Colombia - Bogota Urban Transport Project

Public Disclosure Authorized Document of The World Bank FOR OFFICIAL USE ONLY Report No. P-6678-CO MEMORANDUM AND RECOMMENDATION Public Disclosure Authorized OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN Public Disclosure Authorized IN AN AMOUNT EQUIVALENT TO US$65 MILLION TO THE CAPITAL DISTRICT OF SANTAFE DE BOGOTA WITH THE GUARANTEE OF THE REPUBLIC OF COLOMBIA FOR A BOGOTA URBAN TRANSPORT PROJECT Public Disclosure Authorized April 26, 1996 Department III Environment and Urban Development Division Latin America and the Caribbean Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS As of June 21, 1995 Currency Unit = Peso Colombiano (Col$) US$1.00 = Col$875.59 COL$1 = US$0.00114 FISCAL YEAR OF GOVERNMENT OF COLOMBIA January 1 to December 31 WEIGHTS AND MEASURES Metric System ABBREVIATIONS DACD Departamento Administrativo de Catastro Distrital (Bogoti District, Cadaster Department) DAMA Departamento Administrativo del Medio Ambiente (Bogota District, Department of the Environment) DAPD Departamento Administrativo de Planeaci6n Distrital (Bogota District, Planning Department) DATT Departamento Administrativo de Transporte y TrAnsito (Former District Department of Transport and Traffic) "District" Local Government of the Capital District of Santafe de Bogota DNP Departamento Nacional de Planeaci6n (National Planning Department) EDTU Empresa Distrital de Transporte Urbano (District Public Transport Company) FONDATT Fondo de Seguridad Vial del DATT (Traffic Safety Fund) GOC Government of Colombia IDU Instituto de Desarrollo Urbano (BogotA Urban Development Institute) IGAC Instituto Geografico Agustin Codazzi (National Geographic Institute and Cadastre Agency) INTRA Instituto Nacional del Transporte (National Transport Institute) SOP Secretaria de Obras Publicas (District Secretariat for Public Works) SHB Secretaria de Hacienda de Bogota (District Finance Secretariat) STT Secretaria de Transito y Transporte (District Secretariat for Traffic and Transport) UNDP United Nations Development Programme  FOR OFFICIAL USE ONLY COLOMBIA BOGOTA URBAN TRANSPORT PROJECT LOAN AND PROJECT SUMMARY Borrower: Capital District of Santafe de Bogota Guarantor: Republic of Colombia Beneficiaries: Instituto de Desarrollo Urbano (IDU, Bogota Urban Development Institute), Fondo de Seguridad Vial del DA TT (FONDATT, Traffic Safety Fund), Fondo Vial Distritalde la SOP, (Public Works Secretariat), Secretariade Haciendade Bogotd (SHB, District Finance Secretariat), and Departamento Administrativo del Medio Ambiente (DAMA, Bogota's Department of Environment) Poverty Category: Program of Targeted Interventions: Component A investments widen corridors connecting several poor areas to employment centers and mainly aim to improve bus flows in these corridors. The access road program under component B is targeted at poverty areas and would provide about 630,000 low-income residents with easier access to the urban transport system. The poor are also expected to benefit from employment generated by project investments (about 5,000 person- years of unskilled labor) Loan Amount: USS65.0 million equivalent (including up to USS4.0M to be financed retroactively) Terms: 17 years, including four years of grace, at the Bank's standard variable interest rate for currency pool loans. Commitment Fee: 0.75% on undisbursed loan balances, beginning 60 days after signing, less any waiver Financing Plan: See Schedule A Environmental Classification: B Economic Rate of Return: The corridor component (about 57% of total investment), has an estimated internal economic rate of return (IERR) of 20%; the access roads component (about 10% of total investment) has an IERR of 12% and the maintenance component (about 27% of total investment) has an IERR greater than 50% Staff Appraisal Report: 14901-CO Project Identification Number: CO-PA-6872 Map IBRD No. 22937R 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 widiout World Bank authorization.  MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE IBRD TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE CAPITAL DISTRICT OF SANTAFE DE BOGOTA WITH THE GUARANTEE OF THE REPUBLIC OF COLOMBIA FOR A BOGOTA URBAN TRANSPORT PROJECT 1. I submit for your approval the following memorandum and recommendation on a proposed loan to the Capital District of Santafe de Bogota with the guarantee of the Republic of Colombia for the equivalent of US$65.0 million to help finance the Bogota Urban Transport Project. The loan would be at the Bank's standard variable interest rate, with a maturity of 17 years, including four years of grace. 2. Country and Sectoral Context. Colombia's economic growth rate of about 3.7% over the past decade is among the highest and most stable in the region. Toward the end of the last decade, the Barco administration (1986-1990) tried to maintain this momentum through several reform initiatives aimed at promoting free trade, greater domestic competition, and privatization. The Gaviria government continued these policies during its 1990-1994 term with various trade- liberalization and privatization actions and a movement toward local government reform with greater decentralization to regional and local authorities. The Samper government which followed is now trying to focus upon both a continuation of such policies and ways of ameliorating any negative impact they may have upon the poor. 3. Over the last decade, several legal, financial, institutional and other such actions were taken by different administrations to decentralize the provision of many basic services and end or reduce the role of centralized institutions in these areas. At the same time, steps were being taken by the central government to ensure that there were appropriate tools to monitor performance of decentralized systems in order that minimum performance levels and standards were being maintained. The process of transferring functions and resources and matching these with appropriate institutional and legal arrangements has not been without difficulties; some of the major problem areas involve delegation of implementation responsibility without accompanying these with appropriate human or financial resources, overlapping or unclear jurisdiction, and disruptive staff turnover due to low salary levels and political