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Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No: 489 15-BR PROJECT APPRAISAL DOCUMENT ON A PROPOSED LOAN Public Disclosure Authorized IN THE AMOUNT OF US$130 MILLION TO THE STATE OF Sa0 PAULO, BRAZIL WITH THE GUARANTEE OF THE FEDERATIVE REPUBLIC OF BRAZIL FOR THE Public Disclosure Authorized Sa0 PAULO METRO LINE 4 (PHASE 2) PROJECT MARCH 25,2010 Sustainable Development Department Brazil Country Management Unit Latin America and Caribbean Regional Office This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. Public Disclosure Authorized FOR OFFICIAL USE ONLY CURRENCY EQUIVALENTS (Exchange Rate Effective February 20 10) Currency Unit = Brazilian Real R$1.8 = US$1 FISCAL YEAR January 1 - December31 ABBREVIATIONS AND ACRONYMS ATC Automatic Train Control BNDES National Economic and Social Development Bank (Banco Nacional de Desenvolvimento EconGmico e Social) BUI Single Integrated Fare Ticket (Bilhete Unico Integrado) CBTU Brazilian Urban Train Company (Companhia Brasileira de Trens Urbanos) CETESB Environmental Technology Company (Companhia de Tecnologia de Saneamento Ambiental) CDTI Integrated Transport Coordination Commission (Comite' Diretor de Transporte Integrado) CMSP Siio Paulo Metro Company (Companhia do Metro de Stio Paulo) also known as METRO (see below) CPTM Siio Paulo Metropolitan Train Company (Companhia Paulista de Trens Metropolitanos) CVA Consdrcio Via Amarela, the construction consortium selected for Line 4 EIA Environmental Impact Assessment EMTU Metropolitan Bus Company (Empresa Metropolitana de Transporte Urbano) EMU Electric Multiple Unit IBGE Brazilian Institute of Geography and Statistics (Instituto Brasileiro de Geogra$a e Estatistica) ICB International Competitive Bidding ICMS Circulation Tax on Goods and Services (Impost0 de Circulactio sobre Mercadorias e Serviqos) IERR Internal Economic Rate of Return METRO Siio Paulo Metro Company (Companhia do Metropolitano de Stio Paulo). Same as CMSP MR Metropolitan Region PCU Project Coordination Unit PITU Plan0 Integrado de Transporte Urbano PMU Project Management Unit PPP Public-Private Partnership FOR OFFICIAL USE ONLY SEAIN Federal Secretariat for Foreign Affairs SMA Secretariat for the Environment (Secretaria do Meio Ambiente) SPM SBo Paulo Municipality SPMR SBo Paulo Metropolitan Region SSP State of SBo Paulo STM Siio Paulo Municipal Secretariat for Transport (Secretaria de Transportes da Prefeitura do Municbio de SYio Paulo) STMSP Siio Paulo State Secretariat for Metropolitan Transport (Secretaria de Transportes Metropolitanos RegiYio Metropolitana de Stio Paulo) Vice President: Pamela Cox Country Director: Makhtar Diop Sector Director: Laura Tuck Sector Managerhector Leader: Aurelio MenendedJennifer Sara Task Team Leader: Jorge M. Rebelo 11 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization. BRAZIL SA0 PAUL0 METRO LINE 4 (PHASE 2) PROJECT CONTENTS Page I . STRATEGIC CONTEXT AND RATIONALE ...................................................................... 1 A . Country and Sector Issues ................................................................................................... 1 B . Rationale for Bank Involvement .......................................................................................... 5 C . Higher level objectives to which the project contributes .................................................... 6 I1 . PROJECT DESCRIPTION .................................................................................................. 6 A . Lending instrument .............................................................................................................. 6 B . Proposed Project Development Objectives and Key Indicators .......................................... 7 C . Project components .............................................................................................................. 7 D . Lessons learned and reflected in the project design ............................................................ 8 E . Alternatives considered and reasons for rejection ............................................................... 8 I11 . Implementation ...................................... ........................................................................... 9 A . Partnership arrangements .................................................................................................... 9 B . Institutional and implementation arrangements .................................................................. 9 C . Monitoring and evaluation of outcomes/results .................................................................. 9 D . Sustainability ..................................................................................................................... 10 E . Critical risks and possible controversial aspects ............................................................... 10 F . Loadcredit conditions and covenants ............................................................................... 12 IV . APPRAISAL SUMMARY .............................................................................................. 13 A . Economic and financial analyses. ...................................................................................... 13 B . Technical ........................................................................................................................... 13 C . Fiduciary.. .......................................................................................................................... 14 D . Social ................................................................................................................................. 14 E . Environment ...................................................................................................................... 15 .. F . Safeguard policies .............................................................................................................. 15 G . Policy Exceptions and Readiness ....................................................................................... 17 iii Annex 1: Country and Sector or Program Background .......................................................... 18 Annex 2: Major Related Projects Financed by the Bank and/or other Agencies .................. 23 Annex 3: Results Framework and Monitoring ......................................................................... 25 Annex 4: Detailed Project Description ...................................................................................... 28 Annex 5: Project Costs ................................................................................................................ 30 Annex 6: Implementation Arrangements .................................................................................. 33 Annex 7: Financial Management and Disbursement Arrangements ..................................... 36 Annex 8: Procurement Arrangements ....................................................................................... 42 Annex 9: Economic and Financial Analysis .............................................................................. 46 Annex 10: Safeguard Policy Issues ............................................................................................. 59 Annex 11: Project Preparation and Supervision ...................................................................... 66 Annex 12: Documents in the Project File .................................................................................. 67 Annex 13: Statement of Loans and Credits............................................................................... 68 Annex 14: Country at a Glance .................................................................................................. 72 Annex 15: Maps IBRD nbr. 36790 ............................................................................................. 74 iv BRAZIL SA0 PAUL0 METRO LINE 4 (PHASE 2) PROJECT APPRAISAL DOCUMENT LATIN AMERICA AND CARIBBEAN LCSTR Date: March 25,20 10 Team Leader: Jorge M. Rebelo Country Director: Makhtar Diop Sectors: General transportation sector (1 00%) Sector ManagerDirector : Themes: Access to urban services and housing Aurelio Menended Laura Tuck (PI Project ID: P106390 Environmental screening category: A Lending Instrument: Specific Investment Loan [XI Loan [ ] Credit [ ] Grant [ ] Guarantee [ ] Other: Source Local Foreign Total Borrower 340.9 __ 340.9 International Bank for Reconstruction and -- 130.0 130.0 Development Japan Bank for International Cooperation (JBIC)* -- 130.0 130.0 Private Sector Concessionaire 104.8 202.6 307.4 TOTAL 445.7 462.6 908.3 Borrower: State of Silo Paulo Rua Boa Vista, 175 - 10th floor 01014-001 Silo Paulo - SP Brazil Tel: 55-1 1-3291-2231; Fax: 55-1 1-3291-21 10 [email protected]. br Responsible Agency: Companhia do Metropolitan0 de Silo Paulo Rua Boa Vista, 175 - 6th floor 01014-001 Sa0 Paulo - SP Brazil Tel: 55-1 1-3291-5494; Fax: 55-1 1-3291-5453 egranadoametrosp. com. br * The Borrower has negotiated a loan with JBIC for partialjhancing of Line 4 Phase 2. V Estimated disbursements (Bank FY/US%m) FY 11 12 13 14 Annual 8.2 47.6 62.8 11.4 Cumulative 8.2 55.8 118.6 130.0 Does the project depart from the CAS in content or other