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Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No: 5 1366- BR PROJECT APPRAISAL DOCUMENT ON A Public Disclosure Authorized PROPOSED LOAN IN THE AMOUNT OF US$650.4 MILLION TO THE STATE OF SA0 PAULO WITH THE GUARANTEE OF THE FEDERATIVE REPUBLIC OF BRAZIL Public Disclosure Authorized FOR A SA0 PAULO METRO LINE 5 PROJECT MARCH 3,2010 Sustainable Development Department Brazil Country Management Unit Latin America and Caribbean Regional Office Public Disclosure Authorized 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. FOR OFFICIAL USE ONLY CURRENCY EQUIVALENTS (Exchange Rate Effective June 2009) Currency Unit = Brazilian Real R$1.77 = US$1 FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS ATC Automatic Train Control BNDES National Economic and Social Development Bank (Banco Nacional de Desenvolvimento EconGmico e Social) BUI Single Integrated Fare Ticket (Bilhete Unico Integrado) CBTU Brazilian Urban Train Company (Companhia Brasileira de Trens Urbanos) CETESB Environmental Technology Company (Companhia de Tecnologia de Saneamento Am biental) CDTI Integrated Transport Coordination Commission (Comite' Diretor de Transporte Integrado) CMSP Siio Paul0 Metro Company (Companhia do Metro de SGo Paulo) also known as METRO (see below) CPTM Siio Paulo Metropolitan Train Company (Companhia Paulista de Trens Metropolitanos) CVA Consbrcio Via Amarela, the construction consortium selected for Line 4 EMTU Metropolitan Bus Company (Empresa Metropolitana de Transporte Urbano) EMU Electric Multiple Unit IBGE Brazilian Institute of Geography and Statistics (Instituto Brasileiro de Geogra$a e Estatistica) ICB International Competitive Bidding ICMS Circulation Tax on Goods and Services (Impost0 de Circulacio sobre Mercadorias e Serviqos) IERR Internal Economic Rate of Return METRO S5o Paul0 Metro Company (Companhia do Metropolitano de Si0 Paulo). Same as CMSP MR Metropolitan Region PCU Project Coordination Unit PITU ' Plan0 Integrado de Transporte Urbano 1 PMU Project Management Unit PPP Public-Private Partnership SEAIN Federal Secretariat for Foreign Affairs Secretariat for the Environment SMA (Secretaria do Meio Ambiente) SPM SBo Paulo Municipality SPMR ,580 Paul0 Metropolitan Region SSP State of SBo Paulo STM SBo Paulo Municipal Secretariat for Transport (Secretaria de Transportes da Prefeitura do Munickio de Sdo Paulo) STMSP SBo Paulo State Secretariat for Metropolitan Transport (Secretaria de Transportes Metropolitanos Regido Metropolitana de Sdo Paulo) Vice President: Pamela Cox Country Director: Makhtar Diop Sector Director: Laura Tuck Sector ManagedSector Leader: Aurelio Menendez/Jennifer Sara Task Team Leader: Jorge M. Rebelo i .. 11 BRAZIL Si40 Paulo Metro Line 5 Project CONTENTS Page I . STRATEGIC CONTEXT AND RATIONALE .................................................................. 1 A . Country and Sector Issues ................................................................................................... 1 B . Rationale for Bank Involvement .......................................................................................... 6 C . Higher level objectives to which the project contributes .................................................... 7 I1 . PROJECT DESCRIPTION .................................................................................................. 7 A . Lending instrument .............................................................................................................. 7 B . Project development objective and key indicators .............................................................. 7 C . Project components .............................................................................................................. 8 D . Lessons learned and reflected in the project design ............................................................ 9 E . Alternatives considered and reasons for rejection ............................................................. 10 I11 . IMPLEMENTATION ..................................................................................................... 11 A . Partnership arrangements .................................................................................................. 11 B . Institutional and implementation arrangements ................................................................ 11 C . Monitoring and evaluation of outcomeshesults ................................................................ 11 D . Sustainability ..................................................................................................................... 12 E . Critical risks and possible controversial aspects .............................................................. -12 F . Loadcredit conditions and covenants ............................................................................... 15 IV . APPRAISAL SUMMARY .......................................................... ;................................... 15 A . Economic and financial analyses ....................................................................................... 15 B . Technical ........................................................................................................................... 16 C . Fiduciary ............................................................................................................................ 17 D . Social ................................................................................................................................. 17 E . Environment ...................................................................................................................... 18 F . Safeguard policies .............................................................................................................. 19 G . Policy Exceptions and Readiness ....................................................................................... 21 ... 111 Annex 1: Country and Sector or Program Background .......................................................... 22 Annex 2: Major Related Projects Financed by the Bank and/or other Agencies ..................29 Annex 3: Results Framework and Monitoring ......................................................................... 31 Annex 4: Detailed Project Description ...................................................................................... 34 Annex 5: Project Costs ................................................................................................................ 43 Annex 6: Implementation Arrangements .................................................................................. 46 Annex 7: Financial Management and Disbursement Arrangements ..................................... 49 Annex 8: Procurement Arrangements ....................................................................................... 56 Annex 9: Economic and Financial Analysis .............................................................................. 60 Annex 9a: Impact of Line 5 Extension on Low-Income Population ....................................... 75 Annex 9b: Fiscal Analysis of S30 Paulo State Government, 2003-2008 ................................. 78 Annex 10: Safeguard Policy Issues ............................................................................................. 80 Annex 11: Project Preparation and Supervision ...................................................................... 90 Annex 12: Documents in the Project File .................................................................................. 91 Annex 13: Statement of Loans and Credits............................................................................... 92 Annex 14: Country at a Glance .................................................................................................. 96 Annex 15: Maps IBRD 36790 ........................................................................... 98 iv BRAZIL SA0 PAUL0 METRO LINE 5 PROJECT APPRAISAL DOCUMENT LATIN AMERICA AND CARIBBEAN LCSTR Date: March 3, 2010 Team Leader: Jorge M. Rebelo Country Director: Makhtar Diop Sectors: General transportation sector (1 00%) Sector ManagedDirector: Themes: Access to urban services and housing Aurelio MenendedLaura Tuck (PI Project ID: P 116170 Environmental screening category: A Lending Instrument: Specific Investment Loan Project Financing Data [XI Loan [ ] Credit [ 3 Grant [ ] Guarantee [ ] Other: For Loans/Credits/Others: Total Bank financing (US$m.): 650.4 Proposed terms: Commitment-linked, with all the conversion options, US$ denominated IBRD flexible loan with variable spread option, repayable in 30 years, including 5 years grace and level Source Local Foreign Total Borrower 1,385 -23 0.00 1,385.23 International Bank for Reconstruction and 0.00, 650.40 650.40 Development Inter American Development Bank 0.00 480.97 480.97 (IADB) * TOTAL 1,385.23 1,13 1.37 2,5 16.60 V L Estimated disbursements (Bank FY/WS%m) FY 10 11 12 13 14 Annual 1.6 191.6 302.5 154.3 0.4 Cumulative 1.6 193.2 495.7 650.0 650.4 Does the project depart from the CAS in content or other significant respects? [ ]Yes [ x ] No Does the project require any exceptions from Bank policies? [ ]Yes [x]No Have these been approved by Bank management? n/a ]Yes [ IN0 Is approval for any policy exception sought from the Board? [ ]Yes [x]No Does the project include any critical risks rated “substantial”