Document of The World Bank
FOR OFFICIAL USE ONLY
Public Disclosure Authorized Report No: 54171-IN
PROJECT APPRAISAL DOCUMENT
ON A Public Disclosure Authorized PROPOSED LOAN
IN THE AMOUNT OF US$430 MILLION
TO THE
REPUBLIC OF INDIA
FOR A
Public Disclosure Authorized MUMBAI URBAN TRANSPORT PROJECT – 2A
June 2, 2010
Sustainable Development Unit India Country Management Unit South Asia Region
This document has a restricted distribution and may be used by recipients only in the Public Disclosure Authorized performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.
CURRENCY EQUIVALENTS (Exchange Rate Effective April 30, 2010) Currency Unit = Indian Rupees Rs. 44.42 = $1.0 FISCAL YEAR April 1 – March 31
ABBREVIATIONS AND ACRONYMS
AC Alternating Current KV Kilovolt ACA Additional Central Assistance m/s/s meters per second per second ASCI Administrative Staff College of India MAA Memorandum and Articles of Association CAG Comptroller and Auditor General MMR Mumbai Metropolitan Region Corporate Governance and Financial Mumbai Metropolitan Region Development CGFA MMRDA Accountability Authority CPSU Central Public Sector Undertaking MOF Ministry of Finance CR Central Railway MOR Ministry of Railways CST Chhatrapati Shivaji Terminus Mumbai MOU Memorandum of Understanding DC Direct Current MPC Metropolitan Planning Committee DPE Department of Public Enterprises MRVC Mumbai Railway Vikas Corporation EA Environment Assessment MUTP Mumbai Urban Transport Project EMP Environmental Management Plan MUTP-2A Mumbai Urban Transport Project - 2A EMU Electric Multiple Unit NCB National Competitive Bidding FA&CAO Financial Advisor and Chief Account Officer PAD Project Appraisal Document FM Financial Management PDO Project Development Objective GAAP Governance and Accountability Plan PIO Public Information Officer GHG Greenhouse Gas R&R Resettlement and Rehabilitation GOI Government of India RAP Resettlement Action Plan GOM Government of Maharashtra RDSO Research Design and Standards Organization GPS Global Positioning System RSPM Respirable Particulate Matter HIV Human Immunodeficiency Virus RTI Right to Information Act ICB International Competitive Bidding SAO Senior Accounts Officer ICF Integral Coach Factory SBDs Standard Bidding Documents IGBT Insulated Gate Bipolar Transistor SMF Social Management Framework
IR Indian Railways tCO2e Ton CO2 equivalent ISO International Org for Standardization TSS Traction Sub-Stations IT Information Technology WR Western Railway IUFRs Interim Unaudited Financial Report
Vice President: Isabel M. Guerrero Country Director: N. Roberto Zagha Sector Manager: Michel Audigé Task Team Leader: Hubert Nove-Josserand
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INDIA Mumbai Urban Transport Project-2A
CONTENTS
Page
I. STRATEGIC CONTEXT AND RATIONALE ...... 1 A. Country and Sector Issues ...... 1 B. Rationale for Bank involvement ...... 2 C. Higher-Level Objectives to which the Project Contributes ...... 3
II. PROJECT DESCRIPTION ...... 3 A. Lending Instrument ...... 3 B. Project Development Objective and Key Indicators ...... 3 C. Project Components ...... 4 D. Alternatives Considered and Reasons for Rejection ...... 7
III. IMPLEMENTATION ...... 8 A. Institutional and Implementation Arrangements ...... 8 B. Monitoring and Evaluation of Outcomes/Results ...... 9 C. Sustainability...... 9 D. Critical Risks and Possible Controversial Aspects ...... 10 E. Loan conditions and covenants ...... 11
IV. APPRAISAL SUMMARY ...... 12 A. Economic and financial analyses ...... 12 B. Technical ...... 13 C. Fiduciary ...... 13 D. Social...... 15 E. Environment ...... 16 F. Safeguard policies ...... 17 G. Policy Exceptions and Readiness...... 18
Annex 1: Country and Sector or Program Background ...... 19
Annex 2: Major Related Projects Financed by the Bank and/or other Agencies ...... 31
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Annex 3: Results Framework and Monitoring ...... 33
Annex 4: Detailed Project Description ...... 36
Annex 5: Project Costs ...... 42
Annex 6: Implementation Arrangements ...... 44
Annex 6A: Governance and Accountability Action Plan (GAAP) ...... 49
Annex 6 B: Supervision Strategy Matrix ...... 57
Annex 7: Financial Management and Disbursement Arrangements ...... 59
Annex 8: Procurement Arrangements ...... 75
Annex 9: Economic and Financial Analysis ...... 84
Annex 10: Safeguard Policy Issues ...... 96
Annex 11: Project Preparation and Supervision ...... 102
Annex 12: Documents in the Project File ...... 103
Annex 13: Statement of Loans and Credits ...... 104
Annex 14: Country at a Glance ...... 108
Annex 15: Maps...... 110
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INDIA
MUMBAI URBAN TRANSPORT PROJECT - 2A
PROJECT APPRAISAL DOCUMENT
SOUTH ASIA
SASDT
Date: June 2, 1010 Team Leader: Hubert Nove-Josserand Country Director: Roberto Zagha Sectors: Railways (100%) Sector Manager/Director: Michel Audigé Themes: Other urban development (100%) Project ID: P113028 Environmental category: Partial Assessment Lending Instrument: Specific Investment Loan
Project Financing Data [X] Loan [ ] Credit [ ] Grant [ ] Guarantee [ ] Other:
For Loans/Credits/Others: None Total Bank financing (US$m.): 430.00 Proposed terms: Standard IBRD terms with a maturity of 30 years and a grace period of five years. Financing Plan (US$m) Source Local Foreign Total Borrower 540.50 0.00 540.50 International Bank for Reconstruction and 276.20 153.80 430.00 Development Financing Gap 0.00 0.00 0.00 Total: 816.70 153.80 970.50
Borrower: Republic of India India
Responsible Agency: Mumbai Railway Vikas Corporation Limited 2nd Floor, Churchgate Station Building Churchgate, Mumbai, India 400 020 Tel: (91-22) 2208-0015 Fax: (91-22) 2209-6972 [email protected], [email protected]
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Estimated disbursements (Bank FY/US$m) FY 2010 2011 2012 2013 2014 2015 Annual 3 19 74 130 127 77 Cumulative 3 22 96 226 353 430 Project implementation period: Start January 31, 2010 End: June 15, 2015 Expected effectiveness date: September 15, 2010 Expected closing date: June 15, 2015
Does the project depart from the CAS in content or other significant respects? [ ]Yes [X ] No Ref. PAD I.C. Does the project require any exceptions from Bank policies? Ref. PAD IV.G. [ ]Yes [X] No Have these been approved by Bank management? [ ]Yes [ ] No Is approval for any policy exception sought from the Board? [ ]Yes [X] No Does the project include any critical risks rated “substantial” or “high”? [ ]Yes [X] No Ref. PAD III.E. Does the project meet the Regional criteria for readiness for implementation? [ X ]Yes [ ] No Ref. PAD IV.G.
Project development objective Ref. PAD II.C., Technical Annex 3 To improve the passenger carrying capacity, operational efficiency, level of comfort of, and the institutional capacity of entities involved in, the suburban rail system of Mumbai Metropolitan area.
Project description Ref. PAD II.D., Technical Annex 4 Component 1: Rolling stock fleet increase with procurement of 864 EMU cars. Component 2: Conversion of electric traction system from 1500V DC to 25kV AC on the Central Railway, with signal and telecom system improvements. Component 3: Maintenance facilities and stabling lines to accommodate the additional trains. Component 4: Capacity Strengthening and Technical assistance.
Which safeguard policies are triggered, if any? Ref. PAD IV.F., Technical Annex 10 Environmental Assessment (OP/BP 4.01) Involuntary Resettlement (OP/BP 4.12)
Significant, non-standard conditions, if any, for: Ref. PAD III.F.
Loan/credit effectiveness: The Additional Conditions of Effectiveness consist of the following: the SFA and the MOU with the ICF have been executed.
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I. STRATEGIC CONTEXT AND RATIONALE
A. Country and Sector Issues
1. India is on a high economic growth path. Its urban population has also been increasing, faster than its total population, and urbanization in India is projected to reach 41 percent by 2030. Infrastructure development in most Indian cities is insufficient and is not keeping pace with the increase in travel demand. As a direct consequence, congestion on roads increases travel time as speeds decrease. Meeting the demand is also a challenge for the railways across the country. The Mumbai Metropolitan Region (MMR) is one of the world’s largest cities, with a population of 18 million as per the 2001 census. Within the next 25 years, the MMR is projected to overtake Tokyo to become the largest city in the world, in a country having one of the fastest growing economies. Mumbai, as India’s financial and commercial capital and its most prominent gateway to the country, occupies the top position in terms of its contribution to the all- India GDP.
2. The region faces enormous challenges, one of which is the acute inadequacy of its transport infrastructure. The suburban rail system is the lifeline of Mumbai, carrying more than half of all motorized trips. In 2007-08 an estimated 6.8 million passengers daily (2.5 billion trips annually) travelled on the suburban railway. At peak hour the average frequency for train services was a very reasonable 16 trains per hour. Because of its extensive reach across the metropolitan region and its intensive use by the local population, commuters are subjected to one of the most severe overcrowding conditions in the world, with a density of up to 16 people per square meter in the coaches. In addition to overcrowding in the trains, trespassing on the rail lines is a major cause of accidents, many of them fatal. Death of squatters and trespassers being struck by a train and passengers falling off trains are a daily occurrence, with 10-12 fatalities per day. Furthermore, the rapid pace of urbanization and probable acceleration of car ownership and use in Mumbai present a threat to ambient air quality, already a major health issue in most Indian cities. In Mumbai the main contributor to air pollution is the transport sector, so developing suburban rail use contributes to the efforts being made, in India as well as in other countries, to reduce greenhouse gas (GHG) emissions. The present traffic condition of rail commuters is incompatible with the objectives of Mumbai to become a world-class city with acceptable levels of comfort, convenience, safety and air quality.
3. In early 2000, the Government of Maharashtra state (GOM) and Indian Railways (IR) launched preparation of the first Mumbai Urban Transport Project (MUTP-1)1, which has been implemented since 2002 with the World Bank’s help and is still under way. By March 2010, 84 new twelve-car electric multiple units (EMU) trains had been put into service, 51 of which were financed from the Bank loan and 33 were financed internally by IR. (Previously rakes were all of nine cars.) This has reduced crowding in the system from 500 people per coach ppdpk (persons in peak direction at peak) to 450, despite a net increase in passengers. It is expected that once all additional 72 twelve-car rakes financed under that project are in service, crowding will be further reduced to 350 ppdpk, i.e. 30 percent less than the original density --but still twice the rated carrying capacity.
1 The on-going Mumbai Urban Transport Project, usually referred to as MUTP, is referred to in this document as MUTP-1 to distinguish it from the Second Project.
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4. As demand continues to grow, yet more capacity will be needed. A comprehensive transport study for the Mumbai region, called TranSforM, carried out under MUTP-1, recommended this as a priority, in recognition of suburban rail’s dominant role in the region’s transport network. Suburban rail’s importance is reflected in the size of the planned investment – Rs.315 billion ($7 billion) by 2031, the Region’s second largest investment after the metro.
5. The proposed Mumbai Urban Transport Project-2A (known and referred to in this document as MUTP-2A) is part of this priority program for developing suburban rail. It will be complemented by another domestically-funded project known as MUTP-2B, already approved by the Government of India (GOI) and also part of the priority program, which will further increase the transport capacity of the suburban rail system by adding tracks. MUTP-2B requires land acquisition and its implementation will take longer than MUTP-2A.
B. Rationale for Bank involvement
6. In continuation of MUTP-1, the proposed increase in suburban rail capacity will bring important local benefits, reducing commuting times and increasing comfort for a large segment of Mumbai’s population, especially among its poor. The project will allow more frequent services, cutting waiting time, while higher maximum speeds will cut trip time. The low fare policy of the Mumbai suburban rail system makes this mode of transport cheaper than the bus and particularly attractive to less affluent commuters.
7. As part of this second project, traction voltage will be upped from 1,500 V DC to 25 KV AC, reducing energy losses in distribution. The improved rolling stock supplied under MUTP-2A will further reduce energy consumption, cutting it over all by about 30 percent compared to the present system. This in turn will contribute to mitigating the climate change threat originating from transport.
8. This second project will also continue the capacity building effort started by the Bank team during first project. Throughout the implementation of MUTP-1 the project implementation company, Mumbai Railway Vikas Corporation (MRVC) has gained requisite expertise in managing a challenging suburban rail development project that required professional expertise in technical disciplines, as well as in interagency coordination and communication. This follow-on project will help MRVC in furthering its professional competency and assist it to plan and design more complex projects involving multi-modal stations.
9. Building on the progress made under MUTP-1, the zonal railways, Central Railway (CR) and Western Railway (WR), want to address remaining challenges, in particular to reduce the high number of fatalities related to trespassing and to improve the environmental management side of their operation. The successful partnership between GOM and IR for the development of suburban rail services in the Mumbai Metropolitan Region has been recognized by the railways. In its Vision 2020 strategic plan the Ministry of Railways wishes to develop this type of partnership for suburban rail services across the country and make the management of suburban operations more efficient. This will include addressing the issue of the growing financial deficits of such services. Through specific studies as well as study tours, this MUTP-2A project will help develop the analytical knowledge basis to address these challenges and set up these organizational changes.
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C. Higher-Level Objectives to which the Project Contributes
10. The proposed project is designed to support the Long-term Transportation Strategy for the Mumbai metropolitan region (TranSforM), whose vision is “Transforming Mumbai into a world class metropolis with a vibrant economy and globally comparable quality of life for its citizens”. In addition, the project supports IR’s Vision 2020, which aims to remove bottlenecks and augment capacity to match the growing transportation demand and provide comfort and convenience in every activity.
11. The project supports the World Bank’s Country Strategy for India (FY2009-12), which emphasizes rapid and inclusive growth, sustainable development, and improving government’s effectiveness in delivering services. Continuation of the Bank’s involvement in India’s suburban sector through MUTP-2A, with its mix of growth-oriented investments and capacity building, will help India to develop a collaborative approach between the local governments and IR, towards a more efficient suburban railway system, as befits a middle- income state.
12. The Bank is engaged in consultations with IR for developing a longer-term Plan 2030 that would address the challenges that the Railways face. These derive from India’s expected continued rapid economic growth over the next two decades, the expected changes in the expectation of customers, and the continuing transition to urban life. In parallel with other Bank- funded activities such as the Dedicated Freight Corridor Project under preparation and non- lending technical assistance activities (workshops and study tours), the MUTP-2A project will support the preparation of this strategic plan as it applies to suburban areas, in particular through a provision in the loan for further technical assistance.
13. The project supports environmentally friendly urban public transportation, which is recommended in the Bank’s sector strategy: “Safe, Affordable and Clean Transport”. Rail is one of the most energy-efficient modes of transportation and therefore a direct contributor to cutting GHG emissions, which are widely held responsible for climate change. It even compares well to other modes of public transport. Buses in India emit about 28 grams of CO2 per passenger-km, whereas railways are about 2.5 times more efficient, emitting only about ten grams. The project will help promote the use of this more efficient and climate- friendly mode of public transport. Within its design, the project will support activities that further cut GHG emissions, such as regenerative braking for EMUs and conversion of the power supply from DC to AC. An additional benefit is the local impact on public health from the reduction in pollutants.
II. PROJECT DESCRIPTION
A. Lending Instrument
14. The lending instrument to be used for this project is an IBRD Specific Investment Loan (SIL).
B. Project Development Objective and Key Indicators
15. The proposed project will build upon the progress made under the first Mumbai Urban Transport Project and will further increase the capacity of the suburban rail system within
3 the Mumbai metropolitan region. The project’s development objective is to improve the passenger carrying capacity, operational efficiency, level of comfort of, and the institutional capacity of entities involved in, the suburban rail system of Mumbai Metropolitan area. Accordingly its performance will be monitored through the following indicators: (a) additional capacity in vehicle-km during peak hours, (b) reduction in peak hour overcrowding, (c) reduction in journey times, (d) operational efficiency: reduction in energy consumption, and (e) institutional strengthening: carrying out technical assistance and preparing action plans
C. Project Components
16. The project has four components. The first three lead to the introduction of additional train services on Mumbai’s suburban rail network. The technical assistance component intends to strengthen the institutional and managerial capacity of MRVC and IR. Table 1 shows the project’s components and cost, as well as its financing. Its total cost is estimated at US$970.5 million, and the proposed IBRD loan, at 44 percent of the total, will be US$430 million.
Table 1. Summary of Project Components, Costs and Financing (US$ million, including contingencies) Project Component IBRD Counterpart Total Loan Funding Cost
Component 1 Rolling Stock Fleet Increase 355.7 303.9 659.6 Component 2 DC to AC Conversion 55.2 118.6 173.8 Component 3 EMU Maintenance Facilities and Stabling Lines 0 117.7 117.7 Component 4 Technical Assistance 14.4 0.2 14.6 Front-end Fee 1.075 - 1.075 Unallocated 3.7 - 3.7 Total Financing Sought 430.0 540.5 970.5 Note: Physical and price contingencies are all included
Component 1. EMU Rolling Stock Fleet Increase 17. Under the project 864 additional EMU cars will be procured. This will increase the total fleet to around 3,124 cars. The Bank loan will finance the electrical equipment for the new cars, to be manufactured at Chennai Integral Coach Factory (ICF), while counterpart funds will cover the remaining costs of production. This continues the arrangement adopted under MUTP- 1. As the power supply will be converted from DC to AC before these cars enter service, they
4 will be designed and built for use on 25KV AC system only. This activity is expected to be completed by 2014-15.
Component 2. Conversion of Power Supply from Direct Current to Alternating Current (including Improvements to Signals and Telecoms) 18. Three sections of the MMR’s Central Railway network will be converted from 1,500V DC traction to 25KV AC. This activity comprises (i) modifying overhead catenaries, (ii) installing power sub-stations, along with switching stations (iii) procuring catenary maintenance equipment; and (iv) modifying signal and telecom systems. This investment is needed to allow the operation of the increased fleet as a result of Component 1.
19. The conversion is planned to be completed by 2012-13. In addition to creating capacity to run more trains, the conversion will cut transmission losses and reduce the need for maintenance of power supply installations. Regeneration of electricity during braking is more efficient under high-voltage systems, so this will add a third source of energy savings.
Component 3. EMU Maintenance Facilities and Stabling Lines 20. New stabling lines will be built to accommodate the additional trains supplied under the project. The existing EMU maintenance depot at Kurla on the Central Railway and the maintenance shed at Virar built under MUTP-1 will accommodate the new stabling lines. No new car maintenance shed or overhaul workshop is planned under MUTP-2A. In total, 73 new stabling lines will be built: 34 (including four extensions from 9-car to 12-car) on the Western Railway and 39 on the Central Railway. They will be fully funded by the government.
Component 4. Capacity Strengthening and Technical Assistance 21. Strategic and tactical studies will be carried out, as well as capacity building and training. This represents 1.5 percent of the total project cost. 22. The strategic studies will include: (i) preparation of a priority development program for the Mumbai suburban rail services, consistent with the TranSforM Study and including pre-feasibility studies; (ii) support to IR in the development of their long-term strategy to implement Vision 2020, in particular for the suburban rail services; and (iii) a study to improve the financial situation of the Mumbai suburban rail operation, mostly by maximizing non fare-box revenues. 23. Tactical studies include the following: (i) a ticketing study aiming at establishing a more efficient and user-friendly ticketing system for Mumbai’s suburban rail system; (ii) study and design of an improved passenger information system for the system; (iii) a study to reduce the number of accidents due to trespassing, and (iv) a study to identify specific improvements to environmental practices within the operations of the Central and Western Railways. 24. Capacity building will include supply and installation of software for improved power supply and operation simulation. Training will aim at reinforcing the professional efficiency of MRVC officers on the basis of an approved training plan.
Lessons Learned and Reflected in the Project Design
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25. The on-going MUTP-1 project has made significant progress towards achieving its development objectives with a noted reduction in overcrowding in suburban trains and operation of new buses of improved design. The MMR Development Authority (MMRDA) has improved its capacity to manage resettlement and rehabilitation that is now implemented with reasonable quality. But land acquisition and resettlement and rehabilitation are still slow, as is road construction. 26. The design of MUTP-2A builds on the following key lessons learned from the implementation of MUTP-1 and other transport operations in India.
27. Motivation, ownership, effective implementation planning and sustained follow- up on the part of the client is an important factor in implementation success. MRVC, which started off as a new entity has in course of implementing MUTP-1 developed management experience, expertise in Bank-assisted operations and capacity to liaise with the several departments and agencies of IR2, GOM, and other stakeholders for implementing the project’s suburban rail component. This experience has given MRVC the required understanding and confidence to implement a new externally-funded project on its own in coordination with other institutions and agencies.
28. The project should be designed in a way that inter-agency coordination does not become an obstacle to carrying out key activities. One of the key reasons explaining the slow pace of MUTP-1’s implementation was the complex project design with ambitious implementation arrangements, involving multiple implementing agencies without effective coordination. Five project implementing agencies were involved, with MMRDA as the coordinator. It would have benefitted from a clearer contractual co-ordination framework to ensure effective progress. Long delays in project components such as station area improvement schemes and road-over-bridges, requiring greater inter-agency coordination, forced the removal of these sub-projects from MUTP-1 as part of a project restructuring. To minimize such delays on account of weak co-operation and ineffective inter-agency coordination, MUTP-2A has been designed as a simple but comprehensive project for enhancing the quality and magnitude of the Mumbai suburban rail operations, through activities that will involve essentially IR agencies coordinated by MRVC. Implementation arrangements for MUTP-2A have been planned in such a way that progress will not be vulnerable to poor inter-agency coordination.
29. Project design should adequately focus on capacity building of the client, especially in new areas, and leave space for implementation arrangements to evolve, instead of being frozen in time, to achieve greater efficiency. The nature and significance of some major resettlement difficulties were appreciated by the client during the process of implementation. Through very active Bank involvement, MMRDA has gradually evolved a more sustainable and
2 Central Railway and Western Railway are two of the largest and busiest of the 16 zones of Indian Railways. Their respective divisions, Mumbai Division of the Central Railway and Mumbai Central Division of the Western Railway, are involved in this project. IR is a department owned and controlled by GOI, via MOR. IR manufactures much of its rolling stock and heavy engineering components at its six manufacturing plants, called production units, which are managed directly by the Ministry. Chennai ICF is one of these. Each of the six production units is headed by a general manager, who reports directly to the Railways Board. The Research Design and Standards Organization (RDSO) is a research and development organization under MOR, which functions as a technical adviser and consultant to the Railways Board, the zonal railways, and the railway production units in respect of design and standardization of railway equipment and problems related to railway construction, operation and maintenance.
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consultative approach. It developed capacity for managing large-scale and complex resettlement processes. The present project includes several studies that will help MRVC and IR strengthen their capacity to address difficult and sensitive challenges, such as the safety of trespassers, environmental management and financial sustainability.
30. Mechanisms for strengthening transparency, accountability, and good governance should be planned upstream and integrated into the project design to enhance implementation quality and outcomes. Successful implementation of social safeguards, the most challenging issue in MUTP-1, was due to establishing effective institutional mechanisms. These included an independent monitoring panel for third-party monitoring and a transparent and accountable grievance redress mechanism for resolving complaints and disputes. Measures for transparency, accountability, and good governance, including third-party monitoring and dispute resolution, are incorporated in MUTP-2A as a part of the Governance and Accountability Plan.
31. Urban transport projects undertaken in diverse and challenging metropolitan settings such as Mumbai involve complex political-economy issues. They need to be anticipated and the project designed accordingly, so that the implementation trajectory remains well within the reach of the implementing and funding agencies. Factors other than inter-agency coordination that posed roadblocks in implementation of MUTP-1 included difficult political economy issues, especially with regard to management of necessary land acquisition, resettlement and rehabilitation (R&R). MUTP-2A has been carefully designed to avoid land acquisition and R&R activities. Compared to MUTP-1, which required resettlement of some 19,000 project-affected households, MUTP-2A does not involve any land acquisition, and squatter households required to be resettled may not exceed twenty.
D. Alternatives Considered and Reasons for Rejection
32. Type of World Bank financing: The possibility of treating the project as additional financing for MUTP-1 instead of a separate project was discussed. However, the activities planned for MUTP-2A may go beyond three years of the expected closing date of the on-going loan, the limit allowed by Bank policy, so additional financing would not be possible. Also, the additional financing option would be financially less advantageous for the Borrower. It was agreed that MUTP-2A should be prepared as a separate project as initially stated.
33. Number of rakes included in the project: Initially the project design included the procurement of only 60 12-car rakes, the maximum that could be used efficiently on the existing infrastructure. However, simulation information provided by MRVC showed that it will be possible to use 72 rakes efficiently on the infrastructure available at the end of MUTP-2A, and the project has been adjusted to this higher value to further improve the system’s capacity.
34. Number and size of stabling lines: Initially a larger number of stabling lines were considered to be installed under the project, but they were excluded to minimize land acquisition and resettlement impacts. The project has been designed in a way that it requires no private land acquisition and involves no resettlement activities.
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III. IMPLEMENTATION
A. Institutional and Implementation Arrangements
35. MUTP-2A will continue with the institutional arrangements put in place under MUTP-1 that proved to be efficient for an effective partnership between the Government of Maharashtra state and Indian Railways in carrying out the project. MRVC, incorporated under the Companies Act, 1956, is a Public Sector Undertaking, limited by shares, of the Indian government under IR. Owned almost equally by GOM and IR, MRVC is expected to coordinate and implement development projects for the suburban rail system in Mumbai on behalf of GOM and IR. MRVC will receive a fee called Directional and General (D&G) charges from GOM and IR for its services under MUTP-2A.
36. MRVC is the project implementing agency for MUTP-2A and in that role is accountable for satisfactory completion of all the project works. MMRDA, ICF, RDSO, WR and CR are executing agencies. As the project implementing agency, MRVC, on behalf of GOM and IR, is responsible for financing and procuring all the contracts financed by the loan, including the rolling stock and power supply equipment, as well as for executing certain identified works in the field, with due safeguards in consultation with the Zonal Railways. Memoranda of understanding which incorporate insurance to respect the environmental management plan, time line of works and activities to be carried out by the respective agencies, will be set up between MRVC and the executing agencies.
37. GOM and IR will share the investment costs of the Bank-financed project on a 50/50 basis, making GOM a key beneficiary and stakeholder of the project along with IR. The project will benefit from this partnership and will seek ways to further deepen it through technical assistance and capacity building. GOM and IR will ensure that its activities under the Project are carried out in accordance with the provisions of the Implementation Manual, SMF, and EMPs, and in accordance with the provisions of the Anti-Corruption Guidelines, and shall ensure that the Implementation Manual, SMF, and EMPs are not materially revised, amended, waived, or abrogated without the prior no objection of the Bank.
38. Flow of Funds and Financial Management: The borrower of the World Bank loan will be India, who will make its proceeds available to MOR and GOM. One half of each loan disbursement will be released to GOM as Additional Central Assistance under the standard policy of external assistance to a State and to MOR through the General Budget. MOR and GOM will provide loan and counterpart funds to MRVC. MRVC will be responsible for financial management arrangements for the project. A recently completed assessment concluded that MRVC has a financial management system adequate to account for and report on the project resources and expenditures accurately. The responsibility for overall project financial management will rest with MRVC’s Director (Finance), who will be responsible for activities relating to compiling project budgets, project accounting, reporting to the Bank in a timely manner, submitting applications to the Bank for direct payments, advances and replenishments and periodical audits. The project financial management cell will remain adequately staffed during the implementation of the project.
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39. Safeguards Management: An environmental management plan (EMP) and a social management framework (SMF) for the project have been prepared satisfactory to Bank which are in line with those approved by the Bank for MUTP-1. It is expected that both MRVC and CR will hire a project management consultant to assist them in implementing the project. In addition, MRVC has obtained ISO 14001 certification for its environmental management system. The project’s environmental management plans (EMP will form the basis on which its performance will be measured. The management representative required by the ISO compliance system will be the Deputy Chief Engineer. S/he will supervise the consultant hired by MRVC and co-ordinate with the respective chief engineer of CR to confirm compliance with the relevant provisions of the EMP. For the contracts to be executed through the participating railways, it has been agreed that the relevant provisions from the Railway Contracts Manual will be enforced and the necessary instructions to the contractors are to be issued. The project does not involve any private land acquisition or resettlement impacts. However, MRVC has prepared a Social Management Framework (SMF) Social management framework referred to in Chapter-3 of the Project Implementation Manual in order to deal with any LA or R&R in case of any future alterations in design or layout. MRVC has also reached an understanding with MMRDA that the latter will implement any future resettlement activities as required on behalf of MRVC as per the Bank approved SMF that is based on the Resettlement and Rehabilitation (R&R) policy for MUTP-1. Adverse impacts relating to access, health, safety, and unequal wages are common to most civil works and will be addressed by the concerned railways’ divisions as part of construction management, which MRVC will monitor.
B. Monitoring and Evaluation of Outcomes/Results
40. The Results Framework shown in Annex 3 is the main instrument for monitoring and evaluating achievement of the project developmental objective (PDO) and outcome indicators. The project’s main outcome indicators, namely additional capacity, peak hour overcrowding, journey times and energy consumption, will be generated by routine monitoring by MRVC using ridership/occupancy surveys of commuters and operational statistics, compiled in yearly reports. This will help in assessing the project’s contribution to enhancing the capacity, efficiency and financial viability of MMR’s suburban rail transport system and to redirect it, if necessary, to achieve the PDO. MRVC has provided baseline and end-of-project target values for the outcome and most of the intermediate performance indicators.
C. Sustainability
41. Since the proposed project intends to reduce overcrowding, the financial performance of the suburban rail operations is expected to deteriorate in the medium term as a result, unless revenues increase slightly faster than the cost price index. However, Mumbai’s suburban operations represent a comparatively small share of IR’s total business, so they have only a minor impact on IR’s overall financial performance, which is far more dependent on railway-wide tariff policies and continued strong growth in freight traffic. Therefore this financial condition is not expected to impact significantly the sustainability of the operation and maintenance of the suburban rail system. 42. MRVC has been given the main mandate to formulate and implement rail infrastructure projects that require coordination between MOR and GOM. It is funded
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accordingly by both administrations. However, this does not make MRVC a permanent structure and MRVC will remain in existence only as long as it is judged necessary beyond the year 2014, the end of the current MOU. An amendment to the MOU will be signed to ensure that MRVC continues as implementing agency of MUTP-2A until its completion.
