Document of The World Bank Public Disclosure Authorized Report No: ICR00003473
IMPLEMENTATION COMPLETION AND RESULTS REPORT (COFN-C1150 IBRD-75060 IBRD-78200)
ON A
Public Disclosure Authorized LOAN
IN THE AMOUNT OF US$ 662.91 MILLION
TO THE
STATE OF SÃO PAULO, BRAZIL
FOR A
SÃO PAULO TRAINS AND SIGNALING PROJECT Public Disclosure Authorized
October 29, 2015
Public Disclosure Authorized Global Practices Transport & ICT Brazil Country Management Unit Latin America and Caribbean Regional Office CURRENCY EQUIVALENTS
(Exchange Rate Effective October 19, 2015)
Currency Unit = Brazilian Real (R$) R$3.92 = US$1
FISCAL YEAR January 1 – December 31
ABBREVIATIONS AND ACRONYMS
ATC Automatic Train Control ANTP National Association of Public Transport (Associação Nacional de Transportes Públicos) BNDES National Economic and Social Development Bank (Banco Nacional de Desenvolvimento Econômico e Social) BUI Single Integrated Fare Ticket (Bilhete Único Integrado) CBTC Communications Based Train Control 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 (Comité Diretor de Transporte Integrado) CMSP São Paulo Metro Company (Companhia do Metrô de São Paulo) also known as Metro (see below) CPTM São Paulo Metropolitan Train Company (Companhia Paulista de Trens Metropolitanos) EMTU Metropolitan Bus Company (Empresa Metropolitana de Transporte Urbano) EMU Electric Multiple Unit IBGE Brazilian Institute of Geography and Statistics (Instituto Brasileiro de Geografia e Estatística) ICB International Competitive Bidding ICMS ICMS Circulation Tax on Goods and Services (Imposto de Circulacão sobre Mercadorias e Serviços) IERR Internal Economic Rate of Return IFR IFR Intermediate Financial Report LRF Fiscal Responsibility Law (Lei de Responsabilidade Fiscal) Metro São Paulo Metro Company (Companhia do Metropolitano de São Paulo). Same as CMSP. MR Metropolitan Region PCU Project Coordination Unit PER Preliminary Environmental Report (Relatório Ambiental Preliminar) PITU Integrated Urban Transport Project (Plano Integrado de Transporte Urbano) PMU Project Management Unit RTCC Regional Transport Coordination Commission SEAIN Federal Secretariat for Foreign Affairs (Secretaria de Assuntos Internacionais) SIAFEM São Paulo State Government & Integrated Financial Administration System for States & Municipalities (Sistema Integrado de Administração Financeira para Estados e Municípios) SMA Secretariat for the Environment (Secretaria do Meio Ambiente) SPM São Paulo Municipality SPMR São Paulo Metropolitan Region SSP State of São Paulo STM São Paulo Municipal Secretariat for Transport (Secretaria de Transportes da Prefeitura do Município de São Paulo) STMSP São Paulo Secretariat for Metropolitan Transport (Secretaria de Transportes Metropolitanos Região Metropolitana de São Paulo) TOR Terms of Reference
Vice President: Jorge Familiar Senior Global Practice Director: Pierre Guislain Country Director: Martin Raiser Practice Manager: Aurelio Menendez Project Team Leader: Georges Darido ICR Team Leader: Bianca Bianchi Alves BRAZIL SÃO PAULO TRAINS AND SIGNALING PROJECT
CONTENTS
Data Sheet A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Project Performance in ISRs H. Restructuring I. Disbursement Profile
1. Project Context, Development Objectives and Design ...... 1 2. Key Factors Affecting Implementation and Outcomes ...... 6 3. Assessment of Outcomes ...... 12 4. Assessment of Risk to Development Outcome ...... 18 5. Assessment of Bank and Borrower Performance ...... 20 6. Lessons Learned ...... 23 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners ...... 25 Annex 1. Project Costs and Financing ...... 26 Annex 2. Outputs by Component (cont.) ...... 29 Annex 2. Outputs by Component (cont.) ...... 30 Annex 3. Economic and Financial Analysis ...... 31 Annex 4. Bank Lending and Implementation Support/Supervision Processes ...... 34 Annex 5. Beneficiary Survey Results ...... 35 Annex 6. Stakeholder Workshop Report and Results ...... 40 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR ...... 41 Annex 8. Comments of Co-financiers and Other Partners/Stakeholders ...... 44 Annex 9. Impact assessment of Sao Paulo Trains and Signaling Project on traffic volumes, travel times and emissions ...... 45 Annex 10. List of Supporting Documents ...... 49 DATA SHEET A. Basic Information BR São Paulo Trains Country: Brazil Project Name: and Signaling COFN-C1150,IBRD- Project ID: P106038 L/C/TF Number(s): 75060,IBRD-78200 ICR Date: 09/29/2015 ICR Type: Core ICR STATE OF SÃO Lending Instrument: SIL Borrower: PAULO, BRAZIL Original Total USD 550.00M Disbursed Amount: USD 662.91M Commitment: Revised Amount: USD 662.91M Environmental Category: B Implementing Agencies: Companhia Paulista de Trens Metropolitanos (CPTM) Metro Company of Sao Paulo Cofinanciers and Other External Partners:
B. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 07/24/2007 Effectiveness: 07/28/2008 07/28/2008 01/01/2010 Appraisal: 12/03/2007 Restructuring(s): 12/28/2012 Approval: 05/01/2008 Mid-term Review: 04/26/2011 04/26/2011 Closing: 06/30/2013 04/30/2015
C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Moderately Satisfactory Risk to Development Outcome: Moderate Bank Performance: Satisfactory Borrower Performance: Moderately Satisfactory
C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Satisfactory Government: Moderately Satisfactory Implementing Quality of Supervision: Satisfactory Moderately Satisfactory Agency/Agencies:
i Overall Bank Overall Borrower Satisfactory Moderately Satisfactory Performance: Performance:
C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments (if Indicators Rating Performance any) Potential Problem Project Quality at Entry No None at any time (Yes/No): (QEA): Problem Project at any Quality of Supervision Yes None time (Yes/No): (QSA): DO rating before Moderately Closing/Inactive status: Satisfactory
D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Sub-national government administration 1 1 Urban Transport 99 99
Theme Code (as % of total Bank financing) City-wide Infrastructure and Service Delivery 100 100
E. Bank Staff Positions At ICR At Approval Vice President: Jorge Familiar Calderon Pamela Cox Country Director: Martin Raiser John Briscoe Practice Manager/Manager: Aurelio Menendez Jose Luis Irigoyen Project Team Leader: Georges Bianco Darido Jorge M. Rebelo ICR Team Leader: Bianca Bianchi Alves ICR Primary Author: Bianca Bianchi Alves
F. Results Framework Analysis
Project Development Objectives (from Project Appraisal Document) The development objective was to: a) improve the level-of-service provided to the urban rail transport users in the São Paulo Metropolitan Region in a safe and cost-efficient manner by increasing the peak-hour and off-peak carrying capacity of Lines A and F (now known as Lines 7 and 12) of the Companhia Paulista de Trens Metropolitanos (CPTM) and Lines 1, 2 and 3 of the São Paulo Metro Company (Metro); and b) continue the strengthening of the transport management and policy framework in the SPMR.
ii Revised Project Development Objectives (as approved by original approving authority)
The project development objective was revised only to include Line 11 of CPTM (beside Lines 7 and 12) as the object of intervention.
The final development objective became: a) improve the level-of-service provided to the urban rail transport users in the São Paulo Metropolitan Region in a safe and cost-efficient manner by increasing the peak-hour and off-peak carrying capacity of Lines 7, 11, and 12 of the Companhia Paulista de Trens Metropolitanos (CPTM) and Lines 1, 2, and 3 of the São Paulo Metro Company (Metro); and b) continue the strengthening of the transport management and policy framework in the SPMR.