changes, especially at the managerial level. Even in those cases where privatization can be seen as a natural complement to local government decentralization, the availability of appropriately skilled personnel to review municipal operations adequately and to oversee the privatization process, monitor compliance and perform related functions, pose problems for many municipalities. Both the Bank and the Colombian Government are aware of the nature and extent of the issues involved and steps are being taken to help address them through institutional reform and such projects as the Public Sector Reform Project, Loan 3278-CO and the Public Financial Management Project, Loan 3669-CO. 4. Urban Transport. Over the past decade, the transport system in Colombia has had several comprehensive institutional and policy changes. The current framework is the result of the reforms of 1993 aimed at decentralization of the system. Until 1987, urban transport, at the national level was the responsibility of Colombia's Ministry of Public Works and Transport acting through its National Transport Institute (INTRA) which, among other things, licensed and supervised urban bus and taxi services and established their fares. Decrees 80 of 1987 and 1066 of  -2- 1988 transferred these responsibilities to local governments and redefined INTRA's role in urban transport as that of a normative entity. During 1993, as part of the reorganization of transport agencies (Decree 2171), INTRA was disbanded and its responsibilities transferred to the Ministry of Transport which today has the role of a regulatory and normative national entity. Except for deciding inter-municipal routes, which is the responsibility of the Transport Ministry, the Santaf& de Bogota District Government now has the primary responsibility for urban transport in the city. 5. Santaf6 de BogotA has a population of 6.5 million, 16% of Colombia's total. It is a major contributor to the country's economy, accounting for about 25% of the value added in manufacturing nationwide and 35% of the domestic production of services. The city has experienced a steady north-south expansion between the floodplain of the Rio BogotA in the west and mountains in the east. Spatial incongruence between economic activity centers and residential areas, along with a deteriorating network system, results in complicated commuting patterns and is one of the primary causes of the worsening transport problems which Bogota presently faces. 6. Public transport is very important to the city, with private buses and minibuses accounting for about 77% of all passenger trips. The city provides no subsidy to operators who set their fares within guidelines established by the city. Bus fare regulations were reformed in 1990 to encourage the development of services responsive to demand and to promote fleet renewal. Recent trade liberalization has eliminated non-tariff restrictions on imported vehicles and spare parts and contributed to a 7- 8%annual growth in the car fleet since 1985. Traffic conditions have deteriorated with no perceptible differences between peak and non-peak hours on most arterial streets and congestion throughout the existing network system. Traffic management and road maintenance have been underfunded and poorly planned and rush-hour speeds are currently below 10 kph in several major corridors. Congestion undermines the efficiency of the urban economy and results in high human and environmental costs, especially for the poor, many of whom live in distant settlements in the hilly outskirts of the city with rudimentary transport infrastructure and poor service quality. 7. The District has comprehensive responsibilities to plan, finance and manage its transport system. The Secretariat for Traffic and Transport (STT), created in 1990 by expanding the functions of the former Department for Traffic and Transport (DATT), is responsible for traffic management, traffic law enforcement and the supervision of public transport. STT's investments are executed through a decentralized fund (FONDATT) which is financed by user charges, including traffic fines and vehicle and driver license fees. The Public Works Secretariat (SOP), and its decentralized investment fund (FOSOP) maintain public facilities, including roads and parks. The Urban Development Institute (IDU) is responsible for the execution of road investments and recovers these costs from betterment levies. In the past, these agencies have operated in a disjointed manner in the absence of formal mechanisms to ensure strategic planning and consistency of their programs and to order investment priorities within the sector. 8. Since taking office in January 1995, the present Mayor has proposed a short and medium-term transport strategy for the District which aims to: (a) restructure the institutional framework to make it more accountable and responsive to sector needs; (b) optimize the capacity and use of existing infrastructure facilities through traffic management and focusing on major transit corridors; (c) target new investments toward removal of bottlenecks and improvement of access to low-income areas; (d) promote public transport by giving buses adequate facilities including separating bus and car flows where appropriate; (e) use normative and regulatory  -3- powers as tools to promote greater sector efficiency; and (f) promote the participation of the private sector in concessions such as BOTs for the design, construction, operation and maintenance of mass transit projects, parking facilities, and expressways. 9. One of the basic themes of the present Mayor is that the low sense of civic pride and community responsibility in the District contributes to the current chaotic and poor condition of the system. To address this concern, he has initiated several programs involving citizen participation, public education and awareness campaigns and he has also appointed technical experts to review urban transport sector operations, including institutional changes which are aimed at strengthening the strategic planning capability of the District. Initial steps have also been taken to elicit the opinion of various affected groups, including unions as well as the City Council which has to approve such changes; eventual decisions on institutional changes are likely to take time even though the initial review work is already underway. In response to his call for a fuel surtax to help finance system renovation and maintenance, the Council approved a 13% tax in November 1995 which would reach 15% over the next two years. 