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Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No: 59665-CO
PROJECT APPRAISAL DOCUMENT
ON A
PROPOSED LOAN
IN THE AMOUNT OF
US$350 MILLION
TO THE
REPUBLIC OF COLOMBIA
FOR THE
SUPPORT TO THE NATIONAL URBAN TRANSIT PROGRAM PROJECT
June 20, 2011
Sustainable Development Department
Colombia and Mexico Country Management Unit
Latin America and the Caribbean Region
This document has a restricted distribution and may be used by recipients only in the
performance of their official duties. Its contents may not otherwise be disclosed without World
Bank authorization.
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CURRENCY EQUIVALENTS
(Exchange Rate Effective May 31, 2011)
Currency Unit = Colombian Peso (CO$)
CO$1,825.69 = US$1
US$0.0005477 = CO$
FISCAL YEAR
January 1 – December 31
ABBREVIATIONS AND ACRONYMS
BRTS Bus Rapid Transit System
CAF The Andean Development Corporation (Corporación Andina de
Fomento)
CGN General Accounting Office (Contraduria General de la Nación)
CGR General Comptrollers Office (Contraloria General de la
Republica)
CPS Country Partnership Strategy
CONFIS National Fiscal Council (Consejo Superior de Política Fiscal)
CONPES National Economic and Social Council (Consejo Nacional de
Política Económica y Social)
DNP
EMF
National Planning Department (Departamento Nacional de
Planeación)
Environmental Management Framework
EMP Environmental Management Plan
FM Financial Management
GHG Greenhouse gas
GoC Government of the Republic of Colombia
IADB Inter-American Development Bank
IBRD International Bank for Reconstruction and Development
ICB International Competitive Bidding
IGAC Agustin Codazzi Geographic Institute (Instituto Geográfico
Agustin Codazzi)
IMTS Integrated Mass Transit System
IRR Internal Rates of Return
ISR
ITS
Implementation Status and Results Report
Intelligent Transportation Systems
MHCP Ministry of Finance & Public Credit (Ministerio de Hacienda y
Crédito Público)
MOT Ministry of Transport (Ministerio de Transporte)
NPV Net Present Value
NQS North Quito South Line of the Bogotá Transmilenio S.A
(Corredor Norte Quito Sur de Bogotá Transmilenio S.A)
NUTP
ORAF
National Urban Transit Program
Operations Risk Assessment Framework
PAD Project Appraisal Document
PCU Project Coordination Unit
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PDO Project Development Objective
RAP Resettlement Action Plan
RPF
SIL
STPS
Resettlement Policy Framework
Specific Investment Loan
Strategic Public Transit Systems
Regional Vice President: Pamela Cox
Country Director: Gloria M. Grandolini
Sector Director:
Sector Manager:
Laura Tuck
Aurelio Menéndez
Task Team Leader:
Co-Task Team Leader:
Mauricio Cuellar
Camila Rodríguez
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Table of Contents I. Strategic Context ..................................................................................................................... 1
A. Country Context ............................................................................................................... 1
B. Sector Issues ..................................................................................................................... 3
C. Institutional Context ......................................................................................................... 5
D. Higher Level Objectives to which the Project Contributes .............................................. 7
II. Project Development Objectives............................................................................................. 8
A. PDO .................................................................................................................................. 8
a) Project Beneficiaries ..................................................................................................... 8
b) PDO Level Results Indicators ...................................................................................... 9
III. Project Description............................................................................................................... 9
A. Project Components ......................................................................................................... 9
B. Project Financing............................................................................................................ 11
a) Lending Instrument..................................................................................................... 11
b) Project Financing Table .............................................................................................. 11
c) Detailed Project Costs for IBRD Financing of Eligible Cities under the NUTP ........ 13
C. Lessons Learned and Reflected in the Project Design ................................................... 14
IV. Implementation .................................................................................................................. 15
A. Institutional and Implementation Arrangements ............................................................ 15
B. Results Monitoring and Evaluation ................................................................................ 16
C. Sustainability .................................................................................................................. 17
V. Key Risks .............................................................................................................................. 17
VI. Appraisal Summary ........................................................................................................... 19
A. Economic and Financial Analysis .................................................................................. 19
B. Technical ........................................................................................................................ 20
C. Financial Management ................................................................................................... 21
D. Procurement ................................................................................................................... 21
E. Social .............................................................................................................................. 22
F. Environment ................................................................................................................... 25
Annex 1: Results Framework and Monitoring.............................................................................. 28
Annex 2: Detailed Project Description ......................................................................................... 35
Annex 3: Implementation Arrangements ...................................................................................... 38
Annex 4 Operational Risk Assessment Framework (ORAF) ....................................................... 55
Annex 5: Implementation Support Plan ........................................................................................ 61
Annex 6: Team Composition ........................................................................................................ 64
Annex 7: Characterization of Public Transit Service Provision in Colombia .............................. 65
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PAD DATA SHEET
Colombia
Support to the National Urban Transit Program (NUTP) Project
PROJECT APPRAISAL DOCUMENT
Latin America and the Caribbean
Transport Unit
Date: June 20, 2011
Country Director: Gloria M. Grandolini
Sector Director: Laura Tuck
Sector Manager: Aurelio Menéndez
Team Leader(s): Mauricio Cuellar/Camila
Rodríguez
Project ID: P117947
Lending Instrument: Specific Investment Loan
(SIL)
Sector(s): Transport
Theme(s): Urban Transport (70%), Urban
Renewal (30%)
EA Category: B
Project Financing Data:
Proposed terms: IBRD flexible loan with a Fix-spread, repayment schedule linked to
commitment, bullet repayment and all conversion options (Currency, Interest Rate, and
Caps/Collars)
[X] Loan [ ] Credit [ ] Grant [ ] Guarantee [ ] Other:
Source Total Amount (US$M)
Total Project Cost:
Cofinancing:
Total Bank Financing:
IBRD
407
0
350
350
Borrower: Republic of Colombia. Ministry of Finance and Public Credit.
Responsible Agency: Ministry of Transport
Contact Person: Felipe Targa, Deputy Minister of Transport
Telephone No.: (57 1) 324-0800
Fax No.: (57-1) 324-0800
Email: [email protected]
Estimated Disbursements (Bank FY/US$ m)
FY 2012 2013 2014 2015 2016 2017
Annual 60 80 80 80 30 20
Cumulative 60 140 220 300 330 350
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Project Implementation Period: August 31, 2011-November 30, 2016
Expected effectiveness date: August 2011
Expected closing date: November 30, 2016
Does the project depart from the CAS in content or other significant
respects?
○ Yes ● No
If yes, please explain:
Does the project require any exceptions from Bank policies?
Have these been approved/ endorsed (as appropriate by Bank
management?
Is approval for any policy exception sought from the Board?
○ Yes ● No
○ Yes ● No
○ Yes ● No
If yes, please explain:
Does the project meet the Regional criteria for readiness for
implementation?
● Yes ○ No
If no, please explain:
Project Development objective:
The Project Development Objective is to enhance the efficiency, affordability, quality, safety,
and environmental sustainability, of the provision of public transit services in the participating
cities.
Project description [one-sentence summary of each component]
Component –Part A: Integrated Mass Transit Systems. This component entails the
construction of Bus Rapid Transit systems in Bucaramanga, Cartagena, Medellin, and Pereira.
Component-Part B: Strategic Public Transit Systems. This component entails the
rehabilitation of the road network, travel demand management strategies and urban renewal in
Valledupar and Sincelejo.
Safeguard policies triggered?
Environmental Assessment (OP/BP 4.01)
Natural Habitats (OP/BP 4.04)
Forests (OP/BP 4.36)
Pest Management (OP 4.09)
Physical Cultural Resources (OP/BP 4.11)
Indigenous Peoples (OP/BP 4.10)
Involuntary Resettlement (OP/BP 4.12)
Safety of Dams (OP/BP 4.37)
Projects on International Waterways (OP/BP 7.50)
Projects in Disputed Areas (OP/BP 7.60)
● Yes ○ No
● Yes ○ No
○ Yes ● No
○ Yes ● No
● Yes ○ No
○ Yes ● No
● Yes ○ No
○ Yes ● No
○ Yes ● No
○ Yes ● No
Specific Conditions and Legal Covenants:
Financing Agreement
Reference
Description of
Condition/Covenant
Date Due
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Conditions of Effectiveness
Article V.