(a) PDO Indicator(s) Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years Indicator 1 : Number of trains in peak/off peak-hour - CPTM Line 7 (A) Value quantitative or 7.5/4 15/8 15/8 19/15 Qualitative) Date achieved 12/30/2007 4/30/2012 4/30/2015 12/30/2014 Comments (incl. % 127%/187% achievement) Indicator 2 : Number of trains in peak/off peak-hour - CPTM Line 12 (F) Value quantitative or 7.5/4 15/8 15/8 20/16 Qualitative) Date achieved 12/30/2007 12/30/2012 4/30/2015 12/30/2014 Comments (incl. % 133%/200% achievement) Indicator 3 : Number of trains in peak/off peak-hour - CPTM Line 11 (E) - baseline 2008 Value quantitative or 8.5/5 - 15/8 15/7.5 Qualitative) Date achieved 12/30/2008 - 4/30/2015 12/30/2014 Comments (incl. % 100%/94% achievement) Indicator 4 : Number of trains in peak/off peak-hour - METRÔ Line 1 Value quantitative or 33/24 41/26 41/26 31/26 Qualitative) Date achieved 12/30/2007 12/30/2012 4/30/2015 4/30/2015 Comments (incl. % 76%/100% achievement) Indicator 5 : Number of trains in peak/off peak-hour - METRÔ Line 2 Value quantitative or 24/16 28/18 28/18 25/18 Qualitative) Date achieved 12/30/2008 4/30/2015 4/30/2015 12/30/2013 Comments (incl. % 89%/100%
iii (a) PDO Indicator(s) Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years achievement) Indicator 6 : Number of trains in peak/off peak-hour - METRÔ Line 3 Value quantitative or 35/25 44/28 44/28 35/31 Qualitative) Date achieved 12/30/2007 12/30/2012 4/30/2015 4/30/2015 Comments (incl. % 80%/110% achievement) Travel Time + Waiting Time reduction in CPTM (CPTM Line A - Luz a Francisco Indicator 7 : Morato - length 39 km) Value quantitative or 80 57 57 60 Qualitative) Date achieved 12/30/2007 12/30/2012 4/30/2015 4/30/2015 Comments (incl. % 87% achievement) Travel Time + Waiting Time reduction in CPTM Line 11 (E) - baseline 2008 Indicator 8 : (minutes) Value quantitative or 83 - 51 51 Qualitative) Date achieved 12/30/2008 - 12/30/2014 12/30/2014 Comments (incl. % 100% achievement) Travel Time +Waiting Time reduction in Metro (Metro Line 1-Se a Penha - length Indicator 9 : 9.5 km Value quantitative or 29 14 14 22 Qualitative) Date achieved 12/30/2007 12/30/2012 4/30/2015 12/30/2014 Comments (incl. % 47% (Although travel times are lower, waiting times have increased) achievement) Indicator 10 : Passengers/Square meter - CPTM Lines 7 (A) and 12 (F) Value quantitative or 8 6 6 7.8/6.3 Qualitative) Date achieved 12/30/2007 12/30/2012 4/30/2015 4/30/2015 Comments (incl. % 10%/85% - Although targets for trains/hour were met, they have not reflected in a achievement) decrease of pax/m2, because demand was higher Indicator 11 : Passengers/Square meter - CPTM Line 11 (baseline 2008) Value quantitative or 8.3 6 6 7.2 Qualitative) Date achieved 12/30/2008 12/30/2012 12/30/2014 12/30/2014 Comments (incl. % 78% achievement) Passengers/Square meter - METRÔ Lines 1,2 and 3 (Respective indicators for Lines Indicator 12 : 1, 2, and 3)
iv (a) PDO Indicator(s) Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years Value quantitative or 8 6 6 5.1, 4.6, 7.5 Qualitative) Date achieved 12/30/2007 12/30/2012 4/30/2015 12/30/2014 145%, 170%, 25% (Although targets for trains/hour were only partially met, pax/m2 Comments (incl. % for Lines 1 and 2 were fully met because of redistributions of passengers in the achievement) system, especially after the inclusion of Line 4) Indicator 13 : Incremental Demand in CPTM - Lines 7 and 12 (A+ F) (baseline 2006) Value quantitative or 0 219,341 219,341 258,000 Qualitative) Date achieved 12/30/2006 12/30/2012 4/30/2015 4/30/2015 Comments (incl. % 118% achievement) Indicator 14 : Incremental Demand in CPTM - Lines 11 (baseline 2008) Value quantitative or 242,634 273,828 273,828 299,754 Qualitative) Date achieved 12/30/2006 12/30/2012 12/30/2014 12/30/2014 Comments (incl. % 109% achievement) Indicator 15 : Incremental Demand in Metro - Lines 1+2+3 (baseline 2006) Value quantitative or 0 921,320 921,320 689,135 Qualitative) Date achieved 12/30/2006 12/30/2012 4/30/2015 4/30/2015 Comments (incl. % 74% achievement) Number of users/day of households with less than 4 MS - CPTM Lines 7 (A) & Indicator 16 : 12(F) - thousand (baseline 2006) Value quantitative or 237 357 357 379 Qualitative) Date achieved 12/30/2006 12/30/2012 12/30/2012 4/30/2015 Comments (incl. % 106% achievement) Number of users/day of households with less than 4 MS - CPTM Line 11 - thousand Indicator 17 : (baseline 2008) Value quantitative or 313 559 559 632 Qualitative) Date achieved 12/30/2008 12/30/2012 12/30/2014 12/30/2014 Comments (incl. % 103% achievement) Number of users/day of households with less than 4 MS - METRÔ Lines 1, 2 & 3 - Indicator 18 : thousand (baseline 2006) Value quantitative or 908.53 1,231 1,231 1,154 Qualitative)
v (a) PDO Indicator(s) Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years Date achieved 12/30/2006 12/30/2012 4/30/2015 4/30/2015 Comments (incl. % 94% achievement) Indicator 19 : Working Ratio - CPTM (with gratuity and with no subsidies) Value quantitative or <<1< <1.0 <1.0 2.0 Qualitative) Date achieved 12/30/2007 12/30/2012 4/30/2015 4/30/2015 Not met. CPTM’s working ratio had been estimated as 1 at the time of project Comments (incl. % appraisal, but subsequent analysis showed that this was incorrect, and in fact was 2 achievement) at the start of the project. It neither improved nor deteriorated during the project period. Indicator 20 : Working Ratio - Metro (with gratuity and with no subsidies) Value quantitative or <<1< <1.0 <1.0 <1.0 Qualitative) Date achieved 12/30/2007 12/30/2012 4/30/2015 4/30/2015 Comments (incl. % 100% achievement) Indicator 21 : Maintaining/strengthening PITU Value quantitative or 0% 100% 100% 100% Qualitative) Date achieved 12/30/2007 12/30/2012 4/30/2015 4/30/2015 Comments (incl. % 100%. This indicator relates to the development of the PITU study. achievement)
(b) Intermediate Outcome Indicator(s) Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised Target approval Completion or Values documents) Target Years Indicator 1 : % Completion of CPTM Trains Value (quantitative 0% 100% 100% 100% or Qualitative) Date achieved 12/30/2007 12/30/2012 12/30/2014 12/30/2011 Comments (incl. % 100% achievement) Indicator 2 : % Completion of CPTM Trains (Additional Financing) Value (quantitative 0% 100% 100% 100% or Qualitative) Date achieved 12/30/2007 12/30/2012 12/30/2014 12/30/2014
vi (b) Intermediate Outcome Indicator(s) Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised Target approval Completion or Values documents) Target Years Comments (incl. % 100% achievement) Indicator 3 : % Completion of METRÔ Trains Value (quantitative 0% 100% 100% 100% or Qualitative) Date achieved 12/30/2007 12/30/2012 12/30/2014 12/30/2011 Comments (incl. % 100% achievement) Indicator 4 : % Completion of CPTM Systems Value (quantitative 0% 100% 100% 76% or Qualitative) Date achieved 12/30/2007 12/30/2012 4/30/2015 4/30/2015 Comments (incl. % Data provided per contract – final number is a weighted average using contract values achievement) Indicator 5 : % Completion of METRÔ Systems Value (quantitative 0% 100% 100% 75% or Qualitative) Date achieved 12/30/2007 12/30/2012 12/30/2014 4/30/2015 Comments (incl. % Data provided per contract – final number is a weighted average using contract values achievement) Indicator 6 : % STM Studies Completed Value (quantitative 0% 100% 100% 100% or Qualitative) Date achieved 12/30/2007 12/30/2012 4/30/2015 4/30/2015 Comments (incl. % 100% achievement)
G. Ratings of Project Performance in ISRs
Date ISR Actual Disbursements No. DO IP Archived (USD millions) 1 06/02/2008 Satisfactory Satisfactory 0.00 2 11/25/2008 Satisfactory Satisfactory 93.99