D. Critical Risks and Possible Controversial Aspects Risks Risk Mitigation Measures Risk Rating with Mitigation Risk Rating Operation-specific Risks Technical Design Demand assessment risk: demand may Additional counts will be made during exceed the forecast, thereby reducing project preparation and project the expected passenger comfort implementation to monitor passenger benefits (reduced overcrowding). This loadings. The pace of implementation of can happen because population or the Strategic Transport Plan may be economic growth does not change as revised accordingly. Moderate forecast. It can also happen because the fare does not rise at the same pace as the cost escalation index. Based on recent traffic counts, this risk is moderate. About ten percent of electric motors The Bank team will encourage IR to pay have failed in trains so far delivered more attention to qualification of critical under MUTP-1, with a small impact items of rolling stock procurement. Low on operations as the Vendor has replaced them, but with moderate future risk. Implementation Financial sustainability: continuation The impact of the project on IR’s financial Capacity and of the present fare level trend will performance as a whole is considered small Sustainability increase the financial deficit of the and not liable to affect significantly the Low suburban operation, creating a sustainability of the suburban operations medium-term financial risk for IR. and maintenance. Financial Possibility of certain gaps in corporate An assessment of corporate governance Management governance and financial and financial accountability (CGFA) accountability and management arrangements in MRVC has been practices in MRVC. (MRVC is in the completed. The objective of the assessment process of implementing MUTP-1 and is to (i) benchmark current CGFA practices is already familiar with Bank in MRVC against industry standards and procedures). good practices and (ii) agree on an action plan with dates for implementing capacity building measures that are identified. Progress on the agreed action plan would Moderate be monitored during project preparation (subject to and prior to implementation. progress of Funds will flow to MRVC through budget implementati release, which will be replenished by the on of agreed Bank on the basis of quarterly interim CGFA action unaudited financial reports and expenditure plan forecasts. Direct payment by the Bank to the suppliers will be the likely option under the project. The project will comprise only a few large supply contracts, which will be subject to prior review by the Bank.
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Procurement Use of the Bank’s revised standard bidding documents may require an Bank staff will guide MRVC staff in initial familiarization period, which under-standing the various changes and may result in delays in finalizing their import, even during the period of contract awards. Low issue and receipt of bidding documents,
and clarify doubts at all stages, to avoid Since all procurement packages are long delays. large values, there is likelihood of
delay in decision making, generally The team will discuss and agree on for all packages that involve RDSO as arrangements that will be worked out with the design organization with mandate RDSO and the Railway Board to to clear the specifications and Moderate participate early on during the bidding and particularly for procurement of EMU later evaluation process of these rolling stock, as clearances will be procurements. required at the Railway Board/GOI levels. Social and There are no substantial risks in this (a) MRVC carried out a supplementary Environmental project associated with social and social impact assessment survey in order to Safeguards environmental impacts. All physical reconfirm the nature and magnitude of activities are located within the adverse impacts on a few households living existing railway lands and involve no alongside the rail tracks leading to the land acquisition or resettlement proposed stabling lines site at the Virar impacts. (a) However, stabling lines Scrap Yard. The study confirmed that there proposed at Virar Scrap yard may is no LA or R&R impacts. In order to pose hazard risks for people living in address the safety issues, Railways will hutments outside the execution area barricade the whole stretch from the rail but near the railway racks. tracks and the stabling site. (b) Any alteration the project design may require LA and R&R measures. (b) MRVC has prepared a SMF acceptable to the Bank, based on the R&R Policy approved for the ongoing MUTP-1 to deal Moderate with any LA or R&R impacts caused due to any alteration in design or outlay. In continuation of the arrangements established for MUTP-1, MRVC will carry out any necessary LA through the state government whereas R&R measures will be implemented by MMRDA on behalf of MRVC. Adverse impacts relating to access, health, safety, and unequal wages are common to most civil works and will be addressed by the concerned railway divisions as part of construction management, which MRVC will monitor.
Overall risk (including reputational risks) Moderate
E. Loan conditions and covenants
43. Conditions of Effectiveness: Subsidiary financing agreement between MRVC and GOM and the MOU between MRVC and the ICF have been executed.
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IV. APPRAISAL SUMMARY
A. Economic and financial analyses
44. Economic analysis: Since this project is a continuation of the earlier MUTP-1 project, the economic analysis for this project has been conducted comparing the proposed additional project components as the ‘with’ alternative against the situation at the end of MUTP- 1 as the ‘without’ alternative.
45. The analysis has been carried out of the project’s incremental costs and benefits. The economic analysis for the suburban rail component done at the stage of MUTP-1 has been updated to current prices. The assumptions have been modified after comparing the results of the earlier analysis with the actual outputs for traffic, average trip length, increase in other traffic (passengers and freight), procurement of rakes and the cost of various components. The revised assumptions were then used to add the proposed components (MUTP-2A) and their costs to estimate the total benefits of the whole project. The difference in costs and benefits for MUTP-1, ‘with’ and ‘without’ MUTP-2A were computed to arrive at the economic rate of return for the proposed component.
46. The evaluation shows that the project will have an economic rate of return of 17 percent and net present value, discounted to 2010, of US$262 million in 2008 prices at a 12 percent discount rate over a thirty-five-year evaluation period (2010 to 2045). The above results indicate that the project is very viable economically and the Mumbai city will gain from the better suburban system, the lifeline for commuter transport in the city. Detailed analysis is provided in Annex 9.
47. Financial analysis: MRVC has made financial projections of the Mumbai suburban system over a 35-year period, based on 2008-09, and related them to the overall financial performance of IR. It took into account the impact of both the on-going MUTP-1 (assumed to be completed in 2010-11) and MUTP-2A (assumed to be completed in 2014-15). A Base Case analysis was undertaken, as well as sensitivity analyses for the key assumptions. The model was originally developed as part of the Financial and Institutional Study of the Mumbai Suburban System in 1996 and has since been used regularly to forecast demand, earnings and operating expenses, generally performing well.
48. In 2008-09, the Mumbai system represented an estimated 12 percent of IR’s passenger traffic (measured in passenger-km) and about seven percent of IR’s total traffic including freight. However, because of the very high average loads carried and the low average fare, it only generated about 1.5 percent of IR’s total revenue and about two percent of its total working expenses (excluding depreciation). Because MUTP-2A will reduce over-crowding and thus require more assets and services to carry the same volume of traffic, its financial performance is likely to deteriorate for at least the medium-term. However, its comparatively small share of the total IR business means that it will have only a minor impact on the financial performance of IR as a whole, which is far more dependent on railway-wide tariff policies and continued strong growth in freight traffic. Detailed financial analysis is given in Annex 9.
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B. Technical
49. During MUTP-2A it is expected that the same signaling and telecom technology will be used as existed during MUTP-1, i.e. digital axle counters, both compatible with AC traction. The technical specification for the EMU cars was the subject of extensive discussion with IR during the preparation of MUTP-1. Two separate independent reviews were undertaken, one commissioned by IR, the other by the Bank. These confirmed that the specifications were appropriate for the particular conditions in Mumbai (very heavy passenger loadings and difficult operating conditions during the monsoon season) and are in line with current international trends.
50. The new EMU coaches will be provided with (i) “state-of-the-art” 3-phase “Insulated Gate Bipolar Transistor (IGBT) based” AC traction technology with improved energy efficiency and reliability, (ii) maintenance-free, higher horse-power (30 percent) 3-phase AC traction motors with Variable Voltage Variable Frequency control, (iii) a GPS-based microprocessor-controlled passenger information system, (iv) higher acceleration and deceleration of 0.54 m/s/s and 0.76 m/s/s respectively, with a maximum speed of 100 km/hr, (v) a forced air ventilation system to maintain the difference in CO2 level between the inside and outside of the coach within 700 ppm as per international standards, (vi) air-conditioned driver’s cab and provision of capacity for power supply for air conditioning of passenger areas of the EMUs as a retrofit at a later date, and (vii) air springs in secondary suspension for better riding quality.
C. Fiduciary
51. Financial management (FM): The design of the FM arrangements for the proposed project builds on the following strength in the area of financial management of MUTP-1: a budgeting, accounting and reporting system has been operational in the entity for the past several years, which will be used for accounting and generating the required financial reports under MUTP-2A. MRVC has prior experience in implementing Bank financed project (MUTP-1) and its FM policies and procedures are being further strengthened for implementing MUTP-2A.
52. Disbursement arrangements: The project will be funded through budget releases to MRVC by MOR and GOM as in the case of MUTP-1. Separate budget codes will be established for the purpose by MRVC. The IBRD funds will flow to MOR (through the general budget) and GOM (through Additional Central Assistance) from the GOI’s Office of Aid, Audit and Accounts. The repayment of the loan will be done by GOI/GOM in equal parts and the surcharge already levied on suburban commuters will contribute to this repayment fund. Of the total surcharge collected 50 percent will be transferred to MOR by CR and WR and the remaining 50 percent will be transferred to GOM or adjusted against GOM receivables by MRVC. IBRD will advance an amount equivalent to six months’ forecast expenditure, to be deposited in the Designated Account that will be opened by the Ministry of Finance. Subsequent disbursements by the Bank will be routed through the Designated Account. Disbursements by IBRD will be made on the basis of the quarterly interim unaudited financial reports submitted by MRVC. Supporting documentation, including completion reports, certifications, bills and other documentation will be retained by MRVC and made available to the Bank during project supervision. These will also be audited as a part of the annual audit of project financial statements. Retroactive financing will be available under the project for payments made within
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12 months prior to the expected date of the loan agreement and to be eligible, the activities should be procured as per Bank guidelines on procurement.
53. External Audit: As per Section 619(2) of the Companies Act, 1956, MRVC’s statutory auditors will be appointed by the Comptroller and Auditor General (CAG) to carry out an independent audit and express their opinion as per the requirements of the Companies Act. In addition, the CAG through its Principal Director of Commercial Audit may also conduct supplementary audits under Section 619 (3)(b) of the Companies Act on the audited financial statements. After the completion of the statutory audit and supplementary audit, the audited accounts and auditors’ reports are adopted by MRVC’s Annual General Meeting. Statutory audits of MRVC are on schedule. They do not contain any material observations. In addition to the audits under the Companies Act, MRVC is subject to proprietary audit/ inspection by the Office of the Principal Director of Commercial Audit.
54. Procurement: Procurement under the project will be carried out by MRVC. MOR has implemented several Bank-funded projects aimed at modernizing India’s railways. Generally the officers are aware of the procurement procedures followed in these projects. MRVC will depute some representatives who will deal with this procurement, to the training programs organized by Administrative Staff College of India, the National Institute of Financial Management or other reputable institute for updating their knowledge on procurement.
55. MRVC has been delegated authority by IR to make procurement decisions for contracts up to a value of Rs. 1,000 million (about US$20 million). All contracts except the one for the procurement of EMUs electric equipments will be within this threshold. The value of the EMU contract is expected to be over US$20 million. In this case, the bid evaluation will be carried out by a committee of MRVC and RDSO and forwarded to Indian Railways Board for review and approval of recommendations. MRVC and IR have agreed on a timetable for completing the various stages of bid evaluation and award of contract, to ensure that the contract is awarded within 150 days of bid opening.
56. The agency is staffed by qualified technical personnel and managers, well versed in the project’s technical aspects. Some of the officials have undergone training in Bank procurement and most of the officers have handled procurement under Bank-funded projects. Considering that MRVC has implemented the on-going MUTP-1 successfully, fresh assessment of the capacity of MRVC to carry out procurement for the project has not been considered essential and not done formally. However, based on the experience of the staff engaged in the first project and little change in the organizational structure for implementing the second project, the Bank team concludes that the agency has adequate capacity to handle procurement under this project. The procurement risk is assessed as ‘moderate’ in view of the large packages proposed and considering the possibility of delays due to involvement of several agencies in the decision- making process.
57. Procurement for the proposed project will be carried out in accordance with the World Bank’s "Guidelines: Procurement under IBRD Loans and IDA Credits" dated May 2004 revised in October 2006; and "Guidelines: Selection and Employment of Consultants by World Bank Borrowers" dated May 2004 revised in October 2006, and the provisions stipulated in the loan agreement. The various items under different expenditure categories are described in
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general in Annex 8. For each contract to be financed by the loan, the different procurement methods or consultant selection methods, the need for pre-qualification, estimated costs, prior review requirements, and time frame have been agreed between the Borrower and the Bank in the Procurement Plan. This Plan will be updated at least annually or as required to reflect the actual project implementation needs and improvements in institutional capacity.
D. Social
58. Potential social risks: The project with its current design and outlay involves no involuntary resettlement impacts with the proposed activities of stabling lines, traction sub- stations, section and sub-section posts and maintenance facilities requiring no land acquisition. The stabling lines will be built over about 28 ha of railway land, only along existing railway tracks. All other facilities, where choice of location can be flexible, have been planned to be developed on vacant plots available with the Railways. Thus, MRVC has carefully explored various alternatives and has ensured that no private lands will need to be acquired, in order to avoid and minimize adverse social impacts. A supplementary social impact survey was undertaken by MRVC at Virar Scrap Yard to assess the likely impact on 38 structures located close to railway tracks. The survey confirmed that no land acquisition or resettlement measure was required.
59. In order to deal with any future involuntary resettlement impacts due to any possible alteration in design or outlay, MRVC has prepared and adopted a social management framework (SMF) detailed under the MUTP R&R Policy, which was adopted for the ongoing MUTP-1 and is satisfactory to the Bank. The SMF is referred to in the Chapter-3 of the Project Implementation Manual, which also provides that any necessary resettlement and rehabilitation (R&R) measures will be carried out by MMRDA on behalf of MRVC. In such an event, MRVC will prepare a specific resettlement action plan (RAP) based on the SMF, in a manner acceptable and satisfactory to the Bank. This arrangement is a continuation of the arrangement established for implementing R&R measures for the rail component of MUTP-1. Other social safeguard risks relating to access, health, safety, and unequal wages will be monitored and mitigated as part of construction management.
60. Assessment approach: In order to identify and assess the nature and magnitude of social impacts, MRVC has carried out a social impact assessment (SIA) as part of the Environment Assessment (EA). The EA Report, which includes a separate section on social issues, has confirmed that the project will require no private land acquisition. A few railway employees earlier living at the proposed site at Thane have shifted away after the project was announced and some ten such railway employees living close to the proposed stabling lines at Bhaindar North informed during EA that they will shift away before the commencement of the work. As railway staff, they will be provided with staff quarters or monthly house rent allowance enabling them to relocate away from this place. A supplementary social impact survey was carried out at the proposed site for stabling lines at the Virar Scrap yard to assess the nature and magnitude of impact on 38 structures located close to the railway tracks. The survey findings were as follows: (a) Out of 38 structures, 37 were residential structures and one was a temple; none of these are affected by the proposed stabling lines work; however, (b) 13 of these structures are located alongside tracks and occupied by railway employees living there; the
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families need to be shifted for safety reasons; and they will be provided with staff quarters or receive monthly house rent allowance enabling them to relocate; c) the other structures including a temple and residences for 18 squatter households and six tenants (in private houses) are beyond the execution zone and will not need to be relocated; (d) the execution areas and the railway tracks at this stretch will be barricaded for enhancing human safety.
61. At certain other proposed work sites, some lands required for the project have been licensed out by the Railways to its employees for vegetable cultivation in order to prevent encroachment. These licenses are issued on annual basis and will normally be allowed to run their course before the work commences. In cases where this is not possible, the licenses will be terminated with one month’s advance notice as per the license terms and conditions by the Railways providing the licensees with sufficient time to harvest crops and salvage assets if any before such licenses come to an end.
62. Resettlement instrument and measures: The results of the EA and supplementary social impact survey carried out by MRVC confirmed that no land acquisition or R&R measures are required for the project. In order to deal with any future involuntary resettlement impacts due to any alteration in design or outlay, MRVC has prepared and adopted a Social Management Framework (SMF). which is detailed under the R&R Policy, which was adopted for the ongoing MUTP-1 and is satisfactory to the Bank, setting forth the rules and procedures for carrying out any social, resettlement and rehabilitation activities under the Project, including identification, assessment and mitigation of potential environmental and social impacts arising from the Project, carrying out consultations, processing and redressing grievances, monitoring related impacts, and, if required, limited resettlement and rehabilitation action plans and other development and entitlement plans for people adversely affected as result of Project implementation.
63. Implementation arrangements for mitigation measures: The implementing agency has fair experience in coordinating land acquisition and resettlement activities with the state government. It was involved with the land acquisition for carrying out the rail component of MUTP-1. MRVC has gained considerable exposure to the sensitiveness of urban resettlement issues by way of coordinating with MMRDA in resettling a large number of project-affected people from along the railway sub-projects of MUTP-1. This arrangement is a continuation of the arrangement established for implementing R&R measures for the rail component of MUTP- 1. MRVC’s main task will be to coordinate efforts with MMRDA for carrying out the mitigation measures, for management of which it has the required capacity.
64. Social safeguards in Project Implementation Manual: The current project design involves no private land acquisition or resettlement impacts. MRVC has prepared a Project Implementation Manual, the Chapter-3 of which refers to the social management framework which will enable MRVC to address land acquisition and R&R issues in the event of any future alteration in the project design or lay out.
E. Environment
65. Potential Environment Issues: The project activities under MUTP-2A are expected to have only a few negative environmental impacts. These will mostly occur in areas where new stabling lines or traction substations are proposed. Augmentation of workshops is
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likely to have few adverse environmental impacts. The long-term impacts identified include tree cutting at proposed sites, potential for damage to (only a few) mangroves in one location, and potential traffic safety hazards due to re-routing in select locations. Additionally, temporary impacts related with the construction stage are also expected on the following aspects: increased air pollution and safety hazard due to increased traffic, especially close to sensitive receptors, increased noise levels, potential impacts from improper handling of hazardous substances like asbestos and oils, pollution of water courses close to sites, and provision for labor. In light of these limited impacts, the project has been assigned Category B.
66. Assessment Approach: The environmental assessment has included review of the relevant activities in MUTP-1, followed by site visits to potential sites under the project and on- site discussions with stakeholders, including railway officials. This has been followed up by a review of the contract documents for environmental management aspects. Prototype environmental management plans have been prepared for activities that are common across sites. Plans have then been modified to suit site conditions such as at Chinchpokli traction substation, where handling asbestos is likely to be an important issue. A framework has been prepared to assess and manage impacts in locations where sites may have to be changed due to unforeseen circumstances. The resultant generic environmental management plan has been included in the project’s Operations Manual.
67. Environmental Management: The experience gained during the preparation and implementation of MUTP-1 has been advantageously used in establishing the current approach to environmental management. Permissions for cutting/transplanting trees will be obtained before work starts on site and the contractors will be required to obtain the required regulatory clearances. Following the review of contract documents as part of the EA, modifications have been agreed to mainstream environmental management measures in the contracts executed through MRVC. For the contracts to be executed through the participating CR and WR, it has been agreed that the relevant provisions from the Railway Contracts Manual are to be enforced and the necessary instructions to the contractors are to be issued. Since MRVC has already qualified organization-wide as an ISO 14001-compliant environmental management system, handling of environmental measures is expected to be streamlined, on the basis of the EMPs prepared under the project.
F. Safeguard policies
Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OP/BP 4.01) [X] [ ] Natural Habitats (OP/BP 4.04) [ ] [X] Pest Management (OP 4.09) [ ] [X] Physical Cultural Resources (OP/BP 4.11) [ ] [X] Involuntary Resettlement (OP/BP 4.12) [X] [ ] Indigenous Peoples (OP/BP 4.10) [ ] [X] Forests (OP/BP 4.36) [ ] [X] Safety of Dams (OP/BP 4.37) [ ] [X] Projects in Disputed Areas (OP/BP 7.60) [ ] [X] Projects on International Waterways (OP/BP 7.50) [ ] [X]
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Environmental Assessment (OP/BP/GP 4.01). The environmental category of the Project is B.
Disclosure. Consultations were held with local people during preparation of the environmental and social assessments. Since the majority of stakeholders are railway employees, discussions were also held with railway officials on the likely impacts, and how to handle these. The two assessments, once finalized, will be disclosed on the MRVC website and copies of the summary will also be available in Marathi for perusal in the local railways’ offices.
G. Policy Exceptions and Readiness
68. No policy exceptions are required. The project complies with the readiness filter for transport projects in India. The first-year contracts and consultants are in advanced stages of bidding.
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Annex 1: Country and Sector or Program Background INDIA: Mumbai Urban Transport Project-2A
Urbanization and Infrastructure Development in India
69. In recent years India’s GDP has grown rapidly, at an average pace of eight percent per year and a peak of 9.7 percent in 2006-07. At the same time its inhabitants are moving from the countryside to cities in large numbers. By 2030 more than 40 percent of India’s population will be living in cities and towns, up from 28 percent today; the urban population, growing at three percent per year, will have doubled from 286 million to 575 million. In India as elsewhere, urbanization has been recognized as an important driver of economic growth, and cities now contribute over 55 percent of the country’s GDP.3
70. Infrastructure development in most Indian cities is not keeping pace with the increase in travel demand. Indeed, the growth of vehicles in the streets has been far greater than the growth in the street network; as a result the main arteries face capacity saturation. Between 1951 and 2004 at national level, the motor vehicle fleet grew at a compound annual growth rate of close to 11 per cent compared to an average rate of 3.6 per cent in the total road length. Within this total priority was given to rural roads; national highways grew by only 2.3 per cent4. As a direct consequence of urbanization and the lag in responding, roads have become ever more congested, travel speeds have decreased and travel times have become longer. Energy is wasted and pollution gets worse.
71. The railway network is suffering an equally acute shortage of capacity. At national level, from 1951 to 2008 the network was lengthened by only 18 percent (in route-km), while the number of passengers carried tripled and people traveled further, so that the number of passenger-km multiplied by 105. Suburban rail and Metro account for a large part of this increase in traffic. Suburban rail use increased sharply as the number of passenger-km grew 18-fold over the same period from 1951 to 2008, with a doubling between 1991 and 2008 (Figure 1).
Figure 1. Growth in Suburban Rail Travel in Indian Cities, 1951-2001 (in millions of passenger-km)
150000 119842 100000 88872 59578 41086 50000 22984 6551 11770 0 1950-51 1960-61 1970-71 1980-81 1990-91 2000-01 2007-08
Source: Indian Railways 2009.
3 UNDP. “India: Urban Poverty Report 2009.” http://www.undp.org.in/content/pub/PovertyReduction/INDIA- URBAN-POVERTY-REPORT-2009.pdf 4 Transport Research Wing, “Road Transport Yearbook 2006-07”, Government of India 5 Ministry of Railways of India. Statistical Summary – Indian Railways: 1950-2007.
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Mumbai’s Contribution to National Economy
72. The Mumbai Metropolitan Region (MMR), with a population of nearly 18 million in 20016, is the sixth largest metropolitan area in the world. Mumbai’s primacy in India’s economic well-being cannot be over-estimated. As the financial and commercial capital of India and the most prominent gateway to the country, Mumbai‘s economy is of critical importance for a variety of strategic reasons. It has the largest GDP of any Indian city, followed by the national capital region Delhi, Kolkata and Chennai. In FY 2004-05, MMR contributed 40 percent to the total Maharashtra State GDP7, and in FY2006-07 Mumbai contributed 6.2 percent of national GDP8. It accounts for 33 percent of India’s income tax collections, 60 percent of its customs duty collections, 20 percent of central excise tax collections, 40 percent of port trade and 60 percent of stock exchange trading9. As the subcontinent’s largest port, Mumbai handles 30 percent of India's exports and imports10. 73. While manufacturing’s share in the Indian economy has declined over the last decade, the service sector has emerged as the growth driver, offering financial services, information technology (IT) and information-technology-enabled services, media and entertainment, hospitality and tourism. Mumbai is pre-eminent in these industries and now accounts for 11 percent of India's total employment and 20 percent of its employment in industry11.
Mumbai Transportation
74. Mumbai has an extensive rail and bus system, and public transport is used for three out of every four motorized trips in Greater Mumbai, with rail being the dominant mode (Figure 2). The Mumbai Suburban Railway system, part of the Region’s public transportation system, is operated by two of India Railway’s zonal railways, WR and CR, which run the two largest and busiest networks among IR’s 16 zones12. 75. The Western line runs northwards from Churchgate terminus station in Island City and serves suburban passengers living along the west coast towards Ahmedabad and Delhi. The WR operates 1,106 scheduled suburban train roundtrips per weekday over 124 route-km between Churchgate and Virar, including six trains between Mumbai Chhatrapati Shivaji Terminus (CST) and Borivali. This requires a working fleet of 25 nine-car train sets, 48 twelve-car train sets and one fifteen-car one. 76. The CR runs from Mumbai CST station located very close to Churchgate in Island City and serves a large part of central India to the east of Mumbai. The CR operates 1,464 scheduled
6 Census of India, 2001. 7 LEA Associates South Asia, “Comprehensive Transportation Study for Mumbai Metropolitan Area” (CTS), MMRDA, April 2008. 8 http://www.financialexpress.com/news/gdp-growth-surat-fastest-mumbai-largest/266636/ 9 MRVC. “Mumbai Suburban Railway System.” Presentation. March 2007. 10 Business Melbourne. “City Profile: Mumbai.” July 2004. Prepared by Sustainable Business and Trade Development. https://www.businessmelbourne.com.au/docs/active/doc1044.pdf 11 Source: Ibidem. The term industry here refers to the secondary sector, including: textiles, pharmecuticals, construction, engineering, metals, petroleum, silks, glassware, and printing. Before the industrial growth following World War II, India’s economy used to rely mainly on manufactured goods, of which Mumbai’s textiles have always represented an important share. 12 Indian Railways operate both long-distance and suburban rail systems.
20 suburban train roundtrips per weekday over 280 route-km from Mumbai CST northeast-wards to Kotputari, southeast-wards to Khopoli and to Panvel via Mankhurd, Andheri on the Western Railway and between Thane and Vashi via Ghansoli. This requires an operating fleet of 60 nine- car train sets and 50 twelve-car sets.13 The annual growth rate of rail passengers on CR is 2.6 percent and on WR 0.7 percent.
Figure 2. Modal Split in Mumbai in 2008
Mumbai Modal Split by No. of Trips - No Mumbai Modal Split by Person*km - No Walk Walk Cycle Two Two Car 7% Wheeler Car 5% 3% Taxi/Rick Cycle 1% Wheeler 3% 7% shaw 3%
Taxi/Ric Bus 10% kshaw Train 9% 51%
Train Bus 23% 78%
Source: Comprehensive Transportation Study for Mumbai Metropolitan Region, LEA Associates, April 2008
Quality of Suburban Railway Services 77. Because of its extensive reach across the metropolitan region and its intensive use by the local population, the suburban railway has been suffering severe overcrowding, which has grown to be a major issue. The very poor travel conditions for rail commuters are incompatible with the objectives of Mumbai to become a world-class city with an acceptable level of comfort, convenience and safety. In 2007-08 an estimated 6.8 million passengers daily14 traveled on the Mumbai suburban railway (2.5 billion trips annually), which makes the suburban rail system the lifeline of Mumbai. At peak hour, the average frequency for train services is a very reasonable 16 trains per hour (a train every four minutes). One of the attributes of this suburban rail network is low fares compared to other public transport systems. However, this comes at the price of overcrowding - one of the most acute in the world, with about 5,000 passengers traveling in a nine-car train as against a rated carrying capacity of 1,700. This translates into a density of up to 16 people per square meter in Second Class General coaches (officially referred to as ‘super- dense crush load’ by the Indian Railways when specifically referring to the Mumbai suburban system), as measured in the 2008 TranSforM Comprehensive Transportation Study for MMR. Overcrowding also severely slows down train speeds. While the recently introduced AC/DC
13 Mumbai Metropolitan Region Development Authority. “Comprehensive Transportation Study for Mumbai Metropolitan Region.” April 2008. LEA International Ltd., Canada, in joint venture with LEA Associates South Asia Pvt. Ltd., India. Updated by MRVC by e-mail on January 21, 2010. 14 Number of one-way trips per day.
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EMU trains are capable of 100 km/h under light traffic conditions, the actual average speed of the trains is a mere 35 km/h on most lines, the cumulative effect of several factors.15
78. Due to the overcrowding, doors of coaches cannot be closed and passengers dangle outside from the open doors. Nearby squatter settlements and encroachers within the railway right-of-way safety zone are other causes of frequent casualties on the Mumbai system. Stations are always overcrowded. People rarely use proper crossing places and prefer trespassing and crossing the rail lines. Trespassing, which occurs not only in the station areas but also in between them, forces trains to slow down and so increases travel times, limits capacity and hampers track maintenance work. Deaths of squatters and trespassers after being struck by a train and passengers falling off trains are a daily occurrence. There are about ten to twelve16 deaths per day on the Mumbai rail system (which is high but still less than the rate of five to seven17 deaths per day on the roads and streets in the MMR18, considering the far greater volumes carried by rail). Table 1 below shows the gravity of this issue: the numbers of deaths and injuries have grown at yearly rates of 3.3 and 5.6 percent respectively from 2001 to 2008, with an annual average growth of 4.4 percent for the total number of casualties. Among the causes of death and injury, the continued increase in the number of passengers falling off the train is particularly noteworthy (this increase is in part due to the increase in the number of trains and the opening of new lines). Reducing the number of fatalities related to its suburban rail services is one of the priorities of Western Railway, Central Railway and MRVC, which in November 2009 decided to prepare an action plan on how to effectively reduce the casualties among trespassers.
Table 1. Railway Accidents in Mumbai Metropolitan Region, year by year 2002 2003 2005 2006 2007 2008 Accidental Deaths While crossing the railway line 1,971 2,517 2,479 2,561 2,603 2,448 Falling off the train 603 453 494 606 647 615 Others* 142 85 705 862 747 719 Total Accidental Deaths 2,885 3,055 3,678 4,029 3,997 3,782 Injured Persons While crossing the railway line 1,147 856 810 1,040 1,048 916 Falling off the train 1,454 1,420 1,639 1,898 2,033 1,854 Others 144 657 1,064 1,195 1,226 1,260 Total Injured Persons 2,745 2,933 3,513 4,133 4,307 4,030 Total Casualties 5,760 6,227 7,191 8,162 8,304 7,812 Source: Mumbai Railway Police Commissionerate, 2007 * Other causes of accidents include: falling off the platform, derailments, bridge collapses
15 LEA Associates, Comprehensive Transportation Study. 16 This amounts to 6.9 deaths per 100 million passenger-km (total suburban rail passenger traffic based on LEA Associates’ estimate is 173 million passenger-km/day in 2006). 17 This amounts to 11.2 deaths per 100 million passenger-km (total road traffic including non-mechanized trips based on LEA Associates’ estimate is 62.5 million passenger-km/day in 2006). 18 Basic Transport and Communication Statistics for MMR, March 2005, by MMRDA and Indian Railways
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Mumbai Rail and Urban Poverty
79. Commuting to work accounts for two-thirds of all trips in the Mumbai metropolitan region –when weighted by the distance traveled. Many people still walk, but for distances of more than 1-2 km motorized travel is a must. Suburban rail is the backbone of such commuting trips, accounting for half of all non-walking trips and nearly 80 percent of the non-walking distance traveled (see Figure 2). Rail is consistently the preferred motorized mode of transport across all income groups.