Section 5.01.(a)
Each of the updated
Subsidiary Agreements for the
Large Participating Cities has
been executed by the parties
90 days after the date of the
Agreement, but in no case
later than 18 months after the
Bank‘s approval
Article V.
Section 5.01.(b)
The Operational Manual has
been updated by the Borrower
90 days after the date of the
Agreement, but in no case
later than 18 months after
Bank‘s approval
Article V.
Section 5.01.(c)
The additional FM staff
referred to in Section I.A.3.1.
(a) of Schedule 2 has been
hired in a manner satisfactory
to the Bank
90 days after the date of the
Agreement, but in no case
later than 18 months after
Bank‘s approval.
Implementation
Arrangement Covenants
Schedule 2
Section I.A.3(a) and (b)
(a) The Borrower, through
MOT, shall hire and thereafter
maintain additional financial
management staff acceptable
to the Bank
(b) The Borrower, through
MOT, shall cause each of the
Implementing Entities to be
staffed with financial
management staff acceptable
to the Bank
Throughout Project
implementation
Schedule 2
Section I.B.1.
The Borrower, though MHCP,
MOT and DNP shall maintain
a Subsidiary Agreement with
each of the Participating Cities
and the relevant Implementing
Entity
Throughout Project
implementation
-
Schedule 2
Section I.D.1.(c)
The Borrower, through MOT,
shall, and shall cause the
Participating Entities and the
Implementing Entities to,
maintain and implement an
EMF
Throughout Project
implementation
Schedule 2
Section I.D.2.(a) and (b)
Prior to initiating the
construction of any works
under Part A.1. and/or Part
B.1 of the Project, the
Borrower, though MOT, shall
provide evidence to the Bank
demonstrating that
(a) for those specific civil
works impacting Affected
Persons, the resettlement and
rehabilitation of Affected
Persons has taken place in
accordance with the relevant
RAP, RPF, the Operational
Manual and this Agreement
and
(b) the Participating Cities and
the Implementing Entities
have developed and thereafter
implemented for the purposes
of each activity under Part A
and/or Part B of the Project an
EMP
Throughout Project
implementation
Schedule 2
Section I.D.4.
The Borrower, through MOT,
shall ensure, and shall cause
the Participating Cities and the
Implementing Entities to
ensure, that the terms of
reference for any
consultancies related to
studies, technical assistance or
capacity building under Part
A.3, Part B.1.(a) and Part B.3.
of the Project shall be
satisfactory to the Bank
Throughout Project
implementation
-
Disbursement Conditions
Schedule 2
Section IV.B.1. (c), (d), (e)
and (f)
Notwithstanding the
provisions of Part A of this
Section, no withdrawal shall
be made: […] under categories
(1), (2), (3) or (4) unless a
Notice from the corresponding
Implementing Entity to the
corresponding Fiduciary
Agent has been delivered
informing the Fiduciary Agent
of the existence of the Anti-
corruption Guidelines
Before disbursing under any
of the following Categories:
(1)-(Bucaramanga), (2)-
(Cartagena), (3)-(Medellin)
and/or (4)-(Pereira) (Large
Participating Cities).
Schedule 2
Section IV.B.1(g) and (h)
Notwithstanding the
provisions of Part A of this
Section, no withdrawal shall
be made: […] under
categories (5) or (6) unless: (i)
the respective Subsidiary
Agreement has been updated
and signed; (ii) a Notice to the
corresponding Fiduciary
Agent regarding the Anti-
Corruption Guidelines has
been delivered; (iii) the
Implementing Entity has
fulfilled with specific
conditions set forth in the
Agreement; (iv) the EMP and
RAP have been approved by
the Bank; and (v) the
Procurement Plan has been
approved by the Bank.
Before disbursing under any
of the following Categories:
(5)-(Sincelejo) and/or (6)-
(Valledupar) (Medium
Participating Cities)
-
1
I. Strategic Context
A. Country Context
Political Context
1. A new Government was inaugurated in August 2010 with a strong political mandate that gave its ―national unity‖ coalition an 80 percent majority in Congress. The new President won
the second round of the Presidential poll by more than 70 percent of the vote against a former
mayor of Bogotá. The new Government campaigned on a continuation of the former President‘s
democratic security and economic policies. The elections demonstrated the maturity of
Colombia‘s democratic process and reflected a strengthening of political institutions. The
country has undergone a transformation since 2002, striving to move away from internal
violence, drug trafficking, and weak institutions that has plagued the country for many years.
Today, Colombia has a resurgent economy with promising prospects. It is a safer, more stable
country that is more popular with foreign investors, and it aspires to join the OECD group of
countries.
2. The new Government registered several significant achievements early in its first term. This includes the restoration of diplomatic and trade relationships with Venezuela, which had
been broken off shortly before the second round of the presidential elections in July 2010.
Relationships were also fully normalized with Ecuador. Finally, an agreement reached with the
United States increases the likelihood that the bilateral Free Trade Agreement, which was
negotiated in 2008, will eventually be implemented. Overall, these positive developments have
helped boost the popularity ratings of the new President and strengthened the national unity
coalition.
3. The new Government has launched a very ambitious reform program. To consolidate the fiscal stance and manage windfalls from commodities production, the Government has presented
to Congress a new fiscal rule, a reform of the royalties system, and a proposal to make fiscal
sustainability a Constitutional right. Tax exemptions have been reduced, loopholes closed, and
import tariffs lowered in an effort to enhance revenues and promote competitiveness. Legislation
has been passed to reduce informality and encourage youth employment. A new legal framework
is being introduced to improve the performance of the health system, including the enactment of
an ordinary Health Law in 2011. And, a Victims Law (Ley de Victimas), pending the new
President‘s approval, will compensate victims who have been harmed by actions as a result of
conflict.
4. Municipal and regional elections are scheduled for October 2011, and the next legislative and presidential elections are set for March and May 2014, respectively. The outcome of the
municipal and regional elections will help to gauge the support for the various coalition members
as well as the opposition during 2011–2015.
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2
Recent Economic Developments
5. Colombia is an upper-middle income country whose economic performance is typical of the major economies in Latin America. The economy is well endowed with natural resources,
including oil, coal, gas, iron, and gold. The domestic market is sizeable, making it important for
aggregate demand growth. Agribusiness (particularly coffee) and manufacturing (e.g., the car
industry) are also relatively well developed. Improved security combined with business-friendly
investment rules has led to a surge in foreign direct investment, particularly in the oil and mining
sector.
6. Following a longer period of broad-based economic growth, the economy was not affected too severely by the global economic crisis. Between 2002 and 2007, GDP growth
averaged 5.0 percent per year on account of an improving security situation and a favorable
external environment. The economy slowed down in 2008 to a growth rate of 3.5 percent, as
economic policies were tightened to address overheating. The country‘s strong macroeconomic
framework and the resilience of the financial sector helped cushion the impact of the global
economic crisis. Monetary policy responded swiftly as the policy rate was lowered from 10 to 3
percent. Fiscal policy also contributed to support aggregate demand. Countercyclical policies
were combined with a flexible exchange rate regime, which acted as a shock absorber to counter
the deceleration in external demand. By 2010, the economy had largely recovered from the
slowdown, although a collapse in exports to Venezuela has held back some economic expansion.
The GDP growth increased by 4.3 percent in 2010 compared with 1.5 percent in 2009.
7. As the recovery phase consolidates, Colombia is facing economic policy dilemmas similar to those experienced by other Latin American countries.1 On the one hand, the authorities
face the challenge of keeping inflation expectations anchored in the face of higher economic
activity and rising inflation. On the other hand, international capital flows are exerting
appreciation pressures on the Colombian Peso and could also prompt credit booms and asset
price bubbles, which could in turn destabilize the financial sector.2 The monetary authorities
increased the policy rate by 100 basis points during 2011, and this coincided with a slight decline
in observed and expected inflation (despite higher global prices and a weather-related
emergency.) The Government has taken a range of measures to smooth the exchange rate
adjustment toward its long-term equilibrium value, including a program of reserve accumulation
(with some sterilization), macro prudential measures, tariff and tax adjustments, as well as non-
monetization of dollar proceeds.