vii 3 04/08/2009 Satisfactory Satisfactory 160.76 4 11/10/2009 Satisfactory Satisfactory 185.53 5 04/22/2010 Satisfactory Moderately Satisfactory 241.58 6 12/11/2010 Satisfactory Moderately Satisfactory 323.35 7 06/29/2011 Satisfactory Moderately Satisfactory 503.50 8 01/11/2012 Moderately Satisfactory Moderately Satisfactory 503.50 9 08/14/2012 Moderately Satisfactory Moderately Satisfactory 507.43 10 05/15/2013 Moderately Satisfactory Moderately Satisfactory 576.90 11 12/16/2013 Moderately Satisfactory Moderately Satisfactory 584.76 12 06/28/2014 Moderately Satisfactory Moderately Unsatisfactory 593.49 13 12/18/2014 Moderately Satisfactory Moderately Unsatisfactory 600.35 14 05/18/2015 Moderately Satisfactory Moderately Unsatisfactory 661.25
H. Restructuring (if any)
ISR Ratings at Amount Board Restructuring Restructuring Disbursed at Reason for Restructuring & Key Approved PDO Date(s) Restructuring Changes Made Change DO IP in USD millions The additional financing (AF) of USD $112.91 million was signed in October 18, 2010 and the PDO of the original Project was scaled-up to include Line 11-Coral of the CPTM system. The AF included i) the acquisition of 9 trains of eight cars each and related accessories 01/01/2010 N S S 215.21 for CPTM to increase the level of service on Line 11-Coral and ii) technical assistance to carry out studies for the design of a climate change strategy and manage and supervise the manufacturing and implementation of the new trains. The AF did not change the loan closing date. A restructuring was approved on December 28, 2012. Although considerable progress had been achieved to date from adding 17 new Metro trains and 40 CPTM 12/28/2012 MS MS 549.54 suburban trains in service and institutional components, further progress related to level-of-service improvements depended on the successful implementation of new signaling systems on Metro and
viii ISR Ratings at Amount Board Restructuring Restructuring Disbursed at Reason for Restructuring & Key Approved PDO Date(s) Restructuring Changes Made Change DO IP in USD millions CPTM and upgraded track infrastructure on CPTM. These contracts, signed in 2008 or 2009, had been significantly delayed due in large part to unforeseen technical issues with implementing complex systems and infrastructure while trains continue to operate on the lines, and while ridership on all lines continues to increase. While Metro and CPTM had taken measures to accelerate implementation, these critical contracts remained behind the original schedule. The new closing date for the original loan was set up to April 30, 2015 and, for the AF, October 31, 2014.
I. Disbursement Profile
ix
1. Project Context, Development Objectives and Design
1.1 Context at Appraisal
Brazil’s economy. By 2007, when the Project Appraisal Document (PAD) was finalized, the economy was growing at high rate, 5.4% in the second quarter of 2007. Poverty reduction had been accelerated by conditional cash transfer program and inequality had decreased (GINI coefficient dropped from 0.59 in 2002 to 0.56 in 2006). Inflation seemed to be under control and the country was showing resilience to external shocks of the initiating financial crisis, but interest rates remained high if compared to international standards. However, Brazil still ranked 122 out of 178 on the Doing Business Report, below China (83), Russia (106), and India (120).
Sector context. Brazil had been experiencing steady economic growth and thus had seen a considerable increase in motorized vehicle ownership from 2001 to 2012 (138%)1. The country presented high levels of urbanization (85%)2, and in cities with over 60,000 inhabitants, the public transport mode share had declined, with private car use surpassing public transport participation in 2005, according to the National Association of Public Transport. Congestion in large cities was estimated to cost from 1% to 3% of the total gross domestic product.
Economy and Urban Transport in the São Paulo Metropolitan Region (SPMR): in 2007, the São Paulo Metropolitan Region (SPMR) had 19.5 million inhabitants spread irregularly over 8,000 square kilometers. Although dominated by the São Paulo Municipality with 11.5 million inhabitants, SPMR comprises 39 municipalities. The region generates roughly 20% of Brazil’s GNP and is considered the most important economic region of the country. Poverty and inequality were high and there were numerous slums in São Paulo city, where poverty and public safety were predominant issues. Of the 26 metropolitan regions in Brazil, SPMR had the highest population density and the fourth highest share living in slums (9%3). Rapid urbanization had resulted in uncontrolled urban sprawl with associated traffic congestion, long travel distances, and social problems including crime and rising unemployment. Each day, 39 million person-trips took place, of which 13 million (33%) were by foot, 14 million (37%) by car and the rest by public transport (23% by bus, 4.5% by metro rail and 2.5% by suburban rail). Despite the 315 km rail-based network, the lack of full physical and tariff integration between the bus, metro and the suburban trains had over the years discouraged low-income users from using rail. This had led to an over- reliance on other less sustainable modes including automobiles and motorcycles, and contributed to the heavy traffic congestion experienced in the SPMR. Low-income urban households tended to live in areas with limited access to jobs, and generally had to rely on public transport. As a consequence, they were subject to extreme travel conditions such as: i) overcrowding of trains (>8 pass/m2) due to shortage of capacity at peak hours; ii) long commute times (2.5 hours/day from the metropolitan periphery to the urban centers); and iii) high costs of transport, resulting in the
1 Rodrigues (2013). Evolução da frota de automóveis e motos no Brasil (2001 – 2012). Observatório das Metrópoles . Instituto Nacional de Ciência e Tecnologia. Rio de Janeiro. 2 IBGE, Censo demográfico 1940-2010. Até 1970 dados extraídos de: Estatísticas do século XX. Rio de Janeiro: IBGE, 2007 no Anuário Estatístico do Brasil, 1981, vol. 42, 1979. 3 Brazil São Paulo: Inputs for a Sustainable Competitive City Strategy, World Bank, 2007 1 need to pay between 15% and 20% of income towards fares, a situation which was exacerbated for those not formally employed.
Environmental aspects: the over-reliance on cars, motorcycles (and buses) had also a negative impact on air quality and contributed to increases in accidents. In 2006, there were 4.3 million vehicles registered in the SPMR. Air quality was degraded by the presence of excessive levels of carbon monoxide, ozone and particulate matter. During 2006, health warnings due to air pollution from CO were issued for a total of 250 days, ozone--108 days, and particulate--54 days. Motorized vehicles accounted for 73-94% of most air pollutants in the SPMR, and contributed to 31% of particulate matter. Vehicular air pollution had been somewhat mitigated by the use of alcohol in lieu of gasoline. However, vehicular accidents continued to increase and pose environmental risks. In 2006, there were about 150,000 road accidents in the SPMR, which accounted for 35,000 injuries and about 1,500 deaths, with a cost conservatively estimated at US$1.5 million/day. According to the SP's Traffic Engineering Department, congestion had been increasing at a rate of 20 percent per year; the economic cost of time and fuel lost due to traffic congestion had been estimated at US$6 million per day.
