (Costo Porcentual Promedio, CPP) BANOBRAS National Bank of Public Works and Services (Banco Nacional de Obras y Servicios Puiblicos, S.N.C.) COMETRAVI Transport and Roads Metropolitan Commission (Comisi6n Metropolitana de Transporte y Vialidad) COTREM State of Mexico Transport Commission (Comisi6n del Transporte del Estado de Mexico) CUD Comprehensive Development Agreement (State/Federal) (Convenio Unico de Desarrollo) DDF Department of the Federal District (Departamento del Distrito Federal) FRR Financial Rate of Return GEM Government of the State of Mexico (Gobierno del Estado de Mexico) GIRA General Interest Rate Agreement GOM Government of Mexico (Federal) ICB International Competitive Bidding JC Junta Caminos (Road Maintenance Division, State of Mexico) LCB Local Competitive Bidding LRT Light Rail Transit LVC La Venta - Chamapa Toll Road MAESTRA Urban Transport Enterprise Support Model (Modelo de Apoyo a las Empresas de Transporte Urbano de Pasajeros) MSCP Medium Sized Cities Urban Transport Project NPV Net Present Value PEMEX Mexican Petroleum Company (Petroleos Mexicanos) PPTU First Urban Transport Project (Primer Proyecto de Transporte Urbano) RAMA Air Monitors Automatic System (Red Automatica de Monitores del Aire) SCTEM Communications and Transport Secretariat of the State of Mexico (Secretaria de Comunicaciones y Transportes del Estado de Mexico) SDUOP Secretariat of Urban Development and Public Works (Secretaria de Desarrollo Urbano y Obras Publicas) SECODAM Controller's and Administrative Development Secretariat (Secretaria de la Contraloria y Desarrollo Administrativo) SEDESOL Secretariat of Social Development (fonnerly SEDUE) (Secretaria de Desarrollo Social) SEDUE Secretariat of Development and Ecology (Secretaria de Desarrollo Urbano y Ecologia) This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. SHCP Secretariat of Finance and Public Credit (Secretaria de Hacienda y Cr6dito Publico) SIAM Maintenance Management Integral System (Sistema Integral de Administracion del Mantenimiento) SOPT Secretariat of Public Works and Transport (State of Nuevo Leon) (Secretaria de Obras Puiblicas y Transporte) SofNL State of Nuevo Leon SofM State of Mexico SPP Secretariat of Programming and Budget (Secretaria de Programaci6n y Presupuesto) SCT Secretariat of Communicat:ions and Transport (Secretaria de Comunicaciones y Transportes) STT State-owned Bus Companies (State of Mexico) (Sistema de Transporte Troncal) TA T echnical Assistance TSM Traffic Systems Management VCT Valle Cuatitlan-Texcoco (State of Mexico) ZMCM City of Mexico (Zona Metropolitana del V alle de Mexico) TABLE OF CONTENTS PREFACE ............................................................i EVALUATION SUMMARY ....................................................... i Introduction ...................................................... ii Project Objectives .......................................................ii Implementation Experience and Results ...................................................... ii Summary of Findings, Future Operation, and Key Lessons Learned ............v PART I: IMPLEMENTATION ASSESSMENT ..................................................1 A. Project Objectives ......................................................lI B. Scope of Project and Project Development ..............................................I C. Achievement of Objectives .......................................................4 D. Major Factors Affecting the Project .......................................................8 E. Project Sustainability .......................................................9 F. Bank Performance ...................................................... 10 G. Borrower Performance ......................................................1 I H. Assessment of Outcome ...................................................... 11 1. Future Operation ...................................................... 12 J. Key Lessons Learned ...................................................... 12 PART II: STATISTICAL TABLES ..................................................... 15 Table 1. Summary of Assessment ..................................................... 15 Table 2: Related Bank Loans/Credits ..................................................... 16 Table 3: Project Timetable ..................................................... 17 Table 4: Loan Disbursements ..................................................... 18 Table 5: Key Indicators for Project Operation ............................................. 18 Table 6: Studies for the Project ..................................................... 19 Table 7: Key Indicators for Financial Position ............................................ 19 Table 8A: Project Costs ..................................................... 20 Table 8B: Project Financing ..................................................... 22 Table 9A: Economic Costs and Benefits ..................................................... 22 Table 9B: Financial Results ..................................................... 23 Table 10: Status of Legal Covenants ..................................................... 24 Table 11: Project Implementation Program ................................................... 27 Table 12: Bank Resources: Staff Inputs ..................................................... 29 Table 13: Bank Resources: Missions ..................................................... 30 APPENDICES ...................................................... 32 A. Mission's Aide Memoire ...................................................... 33 B. Borrower's Contribution to the ICR ...................................................... 35 C. Maps: IBRD No. 20367R and 20368R ..................................................... 46 IMPLEMENTATION COMPLETION REPORT MEXICO FIRST URBAN TRANSPORT PROJECT LOAN 2824-ME PREFACE This is the Implementation Completion Report (ICR) for the First Urban Transport Project in Mexico, for which Loan 2824-ME in the amount of US$125 million equivalent was approved on May 28, 1987 and made effective on February 11, 1988. In 1992, US$34 million of the loan were cancelled when the Nuevo Le6n Component was dropped from the project. The Loan was closed on June 30, 1998. Final disbursement took place on October 30, 1998 at which time a balance of US$0.5 million was cancelled. The ICR was prepared by John Cracknell (Consultant), Mahendra Lal (Consultant), and Francisco Wulff (Consultant) under the supervision of the Task Manager Guillermo Ruan of the Finance, Private Sector and Infrastructure Department of the Latin America and the Caribbean Region (LCSFP) and reviewed by Maria Victoria Lister, Quality Assurance Officer (LCSFP); Richard Clifford, Sector Leader (LCSFP); and Jeffrey Gutman, Lead Specialist (LCSFP). The borrower and cofinanciers provided comments that are included as appendices to the ICR. Preparation of this ICR was initiated during the Bank's supervision/completion mission, in May 1998. It is based on data supplied by the Borrower and on project reports and material in the project files. The Borrower also contributed to preparation of the ICR by providing views reflected in the report, and by commenting on the draft ICR. A summary of the Borrower's contribution is included in Appendix B to this ICR. ii FIRST URBAN TRANSPORT PROJECT Loan 2824-ME MEXICO EVALUATION SUMMARY Introduction. 1. The Project was the first urban transport project to be supported by the Bank in Mexico. The Project was identified in 1985, appraised in 1986, approved by the Bank in 1987, and became effective in February 1988 (Table 3). The cost of the Project was estimated at US$294.9 million with a Bank loan of US$125 million equivalent. The Project took eleven years to implement and the final costs were US$144.66 million with US$90.46 million disbursed from the Bank loan'. Project Objectives. 2. The rationale of the Project was to assist the development of traffic and transport operations, management and planning in selected major urban areas in Mexico. The Loan Agreement stated the Project objectives as (i) to improve the quality, accessibility, and effectiveness of transport; (ii) to rationalize tariff policies, improve the financial and economic viability and sustainability of transport investments and encourage private sector participation, (iii) to preserve and maintain (transport) infrastructure investments, and (iv) to strengthen the capabilities of institutions engaged in urban transport. 3. The Project objectives were to be achieved through the implementation of five components: (i) Corridor improvements, (ii) Public Transport, (iii) Road Maintenance, (iv) Traffic Systems Management (TSM), and (v) Institutional Development. The latter component aimed to assist project management and supervision, strengthening agencies in the sector systematic transport planning and preparation of investment programs in urban areas in Mexico. Corridor, Public Transport, Maintenance and TSM components were included for (i) Zona Metropolitana del Valle de Mexico (ZMCM) under the jurisdiction of the State of Mexico (SofM), and (ii) Monterrey, State of Nuevo Leon (SofNL). The Institutional Development component was directed at the Banco Nacional de Obras (BANOBRAS); Technical Assistance (TA) to local agencies was combined with the sectoral components. Implementation Experience and Results. 4. Project implementation was delayed and took 10-11 years instead of the 7-8 years foreseen at Appraisal. The progress and content of the Project was greatly influenced by unforeseen events (such as the consequences of Hurricane Gilbert and the air pollution crisis in ZMCM), the economic downturn in Mexico and policy decisions by borrower i During the period 1987-1998 the Mexican peso devalued from 1.4 to a dollar to 9.5 to a dollar. iii agencies (such as a decision to pursue the metro in Monterrey). It is a complex background extending over 11 years against which the Project must be judged. There were considerable changes in project scope, priorities and costs of individual Project components and changes in institutions, the major amongst which were: a) re-scheduling of Project resources (US$ 11.6m Loan) to finance repairs to transport infrastructure in Monterrey brought about by Hurricane Gilbert; b) cancellation of outstanding SofNL components (US$ 34.Om Loan) in 1992 attributed by SofNL to the lack of counterpart funds; this lack of resources resulted from a change of transport priorities in the city by the decision to pursue a high cost Light Rail Transit (LRT/metro); c) cancellation of the lines of credit for buses (US$28.8m total) due to failure to implement related bus route rationalization and tariff reform programs, the SofNI, withdrawal and existence of alternative bus financing sources; d) reallocation of Project resources (US$38m) in 1990 to the Department of the Federal District (DDF) to implement measures to alleviate the crisis levels of transport related air pollution; e) liquidation of the SofM bus company (STT) and thus the abandonment of the related bus maintenance prograrn; f) changes in scope, types of wvorks and priorities on Corridors and for Maintenance arising as a consecquence of the long implementation period; g) decentralization of traffic responsibilities to local governments which affected the imrplementation of TSM components; h) changes in political administration which resulted in institutional changes such as elimination of State of Mexico Transport Commission (COTREM) (Traffic division) and STT in SofM, the Project Implementation Unit (PIU) in SofNI. and Ruta 100 in DDF. 5. Additionally, the Project was implemented in a time of economic crisis in Mexico with two effects: (i) shortage of counterpart funds at many stages in the Project but notably in the early years of the Project when implementation was very slow and few disbursements were made and (ii) a drop in the value of the Project as the Peso devalued. The original Project cost of US$ 294 m (US$ 125m Loan) was reduced by the withdrawal of Monterrey (a cancellation of US$34 mn of the Loan) to an estimated US$214m; however, during Project implementation the Mexican Peso devalued from 1.38 P to I US$ in 1987 to about 9.5 P to 1 US$ 1998 contributing to an effective drop in the total Project cost to US$144.66 million. 