Colombia - Second (Cartagena) Urban Development Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 7452 PROJECT PERFORMANCE AUDIT REPORT COLOMBIA SECOND (CARTAGENA) URBAN DEVELOPMENT PROJECT (LOAN 1694-CO) October 5, 1988 Operations Evaluation Department 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. ABBREVIATIONS AND ACRONYMS ASAS Alcantarillado sin Arrastre de Solidos (Intermediate Sanitation System) CAIP Centro de Atencion Integral al Pre-escolar (Integrated Day-Care Center for Preschool Children) CDV Centro de Desarrollo Vecinal (Community Development Center) Cienaga Cienaga de la Virgen (Tesca Lagoon) CIS Creditos Individuales Supervisados (Supervised Individual Credits) DNP Departamento Nacional de Planeacion (National Planning Department) DRI Programa de Desarrollo Rural Integrado (Integrated Rural Development Program) DRU Unidad de Desarrollo Urbano (Urban Development Unit) ELECTRIBOL Electrificadora de Bolivar S.A. (Bolivar Electricity Corporation) EPMC Empresas Publicas Municipales de Cartagena (Cartagena Public Municipal Services Corporation) ICBF Instituto Colombiano de Bienestar Familiar (Colombian Family Welfare Institute) ICT Instituto de Credito Territorial (National Urban Housing Authority) IDB Inter-American Development Bank IGAC Instituto Geografico "Agustin Codazzi" (National Geographic Institute) INSFOPAL Instituto Nacional de Fomento Municipal (National Municipal Development Institute) IPC Programa de Integracion de Servicios y Participacion Comunitaria (Program of Integrated Services and Community Participation) JAZSCO Junta Administradora de la Zona Sur-Oriental South-Eastern Zone Administrative Board) MAC Centru de Salud (Urban Health Center) MEN Ministerio de Educacion Nacional (Education Ministry) MINSALUD Ministerio de Salud Publica (Public Health Ministry) PfiIZSU Plan de Habilitacion Integral de Zonas Subnormales (Integrated Upgrading Plan of Substandard Zones) UNDP United Nations Development Program UNICEF United Nations Children's Fund SENA Servicio Nacional de Aprendizaje (National Training Service) SEZ Zona Sur-Oriental de Cartagena (Cartagena Southeastern Zone) SIP Secretaria de Integracion Popular (Popular Integration Secretariat) ZFIC Zona Franca Industrial y Comercial de Cartagena (Cartagena Industrial Export Processing Zone, EPZ) FOR OCIAL USE ONLY THE WORLD BANK Washington, D.C. 20433 USA. OMrs4 Dorectew-Genal Opmawn Ivahastun October 5, 1988 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Performance Audit Report on Colombia Second (Cartagena) Urban Development Project (Loan 1694-CO) Attached, for information, is a copy of a report entitled 'Project Performance Audit Report on Colombia Second (Cartagena) Urban Development Project (Loan 1694-CO)' prepared by Operation Evaluation Department. Attachment This document has a restricted distribution and may be used by tecipients only in the performance of their oicial duties. Its contents may not otherwise be disclosed without World Bank authorization. FOR OFFICIAL USE ONLY PROJECT PERFORMANCE AUDIT REPORT COLOMBIA SECOND (CARTAGENA) URBAN DEVELOPMENT PROJECT (LOAN 1694--0) TABLE !F CONTENTS Page No. Preface ............ ........ . i Basic Data Sheet ..... . ......................... ii Evaluation Sumnary ...................... ............... ... vi PROJECT PERFORMANCE AUDIT MEMORANDUM I. BACKGROUND ................................ 1 A. The Economic Context ............. ....... 1 B. Urban Development .. .......................... C. Urbanization in Cartagena ............................. 3 II. THE PROJECT ................................... 3 III. PROJECT IMPLEMENTATION AND ACHIEVEMENTS ................... 5 A. General ...................... ...... 5 B. Physical Accomplishments and Their Impact ............. 6 C. Procurement and Performance of Consultants, Contractors and Suppliers .......................... 10 D. Financial Performance and Cost Recovery ............... 10 E. Economic Reevaluation ....... ................... 12 F. Bank Performance ................. ............. 12 IV. CONCLUSIONS AND LESSONS TO BE LEARNED ..................... 13 A. Project Design ..................... ............ 13 B. Urban Development Impact ....................... 13 C. Income Distribution Impact .......... ............. 14 D. Long Term Environmental Impact ........................ 14 ANNEX Comments from the Borrower ................................ 15 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. TABLE OF CONTENTS (Cont'd) Page No. PROJECT COMPLETION REPORT I. Background ... .................... ........................... 20 II. Project Origin, Preparation and Appraisal ................ 21 III. Project Description and Implementation .................. 23 IV. Operating Performance ............ . . ................... 27 V. Economic Re-evaluation ....... ............................ 32 VI. Overall Evaluation and Conclusions ....................... 33 PCR TABLES 1. Project Description and Lmplementation .................... 36 2. Project Costs ..... ....................................... 41 3. Comparisons Between Actual and Projected Major Works ...... 42 4. Contract Unit Prices for Selected Civil Works ............. 43 5. Construction Cost Increase ....... ............. ....................... 44 6. Financing Arrangements .................................... 45 7. Economic Analysi . ......................................... 46 8. Allocation of ..an Proceeds ............................. 47 9. Project Costs By Years ......... ....................................... 48 10. Projected and Actual Schedule of Disbursements ..... 49 CHART Project Implementation and Investment Schedule MAP IBRD 19852 i PROJECT PERFORMANCE AUDIT REPORT COLOMBIA SECOND (CARTAGENA) URBAN DEVELOPMENT PROJECT (LOAN 1694-CO) PREFACE 1. This Project Performance Audit Report (PPAR) constitutes a perfor- mance audit of the Colombia Second (Cartagena) Urban Development Project for which Loan 1694-CO for US$13.5 million equivalent was made in May 1979 and final disbursements were made in August 1986. 2. The PPAR consists of a Project Performance Audit Memorandum (PPAM) prepared by the Operations Evaluation Department (OED) and a Project Comple- tion Report (PCR) dated May 12, 1987, prepared by the Latin American and the Caribbean Regional Office. 3. The audit included reviews of the PCR, Appraisal and President's Reports, a preliminary Project Completion Report prepared in draft form by the Instituto de Credito Territorial (ICT), the final audit of project accounts by the Borrower, Bank files and records, and field inspections and discussions by OED staff with officials of the Government, consultants and community leaders during an audit mission to Cartagena, Colombia in May 1988. 4. The audit found that the PCR covers many important aspects of the project and agrees generally with its substance. However, on the basis of further analysis of the available data, including a 1988 survey of the project beneficiaries by ICT, the audit has drawn some additional conclusions concern- ing the performance of the project. 5. Following standard procedures, OED sent the draft PPAR to the Borrower for comments. The comments received have been reproduced verbatim and are attached as Annex I to the PPAM. ii PROJECT PERFORMANCE AUDIT REPORT COLOMBIA SECOND (CARTAGENA) URBAN DEVELOPMENT PROJECT (LOAN 7694-CO) BASIC DATA SHEET Key Project Data Original Actual or Item Plan Reestimate Total Project Cost (US$ million) 35.3 37.4 Cost Overrun () - 5.9 a/ Loan Amount (US$ million) 13.5 8.7 Disbursed 13.5 8.7 Canceled - 4.8 Repaid 4.3 Outstanding as of 04/30/88 - 4.4 Date Physical Components Completed 12/83 12/85 Proportion Completed by Above Date (%) 50 96 Proportion of Time Overrun - 100 a/ Financial Performance Poor Institutional Performance - Mixed Economic Rate of Return (M) 16.0 4.0 Other Project Data Original Item Plan Actual First Mention in Files - 02/02/73 Government's Application - n/a Negotiations - 03/15/79 Board Approval - 05/01/79 Loan Agreement - 08/31/79 Effectiveness 12/19/79 06/23!80 Closing Date 12/31/84 12/31/85 Borrower Government of Colombia Executing Agency Instituto de Credito Territorial (ICT) Participating Agencies ELECTRIBOL, EPMC, ICBF, IGAC, MEN, Municipality of Cartagena, MINSALUD, SENA Fiscal Year of Borrower January 1-December 31 Follow-on Project None iii Crmulative Estimated and Actual Disbursements (US$ million) FY80 FY81 PY82 FY83 FY84 FY85 FY86 (i) Estimated 3.0 6.5 9.6 12.0 13.5 13.5 13.5 (ii) Actual 0.0 0.9 1.8 3.3 6.0 7.0 8.7 2 of (ii) to (i) 0.0 13.8 18.8 27.5 44.4 51.9 64.4 b/ a/ Costs and implementation schedule cannot be fully compared due to changes made in the scope of several components. b/ US$4.8 million equivalent were canceled. Country Exchange Rates Name of Currency (Abbreviation) Colombian Peso (ColS) Exchange Rate (Annual Average) Appraisal Year Average (1978) US$1 - 39.095 Intervening Years (1979) US$1 * 42.550 (1980) US$1 = 47.280 (1981) US$1 - 54.491 (1982) US$1 = 64.085 (1983) US$1 - 78.854 (1984) US$1 - 100.817 (1985) US$1 - 142.312 Completion Year (1986) US$1 = 194.261 STAFF INPUT (Staff-Weeks) FY74 FY75 FY76 FY77 FY78 FY79 FY60 FY81 FY82 FY88 FY84 FY85 FY88 FY87 Tota I Preapprael .8 1.1 11.7 8.0 87.1 - - - - - - - - - 68.2 Appraisal - - - - 48.9 89.2 - - - - - - - - 88.1 Negotiation - - - - - 10.4 - - - - - - - - 10.4 Supervision - - - * - 5.7 46.1 26.4 24.8 28.1 18.6 17.4 18.6 6.5 174.5 Other - - - .1 - .2 - - .1 .8 .0 1.8 - - 2.8 Total .8 1.1 11.7 8.1 84.0 56.4 46.1 28.4 24.4 28.9 18.6 18.7 18.6 5.6 381.7 iv MISSION DATA a/ Month/ No. of No. of Staff Date of Performance Item Year Weeks Persons Weeks Report Rating Identification 02/73 1 3 3 03/16/74 11/74 2 3 6 01/10/75 Preparation I 05/75 3 4 12 II 09/75 3 4 12 10/10/75 III 02/76 2 3 6 03/23/76 IV 05/76 2 2 4 06/03/76 V 07/76 4 6 24 09/09/76 VI 12/76 2 2 4 VII 05/77 2 3 6 06/21/77 VIII 09/77 1 1 1 09/30/77 IX 10/77 1 1 1 01/12/78 Preappraisal 01/78 2 1 2 03/14/78 Appraisal 04/78 2 6 12 05/08178 Post- I 05/78 1 2 2 06/12/78 Appraisal II 01/79 1 2 2 02/08/79 Supervision I 05/79 2 3 6 06/21/79 - II 08/79 1 3 3 09/10/79 1 III 11/79 1 1 1 01/16/80 - IV 02/80 2 4 8 03/24/80 2 V 06/80 2 3 6 07/07/80 2 VI 10/80 2 3 6 11/05/80 2 VII 02/81 1 2 2 03/04/81 2 VIII 06/81 1 2 2 07/17/81 2 IX 03/82 2 4 8 03/17/82 3 X 06/82 1 3 3 07/30/82 3 XI 11/82 1 2 2 11/24/82 3 XII 06/83 2 2 4 06/17/83 3 XIII 12/83 1 2 2 12/22/83 3 XIX 05/84 1 2 2 06/05/84 2 XX 12/84 1 2 2 01/14/85 2 XXI 05/85 1 2 2 05/21/85 2 XXII 03/86 1 2 2 03/24/86 2 Total 158 a/ Most missions combined work on IBRD Loans 1558-CO and 1694-CO; the figures above represent staff time actually allocated to the Cartagena project. V PROJECT PERFORMANCE AUDIT REPORT COLOMBIA SECOND (CARTAGENA) URBAN DEVELOPMENT PROJECT (LOAN 1694-CO) EVALUATION SUMMARY 1. The project reviewed in this report was initially conceived as a component of the first Bank assisted urban development project in Colombia (Loan 1558-CO) which provided services to the urban poor in 23 medium-size cities. However, considering the large scale land reclamation envisaged and the extensive preparatory work required, the Bank and the Borrower decided to process the Cartagena Project as a separate one (PPAM, para. 11). Objectives 2. The primary goal of the project was to fill the flooded area of the Southeastern Zone of Cartagena (SEZ) and provide basic urban and social services to improve the living conditions of approximately 80,000 lower-income residents of the area. This objective wed consistent with the Government's efforts to alleviate urban poverty nationwide and with the emergence of Cartagena as a rapidly growing tourist and manufacturing center. In parallel, the preparation of the Cartagena Industrial Export Processing Zone Project (EPZ), (IBRD Loan 1593-CO of 1978) called for the provision of basic services in Pasacaballos, a small village adjacent to the EPZ, so these additional works were included in the project (PPAM, para. 13). Design 3. Project preparation focused mainly on technical issues related to landfill, drainage, and installation of public utilities in the SEZ, less on the administrative, legal, social and financial aspects of the project. Appraisal in April 1978, defined a broad project scope comprising: land filling, street drainage, external drainage, utilities (including water trunk mains, primary water and sewerage mains, and electricity networks), community centers for health, education, child care and vocational training, and a credit program to support regularization of land tenure, home improvements and individual utility connections. Technical assistance was also provided to improve project management and municipal cadastral operations, and to support the preparation of several financial and engineering studies. Project execu- tion was entrusted to the Instituto de Credito Territorial (ICT) with the participation of seven other agencies. The physical completion of the project was planned for December 31, 1983 (PPAM, para. 14). vi Implementation Experience 4. Project implementation suffered from -..)xpected technical difficul- ties with the land filling works, excessive complexity of project design, adverse community reactions to project activities, and extended periods of shortage of funds and inefficient management. The ensuing delays prompted a one year extension of the loan closing date, to December 1985, resulting in in expansion of the implementation period from five to six years (FAM, paras. 18-19). 5. Numerous changes were made to the original project description. Most importantly, the credit program was not implemented as originally en- visaged due to delays in transferring property titles to the beneficiaries and insufficient staff resources in ICT. The Bank agreed to the proposed reduc- tion in project scope but canceled the corresponding amount from Loan 1694-CO. Further measures were taken by the Bank to reallocate the loan proceeds to meet re-estimated costs of ongoing works. In total, disbursements amounted to US$8.728 million of the US$13.500 million IBRD Loan 1694-CO and US$4.772 million were canceled (PPAM, paras. 20-22). 6. Although the physi-al components of the project were substantially complete to satisfactory standards by loan closing, considerable work still remains to be done to finalize regularization of land tenure, officially transfer project assets from ICT to the Municipality of Cartagena, responsible for operations and maintenance, and intensify the use of the community facil- ities built (PPAM, para. 23). Results 7. The project was generally well executed in its physical aspects and achieved its primary goal of improving the environment and welfare conditions of the residents of the SEZ and Pasacaballos. Notwithstanding the absence of home improvement loans, a large proportion of the families have improved their dwellings with their own resources and their children have benefited from greater access to education, nutrition, and health services (PPAM, paras. 24-35). 8. The technical assistance provided was valuable, particularly in identifying needs for administrative and financial reforms in ICT and in developing a non-conventional sewerage system (ASAS) now starting to be implemented in the SEZ (PPAM, paras. 36-38). 9. Direct employment generated by the project was primarily in con- struction and amounted to approximately four to five thousand person/years of unskilled and semi-skilled labor. On the other hand, the employment impact of the vocational training program and home improvement credits was minimal (PCR, para. 42). 10. The project did not succeed in establishing a viable mechanism to recover the costs of street drainage works and has encountered great difficul- ties in collecting water, sewerage and electricity tariffs from project beneficiaries, partly on account of the proliferation of irregular connec- vii tions. To a large extent, these shortcomings originated from the minimal participation by the Municipality and the beneficiaries in project design and execution (PPAM, paras. 42-43). 11. The sustainability of environmental improvements brought about by the project remains uncertain in view of the reluctance of the Municipality to assume full responsibility for site maintenance and garbage collection, and expedite the installation of the A3AS sanitation system at reclaimed areas so as to reduce pollution levels in the adjacent Tesca lagoon (POR, para. 36). Points of Speciil Interest 12. Although this project is unique in some respects, it offers many lessons which should prove useful in future sectoral operations: (a) with regard to project design, project size was too ambitious considering the lack if previous land reclamation experience of the executing agency and the inherent difficulties of mobilizing community support on such a grand scale; a spa- tially phased implementation strategy would have been both more manageable and more successful, although implying a longer implementation period (PPAM, para. 47); (b) the project had a positive impact on the urban development process of Cartagena as a whole, as it continues to provide well located land for the future expansion of lower-income housing in the city (PPAM, para. 48); (c) given its substantial poverty alleviation results, the project succeeded in achieving national income redistribution objectives as intended (PPAM, para. 49); (d) although the project as implemented led to great improvement in the environmental conditions of the Southeast Zone of Cartagena and its environs, long term environmental sus- tainability is uncertain in view of the less than satisfac- tory site maintenance conditions, the lack of appropriate sanitation facilities in many dwelling units, and the higher pollution and lower water levels in the Tesca lagoon which endanger human health and aquatic life stock. The environ- mental problems in the lagoon are not primarily associated with project works but rather with other public works which partly blocked the water flow between the lagoon and the sea. Nevertheless, the deterioration of conditions in the lagoon will affect both the project site and the environment of the city as a whole and therefore should be arrested (PPAM, paras. 