80. For low-income commuters the cost of transport is the major consideration. For very low- income commuters walking is often the only affordable alternative. Thus, the urban poor rely heavily on walking (61 percent for commuters in households earning less than Rs. 5,000 - US$100- per month), and in general the poor use less motorized transit (including rail) than higher-income groups. However, this income group also often chooses to take rail for long distances (5 km or more) and as much as one in four low-income commuters who live in certain zones take rail to work. These commuters will therefore, even in the short run, benefit from improvements in transit service and/or fares.
81. Middle-income and low-income users above extreme poverty are the prime customers for rail transit, as the fares are lower than for bus transit, and buying and maintaining a car is beyond the means of a large number of households. “The cost per km of traveling by rail is also much cheaper than the cost of bus service or other public transport, especially if a monthly pass is purchased. For example, a worker with a commute of 20 km each way would pay only Rs. 90 per month to commute by rail—less than Rs. 4 (10 US¢) per day. The cost per day of commuting 20 km via bus is, by contrast, Rs. 20”.19
82. Finally, the future strategy for MMR proposed in the TranSforM study also underlines that “the extension of suburban rail will ensure that distances are minimized and access to livelihoods, education and other social needs, especially for the marginal segments of the urban population, is improved.”
Mumbai Rail and Air Quality
83. The rapid pace of urbanization and probable acceleration of motorization trends in MMR present a threat to ambient air quality, which is already a major health issue in most urban areas in India. Indeed, the concentration of respirable particulate matter (RSPM)20 in Mumbai has increased by 53 percent from 2006 to 2008, mainly due to the 45 percent increase in the number of registered vehicles from 2003 to 2008. The Central Pollution Control Board’s National Ambient Air Quality Status Report for 2008 underlines that the RSPM levels in Mumbai are “alarming”. The RSPM concentration in MMR in 2008 was 132 μg/m3. The World Health Organization considers levels above 120 μg/m3 to be “high”, the second highest category right
19 Cropper et al., Urban Poverty and Transport: The Case of Mumbai, World Bank Working Paper 2005. 20 Particles produced by vehicle exhaust, burning of fuel and garbage, industrial sources, and re-suspension of dust.
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below “critical”. Although sulfur dioxide (SO2) and nitrogen dioxide (NO2) levels are still within reasonable limits21, current motorization trends are not environmentally sustainable.22
84. “In Mumbai the main contributor of air pollution is the transport sector, followed by power plants, industrial units and the burning of garbage.”23 Irrespective of improvements in engines and fuel type, ambient air quality is bound to further deteriorate because of the motorization rate if no compensatory action is taken. Understanding the need for a sustainable urban development strategy, in 2004 MMRDA retained the National Environmental Engineering Research Institute to prepare strategies and an action plan for particulate matter reduction in MMR. The study included assessment of ambient air quality status (especially for particulate matter PM10), the development of reduction and mitigation strategies, and a reduction action plan.
85. Developing suburban rail use would contribute to the efforts being made in India as well as in other countries to reduce GHG emissions. MUTP-2A aims at expanding an energy-efficient public transport system and minimizing motor vehicle use, the main source of pollution. Indeed, as presented in Annex 9, expanding the rail network capacity will likely lead to a diversion of passengers from bus services. This reduction in bus operations will in turn contribute to reducing pollution, because EMU trains emit very limited pollutant quantities, whereas buses emit NO2 and SO2 at a rate of 0.25 kg per bus per hour.
86. Finally, the conversion from DC to AC will allow the use of more energy-efficient trains, thus further decreasing CO2 emissions and allowing MRVC to claim carbon credits. The energy saving per year due to the trains already introduced at this point is estimated at 6.2 million kWh, 24 25 and this allows for a generation of carbon credits equivalent to 62.6 thousand tCO2e per year.
Long-term Transportation Strategy for MMR 87. Within the next 25 years, Mumbai is projected to overtake Tokyo and become the largest urban region in the world, in a country having one of the fastest expanding global economies. In 2004, a task force appointed by the Chief Minister of Maharashtra conducted a comprehensive transportation study for the metropolitan region known widely by the acronym TranSforM (for
21 3 3 The concentrations in SO2 and NO2 are 9 μg/m and 42 μg/m in 2008 respectively. Both levels are currently labeled as “low” (between 0 and 40 μg/m3). 22 “According to a study carried out by EMBARQ in cooperation with the World Bank in 2007, continuation of the rapid motorization trends without adequate policy and technological interventions (the “business-as-usual” scenario) would increase the annual national CO2 emissions from urban transport sector (in all major cities) to 254 million tons of CO2 in 2030, which is more than nine times the emissions level in 2005.” (Project Appraisal Document, Sustainable Urban Transport Project, World Bank 2009). 23 Larssen et al., URBAIR Urban Air Quality Management Strategy in Asia: Greater Mumbai Report, World Bank 1997. 24 tCO2e: Tons of CO2 equivalent is a measure for describing how much global warming a given type and amount of greenhouse gas may cause, using the functionally equivalent amount of carbon dioxide as reference. 25 MRVC Letter to World Bank dated May 16, 2008 regarding Generation of Carbon Credits on account of energy saving due to DC/AC conversion on Mumbai Suburban section of CR WR under MUTP 1 and 2.
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“Transportation Study for Mumbai”). 26 Its vision statement is: “Transforming Mumbai into a world-class metropolis with a vibrant economy and globally comparable quality of life for its citizens”.
88. One of the Vision’s several goals is for the MMR to become an important logistic and export hub through synergy between ports, airports and special economic zones. Moreover, it also aims at guaranteeing to all MMR citizens access to public transport, in addition to other basic civic services: safe drinking water, sanitation, education, health care and recreation facilities. A key long-term transportation strategy is “to achieve balanced, integrated and sustainable public/private transportation systems to meet the aspirations of the public for freedom and convenience of travel.”27
89. The transport network recommended by the TranSforM study includes a dominant role for suburban rail. The current strategy is for it to remain the backbone of commuting trips in the MMR in the medium term. A certain decrease in suburban rail’s modal share due to diversion of trips to new metro lines is expected.28 However, if the strategic guidelines of TranSforM are carried out, the forecast sustainable modal split still sees suburban rail as the dominant mode, as shown in Figure 3. Indeed, the proposed future strategy for the region relies heavily on an extensive expansion of the rail-based transit system. This is reflected in the very large planned investment in suburban rail by 2031: Rs. 315 billion (nearly US$7 billion), the second largest investment after the metro system (Rs. 922 billion).29
Figure 3. Modal Split in Mumbai in 2005 and as per TranSforM strategy in 2016
Mumbai Modal Split by No. of Trips - No Strategic Mumbai Modal Split by No. of Walk 2005 Trips - No Walk 2016 Car, 4.9% Car, Metro, Two- 8.6% 0.0% Wheeler, 7.9% Two- Wheeler, Metro, Auto, 11.3% 7.4% 30.7% Auto, Train, Taxi, 4.7% 53.3% 1.6% Taxi, 1.4% Bus, Bus, 9.9% 24.9% Train, 33.5%
Source: Comprehensive Transportation Study for Mumbai Metropolitan Region, LEA Associates, April 2008
26 Mumbai Metropolitan Region Development Authority. “Comprehensive Transportation Study for Mumbai Metropolitan Region.” April 2008. LEA International Ltd., Canada, in joint venture with LEA Associates South Asia Pvt. Ltd., India. 27 Ibidem. 28 This is due to the fact that connectivity by the metro network will be extensive and that metro stations are to be spaced at 1-km intervals. 29 By comparison, investment in freeways and roads is only forecast at Rs. 267 billion and in buses at Rs.43 billion.
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Indian Railways’ Development Strategy
90. Indian Railways, with 63,221 route-km of network and 1.42 million employees, is one of the largest rail networks of the world. It constitutes the lifeline and the mainstay of the country’s transport infrastructure. Over the last few years, IR has achieved a dramatic re-invention of its business and is presently witnessing one of the most impressive and unprecedented expansions in its history. During the last few years the freight traffic on IR has been growing at 9.4 percent and passenger traffic at 7.4 percent, and revenue has grown even faster. This is in sharp contrast to the historical trend rates of growth at 3-4 percent per year. In the passenger segment, while affordability continues to underpin the pricing for second-class passengers, there has been reduction in fares for passengers in air-conditioned class and those traveling short distance. These measures have redefined the transport scene in the country and transformed the railways as a competitive and viable alternative to road transport. By 2012, IR is projected to handle 25 percent more passengers than handled in 2008.
91. During the past five years, IR has achieved commendable results by substantially increasing the volume of traffic carried and its profits. However, it now faces several new challenges. The recent increase in the wage bill, accompanied by a downturn in economic growth in 2009, have already affected IR’s bottom line adversely. In addition, the planned large investment in Dedicated Freight Corridors (DFC) in the medium term will create excess capacity in its start-up years that will reduce IR’s profits unless it develops marketing strategies to rapidly attract new traffic to the existing corridors (mainly passengers), as well as to the new dedicated freight corridors.
92. Going forward, the expected continued economic growth of India over the next 20 years at eight percent or more will impose new challenges on IR in respect of capacity, transportation and logistic products and service quality to be expected by rail customers in freight as well as passenger services. It is foreseen that the customer’s profile will undergo a significant change, as an average rail customer is expected to experience a four-to-five fold increase in income and at the same time will demand more comfortable and faster travel. Customers will be willing to pay higher fares for these improved services. These challenges can be addressed effectively by implementing Vision 2020 for IR. An immediate next step would be to develop a credible financing plan to effectively underpin IR’s developmental plans.
93. Another important step is to develop an action plan (road map) that lays out specific strategies and measures to be implemented to overcome the present constraints and, more importantly, to enable IR to satisfactorily support the growing economy by increasing capacity and improving service quality. IR needs to prioritize actions and investments over the next ten years and set out an implementation schedule. It will also attempt to identify funding sources for the recommended investments.
Management of MMR
94. Responsibilities for the general direction of urban development and urban transport rest with the State Government of Maharashtra (GOM) through the Mumbai Metropolitan Region Development Authority (MMRDA), a regional developmental agency under the Department of Urban Development. To enable the Mumbai Suburban Railway to meet the demands of the ever-
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growing passenger traffic, the Ministry of Railways and GOM jointly established Mumbai Railway Vikas Corporation Limited (MRVC) in 1999 with the mission to develop world-class infrastructure for an efficient, safe and sustainable railway system in Mumbai’s suburban section, to provide comfortable and friendly train services to commuters. Its objectives included to: (i) integrate suburban rail capacity enhancement plans with the urban development plan for Mumbai and propose investments, (ii) implement rail infrastructure projects in Mumbai’s suburban areas, (iii) commercially develop railway land and airspace in Mumbai to raise funds for suburban railway development, (iv) resettle and rehabilitate project-affected households and (v) to be an infrastructure company committed to sustainable development and environment friendly construction in Mumbai suburban section.
95. In 2009 a first step was taken through the decision that metropolitan planning should be done by a “Metropolitan Planning Committee” (MPC). District planning committees also exist whose task is to plan for each district within the Region, but it is not yet clear how they should coordinate with MPC or MMRDA. Further institutional strengthening of the coordinating role of MMRDA or the creation of a separate Unified Metropolitan Transport Authority is currently under consideration.
96. Funding arrangements for urban transport infrastructure and services in Mumbai are split between a number of national, state and local government agencies. No single agency has the role or responsibility for preparing integrated investment and operations budgets which meet travel demands and policy objectives, optimize the use of scarce resources, and are affordable. Public investment has been lagging behind demand, most notably on the railways, while on the roads maintenance expenditure is about half what is needed to keep them in good condition. Since the planning and provision of suburban rail services is IR’s responsibility, MMRDA has little influence over them. The allocation of resources for rail services is subject to the approval of the (national) Planning Commission and IR. The Western Railway and Central Railway operating within the metropolitan region are independent agencies of IR, with their own lines and no integration of services.
MUTP-1 Accomplishments and Potential Benefits of MUTP-2A
97. In early 2000 MUTP-1 was launched to address issues pertaining to (i) the inadequate capacity and low speed of rail services and contentious resettlement and rehabilitation (including land acquisition); (ii) limited East-West connectivity, poor traffic management, and road safety; and (iii) inadequate bus services and road maintenance, pollution from motor vehicles, limited involvement of stakeholders, institutional weaknesses and inadequate funding. In June 2002 the Bank approved Loan 4665-IN and Credit 3662-IN to finance the project, which became effective in November 2002. Because its components concern different sub-sectors, the project has six implementing agencies, including MRVC for the rail transport component. MMRDA is the coordinating agency and is responsible for carrying out the resettlement and rehabilitation component on behalf of all the implementing agencies.
98. The rail component aims to improve the capacity and performance of the suburban rail system through service efficiency improvements (increasing existing track capacity, converting from DC to AC, and improving electrical, signaling and telecommunication systems), procuring new rolling stock and upgrading existing rolling stock, and expanding network
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capacity. The component also supports studies and technical assistance, among other things, to improve Indian Railways capabilities for track and rolling stock maintenance, financial management and control systems, railway safety and quality assurance.
99. Since its start the project has made significant progress towards achieving its development objectives. As a result of the resettlement of squatters along rail tracks and the completion of track doubling on the Western Railway corridor, the efficiency of suburban train operations has increased, with a rise in its peak-time capacity by 7-10 percent and a reduction in commuting time by four to nine minutes for about six million daily passengers. An improvement in transport services in terms of quality and comfort is noticed as a result of the addition of a few new trains and the replacement of 644 buses by new ones. However, improvements in traffic management technical capacity within the Municipal Corporation of Greater Mumbai need to be further strengthened and sustained.
100. Up to March 2010, 84 twelve-car rakes of new EMU trains (equivalent to 108 nine-car rakes) were put into service. Of these 84 rakes, 51 were financed by the Bank and procured by MRVC, while the other 33 rakes were funded and procured by Indian Railways on their own. Together, they have reduced crowding in the system from 500 people per coach ppdpk to 450, despite a net increase in passengers. It is expected that once all additional 72 Bank- financed twelve-car trains (equivalent to 96 nine-car trains) are in service, crowding will be reduced to 350 ppdpk, i.e. 30 percent less than the original density --but still twice the rated carrying capacity.
101. Through the preparation of MUTP-1 a partnership was created between the GOM and IR for developing Mumbai’s suburban rail system, and it was institutionalized by the creation of MRVC. MRVC as an implementing agency has proven to be an efficient tool, and attests to the success of this partnership. Prior to MUTP-1 the Mumbai suburban system suffered due to lack of investment in renewal of aging assets as well as expansion to meet the ever- increasing demand, as IR had much greater interest in main line services on a national scale. The partnership between GOM and IR has been considered positive enough to continue for the preparation and implementation of MUTP-2A. And MRVC has gained professionalism in project implementation, coordinating effectively with both the GOM and the various departments of IR. Its increased efficiency has resulted in MRVC being commissioned for other studies to develop suburban rail services in Mumbai.
102. Through MUTP-1 MMRDA has gained experience and capacity in handling resettlement of large numbers of people. This project has been a first for Mumbai and a first for the Bank to handle resettlement of so many people in an urban setting. During implementation, difficulties occurred in handling the resettlement. A World Bank Inspection Panel investigated the project’s resettlement process and raised concerns about implementation issues, including the way medium and large shopkeepers were resettled, the quality of the baseline survey of project- affected people, management of post-resettlement activities, grievance redressal processes, and project supervision. The implementation by GOM of a remedial action plan, with the active support of the Bank, resulted in a much improved quality of the resettlement and rehabilitation process. MMRDA evolved towards a problem-solving approach for resettlement, exploring negotiated solutions as often as possible. The experience gained by MMRDA thereby is now used by the Bank as an example for other large cities with similar challenges.
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103. Further capacity will be needed to meet the future growth in demand. The population in areas of the Mumbai Metropolitan Region served by suburban railway is expected to grow at 1.8 percent per year for the next decade, boosting the demand for suburban rail services and the need to increase capacity commensurately. The comprehensive transport study carried out under MUTP-1 (paragraph 88 above) recommended such an increase as a priority. This need was already foreseen at the time MUTP-1 was prepared and the genesis of MUTP-2A lies in MUTP-1, one of the key objectives of which was to address the overcrowding on suburban trains. The size of MUTP-1 was limited because funding was insufficient then to finance all the EMU coaches needed for full use of the infrastructure created under the project. By the end of MUTP-1, the suburban rail system will have 2,260 EMU coaches. Based on simulation modeling of the time table, the total number of EMU coaches can increase to 3,124 to reach full use of today’s infrastructure. The additional 864 EMU coaches (72 twelve-car trains) to be financed under MUTP-2A will bring the fleet up to this full capacity. The demand will still be in excess of the supply, but this additional transport capacity will further reduce the overcrowding in suburban trains.
104. The project will provide several categories of local benefits for commuters, such as (i) reduced travel time, (ii) improved travel comfort, and (iii) health improvements, with a focus on benefitting the poor for whom the rail represents an especially important mode of transport. The more frequent service will reduce waiting times, while shorter travel times will flow from the higher maximum speed potential of the upgraded rolling stock. The reduced passenger waiting time has been assessed as half a minute per trip on completion of MUTP-1 and as one minute per trip on completion of both MUTP-1 and MUTP-2A. The average saving in total journey time would amount to as much as two to six minutes per trip depending on the corridor. Using a train design similar to the one developed for MUTP-1, an improved suspension system and better lighting in the trains will provide greater comfort. The improved air ventilation system will have a positive impact on commuters’ health.
105. The 1,500V DC traction power system incurs significant energy losses. These will be considerably reduced with the completion of conversion of all lines to 25KV AC traction power. The conversion will permit running of more services and conversion of nine-car trains to twelve- car trains. The conversion also promises several other benefits:
(a) Supplying higher levels of power through high-capacity traction substations makes it possible to run longer trains as well as more trains per hour during the peak period.
(b) The greater power available to trains enables them to accelerate faster and operate at higher speed, shortening journey times.
(c) A three-phase propulsion system on the new EMU rakes, using modern Integrated Gate Bipolar Technology, allows regenerative braking, which sends energy back into the wire.
106. In carrying out MUTP-1 MRVC has gained a recognized expertise in managing a challenging suburban rail development project that required professional expertise in technical disciplines as well as in interagency coordination and communication. During the last two years MRVC and its key personnel have earned several national and international awards in these disciplines. MRVC has also recognized the importance of a comprehensive systems approach for
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environmental management and social management, and during the preparation of MUTP-2A it has earned its certification to ISO 14001:2004 and ISO 18001:2004. This second project will facilitate the continuation of the capacity building effort provided by the Bank team during MUTP-1. The on-going interaction with the Bank exposes MRVC and the zonal railways operating the system to international good practice and emerging ideas. A set of studies will advise MRVC on specific key topics.
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Annex 2: Major Related Projects Financed by the Bank and/or other Agencies INDIA: Mumbai Urban Transport Project-2A
Issue Project Latest Supervision Ratings Bank-financed, completed or on-going Implementation PDO Progress Capacity expansion of commuter rails, urban Mumbai Urban Transport Project MS MS roads and bus services, and institutional strengthening of concerned agencies Capacity expansion of national highways and Allahabad Bypass Project (Ln.4719-IN) Completed S institutional strengthening of MOSRTH and Lucknow Muzaffarpur National Highway U U NHAI Project (Ln. 4764-IN) Capacity expansion and maintenance of state Andhra Pradesh State Highway Project (Ln. Completed S highways and institutional development of state 2490-IN) road agencies Gujarat State Highway Project (Ln.4577-IN) Completed S Karnataka State Highways Improvement Project Completed S (Ln.4606-IN) Kerala State Transport Project (Ln.4563-IN) MU MS Mizoram State Roads Project (Ln.3618-IN) MS MS Uttar Pradesh State Roads Project (Ln.4685-IN) S MS Tamil Nadu Road Sector Project (Ln.4706-IN) S S Himachal Pradesh State Roads Project MS MS (Ln.4860-IN) Punjab State Road Project (Ln. S S Orissa State Road Project (Ln. S S Improvements of road infrastructure in a Support to Infrastructure Leasing and commercial format Financial Services (Ln.3992-IN; Cr.2838- IN)
Municipal reforms and investments (including Karnataka Municipal Services Project (Ln. improvements of urban road infrastructure) 4818-IN) Improvements of urban transport infrastructure Tamil Nadu Urban Development Project (Ln.4798-IN) Promotion of public/non-motorized transport and Sustainable Urban Transport Project (SUTP) Effective urban transport capacity building (Project ID P100589) Other development agencies, completed, ongoing and planned Japanese Bank for International Cooperation Delhi Metro Rail Project On going (formerly OECF) - Capacity expansion of Urban Transport ADB - TA for Urban Transport Development of national urban transport On going guidance and identification and preparation of a Urban Transport investment project ADB - Capacity expansion of NH and SH and National Highway Corridor I, Surat-Manor On going institutional strengthening of agencies Tollway Project, Chattisgarh State Roads Project, National Highway Corridor II, MP State Roads Project
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ADB- Improvements of urban roads in major Kerala Sustainable Urban Development On going Kerala cities Project UNDP- Capacity development for national and India capacity development program On going local governments Ratings: HS (Highly Satisfactory), S (Satisfactory), MS (Moderately Satisfactory), U (Unsatisfactory), MU (Moderately Unsatisfactory), HU (Highly Unsatisfactory)
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Annex 3: Results Framework and Monitoring INDIA: Mumbai Urban Transport Project-2A
Results Framework
PDO Project Outcome Indicators Use of Project Outcome Information To improve the passenger carrying 1. Additional capacity - Vehicle km per day during To assess the project’s capacity, operational efficiency, morning peak hours (8.30-11.30 a.m.) contribution to the PDO level of comfort of, and the 2. Reduction in peak hour overcrowding – average institutional capacity of entities number of passengers per 12-car train involved in, the suburban rail system 3. Reduction in journey times – average transit of Mumbai Metropolitan area. times in minutes 4. Reduction in energy consumption – average energy consumption per 12-car train-km (kWh/t/km) 5. Action plan on trespassing and safety prepared 6. Action plan on revenue improvement prepared Intermediate Outcomes Intermediate Outcome Indicators Use of Intermediate Outcome Monitoring 1. Train operation performance 1.1. Trains per hour To assess the performance of the 1.2. Length of trains project and to redirect it, if 1.3. EMU 12-car trains in service (258 trains) necessary, to achieve the PDO 1.4. Ridership per day 1.5. Punctuality – percentage of trains reaching less than five minutes late to destination 2. Infrastructure and equipment 2.1. DC to AC conversion (1577 TKM) 2.2. Additional Track (181 TKM) 3. Institutional development and 3.1. Study on potential for ISO 14001 at CR and capacity building WR completed 3.2. Study for Mumbai suburban development plan completed 3.3. TA for IR strategy carried out 3.4. Continued MRVC ISO Certification
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Arrangements for results monitoring Project Outcome Indicators Comment End of Responsibility Baseline December Reports Data Collection MUTP-2A for Data 01.04.09 2012 Frequency Instruments (2014) Collection 1. Vehicle km per day during Corridor: Yearly Working timetable MRVC morning peak hours (8-11 WR 561,461 815,400 reports of WR and CR and a.m.) CR (ML) 447,578 777,050 operational CR (Harbor) 151,001 182,646 statistics 2. Reduction in overcrowding Corridor: Yearly Ridership/ MRVC (passengers per 12-car WR 5400 4000 reports occupancy survey train) CR 4800 4000 of commuters Harbor 4200 4000 3. Reduction in journey times – WR Through Churchgate to Virar 81 75 Yearly Working timetable MRVC transit times in minutes WR Local Churchgate to Borivali 65 62 reports of WR and CR and reduced CR Through CSTM to Kalyan 59 54 operational CR Local CSTM to Thane 56 53 statistics Harbor Local CSTM to Panvel 77 75 4. Average energy consumption Calculated using consumption per 17.62 12.76 Yearly Operational MRVC per 12-car train-km motor car (MC) type: reports Statistics (kWh/t/km) kWh/MC/km for DC = 4.94 kWh/MC/km for AC/DC = 3.19 5. Action plan on trespassing -- Action plan Action plan Final Report MRVC and safety prepared prepared prepared 6. Action plan on revenue -- Action plan Action plan Final Report Rly Board, improvement prepared prepared prepared MRVC (October 2013) Intermediate Outcome Indicators 1.1. Trains per hour during peak Corridor: Yearly Working timetable MRVC hour WR Through 16 18 reports of WR and CR and WR Local 17 18 operational CR Through 14.4 18 statistics CR Local 14.4 18 Harbor Local 16.4 18 1.2. Length of trains ( percent of Corridor: Yearly Working timetable MRVC 12-car trains) WR Through 100% reports of WR and CR and WR Local 100% operational CR Through 100% statistics CR Local 100% 1.3. EMU Fleet size (12-car 190 258 Yearly Performance MRVC rakes in service) reports statistics of Railways and inspection 1.4. Ridership per day Figures in thousands Yearly Performance MRVC Central Railway 3592 3797 reports statistics of Western Railway 3298 3486 Railways 1.5. Punctuality – percentage of Central Railway 93.2% 94% Yearly Performance MRVC trains reaching less than five Western Railway 98.2% 98.5% reports statistics of minutes late to destination Railways 2.1. DC to AC conversion (Track 569 1577 Yearly Performance MRVC 34
KM) reports statistics of Railways 2.2. Additional track (TKM) -- 181 km Yearly Performance MRVC reports statistics of Railways 3.1. Study on potential for ISO -- Study Final Report MRVC 14001 at CR and WR completed completed 3.2. Study for Mumbai suburban -- Study Final Report MRVC development plan completed completed 3.3. TA for IR strategy carried -- TA completed Final Report Rly Board, out MRVC 3.4. Continued MRVC ISO MRVC ISO 14001, Yearly Certification MRVC Certification certified ISO 18001 Document Certification
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Annex 4: Detailed Project Description INDIA: Mumbai Urban Transport Project-2A
Mumbai Urban Transport Project 2A (Cost: US$970.5 million with IBRD’s share of US$430 million)
107. The proposed MUTP-2A consists of the procurement of 72 additional twelve-car EMU trains, completion of conversion from 1500V DC to 25kV AC traction on the remaining sections of Central Railway, expansion of maintenance facilities for EMUs and provision of stabling lines for the additional EMU trains included in the project. Some technical assistance studies are also included in the project. The planned implementation period is five years, commencing in early 2010 and completing all components by the middle of 2014.
108. The various components of MUTP-2A are as under:
Component 1: Rolling Stock Fleet Increase: (Cost: US$659.6 million with IBRD’s share of US$355.7 million)*
109. At the end of MUTP-1, Mumbai Railway Suburban System (MRSS) will have 2260 EMU cars. Based on the Time Table prepared through simulation of train operation this holding will need to increase to 2980 cars for full use of the infrastructure created under MUTP- 1 and by IR already. Thus, procurement of electrical equipment as kits for 864 EMU cars and application of these on trains manufactured at ICF, Chennai is included. Since by the time these trains are delivered and put in service the entire DC to AC conversion would have taken place, unlike the EMU rakes procured under MUTP-1, there will be no need for dual voltage rakes capable of operation on DC as well as AC systems. Hence these rakes will be for use on 25kV AC system only. The prototype supply of kits, manufacture of prototype rakes, and prototype testing will take another 12-15 months. The series supply of kits would thus materialize about two years after issue of bid documents. If the procurement process starts in early 2010, the delivery of kits will commence by 2012.
110. The Bank loan will finance procurement of equipment for 864 EMU cars (72 trains of 12 cars each). The manufacture of trains at ICF, Chennai will be funded by counterpart funds. The manufacture of EMU cars against MUTP-2A would commence from early 2011 after the manufacture of EMU cars against MUTP-1 and another IR contract for EMU cars has been completed by the end of 2010. The delivery of 72 trains shall be completed by the February 2015.
Component 2: DC to AC Conversion (including Signal and Telecom improvements): (Cost: US$173.8 million with IBRD’s share of US$55.2 million)
111. This component covers the conversion of electric traction system from 1500V DC to 25kV AC on the Central Railway over 172 track km (CSTM to Thane, CSTM to Tilaknagar and Mahim to Wadala Road sections). This comprises modification of overhead catenary, setting up of traction power sub-stations at Sion, Chinchpokli, Wadala Road and Thane, along with switching stations, procurement of catenary maintenance equipment and modifications to signal
36 and telecom systems to make it compatible with AC traction. The conversion will permit enhanced power supply for additional services and longer trains consisting of 12 cars.
112. The Bank loan will finance off line works such as setting up of new traction sub- stations and switching posts at Sion and Chinchpokli between Mumbai CST and Vidyavihar, procurement of Digital Axle Counters (DAC) on Mumbai CST-Thane section, and other left over sections of MUTP-1, and catenary maintenance equipment. Additional setting up of two new traction substations at Wadala Road and Thane on Vidyavihar- Thane and Mumbai CST-Tilak Nagar section and other online works, such as modification to catenary system, quad cables and signaling system, will be executed by Central Railway through government funding.
113. The conversion is planned to be completed by 2012-13. Apart from providing capacity to run more and longer trains the conversion will reduce cost of maintenance of power supply installations and transmission losses. There would also be significant energy saving due to higher potential for re-generation of power in case of 25 kV AC system in comparison to the 1500V DC system.
Component 3: EMU maintenance facilities and stabling lines: (Cost: US$117.7 million with IBRD’s share of Nil)
114. New stabling lines to accommodate the additional trains will be constructed. The existing EMU maintenance depot at Kurla on Central Railway and the maintenance shed at Virar constructed under MUTP-1 will accommodate new stabling lines. In total, the project component comprises 73 new stabling lines, 34 (including four extensions from 9-car to 12-car) on Western Railway at Virar, Borivali and Vasai Road and 39 on Central Railway at Sion, Thakurli, Kasara, Khopoli, Belapur, Panvel, Ambernath, Karjat, Titwala and Kurla. The maintenance facilities for the additional coaches being inducted will be provided by augmenting the capacity in the five existing maintenance sheds (at Mumbai Central and Kandivali on Western Railway and Kurla, Kalva and Sanpada on Central Railway) and the two existing periodic overhaul workshops (Mahalaxmi on Western Railway and Matunga on Central Railway). Expansion of the new maintenance shed at Virar under construction in MUTP-1 is also included. No new shed or workshop is planned at this stage. Details of number of stabling lines at each location and and of the maintenance facilities are given in the MUTP-2A Implementation manual. This component is not funded by the Bank loan. The works are expected to be completed by the end of 2013.
Component 4: Technical Assistance: (Cost:US$14.6 million with IBRD’s share of US$14.4 million)
(a) Strategic Plans for Sustainable Expansion of Rail Services.