6. As a result of the lengthy time scale and the events described in para 4, there were changes in Project scope, not all components were implemented and not all objectives were achieved, notably those related to the TSM and Public Transport components. Nevertheless, the Project was the first urbEm transport project in Mexico and significant benefits accrued to users of the transport system in SofM, from the Corridors and the Maintenance components, and in Monterrey from the initial Ring Road investments and the Hurricane Gilbert remedial works. The DDF components, added in 1990, were successfully implemented with beneficial results from reductions of bus emissions and an iv air quality monitoring system was established. Furthermore, from a very low level of initial experience, the TA and training under the Project assisted BANOBRAS to increase its expertise and capabilities in urban transport. While further improvement is still necessary, the gain is demonstrated in the successful co-operation between the Bank and BANOBRAS in developing integrated transport projects in Medium Sized Cities and now, supervision of the on-going Bank project. 7. Financial impact of the Project is assessed as mixed. Although quantitative data are not available, the Maintenance program is considered to have had an overall positive impact on SofM's transport expenditure since if road rehabilitation had been further deferred, then full scale road reconstruction would have been necessary; furthermore, the establishment of improved maintenance planning also assists the SofM to make most effective use of resources. Only one component, the La Venta Chamapa (LVC) Toll Road, involves direct cost-recovery from users. The LVC does not result in a satisfactory Financial Rate of Return (FRR) due to lower than estimated traffic demand and construction cost over-runs2. 8. There is also little data from which to assess the economic impact of investments. However, on the basis of experience of other projects and some un-validated data from the SofM, it is assessed that the Maintenance and Corridor components resulted in improved vehicle speeds which, together with improved road surfaces, reduced vehicle operating costs and gave economic benefits. Due to low traffic demand, it appears that the LVC has not realized its estimated economic benefits. The impacts of the DDF components (Ruta 100 engines and equipment for the Air Monitors Automatic System -- RAMA) are judged to be positive. 9. The Bank showed flexibility and responsiveness in dealing with changing circumstances throughout the Project, in particular in meeting the requests from the Government of Mexico (GOM) to use Project funds to alleviate the effects of two emergencies: (i) damaged transport infrastructure in Monterrey following Hurricane Gilbert, and (ii) alleviation of the transport related air pollution crisis in ZMCM. During later years of the Project, implementation of physical measures was emphasized and supervision efforts were directed to speeding up previous slow disbursement performance but more may have been possible to stimulate greater action in the traffic management and public transport reform programs. Considerable effort was also devoted to the development of a Medium Sized Cities Urban Transport Project (MSCP); this was successfully accomplished and the framework for the development of urban transport systems and institutions in urban areas in Mexico has been improved. Overall Bank performance is rated as satisfactory. 10. Borrower performance was uneven. BANOBRAS performed administrative aspects well (procurement supervision, disbursements, preparation of quarterly reports etc.) but at the outset of the Project, the agency lacked technical expertise to deal with 2 It appears possible that the financial return could be improved through (i) levying a more realistic toll to balance and optimize demand and revenue and (ii) improvement of the vehicular access to/from LVC's catchment area within SofM. v policy and technical issues to maintain the proposed pace of implementation. During the Project, BANOBBAS benefited from exposure to the sector through Bank Supervision missions and, to some extent, from TA and technical performance has improved. In SofM, the Traffic Division (COTREM) was hampered by the economic downturn in Mexico leading to paucity of counterpart ftnds, frequent changes in administration and lack of expertise in traffic matters and, in the end, although studies and designs were completed, little implementation was achieved in the TSM or Public Transport components. The Maintenance Division of SofM, after a slow start, performed well and benefited from the TA under the Project to strengthen their expertise and establish a planning system. Overall Borrower performance is rated as satisfactory. Summary of Findings, Future Operation, and Key Lessons Learned. 11. The outcome of the Project was mixed. Cancellation of some components (notably bus lines of credit) meant that public transport objectives were not achieved, and not all remaining original components were implemented in the form envisaged at Appraisal. There was a notable lack of traffic management actions although some interventions were subsumed into Corridor components. Implementation was slower than forecast. Nevertheless, the Corridor and Maintenance-Rehabilitation works had positive impacts ina economic terms, in financial terms (through improved planning of resource allocation to maintenance) and in raising awareness of cost-effective measures, The LVC appears not to have achieved either its economic or financial returns but this is attributed to unrealistic tolls and poor local road connections rather than a poor scheme concept. While some components were cancelled by Borrower agencies, others were substituted and these, at the time of their inclusion, had positive impacts. The Project had a positive impact on urban transport planning and project development (i) generally in Mexico through the approach to urban transport, now demonstrated by the on-going MSCP Project, and (ii) through promotion of the case for integrated transport in ZMCM through support to the Transport and Roads Metropolitan Commission (COMETRAVI -- Comisi6n Metropolitana de Transporte y Vialidad) and its successors. Thus, although the Project did not achieve all objectives, it was an initial project in the sector and must be viewed against th,e background of a long time-scale and changing political events, economic conditions and institutional changes and its outcome is regarded as generally positive. Thus, a satisfactory rating has been given. The lessons to be learned for future projects are given in the following paragraphs. 12. Political Commitment and Changing Priorities - it is essential for implementation of traffic and transport schemes and policies to secure political commitment to minimize risks of cancellation of components. There is no easy way for which to plan for changing political priorities, particularly in a Project with a life of over 11 years. However, the lessons learned are (i) projects should be "shorter" in planned duration even if this means a project of reduced scale; shorter periods would safeguard, to some extent, against changing priorities and (ii) there is a need to improve consultation procedures with decision makers and key stakeholders. For further work in the sector, the agency responsible for the project should have the capacity to play an effective leadership role in the pursuit of policy reforms. vi 13. Institutional Arrangements for Implementation - the fundamental requirement for the successful implementation of an urban traffic and transport program is the existence (or creation) of a strong, professional Traffic Management Unit (TMU) or equivalent. Planning and implementation of traffic schemes and policies involves many public and private agencies in the sector. Unless a strong TMU exists (or is created) with adequate powers and financing, successful implementation of TSM components will be at risk. In SofM, the Project foresaw this issue and provided TA to COTREM; however, the agency proved to have insufficient experience in the area and had no budgetary powers to force through implementation. The lessons learned are that Bank urban transport lending in Mexico should be even more strongly focussed on institutional strengthening and that the agency selected for planning should have a clear mandate to secure implementation. 14. Project Design - the design of the Project was not unduly complex and yet significant elements were not implemented, notably the TSM and Public Transport Components; although preparation studies were completed for both components but implementation did not follow. The lessons learned are: a) Public Transport - Lines of Credit. The component was not implemented as (i) it was linked to bus route rationalization and reform of public transport organization (such as tariff levels) which, although studied, were not implemented and (ii) the arrangements to actualize the lines of credit outlined at Appraisal were reasonable proposals but did not prove acceptable in practice (even though operators had been consulted). The viability of bus lines of credit requires extensive research into the structure of the local bus service supply industry, its sources of alternative finance and integration, on a staged basis, new buses with the existing bus fleet. The lesson learned is that it is necessary to take the development of a line of credit to a "final scheme" stage at Appraisal; b) TSM - a strong, professional TMU is essential for the realization of a traffic management program; the lesson to be learned has been described in para I3. and is further endorsed. 15. Approach to Detailed Design at Appraisal It is standard practice at Appraisal for detailed design to be completed for a significant proportion of any urban transport project. This procedure was followed and a significant proportion-by-cost of the Project was available at detailed design level. However, the designs were for straightforward road components. The components which, although of lower cost, require intensive design effort (such as the TSM schemes) were not designed. These were planned and designed during the early years of the Project but not implemented following changes of traffic responsibility from State to municipalities and as the focus of attention (by BANOBRAS, SofM and the Bank) in later years of the Project concentrated on the implementation of physical investments. Thus, the TSM objectives were largely lost. The lessons learned are (i) that detailed design of urban transport project at Appraisal should not be assessed only on a cost basis but should include a representative sample of vii all type of measures proposed for the Project and (ii) even if there is a change in system responsibilities, the co-ordination agency should seek consensus with the new authorities. 16. Supervision by BANOBRAS and the Bank - during later years of the Project, there was an emphasis on implementation of physical measures and great efforts were made to speed up previous slow disbursernent performance. As a consequence, the policy aspects of the Project (such as possible Public Transport reform in terms of routes, tariffs, etc) and procedural aspects (such as data for monitoring and ex-post evaluations) tended to be overlooked. The lessons learned are that (i) for projects with very long implementation peiiods, at least one comprehensive review of the Project in relation to its objectives is required after, say, 4 years and a detailed action plan is necessary to recover any overlooked components or policies and (ii) dialogue between the Bank and the co- ordination agency must be continued within the framework of the Appraisal agreements and activities should not concentrate on physical implementation alone. 