50-51). PROJECT PERFORMANCE AUDIT MEMORANDUM COLOMBIA SECOND (CARTAGENA) URBAN DEVELOPMENT PROJECT (LOAN 1694-CO) I. BACKGROUND A. The Economic Context 1. The preparation of the first and second urban development projects assisted by the Bank in Colombia followed a long period of sustained economic growth which began in the early 1950s and lasted until 1978. During that period the Colombian economy grew at an average annual rate of over five percent, varying during the second half of the period from an average of 6.72 per year in 1967-74 to 5.42 per year in 1974-1978. In spite of falling infant mortality rates and longer life expectancy, the population growth rate de- clined from 3.12 per year in 1960 to approximately 2Z per year in the early 1980s, and per capita income is estimated to have grown in real terms at approximately 32 annually over the two decades (1961-80). Thus, in only 25 years, the basically agrarian structure of the Colombian economy was fully transformed by unprecedented levels of urbanization, industrialization, structural diversification and employment expansion, resulting in significant gains in the standard of living of most Colombians. 2. In the mid-1970s, when the preparation of the Cartagena urban project gained momentum, national policy objectives aimed at distributing the benefits of economic growth more equally. Public sector investments focused increasingly on projects designed to alleviate rural and urban poverty and on expanding and improving infrastructure. 3. Starting in 1978, the pace of growth of the Colombian economy slowed down considerably and remained modest until 1985, as the favorable external factors which had fueled past growth dwindled in the world recession of the early 1980s. Consequently, Colombia lost in recent years some of its prior development gains, as seen in the reversal of per capita income and employment expansion trends. The economy began facing a series of financial and economic difficulties that led to recession, particularly during the 1981-83 period. For the most part the Cartagena Urban Development Project was implemented during these recession years and it is understandable that the project also met with difficulties, which, in turn, led to scope reductions and completion delays. Fortunately, the Government exercised efficient economic management throughout the last four administrations, introducing reforms and adjustments in many sectors of the economy. These measures, combined with substantial growth in petroleum and coal production for export, resulted in economic recovery. By the end of 1986, although the unemployment rate was still high, there were indications that the economic recovery had consolidated and once again the prospects of growth for the short- and medium-term were positive. 2 B. Urban Development 4. The period of rapid transformation of the Colombian economy (1951- 73) was also one of intense urbanization. The overall rate of urban popula- tion growth during these two decades averaged 4.7Z per year and, in the major cities, growth rates exceeded 62 per annum. The number of urban dwellers had risen from 5 million in 1951 to 14 million people in 1973 representing 55% of the total population. This massive shift of population from rural to urban locations created unprecedented demand for urban services, prompting the Government to formulate explicit urban development policies and to embark on a vast program of urban services expansion. 5. The main objectives of the Government's urban policies in the early 1970s were to support the continued expansion of employment and to promote redistribution of income through the provision of services for lower income groups. The employment objective would be pursued through reactivation of the construction industry in response to higher demand for housing and public services. Housing demand would be stimulated through the creation of a new housing finance system, based on indexed savings and loans instruments. Several innovations to standards and regulations for land subdivision and building codes were introduced at the same time. These intended to reduce costs for the production of new housing and to facilitate the upgrading of the large squatter settlements which had grown on the outskirts of all major cities. The Instituto de Credito Territorial (ICT), then the largest public housing agency in Colombia, was instrumental in implementing these new urban policies and as such was the logical choice as executing agency for the Cartagena Urban Development Project. 6. In general, Colombian urban policies in this initial phase did not emphasize cost recovery for housing and urban services. During the 1970s, for example, domestic inflation rates exceeded 20Z per year but interest rates on ICT mortgage loans averaged 7.5% per year. In the savings and loans system, although the UPAC (Unidad de Poder Adquisitivo Constante or constant purchas- ing power unit) value was periodically adjusted according to changes in the consumer price index, the adjustments did not take into account variations in interest rates in the banking system up until 1984. Predictably, the competi- tive advantage of the UPACs declined vis-a-vis other financial instruments and the housing finance system gradually lost its share of the savings market. 7. Notwithstanding these and other financial shortcomings, the incen- tives created in the housing sector in the early 1970s had positive impacts. Between 1973 and 1985, the urban housing stock expanded at a rate of 3.9% per year, while the urban population grew by only 2.2% on an average yearly basis. Similarly, the supply of basic public services increased rapidly, to serve an estimated fourth-fifths of all urban dwellings by 1985. 1/ As the 1985 1/ DANE, Censo Nacional de Vivienda, 1985. According to the 1985 housing census, the proportion of urban dwelling served by each of the basic public utilities was: 81% served by sewerage, 89% connected to public water supply system, and 95% supplied with electricity. 3 housing census figures clearly show, most residents in Colombian cities, including those living in illegal subdivisions, gained access to better housing servicec during the last two decades. C. Urbanization in Cartagena 8. During the 1951-73 period which preceded the preparation of the Project, the population of Cartagena was estimated to have grown at an average rate of 4.82 per year. In the subsequent 1973-85 period population growth slowed down to 4.02 per year. By 1985 the city had approximately 491,000 inhabitants. Among the many interesting aspects of the urbanization process in Cartagena compared to that of other major Colombian cities, is the fact that Cartagena grew at a comparatively slower rate during the 1950s and 1960s but at a significantly faster rate in the 1970s. (In this latter period the ten major Colombian cities expanded at an average rate of 2.4% per annum while Cartagena grew twice as rapidly.) Due to several constraints on the supply side, including scarcity of water supply, by the end of the 1970s Cartagena had a large pent-up demand for housing and urban services. This particular circumstance explains in part the timing and the location of the second Bank financed urban development project in Colombia as well as the inclusion of Cartagena in the second and third Bank loans to the Colombian National In- stitute for Municipal Development (INSFOPAL) for the expansion of water supply and sewerage facilities in medium-size cities (Loans 1072-CO and 1726-CO). 9. Urban growth in Cartagena during the 1970s was spurred by the expansion of capital-intensive refining and manufacturing industries combined with a tourist boom based on the city's unique historical heritage and natu- rally beautiful features. However, most of the new jobs in manufacturing and, to a lesser extent, also in tourism, were taken by workers who came to Carta- gena from other major cities recruited for their greater skills and experi- ence. As the large majority of new migrants into Cartagena arrived from the rural areas of the northern coast (most of them young and unskilled), un- employment rates in the city remained high. The new migrants required train- ing before they were able to compete in the city's labor market and, in the meantime, worked in the informal sector. The social and urban structure which emerged from this labor market dualism was highly polarized: on one extreme there were middle- and upper-income families occupying the higher quality 35% of the housing stock, and on the other a majority of lower-income families living in rented rooms and squatter settlements with little or no services. An estimated two-thirds of this lower income group had settled on the banks of the Tesca lagoon, to the southeast of the old city center, and the upgrading of this area became the focus of the Cartagena Urban Development Project. II. THE PROJECT 10. This project was initially conceived as a component of the first Bank-assisted urban development project in Colombia, for which a Bank loan of US$24.8 million equivalent (Loan 1558-CO) was approved in April 1978. The 4 first project aimed at providing integrated urban and social services in depressed areas of 23 medium-size Colombian cities and the Southeastern Zone (SEZ) of Cartagena was initially considered one such area. However, taking into account the large scale land reclamation works envisaged at the SEZ and the extensive preparatory work required, the Bank and the Borrower decided to process the Cartagena Project separately. 11. Project preparation began in earnest in 1975 under the joint spon- sorship of the National Planning Department (DNP) and ICT. Several studies had been previously completed, Bank identification missions had visited Cartagena as of 1973, and the Colombian Government had already obtained commitment on a US$2.0 million grant from the Inter-American Development Bank (IDB) to finance preliminary land filling in the area. Appraisal of the project took place (rather prematurely) in April 1978, when detailed engineer- ing plans for civil works were still not available. For this reason, two additional missions (in May 1978 and in January 1979) were required to refine appraisal estimates. 12. The primary objectives of the project were to reclaim approximately 355 ha of flooded land at the SEZ on the shores of the Tesca lagoon, and provide basic urban and social services intended to raise the welfare stan- dards of an estimated 80,000 residents. In addition, urban and social ser- vices would also be provided in Pasacaballos, a small village on the southwest end of the Bay of Cartagena, given its location at half a kilometer from the Cartagena Industrial Export Processing Zone Project (built with assistance from a US$15 million equivalent Bank Loan 1593-CO, approved in August 1978). (See the SAR, para. 2.01-2.04.) 13. The Project was to be financed by the Bank loan (38.2%), by an IDB grant (5.7Z), by the National Budget (29.2Z), by ICT (22.9%), by the Electri- ficadora de Bolivar S.A. (ELECTRIBOL) (2.02), by the Empresas Publicas Munici- pales de Cartagena (EPMC) (0.6Z), and by the Municipality of Cartag"na (1.4Z). Responsibility for execution of the various components lay with nine agencies, namely: ICT, as principal executor and coordinator of the Project, EPMC, ELECTRIBOL, the Municipality of Cartagena, the Colombian Family Welfare Institute (ICBF), the National Geographic Institute (IGAC), the Ministry of Education (MEN), the Ministry of Health (MINSALUD), and the National Training Service (SENA) and subsidiary loan agreements which were subject to prior Bank approval were to be entered into between ICT and these agencies. Unfortunate- ly, except for ICT, the participating agencies had only minimal input in project preparation. 14. To provide overall policy coordination, a Presidential Decree of January 23, 1976, created an Administrative Board for the SEZ (JAZSCO) which represented the broad spectrum of technical and political interests involved in the Project. This Board would be chaired by a representative of the Presidency and composed of representatives of the following entities: the Governor of the Department of Bolivar (of which Cartagena is the capital), the Mayor of Cartagena, the Miniutry of Economic Development (to which ICT reports), and the National Planning Department (DNP). The Regional office of ICT in Bolivar would constitute the Technical Secretariat and the Development Planning Board of Bolivar would provide technical assistance to the Board. 5 15. The project was expected to be physically completed by December 31, 1983. III. PROJECT IMPLEMENTATION AND ACHIEVEMENTS A. General 16. Project execution began in October 1977 approximately six months before Loan 1694-CO was approved by the Board (October 1978), and three years prior to loan effectiveness (June 1980). Delays in signing the subsidiary loan agreements with the various executing agencies account for the relative tardiness of loan effectiveness, although the reasons for those delays were well founded: participant agencies were reluctant to sign the accords until they had assurances from the Government that the necessary funds would be available from the national budget. On the other hand, project design was the cause of delay in the case of EPMC. The utility objected to building a water main to serve the SEZ when water connections would be contingent upon the resident's choice to take on an ICT loan to cover individual connection costs. EPMC correctly predicted that most families would rather try to connect their dwellings illegally than take on a mortgage loan for this purpose. 17. Project implementation suffered from unexpected technical difficul- ties with the land fill works, procurement delays due to the time needed to complete detailed engineering before bidding documents could be prepared, complexity of project design, difficulties in coordinating activities among agencies that had not participated in Project design, adverse community reactions to project activities, and extended periods of shortage of funds and inefficient management (see PCR, paras. 14-26). These factors led to delays in civil works and other project activities. Thus, the loan closing date had to be extended by one year, to December 1985, which resulted in an expansion of the implementation period from five to six years. 18. Project design was changed in several ways during implementation and details on these changes are given in the PCR (Table 1). Most of the changes responded to realistic reassessments of the situation in which the projec: was being carried out and, in that sense, were warranted. Nevertheless, under their aggregated impact, project costs in Colombian pesos increased by 86% over SAR estimates, considerably reducing the expected economic return to the Project investments. Loan 1694-CO was restructured in 1985 to reflect the reduction in the credit program to a pilot scale, to adjust the loan amount according to the devaluations of the peso, and to reallocate the loan proceeds among the remaining categories. The main reasons for the observed discrepan- cies between the appraisal design and the complete Project were the following: (i) changed quantities in civil works: because the SAR was based on preliminary engineering, it inaccurately estimated the nature and the quantity of several civil works. Landfill works had to be augmented by 1392 to guarantee proper flood protection of the SEZ; excavations for roads were underes- timated by 851; and 10 smaller external drainage canals had 6 to be built in addition to the seven large ditches originally planned to ensure proper drainage of sites; together, excava- tion works for canals increased by approximately 93Z compared to SAR estimates. (ii) Changed financial arrangements: because the credit program was not implemented as envisaged, ICT decided to execute neighborhood improvements directly, rather than through community groups assistee by home improvement loans. These included interlot drains, sidewalks and pedestrian streets, secondary water, and sewerage networks and individual dwell- ing connections (Part B (d) (iii) of Schedule 2 of the Loan Agreement). Clearly, without most of these works the land- fill and the trunk infrastructure built could not be properly used by the beneficiaries and, therefore, in retrospect, the ICT decision was a wise one but it resulted in an increase of approximately 40Z in the work quantities estimated in the SAR for this component. (iii) Works deleted or otherwise modified: the fourth community center in the SEZ was deleted from the Project because the participant agencies could not guarantee the operation of the center. As an alternative, ICT suggested and the Bank con- curred that existing community facilities would be upgraded and sufficient land would be reserved for the future con- struction of one CDV in Sector IV of the SEZ. (iv) Changes in non-physical works. Not all elements under Part B (d) of the Loan agreement pertaining to loans and technical assistance to be provided by ICT to the beneficiaries were implemented as envisaged. ICT was unable to devise the mechanisms for the recovery cost for street drainage works. The Audit concurs with the reasons identified by the Region for such disappointing results (see PCR, paras. 