8. Colombia is experiencing some of the heaviest rainfall in recent history leading to widespread flooding and landslides. The heavy and prolonged rainfall that peaked in November
and December 2010 (and which re-emerged in April 2011) is largely attributed to the
meteorological phenomenon known as La Niña. Almost 3 million people, especially the poor,
have been directly affected through loss of homes or being seriously deprived of access to most
essential public services. Economic losses are expected to have exceeded 1 percent of GDP, but
the weather shock has not derailed the economic recovery. The impact on food prices also
1 See ―LAC Success Put to the Test‖ (World Bank, 2011) for a detailed discussion.
2 The Colombian foreign currency bond credit rating was upgraded to investment grade for the first time since 1999
by Standard and Poor‘s (in March 2011) and by Moody‘s (in May 2011). This upgrade gives Colombia access to a
new class of investors and this may increase capital inflows further.
-
3
proved temporary. The fiscal cost of the disaster increased the Central Government deficit by 0.2
and 0.4 percent of GDP in 2010 and 2011, respectively.
B. Sector Issues
9. Like most Latin American countries, Colombia has experienced high population increases in urban centers due to several economic and social factors. By the mid twentieth-
century there was an especially sharp rise in both population growth and the rate of urbanization.
Urban dwellers increased in search of employment and schooling opportunities as market forces
drew labor to the cities from regions where the returns to labor were relatively lower. Higher
standards of living and access to basic public services in rural areas relative to urban, also
worked as catalysts for urban migration. Furthermore, the urbanization process in Colombia,
unlike that of its peers, has been affected by several decades of armed conflict and violence,
which occurred mostly in rural areas. Today, 75 percent of Colombians live in cities, compared
to 60 percent in 1973. There are seven metropolitan areas with an estimated population of more
than 600,000, and 22 cities with a population of more than 250,000.3
10. Cities have long been the engines of Colombia‘s economic growth. More than 50 percent of Colombia‘s GDP growth in the last four decades can be attributed to the economic growth in
the urban sector. Cities have also contributed to poverty reduction, and data on poverty rates at
the department (departamento) level in Colombia show a negative relationship between poverty
and urbanization.4 Hence, establishing a medium- to long-term vision of the role of cities in
supporting Colombia‘s effort to develop from a middle to a higher income country is a policy
priority for the country.
11. Against this backdrop, public transport has been a long standing concern for planners and decision makers in Colombia. At the national and local levels, urban transport is regarded as a
catalyst for higher productivity, greater access to economic opportunities, and social inclusion.
Across urban transport modes, public transport plays a pivotal role in city efficiency. Although
the country is undergoing a natural process of motorization5, the majority of the population –
particularly those belonging to the middle and lower income groups – uses public transportation
to access jobs, healthcare, education and culture. A transport system which is able to provide
efficient, low-cost and safe mobility and accessibility for all inhabitants in the city is a powerful
tool to promote growth, alleviate poverty, and achieve social cohesion, while at the same time
improving environmental conditions and prompting public space improvements.
12. Prior to the end of the 1990s, Colombia‘s public transportation was entirely characterized by an institutional arrangement that led to an oversupply of buses and low-quality service. In this
traditional scheme, bus companies obtain route ―permits‖ from the local transit authority to
3 Departamento Nacional de Estadística (DANE). Census 2005
4 The World Bank (2011). Colombia Urbanization Review: Amplifying Gains from Urbanization. Concept Note.
5 Colombia‘s vehicle fleet has nearly tripled in the last 15 years (1994-2009), increasing from 2 million to 5.9
million vehicles. While current motorization rate (130 vehicles per 1,000 people) in Colombia is low compared to
similar middle-income countries in the region, under conditions of sustained economic growth motorization will
place higher strain on public space and roads.
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4
provide transit services. In turn, bus companies own the routes granted to them by the city
government but are not required to own the bus fleet. Individual investors own buses, and bus
companies rent out to bus owners the right to operate a certain route. Responsibility for service
provision, therefore, rests with the bus owners—and even the driver hired by the owner—and not
the bus companies. The arrangement induces bus owners to compete in the streets against other
buses, irrespective of demand patterns, as their revenue and the wage of the bus driver is directly
proportional to the number of passengers carried. Bus companies also have the incentive to lure
as many buses as possible to operate their routes. The incorporation of a number of buses beyond
those required to serve the market has led to excessive competition, locally known as ―the penny
war‖ (guerra del centavo) because drivers literally fight for each prospective passenger. The
aforementioned scheme, coupled with a weak institutional, technical and regulatory framework,
results is a pervasive oversupply of buses on the streets that increases congestion and reckless
driving and reduces the quality of service.
13. Colombia has taken important steps over the past decade to improve mobility and gradually replace the traditional public transit system. Initial efforts go back to 1998 when the
city of Bogotá first embarked on a radical program to improve the quality of public transit
services by implementing the Transmilenio Bus Rapid Transit (BRT) system. In this system, a
competitive bidding process is used to determine which bus operators will have the right to
operate a route or a number of buses. Bus operators, in turn, need to own the bus fleet and
operate it under close supervision from Transmilenio, which determines whether operators
supply the scheduled service. On the infrastructure side, the system uses exclusive busways,
high-capacity buses and other technologies to offer high-quality service (Refer to Annex 5).
14. The Transmilenio experience served as a model for the roll-out of BRTs throughout Colombia‘s largest cities, and allowed the Government of Colombia (GoC) to outline a
comprehensive and programmatic policy platform to address urban transport issues in
Colombian cities. In nine of Colombia‘s largest cities (more than 600,000 inhabitants), BRTs are
in the process of being implemented in the highest demand corridors, but the systems have yet to
replace the traditional bus system. In twelve medium-sized cities (between 250,000 and 600,000
inhabitants), interventions are being designed but include less infrastructure-intensive
components and will not require the implementation of BRTs. These cities also face a
disorganized and traditional supply of public transport, but present a number of unique
challenges compared to larger cities including prevalence of informal public transport (such as
motorcycle taxis and vans), and different mobility patterns (greater number of non-motorized
trips, and shorter trips relative to larger cities)6. Hence, urban transport interventions will include
policy packages with more instruments on the supply and demand management side, including
carefully planned fleet size and operations, incentives for the creation of transport operating
companies, integrated fare collection systems, centralized fleet control systems, control and
optimization of traffic management. Reforms also target city-center urban renewal, public space
upgrading and one-stop shops for municipal services7, in order to promote these cities as
economic growth centers of their respective regions.
6 In cities like Sincelejo and Valledupar, non-motorized trips represent more than 30 percent of the modal split.
7 The one-stop shop for municipal services is termed CAMIS (Centros de Atención Municipales de Información y
Servicio).
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5
C. Institutional Context
15. To leverage the success of Bogotá‘s Trasmilenio, in 2002 the GoC adopted the National Urban Transit Program
8 (NUTP) as a national policy to provide competitive, efficient,
affordable, safe, and environmentally sustainable mobility options for the urban population. The
NUTP calls for the implementation of BRTs or Integrated Mass Transit Systems (IMTS) in large
cities (more than 600,000 inhabitants) and Strategic Public Transit Systems (SPTSs) in medium-
sized cities (between 250,000 and 600,000 inhabitants). The goal of the NUTP is to support the
implementation of these transit systems as a means to: (i) improve the efficiency and safety of
public urban transport services; (ii) provide reliable transport accessibility for the poor; (iii)
enhance private sector involvement in service provision; (iv) reduce air pollution and greenhouse
gas (GHG) emissions; (v) foster comprehensive and sustainable urban development processes;
and (vi) promote inter-municipal coordination within the metropolitan areas, interagency
coordination within the cities, and knowledge sharing between the national and local
governments.