17. LVC - the largest single investment does not appear to result in positive financial or economic returns. The increase in constiuction cost was unavoidable but the danger signs relating to low demand were recognized in mid Project. Bank Supervision missions recommended testing alternative tolls to arrive at the optimum balance between toll and demand. It does not appear that this advice was taken. The lesson learned is that in cases where a component has been completed bult its benefits are in doubt, the Bank should exercise all possible influence on the borrower to seek remedial actions - particularly in the present case where such actions appear viable. IMPLEMENTATION COMPLETION REPORT MEXICO FIRST URBAN TRANSPORT PROJECT Loan 2824-ME Part I: Implementation Assessment A. Project Objectives 1. The rationale of the Project was to assist the development of traffic and transport operations, management and planning in selected major urban areas in Mexico. The specific Project objectives (Loan Agreement Schedule 2) were to: (a) improve the quality, accessibility, and effectiveness of transport; (b) rationalize tariff policies, improve the financial and economic viability and sustainability of transport investments, and encourage private sector participation; (c) preserve and maintain (transport) infrastructure investments; (d) at local and national levels, to strengthen the capabilities of institutions engaged in urban transport. B. Scope of the Project and Project Development 2. The Project was identified in 1985, appraised in 1986, approved by the Bank in 1987, and became effective in February 1988 (Table 3). The cost of the Project was estimated at US$294.9 million at Appraisal with a Bank loan of US$125 million equivalent. The Project took eleven years to implement and the final costs were US$144.66 million with US$90.46 million disbursed from the Bank loan. 3. The Project objectives were to be realized by the implementation of five components: (a) Corridor Improvements -road construction (including one toll expressway), road widening, busways, intersection improvements, "missing links" and similar (36% of costs); (b) Public Transport Improvements - studies and TA for bus system management, tariffs, public transport plans and bus maintenance facilities (including equipment); a line of credit for private sector to procure buses was included (37% costs); (c) Road Maintenance -deferred maintenance investments and TA for development maintenance management programs (21% costs); :2 (d) Traffic System Management (TSM) -TA for TSM studies and implementation of resultant traffic management measures to optimize use of existing traffic facilities (5% costs); (e) Institutional Development Prograr - TA to (i) assist Project management and supervision, (ii) strengthen local agencies in the sector and (ii) commence systematic urban transport planning and preparation of investment programs in cities in Mexico (1% of costs). 4. The Corridor, Public Transport, Maintenance and TSM components (paras 3(a)-(d)) were included in the Project for (i) the part of the ZMCM under the jurisdiction of the State of Mexico (SofM) and (ii) Monterrey, State of Nuevo Leon (SofNL). The Institutional Development component was directed at BANOBRAS; TA to local agencies was combined with the sub-sector components. 5. The Project period was extendecl from an estimated 7 to 8 years at Appraisal to 11 years (the original closing date of June 1995 was extended to June 1998) (Table 3). During this period, the content and progress of the Project was greatly influenced by unforeseen events (such as the consequences of Hurricane Gilbert and the air pollution crisis in ZMCM), the economic downturn in Mexico and decisions by borrower agencies. It is a complex background extending over 11 years against which the Project must be judged. There were considerable changes in project scope, priorities and costs of individual Project components and changes in institutions, the major amongst which were: (a) in late 1988, road infrastructure in. Monterrey was severely damaged by the effects of F-lurricane Gilbert. The Bank agreed to a major re-scheduling of Project resources (US$ 11.6m Loan) to finance repairs to transport infrastructure and to bring vital road links back into full operation in the shortest practicable time: (b) in November 1992, the SofNL requested the cancellation of the project in Monterrey (US$ 34.Om Loan); this was agreed by the Bank. The reasons for the cancellation were attributed by the SofNL to the lack of counterpart funds. Although precise data are not available, this shortage of resources appears to have resulted from the commitment of SofNL to the construction of the Monterrey LRT/metro (now in operation but operating at a considerable deficit); (c) the lines of credit for buses were not pursued (US$28.8m Project cost). This arose from a combination of reasons: (i) the lines of credit were tied to realization of bus route rationalization and tariff reform programs; while the studies were completed in SofM, the State lacked the conviction to implement the proposals; (ii) in SofNL, after protracted debate over the scope of the bus route studies and its integration with the then proposed. metro (para (b)), the studies were overtaken by the SofNL cancellation, (iii) bus operators were able to finance buses with supplier credits at more favourable lerms than was likely from a Project line of credit, and (iv) bus operators were unwilling to embrace, without increased tariffs, the higher standards (and costs) of buses likely to be required by a line of credit under the Project (e.g. insistence on imnproved emission standards); 3 (d) in 1989, transport related air pollution had reached crisis point in the DDF. In February 1990, at the request of GOM, the Bank agreed to reschedule US$ 38m (made possible by reallocation of some funds from the Monterrey Project and from the non-established bus lines of credit funds in both states) to assist in meeting that crisis. The Project financed (i) the procurement of 1,200 "clean" engines for Ruta 100 buses, (ii) TA and equipment for RAMA (automatic air quality monitoring program) in DDF, and (iii) studies on vehicle emissions and lead-free gasoline production. While the RAMA equipment continues to function very efficiently, is audited each semester by the Environmental Protection Agency (EPA) of the USA and is well managed, Ruta 100 - the beneficiary of the engines - no longer exists as the company has since been liquidated; (e) following the completion of the bus maintenance study and the definition of a bus maintenance equipment program in the SofM, the State bus company (STT) was liquidated and thus the components were abandoned; (f) the long Project implementation period gave rise, in SofM, to a need to re- appraise priorities for various reasons. Typical changes included (i) road conditions had continued to deteriorate and Corridor and Maintenance works were modified to meet the new priorities, (ii) some Appraisal proposals proved unrealistic following detailed analysis; in particular, the Rl Busway (US$22.4m project cost) was cancelled as it relied on new road construction for continuity and for which costs were not included in the Project, bus re-routing which was not pursued and for a complete scheme, extension out of SofM jurisdiction into the DDF area; road rehabilitation was substituted, (iii) Av Central had deteriorated physically since Appraisal and the works were redefined to deal with the new conditions and further to deal with the effects of the construction by DDF of Metro Line 10 (along the line of Av Central); Project costs are given in Tables 8A-1 and 8A-2; (g) during the early 1990's, decentralization of local government responsibilities took place from states to municipalities. In the SofM, this meant that municipalities became responsible for traffic schemes; the Project proposals for TSM for local centres such as Naucalpan, Ecatepec and Texcoco prepared under the Project by COTREM (SofM) were not implemented although subsequently, some (notably Texcoco) have been taken over by municipalities with their own resources; (h) during Project implementation, there have been changes in political administration e.g. three different administrations in Monterrey. These changes affected the Project in terms of: (i) policy - for example, the decision to proceed with the metro/LRT in Monterrey in preference to "cost-effective", Project investments and (ii) institutions - for example, various institutions/agencies supported by the Project have been eliminated (although sometimes absorbed into other agencies) and these included COTREM and STT in SofM, the Project Implementation Unit (PIU) in SofNL and Ruta 100 in DDF; (i) the Project was implemented in a time of economic crisis in Mexico. Two effects are noted (i) shortage of counterpart funds at many stages in the Project but notably in 1990/91 when implementation was very slow and few disbursements were made (Table 4) and (ii) a drop in the value of the Project as the Peso devalued. The original Project cost of US$ 294 m (US$ 125m Loan) was reduced 4 by the withdrawal of Monterrey (a cancellation of US$34 m Loan) to an estimated US$214m; however, during Project implementation the Mexican Peso devalued from 1.378 P to 1 US$ in 1987 to about 9.5 P to 1 US$ 1998 contributing to an effective drop in the total Project cost to US$144.66 million. C. Achievement of Objectives 6. The SAR defined indicators against which to measure improvements in traffic performance, economic impacts ancd financial returns (where appropriate) for Corridors, Public Transport Maintenance ancd TSM components. However, the extensive changes over the life of the Project in termns of location and type of schemes and the elimination of some components (para 5), rmeans that the SAR indicators are, in many cases, no longer valid. Although monitoring surveys were planned in 1991, they were not executed nor followed up and changes of administration and consequent changes in technical personnel in SofNL and SofM has meant that there has been no consistent, systematic data collection to enable quantified, ex-post evaluations to be made. Thus, the assessment of the achievement of objectives is based largely on qualitative assessments. 7. Corridors and TSM - the objective was to improve the quality of transport by improving the efficiency of existing facilities and supplementing traffic capacity in key locations. Investments comprised new road construction, extensions and widening of existing roads, somne traffic system improvements and road paving in a poor area on the periphery of the cit:y. 8. The works undoubtedly had beneficial effects on traffic performance in terms of (i) improved travel speeds', (ii) increased accessibility to developing areas by the construction of new roads, (iii) improving bus and other access to the poor area of Chalco and (iv) reduced vehicle operating costs (see also Maintenance below). However, the TSM program was not fully realized; the component originally comprised two parts: (i) TSM studies to clevelop cost-effective programs and (ii) implementation of those programs. While a number of TSM studies and plans were completed, no specific TSM components were implemented under the Project since (i) some TSM work (such as road markings and sign:ing) was absorbed into the Corridors and (ii) traffic responsibilities were decentralized from states to municipalities and implementation did not take place. However, although not implemented under the Project, it appears that at least some of the schemes are now being taken up by the municipalities (the Texcoco one way system which was delayed under the Project by the construction of the parallel Metro Line A by the DDF). 9. The major single Corridor investment in SofM was the La Venta Chamapa Toll Expressway (IVC) (Appraisal estimate of US$17.9m plus US$ 5 m sunk costs plus contingencies). Thie aim of the scheme was to relieve the congested local roads in the west of the ZMCM within the jurisdiction of the SofM. The scheme has not fulfilled the ' Although systematic clata are not available, the SofM authorities report "before" and "after" average speeds to be increased by 30% or more. However, the data are not "corrected" for such factors as variation in traffic flows. 