29-37). Notably, effective demand for credit was small due to (a) difficult relations between ICT and the community and (b) the lengthy legal and bureaucratic procedures required for the legalization of tenure, which, thus far has taken six years of work and is not complete. 19. Underlying the above changes in project scope, are basic shortcom- ings in the project design. In addition, the Audit notes the apparent in- ability of the Bank to provide assistance to ICT regarding legalization of tenure and relationships between the Project and the community. In both areas the Bank had gained considerable experience through the upgrading of the Tondo in Manila, the Philippines, which could have been of value to the Cartagena Project Unit. 2/ 2/ Reference is made to the Manila Urban Development Project, partly financed by Bank Loan 1272T/1282-PH, approved in May 1976. 7 20. Not only project design, but also the method of implementation proposed for the Project appear, in retrospect, not to have been conducive to community participation or propitious for carrying out a large home improve- ment credit program. Implementation procedures were predicated on a component approach applied to the entire SEZ area. In so doing it overlooked the 15 separate neighborhoods that existed in the area. The extent to which most Colombians identify with their neighborhoods and traditionally use them as platforms for negotiating with public authorities was also largely ignored. Had the project implementation been phased spatially, with each phase cor- responding to the implementation of all components in a manageable set of neighborhoods, the probabilities of success in community relations would have been greatly enhanced. During the landfill process, for example, an estimated 20Z of the dwellings on site were Oburied" one to one-and-a-half meters below the level of the elevated streets -- perhaps as many as 2,000 SEZ units were thus damaged. 3/ Project design expected the owners of these houses to come to ICT and ask for a mortgage loan to raise their dwellings. Not surprising- ly, when surveyed in 1974 about their willingness to apply for a loan, only 12? said yes. B. Physical Accomplishments and Their Impact 21. The physical elements of the Project were substantially completed to satisfactory standards by loan closing on December 31, 1985. Nevertheless, considerable work still needs to be done to finalize regularization of land tenure, officially transfer project streets and canals from ICT to the Munici- pality for operation and maintenance, and intensify the use of the community facilities built. Achievements under each Project component include: (a) Community Services 22. As indicated in para. 18 above, one of the five CDVs planned was deleted from the Project and replaced by renovation of existing community facilities. The CDVs visited by the Audit mission were well built and fully equipped. Services are being provided satisfactorily in the areas of family welfare and child care and primary and secondary education. In addition to basic child care services in the community centers, ICBF has been providing school lunches for the entire school population of the Project area, preven- tive child and maternal health care and recuperation of acutely malnourished children, these last two programs in collaboration with the health centers. 3/ In a census of houses damaged by the land fill conducted in 1984 (avail- able in the Project files), ICT counted 1,339 units that had not yet been raised to street level, but more units were in fact affected since by 1984 many had already been risen. During the Audit mission in May 1988, more than one hundred "buried" houses were seen on a site visit. 8 23. Health and vocational training services are not as widely spread nor as efficiently provided as education and child care services, primarily due to insufficient staff. A large proportion of the health module in Pasacaballos and a whole health center in the SEZ are not being used. Employment and productivity promotion activities are being carried out on a small scale with assistance from the United Nations Children's Fund (UNICEF), and vocational training is being provided by SENA in two CDVs. 24. The assessment made by Project beneficiaries of the provision of community services in the SEZ was generally positive. Based on the 1988 ICT household survey, most people (82.5Z) think f; ly health has improved in the last five years and many (64?) believe the health services now available in their barrio are superior to those of other barrios in Cartagena. Similarly, 70? of the respondents indicated the education of their families has improved over the past five years and 361 said their children normally use ICBF's child care services. However, only 14? said someone in their family has received vocational training and, among those who did, only half said it resulted in higher earnings. 25. In general the social services provided by the Project have achieved their intended objectives. They were particularly successful, through child care and education, in preparing a new generation of Cartagena youth to take advantage of the opportunities which the city offers for upward mobility. (b) Physical and Environmental Improvements 26. With a few discrepancies, all land fill and infrastructure works (Part B (a), (b), and (c) of Schedule 2 of the Loan Agreement) have been completed to satisfactory standards and fully satisfy municipal requirements. The discrepancies observed include: (i) approximately 30? of the streets in the SEZ were built before the fill had fully consolidated and presently require re-grading; (ii) water supplied to the town of Pasacaballos remains untreated; and (iii) works on the external drainage canal at Chaplundum were finished after the completion date for the Project and present construction defects. 27. The credit program (Part B (c) of Schedule 2 of the Loan Agreement), as mentioned in para. 15 above, has been carried out on a pilot scale cor- responding to approximately 52 of the original plan. Without including the loans made to community mothers, ICT disbursed less than 200 home improvement loans since Project inception, and this number is not likely to increase by much in the near future. The first project beneficiaries to receive clear title to the land will do so towards the end of 1988 and most of them will be persons purchasing the new lots built by ICT at the SEZ. No loans were extended to Pasacaballos's residents. 28. Both the EMPC and ELECTRIBOL are carrying out programs to encourage project beneficiaries to legalize their water supply and electricity connec- tions, but considerable amount of work remains to be done before all replace their illegal utility connections. 9 (c) Project Management, Monitoring and Evaluation 29. In general, ICT's performance as executing agency for the Project could have been better under more stable general management in the Regional office and under less financial uncertainty. The principal problems faced by the Institute during project implementation were scarcity of staff in the Project Unit and financial constraints associated with the often untimely transfer of funds from the Government to the Project account. ICT was also unable to obtain the envisaged financial contributions to the Project from the Municipality of Cartagena, ELECTRIBOL and EPMC (planned at Col$72.7 million or 4.5% of the original project cost) (See PCR, Table 6). However, most of ICT personnel allocated to the Project were competent, hard working professionals and many management problems were solved as of 1984 (the sixth year of Project implementation), through a reorganization of the Project Unit which resulted in more efficient use of the available staff. 30. The long term management problem of the community facilities was ingeniously solved by the creation of a non-profit private entity, whose board comprises representatives of all public agencies which contribute shares to the capital, but also includes the University of Cartagena and members of the community. The entity hires a full time professional manager who has respon- sibility for all administrative, operational and maintenance aspects of the CDVs. This system is operating successfully since 1986 and represents an innovation compared to the management of CDVs elsewhere in the country which is still largely dependent upon the Office of the Presidency. 31. The Audit notes that the Project failed to provide additional staff for agencies strategically located in the critical path of implementation. Two conspicuous examples are IGAC and the Town Registry. Due to insufficient number of surveyors at EGAC, the cadastral survey of the site took four years instead of six months to complete. When lot titles are send to the Town Registry for the recording of the deeds the same problem will arise given the small number of legal clerks in that office. 32. ICT complied, for the most part, with the monitoring and evaluation requirements of the Project, although it has been unable to present the Bank with a completion report in timely fashion. Nevertheless, most of the work for the final report has been done, including a large sample survey of benefi- ciaries, and the Audit was able to have access to all the necessary data. (d) Technical Assistance 33. The technical assistance planned to improve cadastral procedures in Cartagena basically consisted of procurement of operational equipment, vehicles and furniture to facilitate the work of the IGAC. As noted in para. 27 above, this component should have included support for hiring additional staff. On the other hand, the study of municipal fiscal planning was carried out satisfactorily and its results are being used by the Municipality of Cartagena. 34. With some initial delays, all engineering studies contemplated in the Project were completed and their results prcved useful to the Borrower. 10 In particular, attention is drawn to the intermediate sanitation study (ASAS) which has provided the model for improving sanitary conditions in parts of the Project site not providod with public sewerage. ICT is currently installing the system in the barrio La Maria, at the SEZ, at a unit cost of Col$140,000 per dwelling unit (approximately US$500 in 1988 prices) and plans to extend five-year term home improvement credits to the residents to permit cost recovery. 35. Training of staff of the CDVs was carried out by the agencies providing social services as part of their regular personnel training pro- grams, but not as project-financed activity. C. Procurement and Performance of Consultant3, Contractors and Suppliers 36. The Borrower procured all Bank-financed goods and services in accordance with Bank guidelines. In line with appraisal expectations, most contracts for civil works, materials and consulting services were awarded to local firms. Most equipment was purchased from foreign suppliers. Cumbersome procurement procedures were a major problem. Because bid advertisement and contract award was done in Bogota, by ICT headquarters' staff rather than by the Project Unit or ICT regional office in Cartagena, contract awards were delayed by several months. At times, rebidding became necessary repeatedly to correct for misprocurement. Several attempts to streamline this cumbersome process and to make procurement more efficient failed. 37. The performance of contractors and suppliers was generally satisfac- tory although, in a few instances, the lack of funds led to a slowdown or even a complete stoppage of works and, in one instance, a contract was terminated because execution of works was unsatisfactory. In general the engineering consultants performed well in carrying out the various specialized studies included in the Project. Supervision of civil works by ICT, EPMC and ELECTRI- BOL was satisfactory, although a few contracts for installation of primary and secondary water supply networks resulted in damaged streets, particularly in Sector I, causing adverse reactions from the beneficiaries. D. Financial Performance and Cost Recovery 38. Total project costs, estimated at Col$3,036,000 (US$37.4 million equivalent) exceed appraisal estimates by 86% in current Colombian pesos because local inflation was higher than estimated at appraisal, but were below the original figures in US dollars, in view of the rapid devaluation of the Colombian peso during the project implementation period (see PCR, para. 24 and Tables 2, 3, 4 and 5). Increased costs were primarily due to design modifica- tions dictated by final engineering plans combined with higher than expected domestic inflation rates. Thus, the differences between SAR and actual cost figures are best described as underestimations in the SAR rather than as cost overruns. 39. The exchange rate adjustments combined with delays in submitting applications for disbursements to the Bank and changes in project scope, resulted in underutilization of the loar. amount by 35.3Z. Of the original loan amount of US$13 million equivalent only to US$8,147 million equivalent 11 were disbursed and of the amount canceled, US$2,147 million equivalent cor- responded to the credit program and the remaining US$2,625 million were canceled due to exchange rate variations. ICT requested, but the Bank did not agree to, an increase of the disbursement percentage on the loan from 40 to 50%. On the other hand, the Bank was willing to consider the inclusion of two additional elements, in order to fully utilize the remaining loan proceeds but ICT was unable to complete the necessary engineering plans within the time frame proposed. 4/ 40. As planned, IDB contributed with US$2.0 million equivalent in grant funds to project financing, the equivalent of 3.5Z of total project cost. On the other hand, due to the factors discussed above (PPAM, para. 39), the participation of the Bank in Project financing fell to 31.5Z of total project cost from 38? anticipated in the SAR. The shortfall was absorbed by the Government, whose contribution rose from 29 to 532 of total project costs. ICT's financial participation declined by approximately 11%, and that of the other participating agencies did not materialize (see PCR, Table 6). 41. The problem of cost recovery has been the most recurrent issue associated with this Project. Throughout project preparation and execution it appears that ICT was not persuaded by the Bank's arguments regarding the ability of the project beneficiaries to pay for environmental improvements and public services. Perhaps because of this underlying skepticism, and also because there were no precedents in Cartagena of extensive cost recovery for public services, ICT failed to examine in detail the feasibility of the cost recovery arrangements proposed in the SAR. In particular, the cost recovery conditions were not discussed with the beneficiaries during Project prepara- tion (see PCR, para. 35). As a result, the cost recovery of street drainage will most likely not occur (this component corresponds to 24.4% of total project cost). Likewise, utility costs which were expected to be recovered through tariffs are only partially being recovered, as most accounts are over three months in arrears and the majority of beneficiaries have not yet formal- ized their utility connections. 5/ 4/ These elements consisted of a canal separating the SEZ from the Tesca lagoon intended to establish a physical limit and minimize further settlement on site; and the implementation of the ASAS appropriate sanitation program serving dwellings that were not connected to the public sewerage system. 5/ With approximately 6,700 accounts in the Project site, ELECTRIBOL is significantly ahead of EMPC in formalizing individual connections, and the delays still persisting are due to a temporary shortage of electric- ity meters. In Pasacaballos, for example, not one water meter has yet been installed, and consumers have decided they will not pay even the flat rate because the water they receive is not yet treated. 