1. Development Program for Mumbai Suburban Rail Services 115. The TranSforM study recently completed by MMRDA outlines proposals for the transport network development, including the suburban rail network, to 2031 to meet the forecast travel demand. MRVC, Central and Western Railways have put forward proposals for rail service development beyond the current project as an initial stage in realizing the 2031 network and services. Based on these proposals and in coherency with TranSforM recommendations, the
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proposed study will prepare a set of proposals for the staged expansion of network capacity of Mumbai suburban rail system (integrated with other modes) and improvement of the quality of service to passengers to provide for seamless convenient travel by public transport. Key investments proposed for investment after this project in the period 2016 -2021 will then be the subject of a pre-Feasibility Study. The output of this study would be a costed, time based development plan for the suburban rail system to the year 2031, and a pre-feasibility study of the investments proposed for the period 2016 – 2021. The study will be implemented by MRVC. Target Completion Date: By October 2013. Proposed cost: US$5.4 million.
2. Provision to support the development of the Indian Railways long term strategy for Suburban Rail 116. The recently produced Indian Railways’ Vision 2020 document includes a strategy for suburban rail services. This technical assistance includes a provision for a series of studies and advisory services to assist Indian Railways in developing the suburban services dimension of their long term strategy. This effort will include consideration for replication to other cities of the model developed with MRVC in Mumbai. It will also include considerations of institutional and policy improvements to improve further the efficiency of Mumbai suburban rail services and their better integration within the overall regional urban transport system. Mumbai study will in particular take into account the physical segregation that will be achieved at the end of MUTP- 2A and B between suburban and national passenger tracks. This technical assistance will be procured by MRVC and managed by the Indian Railway Board. Target Completion Date: By June 2014. Proposed cost: US$1.6 million.
3. Revenue maximizing study in particular for non-fare box revenues with affordability study 117. At present, most of the revenue on the suburban rail system comes from the sale of tickets. This revenue is insufficient to cover operating costs and the growing financial gap is covered by financial transfer from other rail business segments. The study will examine potential non-fare revenues including from advertising, rental of commercial spaces at stations and property development at stations and on other railway land (talking account to the study undertaken in MUTP-1). The potential for indirect user charges will also be examined, including payroll taxes and increased property taxes in areas around stations (taking account of work carried out as part of the TranSforM Study). The study will also review the socio-economic profile of customers and examine the justification for financial cross-support from other economic agents as well as the potential for fare adjustment in relation with affordability and service quality. The output of the study will be a strategy to improve the financial sustainability of the Mumbai suburban rail operation and a suggested list of options, with estimates of potential revenue, a pre – FS level costed and time based implementation schedule, including any institutional and regulatory changes that may be required. The study will be procured by MRVC and managed by Indian Railway Board. Target Completion Date: By October 2013. Proposed cost: US$1.1 million.
(b) Tactical programs for improving passenger convenience and information
4. More efficient and user friendly ticket issuing
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118. 75 percent of people buying tickets for a rail journey purchase a separate ticket for each journey. This is time consuming and confusing for passengers as there are seven or eight different combinations of ticket systems and ways to purchase these tickets. This leads to maintenance problems and passenger complaints when machines break down. This TA will review the current arrangements, and develop functional specifications for ticketing machines and associated operational arrangements for issuing single journey tickets, with the potential to also issue passes (multi trip tickets). These ticketing arrangements should be compatible with existing and proposed arrangements for single journey tickets on other modes (bus, metro). Options will be examined and recommendations made which would be compatible with the Integrated Fares and Ticketing System for MMR being developed by MMRDA. The output will be a recommended system with a pre – FS level costed and time based implementation schedule. The study will be implemented by MRVC. Target Completion Date: By September 2013. Proposed cost: US$0.5 million.
5. Passenger information and security 119. The present system of Passenger Information and Guidance consisting of Audio Announcements, Train Information Display systems, and Clocks has been provided in a discrete manner requiring each item to have separate Operation and Control, wiring and other features. The station Signage for Passenger guidance is not to International standards. The Station and Platform area illumination including Concourse at major stations also needs to be upgraded keeping in view the optimum level of illumination to meet both aesthetic and energy saving requirements. For Video Surveillance of Station Entrances and Exits from security point of view, an integrated system needs to be designed with both Central and Remote Video Surveillance Monitoring features. The TA will identify the deficiencies in the existing system and taking into consideration the experience of comparable foreign Suburban Rail Systems recommend an integrated state-of-the-art Passenger Information and Guidance, Station and Platform area Illumination and Security Surveillance System. The TA will then prepare the technical specifications and cost estimate for the recommended solution. The study will be implemented by MRVC. Target Completion Date: By September 2013. Proposed cost: US$0.5 million.
(c) Tactical plans for improving safety and environmental management of operations
6. Reduction of trespassing and improvement of safety of the track 120. A large number of deaths and serious injuries occur daily due to passengers and other pedestrians being struck by trains while crossing the railway tracks in the station area or between stations. This study will analyze the data on these and will suggest remedial measures. These could include construction of user friendly grade separated crossings (subway/foot over- bridges) combined with fencing and other barricades to restrict crossing of the track. The output would be a costed and time based program of remedial measures. The study will be implemented by MRVC. Target Completion Date: By December 2012. Proposed cost: US$0.1 million (Counterpart funded).
7. Improved Environmental Management of Rail Operations 121. MRVC has significantly improved the environmental management of its activities which are certified to be in compliance with ISO 14001. Central and Western Railways have
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begun the process of certification of their ancillary installations, including car sheds and workshops using their own resources.
122. This proposed activity will facilitate improvements to environmental performance of each type of installation beyond the regulatory requirements. It will cover the workshops, car sheds, and stations within Western Railway and Central Railway. The initial focus would be better water management and energy conservation. At the workshop, car shed, etc. the focus will be on water recycling, reuse and disposal of oily wastes along with establishing the feasibility of use of more energy efficient devices such as compressors, lights, and other equipment. At stations, techniques and incentives for ensuring cleaner stations and surroundings would be explored. The output of the study will be a series of specific actions to improve environmental performance at these locations, rated according to their efficiency and ease to implement, following consultations with the participating Railways. The study will be implemented by MRVC. Target Completion Date: By December 2012. Proposed cost: US$0.5 million.
(d) Capacity Building for Increased Operational Efficiency
8. Power Supply Simulation 123. Estimates of power supply requirements are needed for the expansion of services. Design of the most cost effective and efficient power supply depends on the use of computer based simulation software. This TA provides for the supply and installation of software, calibration to Mumbai conditions, training of staff in its use and assisting MRVC staff to run a minimum of two scenarios to ensure it is running effectively. The TA will be implemented by MRVC. Target Completion Date: By December 2013. Proposed cost: US$0.9 million.
9. Rail Operations Simulation 124. Optimizing the number of trains that can run on the Mumbai suburban system requires operations simulation software which uses inputs related to the characteristics of the infrastructure and the trains. MRVC is currently using software developed by the railways that dates from 1996-98 and requires too much input data, staff time and computation time to produce the desired results. This TA provides for the supply and installation of software, calibration to Mumbai conditions, training of staff in its use and assisting MRVC staff to run a minimum of two scenarios to ensure it is running effectively. The TA will be implemented by MRVC. Target Completion Date: By December 2012. Proposed cost: US$0.6 million.
(e) Training
125. Even though MRVC has successfully executed projects worth US$800 million, it recognizes the need to continuously improve the skills of its staff, and those of Central and Western Railways with whom it interacts. To make project execution more effective and efficient, it wishes to ensure staff can be trained in best practices followed elsewhere in the world, in subjects including Financial Management, Project Management, Procurement as well as Technical engineering, Social, Environmental protection and Communication. This subcomponent provides funding for the development and delivery in Mumbai of training programs in these and other subjects, as well as domestic and limited international study tours based on Training Plans to be prepared and submitted annually to WB by MRVC. The
40 completion date of training programs in the closing date of the project. Proposed cost: US$3.2 million.
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Annex 5: Project Costs INDIA: Mumbai Urban Transport Project-2A
Table 1. Project Costs and Financing by Components
(Local Crore) (US$ million) Project Component Local Foreign Total Local Foreign Total Component 1 Rolling Stock Fleet Increase 2,377.0 553.0 2,930 535.1 124.5 659.6 Component 2 DC to AC Conversion 686.3 85.8 772 154.5 19.3 173.8 Component 3 EMU Maintenance Facilities 523.0 - 523 117.7 - 117.7 and Stabling Lines Component 4 Technical Assistance 7.4 57.6 65 1.7 13.0 14.6 Total Project Costs 3627.7 662.3 4,290 816.7 149.1 965.8 Front-end Fee - 4.775 4.775 - 1.075 1.075
Unallocated - 16.3 16.3 - 3.7 3.7 Total Financing Sought 3627.7 683.4 4,311.1 816.7 153.8 970.5 Note: Physical and price contingencies are all included
Table 2. Project Cost by Components and Financiers (US$ Million)
Project Component IBRD % CPF % % of Total Loan IBRD CPF Total Cost Component 1 Rolling Stock Fleet Increase 355.7 83 303.9 56 68 659.6 Component 2 DC to AC Conversion 55.2 13 118.6 22 18 173.8 Component 3 EMU Maintenance Facilities and Stabling Lines 0 0 117.7 22 12 117.7 Component 4 Technical Assistance 14.4 3 0.2 0 2 14.6 Total Project Costs 425.3 98.9 540.5 100 99.5 965.8 Front-end Fee 1.075 0.25 - - 0.11 1.075 Unallocated 3.7 0.85 - - 0.38 3.7 Total Financing Sought 430 100 540.5 100 100 970.5 Note: Physical and price contingencies are all included
1. Assuming INR/US$ exchange rate = 44.42 2. Identifiable taxes and duties are US$97 million, and the total financing need, with front-end fee and net of taxes is US$970.5 million. Therefore, the share of project cost net of taxes is 90 percent.
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Table 3. Outlay of Project by Years (US$ Million) 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 Total Rolling Stock Fleet Increase EMU Manufacture - - 20.8 62.5 119.4 101.2 303.9 EMU Electrics - - 41.7 104.2 117.9 91.9 355.7 Subtotal 0 0 62.5 166.7 237.3 193.1 659.6 DC to AC Conversion Digital Axle Counter and Quad ` 1.6 5.3 4.8 4 - 15.7 cable Traction substations at Chinchpokli and Sion and six - 2.2 4.9 5.1 3.5 - 15.7 Switching posts
Supply and installation of 110 kV cables for Chinchpokli and - 2.8 1.8 1.3 0.6 - 6.5 Sion traction substations OHE Maintenance Car - - 1.1 6.3 5.6 4.3 17.3 Non Bank Funded Works 2.2 35.1 21.8 20.6 19.1 19.8 118.6 Subtotal 2.2 41.7 34.9 38.1 32.8 24.1 173.8 EMU Maintenance Facilities and Stabling Lines
EMU Maintenance Facilities - 20.5 20.8 20.9 9.2 71.4 EMU Stabling Lines - 6.7 15.1 13.9 10.2 0.5 46.4 Subtotal 0 27.2 35.9 34.8 19.4 0.5 117.7 Technical Assistance Bank Funded TA - - 1.8 5.4 5.4 1.8 14.4 Non-Bank Funded TA - - - 0.2 - - 0.2 Subtotal 0 0 1.8 5.6 5.4 1.8 14.6 Total Project Costs 2.2 68.9 135.1 245.2 294.9 219.5 965.8
Note: Physical and price contingencies are all included
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Annex 6: Implementation Arrangements INDIA: Mumbai Urban Transport Project-2A
126. MRVC is the project implementing agency for MUTP-2A and in that role is accountable for satisfactory completion of all the works of MUTP-2A. MMRDA, ICF, RDSO, WR and CR30 are executing agencies. As the project implementing agency, MRVC is responsible for financing and procurement of all the contracts financed by the loan, including major equipment such as rolling stock/AC-DC equipment/cables, etc. as also for executing certain identified works in the field with due safeguards in consultation with the Zonal Railways. MOUs which incorporate insurance to respect EMP, time line of works and activities to be carried out by respective agencies, etc. will be set up between MRVC and the executing agencies.
127. The execution of new line works which interfere with the running railway and require extensive block working are to be specifically listed out and carried out by the concerned Zonal Railways. The new lines work which interfere with the running railway only at the track linking on the two ends can be executed by MRVC with due safeguards.
128. The works included in MUTP-2A have been selected to ensure that there is minimal Resettlement and Rehabilitation or land acquisition involved. This resettlement, which is expected to be very limited in extend, will be executed out by MMRDA, as per specific conditions stated in a Memorandum of Understanding (MOU) between MRVC and MMRDA31.
129. Role of MRVC: Chart 1 below illustrates MRVC’s role as implementing agency of MUTP-2A.
30 Central Railway and Western Railway are two of the largest and busiest of the 16 zones of Indian Railways. Their respective divisions Mumbai CSTM and Mumbai are specifically involved in this project. Indian Railways is a department owned and controlled by the Government of India, via the Ministry of Railways. IR manufactures much of its rolling stock and heavy engineering components at its six manufacturing plants, called Production Units, which are managed directly by the ministry. Integral Coach Factory at Chennai (ICF) is one of these. Each of the six production units is headed by a General Manager, who reports directly to the Railway Board. Research Design and Standards Organization (RDSO) is a research and development organization under the Ministry of Railways, which functions as a technical adviser and consultant to the Railway Board, the Zonal Railways, the Railway Production Units in respect of design and standardization of railway equipment and problems related to railway construction, operation and maintenance. 31 MMRDA is a body of the Government of Maharashtra set up under the Mumbai Metropolitan Region Development Authority Act, 1974 Government of Maharashtra as an apex body for planning and co-ordination of development activities in the Region.
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130. The implementation arrangement for MUTP-2A will be as under:
Sr. Work Implementing Executing Funding Likely No. Agency Agency Arrangement completion by (A) Goods/Supply and Installation 1. EMU procurement/ manufacture 1.1 Procurement of electrics MRVC MRVC WB Loan June 2014 1.2 Manufacture MRVC ICF Counterpart Feb. 2015 1.3 Design aspect MRVC RDSO -- -- 2. DC to AC Conversion Electrical Works 2.1 Traction substations and switching MRVC MRVC WB Loan Dec. 2012 posts between CSTM-Vidyavihar section 2.2 Laying of 110 kV cable at Sion and MRVC MRVC WB Loan Jan. 2012 Chinchpokli 2.3 Procurement of OHE maintenance MRVC MRVC WB Loan June 2014 equipment 2.4 Traction substations and switching MRVC CR Counterpart Dec. 2013 posts between Vidyavihar-Thane section 2.5 Laying of 110 kV cable at Thane and MRVC CR Counterpart Dec. 2013 Vadala Road 2.6 OHE modification from 1500V DC to MRVC CR Counterpart Dec. 2013 25 kV AC S&T Works 2.7 Procurement, installation and MRVC MRVC WB Loan Dec. 2012 commissioning of Digital Axle Counters 2.8 Procurement of Quad cable MRVC CR Counterpart Dec. 2012 2.9 Laying of cable MRVC CR Counterpart Dec. 2013 (B) Works 3 Maintenance facilities and stabling lines for EMUs 3.1 Maintenance facilities for EMUs MRVC CR/WR Counterpart Dec. 2013 3.2 Stabling Lines for EMUs Central Railway MRVC CR Counterpart Dec. 2013 Western Railway MRVC Counterpart Dec. 2013 (C) Technical Assistance 4. Technical Assistance Studies MRVC MRVC WB Loan* June 2014
* With the exception of MUTP2A-TA6: Reduction of trespassing and improvement of safety of the track, which is fully counterpart funded.
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Chart 1. Implementation Arrangements for MUTP-2A
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131. Responsibilities of MRVC (Project Management Unit): MRVC is the nodal organization for implementing MUTP-2A on behalf of Govt. of India and Govt. of Maharashtra. Following will the responsibilities of MRVC:
(a) To monitor and evaluate the project; (b) To coordinate the implementation of the project; (c) To prepare and forward periodical reports covering physical and financial progress; (d) To prepare implementation completion report; (e) To undertake necessary surveys and studies for project evaluation.
132. Responsibilities of Maharashtra and MMRDA: implementation responsibilities of the Government of Maharashtra include the following:
(a) be responsible, through the MMRDA and in cooperation with MRVC, for carrying out Project activities related to social management, including carrying out land acquisition and resettlement and rehabilitation activities (including preparation and implementation of RAPs), if any; and (b) facilitate the preparation and carrying out of relevant studies and related activities and recommendations under Component 4 of the Project.
133. Project Director of MUTP-2A: Director (Technical), MRVC is Project Director for MUTP-2A for overall monitoring and coordination of the project. He will be responsible to coordinate various agencies such as Ministry of Railways, Ministry of Finance, Planning Commission, World Bank, GOM, RDSO, ICF, CR, WR and other different agencies.
134. Staffing at MRVC: MRVC will consist of a team of professionals specializing in the following areas:
(a) Finance; (b) Procurement; (c) Environment and social; (d) Training; (e) Institutional development; (f) Engineering;
135. These professionals could either be staff deputed from MOR or could be outsourced from the open market. In addition, services of retired railway employees may also be engaged in successful implementation of the project. The organizational structure of MRVC is given in Chart 2 below.
136. Training of MRVC employees: The training of the MRVC employees are made to familiarize with the procedures and methods as part of this project. MRVC will also arrange a need based training program as and when required for each area of specialization.
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Chart 2. Organizational Chart for MRVC
Officers - 58 Assisting Staff - 137 Total - 195
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Annex 6A: Governance and Accountability Action Plan (GAAP) INDIA: Mumbai Urban Transport Project-2A
137. The context for the preparation of the Governance and Accountability Action Plan (GAAP) is the recognition by the MRVC and the Bank of the need to improve accountability arrangements to reduce the chances of corruption and enhance transparency in implementation of MUTP-2A. The GAAP has been prepared taking into consideration key risks that may be encountered during implementation of the project, relevant issues identified from the Guidance Note on Transport Sector GAAP, lessons learned from MUTP-1 and the measures that are already/would be in place to mitigate the impact of these risks on achievement of the project development objectives.
138. The GAAP seeks to build upon the GOI’s efforts and existing systems such as the Right to Information Act (RTIA, 2005), initiatives of the Central Vigilance Commission in enhancing transparency, and various measures already institutionalized by MRVC. It is premised on enhanced policies, procedures, institutions and capacity for better governance. The underlying assumption is that such mechanisms will enable increased public scrutiny of the project, better address stakeholder concerns and thereby enhance accountability.
Key Governance Risks
139. Based on a review of existing procedures, policies, processes and institutional capacity at MRVC, Indian Railways, and applicable GoI rules and regulations, the following have been identified as the critical risks in project implementation:
(a) Weak disclosure of project information leading to low stakeholder participation and accountability (b) Weak complaint and grievance redressal mechanisms (c) Risk of collusion, fraud and corruption in procurement (d) Weak internal audit and control procedures leading to risk of financial irregularities (e) Weak institutional capacity for project implementation (f) Weak coordination leading to risk of inordinate delays in physical progress of works (g) Implementation delays due to socio-political interference
Some Opportunities
140. MRVC has a pro-active vigilance unit headed by a Chief Vigilance Officer (CVO) (part-time), who is assisted by a Deputy CVO and a Chief Vigilance Inspector (part-time). This unit works in close coordination with the Vigilance Department of the Ministry of Railways and the Central Vigilance Commission. It has been actively focusing on preventive vigilance, system improvements through short inspirational video films with anti-corruption messages, interactive presentations and discussions on complex contract management issues. The unit also publishes a monthly newsletter “Prahari” (Sentinel) and organizes annual events such as vigilance quiz, caption contests, debates and essay competitions to raise awareness about fraud and corruption amongst the staff.
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141. To enhance transparency and fairness in procurement, MRVC proposes to introduce Integrity Pacts during 2009-2010 in association with Transparency International and the Central Vigilance Commission on all its contracts.
142. MRVC has obtained ISO9001 certification for quality of operations. On each of the contracts proposed in MUTP-2A, quality control would be as shown in the table below:
S.No. Contract Quality Control
1 Supply and laying of 110 kV cable MRVC, Zonal Railways
2 DAC RDSO
3 EMU Procurement Prototype by RDSO; routine inspection by Resident Railway Advisor in country of manufacture
4 Installation and commissioning of RITES India Ltd., RDSO (if prototype) TSS/switching posts
5 Procurement of machinery and plant Resident Railway Advisor in country of manufacture for OHE maintenance (as needed)
In addition, MRVC has already been engaging various third parties/technical bodies for technical reviews/assessments during execution of MUTP-1 and envisages similar engagements in MUTP- 2A, as necessary.
143. Through MUTP-1, MRVC has developed the ability to liaise effectively with the several departments and agencies of the IR (Board, Zonal Railways, RDSO, ICF), the GOM etc. which would considerably reduce the risk of delays in coordination and decision-making in MUTP-2A. MRVC conducts meetings of the coordination committee every 45 days with the zonal railways and other executing agencies to discuss pending issues on MUTP-1, and envisages continuation of such coordination meetings on MUTP-2A as well. In addition, the MRVC reports to the Railway Board monthly on each aspect of projects under implementation. In the annual ratings of PSUs by the GoI's Department of Public Enterprises under Ministry of Heavy Industries and Public Enterprises, MRVC's performance has been rated as very good (2007-08) and excellent (2008-09), which also points to better coordination as well.
144. Financial management systems in MRVC comprising budgeting, accounting, internal controls, financial reporting and auditing were put in place during the implementation of MUTP-1. Following a Corporate Governance and Financial Accountability assessment by the Bank, MRVC has formulated an action plan to further strengthen some of these areas as mentioned in Annex 7.
145. MRVC’s accounting staff (mostly on deputation from the Indian Railways) is experienced and familiar with the Bank’s requirements.
146. There is a 3-tier system of audit in MRVC comprising of: (i) concurrent internal audit by management appointed firm of Chartered Accountants under a Terms of Reference; (ii) annual statutory audit of the entity by independent firm of Chartered Accountants appointed by 50 the Comptroller and Auditor General (CAG) of India; and (iii) audit by CAG through the Principal Director of Commercial Audit.
Action Plan
147. Taking the above into consideration, a GAAP has been prepared that comprises of (i) project level actions that support transparent systems and processes for procurement, financial management and reporting and better quality assurance through enhanced demand-side mechanisms within the project, and (ii) organization level reforms to create an enabling environment for better enforcement and prevention of corruption. These actions are in the following areas:
(a) Actions to enhance policies (b) Actions to enhance procedures (c) Actions to enhance institutions (d) Actions to strengthen capacity and human resources The complete action plan matrix is given in Table 1. Key components of the action plan are described in the following sections.
Actions for Enhancing Information Disclosure
148. India passed the Right to Information Act, in 2005 and the Act became operational across India from 12 October 2005. The Act mandates the disclosure of and universal access to information wherever in the public interest. Compliance to the Act is required for all public entities including MRVC.
149. Implementation of RTI requires systems for on demand and suo moto disclosure of information, and for each government department to develop a disclosure policy, automated systems for record and document management, and information handling, and appointment of trained staff, programs for citizen awareness, and annual progress reporting. As mandated by the Act, MRVC has appointed on part-time basis a Public Information Officer (PIO), Assistant Public Information Officer and the Appellate Authority and has uploaded comprehensive information about MRVC’s functioning, project related information, agency’s annual report, sources of funds, directory, roles and responsibilities of MRVC officials, etc. on MRVC’s website (www.mrvc.indianrail.gov.in).
150. To comply with the RTIA provisions for both on-demand and suo moto disclosure of project related information, MRVC has also formulated a comprehensive project disclosure policy (as given in Chapter 9 of the implementation manual).
Actions for Enhancing Complaint Handling
151. MRVC will establish a system to register and monitor status of follow up of all received comments, suggestions and grievances and enable the same on its web site (www.mrvc.indianrail.gov.in), which will be updated monthly. MRVC will record and/or refer as appropriate all incoming grievances or complaints pertaining to the MUTP-2A project.
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152. MRVC will also establish procedures to deal with external complaints on procurement, fraud/corruption and construction quality (as described in Chapter 9 of Implementation Manual). MRVC will respond to all complaints, pertaining to MUTP-2A within 15 days of receipt, with copy to Managing Director, MRVC. Tracking of the status of complaints, related investigations and measures taken will be reported in monthly reports to management. Complaints deemed possible serious infringements may be further investigated by the Vigilance unit of MRVC and the Chief Vigilance Commission. These cases will also be included in quarterly reports to the Bank.
153. Contact information (dedicated email address, phone numbers) of the complaint handling and vigilance officials shall be widely publicized. Web-based campaigns, newspaper advertisements and displays on hoardings at highly visible locations will also be made to encourage public to report any misconduct, misappropriation and grievances to MRVC.
Actions to deter Fraud and Corruption
154. MRVC will formulate a transparent policy describing incentives for whistleblowers, sanctions for staff found indulging in fraudulent behavior and after due approvals, disclose these to the public. If as a result of any such information provided by the member of the public, cost savings are achieved or charges of misconduct and misappropriation are proven, such members of the public will be awarded some recognition such as a certificate of excellence or felicitation at a public ceremony with or without a monetary reward. Simultaneously, strict disincentives will be announced for the erring members of the departments and remedial actions established in cases of fraud and corruption. This will include sanctions to government staff proven to be involved in such cases.
155. Any entity that is found to have misused funds, or not effectively carried out key elements of the anti-corruption plan, may be excluded from participation in subsequent works of MRVC. Information regarding such cases, where lessons are learned and funds are retrieved, will be widely published for information of the members of public. Strict procedures to ensure anonymity of informants will be enforced.
Actions to Enhance Quality and Project Monitoring
156. In addition to design reviews by MRVC/RDSO, MRVC will engage independent third parties/quality assurance consultants such as Indian Institute of Technology, National Institute of Design under agreed Terms of Reference for evaluations of technical designs and advice on technical issues wherever necessary as per the contractual provisions. These entities would also verify achievement of project milestones, enabling better controls over contractor payments. MRVC will also commission impact assessment studies and user satisfaction surveys annually to obtain stakeholder feedback.
157. To strengthen project monitoring, MRVC proposes to develop a MIS within a year of project start, and enable it online for quick review and decision-making. To facilitate the review, MRVC will formulate a score-card method for judging physical and financial progress of the project at any stage. Proposed annual project audits will also enable better monitoring.
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Actions to Strengthen Institutions and Capacity 158. Following an assessment of the current corporate governance and financial management arrangements, MRVC has evolved an action plan for strengthening the same. The actionable areas include strengthening of internal audit, project monitoring and contract management arrangements. In addition, the proposed project will also be subject to annual project audit under Bank agreed TOR and the complete report would be published on MRVC’s website.
159. MRVC will also start building a database with procurement and contractor performance data from the project such as number of bids received, bid prices, unit prices, specifications, time and cost overruns. This will enable statistical analysis to preclude collusion and facilitate reference checks on future bids. MRVC will also disclose on its website the process for disqualification of bidders found to engage in fraudulent/corrupt practices.
160. MRVC will undertake a comprehensive training needs assessment for its entire staff, and finalize a training plan. This, along with the TA studies undertaken32 should facilitate strengthening of capacity. In addition, MRVC proposes to include training on the RTIA for all its officers and staff to sensitize them on the need for transparency of information.
Monitoring Indicators
161. The Bank will monitor implementation of these elements wherever necessary as per the contractual provisions37, through inter alia:
(a) Disclosure of information will be supervised mainly through: (a) checking the frequency and comprehensiveness of website updates, and (b) checking the comprehensiveness of information available on citizen information boards at site(s), newsletters etc. (b) Quality monitoring will be supervised through the harnessing of third parties in review of project design and monitoring, periodicity of reports of the impact assessment and user satisfaction surveys. (c) The complaints handling system and the system of sanctions and remedies will be supervised mainly through: (a) periodic review of statistics based on records kept on the website of MRVC; (b) field level checks to ensure that problems are being reported and acted upon; (c) review of quarterly reports on complaint handling submitted to the Bank (d) Institutional improvements will be monitored through the progress in implementation of the CGFA action plan, online complaints handling system, procurement and project management database and operability of the project MIS. (e) Capacity enhancements will be monitored through percentage of staff and officers sent for training including on RTIA, number and type of preventive vigilance initiatives.
32 See Annex 4 53
Indicative Costs
162. The cost of the GAAP implementation is part of the technical assistance component of the project and project implementation costs (financed by MRVC) comprising of: (a) cost to develop MIS; (b) costs to develop online complaint handling mechanism; (c) costs to commission third-party monitors/quality assurance consultants; (d) costs to commission the annual impact assessment and user satisfaction surveys; (e) cost of training staff.
163. It has been agreed that MRVC and the Bank will review the implementation of the GAAP during the supervision missions and a comprehensive review at mid-term. This will enable an evaluation of the GAAP’s effectiveness and opportunity for mid-course corrections.