5 Appraisal estimates in that the traffic demand is some 40% of that predicted (Table 9B) and consequently this, coupled with increased cost of the final scheme (total US$ 36.9m) has resulted in a lower than expected financial return; a negative Net Present Value (NPV) estimated (Table 9B). The increase in cost was due to (i) changes in design which included a new bridge-access, (ii) construction problems in difficult terrain which required significant design amendments and (iii) contract claims and other problems. The Bank did not disburse against the total cost but against Appraisal estimates. Lower than expected demand is attributed to (i) the high toll which was imposed at the outset (and is now US$ 3 for cars and US$ 9 for trucks for 1 lkms), (ii) the existence of other routes that provided service, and (iii) the poor quality of, and traffic congestion on, the local road access to/from the most likely catchment area for traffic within the SofM2. The situation is not atypical of toll roads in Mexico and it is understood that most SCT3 toll roads are also largely under-utilized. Given the low traffic flows on LVC, it seems likely that the traffic relief to other roads, and thus the economic objectives, have not been achieved to date. 10. In Monterrey, prior to the withdrawal from the Project, Corridor works were completed on the Inner Ring Road. No data are available to assess the traffic impact of the components. The Ring Road is now substantially complete although some schemes proposed as grade separated intersections under the Project are still not completed in their final form. 11. Maintenance - the objective of the investments was to conserve road infrastructure. The component was applied only in the SofM as a result of the Monterrey cancellation. The SofM successfully implemented a program of deferred maintenance- rehabilitation. All works were carried out under locally bid contracts. The improvement of the road surface has assisted in the conservation of the SofM road infrastructure and should have achieved reductions in vehicle operation costs on major road arteries. The program included a Maintenance Study and SofM report that the Maintenance Management Integral System (SIAM -- Sistema Integral de Administraci6n del Mantenimiento), developed by the study, is in use and is applied to establish maintenance priorities on the main road network in the state. In principle, the component must be regarded as successful in "preserving transport infrastructure investments and reduce vehicle operating costs". 12. In SofM, at Appraisal, Corridor and Maintenance works were scheduled on about 130 kms of road at an average cost of about US$ 0.5m/km4. The Project implemented Corridor and Maintenance works on about 105 kms5 at an average cost of US$0.77 m/km. Thus, about 80% of the Corridor and Maintenance physical target was achieved but at a greater than expected unit cost. The reduction in target and increase in cost is attributed to a number of factors - delays in implementation resulted in continued 2 This was clearly recognized by the Bank team at Appraisal and the road, the Carr Naucalpan-Toluca, was included for improvement under the Project; this was not implemented. 3 The LVC is owned and managed by the SofM. 4 Including contingencies divided pro-rate between components. Both totals are estimated and exclude the La Venta Chamapa Toll Road Expressway. 6 deterioration of road surface and thus works were more extensive than envisaged at Appraisal and some higher cost components were substituted for lower cost components (e.g. much needed new roads in Chalco were substituted for lower cost management schemes in Texcoco). 13. Public Transport - the objective was to improve the supply and quality of transport. The Public Transport components did not achieve the stated objectives of rationalizing tariff policies, improving the financial and economic viability, sustaining (public) transport investments and encouraging private sector participation. This failing arose from (i) the cancellation of the bus lines of credit, (ii) the liquidation of the STT in SoiM (for which a Bus Maintenance Study had been successfully completed but which did not lead to investment) and (iii) the lack of implementation of any route restructuring or system re-organization proposals in SofM and (iv) the construction of Metro Line 10 (which eliminated the case for the RI busway). 14. Additional Components - additional components were included in the Project namely: (i) engines for Ruta 100 buses in DDF, (ii) equipment/TA for the RAMA in the DDF and (iii) repairs to roads in Monterrey as a result of Hurricane Gilbert damage. All the components were successfully implemented and met their objectives, namely (i) reduced harmful emissions from buses and a contribution to clean air for the R100 component, (ii) a high standard automatic air quality monitoring system within DDF and (iii) the reinstatement of the road network in. Monterrey. 15. Studies - the Project contained various studies (Table 6) and the manner in which the study objectives were met is summarized below: ILliStudy and TA Summary of Results STATE OF MEXICO I Bus Administration, Incorporated into study 2 below Route and Tariff Study 2 Medium and Long Term Objectives achieved to some extent. The study outputs Public Transport Study were not taken up by the SofM due to changes in State (the study was expanded administration and lack of resources for transport; the to consider all modes) SofM lacked the institutional capability to implement the bus route-tariff study results. However, the study (i) highlighted the need for SofM-DDF transport integration and assisted in the formation of COMETRAVI and its successors as a ZMCM-wide transport planning agency and (ii) some of the planning proposals are now being taken further, including the proposed suburban rail program 3 Maintenance Study for Successfully completed but results rendered redundant as Buses STT (the SofM Bus Company) was liquidated soon after study completion 4 Maintenance Study for Objectives achieved - formed the basis of the Highways maintenance program financed by the Project; established the SIAM system, which while not a full pavement management system, is used in the Junta Caminos of SofM to schedule maintenance activities. 5 TSM Studies Objectives partly achieved - a series of studies were 7 completed but TSM projects were not implemented; some measures are currently under review and forming the basis of new projects BANOBRAS 6 TA to assist Objectives significantly achieved - some TA was not implementation fully successful in BANOBRAS but the exposure of BANOBRAS to advice in systematic transport planning has increased awareness and expertise in the agency in the transport sector; various operational manuals have been produced to guide cities and transport programs; 7 Medium Sized Cities Objectives achieved - the studies established the criteria Project Preparation for the now on-going MSCP; various city programs for ______________________ implementation were prepared. 16. To summarize, the Project was implemented over a long period and against a complex background of political, technical and economic changes. As a result, investment needs changed (e.g. roads were further deteriorated compared to conditions at Appraisal), investment priorities changed (e.g. the decision by Monterrey to pursue a metro outside the Project), political changes affected the organization of the sector (e.g. the elimination of STT) and there was a lack of political will and institutional capacity to follow through some of the complex policy components (the TSM and Public Transport components). Thus, not all objectives were achieved. Nevertheless, the Project was the first urban transport project in Mexico and significant benefits accrued to the users of the transport system in SofM from the Corridors and the Maintenance components and in Monterrey from the Hurricane Gilbert remedial works. The DDF components, added in 1990, were successfully implemented with beneficial results from reductions of bus emissions; an air quality monitoring was established. Furthermore, from a low level of initial experience, BANOBRAS increased its expertise and capabilities in urban transport as has been demonstrated by successful cooperation with the Bank in developing integrated transport projects in Medium Sized Cities and now, supervision of the on- going Bank project. 17. Financial Performance. The Project was adversely affected by the general downturn in the Mexican economy during most of the 1990's, which significantly reduced the availability of counterpart funds for Project activities and was a major contributory factor to the implementation delays. 18. At the component level, although quantitative data are not available, the Maintenance program should have had an overall positive impact on SofM's transport - expenditure since if road rehabilitation had been further deferred, then full scale reconstruction would have been necessary; furthermore, the establishment of maintenance planning also assist the SofM in making most effective use of resources. 19. Only one component, the LVC Toll Expressway, involves direct cost- recovery from users. The LVC does not result in an acceptable Financial Rate of Return (FRR) due to lower than estimated traffic demand and construction cost over-runs. It appears possible that the financial return could be improved through (i) levying a more 8 realistic toll to balance and optimize demand and revenue and (ii) improvement of the vehicular access to/from LVC's catchment iarea within SofM. 20. Economic Performance. Generally, data are not available for economic analysis of investments under the Project. Within SofNL, no data exist from which to assess the performance of the Inner Ring Road. This lack of data is attributable to the closure of the PIU at the time Monterrey %vithdrew from the Project and the subsequent changes of political administration and technical personnel in SofNL agencies. A Project Completion Report memorandum was prepared when Monterrey withdrew from the Project but was concerned primarily with procedural issues and not with quantitative evaluation. The very nature of the other major investments in Monterrey - transport infrastructure repair works following Huiricane Gilbert - precluded the assembly of "before" data. Subjectively, it is considered (i) probable that the Inner Ring Road components were economically viable - the works were concentrated at heavily used junctions and traffic queues were commoniplace "before" and the investments ensured consistent traffic capacity throughout the relevant sections of the route and (ii) that the Hurricane Gilbert works were economically, viable - the works restored important major roads within the road network. 21. Within SofM, there is also little data from which to assess the economic impact of investmients. The SofM Junta Caminos has assessed "after" travel speeds on rehabilitated roads and report that speeds are up to 30% higher than "before" speeds but these data are localized measurements and not adjusted for traffic flow variations. Nevertheless, they support the subjective view that the Corridor and Maintenance investments have had a significantly positive impact on travel speed and vehicle operating costs (particularly due to the reduction in road roughness) on Project roads. With respect to the LVC Toll Road, it appears likely that the low demand (of some 40% of Appraisal estimate) means that the estimated economic benefits have not been realized. 22. The irnpacts of the DDF components (Ruta 100 engines and equipment for RAMA) have not been assessed quantitatively since (i) it is not possible to attach economic value to reductions in emission and furthermore, Ruta 100 has now been liquidated and (ii) the RAMA equipment cannot be assessed in quantitative terms. However, both components are assessed as positive in their impacts. 