12 42. The overall financial performance of the Project has been less than satisfactory. Financially, the Colombian society transferred US$37.4 million equivalent to the city of Cartagena and, more directly, to the inhabitants of the SEZ and Pasacaballos. Considering the prevailing national policy environ- ment in the mid-1970s in Colombia, this outcome was conceivable at the time of appraisal and might even have been justified based on the general goal of improving the national income distribution through public service provision. However, the fact remains that Colombia still lacks a viable and replicable model for large scale urban upgrading, since, in the absence of cost recovery, projects such as the Cartagena one cannot be replicated under present condi- tions. E. Economic Reevaluation 43. The Audit used the available data from the 1988 ICT survey to reestimate the IERR for the Project, following the general methodology used in the SAR. The resulting estimates agree with those offered by the Region (PCR, Table 7) in terms of estimated average annual increment of imputed rents, but varies from it as to the total number of dwelling units improved by the project. Based on the survey results, the Audit estimates the number of dwelling units in the SEZ to have increased from approximately 12,000 in 1978 to 14,400 in 1988. In Pasacaballos, the number of dwellin;s increased from approximately 800 to 1,100 during the same period. Thus, :he total number of units directly improved by the project is estimated at 15,500, or 41Z more than the 11,000 units estimated in the PCR. With these modified figures and aosuming imputed rents doubled as a result of the Project, the Audit estimates the return to Project investments at 4.1Z, which is conuiderably higher than the 0.2Z figure estimated in the PCR. On the other hand, the IERR for this Project cannot be compared with that of most urban projects assisted by the Bank (which lack comparable landfill works). Evidently, the almost doubled costs of the Project account for the less than satisfactory IERR results. 44. The unmeasured social benefits of this project are considerable in terms of improvements in public health, education, child care and environmen- tal amenities. Also important is the fact that these benefits did accrue to a majority of very low-income families who, although still poor in monetary terms, now enjoy much higher welfare standards than prior to the project and can entertain viable expectations of further improvements for their children. F. Bank Performance 45. The Bank's decision to finance this Project was consistent with sector needs and with the Borrower's development priorities. In re rospect, however, the Bank's role in project preparation demonstrated insufficient appreciation of the overall complexity of the upgrading works involved and overlooked the importance of non-physical elements in the execution of the Project. Regarding the latter, the Bank also overestimated the implemen- tation capacity of ICT and failed to emphasize the need for qualified social and legal staff in the Project Unit. During Project implementation, Bank supervision ensured continuity and appropriate technical oversight of the execution of physical works in the Project. However, Bank missions provided only limited guidance to ICT in its relations with the beneficiaries and with 13 the Municipality, with negative impacts for the overall performance of the Project. Finally, in restructuring the Project in 1985, the Bank should have made provisions within the loan for strengthening complementary agencies responsible for lot surveying and registration and should have utilized part of the available loan proceeds to improve the capacity of the Municipality for site maintenance. IV. CONCLUSIONS AND LESSONS TO BE LEARNED 46. The Project was generally well executed in its physical aspects and achieved its primary goal of improving the environment and welfare conditions of the residents in the SEZ and Pasacaballos. Notwithstanding the absence of home improvement loans, a large proportion of the families have improved their dwellings with their own resources and their children have benefited from greater access to education, nutrition, and health services. However, due to lack of cost recovery, the Project cannot be considered replicable. 47. Although this Project is unique in some respects, it offers many lessons which should prove useful in future urban operations. Among these the Audit notes the following: A. Project Design 48. In retrospect the project size was too ambitious, considering that ICT lacked previous experience in extensive land reclamation and also con- sidering the difficulties of mobilizing community support on such a grand scale. Nevertheless, since ultimately the entire SEZ would have to be up- graded to achieve the desired environmental transformation of the area, alternative implementation strategies should have been considered. More specifically, the implementation should have been phased, allowing for the completion of all on-site works on a sector by sector basis. This procedure has been used with success by ICT in the process of realigning lots along the new streets and canals built in the SEZ. In that task, work was completed on a block-by-block basis and succeeded in eliciting a high level of community participation, in minimizing the number of families in need for relocation, and in ensuring that those who had to move would not be relocated outside their original neighborhood. If the implementation of the overall Project had been phased by sector, Project completion might have taken eight instead of six years but overall results most likely would have been superior. B. Urban Development Impact 49. The Cartagena Project supports the widely held view that upgraded settlements consolidate into stable urban neighborhoods. The families in the SEZ now average 16.8 years of residency and there is little doubt that project benefits did in fact accrue to the original inhabitants of the site. Also important is the fact that densities at the SEZ still remain low and there- fore, in the context of the city as a whole, the SEZ still offers a prime location for lower income housing development in the fut-ire. As well located 14 land for low income housing is relatively scarce in Cartagena, this is a most important benefit arising from the Project. C. Income Distribution Impact 50. Based on the latest ICT survey of beneficiaries, 87,500 people resided in the SEZ in 1988 and an additional 5,500 were living in Pasaca- ballos. Thus, the number of direct beneficiaries of the Project is presently estimated at 93,000 persons. As intended at appraisal, project benefits reached preponderantly poor families. At the SEZ, for example, one-half of the families earned monthly income below the minimum wage (approximately Col$27,000 or US$100 equivalent in 1988 prices) and an additional 38% earned only twicc? that amount. These earnings support an average family of 6.2 members. D. Long Term Environmental Impact 51. Two factors point to uncertainties regarding the long term environ- mental impact of this Project. The first relates to the sanitation standards under higher densities, and the second pertains to the ecology of the Tesca lagoon. As noted above, higher residential densities should be expected in the SEZ and as densities rise the present unsanitary conditions of the major- ity of the dwelling units will tend to worsen. Thus, it seems in the best interest of Cartagena that the Municipality should maintain the site infra- structure regularly and that it should also mobilize additional resources to accelerate the implementation of the appropriate sanitation system (ASAS) to serve the dwellings not yet connected to the city's sever system. 52. Regarding the ecology of the Tesca lagoon, considerable attention was paid in the project to hydraulic studies of the process whereby La Boquilla (the channel which links the lagoon to the sea) naturally regulates the water levels in the lagoon, providing adequate flood protection for the newly filled SEZ area and supporting aquatic life. Notwithstanding these studies, road works connected with the construction of the Cartagena- Barranquilla highway obstructed that channel causing massive destruction of fish stock in the lagoon in 1986. Although the problem has since been partly corrected, water flows through the channel are still restricted contributing to the decline of the water levels in the lagoon, a process which poses increasing environmental risks. 6/ 6/ The Audit is indebted to elderly community leaders for calling its attention to the ecology of the Tesca lagoon and its gradual deteriora- tion over the last 40 years. 15 ANNEX I Page 1 of 4 COMMENTS FROM THE BORROWER (WORKING TRANSLATION) NATIONAL PLANNING DEPARTMENT SISEP 02-99-88 September 1, 1988 Mr. Rene A. Ribi Acting Chief Policy-Based Lending, Energy, Industry Urban and Public Utilities Division Operations Evaluation Department World Bank Washington, D.C. OED COMMENTS Dear Mr. Ribi: Reference is made to your letter dated August 2, 1988, to which you attached the draft Project Performance Audit Report on the Second (Cartagena) Urban Development Project, Loan 1694-CO, addressed to the chief of the National Planning Department. In this regard, we are very pleased with the high technical level of the evaluation and wish to make the follow- ing observations: 1. The provision of basic services for the Pasacaballos The implementation community, to be implemented with funds from Credit of the Pasacaballos 1953-CO of the Cartagena Free Zone project, is component is mentioned in the report only under the objectives referred to in the and description of the project. We think it would be PPAM, para. 24 and interesting to make a more detailed evaluation of the PCR, Table 1. these project works, especially in view of the experience gained in the execution of the same with funds from a parallel credit. 16 ANNEX I Page 2 of 4 OED CO)MENTS 2. The report indicates that project executioa sufferei The problems of due to, among other things, extended periods of local funds is shortages of funds. This assertion should be backed adequately up with specific figures reflecting the resources described in the assigned to and utilized by the project, with sources PCR, para. 20. of funds for the total and for each year of project execution in a similar format as that used to present the real and estimated accumulated disbursements. 3. Part IV - Conclusions and Lessons derived from the The reasons for project. Item D, Long Term Environmental Impact not utilizing could be complemented with a summary explanation of undisbursed loan the reasons why the Bank's willingness to consider funds is described the inclusion of additional elements to the loan in the PPAM, para. contract for the use of undisbursed funds could not 40. be taken advantage of. We hope that our observations are of value to the Operations Evaluation Department. Sincerely, Sylvia Escovar Gomez Chief, Project Follow-up and Evaluation 17 ANNEX I Page 3 of 4 COMMENTS FRON THE BORROWER SISEP 02-99-88 Señor RENE A. RIBI Jefe Interino División para Préstamos para Ajustes de Políticas Económicas y Sectoriales Energía, Industria y Sector Urbano Departamento de Evaluación de Proyectos BANCO MUNDIAL Washington D.C. Estimado señor, Hago referencia a su comunicación del 2 de agosto del presente año, en la cual le remite el informe de Evaluación Ex-post del Segundo Proyecto de Desarrollo Urbano (Cartagena) préstamo 1694-CO a la jefe del DEPARTAMEN- TO NACIONAL DE PLANEACION. Al. respecto, deseo manifestarle mi complacencia en cuanto al nivel técnico de la evaluación y me permito hacerle las siguientes observaciones. 1. La prestación de los servicios básicos para la localidad de Pasacaba- los, prevista a ejecutarse con recursos del crédito 1953-CO de la Zona Franca de Cartagena, solo se menciona inicialmente en los obje - tivos y descripción del Informe. Seria interesante una evaluación más detallada de estas obras del proyecto, en especial debido a la expe - riencia adquirida en la ejecución del mismo con recursos de un crédito paralelo. 2. En la expe.riencia de ejecución del proyecto se señala que ésta se vió afectada, entre otras, por los prolongados plazos durante los cuales hubo insuticiencia de fondos. Esta afirmación debería sustentarse con cifras concretas que reflejen los recursos asignados y utilizados por el proyecto, por fuentes de recursos para el total y para cada año en que se estuvo ejecutando el proyecto en un formato similar al utiliza- do en el Informe para presentar desembolsos reales y estimados acumu - lados. ./. 18 ANNEX I Page 4 of 4 - 2 - 3. La parte IV - Conclusiones y Lecciones que pueden derivarse del pro- yecto - podria complementarse en su parte D.- Efectos ambientales a largo plazo- con la explicación resumida sobre la razón pcr la cual la disposición del BIRF de considerar la inclusión de elementos adi- cionales al contrato del préstamo con el fin de utilizar el saldo re- manente, no pudo ser aprovechada. Esperando poder contribuir al esfuerzo del Departamento de Evaluación Re- trospectiva de Proyectos (DERP), me suscribo de usted, Muy atentamente, Sylvia Escovar Gómez Sistema de Seguimiento y Evaluación de Proyectos Jefe 19 PROJECT COMPLETION REPORT COLOMBIA SECOND (CARTAGENA) URBAN DEVELOPMENT PROJECT (Loan 1694-CO) Urban Projects Division Latin America and the Caribbean 7eaional Office 20 COLOMBIA PROJECT COMPLETION REPORT SECOND (CARTAGENA) URBAN DEVELOPMENT PROJECT (Loan 1694-CO) I. BACKROUND 1. Over the past thirty years, Colombia's high urbanization rate has placed it among the fastest-urbanizing nations in the world. Urban growth has been rather dispersed throughout the country, with about forty cities currently having population of 50,000 or more. Under existing conditions, most of these cities are facing enormcus problems in providing adequate shelter and other essential services which their citizens require. 2. Cartagena, the capital of the Department of Rolivar, is its commercial, industrial and touristic center. With a population of about 500,000, it contains about half of the residents of the Department. The city has been growing at P rate of about 8.5 percent per year with migration making up about 5.5 percent of this increase. Rapid population growth and sprawl settlement patterns have resulted in low overall average density (about 136 persons per hectare), and this has contributed to serious deficiencies in public services such as water, sewerage, roads, public transportation, and health facilities. Additionally, housing, particularly for the low-income groups, has been very scarce and of very poor quality. In the mid-1970s it was estimated that about 42 percent of the families in Cartagena lacked adequate dwelling places and the housing deficit was growing at a rate of about 15 percent annually. Slum areas made up about 30 percent of the city at that time. Only about 40 percent of the city was sewered and there was no sewage treatment facility. Consequently, the dumping of untreated human and industrial wastes into the Tesca Lagoon resulted in extremely high contamination levels which killed marine life and posed serious health hazards to residents, particularly the low-income ones residing in areas which were flooded by frequent rains. 3. Located about 5km. from downtown CarLagena is its largest slum area, the SEZ (Zona Sur Oriental), on the southeast part of the Tesca Lagoon. This zone covers about 350 ha., a large section of which is marshland subject to severe and frequent flooding. With a population of over 82,000, densities as high as 500 persons per ha. in some areas, and the absence of water, electricity, roads and other essential services, living conditions were extremely precarious. The Mamonal Industrial Zone and the other industrial and commercial enterprises were not providing sufficient employment to meet the needs of the city and so an acute unemployment problem existed. 21 4. By the early 1970s, both the central and local government authorities were aware of the problems of the city and were actively seeking effective solutions. In line with thinking of that time in various parts of the world, the government felt that slums could be eradicated by clearing the area of squatters. In one area, Chambacu, it used the resources of ICT and local agencies to clear and resettle just over 1500 families at an overall average cost of approximately US$1,200 per family. Success was achieved in removing families from the Chambacu area; however, they went to other slum areas within the city and the net result was perhaps a worsening of conditinns in these resettled sites. 5. With a growing awareness that the problems were very complex, time-consuming and expensive to resolve, the government began to seek external assistance to complement its local resources, both financial and human. Among the important participants in Cartagena, IDB provided a US$2 million grant to assist in filling part of the residential areas of the SEZ, and the Dutch Government financed studies on alternatives for rehabilitating the SEZ. By that time the Bank had also extended two loans to finance water projects in 45 urban areas (including Cartagena) and it was also lending for an export processing zone project in Cartagena. Greater background details on the sector and government activities afe in the appraisal report and the project file of this project. 6. Project Origin. In 1972 ICT conducted a comprehensive inventory of slum conditions in 69 Colombian cities. As a result of this study, the government decided to finance special lines of credit for public utilities, home improvements and legalization of tenure, along with provision of community facilities and technical assistance, which were all administered through the Plan for Integrated Servicing of Substandard Urban Areas (PHISU) of ICT. In early 1973, the Bank responded to a request by the government for assistance in its urban improvement program and an identification mission visited Colombia and reviewed proposals for complementing a multi-city program which the government had proposed. Twenty-five intermediate size cities, including Cartagena, were initially identified throughout the country. Of these, one site, Ruenaventura, was chosen by IDB for a separate development project. 