16. Under the NUTP, the GoC and cities participating in the program enter into a partnership whereby the GoC contributes up to 70 percent of the total sub-project costs in each city, and the
city commits to finance the remainder of the sub-project.9 The financial contributions of the GoC
and of the cities are allocated through a flow of earmarked yearly fiscal transfers (“vigencias
futuras”) from the program‘s inception (2002) to 2017. The GoC and cities signed Subsidiary
Agreements (Convenios de Cofinanciación) laying out the financial and technical commitments
to carry out the program. Through this model, the GoC: (i) creates an incentive for cities to
participate in the program by securing future budget support and eliminates the risk of a potential
change in GoC or municipal policy; (ii) transfers program implementation to the participating
cities, promoting local ownership and knowledge creation; and (iii) provides an incentive for
participating cities to focus on sound and longer-term policy and related investments.
17. The Bank‘s engagement with the GoC on urban transport dates back to the mid 1990s when the government was pursuing a series of regulatory reforms to promote private sector
participation in infrastructure, and when the city of Bogotá was first embarking on the
implementation of Transmilenio. The Bank has supported the NUTP since 2004 and its
engagement in the field of urban transport has comprised the full range of Bank instruments,
including: (i) knowledge services (analytical work, technical advisory); (ii) convening services;
and (iii) financial services (Figure 1). This partnership has helped Colombia lead the way in
urban transport issues and become internationally known for innovations in public transport,
namely, the BRTs. The BRT scheme has been replicated in many cities because they are a cost-
effective transport solution that can be implemented in relatively short time. Delegations from
more than 20 countries, including China, India, Vietnam, South Africa, Kenya, Finland and the
8 The NUTP is built on Law No. 86 passed in December, 1989. Two National Economic and Social Policy Council
documents (CONPES No. 3167and No.3260) approved in 2002 and 2003 have established the policy and
institutional framework for the NUTP. 9 Law No.310 passed in 1996 approves the co-financing arrangement between the Government and cities. On the
other hand, cities main source of funding is the gasoline surtax, mostly paid by automobile users. Nonetheless some
have tapped into property tax revenue and royalties to secure their project contributions.
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6
United States have visited Colombia to learn about the NUTP program and how BRTs are being
implemented in Colombian cities. Furthermore, there has been a significant South-South
collaboration and level of knowledge transfer originating from the Colombian experience.
Figure 1. World Bank Support for Urban Transport in Colombia
18. As part of this portfolio of services, the Bank has supported the NUTP through three loans totaling US$757 million (Integrated Mass Transit System Project and two subsequent
Additional Financings) aimed at financing the GoC‘s commitments to large cities for the
construction and implementation of BRTs.10
Although the NUTP targets nine large cities
including Barranquilla, Bogotá, Bucaramanga, Cali, Cartagena, Cucuta, Medellin-Valle de
Aburrá, Pereira and Soacha, the Bank has so far financed six out of the nine cities – Barranquilla,
Bogotá, Bucaramanga, Cartagena, Medellin-Valle de Aburrá, and Pereira.11
Currently Cali is
being financed by the Inter-American Development Bank (IADB), and Cucuta has partnered
with the Andean Development Corporation to implement the project. As the main focus of the
interventions in large cities is the implementation of BRTs, to date five out of the nine cities have
10
The Bank has supported the IMTS project through three operations: the first IMTS Loan (Loan 7231-CO,
P082466) was approved in June, 2004 for US$250 million, the second corresponds to the First Additional Loan
(Loan 7457-CO, P101356) approved in June, 2007 for US$207 million, and the third corresponds to a Second
Additional Loan (Loan 7739-CO, P114325) approved in August, 2009 for US$300 million. 11
As the NUTP progressed, and new participating cities were incorporated, the program also began to target
Metropolitan Areas (Areas Metropolitanas) comprising more than one city. As such, Soledad was also included to
the project in Barranquilla, Floridablanca, Piedecuesta and Girón were incorporated to the NUTP along with
Bucaramanga, in Medellin-Valle de Aburrá, Itagui and Envigado joined the NUTP, and lastly, in Pereira,
Dosquebradas was also included in the NUTP.
Go
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Initial Engagement
The Foundations
(1996-2003)
• National Urban Transit Program
• National Economic and Social Policy Council Documents (CONPES) to Implement Bus Rapid Transit Systems (BRTs)
• Technical Advisory to Transmilenio
• Support to Transmilenio 's Annual Urban Transport Forums
• Bogotá Urban Transport Project• Colombia Regulatory Reform Project • Bogotá Urban Services Project
Strengthening Urban
Transport Policies
(2004-2010)
• CONPES to Monitor Implementation of BRTs in Large Cities
• Infrastruture Policy Note (Workshop)
• Nat'l Communication Strategy BRTs Implem.
• Road Safety Training
• Universal Access BRTs
• Integrated Mass Transit Systems Project & First and Second Additional Loans• Bogotá Urban Services Project Additional Loan
Mainstreaming Urban
Transport Policies
(2011- )
• CONPES to Mainstream Urban Transport Policies in Medium-sized Cities
• CTF Investment Plan for Bogotá
• Regulatory Framework for Integration Public Transit Services
• Support to the National Urban Transit Program Project (proposed)
Stages of Urban Transport Engagement in Colombia
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BRTs under operation (Barranquilla, Bogotá, Bucaramanga, Cali and Pereira), while the
remaining are under construction.12
19. The proposed Project continues to scale up the Bank‘s support to Colombia‘s NUTP by financing the GoC‘s commitments to the large cities (except Bogotá for which the GoC
commitments have already finalized and Barranquilla that is expected to be financed by another
Multilateral Development Bank) that were previously supported by the IMTS project, and to two
new medium-sized cities requested by the GoC.13
In large cities, the Project will provide
financing so that the infrastructure required to begin the operation of BRTs is in place, and key
technical, institutional and regulatory reforms are consolidated for these systems to effectively
operate. In medium-sized cities, the NUTP anticipates support for twelve cities including
Armenia, Buenaventura, Ibague, Manizales, Monteria, Neiva, Pasto, Popayan, Santa Marta,
Sincelejo, Valledupar and Villavicencio, which are all at the planning stage.14
To date, seven
cities have formalized the support from the GoC through the approval of National Economic and
Social Council (CONPES) and National Fiscal Council (CONFIS) documents. For these cities,
the NUTP foresees urban transport interventions that focus less on infrastructure but address the
negative incentives of the traditional bus system, and tackles new issues such as informal public
transport (motorcycle cabs and vans). The policy package for these medium sized cities will
include instruments on the supply and demand management side, including carefully planned
fleet size and operations, incentives for the creation of transport operating companies, integrated
fare collection systems, centralized fleet control systems, control, and optimization of traffic
management. The GoC has requested the Bank to support these types of interventions in the
medium-sized cities of Sincelejo and Valledupar (Refer to Annex 5).
D. Higher Level Objectives to which the Project Contributes
20. The Project is consistent with the World Bank Group‘s new Country Partnership Strategy (CPS) for FY12-16
15, which is also aligned with the key themes of the National Development
Plan (2010-2014), and with the Bank‘s strategic engagement in the country, particularly the
Sustainable Growth with Enhanced Climate Resilience pillar. The CPS has three themes: (i)
Expanding Opportunities for Social Prosperity, (ii) Sustainable Growth with Enhanced Climate
Resilience, and, (iii) Inclusive Growth with Enhanced Productivity. Each theme supports three
long term outcomes. The CPS recognizes that to continue to address the needs of Colombia‘s
highly urbanized population, it is necessary to meet Colombia‘s ambitious plans for growth and
economic development with the explicit policy objectives of the new administration to make
12
Out of the six cities being financed by the Bank under the IMTS Project, four BRTs are in operation in
Barranquilla, Bogotá, Bucaramanga, and Pereira, while the other two (Cartagena and Medellin-Valle de Aburrá) are
under construction. 13
In this sense, the Bank will finance a definite number of cities that are part of the NUTP, while other Multilateral
Development Banks may finance other cities that are part of the national program. There will be no co-financing of
cities between different MDBs, which clearly delineates the proposed project‘s fiduciary and safeguards
requirements and accountability, as had been done with the previous IMTS projects. 14
Seven out of the twelve cities already received initial support from the Government through CONPES documents:
Pasto (CONPES 3549, November 2008), Santa Marta (CONPES 3548, November 2008), Armenia (CONPES 3572,
March 2008), Popayan (CONPES 3602, August 2009), Valledupar (CONPES 3656), Monteria (CONPES 3638) and
Sincelejo (CONPES 3637). The CONPES document provides a formal approval of the Government to assist and
provide financial support to the projects. 15
To be discussed by the Board on July 21, 2011.