10. The proposed project has been formulated so that its successful implementation would not depend upon the outcome of the reforms currently under consideration. The existing institutions, especially IDU, have a well-established capability and competence in implementing urban transport investments. If some reform measures are enacted while the project is under implementation, the modular nature of the components and their focus on basic improvements to the system would make them compatible with any reforms being considered. 11. While the Capital District of Santafe de Bogoti has always enjoyed a special status as Colombia's capital, in July 1993, the National Government issued a decree, Decree 1421, establishing a special regime for the District. This decree also assigned various responsibilities within the District and provided greater executive control to the Mayor. It also allowed the District to use a wider range of revenue-raising instruments, such as gasoline surtaxes, road tolls, and betterment levies. 12. With transfers from the national government accounting for only about 10% of revenues, the District has a level of fiscal autonomy matched by few municipalities in the region. Taxes on commerce and industry, property, beer sales, and an annual stamp tax on cars are among its major revenue sources. Over the last decade the District's financial situation had been negatively affected by inflation, high administrative costs and poor revenue collection. However in 1991, corrective measures were taken to cut costs, including workforce reductions in the solid waste company and disbanding of a public transport company. These measures also improved the District's revenue base, mostly through collection of overdue tax payments, billing of betterment levies and use of a system of annual property revaluation by owners which has helped to reduce the negative effects of inflation. Total revenues for 1994 were about US$564 million (almost twice that of 1993), of which Central Government transfers comprised only US$81 million. Revenue available for investment in 1994 was about US$200 million. However, investment and maintenance needs exceeded this figure by almost US$85 million and helped in pushing the District to strengthen further its municipal finances and seek more funds for such investments, through such recent measures as the fuel surtax (paragraph 9), the funds from which are earmarked, inter alia, for transport investment and maintenance needs of the District.  -4- 13. Bank Strategy. Bank assistance is aimed at helping the Government to deepen and consolidate its structural reform initiatives; support greater private-sector participation; improve and maintain the infrastructure system and the delivery of and access to basic services, especially for the poor; address the degradation of the natural resource base and strengthen institutional capacity. The Bank has also had an ongoing dialog with the Colombian Government on improving mechanisms for identifying the poor and developing better systems for targeting assistance to them. Assistance is also being provided to help in the decentralization process and to get local government entities to efficiently respond to citizens' needs. 14. With respect to the District of BogotA, Bank assistance strategy focuses on the improvement, maintenance and delivery of basic services to all residents through appropriate sector reform measures aimed at removing institutional and related bottlenecks and enhancing social and economic development of the city. The proposed project would assist in improving operations in urban transport in a similar manner as the Santaf6 I Water Supply and Sewerage Rehabilitation Project, approved by the Board in November 1995, which is aimed at improving efficiency and overall operations of the municipal water company (EAAB). 15. Project Objectives. The Project is expected to: (a) make more efficient use of the street system by improving vehicle flows in a major transport corridor and upgrading environmental conditions for users; (b) promote the use of public transport and of non-motorized transport; (c) facilitate public transport access to low-income settlements; (d) extend the life of the road infrastructure; and (e) strengthen the institutions in charge of planning, managing and maintaining the city's transport infrastructure. Project implementation progress and achievement of project objectives would be measured against the key performance and impact indicators listed in schedule B, Tables 3 and 4. 16. Project Description. The project consists of a package of infrastructure investments along with complementary technical assistance and institutional support measures which would assist the District to address several key problem areas in the sector. The four components, which make up this package, are: (A) traffic management and transport corridors (57% of base costs); (B) access roads for low-income settlements (10%); (C) road maintenance (27%); and (D) institutional support measures (6%). 17. The Traffic Management and Transport Corridors component (A) comprises works, equipment, and consultant services to carry out corridor subprojects. Each subproject consists of an integrated program of least-cost investments, supported by administrative measures, to improve transport flows (including dedicated lanes for buses, car traffic and non-motorized transport) in major transit corridors and their areas of influence. The technical assistance includes: (a) a citizens' education program; (b) computers, software, equipment and vehicles (c) training of the traffic police and other transport sector professionals; (d) traffic count and transport surveys; and (e) assistance in transport planning and policy studies covering bottlenecks in current road design; non-motorized transport; public transport system; parking; traffic signals, and accident reporting and analysis.  -5- 18. The Access Roads component (B) includes designs, works and supervision to pave and upgrade roads of a total length of about 30 km to improve public transport access into various low-income areas, as well as support to IDU aimed at strengthening overall project- execution capabilities and financial planning functions. 