Rationale for Bank assistance: The project was a logical sequence to a long-term engagement with the State to consolidate and expand its rail-based transport systems addressing the important issues of inter-modal integration and sensible tariff policy to recover costs and meet social objectives. The State of Sao Paulo, after the decentralization of the CBTU in the late 1990’s, had started a series of investments to better integrate the subway system, the commuter rail, and the interurban bus system, including an integrated fare scheme. The improved integration had resulted in a new challenge: a dramatic increase in user demand for rail-based systems, with more than 12% increase from 2006 to 2007. This significant growth in demand had led to the urgent need for a rapid increase in the carrying capacity and frequency of trains, especially at peak hours, in order to maintain an acceptable level-of-service quality that ensured passenger safety while minimizing waiting time at stations. In addition, the continuation in the improvement of the carrying capacity of the system was expected to further attract users from road to rail thereby containing or reducing congestion, while also contributing to positive environment impacts, which are important to the climate change agenda. The project was in line with the Bank’s overall Transport Strategy, as well as the customized sectoral strategy for Brazil, in terms of: (i) improving public transport in urban areas as a means to improve access to jobs, education and health facilities; (ii) contributing to poverty alleviation; and (iii) improving financial performance of service providers through better cost recovery and reducing dependence on public subsidies. This was linked to higher level objectives of affordable and accessible urban transport services to promote higher equity and poverty reduction by allowing all segments of society, and particularly those with low-income, to be able to reach employment areas, health, education and leisure facilities, thereby contributing to an improvement in quality of life. This project would also make important contributions to the improvement in air quality and reduction in vehicle emissions as a positive impact on climate change.
1.2 Original Project Development Objectives (PDO) and Key Indicators (as approved) The original development objective was to: a) improve the level-of-service provided to the urban rail transport users in the São Paulo Metropolitan Region in a safe and cost-efficient manner by increasing the peak-hour and off-peak carrying capacity of Lines A and F [now known as Lines 7
2 and 12] of the Companhia Paulista de Trens Metropolitanos (CPTM) and Lines 1, 2 and 3 of the São Paulo Metro Company (Metro); and b) continue the strengthening of the transport management and policy framework in the SPMR.
The improvement in the level of service was achieved through the increase of peak-hour and off- peak carrying capacity, measured by the increase in the number of trains per peak hour and off- peak hour per direction, the reduction of waiting time and through the reduction in the number of passenger/m2 in the peak.
The impact on the transport users was assessed through the evaluation of the additional demand serviced. The focus in the low-income population, which was not included in the PDO but was a strong focus of the project as described in the PAD, was assessed through the increase in the number of users with income levels smaller than 4 and 2 minimum salaries.
The achievement of the PDO in a cost-efficient manner was assessed through the working ratio, which is calculated including revenues from the compensation of gratuities and excluding subsidies.
The project’s results framework did not include indicators for safety, but this ICR provides some data on this outcome (see Section 3.2).
The strengthening of the transport management and policy framework in the SPMR was assessed through the completion of the Integrated Urban Transport Strategy (PITU). The PITU is the main planning instrument that the State has developed and updated continuously. It serves both as a strategic plan for the SPMR, and as guidance for prioritizing investments; the plan has a focus on integrating transport planning among the different institutional levels.
Finally, intermediate outcome indicators measured the progress in the manufacturing, installation and/or delivery of trains and systems included in the project.
1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification The PDO of the original financing was scaled-up to include the scope of the Additional Financing, namely the Line 11-Coral of the CPTM system:
The revised project development objective became: a) improve the level-of-service provided to the urban rail transport users in the São Paulo Metropolitan Region in a safe and cost-efficient manner by increasing the peak-hour and off-peak carrying capacity of Lines 7, 11, and 12 of the Companhia Paulista de Trens Metropolitanos (CPTM) and Lines 1, 2, and 3 of the São Paulo Metro Company (Metro); and b) continue the strengthening of the transport management and policy framework in the SPMR
After the inclusion of the scope for Line 11 with the additional financing, the project was restructured in December 2012 and the closing dates for both the original and additional financing were extended. The key indicators remained the same after the additional financing but included the scope of Line 11 of CPTM; in the restructuring, a revision of the target dates was processed.
3 1.4 Main Beneficiaries The beneficiaries included the public transport users of the São Paulo Metropolitan Region, particularly low-income households (earning up to four minimum salaries) who were and remain the major users of public transport.
By appraisal, the share of low-income users of the rail system (CPTM and Metro) was equivalent to 40% of the total demand. The share of low-income users was also growing rapidly. In CPTM, the proportion of users with family income below 4 MS had grown from 37.7% to 63.7% from 2001 to 2005 and in the Metro, from 20.3% to 28.0%4. In the two systems, the higher growth occurred among the users with lowest family income—below 2 MS.
The project would provide a higher level of comfort and shorter intervals between trains to passengers.
1.5 Original Components The project is comprised two components:
Part A: Infrastructure and Equipment 1. Provision of financing for CPTM’s trains and systems, including: (a) the acquisition of forty trains (EMUs) of 8 cars each and accessories for a total of 320 cars to be operated in Lines A and F of the CPTM network; (b) the supply and installation and/or rehabilitation of traction electrical power systems for selected substations of Line A and Line F of the CPTM network; (c) supply and installation and/or rehabilitation of the electrical cabinets in selected stations of Line A and Line F of the CPTM network; (d) supply and installation of auxiliary power lines for Lines A and F of the CPTM network; (e) supply and installation of a signaling system operated from the operations control center (OCC) of the CPTM network; (f) the supply and installation of an electronic telecommunication system for the CPTM Lines A and F; and (g) associated civil works for (b) to (f) above if necessary;
2. Provision of financing for SP Metro trains and systems, including: (a) the acquisition of seventeen trains (EMUs) of 6 cars each and accessories for a total of 102 cars to be operated in Line 1 and Line 3 of SP Metro network; (b) the supply and installation of a new signaling system known as Communication Based Train Control (CBTC) in Lines 1, 2 and 3 of the SP Metro network; (c) supply and installation of a telecommunication system, access control system (ACS) and platform screen doors (PSD) for the SP Metro Lines 1, 2 and 3; and (d) the modernization of the existing OCC for the SP Metro Lines 1, 2 and 3.
Part B: Institutional and Policy Development 1. Provision of technical assistance to the STMSP for the carrying out of studies on policy development, including: (a) consolidating the CDTI for the SPMR; (b) updating the current
4 Estimates from “Pesquisa AD CPTM” and Pesquisa da GOP / Metro.
4 integrated transport policy, land use and air quality management strategy (PITU) for the SPMR to meet both transport and air quality targets and to introduce sound cost recovery, tariff, regulatory and subsidy policies; and (c) providing an action plan to review the funding of the urban transport system in the SPMR in view of the adoption of the BUI;
2. Provision of technical assistance to CPTM for (a) the carrying out of studies on evaluating the outsourcing to the private sector of selected services including, inter alia, maintenance of track and systems, rolling stock and other operational services; and assessing the impact on affordability, accessibility, availability and acceptability of the Project for the low income urban rail transport users; and (b) management and supervision of the carrying out of Part A.1 of the Project;
3. Provision of technical assistance to SP Metro for: (a) carrying out of studies to assess the impact on affordability, accessibility, availability and acceptability of the Project for the low income urban rail transport users; and (b) management and supervision of the carrying out of Part A.2 of the Project; and provision of financing for the operating costs of SP Metro PMU.
Components related to the Part A, of acquisition of trains and signaling systems, allowed for an improved the level-of-service to the urban rail transport, by increasing the frequency of trains in the peak and off-peak hours, therefore attracting more users, particularly low-income users living in the peripheral areas of the SPMR. The new system, with approximately 1.3 million new users, required a stronger institutional environment, and this was supported by the institutional component, Part B. This component, besides providing resources to manage and supervise implementation, provided guidance to establish fare policies and legal frameworks compatible with the system’s financial sustainability and strengthened planning capabilities in developing an integrated land use-transport model to allow for mitigation of the transport costs on the mobility of poor populations.