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Table 1: Governance and Accountability Action Plan
1. Policy Actions to Enhance Transparency Timeline/Stat Implement- Risk Area Action(s) to be taken to mitigate risk us ing Officials Discretion in Project-level decision making, Formulate a proactive public disclosure policy and Policy PIO, AA, lack of disclose all project information to the public through formulated and HODs transparency and the MRVC web-site. agreed upon. accountability Engagement with media during supervision missions As needed. Bank, MRVC and political to highlight issues. interference that Entity-level may adversely Formulate a transparent policy describing sanctions for July 2010 BOD, affect project staff found indulging in fraudulent behavior and Vigilance outcomes. incentives for whistleblowers. Officials 2. Measures to Enhance Procedures Corruption/ Project-level collusion in Standardize eligibility criteria for bidders and product Continuous HODs procurement; quality needs to preclude confusion. Consult bidders weak financial through pre-bid meetings on the same as needed; management and discourage repeated cancellation of bid invitations. complaint Incorporate feedback received from participatory Quarterly Finance handling monitoring exercises on financial matters in periodic Officials procedures; financial reviews. weak Sign Memoranda of Understanding with all the other June 2010 BOD coordination executing agencies for better coordination. with other executing Entity-level agencies Appoint a complaint handling officer and establish July 2010 BOD, procedures to deal with complaints on procurement, Vigilance Maintain an updated database on complaints received March 2010 PIO, AA, CO and action taken for suo moto or on-demand public and HODs disclosure Strengthen systems and procedures to implement RTI – Already in PIO, AA, through Website, Newsletter, Citizen Information Boards place; will be HODs etc. further strengthened Improve financial management systems to facilitate August 2010 MRVC FM management decisions, periodic monitoring of budgets and timely reporting. Notify details of the process for disqualification of July 2010 Vigilance bidders who engage in misrepresentation/ fraudulent/ officials corrupt practices on MRVC website (Railway Board policy of disqualifying bidders who engage in such practices for supplying to Railway Stores will be adapted for this) 3. Measures to Strengthen Institutions Weak complaint Project-level and grievance Introduce Integrity Pacts for increased Transparency and As and when BOD/Vigilan handling Integrity on all contracts in MUTP-2A mutually ce Officials mechanisms, agreed weak corporate Introduce annual project audit and need-based internal Annual Finance governance, audit and take prompt action to resolve all audit officials, weak quality observations. BOD control and Develop a project MIS for effective project monitoring To be HODs monitoring and review and link it to the web for quick review and developed
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follow up action. during the 1st year of project execution
Commission impact assessment studies and user Annual BOD/HODs satisfaction surveys to obtain user feedback Empanel reputed third-parties for technical As needed. HODs design/studies and/or evaluations. Entity-level Implement corporate governance and financial Plan agreed Finance accountability action plan. upon. officials, BOD Develop a comprehensive comments, suggestions and Already in Vigilance grievances handling system and enable the same on the place Officials and MRVC Website Complaint Handling Officers Commission an online system for registering, tracking July 2010 Vigilance and monitoring of complaints. Officials and Complaint Handling Officers Start compiling database on number of bids, bid prices, July 2010 Procurement unit prices, specifications, contractor performance for officials, future reference. HODs 4. Measures to Enhance Human Resources (all at entity-level) Weak Identify training needs and finalize training plan for all Continuous HODs/HRD implementation staff. Conduct appropriate training for staff from Bank arrangements TA. that may Conduct campaigns to spread awareness of anti- Periodically. Vigilance corruption measures and vigilance mechanisms among Officials adversely affect MRVC staff project processes Conduct training on RTI for all MRVC officers and staff Continuous HRD and and results PIO, AA Key: AA = Assistant Accounts Officer BOD = Board of Directors CO = Complaints Officer HOD = Head of Department HRD = Human Resources Department PIO = Public Information Officer
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Annex 6 B: Supervision Strategy Matrix INDIA: Mumbai Urban Transport Project-2A
164. The Supervision Strategy is to ensure that the objective of MUTP-2A project are achieved satisfactorily and timely manner and the implementation of all project activities follow agreed procedures and complies with all fiduciary and safeguard requirements. Supervision Strategy for the proposed MUTP-2A is developed based on the lessons learnt from the ongoing Mumbai Urban Transport Project, other projects in India Portfolio and India Health Sector DIR, which indentified, among other things, weaknesses in Bank’s supervision strategy and lack of field and independent verification of project activities early on. Also, the supervision strategy links the key project risks identified in the Risk Identification Worksheet with the mitigation measures laid out in the Governance and Accountability Action Plan. 165. Supervision Methodology: The project supervision will be based on (i) physical verification of the works by the Bank task team and Bank hired consultants; (ii) Sample cross checking and verification of the progress reports provided by the client, (iii) Close scrutiny of audit reports and financial management reports (iv) Carrying out interim missions, in addition to full implementation support missions on key issues, (v) discussions and regular meetings with the implementing agency and other stake holders, (vi) Close follow up with the implementing agency on the key issues highlighted during the implementation support missions and (vii) active involvement of the Bank management and the Department of Economic Affairs to resolve key issues specially those related with fraud and corruption. 166. Team Composition: The World Bank supervision core team will comprise specialists having high level of skills covering urban transport, railway engineering, social and environment impact management, procurement, financial management and audit, institutional/ governance, and monitoring and evaluation. 167. Most of the Bank task team will be based in Delhi Bank office, which will allow prompt visits by individual team members to the field as and when required. In addition, the Bank will hire from time to time international experts to check the quality of the work and provide the expert support for overall project implementation. 168. Frequency of the visits: The Bank team will visit project site twice a year. In addition, interim missions will be carried out on key issues. The supervision task team will develop, together with the client, a check list to review the implementation of the project including safeguard and fiduciary actions. This will ensure an objective way of monitoring the project. 169. Supervision Budget: A supervision budget of US$200,000 per year is estimated to cover the cost of Bank staff, consultants and travel expenses. 170. Supervision strategy and expected outcome: The main supervision activities to be covered by the Bank and the client are provided in the table below which also highlights the expected outcomes.
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Table1. Supervision Strategy Matrix Client’s role33 Bank’s role Expected outcomes TECHNICAL and Quality ASPECTS Review of the designs to be carried out by Implementation support mission and Compliance of the MRVC/ RDSO and supervision of the interim missions contract conditions, works to be carried out by MRVC and other Review of the progress reports engineering design executing agencies. Discussion and regular meetings with the and technical implementing agency and other stake specifications holders. Reduced possibility of cost and time over run Reduced possibility of contract variations. PROCUREMENT MRVC clearance process to be followed for Most of the contracts will be prior Bank / MRVC all works, goods and TA contracts for the reviewed. procurement value upto INR 1000 million (US20 Review of the contracts not subject to prior guidelines followed million) and for those above this value, review by the Bank will be carried out Open, transparent and evaluation report to be forwarded to Indian either by the Bank team or Bank hired competitive Railway Board for review of the consultant, who will review agreed samples procurement achieved. recommendations of such contracts. Observations from such To use Bank’s Standard Bid Documents or reviews shall be shared with the Borrower updated model documents as applicable and lessons learnt will be implemented for MRVC staff to attend training courses on future procurement. procurement, contract administration and project management. FINANCIAL MANAGEMENT All the actions listed in Annex 7 Focus on the adequacy of the financial Compliance with all reporting, including timeliness and financial management completeness of the financial reports. requirements; Desk review of the audit reports and follow Audit comments taken up on action taken into considerations; Participating in site visits to review Financial progress MRVC’s internal control procedures and closely following practices. physical progress.
SOCIAL AND ENVIRONMENTAL SAFEGUARDS Coordinate and monitor safeguard measures Monitor safeguard and value added Compliance with to mitigate impacts; and periodically report measures implemented by MRVC and safeguard policies and about progress. provide technical advice as necessary and achieving social and appropriate through discussion and sharing environmental value of emerging issues. added outcomes.
33 Includes NGO and consultants hired by the client
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Annex 7: Financial Management and Disbursement Arrangements INDIA: Mumbai Urban Transport Project-2A
Summary of Financial Management (FM) Assessment
171. The Bank funded MUTP-134 under which MRVC is responsible for implementation of the rail component is continuing. MRVC is the sole implementing agency for MUTP-2A and will be responsible for FM arrangements for the project. This FM assessment concludes that MRVC has a financial management system which is considered adequate, to account for and report on the project resources and expenditures accurately. However there is scope for further improvements in these FM arrangements and in this respect an action plan has been discussed and agreed with MRVC.
Background
172. MRVC was incorporated on July 12 1999 as a government company under the Ministry of Railways (MOR) to implement the rail component of an integrated rail cum road urban transport project called Mumbai Urban Transport Project (MUTP). Its vision/ mission is to develop world class infrastructure for an efficient, safe and sustainable railway system in Mumbai suburban section to provide comfortable and friendly train services to the commuters35. MRVC is also involved in the further planning and development of Mumbai Suburban Rail System for improved rail services in close coordination with Indian Railways and Government of Maharashtra. As per Article 177 of the Memorandum and Articles of Association of MRVC the period of validity of MRVC is minimum five years and maximum 15 years. MRVC has applied to both MOR and GOM for extension of validity period. The approval is expected shortly. 173. MRVC’s has a share capital of Rs.25 crores held in the ratio of 51:49 by Indian Railways and Government of Maharashtra. Its existing manpower is approximately 180. It exercises autonomy and delegation of financial powers as applicable to Schedule-A public sector companies. MRVC’s sources of revenue comprise Direction and General Charges recovered from projects executed by MRVC, Central and Western Railway, MMRDA and other executing agencies under MUTP-1 and interest on term deposit.
174. Operating results of MRVC: Rs. Crores Particulars 2008-09 2007-08 2006-07 Total income 36.38 32.95 17.04 Total expenditure 16.65 10.44 7.04 Surplus 19.73 22.51 10.00 Accumulated surplus 81.48 63.84 41.23
175. MUTP-2A requires a total financing of US$970.5 million (Project costs of Rs.4290 crores). The share of IBRD is estimated at US$430 million and the balance US$540.5 million is
34 The overall coordinating implementing agency under MUTP-1 is Mumbai Metropolitan Regional Development Authority (MMRDA), responsible for the road component of the project including R&R. Municipal Corporation of the Greater Mumbai, Bombay Electricity and Bus Services ; Maharashtra State Road Development Corporation ,MRVC and Traffic Police are other executing agencies under MUTP-1. 35 Source Corporate Plan 2006-2016.
59 counterpart funded. The assets created under the project will be owned by CR/ WR as appropriate.
Financial Management Strengths, Weaknesses and Mitigating Arrangements
176. The project draws the following strengths in the area of financial management: a budgeting, accounting and reporting system has been operational in the entity for the past several years, which will be used for accounting and generating the required financial reports under the project. MRVC is implementing satisfactorily the rail component of MUTP-1 funded by the Bank and has experience of the Bank’s FM policies and procedures including those relating to special commitments. A detailed project implementation manual has been prepared.
177. The Bank team conducted a review of financial management, corporate governance and accountability arrangements of MRVC36 which has indicated that MRVC has institutionalized certain cardinal principles in areas like accounting, auditing, internal control, budgeting and reporting which have laid the foundation for a basic financial accountability and corporate governance framework in the organization. However there is scope to further improve financial accountability and corporate governance arrangements of the organization to further strengthen the capacity to more effectively manage the proposed project. Actions have been initiated to strengthen internal audit and for updating finance manuals. Others are proposed in detail in the action plan (refer to Table 3, page 71). The overall FM risk is rated at Moderate.
Type of Risk Risk Risk Mitigating Measures Residual Risk Assessment Inherent Risks Country level M India country level rating. GoI is the borrower. M (India) Entity level (at H Action plan for improvement of corporate governance S MRVC level) and financial accountability arrangements agreed during preparation. Project level H Internal controls built into the project design with S enhanced internal audit and improved contract management. Project FM manual as part of overall Implementation Manual is being finalized Overall inherent Risk S Control Risks Budgeting S Budgeting framework exists; Monitoring framework will M be improved; Annual work plans and cash forecasting will be enhanced. Accounting M Separate trial balances of MUTP-2A will be prepared; L Accounting and reporting formats will be put in place; Internal H Internal audit system will be strengthened; Audit S Controls committee will be strengthened with independent directors and made more effective; Internal controls for contract management will be enhanced. Funds flow M Funds flow to MRVC through the budget route from L MOR and GOM. Counterpart funding will be available. Similar fund flow mechanism under MUTP-1 found effective.
36 A report on “Corporate Governance and Financial Accountability Arrangements” prepared by the Bank is available in the project files. The report contains a detailed assessment and identifies areas for improvements along with an action plan.
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Financial S Formats agreed for project reporting; Internal financial M Reporting reporting for entity will be enhanced. Auditing S Independent project auditor with agreed terms of M reference. Overall control Risk M RESIDUAL RISK RATING Moderate
178. The residual risk rating is moderate as a few major off-line supply contracts are proposed to be funded under the project. Direct payment by the Bank under special commitment will be availed in specific cases (which has been used under MUTP-1). There are five supply and installation, two goods and seven technical assistance contracts which are subject to prior review by the Bank. Independent third-party consultants will be appointed37 to certify the quality and progress of work and acceptability of the equipment/ works on periodic basis. Equipment procured/ constructed under the project will be handed over to WR/ CR after commissioning and joint review by CR/WR and MRVC.
179. Arrangements for Oversight and Accountability: MRVC will be responsible for the FM arrangements of the project. At the helm of affairs of MRVC is the Board of Directors (Board). As per the Memorandum and Articles of Association (MAA) of the Company the maximum number of directors is 11. The Chairman is part time. The Managing Director is supported by three full-time directors (Technical, Projects and Finance); two part-time directors (Resettlement and Rehabilitation and Infrastructure and Commercial Development); two part- time official directors and one part-time non-official director. There is scope for the appointment of one more part-time non-official director, since there is provision in the MAA for two part-time non-official directors (independent directors)38. The Board meets quarterly39. It is assisted by a full-time Company Secretary and Heads of Departments.
180. There is a Board level audit committee set up in accordance with the requirements of section 292A of the Companies Act 1956 with three members – Director (Technical), and two part time official directors. Thus there are no independent directors in the present audit committee and the audit committee meetings are held twice annually against quarterly prescribed by department of public enterprises (DPE) guidelines40. MRVC will (i) induct the existing non- official Director in the audit committee and request GOM to nominate a non-official Director who would then be inducted in the audit committee (ii) designate one of the non-official directors to function as the Chairman of the audit committee and (iii) increase the frequency of the audit committee meeting to four times in a year in due course of time.
37 MRVC appoints the following agencies/ individuals for inspection: RDSO (for prototypes); Resident Railway Advisors (for imported products) and RITES (for locally manufactured products/ works). MRVC’s engineering team also carries out inspection of works. 38 The provision for two part time non official Directors is less than the required number of four or one-third of the Board strength as prescribed by the Department of Public Enterprises (DPE) in the corporate governance code for central public sector undertakings (CPSUs). Implementing this provision would require restructuring the Board of MRVC. MRVC has requested the Railway Board to approach DPE for relaxation of the provision. 39 There is monthly review of MRVC works by MD and coordination meeting at 45 days interval between MRVC, CR, WR and GOM to review progress of MUTP. 40 DPE’s code on corporate governance for CPSUs prescribes that two-thirds of the audit committee members should be independent directors and that the chairman of the audit committee should be an independent director. Further, the charter of audit committee has been defined by MRVC which also defines the frequency of meetings (at least two meetings) and the scope of the audit committee (covers review of internal controls, financial statements and half-yearly reports, internal and statutory audit reports etc). The frequency of meeting of the audit committee is less compared to the DPE guidelines which prescribe at least four meetings annually.
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181. A detailed Project Implementation Manual will be in place which will provide the structure, systems and procedures, controls and reporting arrangements for overall project management of MUTP-2A including FM and contract management.
182. Fund Flow: MUTP-2A will be financed through IBRD Loan and counterpart funds from IR and GOM. IR and GOM will share equally the cost of the project as well as the proceeds of the loan and its repayment. The counterpart funding will also be on a 50:50 cost sharing basis. To contribute to the repayment of the loan IR has levied a surcharge on suburban rail tickets in Mumbai area being collected by WR and CR. 50 percent of the surcharge collected will be made available to MOF representing MOR’s contribution to the consolidated fund of India towards servicing of the MOR’s share of the loan and the remaining 50 percent of the surcharge collected will be passed on to GOM through MRVC, or adjusted against funds receivable from GOM. The expenditures of the project from the proceeds of the loan as well as from counterpart funds are routed through MRVC (see Chart 1).
Chart 1. Fund Flow Arrangements
Legend Loan disbursement Loan repayment Grant by IR/GOM IBRD Loan
Ministry of Finance/ Govt. of India
GOM 955 cr. 955 cr. IR Mumbai Railway Vikas Corporation
1. Loan 1,910 Jointly taken by IR & GOM 1,200 cr. 1,200 cr. 2. Counterpart Funding Grant by IR 1,200 GOM 1,200
3. TOTAL (Rs. Crore) 4,311
Rolling Stock DC to AC Maintenance Technical Stabling Lines Fleet Increase Conversion Facilities Assistance
Levy of surcharge collected by CR & WR
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183. The project will be funded through budget releases to MRVC by MOR/ IR and GOM as in the case of MUTP-1. Separate budget codes will be established for the purpose by MRVC. The Bank loan will finance (i) procurement of electrical equipment for rolling stock, (ii) off line works including setting up of new traction sub-stations and switching posts, procurement of digital axle counters and catenary maintenance equipment and (iii) technical assistance for studies for sustainable expansion of rail services; programs for improving passenger convenience and information; plans for improving safety and environmental management of operations; capacity for increased operational efficiency; and training. The remaining supplies and works will be counterpart funded: manufacture of trains at Chennai ICF; new traction substations, EMU maintenance facilities and stabling lines and on-line works under AC/DC conversion. The detailed project cost and sharing between IBRD and counterpart are provided in Annex 4. The executing agencies – CR, WR, ICF and RDSO will prepare estimates for the expenditure on the relevant sub-projects in their annual budgets and inform MRVC. MRVC will prepare the consolidated annual project budget/ expenditure schedule taking into account the inputs from the executing agencies and notify both MOR and GOM for creating necessary budget provisions.
184. Each year after passing of the Railway Budget, the Railway Board will issue a sanction order allotting funds to MUTP-2A and authorizing transfer of funds to MRVC for further re-allocation and transfer of funds to the executing agencies concerned. GoM’s annual budget will create a budget head for MUTP-2A under the Urban Development Department for receiving the Additional Central Assistance from GoI and passing it on to MRVC through MMRDA. MMRDA’s annual budget estimates will provide for receipt of ACA and counterpart funds from GoM, and its disbursement to MRVC. Funds for the project will be received by MRVC through quarterly releases by MOR/ IR and from GOM against periodic demands by MRVC. MRVC will maintain a common bank account and will book for the resources and expenditures by project and activity and report to the Bank through IUFR.
185. Based on funds requirement of the various executing agencies, MRVC will provide advances and the executing agencies will submit expenditure statements on periodic basis. The MOU between the executing agencies and MRVC will regulate the periodic fund flow and reporting including submission of annual audit report on expenditure statements by the executing agencies.
186. Disbursement Arrangements: The table below shows disbursement categories and loan financing percentages: Amount Expenditure Category Financing Percentage (US$ million) 1. Goods, Supply and Installation 412.364 Rolling Stock Procurement 355.696 100% DC to AC Conversion 55.155 100% Simulation software 1.513 100% 2. Consultant Services and Training 12.894 100% Total 425.258 Front end Fee 1.075 Unallocated 3.667 Total 430.000
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187. The IBRD funds will flow to MOR/ IR (as a budget grant) and GOM (through ACA) from MOF. IBRD will advance an amount equivalent to six months forecast expenditure which will be deposited in the Designated Account that will be opened by MOF. Subsequent disbursements by the Bank will be routed through the Designated Account. Disbursements by IBRD would be made on the basis of the quarterly IUFRs41 submitted by MRVC. Disbursement options would include IUFR-based advances against forecasts, reimbursements, direct payment to suppliers including special commitments/ letters of credit. Supporting documentation, including completion reports, certifications, bills and other documentation will be retained by MRVC and made available to the Bank during project supervision. These would also be audited as a part of annual project financial statements audit and subject to routine internal audit. Retroactive financing of up to 20 percent of project cost will be available under the project for payments made within 12 months prior to the date of the legal agreement and to be eligible, the activities should be procured as per Bank guidelines on procurement.
188. IBRD Project Accounting: The number of transactions under the IBRD financed project is expected to be few large and bulky transactions except the payments under TA component. All contractual payments for the project will be made after due verification of the bills in accordance with the procedures laid down in the accounting manual as updated by the company/ project implementation manual. The project would have a separate trial balance and financial statement which will help in distinguishing costs financed by the proposed World Bank loan.
189. Separate general and sub-ledger codes will also be established to capture MUTP- 2A budget and expenditure category/ component/ contract wise for monitoring and reporting to facilitate monitoring of budgeted and actual expenditure of the project on periodic basis, analysis of variances and corrective actions. The project budget and variances will also be reflected in the quarterly interim un-audited financial report (IUFR) of the project and the balance in hand would be reconciled with the project bank statement.
190. Supplier bills will be checked and authorized by competent authority and independent inspector as specified for the project. Project progress and milestone completion will be independently certified before payment. Project finance personnel will check bills and pass them for payment in accordance with the agreements/ work orders, pre-dispatch inspection reports (for supply contracts), inspection certificates, measurement books, and original bills etc., as per contractual provisions. All original bills and related documents and records etc will be maintained by MRVC accounts and will be subject to both internal and statutory audit.
191. Following laid down procedures, project monitoring will be carried out on a regular basis. Suitable project monitoring software will be used42 as a monitoring tool by project in charge and quarterly progress reports in both physical and financial terms will be provided to the Bank through the IUFR.
192. As long as the loan is open, IUFR in an agreed format will be required giving details of funds received (IBRD and counterpart) project expenditure incurred during the quarter, year-to-date and project-to-date indicating separately expenditure out of IBRD funds and counterpart funds and comparing them with budgets and variances; project trial balance;
41 MRVC would have the flexibility of furnishing reports earlier (say on a monthly basis) to seek early replenishments wherein they could also provide forecasts for a shorter period than six months. 42 MRVC currently uses MS Project software for project monitoring and is considering Prima Vera under its computerization plan.
64 projected IBRD funds requirement in the next two quarters; summary of claims and disbursements under IBRD; progress of contracting and contract payments; physical and financial progress of the project. The financial information in IUFR will be based on MRVC’s financial systems and submitted to both project management and IBRD. The annual project financial statements, which would be similar to the format of the IUFR would be audited and submitted to the Bank and disclosed in the website. The procedures will be clearly laid down in the Project Implementation Manual.
193. Assets Procured/ Constructed under the Project: Railway assets procured/ created under the MUTP-1 project by MRVC are the property of Indian Railways and under their safeguard and control. The railway assets under construction appear in MRVC’s books as capital work in progress subject to joint inspection and these are handed over to CR/ WR after commissioning43.
194. Project Contract Management: Each contract will be assigned a project manager (PM) who will be the authorized representative of the employer responsible for contract management. The project implementation manual provides guidelines on contract management and specifies responsibility of the PM44, contractor, submission of detailed work program, monitoring of status of clearances, monitoring of work execution and periodic review of work progress. MRVC is using MS Projects for contract monitoring.
195. R&R Payments: There is no R&R envisaged under MUTP-2A. However in the event of the need for land acquisition, MRVC will take necessary steps in consultation with GOM and MMRDA will handle R&R under the existing arrangement prescribed for MUTP-1. Both land acquisition and R&R will be counterpart funded. In the event of any R&R related payments, the fund flow and accountability arrangements would be agreed and reviewed from FM perspective in advance.
MRVC Financial Management Arrangements
196. Staffing: The FM function is headed by a Director, Finance and supported by Financial Advisor and Chief Accounts Officer (FA&CAO). The latter is assisted by two Senior Accounts Officers (SAOs) one of whom is the Coordinator for the World Bank MUTP-1 project; a Chartered Accountant (appointed as a Retainer); eight Senior Section Officers (SSOs); an Accounts Assistant; and three Consultants (retired officials). The total staff strength of the Department is 13, all on deputation from Indian Railways for periods ranging from three to five years. The present staff members have accounting background and experience. It is proposed to strengthen FM with an additional Deputy FA&CAO reporting to the FA&CAO and supported by
43 MRVC’s own assets comprising furniture, office equipment etc and construction of leased flats are accounted for and depreciated in accordance with Companies Act requirements. Fixed assets registers are being maintained and physical verification of assets are carried out periodically. 44 These include ensuring the execution of project as per the scope of the work, setting the standards to which the work shall be constructed and completed, authorizing payments, approving any variations or design changes within the overall scope of the work; maintain proper records for quality, inspection, rejection or acceptance of work, and make available such records as may be called for by the Employer. PM to also ensure that bank/ performance guarantees, insurance policies and powers of attorneys are submitted on time, that provisions relating to extension of contract, quality assurance, safety, environmental protection provisions, liquidated damages, etc. are adhered to, that extension of the completion period and provisions of liquidated damages are imposed as per the delegation of powers of MRVC and that disputes are handled as per contractual provisions.
65 three Senior Accounts Officers. The Deputy FA&CAO will also act as the Coordinator for World Bank projects. A staffing and training needs assessment based on current and future workload is being worked out by MRVC45. The present budget on training is INR 25 lakhs approx. which is expected to go up to INR 50 lakhs to include MRVC training. The TA component under the project provides for training of FM staff in financial management and project management. The details are being worked out.
197. The major elements of financial management accountability framework are in place in MRVC. There is an accounting manual issued in January 2004 which provides broad guidelines on the FM arrangements in MRVC for MUTP-1. There is scope for updating and further detailing the budgeting, fund flow, project accounting and management, and internal audit sections in the manual. This has been agreed with MRVC and the revised manual will be in place by July 2010.
198. Budgeting and Performance Review: MRVC prepares annual capital expenditure budget and annual administrative budget. Annual project works expenditure budget is based on annual project work-plans of MRVC and other executing agencies (eg CR, WR, ICF, and RDSO). The works expenditure budget is approved by the MD and forwarded to the Railway Board. Review of budget against actual expenditure is carried out in August, December (revised estimate) and February (final modification) with information from all executing agencies. For variations from the budget, approvals are obtained in advance from the budget approving authority. Annual administrative budget of MRVC is approved by the Board. Quarterly administrative expenditure reports comparing actual expenditure against budget are presented to the Board. MRVC may consider elaborating on the existing budget preparation guidelines contained in the accounting manual with more detailed instructions regarding the preparation and monitoring of project budgets including formats of reports. Quarterly rolling cash forecasts may be considered to strengthen management of funds.
199. Accounting and Internal Controls: Accounting is carried out in MRVC Head Office. There are no other accounting units. Accounting is based on accrual principles and in accordance with accounting standards issued by the Institute of Chartered Accountants of India. There is an accounting manual which was last updated in December 2003. The manual lays down bill passing and payment procedures. An off-the-shelf accounting software package (Tally 9) is being used for day to day accounting and periodic financial reporting. Half-yearly accounts are prepared and presented to the audit committee and the Board for review.
200. In the areas of accounting and internal controls the rudiments such as schedule of powers46, chart of accounts, accounting policies and standards, brief accounting and procurement guidelines have been laid down in the accounting manual which was last updated in December 2003. There is a need to further update relevant sections of the manual. There is also scope for
45 The Chief Personnel Officer (CPO) is responsible for human resource management in MRVC. He is assisted by a Deputy and two supervisors. MRVC follows DPE guidelines and Railways manuals for human resource management. List of training programs have been identified including and the training institutes. Training needs assessment is carried out by the HoD/ Director concerned. The training program includes training on World Bank procurement procedures conducted by ASCI and NIFM. Further, MRVC proposes to send officers for the Railways mandatory training. 46 According to the Delegation of Procurement Powers, (i) in respect of program of capital expenditure (works sanctioned by Railway Board) MRVC is delegated powers for incurring expenditure up to Rs.150 crores on any program of capital expenditure; and (ii) in respect of purchase and placement of contracts of a major nature involving a substantial capital outlay MRVC is delegated powers for incurring expenditure up to Rs.100 crores for purchase/placement of contract of a major nature involving a substantial capital outlay.
66 more detailed guidelines pertaining to accounting and controls to strengthen the financial management framework - for instance there are no instructions/ guidelines regarding project accounting (receipt of funds, disbursement and utilization thereof and reporting47) in the manual which is the primary activity of MRVC.
201. Management Reporting: There is formal reporting of half-yearly financial statements of MRVC to the audit committee and the Board48. Capital budget reviews are carried out in August, December and February. Administrative budget performance report and progress on sanctioned ongoing works of MUTP-1 are submitted to the Board on quarterly basis indicating both financial and physical progress of projects. There is monthly review of MRVC works by MD and a bi-monthly coordination meeting between MRVC, CR, WR, GOM and other executing agencies to review progress of MUTP-1. In addition MRVC submits monthly report on activities to the Railway Board.
202. There is scope for MRVC to further elaborate on management reporting in the accounting manual with formats of reports and instructions for their preparation. MRVC may consider introducing quarterly reporting of financial results to the Board to match the frequency of progress reviews. MRVC plans to introduce quarterly reporting once the reporting from the executing agencies on a quarterly basis in an acceptable format is formally established. MRVC may also consider carrying out a formal assessment of reporting requirements to ensure that financial and operational reports that are needed are generated and in the form that facilitates decision-making. The assessment of organization wide reporting requirements could cover reports required by (i) top, middle and operating levels of management (ii) statutory and regulatory authorities (iii) lending agencies etc. and could be combined with the proposed computerization of MIS.
203. Computerization: MRVC maintains its accounts in Tally 9, which is an off the shelf accounting software. A separate payroll package has been installed. There is a financial management system (FMS) which is used for preparing the quarterly progress report (QPR) on MUTP-1 for submission to the Bank. The FMS is an excel-spreadsheet where the non financial data is manually input and the financial data is downloaded into the spreadsheet. MRVC management may consider upgrading its computerized systems with appropriate project management and reporting software which could be integrated with the existing financial accounting system to generate management reports. MRVC has outsourced the assessment of computerization needs to be followed by a roadmap for implementation49.
Entity Corporate Governance
204. The DPE, Government of India has issued a code of corporate governance for CPSUs irrespective of whether or not they are listed in the stock exchange50. Although MRVC has implemented corporate governance practices in compliance with relevant provisions of the Companies Act 1956 it is yet to fully comply with the practices mandated by the DPE guidelines.
47 MRVC’s lack of familiarity with Bank procedures for special commitments under MUTP-1 and GOI requirements in this respect has resulted in payment of/ demand for significant amount of penal interest (INR 5 crores approx.) to MoF. Detailed guidelines are being incorporated in both the project implementation manual and the finance manuals to avoid any recurrences. 48 This is reportedly delayed due to delays in receiving expenditure statements from the other executing agencies of MUTP. 49 L&T Infotech has been appointed to prepare the assessment and road map. 50 The aim is to institutionalize good corporate governance practices that are broadly in conformity with SEBI guidelines.
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In the following table, the key components of the model code of corporate governance (applicable to a CPSU) and the present status in MRVC is presented. Table 1: Status of Draft Model Code on Corporate Governance in MRVC DPE code Present MRVC status Board of directors shall have an optimum combination The current strength of the Board is ten as follows: of functional, nominee and independent directors. The Chairman number of functional directors (including CMD/MD) MD should not exceed 50 percent of the actual strength of Three full time directors the board. Four part time official directors One part time non official director The number of nominee directors shall be restricted to a maximum of two. The number of functional directors including Chairman and MD is 50 percent of the current Board strength. The In case of CPSEs listed in stock exchanges, the number number of government nominee (part time official of independent directors shall be at least 50 percent of directors) exceeds the restricted level. The number of board members. In case of CPSEs not listed in the independent directors (part time non official directors) stock exchanges at least one third of the board falls short of the required one-third of the Board members members should be independent directors (part-time by two. directors)51. Qualified and independent audit committee52 shall be There is an audit committee set up under the provisions of set up giving the terms of reference with minimum the Companies Act 1956. The audit committee has three three directors as members; Two thirds of the members members. There are no independent directors in the audit of audit committee shall be independent directors; The committee. The chairman of the audit committee is not an chairman of the audit committee shall be an independent director. independent director. All members of the audit committee possess technical Audit committees should meet at least four times in a knowledge and expertise but no knowledge of financial year and not more than four months shall elapse matters. between two meetings. Audit committee mandate is to meet twice a year Risk management strategies and their oversight shall be There is no formal risk management system in place. The one of the main responsibilities of the board and management considers monitoring and achieving MOU management53. Disclosure on risks and concerns should target as part of enterprise risk management. from part of Director’s report.
The guidelines provide a list of minimum information Half-yearly results of MRVC are placed before the Board. that is required to be placed before the board54 and included in the report on corporate governance in the There is no report on corporate governance in the annual annual report of the company55. report of MRVC and no certificate of compliance with corporate governance norms.