19. The Road Maintenance works Component (C) comprises design, civil works and supervision for a program to repair or rebuild about 400 lane-km of both arterial and secondary roads used by public transport, including walkways, bikeways and green areas along the right-of- way of these roads; and planning, management and quality control of the rehabilitation program; development and implementation of a pavement information system; and development of standards and manuals for pavement design and maintenance. 20. The Institutional Support component (D) includes provision of equipment and professional services for (a) auditing, monitoring and coordination of the project; (b) development of an information system for investment budgeting and monitoring; and (c) upgrading of the tax collection system; technical assistance and training to help the District Department of Environment to develop and establish local environmental guidelines and regulations for such problems as noise pollution and safe disposal of tires, batteries and waste oil. It also includes technical assistance consisting of equipment and consulting services to support on-going sectoral reform to: (a) reorganize the transport authority; (b) define the functional organization and participation of the private sector; (c) implement the new sectoral organization; and (d) train professional staff 21. Project Cost and Financing. The total cost of the Project is estimated at US$141.0 million, including US$22.8 million for price and physical contingencies and US$16.7 million for import duties and taxes. The proposed loan of US$65.0 million would cover about 46% of investment costs; counterpart funds of US$76.0 million would be provided by the District through IDU, FONDATT, SOP and SHB. The Bank loan would cover 100% of the estimated foreign exchange cost and about 14% of local costs. Partial Bank financing of local costs is proposed to maintain a Bank financing presence in the following components with sizable local cost component (a) the labor-intensive access road program, which has a low foreign currency element but a strong poverty focus; and (b) the institutional support activities. 22. A breakdown of costs and the financing plan are shown in Schedule A. Amounts and methods of procurement and the disbursement schedule are shown in Schedule C. A timetable of project events and the status of Bank Group operations in Colombia are given in Schedules D and E. A map, and the Staff Appraisal Report No. 14901-CO are attached. Retroactive financing not exceeding US$ 4.0 million for eligible contracts procured after May 1, 1995 would be allowed. 23. Project Implementation. The District would be the borrower and its finance secretariat, SHB, would have overall responsibility for project implementation. IDU would execute components A and B with FONDATT responsible for the training and consultancy services of Component A; FOSOP would execute Component C. The District would execute Component D through SHB. 24. A project coordinating and monitoring unit has been established within the SHB. A coordinator has already been appointed. To assure timely implementation of the project, this unit will be fully staffed with technical/administrative support prior to loan effectiveness. It would have  -6- resources to contract on an as-needed basis, experts on legal, procurement and financial matters. Funds for Components A, B and C would be disbursed through SHB to FONDATT, IDU and SOP respectively. Technical assistance is included to ensure that these agencies would have sufficient capacity to discharge the above responsibilities. 25. Project agencies would use standard bidding documents issued by the Bank for ICB, and agreed with the Bank with respect to NCB. No force account works are included in the project. 26. Project Sustainability. The physical components of the project are accompanied by technical assistance to strengthen the ability of the District agencies in implementing transport projects. By the time the rehabilitation works on the street infrastructure are complete, SOP is expected to have in place a system and a program to ensure the appropriate follow-up actions over the long term. The current administration's commitment to carrying out institutional reform to strengthen the District's long-term planning and coordination capabilities in the transport sector is critical to ensure the capacity of the District to adequately meet future transport needs in the city of Bogota. The Bank is supporting these institutional reform initiatives within the proposed operation, through relevant diagnostic studies, equipment and technical assistance aimed at strengthening the new transport entity. An improved financial base for the municipality arising from new cost-recovery initiatives including a fuel surtax and annual updated property values for tax purposes, would also help it to continue to improve its services and maintain the existing infrastructure on an ongoing and systematic basis. 27. Lessons Learned from Previous Bank Involvement. Although the Bank has played a major role in the development of Colombia's inter-urban transport system, with cumulative lending of about US$887 million for 12 highway projects and about US$650 million for urban infrastructure projects, it has not previously financed an urban transport project in the country. While these projects are not directly related to the Bogota Transport project, the lessons of PCRs for the completed projects have been taken into account. The proposed project has been kept modest in size and scope to avoid implementation problems. It has also been prepared in such a way to allow for follow-up phases, should the need arise. Similarly, to avoid possible counterpart funding problems, the loan is relatively small and manageable. The experience of urban transport projects in other Latin American countries was also considered. The proposed project is similar in design to the First Urban Transport Project in Brazil (Loan 1563-BR). Lessons from sector experience in the region are that: (a) beneficiary agencies should mobilize resources to adequately fund the operation and maintenance of project facilities, and (b) institutional strengthening measures critical to achieving the project objectives should take place early in the project calendar. 