1.6 Revised Components The following changes consistent with the objectives of the project and scope of Part A and B of the loan were made with the approval of the additional financing: a) Acquisition of at least (9) nine trains (Electrical Multiple Units, EMUs) of eight cars each and related accessories for CPTM to increase the level of service on Line 11-Coral; b) Inclusion of technical assistance for the design of a climate change strategy in accordance with terms of reference acceptable to the Bank; c) Inclusion of technical assistance to manage and supervise the carrying out of Part A of the Project, including with respect to the manufacturing and implementation of the new trains.
The AF loan also financed about 75% of the total estimated purchase cost of new trains and equipment for CPTM. The breakdown of all IBRD financing for the original and additional financing by component is presented below.
5 IBRD Project Financing Plan Original Project Additional (Millions of US Dollars) Financing Total Part A: Trains and Equipment 536.35 110.43 646.78 Part B: Institutional and Policy Development 13.65 2.48 16.13 Total 550.00 112.91 662.91
1.7 Other significant changes The project was restructured in December 2012. The closing dates for both the original loan (P106038, IBRD Loan No. 7506-BR) and additional financing (P117122, IBRD 7820-BR) were extended respectively to April 30, 2015 and October 31, 2014.
By December 2012, considerable progress had been achieved from adding 17 new Metro trains and 40 CPTM suburban trains in service and institutional components including the consolidation of the regional transport coordination commission and updating of elements of the integrated metropolitan transport plan. However, further progress related to level-of-service improvements depended partially on the successful implementation of new signaling systems on Metro and CPTM and upgraded track infrastructure on CPTM. These contracts, signed in 2008 or 2009, had been significantly delayed due in large part to unforeseen technical issues with implementing complex systems and infrastructure in “brownfield” systems, i.e., while trains remain operating. While Metro and CPTM had taken measures to accelerate implementation, these critical contracts were significantly behind the original schedule and an extension of the closing date was requested.
2. Key Factors Affecting Implementation and Outcomes
2.1 Project Preparation, Design and Quality at Entry The project quality at entry was satisfactory because of the reasons detailed below.
The Project and PDO were solidly conceived and structured, given what was known at appraisal. A cost benefit analysis was performed to compare the outcomes with or without the project, and a sensitivity analysis provided the reassurance of a sound project. A technical evaluation was undertaken to compare the acquisition of new trains with other alternatives such as do-nothing, rehabilitation and/or modernization of trains, acquisition of second hand trains, and leasing of trains. The acquisition of new trains in this case was found to be the most cost-effective alternative because the others were either not feasible or there were no available immobilized trains to be rehabilitated. The proposed “systems” were also compared with a do-nothing alternative and other types of systems. Specialized consultants examined the options rejected and agreed that the proposed alternatives were the most suitable for both CPTM and Metro. Financial projections were prepared both for Metro and CPTM for the 2007-2026 period and showed that the working ratio of both operating agencies would be equal or less than one, and operating costs would therefore be below operating revenues.
The project incorporated in its design the lessons identified in previous urban transport and urban projects around the world to include institutional strengthening in all levels of government involved with urban transport, to ensure adequate and timely counterpart funds, and to mitigate risks of slow project implementation through measures to deal with factors such as lack of familiarity with Bank procedures, overoptimistic scheduling at appraisal, lack of final
6 engineering designs at appraisal, and changes in political commitment. Of those, overoptimistic scheduling remained an issue. The cause for this is that rail projects with palpable benefits tend to take longer to implement than typical terms of elected officials, and technicians tend to feel the pressure to aim for non-achievable schedules. Another important risk identified related to political context relates to the way fares are established. Counterparts agreed to proceed with adjustment in fares taking into account the recovery of operational costs; however, political pressures have often been determinant of fare levels, and CPTM did not manage to reach the target of operating/working ratio smaller than 1. This was reinforced by the establishment of the integrated fare. Although resulting in great impact in terms of allowing for a larger participation of low-income users to the system and a general growth of demand, the integrated fare has resulted in an overall decrease of revenue generation for the system.
Risks of not achieving the projected demand levels were clearly identified and closely monitored during implementation by Metro/CPTM. Metro had established demand projections based on state-of-the-art transport models. Physical integration was identified as critical for the achievement of demand targets because it affects the ability of passengers to access the stations in an efficient way, and thus affects the attractiveness of the system. Additionally, because the integrated system (physical and fare integration) works as a system in dynamic equilibrium, fluctuations may arise when any change occurs in the carrying capacity of one of the lines. Historically, demand was growing at a fast pace and projections for the next years were promising, because of optimistic projections of economic growth and increasing limitations of the alternative modes due to higher congestion levels. As evidenced by the demand indicators, the targets were adequately met for almost all lines. The influence of the dynamic equilibrium system is exemplified by the inauguration of Line 4, which produced two small changes to the targeted results, one positive and one negative. The positive consequence was that peak-hour indicators for pax/m2 were achieved for Metro lines 1 and 2 even though the numbers of trains offered were below the end targets. The negative consequence was that, since line 4 stations that would reach poorer areas in the Sao Paulo periphery second phase were not completed, the growth in the number of low-income users in the Metro system was just below the end target.
Risks related to procurement were taken into consideration, such as the possibility of long litigation periods to award the contracts for the trains and higher than appraised costs in the acquisition. The successful and efficient procurement process confirmed that government was fully committed to mitigate these risks. The cost estimates for the trains and each of the systems proposed were in line with those acquired by other equivalent metro and suburban rail systems, and the specialized consultants had reviewed the proposed specifications for the acquisition of the trains and the signaling, telecom, and energy systems, ensuring that they were sound and not favoring any particular manufacturer. Some risks related to the signaling contracts were not clearly identified, although in previous operations these had not emerged as critical. These issues will be further detailed in the sections below.
Finally, recommendations emerging from the IEG review of the transport sector5 were taken into account in terms of building up the sector’s monitoring and evaluation efforts and aligning
5 Independent Evaluation Group (2007). A Decade of Action in Transport. An Evaluation of World Bank Assistance to the Transport Sector, 1995–2005. The World Bank Group. Washington, DC.
7 them with the new strategy which emphasizes urban transport and multimodal transport. This was achieved through the use of relevant indicators that were readily measured and are applicable to a broad range of projects.
2.2 Implementation Delivering large infrastructure projects, especially in urban environments, present intrinsic complexities that often lead to long periods of implementation. The main critical risks identified during project preparation were based on accumulated experience from the counterpart and lessons learned from similar operations in the Bank. The lessons learned included several institutional risks, but because of the appropriate mitigation measures, none of these risks emerged as especially critical during project implementation. The main problems experienced during implementation were more of a technical nature, related to the underestimated difficulties of implementing upgrades in brownfields and to the readiness of the technology when compared to the Metro system level-of-service requirements. During implementation, these issues started to become increasingly critical, and construction companies gradually started to slow down implementation. When project implementation progress became minimal and the resolution of contract issues seemed to have reached a point of no return, the rating was adjusted to moderately unsatisfactory. After the closing date, the implementing agencies continued to negotiate and some of the issues were resolved while others remain under negotiation.
Delivery of trains was fully satisfactory. On one hand, contracts for the delivery of 49 trains to CPTM and 17 trains to Metro were fully achieved with minimal delays and trains are now operational. Contract fines for delays were appropriately applied. There were considerable savings in the procurement process, with the final contract values being 40 and 49% lower than initial estimates.
Delivery of systems suffered delays and was not completely met. On the other hand, the signaling contracts presented successive delays and by mid-term review were significantly behind schedule, resulting in a project restructuring request by STM to extend the loan closing date. Disputes between the implementing agencies and the trains and systems’ companies ranged from issues of import taxes, the lack of access to the tracks because of the unfeasibility of stopping ongoing operations, and the lack of transparency in the way the CBTC system was being developed, generating concerns to the Bank team if the targets would be met. Contractual disputes arose and arbitration was put in place to resolve these issues. During this process, the team actively engaged with CPTM/Metro, before problems had escalated, and Metro/CPTM showed commitment by strengthening the supervision of the contractors and by requesting better management in terms of planning the access and actually using the available windows. The arbitration process is still ongoing for two major contracts. Metro informed that the negotiations with the CBTC contractor have evolved substantially in the last months and an agreement is foreseen in the next months. The CPTM signaling contract is still undergoing arbitration.