23. The F3ANOBRAS components consisted of TA and study activities; no quantitative economic evaluations are possi'ble but it is considered that the activities have contributed significantly to the human capital and institutional development of the sector. D. Major Factors Affecting the Project 24. This vwas the first urban transport project in Mexico financed by the Bank. It encountered some of the problems that affect initial interventions in a sector. The factors which affected the Project have been outlined in para 5. Three key aspects are noted (i) 9 institutional weakness in the sector, (ii) deterioration of the economic situation in Mexico during the life of the Project and (iii) the influence of political changes. 25. At the Federal level, previous Bank Projects had been adversely affected by institutional weaknesses within BANOBRAS and this was recognized as a risk during the preparation of the Project. To meet this risk, technical assistance was provided to BANOBRAS. However, while there are indications that the TA helped alleviate the problem, it takes time for an agency to develop its expertise in a complex sector. At the State level, the Project provided studies and TA to the traffic and maintenance agencies but (i) in SofNL, this was not aimed at a permanent institution and (ii) in SofM, although the intervention was successful for road maintenance, the traffic management institutions have since been disbanded. 26. The deterioration in the macroeconomic situation during the Project period (1987-1998) substantially affected Project execution. Financial stringency imposed by the economic downturn restricted the availability of counterpart funds, slowed the rhythm of investments. In addition, tariff increases forecast at appraisal or recommended by studies could not be implemented because the GOM and local agencies considered them inflationary. 27. The political changes had significant impacts on Project scope including cancellation of the Monterrey components due to the decision to pursue the metro, liquidation of State bus companies which were beneficiaries under the Project (STT in SofM and Ruta 100 in DDF), decisions by DDF to proceed with Metro Line 10 (which required re-orientation of major Project components in SofM, changes in institutional set- up (such as elimination of COTREM) and so on. Over an 11-year period, such changes are not unexpected but it requires a well-established and professional institutional structure to meet the challenges brought about by the changes. E. Project Sustainability 28. At the policy level, the Project has had a sustainable effect on transport investment planning. The direction of policy currently being pursued by GOM (with BANOBRAS as its agent) and local agencies in the follow-up MSCP owes much to the concept of the original Project in that conditions of participation include (i) systematic urban transport planning forms the basis for investments, (ii) the need for allocation of adequate financing of maintenance of transport infrastructure and (iii) the need to establish traffic-transport institutional capabilities. 29. The record of institutional sustainability of the Project is mixed. At the Federal level, BANOBRAS approach to urban transport investment planning and resource allocation is now more technically sound than at the outset of the Project. Within SofM, recent events have placed institutional sustainability of traffic planning in doubt. The Traffic Division of COTREM, which had managed Project work and received the TA, was disbanded in 1998 although the staff have been absorbed into the DGV. However, sustainability of road maintenance appears to be on a firmer foundation; the Project 10 provided TA to the Junta Caminos and contributed to the SIAM system; this is still in operation. There has been no specific institutional sustainability within SofM as the PIU was disbanded when Monterrey withdrew. 30. The sustainability of components in the DDF is also mixed. The Ruta 100 engine componernt was set up to include conditions on engine maintenance and tariffs reviews to increase cost recovery. However, these aspects were not realized as Ruta 100 was disbanded. The RAMA equipment has proved fully sustainable and is well maintained and subject to continuous quality checks. F. Bank Performance 31. Bank Performance during Project Appraisal was satisfactory. In particular, the preparation exercise was instrumental in requiring the Borrower agencies to take a new, progressive view of important urban t;ransport sector issues. 32. The Bank effort on supervision (Tables 12 and 13) comprised over 175 staff weeks, included 204 days in the field, and involved 54 staff members. This was considerably greater than estimated at Appraisal and was due to (i) the staff inputs needed by the Bank to respond to requests by GOM for changes in Project scope, notably the air pollution emergency in DDF and the effects of Hurricane Gilbert in SofNL, (ii) the longer than planned implementation period, (iii) the lack of urban transport expertise in the local agencies which involved the Bank in greater than planned inputs to maintain progress of the Project and (iv) intensive preparation work on the follow-on MSCP (see below). Nevertheless, despite this effort, Project implementation fell somewhat short of expectations and parts of the Project were not fully implemented. While the major reasons for the elimination of components have been described in foregoing sections, more may have been possible during Supervision to stimulate greater action in the traffic management and public transport reform piograms. 33. The Bank showed flexibility and responsiveness in meeting the requests from GOM to use Project funds to alleviate the effects of two emergencies: (i) repair of damaged transport infrastructure in Monterrey following Hurricane Gilbert and (ii) measures to assist in alleviating the transport related air pollution crisis in ZMCM. 34. During the later stages of the Project, considerable effort was devoted to the development of a MSCP. The Supervision missions, BANOBRAS and Secretariat of Social Development (SEDESOL) established the framework for MSCP and assisted in directing a series of specific city studies. MSCP was subsequently financed with Bank Loan 3559-ME for US$200 million to improve air quality, the efficiency of urban transport systems and institutions in qualifying cities throughout Mexico. 35. Although there were, from time to time, changes in Bank staff, a substantial degree of continuity in the essential Bank staff involved made for good cooperation and a constructive dialogue between the Borrower and the Bank. Overall Bank performance is rated as satisfactory. 11 G. Borrower Performance 36. Borrower Performance during Project Preparation and Appraisal was satisfactory. Stimulated by the Bank over a preparation period of more than two years (and several Project briefs) the Borrower produced a credible analysis of, and justification for, the investments. 37. During Project Implementation, Borrower performance was somewhat less satisfactory. At Federal level, BANOBRAS performed administrative aspects well (procurement supervision, disbursements, preparation quarterly reports etc). However, at the outset of the Project, the agency lacked technical expertise to deal with policy and technical issues to maintain the proposed pace of implementation. During the Project, BANOBRAS benefited from exposure to the sector through Bank Supervision missions and, to some extent, from TA. Thus BANOBRAS has been able to take a more pro- active role in subsequent transport projects (MSCP Loan 3559-ME and Transport Air Quality Project (Loan 3543-ME). It is concluded that overall the performance was satisfactory. 38. At the SofM level, the Traffic Division (COTREM) was hampered by the economic downturn in Mexico leading to paucity of counterpart funds, frequent changes in administration and lack of expertise in traffic matters and, in the end, although studies and designs were completed, little implementation was achieved in the TSM or Public Transport components. The Maintenance Division (Junta Caminos) of SofM, after a slow start, performed well and benefited from the TA under the Project to strengthen their expertise. 39. Borrower Compliance with Loan Covenants was generally satisfactory. The status of implementation of major legal covenants is given in Table 10. By and large, the major covenants in the Loan Agreement were complied with (some compliance requirements were amended due to curtailment of parts of the Project) although some were complied with significant delays. A further agreement was reached with DDF relating to the procurement of engines for Ruta 100 (over tariff policy) but liquidation of the company voided the agreement. Overall Borrower performance is rated as satisfactory. H. Assessment of Outcome 40. The outcome of the Project was mixed. Cancellation of some components (notably bus lines of credit) meant that public transport objectives were not achieved and not all remaining, original components were implemented in the form envisaged at Appraisal. There was a notable lack of traffic management actions although some interventions were subsumed into Corridor components. Implementation was slower than forecast. Nevertheless, the Corridor and Maintenance-Rehabilitation works had positive impacts in economic terms, in financial terms (through improved planning of resource allocation to maintenance) and in raising awareness of cost-effective measures. 12 The LVC appears not to have achieved either its economic or financial returns but this is attributed to unrealistic tolls and poor local road connections rather than a poor scheme concept. While some components were cancelled by Borrower agencies, others were substituted and these, at the time of their inclusion, had positive impacts. The Project had a positive impact on urban transport planning and project development (i) generally in Mexico through the approach to urban transport, now demonstrated by the on-going MSCP Project, and (ii) through promoticin of the case for integrated transport in ZMCM through support to COMETRAVI and its successors. Thus, although the Project did not achieve all objectives, it was an initial project in the sector and must be viewed against the background of a long time-scale and changing political events, economic conditions and institutional changes and its outcome is regarded as generally positive. Thus, a satisfactory rating has been given. I. Future Operation 41. Responsibility for the operation and maintenance of infrastructure investments rests with the SofM and, in so far as they were implemented, with SofNL. The components involved conventional technology and continued operation rests with the application of successful maintenance. Since this is the area, in the SofM, where most institutional gain was made, continued operation should be adequate but budget provision for maintenance is understood to be uncertain. In the SofNL, no data are available. The residual component in DDF, the RAMA equipment, continues to operate well. The implementation of the follow-up Projects., Medium Sized Cities Project (Loan 3559-ME) and Transport Air Quality Project (Loan 3543-ME), are expected to enable the Bank to monitor the ins-titutional strengthening of BANOBRAS and other involved agencies. J. Key Lessons Learned 42. Although there were shortfialls in the implementation of the Project, the overall experience was positive. Physical improvements were made to the road network and the continuaous dialogue with the Bank, particularly in the first few years of the Project, steered BANOBRAS and the local agencies towards institutional strengthening and a growing vision of the Urban Transport Sector - culminating in the development of the MSCP. In particular, the Project emphasized the importance of conservation of transport infrastructure - through both investments in works and in system planning. Nevertheless, there are lessons to be learned. 