28. Rationale for Bank Involvement. The 1993 Country Strategy Paper identified the need to address large-city congestion and included the Project in the FY93-FY96 lending program. Similarly, the Project is in accordance with the Country Assistance Strategy, presented to the Board on November 19, 1993, which highlighted the importance of responding to the need to upgrade urban infrastructure. The District has demonstrated its commitment to the project by its preparation effort and by the steps it has taken in its reform program and in seeking a fuel surtax to help finance maintenance works. The Mayor and other senior officials are keenly interested in having the Bank assist in the transformation of the sector and in providing guidance with respect to viable options. Dialogue between the District and the Bank during preparation resulted in stricter investment selection criteria and a stronger emphasis being placed on institutional and beneficiary feedback aspects than  -7- would have been the case without Bank involvement. Continued Bank support during execution would help maintain this emphasis. 29. Agreements obtained. Agreements were obtained during negotiations that: (a) the District and its executing agencies will carry out with the Bank, each year by June 30, a review of project progress and sector changes, and will implement to the satisfaction of the Bank any remedial actions agreed to during such reviews; (b) the District would maintain and adequately staff the Project Coordinating Unit in SHB; (c) IDU will carry out its access road component in accordance with the program which was accepted by the Bank; (d) the District via SOP will furnish to the Bank annually, its proposed road maintenance program (e) the District can enter into contractual agreements with other entities acceptable to the bank for the purposes of TA and procurement assistance; (f) bids shall not be invited for the access roads and maintenance works unless the Bank has satisfactory evidence that the works would not affect residents or vendors, or if it does, Bank resettlement/compensation policies are followed. A condition for loan effectiveness is the execution of the IDU, and FONDATT, subsidiary agreements on behalf of the District/SHIB and each of these institutions. Disbursement conditions are that there will be no financing under the loan for: (a) corridor subprojects under component A unless these are approved by the Bank; (b) expenditures for the road maintenance component (component C) unless the investments are included in annual programs approved by the Bank; and (c) expenditures for a public education program (Part A.2 (a)) unless the Bank approves an action plan for such expenditures. 30. Environmental Aspects. The project has a "B" environmental rating. Overall, it would have a beneficial impact on the environment. Traffic management investments would help relieve congestion, resulting in lower emissions of pollutants per vehicle. In the Calle 80 corridor emissions per vehicle would be reduced by an estimated 12%. The paving or resurfacing of roads would reduce dust pollution. The emphasis placed on public transport in the selection of project investments is expected to promote a more resource-efficient model of urban development. Non- motorized transport including walkways and cycling would be promoted. The project also includes technical assistance to help the District's Department of Environment strengthen its operations. Approximately 113 families and about 164 commercial units would be affected to varying degrees by the proposed road expansion works. A resettlement plan has been finalized for those affected by the Calle 80 works. This plan has been approved by the Bank and a copy has been placed in the Public Information Center. For the Calle 68 works, while the District was, in principle, willing to facilitate NGO-assisted relocation of about 155 street vendors (who were illegally occupying the sidewalk), the District was not willing to set a precedent by providing these vendors with access to alternative public space. The Bank and the District agreed to select alternative sites which do not have such vendor problems or if sites with vendors are selected, the District would prepare a resettlement/compensation plan which must be acceptable to the Bank. 31. Participatory Approach. In view of the impact transportation issues have upon both the urban and national economy, the Mayor has made special efforts to seek the active participation of a wide range of those affected. To this end, he has had meetings with various national officials, the city council, sectoral experts, the business community, public transport owners and operators, citizens and workers. Reconciling the diverse viewpoints and positions has not been an easy task but there are indications that most of those affected agree that the present institutional system is not fulfilling its mandate and it has to be modified. Similarly, there has been a consensus regarding the need to levy a fuel surtax to help meet the cost of maintaining street network. A fuel surtax of 13% was recently  -8- approved by the Council. For the access roads to low-income neighborhoods, IDU has had meetings with the residents regarding the program and it is currently working out with them their responsibility for maintaining these streets (e.g. cleaning debries and weeds) after they are improved. 32. Program Objective Categories. The project falls primarily under the basic infrastructure and urban development POC, with an added focus on the public sector management POC. The project would also have an impact on BogotA's urban poor through the emphasis placed on bus transport. In particular, component A investments aim to improve bus flows in corridors connecting poor areas to employment centers and the access road program in component B is targeted at poor urban areas. 33. Poverty Category. The access road program would provide about 630,000 low- income residents with an easier access to the opportunities of the city. Apart from providing more comfortable and quicker transport facilities, it is expected that the streamlined system would lead to greater competition, reduced fare and better overall service for users, especially those in poor neighborhoods who had to pay a premium because of inaccessible streets. The poor would also benefit from employment generated by project investments (about 5,000 person-years of unskilled labor). 