Furthermore, the delivery of the CBTC technology (main component of the systems contracts) was particularly complex and was not yet fully achieved by the closing date of the project. A few months after the contract was signed, the contractor started showing signs of challenges in meeting the admittedly high performance standards stipulated in the contract. The Bank team actively assisted the clients and the contractor in addressing these issues. Eventually it
8 was agreed, as part of the project restructuring in 2010, that the system would be deployed incrementally, starting with Line 2, and later moving into Lines 1 and 3 (which carry more passengers) only when issues with Line 2 were resolved. At the close of the project, the CBTC system was not yet fully operational, but the parties were collaborating to achieve this objective in a reasonable time frame.
Upgrading metro lines under operation proved to be more difficult than initially envisioned. The project included upgrading the existing signaling systems and civil works for railway lines under operation. These lines carried more than 1 million passengers daily, so an interruption in operations was not a feasible option. In some cases, especially for CPTM where the demand was lower, an alternative bus service was provided to allow for the complete shutdown of the line, allowing for a longer window for implementation. However, this solution could not be used indiscriminately because it was costly. Works had to be conducted during a small time window, generally from 1 a.m. to 4 a.m., which included time for mobilization and de-mobilization, meaning that the actual productive time was even shorter. The services had also to compete for space with the more urgent needs of maintenance of current operations, since safety of the current system was a priority. Therefore, the time windows often could not be provided by CPTM/Metro. Another constraint was related to the right-of-way and the interference with the concessionaire for freight transport, which shares the same railroad space with passenger trains. The project’s works included the construction of porticos that interfered with the concessionaire’s space. The solution came eventually with adaptations to designs and through an agreement with the concessionaire, but this also created delays. The Bank team worked with the companies to increase and monitor the number of time windows offered, but the pace of implementation remained slow and the initial delays could not be overcome. Nevertheless, 75% of these services were completed, which resulted in increased safety, as evidenced by the indicators presented in 3.2.
Macroeconomic conditions were favorable to the country during project implementation. This meant that government was collecting increasingly more tax revenues, securing adequate flow the funds to the project. On the other hand, the heated economy created a boom in the construction sector. During project implementation, according to IBGE (Brazilian Institute of Geography and Statistics), unemployment reached extremely low levels in Brazil, with only 0.4 percent of unoccupied workers in the construction sector. This influenced the costs of labor and the capacity of construction companies to deliver services that were labor intensive.
The Additional Financing increased substantially the benefits for the project as a whole. When the AF was appraised, progress of the original loan was satisfactory, with disbursements of around 48% and physical progress of 39% and 51% for CPTM/Metro trains and 54% and 26% for CPTM/Metro signaling systems. The components financed by the AF, related to new trains and signaling systems for Line 11, were adequately implemented and the targets were fully met.
Despite the issues raised above, final outcomes were achieved for the majority of the PDO indicators, and for 75% of the intermediate indicators, as will be presented in section 3.
2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization 2.3.1 M&E Design: The project was monitored through an appropriate set of indicators adopted by the Borrower to reflect the achievements of the PDOs (see Section F of Datasheet). The
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indicators of number of trains in peak, reductions in travel times, and passengers per square meter address the first goal of the PDO, which is the improvement of the level of service. The indicators related to increase in demand, particularly the increase in low-income users, address the targeted beneficiaries, and the operating costs address the cost-efficient manner through which results have to be achieved. The indicator of the completion of the PITU addressed the achievement of second PDO, of strengthening of the institutional capacity. Although it is generally difficult to measure institutional capacity building outcomes, the project could have included one or two additional indicators of the utilization or adoption of the project’s technical assistance products. No indicators were included in the results framework to measure safety during the implementation of the project. However, available data show increased safety in CPTM operations (again, see section 3.2 below). The intermediate indicators were used to assess outputs, including the physical progress of the train manufacturing, the systems, the permanent way, the overhead lines, and the PITU study.
2.3.2 M&E Implementation and Utilization: The Borrower appropriately used the outcome and output indicators to supervise the progress of the objectives and implementation. Updated values of indicators were reported in a timely way in the ISRs. However, progress reports during implementation demonstrated some inefficiency in the calculation of physical progress indicators for some specific contracts. For instance, the calculation of physical progress in some components used metrics of time spent divided by total contract time. Since the contracts were behind schedule, these indicators were erroneously optimistic and had to be adjusted towards the end. Additionally, safety and reliability-related indicators could have been used to reflect the improvement in operations, especially for CPTM. Although some of the indicators in terms of headways have not been achieved, improvements in reliability and safety of the systems are strong positive impacts that were not acknowledged through the indicators. Although some indicators targets could have been restructured towards the end of the project, by the mid-term review both the Bank team and the Borrower considered that the full objectives would be met.
2.4 Safeguard and Fiduciary Compliance 2.4.1 Procurement: The implementing agency had good procurement capacity, as assessed during preparation, and was knowledgeable of Bank procurement procedures. The procurement ratings were satisfactory during most of the Project, but were downgraded to moderately satisfactory by the end of the Project due to temporary lapses or delays to implement supervision and project management contracts. The procurement of the CBTC technology proved to be complex and somewhat problematic. The Bank team felt that Metro should not have procured the new technology without sufficient certainty about the contractor’s capacity to deliver. An alternative option might have been for the contractor to have implemented the system progressively in one line and then in other lines. Additionally, the schedule of payments of the contracts with the systems’ suppliers was found to be skewed towards the initial deliveries of components and equipment. While these are costly items, the actual installation on the ground is the most complex part of the contract. Coupled with the high costs of labor, companies may have lost ability/motivation to conclude the installation. In subsequent projects, Metro has incorporated this experience and applied a schedule of payments in which the initial delivery of equipment had a lower weight.
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2.4.2 Financial Management: Financial management was in compliance with Bank procedures. Both the State and Metro had previous experience with Bank loans and were able to handle all aspects related to the financial management of the project including accounting, disbursement and auditing functions. Auditing was carried out annually by independent consultants selected on a competitive basis according to Bank procurement guidelines. Financial management reporting and auditing were satisfactory throughout the life of the project.
2.4.3 Environmental: The Project was rated Category B and triggered the Environmental Assessment Safeguard Policy (4.01). It was expected to create a net beneficial impact on society and the environment. The improved rail capacities helped relieve congestion by providing a better quality clean transport alternative, resulting in lower emission of pollutants per vehicle-kilometer. In addition to this beneficial impact, the Project was also the catalyst for a series of internal institutional transformations, especially in the case of CPTM. A specific environmental management unit was created and is being empowered. Of great importance in this scenario is an ongoing initiative related to consulting services for survey and diagnosis, mapping, systematic and georeferenced consolidation of environmental and territorial information, and preparation of environmental management plan and master plan of use, occupation and treatment of the CPTM territory.
In the Mid-term review in April 2011, the project was found to be implemented in accordance with the environmental management plan. CPTM/Metro have adopted comprehensive environmental management systems and all project interventions were found to be properly licensed in the São Paulo city and State environmental agencies, which follow strict environmental standards.
In the course of field visits, because of some interventions related to the CPTM modernization program, the Bank’s environmental specialists raised a possibility that additional safeguards would have to be triggered (Natural Habitats, Physical Cultural Resources and Pest Management).
A specific due diligence was carried out confirming the scope of the Bank-financed project and the CPTM’s Modernization Program (not financed by the Bank) on Lines 7, 11 and 12. The results were the following: (i) the Bank-financed project had not created any significant impacts with regards to Natural Habitats, Physical Cultural Resources and Pest Management; (ii) the due diligence carried out on the Bank-financed project and the Modernization Program confirmed the consistency of the interventions and activities by CPTM with regards to Bank Policies on Natural Habitats, Physical Cultural Resources and Pest Management; (iii) although not covered in the due- diligence report, the Bank Team confirmed with CPTM that neither the Bank-financed project nor CPTM’s Modernization Program had involved any resettlement activities. The Project Team also reaffirmed that CPTM's Modernization Program was not a requirement for the achievement of the Bank-financed project PDOs.