43. Political Commitment and Changing Priorities - it is essential for implementation of traffic and transport schemes and policies to secure political commitment. In Monterrey, while there was political acceptance at the outset, the commitmeiit to the Project was not strong enough to retain scarce counterpart funds when faced with competition from a proposed metro. There is no easy way for which to plan for changing political priorities, particularly in a Project with a life of over 11 years. However, the lessons learned are (i) projects should be "shorter" in planned duration (the original Project was scheduled at 8 years) even if this means a project of reduced scale; shorter implemientation periods would safeguard, to some extent, against changing 13 priorities (an Adaptable Program Loan, APL, could be very appropriate) and (ii) there is a need to seek improved consultation procedures with decision makers and key stakeholders. For further work in the sector, the agency responsible for the project should have the capacity to play an effective leadership role in the pursuit of policy reforms. 44. Institutional Arrangements for Implementation - the fundamental requirement for the successful implementation of an urban traffic and transport program is the existence (or creation) of a strong, professional Traffic Management Unit (TMU) or equivalent. Planning and implementation of traffic schemes and policies involves many agencies including state or national "public works" agencies, municipality agencies, land use and development control planning agencies, bus operators and regulators, private transport operators (trucks, taxis, para-transit, etc) as well as the TMU itself. Unless a strong TMU exists (or is created) with adequate powers and financing, successful implementation of TSM components will be at risk. In SofM, the Project foresaw this issue and provided TA to COTREM; however, the agency proved to have insufficient experience in the area and had no budgetary powers. The lesson learned is that Bank urban transport lending in Mexico should be even more strongly focussed on institutional strengthening and that the agency selected for planning should have a clear mandate to secure implementation. 45. Project Design - the design of the Project was not unduly complex and yet significant elements of components were not implemented, notably the TSM and Public Transport Components. Preparation studies were completed for both components but implementation did not follow. The lessons learned are: (a) Public Transport - Lines of Credit. The component was not implemented for at least two basic reasons. First, it was linked to bus route rationalization and reform of public transport organization (such as tariff levels) wvhich, although studied, were not implemented. Second, the arrangements to actualize the lines of credit outlined at Appraisal were reasonable proposals but did not prove acceptable (even though operators had been consulted; issues not fully resolved included the ability and/or willingness of operators to participate in the credit line, the availability of alternative financing sources (such as supplier credits for buses) and the integration of buses to be financed under the line of credit with existing buses6. The viability of bus lines of credit requires extensive research into the structure of the local bus service supply industry, its sources of alternative finance and how to integrate, on a staged basis, new buses with the existing bus fleet (particularly as new tariffs may be needed to support financing of the new buses). The lesson learned is that it is necessary to take the development of a line of credit to a "final scheme" stage by Appraisal; 6 The forner (new buses) would be of higher quality and have lower emissions than the latter (existing, or existing type, buses) but would cost considerably more. As there are many thousands of buses in SofM, a low percentage of the fleet would be replaced if the line of credit came into operation. The issues include how to set differential fares to enable the new, high quality buses to recover costs, the willingness of (some) users to pay premium fares etc. 14 (b) TSM - a strong, professional TMIU is essential for the realization of a traffic management program; the lesson to be learned has been described in para 44 and is endorsed. 46. Approach to Detailed Design at Appraisal To ensure a rapid start to implementation, it is now standard practice at Appraisal for detailed design to be completed for a significant proportion of any urban transport project. Although the current Project was appraised in 1987, this procedure was followed. A significant proportion-by-cost of the Project was available at detailed design level. However, the designs were for straightforward road components (the LVC and Ring Road junctions in Monterrey). The components which, although of lower cost, require intensive design effort (such as the TSM schemes) were not designed. These were planned and designed during the early years of the Project. However, the schemes were not subsequently implemented following changes of traffic responsibility from State to municipalities and as the focus of attention (by BANOBRAS, SofM and the Bank) in later years of the Project concentrated on the implementation of physical investments. Thus, the TSM objectives were largely lost. The lessons learned are (i) that detailed design of urban transport project at Appraisal should not be assessed only on a cost basis but should include a representative sample of all type of measures proposed for the Project and (ii) even if there is a change in system responsibilities, the co-ordination agency should seek consensus with the new authorities. 47. Supervision by BANOBRAS ard the Bank -- during later years of the Project, there was an em,phasis on implementation of physical measures and great efforts were made to speed Up previous slow disbursement performance. As a consequence, the policy aspects of the Project (such as possible Public Transport reform in terms of routes, tariffs, etc) and procedural aspects (such as data for monitoring and ex-post evaluations) tended to be overlooked. The lessons learned are that (i) for projects with very long implementation periods, it is essential to carry out at least one comprehensive review of the Project in relation to its objectives after, say, 4 years and a detailed action plan is necessary to recover any overlooked components or policies and (ii) dialogue between the Bank and the co-ordination agency must be continued within the framework of the Appraisal agreements and activities should not concentrate on physical implementation alone. 48. LVC - the largest single investment does not appear to result in positive financial or economic returns. The increase in construction cost was unavoidable but the danger signs relating to low demand were recognized in mid Project. Bank Supervision missions recomrnmended testing alternative tolls to arrive at the optimum balance between toll and demand. It does not appear that this advice was taken. The lesson learned is that in cases where a component has been conmpleted but its benefits are in doubt, the Bank should exercise all possible influence on the borrower to seek remedial actions - particularly in the present case where such actions appear viable. 15 Part II: Statistical Tables Table 1: Summary of Assessment A. Achievement of Substantial Partial Negligible Not Objectives Applicable Macro Policies Sector Policies V Financial Objectives V Institutional Development / Physical Objectives / Poverty Reduction / Gender Issues / Other Social Objectives V Environmental Objectives V Public Sector Management V/ Private Sector Development / B. Project Sustainability Likely Unlikely Uncertain .~~~~~~~ C. Bank Performance Highly Satisfactory Deficient X _ _ ~~~~~~Satisfactory Identification Preparation Assistance Appraisal Supervision 1 D. Borrower Performance Highly Satisfactory Deficient Satisfactory Preparation_ _ Implementation Covenant Compliance V, E. Assessment of Outcome Highly Satis factor Unsatisfactcory Highly Satisfactor Unsatisfactory V , . . _. .. .~~ 16 Table 2: Related Bank Loans/Credits Loan/credit title Amount Year of approval Status 1.Loan#1990 164.0 1981 Disbursed Urban & Regional Development 2.Loan #3543 220.0 1992 In Progress Transport Air Quality 3 Loan #3559 200.0 1993 In Progress Medium Sized Cities Urban Developrnent Source: World Bank Statement of Loans 17 Table 3: Project Timetable Steps in Project Cycle Date Planned Date Actual Identification (Executive Project Summary) March 10-24,1985 Preparation March 31 -April 6, 1986 Preparation II May 12-24, 1986 Appraisal July 23-August 9, 1986 Negotiations Feb 24-March 3, 1987 & l______________ April 10, 1987 Letter of Development Policy (if applicable) N/A' Board Presentation May 28, 1987 Signing July 31, 1987 Effectiveness February 11, 1988 First Tranche Release (if applicable) N/A Midtern review (if applicable) N/A Second (and Third) Tranche Release (if N/A applicable) Project Completion June 30, 1995 June 30, 1998 Loan Closing December 31, June 30, 1998 1995 Source: Project Files 1 Not Applicable Table 4: Loan/Credit Disbursements: Cumulative Estimated and Actual (US$ thousands) FY1988 FY1989 FY1990 FYi991 FY1992 FY1993 FY1994 FYI995 FY1996 FY1997 FY1998 Appraisal Estimate' 19.5 32.8 59.6 86.4 96.4 104.1 110.3 119.8 125 Actual 13.8 29.9 34.1 49.4 55.6 58.9 66.46 76.9 81.5 83.2 90.5 Actual as % of Estimate2 70.70% 91.50% 56.90% 57.14% 57.60% 54.70% 73.00% 84.50% 89.50% 91.40% 99.50% Date of Final Disbursement: October 30, 1998 Source: World Bank Loan Records co Table 5: Key Indicators for Project Operation (Not available) 'An amount of US$34,016,769.70 was cancelled with effect from November 6, 1992, and the closing date of the project was extended to June 30, 1998. The last disbursement was made on October 30, 1998 when the remaining balance of $526,840.57 was cancelled. 2 The percentages from FYI 993 awards reflect the reduced amount of the Loan. Table 6: Studies for the Project STUDIES' IMPLEMENTATION Date started Date completed Date of result revision Plan of Action Date started STUDIES AND TECHNICAL ASSISTANCE Appraisal Actual Appraisal Actual Appraisal Actual Appraisal Actual Appraisal Actual MEXICO I. Administrative study of bus routes and tariffs Mar-87 Mar-88 Feb-88 Apr-92 Feb-88 var. Mar-88 -- Apr-88 -- 2. Study of public transport, medium and long range Mar-87 Mar-88 Jan-89 Apr-92 Jan-89 var. Feb-89 -- Mar-89 -- 3. Maintenance program for busses Mar-87 Mar-88 Mar-89 Apr-90 Mar-89 var. Apr-89 -- Jan-90 4. Maintenance program for highways Mar-87 Feb-89 Apr-88 Mar-90 Apr-88 var. Jan-89 Apr-88 Feb-89 May-88 5. Traffic administration study Mar-87 May-94 Jan-88 Apr-96 Jan-88 var. Apr-88 Jan-88 Jan-89 Feb-88 BANOBRAS 1. Technical assistance in implementation of project Mar-87 Feb-87 n/a Jun-93 n/a var. n/a var. n/a Mar-94 2. Study for medium sized cities Mar-87 Mar-97 Mar-88 Mar-93 Apr-88 var. Jan-89 Mar-93 Jan-89 Feb-9 Source: Borrower's Report Summary of results of studies detailed in para 15 of the main report. Table 7: Key Indicators for Financial Position (Not available) Table 8A-1: Project Costs _ Appraisal Estimate (US$M) Actual/Latest Estimate(US$M) Local Foreign Total Local Foreign Total Itern Costs Costs Costs Costs 1. Corridor 51.2 27.6 78.8 31.30 35.82 67.12 Improvements 2. Public 47.7 31.8 79.5 3.36 3.36 Transport 3. Road 28.7 16.1 44.8 15.82 17.78 33.60 Maintenance 4. Traffic 6.2 4.8 ii.u 6.94 6.94 Management CD 5. Technical 1.4 1.3 2.7 0.28 5.32 5.60 Assistance 6. Contingen- 49.1 28.5 77.6 cies 7. PPF 0.1 0.4 0.5 0.35 0.35 8. Equipment! 