34. Project Benefits. The project would help raise the productivity of the urban economy by alleviating infrastructure bottlenecks. Substantial direct benefits will arise from savings in travel time and vehicle operating and maintenance costs. While some of the non- quantified benefits would not be totally independent of the quantified ones (e.g. less accidents reduce delays and congestion), they are significant in their own right (i.e. pollution reduction from both vehicle emissions and paving of dusty access roads). Long-run institutional benefits are expected to result in the enhanced capacity of the municipal administration to manage the urban transport sector in a more systematic and integrated way. 35. The cost and benefits of the major project components (excluding component D, for TA) have been evaluated and the results are summarized in the table below. Corridors Access Roads Maintenance % of invest. evaluated 85% 80% 100% Net Present Value (US$M) 28 1 1,403 Internal Economic Rate of Return 20% 12% >50% Benefit - Cost Ratio 2.03 1.13 42.37 36. Risks. The main risks are possible delays in project implementation arising from (a) reorganization of sector institutions and (b) lack of adequate counterpart funding. The project is designed to address these risks in a number of ways. First, in an overall context, the new administration is fully committed to the project, this being one of the priority areas where the Mayor has already taken several key steps aimed at addressing various sector problems. The proposed institutional reform is currently at an early stage with detailed plans still to be formulated. It is envisaged that this reform would greatly benefit the long-term planning capabilities of the District in the transport sector. While there would be changes under such reorganization, they are not expected to affect most of the key current staff of the existing entities who would comprise the core staff of any new system. Additionally, since most of the tasks  -9- would be contracted out to private sector firms, many of the problems associated with force- account works should not arise. Project investments have been also kept to a modest scale, so that resource demands in terms of time and counterpart funds would not be great. Additionally, many of the TORs for such areas as traffic management and parking system reforms are expected to be substantially completed shortly and be ready by mid-1996. With regard to funding, the District is currently working to strengthen its cadaster system and to make its revenue base wider through more aggressive revenue enhancement measures and upgraded technology. Annual reviews would lead to timely actions to remedy any identified shortcomings. 37. Recommendation. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank and recommend that the Executive Directors approve it. James D. Wolfensohn President Washington, D.C April26, 1996  - 10 - Schedule A COLOMBIA BOGOTA URBAN TRANSPORT PROJECT ESTIMATED COSTS AND FINANCING PLAN Summary of Costs (US$ million)" % of Base % Component Local Foreign Total cost Foreign A. Traffic Mgt. and Corridors 34.4 23.4 57.8 56.9% 40.5% B. Access Roads 6.7 3.7 10.4 10.2% 35.6% C. Road Maintenance 14.9 12.5 27.3 26.9% 45.8% D. Institutional Support 3.0 3.1 6.1 6.0% 50.8% BASE COST 59.0 42.6 101.6 100.0% 41.9% Physical Contingencies 4.3 3.4 7.7 7.6% 44.2% Price Contingencies 8.7 6.3 15.1 14.9% 41.7% TOTAL PROJECT COST 72.0 52.3 124.3 122.3 42.1% Import Duties and VAT 16.7 0.0 16.7 16.4% 0.0/0 TOTAL INVESTMENT COST 88.7 52.3 141.0 138.8% 37.1% Financing Plan" ----- US$ MILLION---------------- % of Component A B C D Total Total District through IDU 44.1 7.8 51.9 36.8% SOP 21.4 21.4 15.2% FONDATT 1.0 1.0 0.7% SHB 1.9 1.9 1.3% IBRD 34.8 6.8 17.4 6.0 65.0 46.0% Total 79.9 14.6 38.8 7.9 141.0 100% I/ Numbxn may not exactly add up due to rounding.  ECONOMIC ANALYSIS Year Corredor Component Access Roads Com onent Road Maintenance Component Incremental Incremental Incremental Incremental Incremental Incremental Incremental Incremental Incremental Benefits Costs -Net Benefits Benefits Costs Net Benefits Benefits Costs Net Benefits 1995 0 2,641,950 (2,641,950 0 1,054,377 (1,054,377) 0 37,234 (37,234) 1996 0 12,236,950 (12,236,950 424,370 5,000,828 (4,576,458) 0 11,556,413 (11,556,413) 1997 0 9,695,700 (9,695,700 998,791 3,002,080 (2,003,289) 47,636,468 8,739,559 38,896,909 1998 0 8,852,100 (8,852,100 1,176,430 175,463 1,000,967 116,264,716 11,642,816 104,621,900 1999 0 333,165 (333,1651 1,206,993 175,463 1,031,530 159,785,334 1,836,114 157,949,220 2000 10,037,467 235,285 9,802,182 1,238,901 175,463 1,063,438 174,684,374 1,836,114 172,848,260 2001 10,389,799 235,285 10,154,515 1,272,226 175,463 1,096,763 191,374,701 1,836,114 189,538,587 2002 10,727,730 235,285 10,492,445 1,307,045 175,463 1,131,582 210,097,290 1,836,114 208,261,176 2003 11,055,943 235,285 10,820,658 1,343,439 175,463 1,167,976 231,126,502 1,836,114 229,290,388 2004 11,369,107 235,285 11,133,822 1,381,494 175,463 1,206,031 254,774,708 1,836,114 252,938,594 2005 11,661,478 235,285 11,426,193 1,421,301 175,463 1,245,838 281,397,559 1,836,114 279,561,445 2006 11,948,679 235,285 11,713,395 1,462,956 175,463 1,287,493 286,671,832 1,836,114 284,835,718 2007 12,230,922 235,285 11,995,637 1,506,560 175,463 1,331,097 292,617,311 1,836,114 290,781,197 2008 12,508,404 235,285 12,273,119 1,552,221 175,463 1,376,758 299,325,337 1,836,114 297,489,223 2009 12,770,284 235,285 12,534,999 J 1,600,053 175,463 1,424,590 306,899,848 1,836,114 305,063,734 2010 13,037,809 235,285 12,802,525 1,650,176 175,463 1,474,713 315,459,120 1,836,114 313,623,006 2011 13,311,106 235,285 13,075,821 1,702,718 175,463 1,527,255 325,137,729 1,836,114 323,301,615 2012 13,590,300 235,285 13,355,015 1,757,812 175,463 1,582,349 336,088,797 1,836,114 334,252,683 2013 13,875,523 235,285 13,640,238 1,815,602 175,463 1,640,139 348,486,536 1,836,114 346,650,422 2014 14,166,908 235,285 13,931,623 1,876,238 175,463 1,700,775 362,529,139 1,836,114 360,693,025 Net Present Value 27,988,665 Net Present Value 1,094,381 Net