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8
development environmentally and socially sustainable. To reach such a goal the CPS gives high
priority to the improvement of access to high quality urban services for the least privileged
segments of the population, and to the priority of achieving these goals in an environmentally
sustainable manner. In this area, the Project by supporting initiatives to organize and make more
efficient urban transit systems, is expected to foster productivity and competitiveness, provide
better services to the poor, improve environmental conditions (i.e. better air quality and GHG
emission reductions), and quality of life in urban areas. Additionally, the Project is expected to
enhance institutional capacity both at the national and local level, particularly as it relates to
strengthening implementation capacity of cities in large-scale infrastructure projects and in
public transport regulation.
II. Project Development Objectives
A. PDO
21. The Project Development Objective (PDO) is to enhance the efficiency, affordability, quality, safety, and environmental sustainability, of the provision of public transit services in the
participating cities.
a) Project Beneficiaries
22. Direct beneficiaries of the Project include users of the public transit system who will directly benefit from an enhanced public transport service provision. Since this public transport
constituency is primarily made up of lower-income users (up to 70 percent of public transport
users are from the lower income strata16
—strata 2 and 3) the Project will improve their access to
services, markets and economic opportunities, and lower their travel costs and times. The Project
is furthermore designed to allow the use of public transit by the disabled population, and improve
safety conditions, especially for women by introducing proper lighting and restricted access to
improve security conditions in bus stations. More generally, the Project will indirectly benefit the
urban population at large, who will experience better overall urban mobility and environmental
conditions, through the relief of traffic congestion, reduction of road accidents and air pollution.
With the implementation of the Project, cities will promote the renewal of the existing bus fleet,
reduction of the bus over-supply, introduction of cleaner fuels, reduction of inefficient routes,
and an improvement of public space to promote greater walking and cycling. Other potential
indirect beneficiaries are the residents and businesses along the bus corridors and the renewed
public space, which are likely to see an increase in property value by having better accessibility
and improved mobility options.
16
In Colombia, according to Law 142 of 1994, there are legally six socio-economic strata as defined by the National Department of Statistics (DANE) for the purposes of classifying households. The methodology takes into account the level of poverty of
household owners, accessibility to public utility services, urban/rural population, etc. The percentage of population included in
each strata is: strata 1 (low-low) = 22.3% pop. , strata 2 (low) = 41.2% pop., strata 3 (medium-low) = 27.1% pop., strata 4
(medium) = 6.3% pop., strata 5 (medium -high) = 1.9% , and strata 6 (high) = 1.2% pop (according to latest household survey).
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9
b) PDO Level Results Indicators
23. Project performance and success in achieving the proposed PDOs of the Project, will be measured against the following outcome indicators:
Enhanced efficiency of public transit services:
Reduction in average travel time for the lowest income strata users (income strata 1 and 2)
Enhanced affordability of public transit services:
Percentage of household expenditure in urban transport with respect to total household income
Enhanced quality of public transit services:
Percentage of people rating the system as being better than the previous system
Enhanced safety of public transit services:
Reduction in the number of accidents per 1 million passengers
Enhanced environmental sustainability of public transit services:
Reduction in local emissions (PM10). This indicator will be measured in cities that are currently monitoring local emissions through their Local Environmental Authority.
Enhanced institutional capacity in urban transport policy formulation:
Restructuring of the existing public transport route system
III. Project Description
A. Project Components
24. To achieve its objectives, the NUTP relies on an effective public-private partnership in which roles are assigned as follows: (i) the public sector finances, builds and maintains the
required infrastructure through co-financing arrangements between the GoC and municipal
governments; (ii) the private sector provides the equipment (i.e. fleet, fare collection and fleet
control system) and service provision under concession contracts granted by the city; and (iii)
each city participating in the NUTP establishes a transportation entity to plan, regulate and
control the operation of the BRTs (in large cities) or of the new urban transport system in
medium-sized cities. Furthermore, the NUTP relies on an effective technical collaboration
between the GoC and the cities participating in the program. At the national level, the MOT,
through a Project Coordination Unit, oversees the overall management and implementation of
the Project, provides technical support to cities participating in the NUTP and is responsible for
the follow-up and supervision of program implementation. The unit has proven to be effective in
the implementation of IMTS project and provides direct support to the participating cities and
Implementing Entities in technical, operational, environmental, social, resettlement, and
procurement aspects. As has been the case with the previous IMTS Project, the MOT, through
the PCU will provide targeted technical assistance aimed at strengthening the institutional
capacity, both at the national and local level. Annex 2 presents a more comprehensive
description of the NUTP reform agenda and of the roles played by each actor. This section
describes the components that are financed by this loan which mainly concern the required
infrastructure investments in large and medium-sized cities, the supervision (interventorías) of
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10
construction works and the strengthening of the capacity of the Implementing Entities in
medium-sized cities, including the hiring of specialized technical staff for the implementation of
the Project.
25. Component A17: Integrated Mass Transit Systems (US$ 253 million). 1. Expansion of the physical scope and geographical and social coverage of the NUTP in large cities, through the carrying out of the following selected activities: (a)the
revision of detailed engineering designs; (b) the construction of bus rapid transport
segregated busways; (c) the construction of bus stops, terminals and transfer centers; (d)
the construction of mixed-traffic lanes adjacent to busways corridors; (e)the construction
of sidewalks and bicycle paths; (f) the rehabilitation of feeder routes; (g) the
construction of pedestrian ways along busways corridors, including pedestrian bridges;
(h) the construction or adaptation of complementary transport corridors to the segregated
busways; (i) the carrying out of required adaptation and/or relocation of public service
networks adjacent to the construction areas; (j) the construction of bus workshops and
parking; (k)the review and upgrading of technical designs; (l)the carrying out of
supervision (interventorías) of construction works referred to in this paragraph A.1, all
under terms of reference acceptable to the Bank.
2. (a) Provision of financing for the acquisition of land required for the carrying
out of Part A.1 of the Project; (b) provision of financing for the resettlement of, and the
provision of compensation to, Affected Persons pursuant to the provisions of the
corresponding RAP, in connection with the carrying out of Part A.1 of the Project.
3. Design and implementation of EMPs for the carrying out of Part A.1 of the
Project.
26. Component B: Strategic Public Transit Systems (US$ 97 million). 1. Expansion of the physical scope and geographical and social coverage of the
NUTP in the medium-sized cities through the carrying out of, the following selected
activities:(a)the development of detailed Project engineering designs of integrated
transport systems, all under terms of reference satisfactory to the Bank; (b)the
construction and rehabilitation of road networks; (c) the construction and rehabilitation of
sidewalks, public space, pedestrian ways along bus corridors and bicycle paths; (d)the
construction of pedestrian bridges;(e)the construction of bus stops, terminals and transfer
centers; (f)the construction of bus workshops and parking places; (g)the acquisition of
control centers for strategic public transport systems, including fleet control, traffic lights
and traffic signaling; (h)the rehabilitation and renewal of historic centers;(i)the provision
of equipment and training to the Implementing Entities; (j) the hiring of specialized
technical staff for the Implementing Entities for the implementation of the Project; (k)the
financing of Operating Costs; (l)the hiring of Project auditors; (m) the design and
construction of centers of public citizen services; (n)the design and implementation of
broad communication strategies; and (o) the supervision (interventorías) of all the
activities specified in paragraphs (a) through (n) referred to in this paragraph B.1, all under terms of reference satisfactory to the Bank.
17
In the Loan Agreement, Component A is referred to as Part A of the Project. The same is true for Component B
(Part B).