7. Project Preparation. Preparation was initially rather slow because of a variety of reasons. First, since this was one of the early Bank urban projects, there were various discussions regarding its goals, contents, form, administrative system, etc. Also, on the part of the country, there were coordination problems and difficulties in defining the role of various entities involved in project preparation. By early 1975, preparation work for 23 cities (Loan No. 1558-CO) had progressed well enough for appraisal but the Cartagena component was lagging behind. Not wanting to delay the appraisal any further, the Bank and the government decided to separate Cartagena from the other cities and prepare it separately. It was acknowledged in the appraisal report of this project that Cartagena had a unique physical environment requiring more technical studies and designs. However, it was still felt that Cartagena was not too 22 different from the original multi-city model; an assumption which proved to be incorrect and which could be regarded as one of the primary causes of many of the problems of this project. 8. After the decision was made to prepare a separate Cartagena project, it was then decided to add works in Pasacaballos, a community of 5,400 residents. Pasacaballos is located about twelve kilometres south of Cartagena and adjacent to the Export Processing Zone project which was then being prepared for a Bank loan. It was felt that with the increase in economic activities in the area, there was need to adequately provide services and have orderly settlement of the workers who would arrive there. 9. Since 1965, there have been several studies and master plans for Cartagena which were developed by various local, regional and national agencies. The preparation and design work for this project were based primarily upon a study done by local contractors who were financed by the Dutch Government. Even before this study began, there was the debate on the cost effectiveness of reclaiming flooded land along the lagoon vis-a-vis developing other sites for the residents. One ICT study estimated that (at that time) it would cost about SCol 81 per square meter to reclaim the land while purchasing of land with similar locational and beneficial characteristics would have cost about $Col 25 per square meter. The ICT study had assumed that it would have been possible to use hydraulic fill from the lagoon to reclaim the land. However, later studies indicated that this was not feasible and so fill material had to he transported from quarries which were about 10 kilometers away, this making it an even costlier alternative. Initially, the consultants briefly considered other alternatives for reclaiming the area. Among these were construction of dykes and canals to keep out the tide and drain the water. Such alternatives were generally not regarded as technically, socially, or financially viable ones and the focus remained upon landfilling under the general assumption that the area had to be improved because squatters would not leave it vacant even if the then residents were relocated. 10. In line with the concept of the twenty-three cities program, primary preparation responsibilities were with DNP, and only towards the end of the process was ICT involved in any important decision-making role. Apart from minor maintenance, municipal officials were not included in any important way in the process, nor were there any substantial contacts made with potential beneficiaries. As discussed later, this late involvement of ICT and the non-involvement of the municipality and beneficiaries in preparation work has had a pronounced negative impact upon several aspects of project implementation and management. 11. Project Apraisal. The project was appraised in April, 1978, with additional field work undertaken in May, 1978, and January, 19;9. The period between identification and appraisal was thus about five and a half years; a rather long period even for an early Bank project and allowing for the initial difficulties of defining tasks, responsibilities, etc. It could 23 be argued that one should not count 1973 as the starting point since preparation of the first project really began at that time. Although this may be true, the second project was part of the first one and so its preparation technically began then also. Partly because of the continued use of the frame of reference of the first project, the extent of physical works was apparently not fully understood. Conseauently, at appraisal, many of the necessary technical studies were not completed and preliminary designs of the consultants and ICT for both the SEZ and Pasacaballos were used as the basis of cost estimates. The follow-up missions had to work on finalizing these cost figures and preparing detailed administrative and personnel resource needs for ICT to manage and implement the works. During the appraisal it was decided that the originally proposed work was beyond ICT's four-year implementation capacity and it also implied a cost which many beneficiaries could not afford. As a result, it was then decided to provide only the essential basic services (e.g. landfill, streets, water and electricity) on a project-wide basis while the others (inter-lot drainage, home improvements, etc.) were to be provided either through community effort or through private contractors to those who could afford them. 12. Project Objectives and Description. Although not explicitly stated in the appraisal report, the primary objectives of this project were to reclaim the flooded land in the SEZ, improve environmental and health conditions throughout the zone and achieve social integration through appropriate use of community facilities. Ancillary goals included use of this project as a demonstrative one for other areas of Colombia, introduction of cost-recovery principles and technical assistance to ICT and various local agencies. 13. The components of the project in the SEZ were: (a) landfilling to raise the level of the streets and lots above sea-level; (b) infra- structure works such as street construction, canalization of drains to the lagoon and installation of utility services; (c) loans and technical advice to community groups and individuals for the regularization of land tenure, interlot drains, paving of sidewalks and pedestrian streets, secondary water and sewerage lines, house connections for water, electricity, and sewerage, home construction and improvement and serviced sites purchases; (d) improved social services, including construction of Community Development Centers (CDVs), equipping of existing and new facilities, training programs for education, health and social service teachers, and technical assistance for small-scale enterprises; and (e), project management and technical assistance for strengthening participating agencies through financing of equipment, start-up expenses, training programs for project staff along with engineering studies of water supply and sanitation projects in the city. The works in Pasacaballos included road improvements, construction of a CDV and a water distribution line. Greater details of these components are in the appraisal report. 24. Project Implementation 14. The primary implementation responsibility was to be with the Bolivar branch of iCT under overall policy direction of a committee which was established by Presidential Decree in January, 1976. This committee, JAZSO, consisted of representatives of various agencies, and it had the policy- making role for development in Cartagena. ICT's task was to be implemented through a project unit which was to be especially established for this project. Through its project unit, ICT had responsibility for implementing the water, sewerage and electricity networks and hand these over to the municipal service company (EPM-C) for operation and cost recovery. It was also assigned the task of constructing the CDVs and handing these over to the agencies which normally operate them, and it had responsibility for assisting beneficiaries in the home improvement loans, land tenure regularization, resettlement and social orientation programs. The agencies which were to be involved in the CDV operations were the National Training Service (SENA), the National Family Welfare Institute (ICBF), and the Ministries of Health and Education. 15. Although the loan agreement was signed in August, 1979, and the effectiveness date was originally set at December 19, 1979, it was not until June, 1980, that the loan became effective after all of the subsidiary loan agreements were signed. The Bank granted two postponements of the date by which the government had to have the subsidiary agreements signed and it had to threaten cancellation of the loan before the agree- ments were finally signed. Basically, the signing problem was because the model of the first urban project was used, and while in that project the agencies understood their clearly- defined roles, in the Cartagena project, most of them felt that they were not needed. For example, SENA already had community facilities operating in the SEZ and in Pasacaballos (with technical assistance from the Japanese) and so it was reluctant to sign agreements to operate and maintain other CDVs in the project areas, especially with no understanding of its funding sources for these new commitments. Also, in the case of INSFOPAL (the national water agency), its jurisdiction and functions were made redundant by the presence of EPM-C (the local water agency) but still it had to sign the subsidiary loan agreement. In many cases, the agencies were not kept informed of the nature of the second urban project and so they were not sure how to respond when asked to sign agreements for its implementation. Through special efforts of DNP, the nine subsidiary agreements were all signed on April 18, 1980, and the loan became effective on June 23, 1980. 16. For ICT, there was the additional uncertainty about funding of its project investments. While it was true that there was retroactive financing for project works (US$1.18 mill.), ICT was concerned that the loan may not be signed and it would not be compensated in a timely manner for its work. It therefore kept the level of initial activities and staffing to a minimum. Two factors which negatively affected start-up works were: (a) the need to get final designs prepared in time for bid opening, and (b), getting lines of communications and responsibility 25 established among the three levels of operation in ICT, viz., the head office, the regional office and the project unit. By that time, the role of the JAZSO unit was waning while ICT became more prominent. ICT was thus left with sole overall responsibility for the project after the de facto dissolution of JAZSO. 17. Chart 1 contains details of various aspects of project prepara- tion and implementation. As it indicates, there were to he two phases of project implementation: the first between October, 1977, and December, 1979, and focussing primarily on landfilling and drainage works, and the second between January, 1980, and December, 1983, with all of the other infrastructure, superstructure and complementary activities. The actual completion date for the project was June 30, 1986, and there was thus a 30 month delay in project execution. Moreover, the material credit and tenure regularization programs have still not been completed. 18. Some of the reasons for the long implementation time have already been mentioned above. Other reasons include staffing and administrative problems, incomplete design work, lack of appropriate counterpart funding, cumbersome contracting procedures and coordination problems with other agencies. All of these should be examined in light of the frequent changes in key personnel; over the life of the project, there were three national presidents, five general managers of ICT, four regional managers in Cartagena and four project unit heads. A more detailed discussion of these problems follows. 19. Staffing and Administration. The frequent administrative changes were not conducive to continuity and in-depth understanding of the project and so it was difficult for the works to proceed smoothly. Even at the lower levels, there were high turnover rates caused partly by low salaries and partly because most of the project unit positions were temporary ones which had to be renewed annually. On several occasions, these positions were not renewed on time and work had to be stopped or severely curtailed. Various supervision missions tried to resolve this problem but were only partially successful (insofar as there were contract renewals for temporary staff) because the government had a hiring freeze policy at that time. 20. Designs and Funding. Because most of the cost estimates were based upon preliminary design works, there was need to have final designs before the works could be contracted. This led to delays while consultants were selected and the final work was done. Even in cases in which the work was ready to be contracted, there were other complications arising from the budgeting process of ICT. Essentially, upon requesting its funds, ICT has to earmark these for specific expenditures. Upon reviewing the budget request of ICT, the planning and budgeting authorities had the power to make adjustments as they wished. Consequently, ICT sometimes found itself with resources to construct only half of a canal or bridge, for example, and it was not permitted to use approved funds from one category in other categories. Additionally, in some cases, it received approval of its budget request but it did not receive the actual funding which was 26 authorized for that year. Funds unused in one year could be kept for the next year. Powever, if they were not enough for their respective categories in the assigned year and if they were not complemented in the following year to meet minimum threshold sizes, they were still of no value and they can even give the impression that ICT was not able to spend its allocated budget. 21. Contracting. Contracting procedures in Colombia are subject to several monitoring and control mechanisms and these can sometimes cause delays in the work schedule. For ICT, its project works were subject to decrees issued in 1976, 1977, March and September, 1983, as well as Bank reqiiirements. Although there ,::s provision for ICB, foreign firms did not participate, mainly because of che size of the work and competitiveness within the country. ICT's system of using mathematical formulae and awarding contracts to bidders closest to a calculated price was initially not acceptable to the Bank. However, after various reviews, discussions, and modifications to the procedures, the Bank accepted this system and about fifty contracts were awarded for project works. The main problem in contracting delays was due to the procedure which ICT insisted in having for project contracts. Instead of having the project unit and the regional office advertise and select the contractor according to established guidelines and laws, ICT decided that the Bogota office had to do this task. As a result, in some cases, it took several months before contracts were finally approved and in many instances, re-contracting was necessary because of non-compliance with various requirements during the original process. 22. Coordination. Inter-agency coordination was not easy, primarily because of the problems which were mentioned earlier, i.e., exclusion of key participants during the project preparation stage, poor communications among the participants, and absence of workable procedures for dealing with coordination issues. As an example, the Geographic Institute (IGAC), was to complete surveys and document location of residents in the project area in order to facilitate the registration work of the land titling department. IGAC did not complete its task because it had other priority work and was not aware of what additional work was to be done. 23. Overall, the combined effects of the above factors were responsible for project delays and the rather uneven pace of project implementation as indicated In the implementation schedule and investment figures of Chart 1. 24. Project Costs and Financing. Table I contains details of planned versus actual targets of the project while Table 2 has the relevant cost figures. As it indicates, the project was originally expected to cost $Col 1,631.3 million (US$35.3 million, equivalent); however, the actual cost was $Col 3,036.0 million (US$37.4 million, equivalent), an increase of about 86 percent over original estimates in terms of Colombian Pesos, but about 5.9% in US Dollars because of the devaluation of the peso against the US dollar. Unfortunately, a straightforward comparison between the planned and actual total figures cannot be made because some works were reduced (e.g., material credits), while others were expanded (e.g., landfilling). 