World Bank Document

PROJECT INFORMATION DOCUMENT (PID) CONCEPT STAGE Report No.: AB2469 Project Name Ecuador Urban Transportation Project Region LATIN AMERICA AND CARIBBEAN Public Disclosure Authorized Sector General transportation sector (81%);Sub-national government administration (14%);Other social services (5%) Project ID P099834 Borrower(s) Borrower: The Municipality of Cuenca (US$25 million) and the Municipality of Quito (US$10 million) Implementing Agency Unidad Metropolitana de Transporte (UMT) Ecuador Tel: 593-7-284-1373 [email protected] Dirección Metropolitana de Transporte y Vialidad (DMT) Ecuador Public Disclosure Authorized Tel: 593-2-2286125 [email protected] Environment Category [X] A [ ] B [ ] C [ ] FI [ ] TBD (to be determined) Date PID Prepared July 11, 2006 Estimated Date of October 1, 2006 Appraisal Authorization Estimated Date of Board December 19, 2006 Approval 1. Key development issues and rationale for Bank involvement Public Disclosure Authorized a. Key Development Issues Rapid urbanization has placed a serious strain on the economic and financial resources of Ecuador’s urban centres. During the 90’s approximately 30-40 percent of the Ecuadorian population migrated both within and outside the country with now 61 percent of the country’s total population living in cities.1 Migratory flows have reflected relatively better living conditions and economic opportunities in urban areas but have also led to the largest poverty increases being in the urban areas in the Costa and the Sierra. In these areas, the poverty rate climbed by more than 80 percent between 1990 and 20012 with access to an adequate supply of developable land and reliable delivery of public services being now critical challenges for sustaining economic growth and reducing poverty. As in most of Latin America, cities in Ecuador face acute urban transport problems mainly Public Disclosure Authorized because of the unintended consequences of sector liberalization during the 80’s that led to a high number of old units operating in mixed traffic, with inappropriate boarding and ticketing 1 Source: National Institute of Statistics and Censuses (INEC), Administrative Policy Division 2 Source: Ecuador Poverty Assessment. April 2004 - 1 - schemes. Urban transport problems affect all urban residents but it is the poor who often suffer the most. Over-supply and widespread congestion3 lead to low operation speeds that hurt the poor who have relatively long and expensive journeys to make each day. Having to take two or more buses to access jobs and social services means that low income groups are particularly vulnerable. In 1999, Quito, Guayaquil, and Cuenca ratified the constitutional mandate (the new Constitution was approved by Congress in June 5th 1998) to decentralize urban transport regulation. While the National Government retained the relevant legislative powers, the municipalities were made responsible for the execution of by-laws and to set regulation governing transport services and contracting. With this new authority, the cities have started overhauling the urban transport sector, however significant challenges remain with weak institutions and incomplete coverage and integration of quality public transport being fundamental challenges. Cuenca and Quito have recently requested support from the Bank to help deal with the challenges they face on urban transport generally and on public transport specifically. • Cuenca Context: Cuenca is the third largest city in Ecuador and serves as capital of the Azuay Province; with a population of 0.35 million represents 4.5 percent of the country’s total urban population. In 1999, the municipal authority created the Metropolitan Transport Unit (UMT) to consolidate the management of the local transport sector. The UMT acted to assign routes and organize the services of the local transport companies. The city ruled over schedules, service, and routes to reflect passenger demands and also implemented unified vehicle specification standards such as number of passengers, type of doors, color, and age. During the restructuring process, the seven formally constituted companies have gradually been implementing reforms and updating management procedures, resulting in some of the companies now being capable of taking on debt for the first time. Regulations passed by the newly constituted UMT and approved by the Municipal Council, also prevented new buses from entering the system. New units can now only replace older, pre-registered units which has caused the fleet’s average age to drop to 3.2 years. Despite this progress, the city needs to work further to continue with the sector modernization by rationalizing service coverage, extending the routes to peri-urban areas, and optimizing traffic flows and overall circulation by means of traffic engineering and traffic signals. The lack of dedicated infrastructure and specific regulation is also hampering the city’s ability to improve the quality of service. The original reform plan envisaged private investment in rolling stock being paired with public investment in dedicated infrastructure—corridors, stations, and terminals—that has not yet occurred and so the benefits of the fleet modernization have not been fully realized. Looking forward, with appropriate investments and reforms, Cuenca has the potential to become a valuable role model for urban transport reform of mid-size cities for both Ecuador and the broader region. This is the explicit aim of the municipal government whose current efforts on physical planning, social, and gender inclusion, will be supported by the proposed project. Being an important regional center, Cuenca is at a crucial stage where its future can be positively shaped. The city serves as the main commercial and service center (institutional, educational, and 3 Although private vehicle ownership levels are still moderate, motorization in Ecuador has grown more rapidly than peer countries in the region with private car registration growing at an annual rate of 11 percent in Quito and 6 percent in Cuenca for the last five years. - 2 - health related) in Azuay Province and the southern highlands of Ecuador and the proposed project will address transportation linkages to the surrounding areas and so also have positive impact well beyond the city’s boundaries. • Quito Context: Quito is the country’s capital and second-largest city and lies in a mountain flanked Andean valley. With a population of about 2.0 million in the metropolitan area, growing at 2.2 percent, Quito accounts for about 19 percent of Ecuador’s population and constitutes a major regional and national economic center. Reflecting its size and economic importance, Quito’s transportation infrastructure is heavily loaded with growing passenger and freight movements. Public transportation services include municipal, inter-parish, and inter- cantonal services circulating through the city. Quito is also the major inland logistical hub for Ecuador and so, carries significant road freight that due to the mountainous geography has only limited ability to avoid major choke points in the urban area adding to congestion and pollution problems. Even before formal local responsibility for transport regulation or management was assigned, Quito developed several feasibility studies during the late 80’s that showed the need for an integrated transport system. In 1990, the city began transport-engineering studies to reorganize and modernize the transport system leading to the implementation of the Trolleybus line in 1995 and the growth of Quito’s reputation as a city with a sustainable and viable urban transport system.4 This reputation was further strengthened when two additional segregated bus rapid transit (BRT) corridors were implemented, the Ecovía in 2002, and the Central North Corridor in 2005. Today the transport system is comprised of three corridors, 35km in length, and the first 7km of a new South-East Corridor. The established corridors, however, do not fully cover the city; out of the 2.1 million daily trips generated, the system only serves 18 percent with traditional services covering the remainder. The three established corridors are neither physically nor operationally integrated and are run under distinct ownership and regulatory regimes. In the northern area of the city, the corridors run almost parallel but key works to physically integrate the stations and other pedestrian infrastructure have not occurred. Buses are typically crowded, the lack of system integration and resultant double-paying are severe limitations of the system. The distinct ownership and regulatory regimes are the legacy of corridor by corridor concessioning and construction that has not yet included quality inter-corridor connection facilities. This lack of integration severely restricts the potential effectiveness of the system and makes inter corridor transfers particularly difficult, especially for those with limited personal mobility such as children, pregnant woman, and the elderly. Quito experiences high levels of transport driven pollution with the reliance on diesel fuel, the aged bus fleet (12.5 years average age for conventional buses) and challenging topography being the significant drivers of local air pollution. In 2003 the CO2 emissions due to the transport 4 The city also established in 2003 the Transport Master Plan with the objective to set the sector policies with four pillars: (a) improve competitiveness: develop a new transport model aiming at: adequate mobility of persons and goods, environmental sustainability,

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