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11
2. (a) Provision of financing for the acquisition of land required for the carrying
out of Part B.1 of the Project;(b) provision of financing for the resettlement of, and the
provision of compensation to, Affected Persons pursuant to the provisions of the
corresponding RAP, in connection with the carrying out of Part B.1 of the Project.
3. Design and implementation of EMPs for the carrying out of Part B.1 of the
Project.
B. Project Financing
a) Lending Instrument
27. The Project will be financed by a Specific Investment Loan (SIL) in the amount of US$350 million, to be carried out over a period of 5 years. The SIL was chosen because of the
targeted nature of the proposed Project and its intention to support implementation of specific
activities in a number of large and medium-sized cities. The SIL is also considered a good
instrument for financing consulting services as envisioned in the Project.
b) Project Financing Table
28. The GoC has requested the Bank to finance the Government‘s NUTP commitments to large and medium-sized cities eligible for IBRD financing from 2011-2017, which amount to
approximately US$407 million (see Table 1). Due to the limitations and competing priorities of
the Colombia country envelope, the Bank will only be able to support the program with a
US$350 million loan. However, the Bank expects the GoC to request a subsequent follow up
operation to complete the NUTP financing until 2017.18
29. The GoC has also requested the Bank to continue to finance the cost of land required to construct the infrastructure and related public space in both large and medium-sized cities, and
the compensation stemming from land acquisition and resettlement processes. The Bank has
made land an eligible expenditure for Bank financing since the Second Additional Financing for
the IMTS Project. To date, US$3 million have been disbursed out of a total of US$3.5 million
allocated for land acquisition to the cities of Itaguí and Envigado (in the metropolitan area of
Medellin-Valle de Aburrá).19
To date, the land acquisition process has progressed in a
satisfactory manner and this has been validated through regular supervision missions and
comprehensive analysis of the resettlement and land acquisition process. Maintaining land
acquisition as an eligible expenditure for Bank funds will provide an additional degree of
flexibility on the cost allocation between the national and the municipal contributions. The
eligibility of land as an expenditure does not affect the Project‘s safeguards approach; under the
18
At the time of the original IMTS project approval (and the first and second request for Additional IMTS Loans),
the Bank anticipated that the GoC would likely seek further Bank financing for the later years of the program (2011-
2017). See original PAD (Loan 7231-CO) pg. 3: ―…since the implementation of the NUTP will continue beyond
2008, it is likely that GOC will request the Bank to provide a follow-on operation to continue supporting the
program‖. Additional Financing Project Paper (PP) pg. 8: ―It is proposed that the follow-on financing for the NUTP
would be structured as a series of lending operations. The first one would be the US$ 207 million Additional
Financing to cover the NUTP transfers through the end of 2007.‖ A second Addition Financing for US$300 million
followed, which brought total financing for the NUTP to US$757 million. 19
Initially, the Second Additional Financing for the IMTS project allocated US$26 million for the acquisition of
land. In April, 2011, the GOC requested a re-categorization of loan proceeds, whereby US$3.5 million where
allocated to land acquisition.
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12
existing operation, all land acquisition undertaken with non-Bank funds uses the same safeguards
approach to managing Involuntary Resettlement OP 4.12 issues. In accordance with Bank Policy,
the Bank‘s Land Committee reviewed the proposed arrangements for the Bank to finance land
acquisition and found them appropriate. Land acquisition and compensation are expected to
amount up to US$45 million of the proposed operation, and will be conducted as established in
the BP 6.00, Annex A—Special Authorization Arrangements for Selected Types of Expenditure,
―Guidance Note on World Bank Financing of Land Acquisition For Protected Areas‖ dated
August 11, 2005 and related documentation.
30. Table 1 summarizes the estimated Project costs. The table reflects the fact that the proposed US$350 million loan will only partially cover the GoC‘s financing needs to cities
eligible for Bank financing under the NUTP until 2017, which amount to US$407 million. In
effect, the loan will meet the GoC‘s financial requirements to the NUTP for all large cities
(2011-2015), and will only partially finance the program for medium-sized cities. The proposed
loan will finance Component A: Integrated Mass Transit Systems in Large Cities in the amount
of US$253 million, and Component B: Strategic Public Transit Systems in Medium-sized Cities
in the amount of US$97 million.
Table 1. GoC Budget Commitments to the NUTP for Cities Eligible for IBRD Financing
(Calendar Year 2011-2017, US$ Million)
Source: CONPES Document No. 3657 Note: Exchange Rate based on 1USD=COP 2,000.
31. Table 2 describes the total cost of the Project and financing from IBRD.
Table 2. Project Financing Table
Large C it ies Eligible
fo r IB R D F inancing2011 2012 2013 2014 2015 2016 2017 T OT A L
Bucaramanga-M etro linea - 11 18 20 - - - 49
Cartagena-Transcaribe 33 - - - - - - 33
M edellín-M etroplus - 13 53 55 41 - - 163
Pereira-M egabus 8 - - - - - - 8
T OT A L 41 24 71 75 41 - - 253
M edium-Sized C it ies
Eligible fo r IB R D
F inancing
2011 2012 2013 2014 2015 2016 2017 T OT A L
Sincelejo 2 8 28 9 6 4 - 57
Valledupar 3 8 30 6 15 1 34 97
T OT A L 5 16 58 15 21 5 34 154
C UM ULA T IVE T OT A L
(Large & M edium-
sized C it ies)
46 86 215 305 368 373 407 407
Component and/or Activity Total Project
Cost
(US$ million)
Total IBRD
(US$ million)
% IBRD
Financing
Component A: Integrated Mass Transit Systems 253.0 253.0 100%
Component B: Strategic Public Transit Systems 154.0 97.0 63%
Total Financing: 407.0 350.0 86%
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c) Detailed Project Costs for IBRD Financing of Eligible Cities under the NUTP
32. As previously mentioned, the Bank has already supported the NUTP through three loans totaling US$757 million aimed at financing the GoC‘s commitments to large cities for the
construction and implementation of BRTs: (i) Integrated Mass Transit System Project (Loan
7231) for US$250 million, of which US$249.9 million have been disbursed; (ii) First Additional
Financing for the Integrated Mass Transit System Project (Loan 7457) for US$207 million, of
which US$206.8 million have been disbursed20
; and (iii) Second Additional Financing for the
Integrated Mass Transit System Project (Loan 7739) for US$300 million, of which US$297.6
million have been disbursed. Table 3 presents detailed cost information that shows exactly how
these Loans have been applied to each of the cities being financed.
33. The total amount of IBRD financing in each city corresponds to the information provided by each Implementing Entity of their Procurement Plans on a per contract basis. Because related
expenditures for each contract took place in Colombian pesos, and different exchange rates were
applied at the time of the disbursement processing, the numbers related to total expenditures
cannot match with the overall disbursements to date. Furthermore, Annex 2 includes a related
table that provides summary cost information in each of the large cities being financed per type
of infrastructure investment. For the proposed new Loan, Table 3 reflects an approximate
allocation of Loan proceeds for each sub-project.
Table 3. Total IBRD Financing of Eligible Cities under the NUTP
Note: Information based on Local Implementing Entities Procurement Plans as of November, 2010. Information
for Bogotá as of April, 2011.
Totals may not reflect total disbursements due to exchange rate fluctuations. An average exchange rate of
COP1950/USD was used for period 2004-2010.
* Approximate allocation of Loan proceeds for each sub-project. Financing of land, which amounts to US$45 million for this project, is reflected in total allocated to each city.
20
Loan 7231 and Loan 7457 have closed.