Present Value 1,402,887,823 Internal Rate of Return 20.0% Internal Rate of Return 12.2% Internal Rate of Return >100 Benefit-Cost Ratio 2.03 Benefit-Cost Ratio 1.13 Benefit-Cost Ratio 42.37 r  - 12 - Schedule B Table 2 COLOMBIA BOGOTA URBAN TRANSPORT PROJECT Assumptions Main Assumptions Discount rate 10% Value of time 30% Standard conversion factor 0.95 Nature of Benefits - Travel time savings - Vehicle operating cost savings - Road maintenance savings - Decrease in the incidence of traffic accidents - Reduction of air pollution - Improved institutional capacity of the municipal administration and the environmental agency (DAMA) to manage urban transport problems - Increased land values due to reduced traffic congestion Main Beneficiaries 630,000 low-income residents get easier access to public transport because of the access roads program;  - 13 - Schedule B Table 3 COLOMBIA BOGOTA URBAN TRANSPORT PROJECT KEY PERFORMANCE INDICATORS Key Performance Indicators: 1995 1996 1997 1998 1999 2000 2001 Resettlement Plan Pian Preparation 11 3 Approved by Bank 3 Plan Implementation 4 3 Plan Monitoring/Follow-up 4 12 Calle 80 Works TOR for Design/EIA Reviewed by Bank 11 Design and Bidding Docs. Finalized 9 Contract Award 6 Construction Commences 7 Construction Ends 12 Other Subproject Bank Approval of Updated Designs 8 EIA prepared and Reviewed 12 Bidding Doc. Finalized 8 Contract Award 11 Construction Commences 12 Construction Ends 6 Avenida Caracas Works Preparation of List of Project Works 10 Bidding Doc. Finalized 12 Contract Award 6 Construction Commences 7 Construction Ends 3 Studies and TA Traffic Signals Optimization Study 10 5 Public Transport Study 8 6 Parking Plan and Policy Study 8 3 Traffic Accident and Reporting System 3 12 Non-Motorized Transport Study 4 9 Note: Numbers in the year column refer to the month by which the tasks are to be completed.  - 14 - Schedule B Table 4 COLOMBIA BOGOTA URBAN TRANSPORT PROJECT IMPACT INDICATORS Impact Indicators: Average Rush Hour Speed (koh): 1995 2002 Calle 80 13 18 Number of Buses in Peak Hour: Calle 80 520 450 Access Roads 1996 1997 Number of access roads constructed 10 9 Cumulative number of beneficiaries (000) 400 630 Road Maintenance 1996 1997 1998 Intensive Maintenance 0 98 105 Reconstruction 20 77 94 Total Executed lanelkm. 20 195 199 Note: Other performance indicators will be included to measure: (a)comparisons of average time and cost of bus trips between selected points of the city annually; (b) average driving time to cover selected points by cars during peak and non-peak hours; and (c) air quality indicators in selected locations which have baseline data available.  - 15 - Schedule C Page 1 of 2 COLOMBIA BOGOTA URBAN TRANSPORT PROJECT PROCUREMENT METHODS AND DISBURSEMENTS Procurement Arrangements (US$ million)' X. Civil works 51.4 56.7 2.0 0.0 110.1 (20.5) (22.7) (0.8) (0.0) (44.0) Goods 2.1 0.0 1.4 0.0 3.5 (1.0) (0.0) (0.7) (0.0) (1.7) Consultancies 0.0 0.0 19.3 0.0 19.3 (0.0) (0.0) (19.3) (0.0) (19.3) Miscellaneous 8.2 8.2 (0.0) (0.0) TOTAL 53.5 56.7 22.7 8.2 141.0 (21.5) (22.7) (20.8) (0.0) (65.0) Allocation of Loan Proceeds X~ Works 45.0 40 Goods 1.5 50 Consultancies 18.5 100 Total 65.0 Numbers may not exactly add up due to rounding. Table includes contingencies. Amount in parentheses show allocation from loan proceeds. 2 ILC, National Shopping (Goods and Works), short list and directing contracting (Consultancies). 3 Items financed from local government funds.  - 16 - Schedule C Page 2 of 2 COLOMBIA BOGOTA URBAN TRANSPORT PROJECT PROCUREMENT METHODS AND DISBURSEMENTS Estimated Disbursements (US$ millions) Annual 2.0 14.0 17.0 16.0 11.5 4.5 Cumulative 2.0 16.0 33.0 49.0 60.5 65.0  - 17- Schedule D COLOMBIA BOGOTA URBAN TRANSPORT PROJECT Timetable of Key Project Processing Events (a) Time taken to prepare: Six years (b) Prepared by: Capital District of Santafe de Bogota (c) First Bank mission: June 1989 (d) Appraisal mission departure: June 1990 (e) Negotiations: July 1991 (f) Re-appraisal missions (*) August 1993, February 1995 (g) Negotiations: February, 1996 (h) Planned date of effectiveness: June, 1996 (i) Relevant PCRs: Urban I (Loan 1558-CO, PCR No. 7210) (*) Note: Project processing was frozen after the July 1991 negotiations because of the deteriorating financial position of the District and difficulties in implementing a betterment levy. Processing was resumed after a financial adjustment program including a plan of betterment levies was initiated in August 1993 by a new administration. Loan preparation was suspended again after the GOC and the District could not agree on the outstanding debt obligation of the District to GOC for bus purchases of the District's liquidated bus company and also because the Mayor did not have Council authorization for a Bank loan. Processing resumed in February 1995, at the newly-elected Mayor's request and after a re-appraisal mission found that conditions had changed: the debt obligation dispute is under binding arbitration and according to the Finance Ministry is expected to be resolved shortly; the Municipal Council has granted authorization to the Mayor to incur the debt; and a review of the Municipality's accounts and financial projections show a strong financial position.  18 Schedule E BAK LOAS & 1A CREJTS K COLOMSIA A. STAEMENTOF JfMah31 Amount in US$ Million Ln/Cr Fiscal (less cancellations) Undis- Number Year Borrower Purpose Bank IDA bursed 125 Loans Closed 5,915.23 23.48 2.25 2667 1986 HIMAT Irrigation II 114.00 26.59 2961 1988 Caja WS & Waste Sector 150.00 17.41 3010 1988 BCH Ed Sector 100.00 35.04 3113 1990 Bco.Rep. Sm-Scale Irrig 50.00 24.95 3201 1990 Fdo.Vial Comm Child Care & Nu 24.00 3.96 3250 1991 Colombia Rural Dev Invest 75.00 13.00 3321 1991 Colombia Indust Restruct 198.85 30.35 3336 1991 Colombia Munic Devt 60.00 7.78 3449 1992 Colombia IFI-Restrc.&Divst. 100.00 55.49 3453 1992 Colombia Third National Roads 266.00 74.06 3615 1993 Colombia Municipal Health Serv. 50.00 46.36 3669 1994 Colombia Public Fin. Mgmt. 30.00 27.96 3683 1994 Colombia Secondary Educ. 90.00 86.00 3692 1994 Colombia Natural Resource Mgmt. 39.00 34.79 3827 1995 Colombia Energy TA 11.00 9.49 3871 1995 Colombia Agriculture Techno 51.00 49.60 3952 1996 Colombia Santafe I (Wtr/Suppl) 58.00 58.00 3953 1996 Colombia Santafe I (Wtr/Suppl) 87.00 87.00 3954 1996 Colombia Power Market Dev 104.30 104.30 3955 1996 Colombia Power Market Dev 145.00 145.00 3973 1996 Colombia Urban Environment TA 20.00 20.00 Subtotal 1,823.15 957.13 TOTAL 7,738.38 23.48 Of which repaid 4,730.22 12.53 Total held by Bank & IDA 3,008.16 10.95 Amount sold Of which repaid 50.99 Total undisbursed 50.99 959.38 B WTATEMEiT O IFO ESTIENTS (As of March 31. 