27 25. Following the comparisons made by components in Table 2, it can he seen that there were substantial cost overruns on land fillirig, street drainage and utility works. Again, the status of design works can be cited as one of the primary reasons for significant underestimation of the work (see Table 3). While at appraisal it was estimated that landfill works would amount to about 821,250 cubic meters, the actual figure was 1,965,258, a 139 percent increase in volume. Excavations for both street drainage and canals were similarly underestimated by about 85 and 93 percent respectively. In terms of prices, compared to an appraisal estimate of about 81 pesos per cubic meter, as Table 4 shows, in 1980 the cost was 95 pesos, and 1981 filling material reached to about 240 pesos per cubic meter in one quarry. Excavation costs increased even more from about 40 pesos per cubic meter to about 211 pesos between 1980 and 1982. Overall, as shown in Table 5, between 1978 and 1983, the appraisal mission estimated inflation to be about 119 percent with the majority of works to be done early in the period. The actual inflation as measured by the construction price index was 281 percent and most of the works was done later than anticipated at appraisal. 26. In terms of financing, as Table 6 indicates, the government's share increased from about 29 to 53% of total project cost while the Bank and ICT's share declined from 38% to 32% and 23% to 12% respectively. The minimum participation of other agencies did not materialize in any direct expenditures although there were indirect administrative and other expenses incurred by the municipality and electric company. The decline in the Bank's share is attributable to project cost increases and peso devaluation. Of the US$13.5 million loan, only about US$8.7 million was used for project works; the remaining sum was cancelled in two stages when it became apparent that it was not needed for the project. 27. Project Results. Map 1 and Table 1 contain details on the accomplishments of the project. In general, the land filling works were completed, the drainage canals were constructed, the streets have been re- aligned sad upgraded, the surface drainage and street gutter works were completed and the water and electricity supply and distribution systems were built. Instead of the five CDV's originally planned at appraisal, four were built--three in SEZ and one in Pasacaballos. After reviewing the actual needs of the SEZ it was decided that it was more beneficial to rehabilitate various existing schools and health centers with the funds allocated to the fourth CDV in the SEZ. 28. While the physical works have almost all been implemented as originally envisaged, progress in implementing the complementary ones have not progressed as well. Among these, the land titling, materials credit, technical assistance and studies components have experienced some type of difficulty. Also, the pace of beneficiary participation has been slow and the municipality has not acted quickly to provide sewer services in the deficient areas. Greater details on these topics follow. 28 29. Land Titling. In terms of residents, about 6,000 families live in the rehabilitated area and another 4,000 live in the upgraded sectors. The land titling work has been one of the more complicated components to implement mainly because It is a multi-stage process involving several agencies and leading finally to the actual titling of plots. Since all land towards the sea from a point 50 meters above the high tide mark belongs to the state, it was necessary to have formal transfer of title of the reclaimed area from the government to ICT. This stage was expected to be done by mid-1980; however, because of the legal and bureaucratic process involved, it was not completed until 1982. One of the complicating factors was the presence of several residents who claimed ownership title even though the land was legally government property. Factors which complicated the next stage of actually surveying and titling the plots were coordination problems with the IGAC (the Geographic Institute) and the land titling department. The daily movement of residents in and out of the sites also negativaly affected survey and resident documentation efforts, as did temporary lack of legal staff in ICT and the land titling department. After a great deal of work, ICT has finally managed to reach the point of beginning the actual titling process for one sector. Nevertheless, the schedule for completing this activity is not firm because residents have to voluntarily go to the titling division and provide all of the required personal documents (identity cards, military records, etc.), and there is a final snag in that the law prohibits any disposal of state property without appropriate market-value compensation to the state. For residents who lived in the area for an average of 5-10 years, many of whom having already paid someone for their plots, this is a delicate economic and political issue which ICT is working to resolve. 30. Materials Credit. ICT was to make loans to residents for various types of home improvement works. Unfortunately, this component was delayed primarily because residents did not have land title and so they could not use their property to guarantee their loans. Also, with the titling process unclear, many residents were reluctant to improve their homes. Various supervision mission efforts to devise some other system of guarantee for loans were not successful. One of the main reasons was because ICT's experience with non-mortgage guaranteed loans in other parts of the country has not been very good and it suffered substantial losses. 31. Technical Assistance and Studies. The project included studies for evaluating the flooding risks of the filled area, recommending appropriate intermediate sanitation solutions, evaluating ways of improving municipal revenue collection and management, and preparing a diagnostic study and firancial strengthening plan for ICT. In general, after a slow start (due mainly to lack of terms of reference and contracting), most of these studies were completed and provided useful and beneficial information. The flood study concluded that the filled area was safe from flooding from most storms and the municipal study made several important recommendations on organization, revenue collection, etc., which are now being implemented by the municipality. The intermediate sanitation study has won its author several national awards for its suggestion of a 29 relatively low-cost intermediate level solution for dealing with sewerage problems of the zone. The ICT study was not as detailed as expected; however, it served to identify enough deficiency areas of ICT for UNDP/Hahitat to become interested in partially financing a more comprehensive study for improving the institution. In spite of these successes, one general shortcoming of many of these studies is the lack of defined follow-up actions (on what to do, who is to do the work, when, under what financing and administrative arrangements, etc.). This was most evident in the case of the sewer solutions (ASAS) where it was expected that the municipality would undertake necessary follow-up actions. The ASAS have not been built and the result is that no proper system of human waste disposal is in place in most of the project area. Efforts to use some of the excess loan funds before the closing date tn install ASAS were unsuccessful mainly because counterpart funds were not available (the budgeting process was not flexible enough to authorize these expenditures). 32. Beneficiary Participation. One of the cornerstones of this project was the aim to have beneficiaries actively participating in all phases. In spite of this, the lack of beneficiary participation has been one of the greatest shortcomings. From the early phases of project preparation, beneficiaries were excluded and this continued throughout the process. Indications are that this was not a deliberate action; rather, it was a matter of expediency especially in the initial phases to get the project prepared and implemented. Also, there appeared to be a lack of credibility of many agencies, and political groups promising so much to the residents without delivering anything contributed to their non- participation. Even though there were provisions made in the project for social workers to visit the areas and explain to the residents the nature of the works to be done and the roles and responsibilities of the various actors, several supervision missions found residents who had no idea of project goals and role of the agencies, and they had the belief that they were to he evicted (as was done in the Chambacu area) after the improvements were made. Consequently, participatory action and feedback from residents in the project area was a difficult task. Recently, ICT has exerted greater efforts while at the same time, various resident groups have been formed. However, the results have not been encouraging since the dialogue tends to be more confrontational than cooperative. 33. Continued Land Invasions. Soon after the sites were reclaimed and the fringe area residents were relocated, newly arrived migrants once again occupied the vacated plots, creating a new slum area along the margin of the project sites. Use of ICT personnel and other municipal authorities could not stop this and there are currently about 1,000 families squatting on these plots. Indications are that this possibility was not fully foreseen during appraisal. ICT has been considering alternatives ranging from a deep canal or similar physical impediment, to armed guards; however, none of these solutions appear feasible at this time mainly because it is a national phenomenon and cannot be dealt with on a piecemeal basis at the local level. 30 34. Operation and Maintenance. The water and electricity networks have been officially handed over by ICT to EPM-C and ELECTRIBOL and they are being managed as other assets of these agencies. The street and drainage works are scheduled to be handed over to the municipality. The CDV's were to be handed over to the municipality and the various agencies which provide services there (e.g. health and education). However, these agencies have been reluctant to assume their full responsibilities and so ICT continues to provide financing for needed maintenance activities. ICT is currently in the process of forming a group consisting of residents and representatives of the affected agencies and the municipality who are expected to manage CDV activities in the future. One persistent problem which now affects the project area is the dumping of garbage into the canals and streets. This is a problem which reflects a weak refuse collection system along with poor beneficiary discipline and education. There have been campaigns to clean-up the area but these have been focussed more at periodic clean-ups rather than proper maintenance and disposal systems. 35. Cost Recovery. During appraisal, it was estimated that about 55 percent of the project costs would be recovered either directly from beneficiaries or through the utility enterprises. The specific component subject to direct recovery was the street drainage works while the water and electricity components were to be recovered through the utilities. The home improvement loans were to be based upon legal agreements and so recovery was not expected to be a problem. Since landfill material was tradiAonally provided free of charge to residents, it was decided not to levy any charges for landfill under the project. 36. For the amounts to be recovered both directly and indirectly there have been serious cost recovery problems. In the case of the street drainage works, there was no defined mechanism or system identified during appraisal for cost recovery. The appraisal report did mention recovery through a capital development levy charge by ICT but the authority and legal basis for such charges were not reviewed. Perhaps, part of the reason for this oversight was because of the late entry of ICT in the project preparation stage. The result has been a series of unsuccessful attempts to legally recover cost of the street drainage works. The main obstacle to such recovery (according to the lawyers of ICT and the municipality) is the absence of a prior agreement with the beneficiaries to pay the improvement costs. To their credit, officials of ICT, the municipality and DNP all exerted great efforts to create a system to resolve this problem. ICT officials even sought special congressional approval and a stamp duty mechanism for Cartagena to cover these charges. Unfortunately, none of these attempts bore fruit and no street drainage charges have been recovered so far. With respect to the water and electricity charges, these have been levied by the companies but they have had a poor recovery record, not only for project residents but In low-income areas in the entire city. The water company has about 75 percent of its accounts unpaid in the low-income neighborhoods and its lifeline has been the higher tariffs which it levies and receives from the hotels and businesses in the city. 31 37. The tradition of cost recovery in Colombia is not yet fully established. In dincussions with various Colombian officials, supervision missions were assured that the government was interested in having cost recovery. However, it was also acknowledged that beneficiaries needed greater orientation which was not easy in an environment where politicians continually outbid each other in promising cost-free benefits. In terms of cost recovery, this project has not been successful even in the limited range to which it was ficussed. Although the poor tradition of paying for services had an effect, it appears that one of the primary reasons for the failure was the non-participation of beneficiaries in the design of the project and its implementation. Ironically, in discussions with several supervision missions, many residents expressed their willingness to pay within their budgetary constraints provided security of tenure was assured. The municipality, DNP and ICT are continuing efforts to recover some of these costs, and they are considering some type of payment for the land which ICT will transfer to the residents. 38. Reporting. The quarterly progress reports were generally sent on time and they were informative. However, despite the fact that the project director was able to identify and draw attention to the problems adversely affecting project implementation, most of the time the director was not able to resolve them because they involved decisions which had to be made by ICT and the Planning Ministry in Bogota. This was especially true for staffing, budgetary and contracting problems. 39. Audit Reports. Although the audit reports for the project generally arrived an average of about 4-5 months late, they were without any substantial qualifications. The audit reports for ICT were also about 4-5 months late, but contrary to the reports on project accounts, they invariably had several substantial comments by the auditor. Frequently, the late arrival of the audited reports was due to staffing problems in the office of the Contraloria General de la Republica, the governrent auditors who audit ICT's accounts. The auditor's comments were generally of two types: those involving computational and factual discrepancies which were generally easily traced and corrected, and those arising from conflicting policies and procedures which needed to be reconciled. After receiving the first two qualified audited reports, Bank missions met with both the auditor and ICT officials which resulted in ICT undertaking a comprehensive reform program with the auditor and UNDP assistance. By early 1983, ICT made sub6tantial progress in streamlining its operations, filling vacancies and upgrading the staff of its accounting division and it also created an internal audit division, arranged training seminars, and prepared operating manuals for both its head and field office staff. It also agreed to prepare a detailed point-by-point response to all comments which the auditors made in future reports and submit these to the Bank and the auditors for further comments. ICT has consistently complied with this agreement but the Contraloria's office was not able to respond to such comments primarily because of workload constraints. However, many difficulties are now being resolved through UNDP technical assistance and the computerization. 32 40. Economic and Social Benefits. During appraisal it was estimated that the physical and environmental improvements in the SEZ and Pasacaballos and the housing Lprovement program would yield an internal economic rate of return (IERR) of about 16 percent. Individually, the physical improvements were expected to have an IERR of about 15 percent while the housing improvement works were expected to have about 21 percent IERR. 41. There are not sufficient details in the appraisal or supporting documents to facilitate closer examination of the assumptions made. However, the methodology is clear enough to permit similar ex-post calculations. As Table 7 shows, the recalculated IERR for all of the physical works is less than 1 percent using all investment costs and matching these against imputed incremental rental values which can be attributable to the project but excluding tariff benefits of the water and electricity companies. When the water, electricity and community facilities are excluded from the cost side (since benefits of these services were not included in the above case), the IERR is just over 4 percent. Given the cost overruns, project implementation delays and continued state of consolidation of the project, these IERR figures are not inconsistent with appraisal projections. The sensitivity analysis used V percent cost increases but it was not expected that there would be the greater than 100 percent increases which were encountered in some cases. There were some increases in imputed rental benefits but these did not match the cost increases which occurred. 