51 Nominee directors appointed by an institution which has invested in or lent to the company shall be deemed to be independent directors 52 All members of audit committee shall have knowledge of financial matters of company and at least one member shall have good knowledge of accounting and related financial management expertise. Detailed and elaborate role has been prescribed for audit committees including, financial performance, reporting and disclosures; internal control mechanisms (including internal audit); compliance with audit observations (internal as well as statutory); whistle blower mechanism etc 53 On risk management the board shall ensure the integration and alignment of the risk management system with the corporate and operational objectives and also that risk management is undertaken as a part of normal business practice and not as a separate task at set times. The company shall lay down procedures to inform board members about the risk assessment and minimization procedures. These procedures shall be periodically reviewed to ensure that executive management controls risks through means of a properly defined framework. Procedure shall be laid down for internal risk management also. 54 The list includes quarterly results for the company and its operating divisions or business segments (Annex IV). 55 Annex VII to the guidelines provides a list of items to be included in the report on corporate governance in the annual report of companies. The company is also required to obtain a certificate from either the auditors or practicing company secretary regarding compliance of conditions of corporate governance as stipulated in the guidelines.
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Actions for Improving Corporate Governance
205. During discussions with MRVC it was felt that the validity clause (life of 15 years for the entity) has come in the way of a long term vision and plans for the organization. The organization will complete 15 years in 2014. However there is strong likelihood of the validity period being extended/ removed. Nevertheless as long as MRVC functions as a CPSU, corporate governance norms prescribed by DPE for CPSUs would be applicable and therefore MRVC may consider taking appropriate steps to comply with these requirements.
206. Independent directors: MRVC may engage MOR and DPE in restructuring the Board composition to accommodate the required number of independent directors with at least one finance professional among them56. In the interim, the remaining non-official director may be appointed to the Board by GOM.
207. Audit committee: In the short term, induct the present independent director (non- official director) in the audit committee and enlarge audit committee charter and frequency of meetings as prescribed by the guidelines. On the appointment of the second non-official director s/he may be inducted in the audit committee. Otherwise MRVC may consider appointment of eminent person/s in an organizational committee to inject an element of independence and external and impartial debate in the proceedings/ decision making.
208. Risk management: In the area of risk management, the corporate governance framework requires MRVC to develop suitable strategies for risk identification, assessment and mitigation. Risk factors that could have adverse bearing on MRVC’s functions, performance and reputation should be identified and managed. MRVC does have a brief corporate plan laying down vision/ mission and objectives, and the frame work of MUTP-1, 2 and beyond, however, there are no long term operational and risk management strategies and no plan projections for the MUTP life cycle. MRVC operates more on a ‘project to project mode’ with short term/ ad hoc plans (e.g., implementation of MUTP-1, followed by 2A) rather than as a business concern with long term plans and organization (e.g., the entire MUTP project). This is largely due to the limited validity period prescribed which is now proposed to be dropped57. Since the entity’s life is being proposed to be extended, the need for risk management needs to be viewed in the longer term perspective for MRVC based on its future role and suitable risk identification, mitigation and monitoring strategies need to be put in place. Major risks for MRVC as project implementation agency are time and cost over-run, quality of equipment and works, several executing agencies not under the control of MRVC; important income source for GOM/MOR is levy of surcharge collected by CR and WR – changes in this may affect financing capacity; resettlement of project affected families may delay project implementation etc. In the area of governance, absence of independent and objective viewpoint in decision making, inadequate capacity/ vacancies/ continuity of staff as MRVC is staffed by personnel on deputation etc are risks. For enterprise risks suitable mitigation measures need to be developed, monitored and reported. MRVC needs to chalk out a plan for risk assessment and mitigation externally aided if necessary and weave in risk monitoring into its internal audit framework58.
56 The CAG while reviewing unlisted companies with the objective of assessing compliance with DPE guidelines has observed that MRVC does not fulfill the requirement of 1/3rd of independent directors. 57 Article 177 of the MAA stipulates the period of validity up to July 11 2014. MRVC has applied to the Railway Board and GOM for deleting the article (letters dated January 15 2010) 58 The Dedicated Freight Corridor Corporation of India Limited has developed a risk management strategy which proposes detailed risk register along with a risk management team.
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Internal Audit 209. Internal audit is carried out by a firm of chartered accountants under terms of reference issued by MRVC. The internal audit is continuous59 and quarterly internal audit reports are submitted to MRVC. Coordination for internal audit is the responsibility of an SAO reporting to FA&CAO. Internal audit reports together with management response are reviewed by the audit committee and by the Board. The statutory auditors have opined that the company has an adequate internal audit system commensurate with the size and nature of its business.
210. From a review of internal audit reports by the Bank it appears that the internal auditors are more focused on day-to-day accounting transactions and thereby fulfilling only a part of the scope of work relating to transaction reviews. However the internal audit scope of work requires the auditors to also (i) visit various field offices (ii) assess the adequacy of project financial management systems including internal controls and remedying weak controls etc (iii) assess compliance with provisions of financing agreements (iv) judge adequacy of records maintained regarding assets created and (v) certify eligibility of expenditures charged to projects and its correct classification and (vi) prepare internal control manual. These areas are not adequately addressed by internal audit. MRVC appointed new internal auditors from October 1 2009 and monitor the quality of the audit and deliverables.
211. MRVC may consider preparing a detailed internal audit manual to serve as the basis for internal audit. The audit manual would set out the objectives, scope and coverage of audit, the detailed methodology of review, audit questionnaires, and the required reporting and follow up. The internal audit would need to be organization wide (covering project funding, procurement and projects construction in addition to accounting) and oriented towards mitigating risks and improving/ strengthening relevant systems and controls. The internal auditors should also possess the specific skills and experience required to carry out the audit which should go beyond traditional financial audit. MRVC has assigned the responsibility of developing both the internal audit and finance manuals to the internal auditors.
212. The IBRD financed MUTP-2A will be subject to internal audit (under agreed terms of reference) and its reports would be made available to IBRD, on request.
External Audit
213. Under Section 619(2) of the Companies Act, 1956, the Comptroller and Auditor General (CAG) appoints MRVC’s statutory auditors to carry out an independent audit and express their opinion as per the requirements of the Companies Act. In addition, the CAG through its Principal Director of Commercial Audit also conducts supplementary audit under section 619 (3) (b) of the Companies Act on the audited financial statements. After the completion of the statutory audit and supplementary audit the audited accounts and auditors’ reports are adopted by the Annual General Meeting of MRVC. Statutory audits of MRVC are on schedule. The statutory audit reports do not contain any material observations60.
59 The internal auditors are required to spend at least two working days every week and the Partner/ Director at least once a week at MRVC. 60 The 2007-08 audit report points out that accounting of provisions for retirement benefits of employees on deputation is not on actuarial valuation as prescribed under AS-15. This is being addressed by the management. Also the auditors have pointed out in their opinion that MRVC has placed reliance on audited/ unaudited statements pertaining to expenditure incurred on various projects by CR/ WR/ MMRDA and the resultant D&G charges.
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214. In addition to the audits under the Companies Act MRVC is subject to proprietary audit/ inspection by the Office of the Principal Director of Commercial Audit. While the inspection report for FY 2007-08 did not observe any persistent irregularities, the inspection report for FY 2006-07 contained several observations. MRVC management has responded to the observations which pertain to project/ contract management and violation of existing guidelines etc. Only one objection is yet to be resolved61.
215. Annual project audit: In addition to the annual entity audit report and accounts, MRVC would submit to the Bank a separate annual project audit report along with the audited project financial statements by September 30 each year during the currency of the project. It is proposed that the project (including all components) will be audited by an independent firm of chartered accountants (which may include the statutory auditors appointed on the advice of CAG), acceptable to the Bank, under agreed terms of reference. The annual audited project financial statement would separately identify each component under the project, its progress and the funding sources for each of the components. While certifying the project financial statements the project auditor would take cognizance of the annual audited utilization statements of the executing agencies receiving advances from MRVC under the project. The following annual audit reports will be tracked by the Bank’s Audit Reports Compliance System (ARCS):
Table 2. Audit Reports Monitoring
Agency Audit Report Audited By Due Date MRVC Annual entity audit reports as required under Statutory Auditors appointed by 30th the Companies Act CAG September MRVC Project audit reports Independent firm of Chartered 30th Accountants September GOI Audit Report of the Designated Account held CAG 30th at RBI September
Disclosure, Transparency and Implementation of Rights to Information (RTI) Act, 2005
216. Under Right to Information (RTI) Act, 2005 a public authority is required to maintain and make available detailed records to facilitate right to information. It envisages computerization of records and accessibility through network. The Act also requires every public authority to, designate required number of Public Information Officers, in all administrative units or offices under it and publish particulars of such officers to provide information to persons requesting for it under the Act.
217. MRVC has developed a separate RTI website. Information relating to the company, powers/ duties, rules and regulations etc has been posted on the website including names and contact information of public information officers/ appellate officer.
218. There is a separate vigilance cell in the organization headed by Chief Vigilance Officer/ Deputy Chief Vigilance Officer. Notifications are issued by Chief Vigilance Commissioner from time to time.
61 Audit observations and current status: Delay in implementation of MUTP-1, cost overrun of Rs.350.6 crores in implementation and levy of surcharge of Rs.298.84 crores without providing any additional facilities; (the para is still open);
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219. MRVC discloses annual audited statement of accounts in the website. It is a limited view of the Balance Sheet and Profit and Loss Account only. During project implementation the audited project financial statements and other pertinent project-related details would be disclosed in the website in a suitable manner.
Proposed action plan
220. The proposed action plan with risk assessment and implementation horizon is summarized below in Table 3. The proposed actions are bifurcated between those that are under the control of MRVC and its management and those that are under the control of other stakeholders and prioritized over short to medium term
221. If MRVC faces constraints in staffing while trying to implement some of the proposed actions as listed below it may consider seeking assistance from reputed and experienced consultants (or / eminent persons from the sector) in its efforts to further improve financial accountability and corporate governance.
Table 3. Financial Management Action Plan
Area of Action Risk Actions required Action by, Remarks for Date implementation Actions within the control of MRVC (short term) Internal audit Strengthen internal audit Internal controls and Ensure adherence to 2009-10 internal New auditors arrangements in line with risk management are terms of reference by audit appointed from own requirements and weakened without a internal auditors October 2009 with good industry practices; robust internal review fresh TOR. develop appropriate and follow-up Develop detailed Final report by Adherence to TOR internal audit manual mechanism internal audit manual July 2010. to be monitored. with enlarged scope covering project/ Internal auditors to contract prepare internal implementation and audit manual. To be focus on risk shared with the management/ Bank systems improvement Audit Committee Induct independent Assurance function is Induct two As soon as Serving non-official directors in audit impaired without independent (non- appointed as director to retire in committee or invite independent review official) directors in Board non- May 2010. MRVC independent professionals and recommendation; the audit committee official has requested GOM (in an advisory capacity) risk of ineffective directors. and MOR to appoint to inject professional controls may lead to non-official independence and improve future problems directors. oversight
Currently meetings Strengthen oversight by Increase frequency of From FY 2011- are half-yearly since audit committee in line audit committee 12 onwards financial statements with corporate governance meetings to four as reporting to the requirements per DPE guidelines Board is half-yearly. MRVC to increase the frequency with the introduction of
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quarterly financial statement reporting to the Board. FM capacity Inadequate capacity Recruit/ depute staff Replacement Key FM staff slated Fill vacancies and train and will affect level of as per project staff in place to to revert to Indian build capacity efficiency and lead to requirement avoid vacancy. Railways including delays FA&CAO and SAO. Indian Railways to ensure proper addition/replacement with adequate time for hand-over. In-year reporting to management Introduce quarterly Proper and adequate Prepare un-audited From FY 2011- Currently half yearly financial reporting to BoD information not financial statements 12 financial statements as per corporate available in timely on a quarterly basis are submitted to the governance requirements fashion for informed with closing entries Board; MRVC plans decision making; compare with budget to increase the delays in corrective and provide variance frequency when actions analysis acceptable expenditure statements are received from the executing agencies. Financial management Manuals Update the finance and Inconsistent/ Initiate action for Final report by Consultant accounts manual for a improper practices to updating the July 2010 appointed to prepare more formalized and the possible detriment following: finance manuals elaborate coverage of of the organization; (a) Schedule of MRVC’s activities to risk of becoming Powers strengthen financial person dependent (b)Budgeting management environment rather than process (c) Project dependent Accounting (d) General Accounting (e) Internal Controls (f) Procurement (g) Contract Management (h) Reporting Actions within the control of MRVC (medium term) Computerized MIS Assess requirements of Failure to get Develop terms of Computerization Assignment organization wide MIS and properly automated reference and road map to be outsourced prepare computerization and integrated in a commence work ready by May strategy and road map timely fashion with 2010 consequences - need for manual intervention; delays, duplications and possibility of errors; proper and adequate information not available in timely fashion for informed decision making; delays in corrective actions
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Actions beyond the control of MRVC but critical from management and corporate governance perspective Independent Directors Induct independent Creates impression Initiate consultations Clear timeline One independent directors/ eminent that company lacks with appropriate for appointment director in place; to professionals to enhance independence and that authorities by July 2010 retire in May 2010. the level of corporate adequate The number should governance professionalism and be compliant with objectivity are not DPE guidelines. brought into decision making; non- compliance with Departmental guidelines and organization’s Articles of Association Extension of validity Lack of lasting vision, Obtain in principle By May 2010 period of MRVC beyond ad-hoc decisions and approval. 2014 barrier to improvements.
MUTP-2A may not be fully implemented within the validity period
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Annex 8: Procurement Arrangements INDIA: Mumbai Urban Transport Project-2A
A. General
222. Procurement for the proposed project would be carried out in accordance with the World Bank’s "Guidelines: Procurement Under IBRD Loans and IDA Credits" dated May 2004 revised October 2006 (Procurement Guidelines); and "Guidelines: Selection and Employment of Consultants by World Bank Borrowers" dated May 2004 revised October 2006 (Consultant Guidelines), and the provisions stipulated in the Legal Agreement.
223. The various items under different expenditure categories are described in general below. For each contract to be financed by the Loan/Credit, the different procurement methods or consultant selection methods, the need for pre-qualification, estimated costs, prior review requirements, and time frame are agreed between the Borrower and the Bank in the Procurement Plan. The Procurement Plan will be updated at least annually or as required to reflect the actual project implementation needs and improvements in institutional capacity.
224. Procurement of Goods and Works: There are no Works envisaged to be procured using Bank’s SBDs for Works, at this stage. Goods to be procured under this project include (i) Electrics for 3-phase EMUs (Rolling Stock) and (ii) OHE Maintenance Car and will be procured using Bank’s SBD for Goods on ICB basis. Procurement of other items include (iii) Setting up of Traction Substation at Chinchpokli and Sion and six Switching posts, (iv) Supply and Installation of 110 kV cable for Chinchpokli and Sion traction substations and (v) Digital Axle Counters and will be done using the Bank’s Standard Bidding Documents (SBD) for Supply and Installation on ICB basis. In addition, the Project envisages procurement of Information System including TA for suburban Rail Simulation Model and Power Supply Simulation Study, for which the procurement method will be ICB with post qualification, using Bank’s SBD for procurement of Information Systems.
225. Pre-Qualification of Bidders: Procurement of Goods and Works will follow post- qualification of bidders and pre-qualification procedures are not envisaged.
226. Domestic Preference: The project procurement does not envisage providing any domestic preferences and has adopted the default provisions of the Bank SBD.
227. No procurement requiring National Competitive Bidding (NCB) method of procurement is envisaged under the project, If, however, some smaller value contracts for Works/ Goods are identified during implementation, these shall be procured using model documents as agreed with and satisfactory to the Bank.NCB contracts, if any, will be awarded in accordance with the provisions of paragraphs 3.3 and 3.4 of the Procurement Guidelines ("Guidelines: Procurement Under IBRD Loans and IDA Credits" dated May 2004 revised October 2006). All NCB contracts to be financed from the proceeds of the loan will follow the procedures described in Chapter 5 of the MUTP-2A Implementation Manual and the following conditions shall apply:
a. Only the model bidding documents for NCB agreed with the GOI Task Force (and as amended from time to time) shall be used for bidding. b. Invitations to bid shall be advertised in at least one widely circulated national daily newspaper at least 30 days prior to the deadline for the submission of bids.
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c. No special preference will be accorded to any bidder either for price or for other terms and conditions when competing with foreign bidders, state-owned enterprises, small scale enterprises or enterprises from any given state. d. Except with the prior concurrence of the Bank, there shall be no negotiation of price with the bidders even with the lowest evaluated bidder. e. Extension of bid validity shall not be allowed without the prior concurrence of the Bank (i) for the first request for extension if it is longer than four weeks and (ii) for all subsequent requests for extension irrespective of the period (such concurrence will be considered by Bank only in cases of Force Majeure and circumstances beyond the control of the project). f. Re-bidding shall not be carried out without the prior concurrence of the Bank. The system of rejecting bids outside a pre-determined margin or “bracket” of prices shall not be used in the project. g. Rate contracts entered into by Director General of Supplies and Disposal will not be acceptable as a substitute for NCB procedures. Such contracts will be acceptable, however, for any procurement under National Shopping procedures. h. Two or three envelop system will not be used.
228. Selection of Consultants: Consulting services procured under this project would include: TA for development program for Mumbai suburban rail services, TA to support the development of Indian Railway Long Term Strategy, TA for revenue maximizing study for Mumbai rail suburban system, TA for suburban ticketing system for Central and Western Railways, TA for design for passenger information and security within Mumbai suburban rail system, and TA for study to improve environmental management of operation of Central and Western Railways.
229. For all consultant procurement, the Bank’s Standard Request for Proposal (SRFP) document and pertinent Form of Contract shall be used.
230. The following methods of selection will be adopted depending upon size and complexity of assignment, as defined in the Consultancy Guidelines:
a. Quality and Cost Based Selection (QCBS) b. Quality Based Selection (QBS) c. Selection under Fixed Budget (FBS) d. Least Cost Selection (LCS) e. Selection based on Consultant’s Qualifications (CQS) f. Single Source Selection (SSS) g. Individuals 231. The services of individual consultants will be procured as per the provisions stipulated in paragraphs 5.1 to 5.4 of the Bank’s Guidelines.
232. Retroactive Financing: The Project has issued some of the Bidding Documents inviting bids for awarded contracts following Bank’s Procurement Guidelines and agreed format of Bidding Documents. One contract has already been awarded and others are in various stages
76 of bidding. These contracts if awarded, prior to the project loan effectiveness, as these would have been prior review contracts, cleared with the Bank, will be eligible for retroactive financing as per the criteria for such funding specified in the Lon Agreement. The amount of funding, if and where applicable, for such contracts as meeting the criteria, will not exceed 20 percent of the loan amount.
233. The procurement plan compiled for all the identified packages under the projects and the consultancies procedures and SBDs to be used for each procurement method, as well as model contracts for works and goods procured, are presented in Chapter 5 of the Mumbai Urban Transport Project 2A Implementation Manual.
B. Assessment of the agency’s capacity to implement procurement
234. Procurement under the project will be carried out by MRVC. MOR has implemented Bank’s project covered over several loans in modernization of the rail transport. Generally the officers are aware of the procurement procedures followed in Bank financed projects. MRVC will depute some representatives who will deal with this procurement to the training programs organized by Administrative Staff College of India (ASCI), National Institute of Financial Management (NIFM) or other reputed institute for updating their knowledge on procurement.
235. MRVC has been delegated authority by IR to take procurement decisions for contracts up to a value of Rs. 1,000 million (approx. US$20 million). All contracts except the one for the procurement of Electrical Multiple Units (EMUs) and kits shall be within the threshold of the US$ 200 million. The value of EMU contract is expected to be over US$200 million. In this case, the bid evaluation would be carried out by a committee of MRVC and RDSO and forwarded to Indian Railway Board for review and approval of recommendations.
236. Furthermore, Mumbai Railway Vikas Corporation Limited (MRVC) has performed satisfactorily compared with the other agencies involved in the implementation of MUTP-1, both on procurement and implementation of contracts. In the process, MRVC has acquired reasonable proficiency in procurement capacity following Bank guidelines and SBDs. However, for this project, Bank’s revised SBDs (2007 and 2008 for Works, Supply and installation and Goods procurement) will be applicable. The SBD for Supply and Installation has substantial changes from the previous version, which was applicable for MUTP-1 and with which these officials are well versed. In order to familiarize these officers of MRVC, the Bank apart from discussions on these bidding documents during missions organized a workshop at New Delhi, which was attended by senior officers of MRVC. During these discussions and workshop, several concerns of MRVC officials were clarified. Draft bidding documents for major procurements covered under the project have already been prepared. One contract has been awarded and two are in advanced stage of bidding process. The main bidding document for procurement of Electrics (EMU Rolling Stock) has been issued.
237. The responsibilities of MRVC officials inter-alia include duties pertaining to Procurement function. The procurement function is staffed by officers of MRVC at various levels as stated in the table 1 below.
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Table 1. Staffing of Procurement Functions at MRVC Senior Selection Grade/ Administrative Junior NATURE OF Managing Director Grade (Chief Administrative REMARKS POWERS Director Engineers etc.) Grade (SG/ JA) (SAG) Invitation of Works The tenders will be opened in the Tenders presence of one officer from the Executive department and one Accounts representative and an opening register will be maintained for noting the salient details of the offers as per the guidelines. The comparative statement of offers, a detailed briefing note containing technical conformity statement as per the laid down parameters and specifications will be prepared by the Executive of the department concerned of the rank not lower than Sr.Scale. Open tenders/ pre- Up to INR 250 Up to INR 30 - qualified tenderers Million Million Limited tenders Up to INR 250 Up to INR 30 - Finance Concurrence required Million Million Single tenders Up to INR 50 Up to INR 10 - Finance Concurrence required Million Million Accepting authority Over INR Over INR 100 Up to INR 100 - For tenders of value more than INR 500 Million Million up to INR Million 1000 Million, evaluation up to INR 500 Million. committee shall consists of three 1000 Directors including Director Million (Finance) for acceptance of Railway Board with MD’s recommendation Issue of acceptance Over INR 500 Over INR 100 Up to INR 100 Finance vetting required. letter and signing Million up to INR Million up to INR Million of contract 1000 Million 500 Million For foreign companies, Legal agreement. vetting also required Consultancy Tenders/Contracts Invitation of Full Powers a) Full powers for Nil Nil Prior finance concurrence will be Consultancy feasibility, detailed required if the consultancy is not an Tenders engineering and approved item in the consolidated supervision of MUTP estimate costing more than works (PMC). Rs.25000/- b) Full powers for hiring consultancy services pertaining to execution of works other than specified at a) above up to INR 25000/- each case subject to a ceiling of INR 500,000 / annum Composition of To consist of three To consist of three tenders evaluation SAG officers JA/SG Officers, committee. consisting of one (Finance Member Finance Member. In can be of next case of non- lower grade) of availability, next tenders up to INR lower category 1Million Finance officer (full powers). Accepting Full powers. Full powers of Authority acceptance for tenders dealt by the JA/SG Committee. Variation in Full power in Full powers for Variation in consultancy contracts consultancy consultation with tenders within approved by World Bank, if any, contract Finance acceptance limits, in will require prior approval of consultation with World Bank with Finance Finance. comments.
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Senior Selection Grade/ Administrative Junior NATURE OF Managing Director Grade (Chief Administrative REMARKS POWERS Director Engineers etc.) Grade (SG/ JA) (SAG) Extension of Full powers for Full powers for NIL Subject to Contract contract within contracts within their a) no loss to the administration their power of power of acceptance b) Contract is not awarded on the acceptance grounds of earlier completion period.
Variations in Contract
Contract Full powers for Full powers for NIL Any change having financial Conditions contracts with in contracts with in implication shall require their power of their power of concurrence of finance acceptance. acceptance. Quantities beyond Up to 50 percent Up to 25 percent of NIL Prior finance concurrence shall be permitted of initial contract initial contract value required for overall variation in percentage in the value provided provided enhanced excess of 25 percent of original contract. enhanced value of value of contract is contract value and for overall contract is within within his power of variation of individual item in his power of acceptance excess of 25 percent of schedule acceptance quantity. For foundation items, however, the variation limit of 25 percent will not apply and prior finance concurrences will not be required. For processing variation in excess of 25 percent Engineering Code provisions shall be adopted to explore possible cost reduction
Introduction of Full power Full power provided NIL All such cases require concurrence additional items in provided the the revised cost of of finance contract. revised cost of the the work is within work is within the the power of original power of original sanctioning sanctioning authority”. authority”.
238. An assessment of the capacity of the Implementing Agency to implement procurement actions for the project has been carried out based on the information provided in response to the Questionnaire, by MRVC and considering the experience of the bank team during implementation of the MUTP-1. The assessment reviewed the organizational structure for implementing the project and the interaction between the project’s staff responsible for procurement at MRVC.
239. The Table 2 below, sums up the Procurement Capacity Risk and Mitigation Action Plan agreed with MRVC: Table 2. Procurement Risk Mitigation Action Plan Pending Action/ due Action Due Status/ Completed on Agree on appropriate dispute December Bank's SBDs/ Model documents for ICB Nil resolution provisions for 31, 2009 and NCB will be used, which provides for contracts (at least for Bank these requirements adequately. Action financed ones, note that it is completed. mandatory for ICB). Agree on list of unacceptable December Same as above. Conditions agreed to Nil NCB issues and on removal 31, 2009 already. from documents to be used for Bank financed procurement.
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Arrange for training on September This is being implemented and details of Will be continuous procurement planning and use 30, 2010 the staff that has undergone such training exercise during the of new SBDs of the Bank. shall be provided to the Bank. Also a implementation detailed list of training scheduled for the phase next year will be prepared and provided for information of the Bank Improvement / Modernization December Project will carry out internal/ During project of Records Management 31, 2010 independent assessment to improve/ implementation Systems modernize records management systems Capacity Building in December Project will draw out a plan of training During project Contracts Management 31, 2010 activities for staff to enhance their skills implementation in the area of Contracts Management
240. The overall project risk for procurement is ‘Moderate’.
C. Methods of Procurement
Goods and Works
241. Goods/ Information Systems, estimated to cost US$500,000 or more per contract; and Works/ Turnkey Contracts/ Supply and Installation Contracts, estimated to cost US$10,000,000 or more per contract will be procured following ICB procedures as per Section II of the Procurement Guidelines. Goods/ Information Systems, estimated to cost US$30,000 or more but less than US$500,000 per contract and Works/ Turnkey Contracts/ Supply and Installation Contracts, estimated to cost US$30,000 or more but less than US$10,000,000 per contract may be procured following NCB procedures, meeting the requirement of Paragraphs 3.3 and 3.4 of the Procurement Guidelines.
242. Goods and Works estimated to cost less than US$30,000 per contract may be procured following Shopping procedures which meet the requirement of Paragraph 3.5 of the Procurement Guidelines.
243. Goods and Works which meet the requirement of Paragraph 3.6 of Procurement.
244. Guidelines may be procured following Direct Contracting Procedures.
Hiring of Consultants
245. Shortlists of consultants for services estimated to cost less than US$ 500,000 equivalent per contract may be composed entirely of national consultants in accordance with the provisions of Paragraph 2.7 of the Consultant Guidelines.
246. The following methods of selection will be adopted depending upon size and complexity of assignment, as defined in the Consultancy Guidelines: Quality and Cost Based Selection (QCBS) Quality Based Selection (QBS) Selection under Fixed Budget (FBS) Least Cost Selection (LCS) Selection based on Consultant’s Qualifications (CQS) Single Source Selection (SSS)
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Individuals
247. The services of individual consultants will be procured as per the provisions stipulated in paragraphs 5.1 to 5.4 of the Bank’s Guidelines.
D. Review Requirements
248. Contracts for Works/ Turnkey Contracts/ Supply and Installation Contracts, estimated to cost over US$10 million; and those for Goods/ Information Systems, estimated to cost over US$1,000,000 equivalent per contract, shall be subject to prior review by the Bank.
249. Thresholds for prior review by the Bank will be reviewed during the implementation of project, based on reviews by the Bank.
250. All contracts awarded on Direct Contracting basis, will be subject to prior review by the Bank.
251. The prior review threshold for Consultancy Contracts with firms is proposed at US$200,000 equivalent, whereas the same for individual consultants is proposed as US$50,000 equivalent. Further, sole source contracts to firms estimated to cost US$100,000 or more and to individuals estimated to cost US$20,000 or more will be subject to prior review.
252. All contracts not covered under prior review arrangements specified above, will be subject to post award review/ review during supervision missions/ review by consultants to be appointed by the by Bank
E. Procurement Plan 253. The Borrower, at appraisal, developed a procurement plan for project implementation which provides the basis for the procurement methods. This plan, included in the Implementation Manual, has been agreed between the Borrower and the Project Team on April 30, 2010 and is available at Mumbai Railway Vikas Corporation Ltd, 2nd Floor, Churchgate Station Building, Mumbai – 400 020, India. It will also be available in the project’s database and in the Bank’s external website. The Procurement Plan will be updated in agreement with the Project Team annually or as required to reflect the actual project implementation needs and improvements in institutional capacity.
F. Frequency of Procurement Supervision
254. In addition to the prior review supervision to be carried out from Bank offices, the capacity assessment of the Implementing Agency has recommended that the procurement arrangement and implementation progress should be reviewed during six monthly supervision missions, which shall also include need based visits to the field and to carry out post review of procurement actions.
255. Procurement information will be collected and recorded as follows: (a) Prompt reporting of contract award information for the respective components; (b) Comprehensive quarterly reports indicating, (i) Revised cost estimates for individual contracts and total cost;
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(ii) Revised timings of procurement actions including advertising, bidding, contract award and completion time for individual contracts; and (iii)Compliance report by the borrower within three months of the loan signing date
G. Details of the Procurement Arrangements Involving International Competition
256. Goods, Works, and Non Consulting Services
(a) List of contract packages to be procured following ICB and direct contracting:
1 2 3 4 5 6 7 8 9
Ref. No. Contract Estimated Proc. P-Q Domestic Review Expected Comments (Description) Cost Method Preference by Bank Bid- ($ Million) (yes/no) (Prior / Opening Post) Date GOODS Bidding Procurement of Documents MUTP2A-G1 electrics for 3- 355.7 ICB No No Prior Sep 2010 reviewed by phase EMUs the Bank Procurement of OHE MUTP2A-G2 17.3 ICB No No Prior 31.10.10 maintenance car SUPPLY AND INSTALLATION Procurement of digital axle MUTP2A-W1 15.7 ICB No No Prior 30.06.10 counter and quad cable Setting up of traction substations at MUTP2A-W2 Chinchpokli 15.7 ICB No No Prior 31.05.10 and Sion and six switching posts Supply and installation of 110 kV cables Contract MUTP2A-W3 for Chinchpokli 6.5 ICB No No Prior 11.08.09 awarded and Sion traction substations MUTP2A- Power Supply 0.9 ICB No No Prior 30.11.10 TA8 Simulation MUTP2A- Rail Operations 0.6 ICB No No Prior 30.09.10 TA9 Simulation
257. Slice and Package: If a transaction comprises several packages, lots and slices, the aggregate estimated value of all contract(s) resulting out of the bidding process will determine the applicable threshold for deciding about the review requirements. Further, Scope of Work or Requirements for procurement of Goods shall not be broken down into several packages to reduce the review requirements or to resort to a less competitive method of procurement.