6.80 20.89 27.69 Motors TOTAL 184.4 110.5 294.9 54.20 90.46 144.66 Source: Bank and Borrower 's records Table 8A-2: Project Costs Appraisal Estimate (US$M) Actual/Latest Estimate (US$M) Local Foreign Total Local Foreign Total Item Costs Costs Costs Costs 1. Nuevo 75.30 45.00 120.30 10.65 11.66 23.31 Le6n 2. State of 107.50 63.20 170.70 35.47 51.74 87.21 Mexico 3. Federal 1.97 1.94 3.91 7.08 27.06 34.14 TOTAL 184.77 110;14 294.91 54.20 90.46 144.66 Source: Bank and Borrower's records Table 8B: Project Financing Appraisal Estimate (US$M) Actual/Latest Estimate(US$M) 1 Local Foreign Total Local Foreign Total Source Costs C.osts C.osts C.osts IBRD/IDA 14.50 110.50 125.00 90.46 90.46 State of Mexico 94.50 94.50 35.47 35.47 State of Nuevo Le6n 62.40 62.40 10.65 10.65 Federal Government 13.0 13.0 7.08 7.08 TOTAL 184.40 110.50 294.90 54.20 90.46 144.66 Source: Bank and Borrower's records Table 9A: Economic Costs and Benefits (Not available) Table 9B: Financial Anaysis of La Venta-Chamapa Toll Road Project Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Calendar Year 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Cars Million/year 1.80 1.90 2.00 2.05 2.11 2.32 2.60 2.70 3.00 3.50 3.70 3.80 4.00 4.40 4.70 5.00 5.40 5.80 6.20 6.70 Other vehicles Million/year 2.50 1.63 1.05 0.72 0.63 0.55 0.55 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 Cuota cars NP 1987 prices 0.54 0.54 0.65 0.70 0.73 0.70 0.73 0.83 0.58 0.52 0.55 0.58 0.61 0.64 0.67 0.70 0.74 0.77 0.81 0.85 Cuota other vehicles NP 1987 prices 2.50 3.00 4.00 4.69 5.55 5.31 5.58 5.77 4.98 6.01 7.67 8.05 8.46 8.88 9.32 9.79 10.28 10.79 11.33 11.90 Total Income from tolls Million NP 7.22 5.92 5.50 4.81 5.04 4.54 4.97 5.13 4.23 4.83 5.87 6.22 6.65 7.24 7.80 8.40 9.12 9.88 10.70 11.67 Operation Costs Million NP 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 Net Operating Income Million NP 6.99 5.68 5.27 4.58 4.62 4.31 4.73 4.89 4.00 4.41 5.64 5.99 6.42 7.01 7.38 8.17 8.88 9.65 10.47 10.69 ROE (1987) US$:N.Pesos 1.378 Construction Costs (1) US$m 36.90 Maintenance costs US$m 0.18 0.18 0.18 0.18 0.37 0.18 0.18 0.18 0.18 0.37 0.18 0.18 0.18 0.18 0.37 0.18 0.18 0.18 0.18 0.92 Net Operating Income US$m 5.07 4.12 3.82 3.32 3.35 3.13 3.43 3.55 2.90 3.20 4.09 4.34 4.66 5.08 5.36 5.93 6.45 7.00 7.60 7.76 X Outstanding capital sum US$m -31.83 -30.25 -28.85 -27.84 -26.71 -25.72 -24.35 -22.75 -21.67 -20.20 -17.73 -14.80 -11.33 -7.15 -2.36 3.38 0.00 7.00 7.60 7.76 Cost of Borrowing (8%) (2) US$m -2.55 -2.42 -2.31 -2.23 -2.14 -2.06 -1.95 -1.82 -1.73 -1.62 -1.42 -1.18 -0.91 -0.57 -0.19 0.00 0.00 0.00 0.00 0.00 Total Outstanding Debt US$m -34.38 -32.67 -31.16 -30.07 -28.85 -27.78 -26.29 -24.56 -23.40 -21.82 -19.15 -15.99 -12.23 -7.72 -2.55 0.00 0.00 0.00 0.00 0.00 Payments(-)/Income(+) (3) US$m -2.55 -2.42 -2.31 -2.23 -2.14 -2.06 -1.95 -1.82 -1.73 -1.62 -1.42 -1.18 -0.91 -0.57 -0.19 2.55 6.45 7.00 7.60 7.76 NPV (US$m) -9.40 (1) Construction costs are based on a Bank memo of June 22, 1988 that shows original bid price of $12.70 million plus sunk costs of $5.97 million plus cost increases of $18.23 million for a total of $36.90 million. They were significantly higher than original SAR estimate of $17.90 million. (2) This is the interest on the construction costs and it is estimated to be around 8%. This cost item does not represent a cash-out item for the invetment as the financial costs are assumed by the Government and are not imputed to the investment. Although this item was not included in the original SAR cost estimate, it must be taken into account for the evaluation of the financial performance of the investment. (3) It is assumed for the purpuse of this evaluation that all revenues from the toll go to pay off the capital investment in the year they are being collected. Eventually (year 16) the investment is paid up and the road generates a positive net income. 24 Table 10: Status of Legal Covenants Mexico First Urban Transport Project (Ln. 2824-ME) Agreement Section Covenant Present Original Revised Description of Comments type status fulfillment fulfillment covenant (compliance) date date LA 3.02 3 C BANOBRAS shall enter C into contractual arrangement satisfactory to the Bank, with S.H.C.P., providing for the transfer of the Loan funds LA 3.03 3 C BANOBRAS shall make a C subsidiary loan to each eligible state for purposes of relending such proceeds of the loan as shall be required by such eligible state to carry out Parts A and B of the Project LA 3.04 3 NC BANOBRAS undertakes GOM's bus fleet was that all subloans to eligible privatized and no subloan beneficiaries for bus for purchasing buses was investments shall be made necessary pursuant to the terms and conditions for subloans set forth in Schedule 8 of the Loan Agreement LA 3.05, 5 CP No latter than 30 days Complied but poor 3.06 before the end of each availability of funds fiscal year, the Borrower adversely effected project (BANOBRAS) shall implementation, including furnish to the Bank a cancellation of part A of proposed Annual the Project and Investment Plan, including $34millions of Bank loans annual budget allocations, and the proposed annual road maintenance program and the budget made and proposed to be made by each eligible state LA 3.07 9 CD BANOBRAS shall Complied with defects provide quarterly project progress reports LA 3.08 10 CD In accordance with a plan Studies under part A were set forth in schedule 6 of not fully carried out the Loan Agreement, the because this part of the borrower shall carry out, project was cancelled. or cause to be carried out, Studies under Parts B, C, each of the studies and D were carried out described in Schedule 2 of albeit with some delays. the Loan Agreement, discuss their results with the Bank, and implement their agreed action plans in accordance with their timetables LA 3.0'3 5 C Procurement of goods, C works and consulting 25 services financed out of the proceeds of the loan shall be governed by the provision of Schedule 4 of the Loan Agreement LA 3.10 1 C The Borrower assumes, as C primary obligor, the obligation of the Guarantor contained in the Project Preparation Advanced LA 4.01(a) I C The Borrower shall C maintain, and cause each of the eligible states to maintain separate records and accounts adequate to reflect the operation s, resources and expenditures of the Project and each subproject LA 4.01(b) 1 CD The Borrower shall have C the accounts mentioned in 4.01(a) audited by independent and shall fumish this records to the Bank no latter than six months after the end of the fiscal year. Each month the Borrower, shall fumish to the Bank certified statements of the Special Accounts LA 4.01(c) I C For all expenditure C charged to the Loan Account on the basis of statement of expenditure, the Borrower shall a) maintain adequate records and accounts, b) retain records for at least one year after last Audit Report is received by the Bank, c) let Bank staff examine records, d) have extemal auditors prepare a separate opinion Source. Project Files 26 Covenant types: I. = Accounts/audits 8. = Indigenous people 2. = Financial performance/revenue generation from 9. = Monitoring, review, and reporting beneficiaries 10. = Project implementation not covered by categories 1-9 3. = Flow and utilization of project funds II. = Sectoral or cross-sectoral budgetary or other rcsource 4. = Counterpart funding allocation 5. = Management aspects of the project or executing 12. = Sectoral or cross-sectoral policy/ agency regulatory/institutional action 6. = Environmentall covenants 13. = Other 7. = Involuntary resettlement 8. Present Status: Source: Project Files C = covenant complied with CD = complied with after delay CP = complied with partially NC = not complied with 27 Table 11: Project Implementation Program 1. State Of Mexico Components 86 87 88 89 90 91 92 93 94 95 96 97 98 1. Corridors Appraisal Actual 2. Public Transport Appraisal -------- Actual 3. Highway Maintenance Appraisal Actual 4. Traffic Systems Appraisal Actual 2. State Of Nuevo Le6n Components 86 87 88 89 90 91 92 93 94 95 96 97 98 1. Corridors Appraisal Actual 2. Public Transport I I Appraisal Actual Not m p I e m e n t e d 2.8 3. Highway Maintenance Appraisal _ Actual 4. Traffic Systems Appraisal _ _ a a _ a Actual Not I m p I-e m e n t e d Source: Borrower's Report 29 Table 12: Bank Resources: Staff Inputs Stage of Planned' Revised Actual Project Cycle Weeks US$2 Weeks US$ Weeks US$ Preparation to Appraisal N.A.' N.A. 50.40 102.10 Appraisal-Board N.A. N.A. 57.20 93.80 Negotiations through Board Approval N.A. N.A. 22.70 54.30 Supervision 38.30 91.80 175.40 422.10 Completion 9.00 20.00 10.00 25.00 TOTAL 47.30 111.80 315.70 697.20 Source: FACT Bank Records 1 US$ are in thousands 2 Planned figures are available only for the last 3 years of the project file 3 Not Available :30 Table 13: Bank Resources: Missions Performance Rating Number Specialized Implemen- Develop- Stage of Month/ of Days in StaffSkills tation ment Types of Project Cycle Year Persons Field Represented' Status Objectives Problems Through Appraisal I Identification March 85 1 14 TP Preparation March 86 1 6 TP Preparation May 86 5 12 TP, Eng. C(3) Appraisal July 86 5 16 TP (2), E (2), FNA Appraisal through Board Approval Supervision Sept 87 2 3 TP, E Supervision Feb 88 3 11 TP, E, C Supervision July 88 2 12 E, C Supervision Oct 88 1 7 C 2 I Hurricane Supervision Nov 88 2 12 E, C 2 1 F Supervision March 89 2 II E, C 2 1 F Supervision July 89 4 17 E, Eng., FNA, C 2 I F Supervision March 90 3 14 E, Eng., C 2 1 Also preparation 2nd Urban Project Supervision Aug 90 3 12 E, Eng., C 2 1 F, PM Supervision Nov 90 2 6 E, TP F, PM Supervision March 91 2 7 TP, C 2 1 Cancellation Part A Supervision June 91 3 13 E, TP, C 2 Supervision Nov 91 2 2 Eng., C 2 1 Limited Supervision Supervision Feb 92 2 5 Eng., C 2 I Supervision Feb 93 4 24 E, C (2), TP 2 Supervision April 93 2 10 E, Eng. 2 Supervision Aug93 1 4 E, Eng. 2 Supervision Nov 93 I 5 Eng. 2 2 Change in GOM Supervision May 94 _ 3 Eng. 2 S Supervision Sept 94 i 4 Eng. 2 S New Administra- tion Supervision Feb95 i 4 Eng. 2 S SOM 31 interested in new project Supervision MayI95 4 Eng. 2 S Supervision Dec 95 I 4 Eng. 2 S Supervision May 96 I 9 Eng. 2 S Financial conditions of GOM deteriorates Supervision Oct 96 i 3 Eng. 2 S Supervision June 97 2 3 Sng. (2) S Supervision Dec 97 2 3 TM, Eng. S Supervision May 98 2 2 Eng. (2) S Completion ICR 2 4 Eng. (2) 3 S Source: Project Files iDefinition of skills: Eng = Engineer E = Economist TM = Task Manager C = Consultant TP = Transport Specialist Appendices 33 APPENDIX A: MISSION'S AIDE MEMOIRE MEXICO - FIRST URBAN TRANSPORT PROJECT (LOAN 2824-ME) SUPERVISION MISSION MAY 11-14,1998 1. A mission of the World Bank visited Mexico to follow up the execution of the works financed partially by Loan 2824-ME, and to initiate action for the preparation of the completion Report for the project. The mission included Messrs. Guillermo Ruan, Gustavo Unda and Mahendra Lal. 2. The mission acknowledges the cooperation received from the Secretariat of Communications and Transport (SCT), the Secretariat of Finance and Planning of the State of Mexico as well as the National Bank of Public Works and Services (BANOBRAS). Attached (Annex 1) is a list of the officials who participated in the discussions with the mission. Subjects Dealt with by the Mission 3. The following main subjects were discussed: (a) Physical progress of the works, (b) Complementary works, (c) Implementation Completion Report. Physical Progress of the Works 4. The mission, along with the officials of the Government of Mexico and BANOBRAS, visited all the works in progress and met with the Contractor and the supervising firm for each of these works. The works show significant progress since the December 1997 mission. The highway works have been finished (paving and bridge) except for some pending works that are described in the following paragraphs. These are expected to be completed by June 30, 1998, the date of closing of the loan, according to the work program attached. (a) Avenida Control Phase III - cabling of illumination posts - assembling of 4 bridges (for pedestrians) - automatic barriers for railway (Ferroviales responsibility) - arranging the joints for covering the canal. (b) Lecheria - Cuantitlan - arrangement of open graded joints approx. 3.5km of highway - horizontal signaling - stoplight signals - installation of public lighting - pedestrian bridges - urban passage. (c) Adolfo Lopez Mateos - correction of the sinking of the part under the responsibility of Constuctora Ochoa S.A. and ICA Construction Urbana S.A. de CV (d) Side streets of Av. Toluca 34 - this work was completed. Complementary Works 5. With respect to the project of Av. Central, Junta de Caminos sought the mission for no objection for the execution of some complementary small works from funds available from the loan with the existing; contracts. These works, whose value is approximately $6 rnillion, are as follows: (a) 1 00 meters additional of Canal de Sales, (b) open graded treatment of some branches of Av. Central, (c) painting, signaling and re-leveling, (d) cleaning of ridges and highways. 