42. Employment effects. Of the increased employment expected to be generated from infrastructure works, superstructure works, materials credit construction, small scale enterprise loans and training programs, only the infrastructure work has resulted in substantial employment. Some of the other components (e.g., material credits and small scale loans) have not been implemented or they are still not yet fully operational (e.g., the training programs). Since most of the urbanization works were labour intensive and used many unskilled and semi-skilled workers, the project made a significant contribution to employment during its implementation phase. Assuming that about 30 percent of the project cost went for labour, then there were approximately 4,000-5,000 person years of direct employment created by this project. There would also be at least about half as many other jobs created indirectly from secondary and lower-level activities. 43. Poverty Impact. Approximately 10,000 families in the reclaimed and upgraded areas of the SEZ and about 1,000 in Pasacaballos received benefits from this project. Of these, almost all of those in the reclaimed area (approx. 7,000 families), about 60 percent in the upgraded area (about 1,800 families), and about half of those in Pasacaballos (about 500 families) have incomes which are below the urban poverty level. During appraisal, it was estimated that about 14,350 families would receive direct benefits from the project. This figure resulted from an overestimation of the density and migration into the project areas during appraisal. Given the current situation in which almost all of the facilities have been 33 provided without charge to the beneficiaries, project benefits have been accessible to all of the residents. Even when the issue of cost recovery is resolved, payments to be made by residents will not substantially change accessibility of residents. Overall Evaluation 44. General. There is need to place the project in proper perspective before evaluating it. It was one of the early Bank projects and it was thus subject to the conceptual and other associated preparation difficulties which existed during that time. Also, within the borrowing countries, there was the feeling that urban problems were domestic ones and there was still strong resistance to having external agencies entering with proposals which were counter to their traditional way of thinking (e.g., upgrading vs. eradication). Bank knowledge of the sector and its medium- and long-term urban strategy for Colombia were not well developed then and the immediate goal was to try to convince the government that lower norms and standards, upgrading, subsidy reductions and cost recovery should be basic tools of its urban strategy. 45. The project unit had an enormous task and in general, it performed very well, considering the obstacles which it faced. Not all of the originally planned works were completed; however, most of the remaining ones are those for which there is shared responsibility with the beneficiaries and other entities, e.g., for land titling and community facilities. Two basic handicaps which the unit had were the temporary staff and limited power to take actions regarding the project (in staff appointment, contracting, budgeting, etc.). The five changes in project coordinator during the life of this project was also a negative factor. Even allowing for its constraints, one of the most obvious shortcomings of this unit was its inability to get residents of the project area involved in the works and the community activities. Part of the reason lies with the initial exclusion of residents from the planning process and part with the over exposure of the residents to promises of other groups which never materialized. However, in terms of numbers, the project unit was equipped with social workers and it did have a program for the social elements of this project. Unfortunately, the need for greater coordination was not met and there was also perhaps need for social workers with greater sensitivity to the population. 46. ICT's Role. As explained earlier, ICT came on the scene when the loan was at the point of negotiation. Its input in the preparation process was thus minimal. As shown in Chambacu, it was used to slum clearance and highly subsidized solutions as a means of solving squatter problems and so it initially displayed some reluctance in implementing this project. Perhaps, another reason for its initial reluctance was the difficulty in getting the loan signed and being compensated for its investments. It also had some initial confusion in getting organized for the project. Since this involved creation of a new unit to manage the works and there was a freeze in hiring new staff, ICT had to juggle its regional staff and it had 34 to complement this with short-term employees. The five changes in managers in its central office did not h 1p in continuity especially since these were accompanied by four changes in the regional office. The regional office provided support to the project unit in such areas as contract preparation, designs and supervision. Its role was rather ambiguous since it was involved in other ICT regional operations and it was not given any clear-cut mandate over the project works. 47. The Government's Role. The government should be credited with early recognition of the nature and dimension of the problem and the need to seek assistance in developing an alternative to slum clearance and highly subsidized costly solutions for a small number of heneficiaries. The participation of DNP in the planning and preparation stage was helpful but there was a gap between the time it was recognized that this project was to be prepared separately from the first one and the time ICT was actually brought in to actively participate. This, together with the lack of municipal and beneficiary contribution, was a major oversight of the government. Regarding project implementation, the government's budgeting process, its hiring policies, and its contracting system have had negative impacts. To some extent, so also has its inability to work with the relevant agencies and develop a system to recover the charges which it promised to recover from beneficiaries. Its unsuccessful attempts to control unauthorized developments and squatter settlements throughout the country has also had adverse consequences for the project since it appears that there would be similar conditions existing once again for residents in the unserviced flooded areas. It needs to work with the municipality and the relevant ministries to develop appropriate uses for the community facilities and for their proper administration and maintenAnce. Also, of crucial importance is its need to complete the installation of a sewerage system and so prevent continued contamination of the lake. 48. The Bank's Role. In identifying and preparing this project, one of the primary mistakes which the Bank made was to regard it as similar to the first project (i.e. Loan 155R-CO). With this frame of reference, many of the obvious differences were viewed as only minor deviations from the twenty-three cities project and no adequate provisions were made. Consequently, even with extensive landfilling and infrastructure works, the decision was made to regard them as normal upgrading operations. Final designs based upon specific site studies were thus not given enough consideration nor were some basic questions regarding site selection and work dimension fully analysed. This approach also made it easy to overlook the special role of the municipality and beneficiaries in the preparation and decision-making process; an oversight which has had substantial negative impact. Looking at the various components of this project today, almost any of them can in itself he a project. Filling approximately 400 hectares of marshland with over two million cubic meters of material; installing water, electricity, streets, drainage canals, etc.; documenting and titling about 10,000 plots for residents (a majority of them without proper legal claims); constructing five community centers and coordinating various health and social programs; administering and managing subloan 35 programs for home improvement and small enterprises; undertaking studies ranging from municipal and ICT improvements to technical sanitation systems; these were the tasks defined in the project and expected to be completed in four years. 49. As the complexity and special nature of the project became apparent, the Bank did try to make mid-term modifications. Supervision missions reviewed the various components and made changes aimed at reducing the scope of several which could he reduced, e.g., in interlot drainage and sidewalk standards. Still, the original framework had its negative impact and its effects were not so easy to modify once the project began. This is especially true for the role of the municipality and beneficiaries. The Bank has been criticized for not being pragmatic and accommodating enough in several instances in this project. Among such cases are its insistence in having the titling works commence on the data stipulated (January 1, 1984), even though it was known that this action depended upon several institutions other than ICT and ICT could not act until such actions were taken. In another instance, the Bank appeared to be trying to use this project with primary focus in landfill works in Cartagena (and which is very small compared to ICT's overall operations), to influence overall ICT operations in investment policies, administration, production, etc. Still, having noted such observations, it should be acknowledged that in spite of the relatively small size and importance of the Cartagena operation in ICT's overall program, the Bank did accomplished several significant goals with ICT. Among these are the UNDP/HABITAT diagnosis and technical assistance program which began partly through Bank insistence in an overall asssessment of ICT; the creation of an internal audit system and restructuring of the accounts department; adoption of a more competitive and equitable system of evaluating and selecting contractors; and application of the Cartagena model to other ICT operations. 50. In general, the project was over ambitious both in its scope and depth; it sought to achieve too many goals in too comprehensive a manner and it omitted too many of the important participants at crucial stages. Perhaps this overreaching was a consequence of lack of experience and underestimation of the complexity of the problems involved. Nevertheless, in spite of its obvious shortcomings, there have been substantial achievements. The landfilling is complete, the services (excepting sewerage) are in place, the land titling process is underway, and the community facilities have been built and their operation and maintenance is being finalized. Upgrading as an alternative to slum clearance is widely accepted and so are the principles of reduced norms and standards and cost recovery. Unfortunately, implementing the cost recovery principle, albeit partially, has not been easy in this case. Two other problems which overshadow this project are the continued invasions along the fringes of the project area and the lack of adequate sewerage services. Taking all of the positive and negative factors into consideration, on balance, the project was successful in meeting its primary goal of improving living conditions in the S.E. Zone, given the circumstances under which it was planned, developed and executed. 36 0ILMBIA TABLE I SEM (cA NA) URBAN DVEWRMT WR (Loan 1694D) RuLEESCRIPrIN AND ouf4 ONm FRJECr UIEMDRS AS MOSIDERED IN MlE APPRAISAL ACITIAL StAllS 1. LAND FILING Lard filling to ensure protection of streets and house lots The final level of streets was 0.85 m.; against flooding. for lots it was 1.00 m. Both of them were higher than the EPM-C level data. In the conservation area filling would be lidtad to the ainluum Streets have been filled and graded. required to grade the streets. In the rehabilitation area filling will be done using lirestone Linestone was obtained in Turbaco" obtained from a quarry sane 8 km. away. quarry, same 10 km. away. Also, froa 'Nuevo Bosque" located 3 lan. a4ay. At northern edge of the filled area, a reserve of 50.00 in. wide Reserve left and creation of a canal to will be left for an eventual road. This would extend the length define project limits was considered. No of the project area. engineering studies or works have been done. 2. STRET DRAINA The streets in the SEZ would serve as unpaved drainage channels The 0.85 m. elevation over the reference for storm water discharging into the lagpon at an elevation of ER4-C was considered adequate to en- sufficient to protect against flooding. sure protection against flooding. Sur- face drainage is slow because of the mininal restricted slope. Concrete arbs or gutters and ourbs would be provided to all Works have been done in conpliance with streets in the project area which lack them (i.e., about 30% of stipulations. Sidewalks have been built the streets in the conservation area and 100% of the streets in additionally. the rehabilitation area). In Pasacaballos approxtuately 3 km. of road would be graded. The works are completed. 3. EIERNAL DRAINAE Under this coonent the drainage ditches that traverse the SEZ, The works designed for six nain drainage conveying surface water from Cartagena's southeastern hinterland ditches have been coupleted. Works for to the lagoon, would be treated as follows: Canal Chaplundum are underway and nearing coupletion. Six drainafp ditches would be replaced by reinforced concrete In addition, lCT have bilt works for canals. A seventh waterourse, the Canal Chaplundum, at the another 9 minor canals. eastern end of the project area would be contained by levees. For design purposes, the considered Rain Return Period will be 10 The 10 years period was olserved for years. design. 37 TABLE I (cont.') 4. 11UIJ=lY INFRASIWC1URE Design of the water distribution will update the recomwendations Water works neet the standards and were of the 1974 Water Master Plan for the city. The sewerage systen received by EP*-C. Sane for selerage will comply generally with the standards of INSIOPAL, with installations. nodifications approved by EPM-C to suit local conditions. The electricity networks will be designed in accordance with the Design and works have been done in minina norms of ICr and in consultation with and subject to the accordance with the standards. approval of EIECRIloL. Off-Site Water Trunk Mains SEZ 1 km. of pipeline leading from the storage tarks It has been built as stiplulated in the near the El Basque treatnent plant. 