LN.7231 LN. 7457 LN.7739 Total IMTS Project New Loan*
(1) (2) (3) (1)+(2)+(3)
Large Cities
Barranquilla 4,712,496 16,282,870 36,673,796 57,669,162 -
Bucaramanga 27,591,055 30,392,419 23,351,392 81,334,866 49,000,000
Cartagena 20,120,103 20,817,962 31,276,566 72,214,630 33,000,000
Medellin 32,562,564 20,607,014 12,617,004 65,786,582 163,000,000
Pereira 26,172,872 - - 26,172,872 8,000,000
Bogota NQS Corridor 147,564,448 118,255,760 176,500,000 442,320,208 -
Medium-Sized Cities -
Sincelejo - - - - 45,000,000
Valledupar - - - - 52,000,000
Technical Assistance 2,300,000 617,130 2,500,000 5,417,130 -
Land - - 3,000,000 3,000,000
TOTAL 261,023,538 206,973,154 285,918,758 753,915,450 350,000,000
Approved IBRD Loan Amounts 250,000,000 207,000,000 300,000,000 757,000,000
Disbursements to Date 249,940,000 206,810,000 297,600,000 754,350,000
City
IBRD Financing (USD)
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14
C. Lessons Learned and Reflected in the Project Design
34. The Project has been designed taking into account the lessons learned from previous Bank operations and analytical work on urban transport projects. Based on the lessons learned,
the Project has incorporated the following design features:
35. There is a role for the GoC in the implementation of urban transport services reforms. Reforms in the sector normally require large investments and complex technical decisions. Given
that cities lack both financial and technical resources, the GoC‘s participation becomes crucial in
promoting reforms at the municipal level.
36. Reliable funds are key to implement long term reform. Urban transport financing should be seen as an integrated whole, justifying the use of taxes on auto users to provide reliable funds
to implement public transport projects. In the case of Colombian cities, gasoline surtax, mostly
paid by private car users, is providing about 34 percent of total NUTP cost, and more importantly
is helping the cities to leverage funds from the GoC.
37. The regulatory framework is key in advancing sound reform. Within the different planning stages for urban transport reforms, most of the attention goes to the technical aspects of
the projects (engineering designs, technology, equipment, etc.), neglecting the regulatory design
of the operation. Given the crucial role of the private sector in the operation of urban transport
systems, the planning process should concentrate more on the definition of several issues that
regulate the partnership between the public and private sector. Efforts should focus on improving
the regulatory framework to encourage efficient, competitive and quality service-standard bus
operations.
38. Environmental and social management are important to ensure successful project implementation. The local Implementing Entities include environmental and social management
teams. Experience has shown that the earlier these teams are onboard and being able to
participate in project design and planning, the higher the rate of success for the particular project
activity. On the other hand, examples have shown that where environmental and social teams
were not brought onboard early on, unmanaged social issues caused serious implementation
delays, and adverse impact on the affected populations. Furthermore, environmental and social
management teams need to place especial consideration on tackling problems and designing
communication and implementation strategies for vulnerable groups, including the poorest
member of a community, informal street vendors, disabled people and women.
39. Implementation strategy should have both high political commitment and strong technical support. Of the several lessons that arise from the successful implementation of
Transmilenio (Bogotá) and Megabus (Pereira), two are particularly critical. The first is that the
implementation of such an initiative requires visionary leadership willing to take risks and
closely involved in the process. The second is that there is the need to create local Implementing
Entities with strong technical capacity to design, plan, and control the new public transit
operation.
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15
40. The implementation of public transit systems goes beyond the construction and/or rehabilitation of the road network. Another lesson resulting from the Transmilenio and Megabus
experiences is that the project cannot be limited solely to the construction of the segregated
busway, or the rehabilitation of the road network. Other complementary actions must be
implemented to guarantee the completion of the urban transport strategy within a comprehensive
perspective that includes reorganizing bus routes, implementing traffic demand management
measures, developing measures to reduce the oversupply of obsolete bus fleet, investing in the
renewal of public space and bicycle paths to promote non-motorized transit, strengthening the
institutional and regulatory capacity of the local transport authority, etc. This demonstrates that
the value added of these types of projects goes far beyond the construction of the required
infrastructure.
41. Synergies and knowledge transfer are fostered by the simultaneous implementation of projects in multiple cities. Important synergies have been created as a result of the simultaneous
implementation of projects in cities participating in the NUTP. This has resulted in a continuous
flow of know-how and best practices among participating cities, the PCU and the Bank in areas
such as civil works management, procurement and fiduciary processes, safeguards management,
operational design, strategies for initiation of operation, among others. The Project has also
benefited from these informal knowledge sharing arrangements to strengthen the implementation
and institutional capacity of the new medium-sized cities which will begin implementation under
this operation. Through this framework, the NUTP is enhancing institutional capacity, fostering
best practices and fast-tracking the learning curve in the large cities that have yet to the operation
of their BRTs, and in medium-sized cities.
IV. Implementation
A. Institutional and Implementation Arrangements
42. At the national level, the implementing agency of the NUTP is and will continue to be the Ministry of Transport (MOT), in close coordination and collaboration with the National Planning
Department (DNP) and the Ministry of Finance and Public Credit (MHCP). MOT has the overall
responsibility for the execution of the Project, provides technical support to the NUTP and is
responsible for monitoring and evaluating program implementation. The MHCP is in charge of
the overall management of resources (including GoC transfers and disbursements), and the
National Planning Department (DNP) carries out preparatory studies, prepares CONPES
documents for each city participating in the program, and also oversees project implementation.
Currently, there is a PCU at MOT that oversees the overall management and implementation of
the NUTP. This unit reports to the Deputy Minister of Transport and is staffed by a mix of civil
servants and individual consultants, including urban transport engineers, economists, accountants
and social and environmental specialists, among others. The unit has proven to be effective in the
implementation of IMTS project and provides direct support to the participating cities and
Implementing Entities in technical, operational, environmental, social and resettlement, and
procurement aspects. The PCU will continue to exist within the MOT to oversee the
implementation of the Project.
43. At the local level, all large cities that participated in the IMTS project have established Implementing Entities that are in charge of executing the civil works and operating the BRTs
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16
once the infrastructure is completed.21
These Implementing Entities are corporate transportation
entities, created upon city council approval and pursuant to the provisions of Colombia‘s
industrial and commercial enterprise laws.22
With respect to medium-sized cities, their CONPES
documents call for the creation of simplified corporate transportation entities, similar to those
created in the IMTS project cities. These project Implementing Entities are currently being
created in each city, and need to be established before the GoC commits co-financing resources
through the Subsidiary Agreements. Furthermore, and as is the case with the IMTS project, these
Implementing Entities will have to work in close collaboration with other municipal agencies,
including the local Transport Authority (Secretaria de Transito), Finance Secretariat (Secretaria
de Hacienda) Public Works or Infrastructure Secretariat (Secretaria de Obras
Publicas/Infraestructura), and Planning Secretariat (Secretaria de Planeación) to execute their
projects. Despite the know-how that has been created at the local level with the implementation
of the IMTS project, and the knowledge transfer created by these institutional arrangements –
whereby the GoC promotes the leadership of the city in the planning, execution and control of
the system, while levering its role as policy regulator, through participation in the Board of
Directors of the Implementing Entities in charge of system development and control— the
project team foresees to a greater extent some higher institutional risks in the implementation of
the Project in medium-sized cities. These institutional risks emerge as a result of their relatively
weaker institutional and technical capacity vis-à-vis the larger cities. However, risk mitigation
plans, developed at appraisal and put in place during implementation will address these and other
risks with mitigation actions, such as, training and capacity building, close supervision by MOT
and PCU, and increased Bank supervision. In addition, the MOT will ensure that each of the
Implementing Entities is staffed with a core team with functions, responsibilities, qualifications
and experience acceptable to the Bank, all throughout Project implementation, in the following
areas: environment, resettlement, procurement, and financial management, and ensure that said
core team is supported by any other professional and administrative staff, as appropriate.
B. Results Monitoring and Evaluation
44. Project progress reports will be prepared by the local Implementing Entities on a semi-annual basis will be reviewed by the PCU and will be submitted to the Bank. These reports will
indicate the progress made under the different components of the Project and measure
performance against the results indicators established in the results framework (Annex I). The
PCU will also prepare and submit to the Bank semi-annual project progress reports that include
the following information: (i) assess progress in the carrying out of the Project, with respect to
each component; (ii) assess progress in the implementation of the Environmental and Social
Management Plans laying out problems identified as well as documenting environmental and
social impacts of the Project in the areas of intervention; (iii) provide a procurement report, and
an updated procurement plan; and (iv) identify any potential developments that could affect
project implementation, and propose solutions to resolve such.