6. The mission has no objection to the requests made provided: (a) all the works are executed before the closing of the loan according to the work program, (b) the works are done through existing contracts and not through new contracts, (c) counterpart funds are made availalble. The official request will be given to the Bank as soon as possible. Implementation C'ompletion Report 7. The mission met with COTREM, the General Highways Directorate, Autopistas y Servicios Conexos, the Junta de Caminos and BANOBRAS to discuss the guidelines for preparation of the ICR which must be presented to the Bank's Directorate within 6 months of the closing of the loan. In this meeting the following was reviewed: (a) The coordination for preparation of the Borrower's Contribution, which will be the responsibility of BANOBRAS (specifically, Mr. Gustavo Rodriguez Toledo); (b) The initial information required by the Bank for the draft of the ICR, which is listed in Annex 3 and should be sent to the Bank no later than June 30, 1998; (c) The draft ICR will be sent to the Borrower for comments no later than September 30, 1998; (d) Once the Borrower's comments are incorporated, the publication and distribution of the final ICR to the Bank's Directorate will take place. 8. The basic information will be sent b:y the Borrower to the Bank before June 30, 1998. Economic evaluations that may require additional time must be sent by July 18, 1998. Mexico, D.F., May 14,1998. (signed) (signed) Lic. Ismael Diaz Aguilera Ing. Francisco J. Enriquez Arias Manager of International Financing Manager of Roads and Transport (signed) (signed) Lic. Isidoro Mostkoff Linares Sr. Gustavo Unda State of Mexico Transport Commission World Bank 35 APPENDIX B: BORROWER'S CONTRIBUTION TO THE ICR (SUMMARY)' PROJECT OBJECTIVES 1. General Objectives i).- Improve public transportation accessibility, quality of service, operational efficiency and costs. ii).- Preserve and maintain investments in transport infrastructure and reduce vehicle operation costs. iii).- Rationalize tariff policies, improve economic and financial viability and the sustainability of transport investments, and encourage private sector participation. 11. Reinforce involved institutions' planning capability of development and regulation of urban transport at the local and national levels. Initially, the project included the implementation of three components entrusted to different entities as follows: COMPONENT "A" State of Nuevo Le6n COMPONENT "B" State of Mexico COMPONENT "C" Federal, managed by BANOBRAS Subsequently, a new component was added to the above components: COMPONENT "D" Activities to monitor and control environmental pollution in the metropolitan area of Mexico City. Components "A" and "B" included implementation activities for: * Improvement of Roads * Public Transport ' Bus System and Maintenance Management Study '> Routes and Tariffs Rationalization * Public Transport Programs * Roads Infrastructure Maintenance * Traffic Management The project included specific studies in support of public transport, traffic and roads maintenance management, as well as construction, rehabilitation and maintenance of road infrastructures. 'Due to space constraints, the Bank prepared this summary from the information and data received from the Borrower. 36 Component "C" initially included implementation activities to: * Perform comprehensive urban transport studies in medium size cities (this resulted in the preparation of the Medium Size Cities Urban Transport Project), which were conducted by this institution and SEDESOL. * Provide technical assistance for project monitoring and evaluation. * Purchase equiprnent to support follow-up tasks. * Provide credit to eligible borrowers for the acquisition of buses in the states ilcluded in the project. The following activities were later added: * Provide complementary support for the completion of the study on Integral Strategy for Transport and Air Quality for Valle de M'xico's metropolitan area (ZMVM), which was financed with funds from the Japanese Donation No. 029369. This study would serve as basis for the Second Urban Transport and Air Quality Project. The execution of these activities were entrusted to the Transport and Roads Metropolitan Commission (COMETRAVI). * Implement the Urban Transport Enterprise Support Model as part of the Urban Transport Financing Program carried out by BANOBR'AS. COMPLETION OF PROJECT OBJECTIVES With regards to objective I (i, ii, iii): Through activities included in Components "A" and "B", important road infrastructure works were completed which allowed increased operational efficiency and access to the urban transport system through the construction of new roads, access to populous neighborhoods, elimination of traffic bottlenecks and improving conflicting road intersections. In addition to activities above mentioned, complementary traffic management and road rehabilitation program activities were conducted. Rehabilitation work. was basically completed on roads classified as primary by the project. The construction and improvement of road infrastructures allowed the increase of speed limits and decrease in traveling time, which resulted in lower operating costs. The internal rate of return of the project's economic evaluation was greater than 12%, which indicates the value of the project (See Annex 8, Table 1). In addition to the works, a series of support studies were completed to define specific issues related to urban transport system planning, public transport operation and maintenance. The impact of works accomplished is significant because of the orientation given to investments, since they handled problems associated with issues developed in the metropolitan areas of Monterrey, Nuevo Le6n and the city of Mexico, D.F. and because of the amounts allocated in relation to the size and existing problems in these cities. Monterrey, for example, has a population of 3 million inhabitants and an area of 1,663 Km2 ; the cornubation of Valle CuautitlAn Texcoco with the metropolitan area of the city of Mexico (ZMCM) has a population of 9 million inhabitants and an area of 3,500 Km2. 37 COMPONENT "A", STATE OF NUEVO LEON Project funds were used in important activities completed in the metropolitan area of the city of Monterrey, such as the consolidation of the inner city beltway with access to neighborhoods and, in a very prominent way, the assistance to the damages caused by HurricaneGilberto in the banks of the river Santa Catarina that runs through the city. These are shown in the following brief summary: COMPONENT "A" NUEVO LEON PROJECT SCOPE OF WORK STATUS DISBURSEMENTS BANOBRAS IBRD TOTAL (millions) US$11.6 Monterrey Inner Construction of Complete City Beltway 6 Bridges Consolidation Improvements and Complete Roads Construction Neighborhood Construction of Complete Access several kilometers Hurricane Gilberto's Reconstruction and Protection Works COMPONENT "B", STATE OF MEXICO Activities that were completed in Valle Cuautitlan-Texcoco, formed by the cornubation of the State of Mexico and the Federal District, represent a very important contribution to meet the needs of primary roads in the northern area of the city of Mexico. These were the rehabilitation and partial construction of the main access roads to this area and the consolidation of connection of this area with Toluca, capital of the State of Mexico. The following construction works stand out: * Naucalpan-La Venta Freeway and road rehabilitation programs which include access roads to the northern zone of the metropolitan area. * Mexico-Queretaro Freeway, with a traffic of about 200,000 vehicles per day in the section between Cuatro Caminos and Kilometer 11.3, which constitute the link with the main roads system that connect the city of M6xico with the central-north region. * Rehabilitation of Avenida Ceylan and its widening to 8 lanes in the section connecting Mexico-Qeretaro Freeway and Avenida Mario Colin, which handles most freight and outside bus traffic. * Rehabilitation and construction of Avenida Central which was extended from Bulevar de los Aztecas to Ecatepec and, aside from being the traffic structuring element of an area inhabited by nearly 2 million people, is the only north-east access to the city of Mexico. * Construction of the most strategic axes in Zona Valle de Chalco, which involved the connection of this zone with the mass transport service terminals at los Reyes-La Paz, State of Mexico. 38 * Reliabilitation of 9 of the most important: primary roads in Zona Valle de Chalco. Following is a list of completed works: DESCRIPTION STATUS A. Project Works - La Venta-Chamapa Toll Paying Road Complete - Mexico-Queretaro Freeway Rehabilitation Complete - Ave. Central I' Phase Rehabilitation Complete - Indios Verdes-San Juan y Via Morelos Ftehabilitation Complete - Mexico-Queretaro Freeway Signalling Complete - Ave. Central Signalling Complete - Ave. Cuauhtemoc Construction Complete - Ave. Uno and Jose G. Posada Construction Complete - Ave. Isidro Fabela Construction Complete - Via Gustavo Baz Rehabilitation Complete - Ave. Ceylan Drainage and Reconstruction Cancelled - Ave. Toluca Laterals Construction Complete - Ave. Toluca Bridges Construction Complete - Via Adolfo L6pez Mateos (R- 1) Construction Complete - Via Adolfo L6pez Mateos (R- 1) Bridges Construction Complete - Via Adolfo l,6pez Mateos Pemex Pipes Relocation Complete - Ave. Central 2nd Phase Rehabilitation Complete - Ave. Central 3d Phase Construction Complete - Bridge "El Arbolito" Construction Complete - Bridge "La Papelera" Construction Complete - Bridge "Lec]heria-Texcoco" Construction Complete - Ave. Central 3rd Phase Bridge Construction Complete - V. Los Reyes-Acozac-Zumpango Rehabilitation Complete - Aves. Isidro Fabela and G. Posadas Construction Complete - Ave. Primero de Mayo Rehabilitation Complete - Via Lecheria-Cuautitlan Widening Complete - Lecheria-Cuautitlan Pemex Pipes Relocation Complete B. Technical Assistance and Supervision - Transport Planning Study Complete - Bus Maintenance Study Complete - Roads Maintenance Study Complete - Ave. Central 1st Phase Supervision Complete - Valle de Chalco Executed Projects Complete - Toluca's Integral Study Complete - Av. Central, R- I and Tecamachalco Study and Projects Complete - Ave. Texcoco Transit System Management Complete - Transit System Management Complete - Transport Planning Complete - Ave. Centrall Bridges Supervision Complete - Ave. Central Induced Works Supervision Complete - Geotechnical and Paving Designs Consulting Complete - Ave. R-l Works Supervision Complete - Drainage Consulting Complete - Paving Management Complete 39 - Toluca's Integral Study I Updating Complete - Toluca's Integral Study 11 Updating Complete - Via Lecheria-Cuautitlan Supervision Cancelled - Ave. Ceylan Reconstruction Supervision Complete - Ave. Toluca Works Supervision Complete The Project visualized the implementation of studies supporting policy definitions on issues arising from situations related to the management of the urban transport system. Accordingly, the authorities of the Government of the State of Mexico conducted, during the indicated years, the following studies: STUDY DATE Planning (1) 1988 - 1990 Main Transport System Maintenance (11) 1988 - 1989 Road Maintenance (111) 1988 - 1989 The purposes of the Planning study (I) were to: * Define the short, medium and long term needs for infrastructure and transport equipment.
World Bank Group · Implementation Completion and Results Report
Mexico - First Urban Transport Project
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World Bank Group
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Implementation Completion and Results Report
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Mexico
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