4.8 kn. of Appraisal Report. pipeline eastward extension. PASACALDS 1 km. length of amin linking to a trunk min It was completed in accordance with the being extended fran Cartagena to the EPZ Under design. the Bank-assisted Export Processing Zone Project. Installation of a punp and construction of an overhead tank. PrinEry Water Mains SEZ Would be provided to the part of the conservation It was coupleted as stipulated during area that is not yet served (approxintely 35%), project preparation. and to the whole of the rehabilitation area. Primary wains already serving the town will be Works have been done in accordance with renovated and exterded to rumber of unserved the project objectives. areas. PASACABALDS PrinEry Sewerage Main sewage pipes would be installed in that part Main sewage pipes have been installed of the conservation area that is not yet served only in the subzone No. I of three (approxintely 80%). These pipes would discharge subsectors, No. 1, 2 and No. 3. No into sunps fran which the sewage waild be pumped pumping system has been installed for into five existing sewaW collectors which in sewerage discharges. No water-borne turn discharge into the lagoon. No waterborne sewage disposal system has ben provided. sewage disposal system would be provided in the SEZ rehabilitation area during the life of the project. Electricity Networks Electricity networks would be provided to thoMe Networks have been provided in full parts of the SEZ, not yet served, i.e., 20f. of cmpliance with Apprais. Report. the conservation area and virtually the entire rehabilitation area. 38 TARE I (cont.') 5. ICr IANS Supervised credits for: (a) regularization of land temure; (b) Five hudred sixty families (of which public services and neighborhood Iaprovemnts; (c) housing in- about 95 are residents of Cartagna SE) provennts; (d) serviced sites and relocation. The loans would have applied for a housing improvement be ude available under PRIZJ loan procedures. It is estimted loan from ICT. After screening, only 116 that at least 5,600 families would avail themselves of one or families had received a loan. Land more loans. titling delays antailed project compo- nnt (see text for details). Regularization of Lanad Trnure This component would meet the tedhnical and administratiNe ccsts The rehabilitation area of the project of land tenure surveys connected with regularization of teure, belonga to the state, only the right to as well as legol fees for the transfer of title to residents. its use may be transferred. Special Titles would be processed at an average prices varying frof about legal arrange nts are required for its US$21 to US$49. finalization. Public Services and Neighborhood Iprovenxts Donestic connections would be ude by families singly or in small No loans were extended. groups, contracting out part or all of the work. This conponent includes: % of the blocks of area of: Works Csrvtn. RhbIttn. Pasacab. (a) Construction of inter lot drainage 30 60 (b) Paving of sidewalks and pedestrian streets 30 40 (c) Secondary water distribution and connections 35 35 40 (d) Secondary saerage and connections - - - (e) Electricity connections 20 80 90 39 TABLE I (cont.') Housing Inprovents To assist the households by providing sual castruction loans ICE rules, restrict loans to beneficiar- for improvenents to their dwellings, as well for the installation tes who have titles to property and can of sanitary facilities. Two thousand households would obtain nortgage their properties. loans in anunts rangLng from abat US$350 to US$1,000 equiva- lent. Sites and Relocation This component would finance the provision of: (a) 715 inf ill One hudred sixteen loans were extended lots in the SEZ. The lots will be of 72 sq. m. with individual tobeneficiaries, ofwhich68hadreceiv- water, sanitation, and electricity connections; and (b) 750 lots ed the total loan amount, other 38 fai- in Pasacaballas of which 300 will comply that conditions deter- lies had received only 50. of the loan uinated for the lots in the SEZ. The remaning 450 lots would amount* have access to nearby priary services. Resettlenent of families within the SEZ would involve a total of about 730 dwellings, half presently outside the project area nearer the lagoon and the other half an sites for future streets and conunity facilities within the project area. The families to be relocated would be provided with a loan averaging about US$685.00 for construction of a daelling. 6. C UNWITY FACILITIES Five community development centers (CDV's) would be constructed Four CD's ham been built and equipped and equipped to provide services to about 20,000 persons in the by ICr. One of them is located in dow- SEZ and about 10,000 in Pasacaballos. The CDV's will provide tow Pasacaballos. The CDV designed for physical facilities in an integrated complex for the delivery of: the sector No. 4 of the SZ has not been (a) education, a 5-classroom priasry school catering for 400 built because it ws decided to improve students in two shifts. These schools would also be used for other existing community facilities which adilt edication and literacy prograns; (b) health, an urban were providing adequate counal services health center capable of serving up to 30,000 persons; (c) voca- in the area. Physical facilities, equip- tional training, an enplaynent unit which would aim to improve ment and services supplied for CDVIs the skills of wofrkers and managrial coopetence of snall entre- operations are in complian with the preneurs in the area. SENA would provide the training and the standards of the First Urban Project. technical assistance. The transference of the CLY's to the agencies had been delayed becaus legal Designs for these programs would follow national standards which restrictions to apply bugets for mainte- were appraised and agreed to under the first urban project. The nance (se text). CDVI's would be constructed and equipped by ICT and transferred to the agencies who will be responsible for delivery of the serv- ices. 7. PROJECr MANAMM The project would strengthen the impleFentation capacity of par- AlthouD it had son measure of success, ticipating agencies, develop a mnitoring capability within ICT/ staff dunges, fiancing and adnistra - Cartagena, and conduct an ongoing evaluation of project activi- tive problems have had negative effects ties. The project managemnt structure within ICr/Cartagena on this cono.ent (see text). wbuld consist of a technical director, a director of social ser- vices, and a director of evaluatiei, with the decessary support- ing staff. The local field staff for each CiV wcnPcd consist of a coordoipator of CDV operations, a siaol enterpises pronter, two promsters ftor the cotmanity action public services program, and a social worker. 40 TABLE 1 (cont.') 8. TECHNICAL ASSISME Cadastral Iproveents and Municipal Fiscal Planning This subcomponent will support the purchase of surveying equip- IGAC had received from ICr the survying nent and vehicles under a five-year program to which IGAC will equipment and vehicles. IGAC Lowleted contribute technical and administrative staff. During 1979, IGAC the assessments of the properties includ- would survey and establish assessments for about 12,000 proper- irg the municipal properties within the ties in the project areas. All aumncipal properties including SZ, but it was done behind schedle. those in the SEZ would b placed on the sane footig by 1982. longperiods ofdelayoccurredd(ringthe The citywide re-,evaluation vas sd*&le for 1983. emoutih n of this oonet (dies ainly to coordination problems). Study for inicipal Finance and Paning in Cartagena The study would: (a) assess the perforunnce of the tax systen The study has been done and its reconmen- and recomend improvnents in coverage, collection, and advirns- dations are currently being implenented tration; and (b) establish criteria for determining appropriate by the municipality. neans of financing city activities and of preparing and updating capital budgets. Studies carried out in the Project Area and its Environs Water Trunk Main Study This study will refine estinates in the 1974 Water Master Plan of The study was conpleted as stipulated in the appropriate dianeter of the trunk imn serving the SEZ, the Appraisal Report. including the preparation of final engineering designs and con- tract docunents. Internediate Sanitation Study This study would examine the applicahility of internediate sani- The study has recomended the use of tation neasures in those areas in which waterborne serage sys- septic tanks to be followed by aiall bore tem will not be installed in the near future. sers to carr out the settled effluent. A 1 1/2 inches dianeter pipe is recamended for sewer lines located along ae side of the street. Inplenn- tation of findings is still undefined (see text). Sewage Treatment Study A third study, wo1d deal with the treatnent of semge now dis- As Indicated in Project Files, it appears charged directly into the lagoon from a large part of the city. to be that the recimendations of this The study would assess mDre broadly the feasibility of alterna- Study wre not based on a omprehensive tive treatnent system, carry out field trials, and prepare evaluation. engineering designs and contract docnmnts. Alcantarillado Sin Arrastre de Solidos - ASAS was considered a very important elenent in reducing health hazard. It is still to be inplented on a large-scale basis. Study of Proposals for Works at la Boquilla This study would establish what nodfications, if any, to designs The final report of the Center for Ocean- for stabilization works are required to ensure stable flows ographic and Hydraulic Investigations of throug* the connecting dannel and thereby to regulate nore sys- the Na, cocludes that the risk of tevatically the water levels in the lagoon and provide protection flooding of the newly-filled areas (be to agginst flooding of the newly filled areas. water levels in the Cienag is low (a probability of less than 1 in 50 years. 41 ILBIA TAE 2 S!E (CAl@~) URBAN EVW R HECr NLan 1694-D) HR cr osms (Col.'000 pesos) Actual Civil Wok Item Estimated Pasacaballos SEZ Total % of Total Differene A. Land filling 156,300.00 - 466,236.40 466,236.40 15.36 3)9,936.40 B. Street drainge 174,300.00 33,140.70 709,280.00 742,420.70 24.45 568,120.7-. C. External drainage 244,400.00 - 459,233.50 459,233.50 15.13 214,833.50 D. Utiity infrastructure 243,000.00 50,065.40 721,150.20 771,215.60 25.40 528,215.60 E. Icr loans 502,700.00 - 142,524.50 142,524.50 4.69 (360,175.50) F. Cmnanity facilties 226,700.00 20,500.00 206,579.70 227,079.70 7.48 379.70 G. Project mnagenent 52,400.00 - 123,122.30 123,122.30 4.06 70,722.30 H. Technical assistance 31,500.00 - 41,190.80 41,190.80 1.36 9,690.80 I. Design and supervision n.a. - 63,008.20 63,008.20 2.08 63,008.20 1U=rAL P æSr 1,631,300.00 103,706.10 2,932,325.60 3.,036,031.70 100.00 1,404,731.70 42 ODUIMIA TABIE 3 SEMOOD (CARTAG ) URBAN DEVELO W PRCECT (loan 1694-0)) C"lPARISONS BE1MEN ACTUAL AND PROJECIED MAJOR WORKS Actior- WORK QUAflTIES (cubic neters) Planned Hidroes udios ICr's Revision Ratio Civil Works Description Estination April 1982 % L1ND FILLING Within blocks 821,250.00 1,965,258.00 239 Streets grading 254,450.00 188,424.00 74 Total 1,075,700.00 2,153,682.00 200 STREE R lEAINAGE Excavations 56,963.00 105,116.00 185 Filling (ditches, trenches) 136,157.00 123,528.00 91 Concrete 26,480.00 26,096.00 99 Excavations 40,576.00 78,423.00 193 STORM IAINAGE CANAIS Filling and compacting 79,024.00 140,369.00 178 Concrete 17,074.00 20,295.00 119 43 0I0MIA TABIE 4 SEM (CAR AM) BAN DEVEWIMEr PRWEM (loan 1694-0)) CONRACT UNIT PRICES FOR SELECED CIVIL WORKS Unit Prices classified by sone contracts (Colonbian Pesos) Contract Contract Contract Contract Contract Contract Civil Work Iten 451/80 453/80 454/80 455/80 407/81 423/82 USS UsS Uss UsS usS Excavations - 40.00/mu3 40.00/m3 49.50/m3 - 211.00/m3 Filling muterial, supplied fran: "Nuevo Boaque" quarry 95.00/m3 140.00/m3 109.20/ma3 100.26/m3 240.00/m3 195.00/m3 "Tlrbaco" quarry 170.00/m3 180.00/m3 210.60/n3 200.00/m3 450.00/n3 295.00/m3 Conforned filling 15.00/M2 44.00/m2 8.00/m2 9.75/m2 40.00/m2 20.00/m2 Compacted filling 24.00/u2 20.00/m2 24.80/m2 - 30.00/m2 20.00/n2 44 COLOMBIA TABLE 5 SECOND (CARTAGENA) URBAN DEVELOPMENT PROJECT (Loan 1694-CO) CONSTRUCTION COST INCREASE Appraisal estimate Actual construction of price escalation cost increase (%) Consumer pricea/ Year % ICT indices, estim. indices (%) 1977 - 29.15 - 28.38 1978 18 28.8 - 18.78 1979 16 15.44 - 28.8 1980 14 26.67 - 25.93 1981 12 - 26.0 26.33 1982 12 - 26.5 24.06 1983 12 - 27.0 16.64 1984 - - n.a. 18.28 1985 - n.a. 0 1986 - n.a. 48.71 a/ Banco de la Republica, Magazines 45 COLOMBIA TABLE 6 SECOND (CARTAGENA) URBAN DEVELOPMENT PROJECT (Loan 1694-CO) FINANCING ARRANGEMENTS (figures in millions) Actual Appraisal Planned Arrangements Financing Arrangements Entities Col$ US$ % COT$ % National government 479.2 10.3 29 1,612.0 53.0 IBRD Loan 1694-CO 618.8 13.5 38 956.5 31.5 IDB grant 84.3 2.0 6 107.5 3.5 ELECTRIBOL 35.1 0.7 2 0.0 0.0 Local Government 26.5 0.5 1 0.0 0.0 EPM-C 11.1 0.2 1 0.0 0.0 ICT 376.3 8.1 23 360.0 12.0 TOTAL 1,631.3 35.3 100 3,036.0 100.0 46 00milBIA TABLE 7 SECND (CAlRGENA) URBAN DEVELlENM PRJECT (Loan 1694-00) EIM0KC ANALYSIS 1 2 3 4 5 6 7 8 9 10 11 Invest. in Units Avg. yrly Total prj. Col 10 Invest. 1986 prices laprv. by incre. rnt gross Tot. prj. less in Curr. % of Infl. (Col$'000) Project per unit benft. net bnft. Wtr elec. Col$'000 Infla. FCIR (3k5) (Number) (Col$) (Col$'000) (Col$'000) & om fac. 1 1977 19,713 28 8.36 164,852 - - - (164,852) (110,451) 2 1978 87,830 19 6.75 532,236 - - - (532,236) (356,598) 3 1979 74,720 29 5.47 366,515 - - - (366,515) (245,565) 4 1980 195,500 26 4.29 837,826 - - - (837,826) (561,343) 5 1981 372,535 26 3.40 1,267,079 - - (1,267,079) (848,943) 6 1982 293,297 24 2.72 797,372 1,000 38,400 38,400 (758,972) (495,840) 7 1983 474,277 17 2.25 1,067,608 2,000 38,400 76,800 (990,808) (638,497) 8 1984 457,722 18 1.92 877,197 4,000 38,400 153,600 (723,597) (434,122) 9 1985 592,343 18 1.62 962,025 7,000 38,400 268,800 (693,225) (375,757) 10 1986 468,205 49 1.25 582,915 8,000 38,400 307,200 (275,715) ( 83,353) 11 1987 74,556 11,000 38,400 422,400 347,844 372,447 12 1988 74,556 11,000 38,400 422,400 347,844 372,447 13 1989 74,556 11,000 38,400 422,400 347,844 372,447 14 1990 74,556 11,000 38,400 422,400 347,844 372,447 15 1991 74,556 11,000 38,400 422,400 347,844 372,447 16 1992 74,556 11,000 38,400 422,400 347,844 372,447 17 1993 74,556 11,000 38,400 422,400 347,844 372,447 18 1994 74,556 11,000 38,400 422,400 347,844 372,447 19 1995 74,556 11,000 38,400 422,400 347,844 372,447 20 1996 74,556 11,000 38,400 422,400 347,844 372,447 21 1997 74,556 11,000 38,400 422,400 347,844 372,447 22 1998 74,556 11,000 38,400 422,400 347,844 372,447 23 1999 74,556 11,000 38,400 422,400 347,844 372,447 24 2000 74,556 11,000 38,400 422,400 347,844 372,447 25 2001 74,556 11,000 38,400 422,400 347,844 372,447 26 2002 74,556 11,000 38,400 422,400 347,844 372,447 27 2003 74,556 11,000 38,400 422,400 347,844 372,447 28 2004 74,556 11,000 38,400 422,400 347,844 372,447 29 2005 74,556 11,000 38,400 422,400 347,844 372,447 30 2006 74,556 11,000 38,400 422,400 347,844 372,447 Col. 3: Investment costs as per Table 9. IR =O.2% 4.0% 5: Adjustnent factor based on Col. 4. 6: Investment adjusted to 1986 prices and including 1% maintenance cost. 7: No. of houses in project area benefitting from project works in the SEZ and Pasacaballos. 8: Overall average annual incremental benefit attributable to project woks. 10: Net benefit stream if all project costs are considered but benefits for water and electricity and comuinity facilities are not included. 47 COLOMBIA TABLE 8 SECOND (CARTAGENA) URBAN DEVELOPMENT PROJECT (Loan 1694-CO) ALLOCATION OF LOAN PROCEEDS (Figures in US$) Re-allocation Loan Agreement of Loan Amendment CATEGORIES August 31, 1979 July 29, 1983 June 25, 1985 1. Civil Works (a) Land filling 600,000 1,385,000 1,343,000 (b) Other 6,900,000 8,539,000 8,521,000 2. Equipment and furniture of CDV's 350,000 272,000 166,000 3. Credit program 3,425,000 2,247,000 100,000 4. Project management 350,000 337,000 106,000 5. Technical assistance and training 275,000 220,000 177,000 6. Unallocated 1,600,000 500,000 - Subtotal 13,500,000 13,500,000 10,413,000 Cancellation - - 3,087,000 TOTAL 13,500,000 13,500,000 13,500,000 48 COLOMBIA TABLE 9 SECOND (CARTAGENA) URBAN DEVELOPMENT PROJECT (Loan 1694-CO) PROJECT COSTS BY YEARS Project InvestmentsZ/ Exchange rateb/ Project investments per year computed to per year Year Col'OOO pesos June 30, e. vear US$'000 equivalent 1977 19,713 36.5 540,082 1978 87,830 38.87 2,259,583 1979 74,720 42.71 1,749,473 1980 195,500 47.32 4,131,445 1981 372,535.4 54.18 6,875,884 1982 293,296.6 63.84 4,594,244 1983 474,276.6 78.51 6,040,970 1984 457,722.4 99.4 4,604,853 1985 592,343.3 140.73 4,209,076 1986 468,205.2 195.00 2,401,052 TOTAL 3,036,142.5 - 37,406,665 a/ See Chart No. 1 b/ Banco de la Republica 49 COLOMBIA TABLE 10 SECOND (CARTknENA) URBAN DEVELOPMENT PROJECT (Loan 1694-CO) PROJECTED AND ACTUAL SCHEDULE OF DISBURSEMENTS Accumulated disbursements - US$ M Appraisal Actual Quarter ending Estimate Total September 30, 1979 0.9 0.0 December 31, 1979 1.2 0.0 March 31, 1980 2.0 0.0 June 30, 1980 3.0 0.0 September 30, 1980 3.9 0.0 December 31, 1980 4.8 0.0 March 31, 1981 5.7 0.0 June 30, 1981 6.5 0.9 September 30, 1981 7.3 0.9 December 31, 1981 8.1 0.9 March 31, 1982 8.9 1.8 June 30, 1982 9.6 1.8 September 30, 1982 10.3 2.7 December 31, 1982 10.9 2.7 March 31, 1983 11.5 3.2 June 30, 1983 12.0 3.3 September 30, 1983 12.5 3.4 December 31, 1983 12.9 3.4 March 31, 1984 13.2 3.4 June 30, 1984 13.5 6.0 September 30, 1984 - 6.3 December 31, 1984 - 6.5 March 31, 1985 - 6.8 June 30, 1985 - 7.0 September 30, 1985 - 7.5 December 31, 1985 - 8.0 March 31, 1986 - 8.3 June 30, 1986 - 8.7 September 30, 1986 December 31, 1986 Closing Date 12/21/84 12/31/85 Total amount cancelled was US$4,772,009. 1 <a R i -------------------- - - - -- - - - -2-- -- -- - - ------------ - g----------~----0 F2- li tie3 ~ 2~ii~313iÄI13i1 3 ~~2 2o 0Q2Q23332 '1~ 2 31131 as !1111¼o e1aÉ x1 e 1I3 C01.OMBIA . 3UUn * . nm M s2-mi *.ngoN PROGMtMACION DE OBRAS E INVERSION om.s o-- | ~~ o 1 l 1 sii 1no o am 1 1. 21222222222. 1 1 2 I L2acoesj 11 2 2 f1jn222 222 225o2n22222222225221222 12 21 2 22222sa922 22 22222 no 121 1502220.2222 202 225 22,s 22 !b 2 24 o102 5 22 99 22 2 22 22 2922222 22222T2505T20 T1 - - -2 - - 2 2 2' ×22.22 b 1 222252221 1222|2 522L22 222222.~ 22: I| | 202202F Li _L22 114.,-,, 290552222222222 22225222 222 1 w+i1 ' - IL f -．国国．.n加6醜m昭園召馴 coLoMBI^ ...I.&..．。に豊器農申一助一～~ PRoGRAM^cloNDEoB.^sE.NvERsloN --－農狙お認ご一 馴て -IBRD 19" COLOMBIA CARTAGENA URBAN IMPROVEMENT PROJECT LAND FILL AREAS S.~ 2 S.o., 3 --------------- ---------- 1sQ, N. Fýl RTE k L 5 T CARTAGENA M IE L..d F,11 B-do,y i F-,. P-ph~! R..d (.p- A,,- R-d Nd. ft S.ledlý V.h'"I., S'_, M- Pýd-,- St~1, E-l,ng M.,., M-,,p.l R-d Ne.9hl,,,h-d Sq-~ A,- f., C...-,, F-fit.., ýEl,iEZUELA Opýn A,... E--1 D-..,e 0-11ký1 I. b, C.n.l-d G-N. E -1., 1. bý P-d Bý." ýl, A- R.h.b,k.l..n Z- .il-, A- C-e-1.- Z- 0 2?0 4?0 ó?0 800 1000 A- -d.,y J s f Bl. METERS .ýýd.,y . L-d T-,fe, I. E--t.ý, A,-y 0 2 3 0 iopo 2ý00 3ý00 ...... FEET -ES .UGUS, '986