Mexico - First Urban Transport Project

 ICRR 10458 Report Number : ICRR10458 ICR Review Operations Evaluation Department 1. Project Data : OEDID : OEDID: L2824 Project ID : P007615 Project Name : First Urban Transport Project Country : Mexico Sector : Urban Transport L/C Number : Loan 2824-ME Partners involved : Prepared by : Antti P. Talvitie, OEDST Reviewed by : Hernan Levy Group Manager : Gregory K. Ingram Date Posted : 08/19/1999 2. Project Objectives, Financing, Costs and Components : Objectives : There were three objectives: (i) improve the quality, accessibility, and effectiveness of urban transport; (ii) rationalize tariff policies, improve the financial and economic viability and sustainability of urban transport investments, and encourage private sector participation; (iii) preserve and maintain (transport) infrastructure investments; and (iv) at local and national levels, to strengthen the capabilities of institutions engaged in urban transport. Components : (a) Corridor Improvements --road construction (including one toll expressway ), road widening, busways, intersection improvements (36% of costs); (b) Public Transport Improvements --studies and technical assistance (TA) for bus system management, tariffs, public transport plans and bus maintenance facilities (including equipment); a line of credit for private sector to procure buses (37% costs); (c) Road Maintenance --deferred maintenance investments and TA for development maintenance management programs (21% costs); (d) Traffic System Management (TSM) --TA for TSM studies and implementation of resultant traffic management measures to optimize use of existing traffic facilities (5% costs); (e) Institutional Development Program --TA to (i) assist project management and supervision, (ii) strengthen local agencies in the sector and (ii) commence systematic urban transport planning and preparation of investment programs in cities in Mexico (1% of costs). Costs and Financing : The project costs were US$144 million (US$294.9 million at appraisal). The project was supported by a Bank loan for US$125 million, of which US$34 million was canceled in 1992. The loan was approved May 1987 and closed in June 1998, two and half years later than planned at which time the remaining balance of US$ 0.5 million was canceled. Project costs were affected by a significant devaluation of the peso . 3. Achievement of Relevant Objectives : The objectives were partially achieved . The success in implementing the corridor and TSM improvements was mixed. The major corridor investment (La Venta Chamapa Toll Expressway ) did not yield its anticipated benefits . No comprehensive TSM plans were implemented . However, several lesser corridors and specific TSM works improved travel speeds, increased accessibility by road and public transport, and provided studies for implementation by the municipalities (after decentralization). Road maintenance investments were appropriate and conserved road infrastructure. Public transport improvements were marginal . No route rationalization took place, nor were improved tariff policies instated to improve bus companies financial viability or private sector participation . Finally, several studies were successfully completed but not implemented . Significant loan reallocations were accepted to repair road damages from Hurricane Gilbert; in response to transport related air pollution crisis in Mexico City; and in response to the private bus operators' lack of interest to utilize the line of credit to procure buses . These reallocations were successful . Hurricane damaged streets were repaired in Monterrey, air pollution control equipment was acquired and enabled sustained monitoring, and 2800 'clean' engines were procured for buses . Technical assistance had positive long term effects for professional development and these beneficial effects are now felt in urban transport operations in Mexico and specifically in the ongoing Bank loans . 4. Significant Achievements : Significant economic, political, and technical changes took place during the project's 11 year long implementation. These changed priorities and investment needs . Consequently, the project's most significant achievement is the borrower's understanding of the importance of urban transport planning as a continuous activity that needs a competent institution to develop both the major investments and TSM actions, and their financing plans . The project also adapted to changing circumstances in a manner that provided real benefits to the users and urban residents . 5. Significant Shortcomings : The significant shortcoming of the project was institutional . This was identified at appraisal. At the outset there was no focal agency with sufficient political oversight and power and professional expertise to coordinate the implementation of project components and the several involved agencies representing different political jurisdictions . In retrospect, the line of credit element in the Public Ttransport Improvements component would have merited a more comprehensive appraisal. 6. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Satisfactory Satisfactory Institutional Dev .: Partial Modest No difference or disagreement. ICR and OED scales are different. Sustainability : Uncertain Likely The sub-projects implemented are being sustained. Institutional changes are taking hold: decentralization; metropolitan wide planning; improving institutional framework and professional capacity for comprehensive urban transport planning; and, sustained air quality monitoring . Bank Performance : Satisfactory Satisfactory Borrower Perf .: Satisfactory Satisfactory Quality of ICR : Satisfactory 7. Lessons of Broad Applicability : There are two generic lessons . First, urban transport evokes strong political interests . It is essential that these political interest are woven into the implementation plan, either in terms of the duration of the project or, preferably, as an oversight body to a professional metropolitan transport planning organization (which may have to be created ) and allowing for flexibility in the project (by means of an APL loan instrument, for example ). Second, the viability of lines of credit for (private) bus operators requires careful consideration of numerous issues --pollution control, tariff policies, integration with existing fleet, sources of alternative finance, bus suppliers and so forth -- for it to be attractive. Nonetheless, the lines of credit approach is preferred to lending for outright procurement of buses . 8. Audit Recommended? Yes No Why? The project together with its successor projects can provide useful lessons to tackle the provision of urban and urban public transport and its externalities, especially air pollution . 9. Comments on Quality of ICR : The ICR is a thoughtful and honest assessment of the project . It admirably and fairly sorts out the complex web of interrelationships that affected the project's implementation .