19 Loan Equity Total (in Millions of US$) Total Gross Commitments 351.67 325.54 677.21 Less cancellations, terminations, exchange adjustments, repayments, writeoffs, and sales 208.60 116.55 325.15 Total Commitments now held by IFC 143.07 208.99 352.06 Total Undisbursed IFC 41.71 34.87 76.58  19 Schedule F Colombia at a glance Latin Lower- POVERTY and SOCIAL America middle- Colombia & Carib. Income Development diamond' Pooulation mid-1 994 (millions) 36.3 471 1,097 Life expectancy GNP per capita 1994 (USS) 1.620 3.310 1.680 Average annual growth, 19904 Population (%) 1.9 1.8 1.4 Labor force (%) 2.3 2.4 1.6 GNP Gross per pnmary Most recent estimate (latest year available since 1989) capita enrollment Poverty tieadcount index (% of population) Uroan population (% of total population) 73 71 54 Life expectancy at birth (years) 70 68 67 Infant mortality (per 1,000 live births) 20 42 35 Chuld malnutrition (% of children under 5) 10 . Acces to sale water Access to safe water (% of population) 83 80 78 Illiteracy (% of population age 15.) 13 15 Gross pnmary enrollment (% of school-age population) 119 110 104 -Colombia Male 118 105 - Lower-middle-4ncome group Female 120 .. 101 KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1975 1985 1994 1995 Economic ratios' Grcss domestic investment/GOP 17.0 19.0 24.1 24.3 Excorts of goods and non-factor services/GOP 15.8 13.8 17.2 17.7 oenness of economy Grcss domestic savings/GOP 18.8 20.3 20.5 21.0 - Gross national savings/GOP 16.4 16.9 19.5 18.6 Current account balance/GDP -1.7 -4.6 -4.2 -4.9 interest payments/GOP 1.0 2.5 1.6 .. Savings Investment Total debt/GOP 28.7 40.8 30.2 29.6 Total oebt service/exports 14.3 40.0 29.8 Present value of aeot/GOP .. .. 28.7 Present value of debt/exports .. .. 149.4 Incebtedness 1975-84 1985-95 1994 1995 1996-04 (averageannual growth) GOP 3.9 4.2 5.7 5.3 4.8 Ca GNP :er caDita 1.6 2.5 6.5 2.7 3.7 - Lower-miodie-income grouc Exoorts of goods and nfs 2.6 8.3 0.0 8.1 5.7 STRUCTURE of the ECONOMY 1975 1985 1994 1995 Growth rates of output and investment (%) (% of GDP)a- Agriculture 23.9 17.0 20.8 21.0 Industry 29.2 34.6 29.5 29.2 ai Manufactunng 23.2 21.7 21.2 20.3 Services 46.9 48.4 49.6 49.8 0* 72.3 69.0 66.0 66.0 . 9 n 92 9 a Pqvate consumption General govemment consumption 8.9 10.7 13.5 13.0 moons of goods and non-factor services 14.0 12.5 20.7 21.1 -GI GDP (average annual growth) 1975-84 1985-95 1994 1995 Growth rates of exports and imports (%) Agriculture 3.1 3.9 2.0 5.6 o- Industry 3.1 3.9 3.6 3.7 Manufactunng 2.5 3.8 2.8 0.9 Services 4.7 4.1 7.6 5.3 Private consumption 3.7 3.6 6.8 5.7 o . General government consumption 6.8 7.8 16.4 1.6 9o 3' a2 a2 . 36 Gross domestic ivestment 6.4 8.0 12.7 7.2 *20 irroorts of goods and non-factor services 7.4 13.1 16.6 8.5 -Ezoorts -impons Gross national product 3.8 4.4 8.4 4.3 Note: 1995 data are preliminary estimates. The diamonds snow four key Indicators in tie country on bold) compared with its inome-group average. If data are missing, the diamond will be incomplete.  20 Schedule F Colombia PRICES and GOVERNMENT FINANCE 1975 1965 1994 1995 fnneson(%) Domestic prices (% cnange) Consumer prices 22.9 24.0 22.6 19.5 w Implicit GOP deflator 23.1 24.7 19.9 21.1 Government finance 10 (% of GDP) Current revenue .. 20.3 29.4 30.3 Current budget Dalance .. 4.3 7.9 7.1 9 s s a 0s Overall surplus/deficit .. .4.6 (.4 -0.5 -GDP def. CPI TRADE 1975 1985 1994 1995 Export and Import levels (mlL USS) (millions USS) Total exports (lob) .. .. 8.756 10,497 1.0 Cottee 1,702 1,990 2,406 Golde1365 305 2.12 lom ManufactuWs .. .. 2,752 3,185 Total imports (cif) .. .. 11.040 12,650 Food .. .. 486 273 .. 341 .. hfoo Fuel and energ .. Capitalgoods .. 1,165 4,509 5,211 Expon rice index (1987=100) - .. .. .. Import pnce index (1987=100) .. Terms of trade (1987=100) .. .. .. BALANCE of PAYMENTS 1975 1985 1994 1995 Current account balance to GOP rao (%) (mittions USS) Exoorts of goods and non-factor services 2,105 4,642 11,969 13,771 Imocrts of goods and non-factor services 2,007 4,989 14.170 16072 Pesource Dalance 98 -347 -2.201 -2,301 Net facor !ncome -318 .1,710 -1,654 -2.422 Net current transfers 0 455 859 750 _o Current account balance, 4 W 0 22 2 before official transfers *220 -1,602 -2,996 -3,973 Financing items (net) 282 1,867 3.130 3.738 .4 Onanges in net reserves -62 -265 -133 235 Memo: Reserves inciuding gold (mill. USS) 633 2,197 8.103 8,037 Conversion rate (local/USS) 30.9 142.3 837.9 944.5 EXTERNAL DEBT and RESOURCE FLOWS (millions uSS) 1975 1985 1993 1994 (mill. USS) Composition of total debt 19M4 Total debt outstanding and disbursed 3,758 14,245 17,177 19,416 A iBAD 633 2,399 2.988 2.629 G IDA 23 18 12 12 4000 Total debt service 314 1,980 3,163 3,685 ]SRO 78 318 819 1.054 IDA 1 1 1 1 D 2738 Composrtion of net resource flows Official grants 18 20 76 45 Offical creditors 111 938 -531 .387 E Private creditors 216 392 149 590 Io Foreign direct investment 37 1,023 850 950 Portfolio equrty 0 0 128 320 F World Bank program 73s1 Commitments 88 489 400 159 A - 1BRD E- Bleter Disoursements 106 590 301 310 8-IDA D-Onrwmustalamrl F-Pvate Principal repayments 34 165 578 837 C- IMF G - Shon-term Net flows 71 424 -276 -526 Interest payments 45 153 242 218 Net transfers 27 271 -519 -745 Intemational Economics Department 2/29/96 MAP SECTION  IBRD 22937R COLOMBIA 7410 7405 BOGOTA URBAN TRANSPORT PROJECT --- ADMINISTRATIVE LIMIT OF SANTA FE DE BOGOTA SPECIAL DISTRICT URBAN PERIMETER MAIN ROAD NETWORK - EXISTING INTERCITY RAILWAY (SOUTHWEST RAILWAY S; CONSIDERED FOR A METRO ROUTE) 5 CALLE 80 (PROPOSED BUSWAY) 4°45 - AV CARACAS 1EXISTING BUSWAY) CENTRAL AREA LOW INCOME AREAS TARGET ED FOR ACCESS ROADS PROGRAM SAMPLE ACCESS ROADS INTERNATIONAL BOUNDARIES Airporo -440'44 4~644 .2 s - .xPtde us. ofl h wrd Bak and h ... .... -- U jh. desm ~dd,h ;-x, o4 ~PANAMA5 VENEZUELA 7Santa Féde Bogot COLOMBIA 0 3 5 6KILOMETERS 1 3 AECUADOR BMIRES -4-30' 430 , 74110' PERU APRIL 1993 i A(ING Report No: P- 6678 CO Type: MOP