2.4.4 Social: The project did not include involuntary resettlement, so the Bank’s Involuntary Resettlement Policy was not triggered. Reconstruction of stations along CPTM lines 7 and 12 was carried-out with non-Bank funding and took place within the railroad right-of-way. Aside from minor traffic disruptions and short-term delays on the trains, no adverse social impact occurred, as evidenced by the users’ surveys.
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The results from the user’s survey, further detailed in Annex 5, demonstrate that the project- supported improvements increased the beneficiaries’ approval rates, with the exception of 2012, when a few localized problems and disruption in operations due to construction affected the survey results.
2.5 Post-completion Operation/Next Phase The Bank team continues to follow-up on the activities related to this project through engagement with Metro and CPTM’s team and the support to implementation activities related to other ongoing loans. Metro/CPTM continue to implement the project after the Bank loan has closed, with their own funds. The current fiscal crisis in Brazil might generate a slow pace of implementation of next steps, but both Metro and CPTM are committed to conclude the project scope. The contract with EFACEC is being terminated by CPTM and a new procurement is being prepared for the installation of remaining permanent way and electric systems. Metro is negotiating an agreement with the contractor to complete the existing scope on the signaling contracts. The focus is to get Line 2 fully operational, and then agree on a plan to complete Lines 1 and 3, which are more complex.
The Bank continues to engage with Sao Paulo on a US$130 million loan for Line 4 Phase 2, which includes the civil works and systems to complete the 12.8 km subway with 11 stations. This loan was matched by financing from JBIC for an amount of US$130 million. The Bank is also financing Metro Line 5 through a US$650 million loan to extend the current Line 5 to the Chacara Klabin station and benefit the low-income population of the Capao Redondo and neighboring areas.
3. Assessment of Outcomes
3.1 Relevance of Objectives, Design and Implementation The PDOs remained relevant throughout the life of the two loans and did not require any revisions in response to changing government priorities or external conditions. The only adjustments were related to the scope of the PDO to include CPTM Line 11 and the schedule of the proposed targets. The objectives also stayed relevant in light of Bank’s priorities regarding Brazil. The current Sector Country Diagnosis notes that although a wider range of transport alternatives can be explored for improving quality of life and sustainability of urban centers, there is still a strong need for heavy infrastructure projects, especially in the large and heavily populated cities of the country. The objectives remained aligned with the country strategy because they prioritized public over private transport and allowed for a shift towards a cleaner transport matrix. Moreover, because of the socioeconomic profile of the main beneficiaries, the objectives emphasize the impacts on the poorest bottom 40%, achieving considerable benefits in terms of commute time reduction and improved accessibility. The project was also coherent with the social demands for better transport, which arose as the main concern in the 2012 demonstrations that joined millions of Brazilians complaining about quality of life in urban centers.
The project’s design, in terms of components and subcomponents, remained fully aligned with its objectives. There were no deviations from the original objectives or design that would diminish the project’s relevance in implementation. Overall the relevance of the project is rated High.
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Project amendments, including the additional financing and extensions of the closing date, reflected an appropriate level of flexibility by the Bank that allowed for the achievement of the PDO. The planned implementation period of 5 years was appropriate given the risks identified during preparation but turned out to be too short given the complexity of the project and unforeseen delays regarding technical difficulties regarding the signaling systems.
3.2 Achievement of Project Development Objectives Achievement of the first PDO, “improve the level-of-service provided to the urban rail transport users in the São Paulo Metropolitan Region in a safe and cost-efficient manner by increasing the peak-hour and off-peak carrying capacity of Lines 7, 11, and 12 of the Companhia Paulista de Trens Metropolitanos (CPTM) and Lines 1, 2, and 3 of the São Paulo Metro Company (Metro)”, is rated Moderately Satisfactory based on the following:
a) The trains for both Metro and CPTM were delivered and are under operation, increasing the transport capacity in the CPTM lines. Although the trains in operation for the Metro Lines 1, 2, and 3 have not increased for the peak period, the actual comfort levels in the peak, measured through the indicator passengers/m2, were fully achieved. This was a result of a new trip distribution through the metro network after the introduction of Line 4, and changes in transport patterns that produced a less pronounced peak in demand and allowed for a better level of service to be offered even without adding trains. b) For CPTM Line 11, the target for trains under operation was fully achieved and so for the passengers/m2, indicating a full achievement of the improvement in the level of service. For CPTM lines 7 and 12, the indicators for trains in operation were surpassed, but the levels are comfort are still far from ideal, reaching up to 7.2 passengers/m2 during the most crowded 15- minute-period. c) The results in terms of demand achieved are dramatic; 1.35 million new users were added to the system during these years (96% of the 1.4 million target), of which more than 51% are from the lowest income groups (monthly income of 4 or less minimum salaries). There was substantial reduction in travel times (80% of the indicators met on average for the six lines). Comparing this with a scenario that all these new passengers would have shifted to private road based modes, there has been up to an estimated 14% savings in CO2 emissions (2,929 ton/day), 9% savings in passenger travel times (1,423,232 pax-hours/day) and a 16% reduction in traffic volumes. Results can be even more pronounced when signaling systems for Metro Lines 1, 2 and 3 are fully operational. Refer to Annex 9 for detailed information and other counterfactuals. d) Metro’s working ratio (defined as operating costs divided by operating revenues) has always remained below one as planned and has actually improved. This is a very important achievement for the financial sustainability of the metro transport network, but it is important to analyze also the working ratio of the CPTM system, from an integrated perspective. e) CPTM’s working ratio (defined as operating costs divided by operating revenues) had been estimated as 1 at the time of project appraisal, but subsequent analysis showed that this was incorrect, and in fact was 2 at the start of the project. CPTM’s working ratio decreased during the course of the project to 1.5, but at the end of 2013 it returned to 2. Although operational revenues have increased 70% in the 2008-2013 period, because of the increase in demand, operational costs have increased 105%. Operational and maintenance costs have increased considerably (around 15% only in 2012-2013) and so did administrative costs (more than 100%
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for the same period), a consequence of the more intensive use of the system. Revenues, on the other hand, did not increase at the same rates, because of political pressures to avoid raising tariffs, together with tariff integration that does not generate higher revenues. Although the end-of-project working ratio of 2 might seem high, it had neither improved nor deteriorated during the project period. f) The share of Metro trips among motorized trips in the Region increased from 16% estimated for 2001 to 19.3% estimated for 2011. This is a significant achievement considering the rapid growth in motorization during this period that is highly correlated to rising incomes. The other rail ridership and mode share of CPTM also increased significantly in this period. This positive trend is attributable to a portfolio of investments made by the SSP, including the implementation of Line 4, improved reliability and service frequencies on CPTM lines, and improvements and/or extensions to Lines 1, 2 and 3.
Although the majority of results in terms of demand, comfort levels and travel time savings were achieved, the working ratio for CPTM is considered high, and the sustainability of the system as a whole (Metro + CPTM), might be endangered if strong measures to contain costs and to find additional sources of revenue are not explored. Fortunately, studies from the institutional component have provided the companies with a tool to test different fare schemes to encourage evidence-based discussion of financial sustainability issues, even while the political environment may be unwelcoming of fare increases or changes.
Finally, no indicators were included in the results framework to measure safety during the implementation of the project. However, available data show increased safety in CPTM operations, with the rate of accidents in the whole system declining from 9 to 5 accidents/year and from 67 to 12 injured passengers/year when comparing the years before project to the period of project implementation. CPTM has also an indicator that measures events of operational safety to the public which has seen a dramatic decrease in the last years, as presented below. No accidents/safety related data for the Metro was available.
Operational Safety Events (units per million passengers transported)
Source: Relatório de Encerramento do Contrato de Empréstimo BIRD - JBIC Empréstimo 7506– BR / COFN C1150 Projeto São Paulo Trens e Sinalização.