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258. Consulting Services
a) List of consulting assignments with short-list of international firms.
1 2 3 4 5 6 7
Ref. No. Description of Estimated Selection Review Expected Comments Assignment Cost ($ Method by Bank Proposals million) (Prior / Submission Post) Date MUTP2A-TA1 Development Program for Mumbai Suburban Rail 5.40 QCBS Prior 31.08.2010 Services MUTP2A- TA2 Provision to support the development of the Indian Railways long term 1.60 QCBS Prior 31.01.2011 strategy for Suburban Rail MUTP2A- TA3 Revenue maximizing study in particular for non-fare box revenue and 1.10 QCBS Prior 01.10.2010 affordability for commuters MUTP2A- TA4 More efficient and user friendly ticket issuing 0.50 QCBS Prior 31.07.2010 MUTP2A- TA5 Passenger information and security 0.50 QCBS Prior 31.07.2010 MUTP2A- TA6 Reduction of trespassing and improvement of safety 0.10 CPF 30.06.2010 on the track MUTP2A- TA7 Improved Environmental Management of Rail 0.50 QCBS Prior 31.08.2010 Operations MUTP2A- TA10 Training 3.20 QCBS Prior 31.07.2010
H. Anti- Corruption Measures
259. The project has prepared a GAAP which is presented in Annex 6A. The key issues and risks concerning implementation of the project have been identified, including those relating to Procurement, listed in the Table 1 - Governance and Accountability Action Plan.
260. GAAP also identifies the risks associated with procurement processes, namely weak disclosure of project information leading to low stakeholder participation and accountability, weak complaint and grievance redress mechanisms, risk of collusion, fraud and corruption in procurement, and weak institutional capacity for project implementation. Actions pertaining to mitigating these risks include (a) suo motu disclosure of information, development of better systems for record and document management; (b) establish procedures to deal with external complaints on procurement, fraud/corruption and construction quality; (c) tracking of the status of complaints, related investigations and measures; (d) a transparent policy describing incentives for whistleblowers, sanctions for staff found indulging in fraudulent behavior; (e) strengthening of internal audit, project monitoring and contract management arrangements; (g) building a database with procurement and contractor performance data from the project such as number of bids received, bid prices, unit prices, specifications, time and cost overruns and (h) a comprehensive training needs assessment for its entire staff, and finalize a training plan.
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Annex 9: Economic and Financial Analysis INDIA: Mumbai Urban Transport Project-2A Introduction
261. This annex presents the results of the economic evaluation of the procurement of an additional 72 12-car rakes for the Mumbai suburban system. This is expected to yield a net present value over 35 years of operation of over US$262 million (2008 prices discounted at 12 percent to 2010) and to achieve an economic rate of return of 17 percent. It also summarizes the projected financial performance of the Mumbai suburban system and relates it to the overall financial performance of Indian Railways. Background and Project Description
262. Passenger traffic on the Mumbai suburban system has been growing steadily for over two decades, during which time the network and fleet has been progressively expanded and improved. MUTP-1, signed in 2002, included a component for the supply of additional rakes and is now nearing completion. During this time, the conversion of the suburban network from DC to AC traction has also been taking place to enable the more intensive service to be operated. However, the trains remain probably the most crowded in the world and the current project aims to provide a further 72 12-car rakes to provide additional capacity as well as completing the first phase of conversion from DC to AC and providing maintenance facilities for the additional rakes and stabling lines.
Traffic Forecast
263. The model used to derive the traffic forecasts and the associated system operating costs was originally developed as part of the Financial and Institutional Study of the Mumbai Suburban System in 1996. It has been used for over a decade by MRVC and has been continuously validated by comparing its forecasts, assuming the changes in these four variables that actually occurred, with what has occurred in practice. This comparison has showed a close correspondence and the model is considered a robust tool suitable for forecasting demand in this project. It has three main sets of inputs:
(a) financial and economic parameters; (b) base operating statistics; (c) parameters for forecasting traffic demand, earnings and operating expenses.
264. Passenger demand was projected taking into account:
(a) assumed annual population growth in the part of the Mumbai Metropolitan Region served by the suburban railway of 1.8 percent (b) changes in the key service parameters of service frequency, new routes, fares and crowding, using the elasticities given in Table 1. These are the same as used in the original MUTP-1 forecasts except for the elasticity with respect to network size (as measured by route-km). This was reduced from 0.2 to 0.1 as the new routes now proposed would pass through sparsely populated areas. The original MUTP-1 forecasts are based on a 1996 consultant study which undertook time-series analysis of demand to establish fare elasticities and stated preference studies to estimate the impact of crowding on demand through a willingness to pay approach, complemented by a willingness to pay estimate of in-vehicle time.
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Table 1. Assumed Demand Elasticities Parameter Elasticity Fare - 0.3 Route Kms + 0.1 Service + 0.1 Crowding - 0.2
(c) Increase in the per capita trip rate of 0.2 percent per annum, based on the recently concluded Comprehensive Transport Study. (d) Increase in average trip length of 0.5 percent per annum. Although the historical data shows a much higher growth, the shifting of business districts towards the north of Mumbai and the improved transport infrastructure for east-west connectivity is likely to reduce the average trip length on the suburban system. (e) Fares are assumed to increase at the same rate as inflation in the long run, i.e. fares will be constant in real terms. The fare surcharge is assumed to continue till the loan for MUTP-1 is paid back and no additional surcharge was considered. A sensitivity test also considered the case in which fares remain constant in nominal terms; as inflation is forecast at eight percent p.a. this is equivalent to a reduction in real fares of 7.4 percent p.a. (f) Service plans (train frequency and size) were derived from the current suburban railway timetable and the future timetables developed during project planning. 265. The key assumptions used to calculate operating costs are: (a) base costs taken from the annual cost analysis of suburban services (b) no change in the real cost of energy but reductions in energy consumption of dual voltage rakes of ten percent because of reduced starting resistance and ten percent from regeneration; (c) a reduction in maintenance cost of new rakes of 15 percent; (d) savings in energy consumption in sections converted from DC to AC of five percent from reductions in transmission losses and five percent because of improved reception of regenerated energy; (e) reduction of 60 percent in the maintenance cost of power supply installations in the converted sections; (f) reduction in transmission losses of about five percent on the energy consumed by main line trains on DC to AC converted suburban sections.
266. The reduction in operating costs as a result of AC conversion have all been estimated by MRVC based on experience gained during the first phase of the AC-DC conversion. The base operating and demand statistics were taken from the published statistics for 2006/7. These give, for each of Central and Western Railways, passengers, passenger-km, vehicle-km, train-km and gross tonne-km.
Economic Analysis Framework 267. The economic analysis compares the incremental costs and benefits of the project compared to delaying the purchase of additional rakes until 2022.
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268. Project Costs: These cover the capital cost of the incremental rakes, the conversion from DC to AC of the remaining network and additional maintenance facilities (Table 2).
Table 2. Incremental Capital Costs (Rs crores) US$ (million) 2009-10 130 27 2010-11 316 66 2011-12 623 130 2012-13 1127 235 2013-14 1359 283 2014-15 735 153 Total 4290 894 Converted at US$1 = Rs 48
269. The project costs also include the operating cost of the additional services that are run in the Project Case, net of the reduction in unit operating cost caused by the more economical AC units.
270. Terminal values of the assets have been based on the remaining lives of the assets in the final year of the analysis. The financial costs have been converted into economic costs using a conversion factor of 0.9.
271. Benefits: These include the following: (a) The reduction in crowding will reduce travel discomfort for passengers. This was valued at Rs.3.5 per hour (2001 prices) in the economic analysis of MUTP-1, based on stated preference surveys undertaken as part of project preparation. This has been updated to Rs.5.0 per hour at 2008 prices. (b) Savings in time due to (i) reduced journey time, and (ii) reduced waiting time due to increase in the frequency of trains once rakes are put into service. Journey time savings accounted for 32 percent of economic savings (compared to 24 percent in MUTP-1). The current evaluation does not include benefits from waiting time savings, as these would be relatively small at peak periods (if they were included at the conventional value of twice in-vehicle time, they would increase total net benefits by over 40 percent). Thus, the benefit accruing due to reduction in waiting time has not been taken into account while calculating the ERR. The value of time was derived in the CTS study as Rs.25.00 per hour (2006 prices). This has been updated to Rs.27.50 per hour for the base year (2008) and increased by five percent annually to reflect increases in per capita income. The CTS estimates were derived by transportation mode, based on household characteristics (including trip frequency and household income) recorded in the household survey. (c) The improved level of service is forecast to generate additional demand in the Project Case compared to the Base Case. The benefits for these passengers have been estimated using the ‘rule of half’. (d) Some of these passengers will be diverted from other modes. Diversion from car has been neglected but 20 percent of the additional patronage has been assumed to come from bus. This reduction in bus patronage will enable service levels to be adjusted (assuming an average bus occupancy of 54 passengers/bus), leading to a reduction in bus
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operating costs. These were estimated in the BEST business plan at Rs.45.60 per km (2008 prices). (e) The reduction in bus operations will also contribute to reduced pollution and road congestion. While the Mumbai EMU services generate very limited pollutants locally, buses emit NO2 and SO2 at an estimated rate of 0.25 kg per bus hour. The direct benefit was estimated at Rs.175 per passenger per annum (2001 prices) in the MUTP-1 analysis; this has been updated to Rs.240 in 2008 prices. Indirect benefits from reduced pollution arise to the population living along the road corridor and are estimated at Rs.5.5 per ton per person (2008 prices). Road congestion benefits, estimated at Rs 0.05 per passenger- km, averaged over the day are negligible. Indeed, while based on Mumbai data, they are conservative compared to results obtained in Paris for instance.62
Result of Economic Analysis and Sensitivity Analysis:
272. The benefits are calculated for the 35-year period following project completion, from 2010 to 2045 and the estimated EIRR derived and NPV calculated (using a discount rate of 12 percent). The estimated NPV, discounted to 2010, is about US$262 million in 2008 prices with an EIRR of 17 percent. The distribution of benefits is shown in Table 3 and the forecast cash flows in Table 4.
Table 3. Project Benefits (US$ million 2008, discounted at 12 percent to 2010)
Total Capital expenditure -501 Additional operating cost -1122 Subtotal -1623 User benefits Benefits to existing passengers Reduced crowding 952 Reduced journey time 613 Benefits to diverted passengers 80 Subtotal. 1645 Bus-related Reduced operating costs 178 Pollution benefits 77 Subtotal 255 NPV 262
62 Prud’homme, R. et al, Public Transport Congestion Costs: the Case of Paris Subway, Draft, 2010
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Table 4. MUTP-2A Forecast Economic Cash Flows (In crores of Rupees - Nominal)
Capital Incremental Replacement Terminal Journey Bus Direct Indirect Diverted Economic Net Year Investment Operating Comfort Cost of Value of time VOC pollution pollution passengers Savings Benefits in MUTP-2A Cost Assets Assets 2009-10 -117 0 0 0 0 0 0 0 0 -117 2010-11 -284 0 0 0 0 0 0 0 0 -284 2011-12 -561 -38 47 77 4 0 2 0 131 -468 2012-13 -1014 -296 253 160 40 1 16 7 477 -834 2013-14 -1223 -704 459 260 121 3 49 37 929 -998 2014-15 -662 -767 476 368 173 4 70 59 1151 -278 2015-16 -823 533 393 164 4 66 61 1221 398 2016-17 -889 583 423 171 4 69 67 1318 429 2017-18 -938 740 470 116 3 47 52 1428 490 2018-19 -1017 784 503 135 3 54 64 1543 526 2019-20 -1096 861 538 138 3 55 69 1664 568 2020-21 -1183 939 576 144 4 58 77 1798 615 2021-22 -1183 967 594 148 4 60 79 1852 669 2022-23 -1183 996 611 153 4 61 82 1908 724 2023-24 -1183 1026 630 157 4 63 84 1965 782 2024-25 -1183 1057 649 162 4 65 87 2024 840 2025-26 -1183 1089 668 167 4 67 89 2084 901 2026-27 -1183 1121 688 172 4 69 92 2147 964 2027-28 -1183 1155 709 177 4 71 95 2211 1028 2028-29 -1183 1190 730 182 5 73 98 2278 1094 2029-30 -1183 1225 752 188 5 75 101 2346 1163 2030-31 -1183 1262 775 193 5 78 104 2416 1233 2031-32 -1183 1300 798 199 5 80 107 2489 1306 2032-33 -1183 1339 822 205 5 82 110 2564 1380 2033-34 -1183 1379 846 211 5 85 113 2640 1457 2034-35 -1183 1421 872 218 5 87 117 2720 -90 1446 2035-36 -1183 1463 898 224 6 90 120 2801 -180 1438 2036-37 -1183 1507 925 231 6 93 124 2885 -414 1288 2037-38 -1183 1552 953 238 6 96 128 2972 -864 925 2038-39 -1183 1599 981 245 6 98 131 3061 -1127 751 2039-40 -1183 1647 1011 252 6 101 135 3153 -657 1313 2040-41 -1183 1696 1041 260 7 104 139 3247 2064 2041-42 -1183 1747 1072 268 7 108 144 3345 2162 2042-43 -1183 1799 1104 276 7 111 148 3445 2262 2043-44 -1183 1853 1138 284 7 114 152 3549 2365 2044-45 -1183 1909 1172 292 7 118 157 3655 2799 5271 NPV -501 -1122 952 613 178 5 72 80 1899 -425 521 262 ERR 17%
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273. The sensitivity of these results was tested against changes in seven base case assumptions:
(a) an increase in investment costs of 20 percent; (b) including user benefits only (c) reducing the benefits by ten percent (d) evaluation period of 15 years (e) income growth of two percent p.a. instead of three percent p.a. (f) fares held constant in nominal terms i.e. a reduction in real terms of 7.4 percent p.a. (g) delays of one, two or three years in the delivery of the trains.
274. Switching values (that is the values which will cause the IERR to be below the discount rate) for the following variables were also included in the sensitivity analysis: construction costs, benefit reduction factor, income growth per year, incremental operating cost, journey time benefits, comfort benefits. They are presented in Table 5.
Table 5. Switching Values for Key Project Variables Variable Switching value Construction costs 152% of base case Benefit reduction factor -14% compared to base case Income growth per year 3.50% (base case is 5%) Incremental Operating Cost 123% of base case Comfort benefits 73% of base case Journey time benefits 57% of base case
275. The results of the sensitivity analysis, given in Table 6, show the project is robust.
Table 6. Sensitivity of Project Evaluation Test IRR (%) $ (million) 1 Base 17 262 2 Construction costs +20% 14 162 3 User benefits only 12 7 4 Benefits reduced by 10% 13 72 5 Evaluation period of 20 years 14 62 6 Income growth of 2% p.a. 8 -220 7 Fares constant in nominal terms 25 864 8 1 year delay in EMU procurement 17 259 9 2 years delay in EMU procurement 17 253 10 3 years delay in EMU procurement 17 245
276. Table 6 indicates that benefits approximately triple if fares are held constant in nominal terms. This is caused by the increased patronage, in both the with and without-project cases (Table 7), and the resulting increase in benefits due to frequency and journey time savings as well as the significantly increased comfort benefits because of the greater relief provided by the project.
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Table 7. Forecast Number Of Passengers Originating With and Without Project (million) 2008/9 2011/12 2015/16 2020/21 Fares constant in real terms Without project 2,648 2,817 2,980 3,324 With project 2,648 2,825 3,282 3,583 Fares constant in nominal terms Without project 2,648 2,928 3,323 4,136 With project 2,648 2,937 3,659 4,384
Mumbai Suburban System Financial Performance and Impact on IR Finances
277. Although the Mumbai system is one of the world’s major suburban railways, it is nevertheless a relatively small component of IR’s overall operations. In 2008/9, the Mumbai system represented an estimated 12 percent of IR’s passenger traffic (measured in passenger-km) and about seven percent of IR’s total traffic task63. However, because of the very high average loads carried and the low average fare, it only generated about 1.5 percent of IR’s total revenue and about two percent of its total working expense (excluding depreciation). Because MUTP-2A will reduce overcrowding and thus require more assets and services to carry the same volume of traffic, its financial performance is expected to deteriorate for at least the medium- term. However, its comparatively small share of the total IR business means that its financial performance has only a minor impact on the overall financial performance of IR as a whole, which is far more dependent on railway-wide tariff policies and continued strong growth in freight traffic.
Projected Financial Performance of Mumbai Suburban System
278. Using the operating and financial model described in the traffic forecast section, MRVC have undertaken financial projections of the Mumbai suburban system over a 25-year period from 2008-09, which takes into account the impact of both the ongoing MUTP-1 (assumed to be completed in 2010-11) as well as MUTP- 2A (assumed to be completed in 2014-15). A Base Case analysis has been undertaken as well as sensitivity analyses for the key assumptions.
279. Depreciation charges were derived directly as the annual cost of replacing the fleet. An estimate of depreciation has been made using the results of a detailed analysis undertaken by consultants in 1996 which examined all renewable assets used by the suburban services (equivalent to about 15 percent of total cost).64
280. Table 8 and Figure 1 show that the deficit, excluding dividend payments to GOI and any depreciation related to infrastructure, will increase to around Rs 200 crore (Rs 2008), if fares increase in line with inflation or to around Rs 1100 crore if fares remain at their current levels.
63 As measured by traffic units, the sum of passenger-km and net tonne-km. 64 This bears little or no relation to the ‘depreciation’ included in the IR accounts, which is primarily determined by the surplus available each year for reinvestment in assets and has been excluded from these projections. The depreciation allowance calculated by IR is not a true measure of depreciation but rather an allocation of the annual appropriation of surplus cash to a Depreciation Renewal Fund; it has no direct relation to asset values or lives.
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Figure 1. Financial Projections of Mumbai Suburban Services (Rs crores 2008)
2,500
2,000
1,500
1,000
500
0
Deficit (Constant nominal fares) Deficit (Constant real fares) Revenue (Constant real fares) Revenue (Constant nominal fares fares) Cost (excl dividend and infra depreciation)
281. As highlighted in Table 8, the increase in the deficit is directly linked to the reduction in crowding. The average passengers per coach is expected to reduce by around 35 percent, from about 234 to about 155, as the additional fleet is introduced before beginning to increase again as demand increases. This increase in the fleet can be seen in the financial projections, with working expenses increasing from Rs 1,300 crore to about Rs 1,900 crore as the additional vehicles are introduced.
282. The estimated working ratios and operating ratios65 to 2020/21 are given in Table 9 below. They assume fares rise in line with inflation and are given including and excluding the suburban fare surcharge. Without the project, the working ratios are below 100 percent and the Zonal Railways would be able to carry on in the short-term without financial support from third parties. If MUTP-2A is undertaken the Zonal Railways would be less able in the short term to generate profit if revenues decrease (the working ratio is consistently over 100 percent). In addition, if MUTP- 2A is carried out, the suburban railway would be less able to recover operating costs on the long term without financial support and would not cover its long run variable costs because of low tariffs (the operating ratio is higher with MUTP-2A than without).
65 The working ratio is the ratio of a company's total annual expenses (excluding depreciation and debt- related expenses) to the annual gross income. The operating ratio is the ratio of the company's operating expenses (also excluding debt service charges) to operating revenues.
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283. In spite of this, the results for the Mumbai system even with MUTP-2A remain reasonable compared to suburban systems elsewhere in the world and significantly better than the results for the two other major IR suburban systems in Chennai and Kolkata.
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Table 8. Mumbai Suburban Services – Financial Projections Assuming MUTP-2A (Rs crores 2008/9) Assumptions 1 Fares Fare rise in line with inflation from 09/10 2 Fare surcharge For Phase I - As decided between IR,GOM and MOF For Phase II - Phase I Surcharge continues
SUBURBAN OPERATING FORECAST STATEMENT (Rs crores Mar 08):
2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 Revenue - Constant real fares 1 Fare Revenue 1,165 1,127 1,093 1,114 1,147 1,184 1,216 1,313 1,381 1,403 1,437 1,469 1,502 1,536 1,570 2 Other 44 51 55 59 64 69 75 81 87 94 102 110 119 128 139 3 Total 1,209 1,178 1,148 1,173 1,212 1,253 1,291 1,394 1,468 1,497 1,539 1,579 1,621 1,664 1,709 Revenue - Constant nominal fares 1 Fare Revenue 1,165 1,127 1,093 1,114 1,086 1,055 1,019 1,039 1,029 986 952 918 886 854 824 2 Other 44 51 55 59 64 69 75 81 87 94 102 110 119 128 139 3 Total 1,209 1,178 1,148 1,173 1,150 1,124 1,094 1,120 1,117 1,080 1,054 1,028 1,005 983 963 Expenditure (Excl. Depreciation) – Constant real fares 1 Staff 722 749 808 820 824 834 946 1,104 1,104 1,100 1,098 1,096 1,093 1,091 1,089 2 Materials 148 154 166 169 169 171 194 227 227 226 226 225 225 224 224 3 Traction Energy 230 247 254 230 219 218 251 304 307 307 309 310 311 312 314 4 Other 182 189 204 207 208 210 238 278 278 277 277 276 276 275 274 5 Working Expenses 1,282 1,339 1,432 1,425 1,420 1,433 1,629 1,914 1,916 1,911 1,909 1,907 1,905 1,903 1,901 Expenditure (Excl. Depreciation) – Constant nominal fares 1 Staff 722 749 808 820 828 840 956 1,119 1,123 1,123 1,126 1,128 1,131 1,134 1,138 2 Materials 148 154 166 169 170 173 196 230 231 231 231 232 232 233 234 3 Traction Energy 230 247 254 230 220 220 254 308 311 313 316 318 321 324 327 4 Other 182 189 204 207 209 212 241 282 283 283 284 284 285 286 287 5 Working Expenses 1,282 1,339 1,432 1,425 1,427 1,445 1,647 1,939 1,949 1,951 1,957 1,963 1,969 1,977 1,985 Deficit 1 Constant real fares -73 -161 -284 -252 -209 -180 -339 -519 -448 -414 -370 -328 -284 -239 -193 2 Constant nominal fares -73 -161 -284 -252 -277 -321 -553 -819 -832 -871 -902 -934 -965 -994 -1,022 Passengers/Vehicle 234 226 213 214 212 211 178 155 163 166 170 174 178 182 186
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Table 9. Mumbai Suburban Services – Working and Operating Ratios with and without MUTP-2A
2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 Without MUTP-2A Working ratio Incl surcharge 106% 115% 107% 106% 104% 98% 97% 95% 93% 92% 97% 95% 93% 90% Excl surcharge 114% 124% 121% 120% 116% 114% 111% 108% 105% 102% 97% 95% 93% 90%
Operating ratio Incl surcharge 127% 138% 128% 127% 125% 118% 116% 114% 112% 110% 116% 114% 111% 108% Excl surcharge 136% 148% 146% 144% 139% 137% 133% 129% 126% 123% 116% 114% 111% 108%
With MUTP-2A Working ratio Incl surcharge 109% 120% 115% 113% 111% 109% 107% 105% 103% Excl surcharge 126% 137% 130% 128% 124% 121% 117% 114% 111%
Operating ratio Incl surcharge 131% 144% 138% 136% 134% 131% 129% 126% 123% Excl surcharge 152% 165% 157% 153% 149% 145% 141% 137% 134%
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Impact of Mumbai Services on IR Financial Performance
284. Table 10 summarizes the estimated revenue and working expenses for key IR market segments for 2008/2009. This is based on the analyses of the costs of the freight and passenger services undertaken annually by IR, updated to the 2008/2009 control totals for revenue and expenditure.
Table 10. Estimated IR Financial Results by Segment 2008/9
Revenue Pass-km/ntk Yield Working expense (Rscr) Unit cost (Ps/tu) Rs cr (billion) (Ps/unit-km) Labour Non-labour Labour Non-labour Passengers 20193 571 35.3 10203 8008 17.9 14.0 Other coaching 1964 EMU - Mumbai 1250 85 14.8 548 430 6.5 5.1 EMU – other 497 46 10.8 513 403 11.2 8.8 Freight 53433 547 97.8 10317 8097 18.9 14.8 Infrastructure 7706 887 6.2 0.7 Corporate 2525 3666 1339 2.9 1.1 Total WE 79862 1249 64.0 32952 19164 26.4 15.3 (1) Excludes dividend and DRF contributions. Includes pensions (included in labour) and recurrent component of 6th Pay Commission. Excludes arrears component of 6th Pay Commission.
285. The presentation of revenue and working expenses in Table 10 separately identifies train operation, infrastructure and general administration (‘corporate’) costs. It only covers working expenses, including pension costs but excluding contributions to DRF and also any share of the dividends payable to GOI. Thus revenue from the non-EMU passenger services (including other coaching) made an estimated surplus of Rs 3946 crore over its train operations costs as a contribution to infrastructure costs, corporate costs and depreciation. Freight, by contrast, contributed Rs 35,019 crore towards these same costs; it is cross-subsidizing passenger services, by about Rs 4-5,000 cr , but is also generating all the IR dividend and retained earnings required for capital projects.
286. The EMU services in general, and the Mumbai EMU services in particular, are relatively small in comparison the IR operations as a whole, with the Mumbai services representing only around two percent of the total working expenses. As a result, the overall IR surplus is relatively immune to the performance of the Mumbai services unless some relatively extreme policy scenarios are assumed.
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Annex 10: Safeguard Policy Issues INDIA: Mumbai Urban Transport Project-2A
Environmental Management Aspects
287. Most of the components sub-urban rail infrastructure in Mumbai that MUTP-2A proposes to implement are likely to have environmentally beneficial outcomes as rail based mass transport is far less polluting than any other form of land-based transport. However, limited negative impacts are expected due to the removal of a few trees, and other important natural and cultural resources due to the provision of stabling lines and construction of electric substations for the traction. Most of the negative impacts are however confined to the implementation stage and can be mitigated with careful environmental management planning. Environmental and Social (E&S) safeguard frameworks for the project are in line with that approved by the Bank for MUTP-1. E&S risks are very minimal in view of nature and location of activities proposed under the project. Finally, MRVC has recently been certified to ISO 14001:2004 and ISO 18001:2007
Environmental Management Approach and Instruments
288. Since MUTP-2A builds on the activities initiated under MUTP-1, MRVC began the environmental assessment with a review of its on-going activities. Using the same consultants who have assisted in building capacity during MUTP-1, and are therefore familiar with the current situation and how it has evolved within MRVC and participating Railways, the review has been supplemented with site visits to all identified candidate sites, and review of contract documents prepared in MUTP-1 as well as MUTP-2A. A review of the applicable policies of the GoI, GoM and local regulations of the municipalities, where the subprojects are proposed was also carried out. Following this, an Environmental Assessment (EA) has been undertaken with Environmental Management Plans being prepared for each component and modified to focus on issues specific to individual sites.
289. Baseline assessment of the environmental status within a direct impact zone of one hundred meters radius of the project site was undertaken. The data collected during from these visits was analyzed in terms of the type and scale of impact of the project. Detailed field visit to most of the site location are undertaken to identify and analyze site specific issues based on following:
(a) Floral and faunal ecological status (b) Air quality (c) Noise level (d) Water quality – Surface and Groundwater, Seawater intrusion status (e) Soil quality (f) Land use status (g) Traffic and transport network (h) Visual and aesthetic status (i) Sensitive receptors (such as schools, hospitals etc) (j) Status of Archaeological, Architectural, Historical, Religious and other such cultural properties
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(k) General social features (l) Hazardous waste handling and disposal
290. Of the various components, the DC to AC conversion --which involves construction of traction substations, subsectioning and paralleling posts, and sectioning and paralleling posts-- construction of stabling lines and provision of maintenance facilities for EMUs were considered to be important from the environment point of view.
291. The EA has been carried out with respect to various components namely land use, ecology, air quality, noise levels and severance. Depending upon the sub project, other relevant impact areas have also been considered.Apart from these, activities associated with the project during the preconstruction, construction and post construction stage are taken in to consideration to identify the impacts.
Environmental Impacts and Management Measures
292. Based on the overall understanding of the project and assessment of the site specific issues, ERM has formulated generic and specific Environmental Management Plan.
293. Environmental Bill of Quantities: Based on the impacts identified from the assessment, the environmental bill of quantities (BoQ) have been estimated and have been incorporated into the EMP. If required these can be included in the contract for implementation by contractor/implementing agency.
294. Stabling Lines Construction for Additional EMUs: This activity comprises laying of short lengths of track (about 300m for about 70 12-car trains) close to ten railway stations close to where trains terminate/originate. Key impacts include damage to/removal of trees within the proposed alignment for the stabling line. No other impacts are expected except during the construction phase when proper mitigation measures can substantially limit/eliminate adverse impacts. These temporary impacts include: air pollution from stored material and vehicle movement through congested areas, potential for pollution of water courses close to the alignments due to spillage of material, increased risk of accidents due to movement of heavy vehicles in inhabited areas close to the sites. The long term impacts cannot be completely avoided but would be minimized by careful selection of stabling line alignments, or mitigated by transplanting trees, identified as important, or compensatory plantation. Of the currently identified locations, most significant impacts are close to Bhayander staion (North) where the railway land has rows of trees and the termination point goes very close (~ 50m) to the south bank of the Bhayander creek where a few mangroves are located at the edge of the creek. While care would be taken during the construction and the EMP provides for limiting the extent of construction, accidental damage could result. In case of construction related impacts, the EMP includes provisions for ensuring that the vehicles used by contractors comply with the standards, are operated with proper safety considerations, etc. Facilities would be provided for laborers housed by the contractor and personal protective equipment would be compulsory for all site workers.
295. Traction Substations and Sectioning Post Installation for DC/AC conversion: The key impacts pertain to the removal of or damage to trees, and in one/two cases (a very small
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number of) mangroves due to the project activities. Other impacts are mostly localized and temporary – pertaining mostly to the construction stage of the project. These include the deterioration of air quality due to gaseous pollutants and noise, increased risk of traffic accidents in crowded locations, potential for water quality degradation close to construction sites, handling of construction and demolition waste, including potential for hazardous waste such as in locations where older structures need to be dismantled – Chinchpokli, Sion, and Khopoli, hazardous conditions for on-site labour as well as passers-by given the urban setting for the activities. Management measures specified under the project include minimization of tree- cutting, provision of transplantation and if not possible, compensatory plantation as directed by the respective Tree Authority under each municipal body has been made for each site. Precautions are specified to avoid and minimize, if unavoidable, damage to (the very few) mangroves, close to stabling line extensions like Bhayander. For the construction phase, following the review of sample contract documents, contractors’ responsibilities are being specified to ensure that the agreed mitigation measures – limiting pollution from vehicles/equipment by complying with standards, provision of adequate facilities for housing, personal protective equipment, including those for preventing electric shocks, and health care for workers, safe storage of material and equipment, are integrated in appropriate places. In places locations where special care is required to be exercised, such as in the case of handling asbestos, the contracts specify the contractors’ responsibilities and methods for handling.