21
In the case of Bogotá, the city relies on specialized municipal works agency— Instituto de Desarrollo Urbano
(IDU) — to carry out the construction of the BRTs infrastructure. 22
The Implementing Entities for the cities participating in the IMTS project are: Barranquilla‘s Transmetro S.A,
Bogotá‘s Transmilenio S.A, Bucaramanga‘s Metrolinea S.A, Cali‘s Metrocali S.A (MIO), Cartagena‘s Transcaribe
S.A, Medellin‘s Metroplus S.A, Pereira‘s Megabus S.A, , and Soacha‘s BRTs will also be managed by Transmilenio
S.A.
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C. Sustainability
45. Improving the provision of urban transport service provision is a key goal of Colombia‘s National Development Plan. The proposed Project was requested by the GoC as part of a
continued dialogue and support to the National Urban Transit Program. The GoC and the cities,
by entering into co-financing arrangements to finance the implementation of the NUTP , and by
committing resource to strengthening the institutional capacity at the national and local level,
have signaled their commitment to and ownership of the Project, both of which are critical
conditions for the long-term sustainability of activities. Yet, cities have fallen short in devising
schemes to ensure the maintenance of the road infrastructure constructed/rehabilitated, and not
earmarked funds for such activities. With regards to the sustainability of investments in urban
renewal, the cities and the local Implementing Entities are also looking to enter into partnerships
with the private sector to maintain public space and green areas, and are revisiting their Land
Use Master Planes (Planes de Ordenamiento Territorial) to assess changes in land use.
46. Also, direct measures are being taken to ensure the sustainability of the operation of the urban transport service provision. On the one side, when changing from a competition in the
market to a competition for the market arrangement for transit service provision, costs could go
up as externalities are being internalized. To prevent fares from going up, subsidies might be
needed. In fact, this is one of the key policy debates in the area of public transport, and one that
the new GoC administration will likely tackle, particularly as to who pays for such subsidies
(national or local government, private car users, etc). On the other side, the technical capacity of
cities in the planning, control and operation of the new transport system is a key sustainability
factor. The GoC has committed to allocating resources to strengthen the planning and operational
capacity of large and medium-sized cities participating in the NUTP, particularly at the initial
implementation stage (beginning of operations).
V. Key Risks
47. The overall risk rating for the Project is High. Potential risks and proposed mitigation measures are detailed in the Operations Risk Assessment Framework (ORAF) in Annex 4. For
project implementation, a risk rating of High was selected as there are implementation risks
related to: (i) safeguards and fiduciary management of the Project; (ii) implementation (and
supervision) complexities stemming from the Project‘s scope of activities and geographical
coverage, (iii) weak implementation capacity in new medium-sized cities, (iv) prevalence of
informal transportation, including motorcycle taxis, that may hinder the reorganization and
formalization of the transport sector by decreasing overall demand for public transit; and (v)
alleged cases of fraud and corruption.
Project Governance Approach
48. In addition to standard requirements under Bank financed projects (including those required under the Bank‘s Procurement Guidelines), the current Project includes some explicit
measures to improve transparency and accountability during Project implementation
incorporating the lessons learned over 7 years of implementation of the NUTP. These include:
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Independent review of compliance processes: Audit by the CGR. While all projects in Colombia being implemented by lines Ministries are subject to the Contraloria General de la
Republica23
– CGR‘s (General Comptroller‘s Office) internal and quality procedures reporting,
the proposed Project will be audited on an annual basis, including an innovative procedure
agreed among the Borrower through MOT, the CGR and the Bank, in the sense that the audit
Terms of Reference will include specific and concrete provisions for interim visits by the
auditors to each of the participating cities throughout the year at different intervals, to look at
specific issues. The results of such interim visits will be shared with the Bank and used during
Bank supervision of the project. The decentralized task force of the CGR also oversees sub-
project implementation in all of the cities participating in the NUTP. As part of the use of CGR
for audits of Bank financed operations, the Bank will continue to provide regular
training/information sessions to CGR to explain and clarify Bank guidelines. Additional efforts
will be undertaken to build the capacity of the CGR auditors as regards World Bank fiduciary
policy and procedures.
Technical audits. In addition to the use of interventorias, technical audits will continue to be conducted under the Project, focusing on sub-projects representing higher risks (e.g. contracts
that have received complaints, contain frequent price variations, or are subject to delayed
implementation). These technical audits will include site visits focusing on verifying that work
has been performed according to contractual standards, and that oversight by both the
Implementing Entity and the interventoria is appropriate.
Prior review of all procurement processes in medium-sized cities. For the medium-sized cities, where capacity is expected to be weaker, the Bank will carry out prior review of all
procurement procedures for the first years of the operation.
Creation of a mechanism for handling procurement complaints. A complaint handling mechanism will be established as a new measure to allow contractors and the community
members to report possible issues related to contract award and implementation. The complaint
handling mechanism will be described in the Project‘s Operational Manual.
Developing price monitoring mechanisms across participating cities. In order to lessen the risk of inflated cost estimates which can often result in higher bid prices downstream, during
implementation, the Bank will work with the Government to assess the feasibility of developing
a price monitoring mechanism for civil works contracts to provide benchmarks to establish the
reasonableness of the prices quoted by Implementing Entities and bidders.
Access to bidding opportunities. Invitations to bid will be proactively made available to contractors‘ associations, such as the Camaras de Infraestructura and Camara de Comercio.
Business outreach events will also be organized. Bidding documents for each contract will be
available for access and download by potential bidders on the MOT website and the
Implementing Entities‘ website.
Communications and outreach. The MOT, in coordination with the local Implementing Entities, have launched a broad Communications Strategy with the objective of informing
stakeholders as a whole, with particular emphasis on civil society, public opinion shapers, and
23
Per MOU between the Ministry of Finance, CGR and the Bank dated March, 2007.
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the media, on the strategic objectives of the NUTP and the co-financing partnership between the
Government and cities to carry out its implementation. The Communications Strategy, initiated
during the Second Additional IMTS Project and financed by the Bank, will continue throughout
the implementation of the proposed Project. A key component of this communication strategy is
the ―Visible Works‖ (Obras Visibles) campaign. Under this initiative, the Government, in
conjunction with the participating city, organizes a public forum with all relevant stakeholders,
including civil work construction companies, work supervision contractors, relevant chambers of
commerce, city authorities, community representatives, public opinion shapers, and the media, to
openly discuss the progress made in each sub-project and tackle specific challenges moving
forward. These forums have proven extremely effective to signal local communities of the
Government‘s oversight and commitment to the effective implementation of the NUTP.
Complaint and grievance mechanisms, including the Centers for Public Attention. During implementation, Centers for Public Attention are probably the most critical mechanism and point
of contact with the local community for receiving questions, claims and complaints. The Centers
for Public Attention are to be set up under the guidelines established in the Project‘s
Environmental Management Framework. These grievance mechanisms exist in all subproject
areas and are a one-stop-shop located for citizen attention and problem resolution. The Centers
are used to publicize works plans, work progress and traffic measures and to receive complaints
and grievances of all types. Such a tool allows for contractors and community members to report
possible issues related to the contract awards and contract implementations. Claims can also be
posted on the website of the local Implementing Entity, received directly in their office or in a
local office in the field. In each city, every step of this process is well documented and the teams
also digitize all information. Lastly, citizens can also place specific complaints regarding
fraudulent or corrupt practices by calling the Government‘s corruption hotline (Línea
Transparente 01-8000-913040).
Capacity building and training. As part of implementation support, the Bank will provide training to build the capacity of Implementing Entities, targeting technical and fiduciary areas, in
particular for new medium-sized cities. Furthermore, the fiduciary training will also target topics
of governance and anti-corruption. These training events will be provided by the Bank.
VI. Appraisal Summary
A. Economic and Financial Analysis
49. A standard cost-benefit analysis was carried out for the large cities of Cartagena and Medellin-Valle de Aburrá, which have yet to start operations, and for the two medium-sized
cities. The analysis includes all public and private costs associated with the implementation a