296. Air Pollution Reduction: The conversion to AC from DC would result in about 30 percent of energy savings per coach km traveled (specific energy consumption). Beneficial environmental impacts due to the project include avoided emissions of local and global air pollutants. The reduction in the consumption of energy due to use of state-of-the-art technologies such as regenerative braking, DC to AC conversion would reduce the emissions of particulates, SOx and NOx at source power plants, reducing local damage. In addition, reduction in specific energy would also be reduced. It is currently estimated that the approximately 285,000 MWh of energy saved annually by interventions under the project has the potential to reduce about 228000 t CO2e of GHG emissions.
Environmental Implementation Arrangements
297. As the project components are spread over various authorities such as MRVC, CR and WR, the institutional setup will play an important role in implementation of the EMPs. Both MRVC and CR have agreed to hire services of Project Management Consultant (PMC) to implement activities under the project.
298. MRVC has recently been certified to ISO 14001:2004 and ISO 18001:2007, with the EMPs developed under MUTP-2A forming the basis on which its performance will be measured. This certification will lead to streamlined environmental management across all of MRVC’s operations. The Management Representative required as per the ISO compliant system will be the Deputy Chief Engineer. S/he would supervise the PMC hired by MRVC and co- ordinate with the respective Chief Engineer of CR to confirm compliance with the relevant provisions of the EMP.
299. The EMP will be implemented through the C.Rly/MRVC by incorporating the EMP requirements in the contractual agreement. For the contracts to be executed through the
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participating Railways, it has been agreed that the contractor shall submit a report on compliance with the environmental mitigation measures (Environmental Compliance Reports, ECRs) before start of construction activities and periodically thereafter to Project In-charge. As per ISO 14001, a suitable officer in MRVC will be assigned duty of visits to various sites and review of ECRs at sites and submit a report to World Bank.
Environmental Management Monitoring and Reporting
300. Monitoring and Reporting would be carried out under the project using the arrangement developed under MUTP-1. The monitoring and reporting process for mitigation measures during construction will initiate from the contractor at the lowest rung who will report to the site engineers of MRVC/CR. CR would report regularly on environmental management through MRVC and through its Deputy Chief Engineer, MRVC’s own monitoring and reporting would cover periodic site visit and visual inspections for plantation, provision and use of personal protective equipment at site, provision of safety measures to avoid accidents, as well as pollution monitoring for ambient environmental quality – air and water, as appropriate. Bi- monthly meetings under the aegis of the MRVC Deputy Chief Engineer are envisaged where the subproject specific environmental issues would be discussed at these meetings to be attended by project Engineers, PMC, and Contractor’s official responsible for environment, health and safety issues on site.
Social Impacts and Management Measures
301. A part of social impact assessment in the EA focused on identification and assessment of social impacts including land acquisition requirements and involuntary resettlement, if any, and likely impact on livelihoods, labor and human safety with a sentence on social impact assessment method and process. MUTP-2A has been designed in such a way that there will be no involvement of private land acquisition and Resettlement and Rehabilitation (R&R) of Project Affected Households (PAHs). MRVC has entered into an understanding with MMRDA, which will undertake R&R activities on behalf of MRVC as per the MUTP-1 R&R Policy. MRVC has experience in social safeguard management by way of coordinating LA and R&R activities for the rail component of the on-going MUTP-1. The expected social impacts of MUTP-2A are minimal and it will not require to establish a separate Social Unit for the social safeguard activities; however, MRVC will designate a senior officer in the PMU for monitor and coordinating social safeguard activities. MRVC will coordinate social safeguard activities with MMRDA for implementing mitigation measures, which it has the required capacity to manage.
302. Resettlement and Rehabilitation of PAHs: A few railway employees earlier living at the proposed site at Thane have shifted away soon after the project was announced and some ten such railway employees living close to the proposed stabling lines site at Bhaindar North informed during EA that they will shift away before the commencement of the work. As railway staff, they will be provided with staff quarters or monthly house rent allowance enabling them to relocate away from this place. A supplementary social impact survey was carried out at the proposed site for stabling lines at the Virar Scrap yard to assess the nature and magnitude of impact on 38 structures located close to the railway tracks. The survey findings were as follows: (a) Out of 38 structures, 37 were residential structures and one was a temple; none will be
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impacted by the execution of the proposed stabling lines; however, (b) 13 of these structures located alongside tracks and occupied by railway employees and their families will need to be shifted away for safety reasons; they will be provided with staff quarters or receive monthly house rent allowance enabling them to relocate; (c) the other structures including a temple and residences for 18 squatter households and six tenants (in private houses) are beyond the execution zone and will not need to be relocated; (d) the execution areas and the railway tracks at this stretch will be barricaded for enhancing human safety. Some lands required for the project have been licensed out by the Railways to its employees for vegetable cultivation in order to prevent encroachment. These licenses are issued on annual basis and will normally be allowed to run their course before the work commences. In cases where this is not possible, the licenses will be terminated with one month’s advance notice as per the license terms and conditions by the Railways providing the licensees with sufficient time to harvest crops and salvage assets if any before such licenses come to an end.
303. In order to deal with any future involuntary resettlement impacts due to any alteration in design or outlay, MRVC has prepared and adopted a Social Management Framework (SMF) which is detailed under the R&R Policy, which was adopted for the ongoing MUTP and is satisfactory to the Bank, setting forth the rules and procedures for carrying out any social, resettlement and rehabilitation activities under the Project, including identification, assessment and mitigation of potential environmental and social impacts arising from the Project, carrying out consultations, processing and redressing grievances, monitoring related impacts, and, if required, limited resettlement and rehabilitation action plans and other development and entitlement plans for people adversely affected as result of Project implementation. If resettlement is needed MRVC will prepare a specific resettlement action plan (RAP) based on the SMF and that is found to be acceptable and satisfactory to the Bank
304. The SMF referred to and outlined in the Chapter-3 of the Project Implementation Manual provides that any necessary resettlement and rehabilitation (R&R) measures required due to any future alterations in design or layout will be carried out by MMRDA on behalf of MRVC as per the MUTP R&R Policy. If resettlement is needed MRVC will prepare a specific resettlement action plan (RAP) based on the SMF and that is found to be acceptable and satisfactory to the Bank This arrangement is a continuation of the arrangement established for implementing R&R measures for the rail component of MUTP. MRVC’s main task will be to coordinate efforts with MMRDA for carrying out the mitigation measures, for management of which it has the required capacity. MMRDA already has sufficient experience and capacity for handling the issues related to R&R for MUTP-2A.
305. The project is to be executed entirely in urban area so there is no impact envisaged on Tribal community.
306. Bid documents will include provisions to minimize social risks in order to prevent engagement of child labor, address human safety and hazard risk reduction, ensure equal wages, and social security measures under applicable labor laws.
307. The safety and health hazards to the nearby community and sensitive receptors if any shall also be looked for. Mitigation majors shall be framed accordingly and included in the EMPs for individual projects if required.
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308. Land Acquisition: There is no land acquisition, and if there will be any in future, MRVC will carry out LA through the state government as per applicable procedures.
309. Completion of R&R activities under on-going MUTP-1: The R&R activities for the Railway sub-projects of MUTP-1 have been substantially completed as per applicable norms set out in the loan agreement as confirmed by MRVC. About 196 land owners whose land was required for the construction of the Virar Car shed have received 80 percent advance compensation and the payment of the remaining 20 percent is under process by the GOM with MRVC funds.
310. Gender and social inclusion: The IR has recently started taking remarkable steps to address gender and social inclusion aspects in its operations. Sensitivity to issues of involuntary resettlement is evident in the passing of the Railways Amendment Act, 2008. It is one of the few such documents to confirm the application of the National Resettlement and Rehabilitation Policy, 2007. IR’s decision to introduce special passes for the HIV-affected, students, etc., and introduction of special local trains for women in peak hours are some other notable examples. In this context, the Bank in cooperation with MRVC will conduct a gender needs assessment in Mumbai’s urban transport system. It will help prepare a gender action plan, which could be piloted in the Mumbai suburban railways in future.
Social Management Implementation, Monitoring and Reporting
311. In case of any future alterations in project design requiring LA and R&R, day to day implementation and monitoring of social safeguard management will be done by MMRDA whereas MRVC will undertake regular stock taking and prepare status updates.
312. MRVC will monitor the coordination of civil works with any necessary R&R activities undertaken by MMRDA in future. A single evaluation of social impact mitigation and value added activities will be undertaken at the end of the implementation for future learning, provided LA and R&R activities are undertaken as a result of design change.
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Annex 11: Project Preparation and Supervision INDIA: Mumbai Urban Transport Project-2A
Planned Actual PCN review 05/14/2009 05/14/2009 Initial PID to PIC 06/04/2009 06/03/2009 Initial ISDS to PIC 06/08/2009 06/05/2009 Appraisal 04/20/2010 02/08/2010 Negotiations 05/07/2010 05/07/2010 Board/RVP approval 06/29/2010 Planned date of effectiveness 09/15/2010 Planned date of mid-term review 02/28/2013 Planned closing date 06/15/2015 Key institutions responsible for preparation of the project: Government of India, Mumbai Railway Vikas Corporation Ltd. Bank staff and consultants who worked on the project included: Name Title Unit Hubert Nove-Josserand Team Leader/Sr. Urban Transport Spec. SASDT Atul Agarwal Transport Specialist SASDT Ramola Bhuyan Sr. Financial Mgmt. Spec. SARFM Satya N. Mishra Social Development Spec. SASDS Manmohan Singh Bajaj Senior Procurement Specialist SARPS Abduljabbar H. Al Qathab Senior Procurement Specialist SARPS Gaurav D. Joshi Environmental Specialist SASDI Vasile Olievschi Sr. Railway Specialist ECSS5 Gennady Pilch Sr. Counsel LEGES David Freese Sr. Finance Officer CTRFC Krishnan Srinivasan Consultant SASDT Jitendra Sondhi Consultant SASDT Ed Dotson Consultant SASDT Alok Nath Bansal Consultant SASDT Richard G. Bullock Consultant SASDT Jorge M. Rebelo Lead Transport Spec./Peer Reviewer LCSTR John Scales Lead Transport Spec./Peer Reviewer EASCS Shomik Raj Mehndiratta Sr. Transport. Spec./Peer Reviewer EASCS Radia Benamghar Operations Analyst SASDT Natalya Stankevich Operations Analyst SASDT Gizella Díaz Program Assistant SASDO Ritu Sharma Program Assistant SASDO Bogdan Filip Popescu E T Temporary SASDT
Bank funds expended to date on project preparation: The breakdown is as follows: (1) Bank resources: US$407,900, (2) Trust funds: none, (3) Total: US$407,900.
Estimated Approval and Supervision costs: The breakdown is as follows: (1) Remaining costs to approval: US$25,000, (2) Estimated annual supervision cost: US$200,000.
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Annex 12: Documents in the Project File INDIA: Mumbai Urban Transport Project-2A
Client’s documents
1. MoUD, “National Urban Transport Policy”, April 2006 2. MMRDA, “Comprehensive Transportation Study (CTS) for Mumbai Metropolitan Region”, LEA International Ltd. in joint venture with LEA Associates South Asia Pvt. Ltd., Consultant Draft Final Report, April 2008 3. MRVC, “Social Management Framework for MUTP- 2A”, April 2010 4. MRVC, “Draft Environmental Assessment Report and Environmental Management Plan”, Environmental Resources Management India (ERM), March 2010
World Bank’s documents
5. World Bank Policy Note: Towards A Discussion of Support to Urban Transport Development in India, March, 2005 6. World Bank, Integrated Safeguard Data Sheet, April 2010 7. World Bank, Project Information Document (PID) Appraisal Stage, March 2010
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Annex 13: Statement of Loans and Credits INDIA: Mumbai Urban Transport Project-2A
Difference between expected and actual Original Amount in US$ Millions disbursements Project ID FY Purpose IBRD IDA SF GEF Cancel. Undisb. Orig. Frm. Rev’d P100735 2009 Orissa Community Tank 56.00 56.00 0.00 0.00 0.00 104.96 -2.71 0.00 Management Project P102331 2009 MPDPIP-II 0.00 100.00 0.00 0.00 0.00 100.26 0.00 0.00 P100101 2009 Coal-Fired Generation 180.00 0.00 0.00 0.00 0.00 180.00 0.00 0.00 Rehabilitation P093478 2009 Orissa Rural Livelihoods 0.00 82.40 0.00 0.00 0.00 75.06 -0.47 0.00 Project P096023 2009 Orissa State Roads 250.00 0.00 0.00 0.00 0.00 249.38 0.00 0.00 P094360 2009 National VBD ControlandPolio 0.00 521.00 0.00 0.00 0.00 488.67 13.98 0.00 Eradication P112033 2009 UP Sodic III 0.00 197.00 0.00 0.00 0.00 197.60 0.00 0.00 P095114 2008 Rampur Hydropower Project 400.00 0.00 0.00 0.00 0.00 318.30 9.30 0.00 P105124 2008 HP DPL I 135.00 65.00 0.00 0.00 0.00 99.75 0.00 0.00 P102737 2008 Bihar DPL 150.00 75.00 0.00 0.00 0.00 111.86 111.10 0.00 P102547 2008 Elementary Education (SSA II) 0.00 600.00 0.00 0.00 0.00 354.45 2.47 0.00 P101653 2008 Power System Development 1,000.00 0.00 0.00 0.00 0.00 602.32 -50.68 0.00 Project IV P090585 2007 Punjab State Roads Project 250.00 0.00 0.00 0.00 0.00 143.81 -12.19 0.00 P090768 2007 TN IAM WARM 335.00 150.00 0.00 0.00 0.00 428.73 104.56 0.00 P090592 2007 Punjab Rural Water Supply and 0.00 154.00 0.00 0.00 0.00 142.37 81.77 0.00 Sanitation P096019 2007 HP State Roads Project 220.00 0.00 0.00 0.00 0.00 195.63 24.58 0.00 P083187 2007 Uttaranchal RWSS 0.00 120.00 0.00 0.00 0.00 111.87 49.60 0.00 P090764 2007 Bihar Rural Livelihoods 0.00 63.00 0.00 0.00 0.00 59.64 3.06 0.00 Project P102768 2007 Stren India's Rural Credit 300.00 300.00 0.00 0.00 0.00 286.88 135.25 0.00 Coops P071160 2007 Karnataka Health Systems 0.00 141.83 0.00 0.00 0.00 81.60 -13.09 0.00 P100789 2007 AP Community Tank 94.50 94.50 0.00 0.00 0.00 178.37 22.55 0.00 Management Project P075060 2007 RCH II 0.00 360.00 0.00 0.00 0.00 204.28 42.95 0.00 P075174 2007 AP DPL III 150.00 75.00 0.00 0.00 0.00 76.02 -77.33 0.00 P078538 2007 Third National HIV/AIDS 0.00 250.00 0.00 0.00 0.00 196.46 116.73 0.00 Control Project P078539 2007 TB II 0.00 170.00 0.00 0.00 0.00 112.22 -13.22 0.00 P099047 2007 Vocational Training India 0.00 280.00 0.00 0.00 0.00 218.34 -0.31 0.00 P093720 2006 Mid-Himalayan (HP) 0.00 60.00 0.00 0.00 0.00 33.24 3.60 0.00 Watersheds P079675 2006 Karn Municipal Reform 216.00 0.00 0.00 0.00 0.00 173.84 70.84 0.00 P092735 2006 NAIP 0.00 200.00 0.00 0.00 0.00 166.10 55.09 0.00 P079708 2006 TN Empwr and Pov Reduction 0.00 120.00 0.00 0.00 0.00 83.21 30.25 0.00 P078832 2006 Karnataka Panchayats 0.00 120.00 0.00 0.00 0.00 79.92 -33.18 0.00 Strengthening Proj P083780 2006 TN Urban III 300.00 0.00 0.00 0.00 0.00 195.60 101.35 0.00
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P086414 2006 Power System Development 400.00 0.00 0.00 0.00 0.00 23.86 -126.14 0.00 Project III P094513 2005 India Tsunami ERC 0.00 465.00 0.00 0.00 0.00 391.28 387.96 0.00 P073370 2005 Madhya Pradesh Water Sector 394.02 0.00 0.00 0.00 0.00 304.11 224.36 0.00 Restructurin P073651 2005 DISEASE SURVEILLANCE 0.00 68.00 0.00 0.00 0.00 52.43 44.49 0.00 P075058 2005 TN HEALTH SYSTEMS 0.00 110.83 0.00 0.00 20.06 38.88 48.13 22.23 P077856 2005 Lucknow-Muzaffarpur National 620.00 0.00 0.00 0.00 0.00 237.18 87.18 0.00 Highway P077977 2005 Rural Roads Project 99.50 300.00 0.00 0.00 0.00 107.69 69.21 0.00 P086518 2005 SME Financing and 520.00 0.00 0.00 0.00 0.00 400.00 0.00 0.00 Development P084792 2005 Assam Agric Competitiveness 0.00 154.00 0.00 0.00 0.00 91.83 68.88 -0.00 P084790 2005 MAHAR WSIP 325.00 0.00 0.00 0.00 0.00 228.41 129.41 0.00 P084632 2005 Hydrology II 104.98 0.00 0.00 0.00 0.00 84.26 71.71 42.45 P078550 2004 Uttar Wtrshed 0.00 69.62 0.00 0.00 0.00 34.95 2.47 0.00 P050655 2004 RAJASTHAN HEALTH 0.00 89.00 0.00 0.00 0.00 40.26 32.58 0.00 SYSTEMS DEVELOPMENT P076467 2003 Chatt DRPP 0.00 112.56 0.00 0.00 20.06 50.28 57.05 0.00 P073094 2003 AP Comm Forest Mgmt 0.00 108.00 0.00 0.00 0.00 20.62 0.16 0.00 P071272 2003 AP RURAL POV 0.00 215.03 0.00 0.00 0.00 26.19 -58.48 0.00 REDUCTION P050649 2003 TN ROADS 348.00 0.00 0.00 0.00 0.00 61.97 61.97 0.00 P067606 2003 UP ROADS 488.00 0.00 0.00 0.00 0.00 93.47 93.47 0.00 P050647 2002 UP WSRP 0.00 149.20 0.00 0.00 40.11 73.38 85.16 0.00 P050653 2002 KARNATAKA RWSS II 0.00 151.60 0.00 0.00 15.04 16.33 3.95 0.00 P050668 2002 MUMBAI URBAN 463.00 79.00 0.00 0.00 0.00 255.19 243.09 112.09 TRANSPORT PROJECT P040610 2002 RAJ WSRP 0.00 140.00 0.00 0.00 25.84 41.20 28.74 0.00 P069889 2002 MIZORAM ROADS 0.00 78.00 0.00 0.00 0.00 16.43 -13.12 0.00 P071033 2002 KARN Tank Mgmt 32.00 130.90 0.00 0.00 25.07 110.97 51.19 -5.69 P072539 2002 KERALA STATE 255.00 0.00 0.00 0.00 0.00 93.42 93.42 0.00 TRANSPORT Total: 8,086.00 6,775.47 0.00 0.00 146.18 8,945.33 2,462.69 171.08
INDIA STATEMENT OF IFC’s Held and Disbursed Portfolio In Millions of US Dollars
Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic. 2005 ADPCL 39.50 7.00 0.00 0.00 0.00 0.00 0.00 0.00 2006 AHEL 0.00 5.08 0.00 0.00 0.00 5.08 0.00 0.00 2005 AP Paper Mills 35.00 5.00 0.00 0.00 25.00 5.00 0.00 0.00 2005 APIDC Biotech 0.00 4.00 0.00 0.00 0.00 2.01 0.00 0.00 2002 ATL 13.81 0.00 0.00 9.36 13.81 0.00 0.00 9.36 2003 ATL 1.00 0.00 0.00 0.00 0.68 0.00 0.00 0.00 2005 ATL 9.39 0.00 0.00 0.00 0.00 0.00 0.00 0.00
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2006 Atul Ltd 16.77 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2003 BHF 10.30 0.00 10.30 0.00 10.30 0.00 10.30 0.00 2004 BILT 0.00 0.00 15.00 0.00 0.00 0.00 15.00 0.00 2001 BTVL 0.43 3.98 0.00 0.00 0.43 3.98 0.00 0.00 2003 Balrampur 10.52 0.00 0.00 0.00 10.52 0.00 0.00 0.00 2001 Basix Ltd. 0.00 0.98 0.00 0.00 0.00 0.98 0.00 0.00 2005 Bharat Biotech 0.00 0.00 4.50 0.00 0.00 0.00 3.30 0.00 1984 Bihar Sponge 5.70 0.00 0.00 0.00 5.70 0.00 0.00 0.00 2003 CCIL 1.50 0.00 0.00 0.00 0.59 0.00 0.00 0.00 2006 CCIL 7.00 2.00 0.00 12.40 7.00 2.00 0.00 12.40 1990 CESC 4.61 0.00 0.00 0.00 4.61 0.00 0.00 0.00 1992 CESC 6.55 0.00 0.00 14.59 6.55 0.00 0.00 14.59 2004 CGL 14.38 0.00 0.00 0.00 7.38 0.00 0.00 0.00 2004 CMScomputers 0.00 10.00 2.50 0.00 0.00 0.00 0.00 0.00 2002 COSMO 2.50 0.00 0.00 0.00 2.50 0.00 0.00 0.00 2005 COSMO 0.00 3.73 0.00 0.00 0.00 3.73 0.00 0.00 2006 Chennai Water 24.78 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2003 DQEL 0.00 1.50 1.50 0.00 0.00 1.50 1.50 0.00 2005 DSCL 30.00 0.00 0.00 0.00 30.00 0.00 0.00 0.00 2006 DSCL 15.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2005 Dabur 0.00 14.09 0.00 0.00 0.00 14.09 0.00 0.00 2003 Dewan 8.68 0.00 0.00 0.00 8.68 0.00 0.00 0.00 2006 Federal Bank 0.00 28.06 0.00 0.00 0.00 23.99 0.00 0.00 2001 GTF Fact 0.00 1.20 0.00 0.00 0.00 1.20 0.00 0.00 2006 GTF Fact 0.00 0.00 0.99 0.00 0.00 0.00 0.99 0.00 1994 GVK 0.00 4.83 0.00 0.00 0.00 4.83 0.00 0.00 2003 HDFC 100.00 0.00 0.00 100.00 100.00 0.00 0.00 100.00 1998 IAAF 0.00 0.47 0.00 0.00 0.00 0.30 0.00 0.00 2006 IAL 0.00 9.79 0.00 0.00 0.00 7.70 0.00 0.00 1998 IDFC 0.00 10.82 0.00 0.00 0.00 10.82 0.00 0.00 2005 IDFC 50.00 0.00 0.00 100.00 50.00 0.00 0.00 100.00 IHDC 6.94 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2006 IHDC 7.90 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2006 Indecomm 0.00 2.57 0.00 0.00 0.00 2.57 0.00 0.00 1996 India Direct Fnd 0.00 1.10 0.00 0.00 0.00 0.66 0.00 0.00 2001 Indian Seamless 6.00 0.00 0.00 0.00 6.00 0.00 0.00 0.00 2006 JK Paper 15.00 7.62 0.00 0.00 0.00 7.38 0.00 0.00 2005 K Mahindra INDIA 22.00 0.00 0.00 0.00 22.00 0.00 0.00 0.00 2005 KPIT 11.00 2.50 0.00 0.00 8.00 2.50 0.00 0.00 2003 LandT 50.00 0.00 0.00 0.00 50.00 0.00 0.00 0.00 2006 LGB 14.21 4.82 0.00 0.00 0.00 4.82 0.00 0.00 2006 Lok Fund 0.00 2.00 0.00 0.00 0.00 0.00 0.00 0.00 2002 MMFSL 7.89 0.00 7.51 0.00 7.89 0.00 7.51 0.00 2003 MSSL 0.00 2.29 0.00 0.00 0.00 2.20 0.00 0.00 2001 MahInfra 0.00 10.00 0.00 0.00 0.00 0.79 0.00 0.00 Montalvo 0.00 3.00 0.00 0.00 0.00 1.08 0.00 0.00 1996 Moser Baer 0.00 0.82 0.00 0.00 0.00 0.82 0.00 0.00 1999 Moser Baer 0.00 8.74 0.00 0.00 0.00 8.74 0.00 0.00 2000 Moser Baer 12.75 10.54 0.00 0.00 12.75 10.54 0.00 0.00
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Nevis 0.00 4.00 0.00 0.00 0.00 4.00 0.00 0.00 2003 NewPath 0.00 9.31 0.00 0.00 0.00 8.31 0.00 0.00 2004 NewPath 0.00 2.79 0.00 0.00 0.00 2.49 0.00 0.00 2003 Niko Resources 24.44 0.00 0.00 0.00 24.44 0.00 0.00 0.00 2001 Orchid 0.00 0.73 0.00 0.00 0.00 0.73 0.00 0.00 1997 Owens Corning 5.92 0.00 0.00 0.00 5.92 0.00 0.00 0.00 2006 PSL Limited 15.00 4.74 0.00 0.00 0.00 4.54 0.00 0.00 2004 Powerlinks 72.98 0.00 0.00 0.00 64.16 0.00 0.00 0.00 2004 RAK India 20.00 0.00 0.00 0.00 20.00 0.00 0.00 0.00 1995 Rain Calcining 0.00 2.29 0.00 0.00 0.00 2.29 0.00 0.00 2004 Rain Calcining 10.00 0.00 0.00 0.00 10.00 0.00 0.00 0.00 2005 Ramky 3.74 10.28 0.00 0.00 0.00 0.00 0.00 0.00 2005 Ruchi Soya 0.00 9.27 0.00 0.00 0.00 6.77 0.00 0.00 2001 SBI 50.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1997 SREI 3.21 0.00 0.00 0.00 3.21 0.00 0.00 0.00 2000 SREI 6.50 0.00 0.00 0.00 6.50 0.00 0.00 0.00 1995 Sara Fund 0.00 3.43 0.00 0.00 0.00 3.43 0.00 0.00 2004 SeaLion 4.40 0.00 0.00 0.00 4.40 0.00 0.00 0.00 2001 Spryance 0.00 1.86 0.00 0.00 0.00 1.86 0.00 0.00 2003 Spryance 0.00 0.93 0.00 0.00 0.00 0.93 0.00 0.00 2004 Sundaram Finance 42.93 0.00 0.00 0.00 42.93 0.00 0.00 0.00 2000 Sundaram Home 0.00 2.18 0.00 0.00 0.00 2.18 0.00 0.00 2002 Sundaram Home 6.71 0.00 0.00 0.00 6.71 0.00 0.00 0.00 1998 TCW/ICICI 0.00 0.80 0.00 0.00 0.00 0.80 0.00 0.00 2005 TISCO 100.00 0.00 0.00 300.00 0.00 0.00 0.00 0.00 2004 UPL 15.45 0.00 0.00 0.00 15.45 0.00 0.00 0.00 1996 United Riceland 5.63 0.00 0.00 0.00 5.63 0.00 0.00 0.00 2005 United Riceland 8.50 0.00 0.00 0.00 5.00 0.00 0.00 0.00 2002 Usha Martin 0.00 0.72 0.00 0.00 0.00 0.72 0.00 0.00 2001 Vysya Bank 0.00 3.66 0.00 0.00 0.00 3.66 0.00 0.00 2005 Vysya Bank 0.00 3.51 0.00 0.00 0.00 3.51 0.00 0.00 1997 WIV 0.00 0.37 0.00 0.00 0.00 0.37 0.00 0.00 1997 Walden-Mgt India 0.00 0.01 0.00 0.00 0.00 0.01 0.00 0.00 2006 iLabs Fund II 0.00 20.00 0.00 0.00 0.00 0.00 0.00 0.00 Total portfolio: 956.52 249.41 42.30 536.35 604.74 175.91 38.60 236.35
Approvals Pending Commitment FY Approval Company Loan Equity Quasi Partic. 2004 CGL 0.01 0.00 0.00 0.00 2000 APCL 0.01 0.00 0.00 0.00 2006 Atul Ltd 0.00 0.01 0.00 0.00 2001 Vysya Bank 0.00 0.00 0.00 0.00 2006 Federal Bank 0.01 0.00 0.00 0.00 2001 GI Wind Farms 0.01 0.00 0.00 0.00 2004 Ocean Sparkle 0.00 0.00 0.00 0.00 2005 Allain Duhangan 0.00 0.00 0.00 0.00 Total pending commitment: 0.04 0.01 0.00 0.00
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Annex 14: Country at a Glance INDIA: Mumbai Urban Transport Project-2A
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Annex 15: Maps INDIA: Mumbai Urban Transport Project-2A
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To Palghar INDIA
VAITARNA MUMBAI URBAN TRANSPORT PROJECT IIA Rail Components
MUTP I RAIL PROJECT COMPONENTS: MUTP IIA RAIL PROJECT COMPONENTS: TRACTION SUBSTATIONS COMPONENT 1 RAIL (5TH LINE) PROCUREMENT OF 72 NEW TECHNOLOGY EMU TRAINS 6 Virar Northeast RAIL (PAIR OF LINES) Virar Northwest 3 COMPONENT 2 16 Virar Cutting Yard DC TO AC CONVERSION (INCLUDING EXISTING: SIGNAL AND TELECOM IMPROVEMENTS) RAILWAY STATIONS VIRAR NON-BANK FUNDED TRACTION SUBSTATIONS MAIN ROADS BANK FUNDED TRACTION SUBSTATIONS ROAD UNDER CONSTRUCTION COMPONENT 3 LOCAL ROADS 6 EMU LOCATION AND NUMBER OF STABLING LINES 6 AT THE LOCATION RAILROADS METRO LINE 1 M METRO STATIONS ON LINE 1
Vasai Road Southwest 2 VASAI ROAD
To Kasara Station, 3 stabling lines, xx km from Mumbai CST
Mumbai
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L xx km from Mumbai CST A Malad Creek N O I T I D D Oshiwara A E N JOGESHWARI WESTERN EXPRESSWAY A H EASTERN EXPRESSWAY T - A L R M M U M K
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CHURCHGATE CST SHEVA MUMBAI
This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations
JANUARY 2010 and any other information shown on To Karjat Station,
this map do not imply, on the part of IBRD 37317 2 stabling lines, URAN The World Bank Group, any judgment on the legal status of any territory, or 99 km from Mumbai CST any endorsement or acceptance of such boundaries.