14 Achievement of the second PDO, “to continue the strengthening of the transport management and policy framework in the SPMR”, was also rated Moderately Satisfactory because of the delays in the development of the PITU and the fact that the actual content of the report did not cover a full long term plan, only the updating of the transport network in the transport model. Although this was an important first step towards the implementation of the full PITU, STM did not manage to develop this study in the period of the project implementation. STM has informed the Bank that it intends to proceed with a full version of the study and will suggest that the Line 5 loan finances the new contract.
3.3 Efficiency A conventional cost-benefit analysis was carried out for this ICR using the same approach used during appraisal. The situation with the project was compared against the situation without the project. The revised Net Present Value (NPV) of benefits calculated for this report is US$720 m. and Economic Internal Rate of Return (EIRR) is 15.3%. This ex-post assessment confirms a positive economic efficiency of the project and the EIRR is higher than international experience with metro projects of this kind, which average around 8%. The result is also generally consistent with, though lower than, the NPV and EIRR calculated at appraisal in 2007 (US$1.34 bn.; 21.4%) primarily due to an increase in costs and delays that postponed accruing benefits. The following conservative assumptions were made in this analysis with respect to the situation at appraisal: a) Updated investment cost stream to reflect the changes to the components and timing; b) Updated benefits stream to reflect the approximately 4-year delay in the benefits; c) Maintained the reduction in wages and the incremental increase in operating and maintenance cost which were consistent with appraisal.
Overall the efficiency of the project is rated as High, given the very positive ex post NPR and EIRR.
3.4 Justification of Overall Outcome Rating Rating: Moderately Satisfactory
The overall outcome rating of Moderately Satisfactory is based on: (i) the High continued relevance of the project objectives and design; (ii) the Moderately Satisfactory achievement of the two development objectives; and (iii) the High estimated economic efficiency of the investments despite significant delays to complete the Project.
3.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts As described above, the project improved the access of low-income populations to the system. A geographical analysis of census data provides additional indications of the impacts on poorer segments of the population. The following table presents the growth in populations in buffer areas of 1, 3 and 5 km distance to the Metro and CPTM stations, classified by low income/not low income. Low-income is defined as the bottom 40% in terms of family income. High income, in this case, is defined as the 60% richest percentiles. The overall data includes families that have not
15 declared their income. The source data is the 2000 and 2010 census6. Although 2010 does not represent the final date of the project, some of the project objectives had been completed by then.
Percentage Growth Share of low- Inside/ Radius (2000-2010) income System Outside (km) Low High Overall Buffer 2000 2010 income income Growth* Inside -1.4% -5.3% -3.6% 43.7% 44.7% 1 CPTM - Outside 14.5% 1.4% 7.4% 45.7% 48.7% SPMR Inside 5.8% -1.6% 1.6% 43.3% 45.1% 3 census Outside 17.0% 2.4% 9.3% 47.3% 50.6% tracts Inside 7.9% -2.3% 2.1% 43.3% 45.8% 5 Outside 20.7% 8.3% 14.5% 50.3% 53.0% Inside 13.7% -1.9% 1.7% 23.0% 25.7% 1 Metro – Outside 10.6% 0.2% 5.1% 47.9% 50.3% SP Inside 8.9% -5.9% -1.6% 29.5% 32.6% 3 census Outside 18.1% -10.8% 3.3% 48.7% 55.7% tracts Inside 8.6% -7.8% -2.4% 33.3% 37.0% 5 Outside 22.2% -9.7% 6.9% 52.1% 59.6%
While the overall growth in population cannot be attributed (entirely or exclusively) to the project, the analysis of growth in population evokes an interesting discussion in terms of synergy of policies of land use planning and transport.
From the table above, on one hand, it is clear that relative growth in population outside the areas of influence of both Metro and CPTM is higher than in areas closer to the rail, which decreases the attractiveness of the public transport system. One can analyze for instance the 3 km buffer for CPTM. While relative growth in population was 9.3% outside the 3 km buffer, the growth inside the 3 km buffer was only 1.6%. Additionally, there is a population decline on the 1 km buffer around CPTM stations (-1.44% for low-income, -5.3% for not low income, and a -3.63% for overall growth).
These unfortunate symptoms of unsustainable development were addressed in the new Master Plan for the city of São Paulo in 2014, which incorporates incentives to accelerate the densification around transport terminals/stations.
On the other hand, on a positive note, it can be seen that growth for low-income populations is much higher than for the remaining populations inside the buffer areas. For instance, while in the 3 km buffer for CPTM, there was a decrease of 1.6% in population of high-income, there was an increase of 5.8% of low-income populations, which can be seen as a consistent gain. The data for Metro shows even more encouraging results. Low-income populations have increased inside areas
6 IBGE – Instituto Brasileiro de Geografia e Estatística. Census 2000 and 2010.
16 of influence of 1, 3 and 5 km, between 8 and 13.7% while high-income populations have decreased from 1.8 to 7.8%.
This movement of low-income populations closer to the stations is a positive signal of poorer populations migrating closer to rail stations. The generally higher speeds provided by the rail system generate a decrease in travel times possibly resulting in higher quality of life, and/or of higher accessibility to a larger set of opportunities (jobs, leisure, etc.) for a given travel time budget.
(b) Impact assessment An impact assessment of São Paulo Trains and Signaling Project on traffic volumes, travel times and emissions was conducted by the Bank team. Data came from the 2012 Mobility Survey from Metro, CAF – Observatorio de Movilidad Urbana and the project indicators provided by Metro and CPTM. The detailed results can be found in Annex 9.
The current scenario was compared to counterfactual scenarios that considered that part of the new users of the rail system would have migrated to other less efficient modes of transport in case the project was not implemented. Considering the fact that in 2007 the systems were vastly saturated, this is a reasonable assumption. The most critical counterfactuals considered that all new users would have migrated to either bus, cars, or motorcycles. Two other scenarios simulated that the same modal shift from 2007 (before implementation) would be preserved, taking into account mobility patterns of different socioeconomic levels. The results indicate up to 14 percent in CO2 savings, up to 21 percent savings in traffic volumes, and up to 9 percent in travel time savings.
(c) Institutional Change/Strengthening One aspect of particular importance relates to the series of reforms that the state government has introduced to improve the system integration, with particular attention to the integrated modal tariff implemented in 2004 for the municipal system, and expanded to the Metro system in 2005. Up to the mid 2000s, public transit was inconvenient and unaffordable for a majority of citizens in São Paulo. Reform started when State and City governments provided physical and tariff integration between Metro and suburban rail services. Ridership increased, particularly by low- income users. The fully-integrated transit system through the BUI has made transit more affordable, and low-income family expenditures on transport decreased, with considerable impacts in demand. While before the reforms, less than 5 percent of rail users were low-income, thanks to the reforms 35 percent of Metro users and 63.7% of suburban rail users are low income7. Government has continued to expand its integration policies with the BOM fare card that integrates the Metro to the inter-municipal bus transport system. One impact of these integration policies is that demand increases have not been backed up with sufficient investment, and system crowdedness may lead to rapid deterioration of the system through excessively intensive usage.
The revised PITU, the land-use transport model and the improved environmental management have been important steps towards integrating metropolitan region planning. The companies are now more aware of the impacts of the Metro on land use and are more actively involved in terms of identifying integrated policies. The Bank is currently working with Metro on an Impact
7 Rebelo et al (2007). Impact of an integrated modal tariff on the mobility of low-income population in the são paulo metropolitan region. 17 evaluation study for Line 5 that intends to address opportunities for enhancing metro use by low- income people and by providing poor populations with tools to remain in the areas most benefited by the rail system and thus be able to assess the benefits more efficiently.
Finally, the continuous Bank financing and RAS provided on public private partnerships have included a wider range of financing mechanisms to allow for a more rapid growth of the network. Nevertheless, because of the complexity of agents involved in urban projects and the high costs of implementing these infrastructures, strong government financing is still crucial for the success of the system expansion.
3.6 Summary of Findings of Beneficiary Survey The analysis of users’ perceptions was based on information from three different data sources: the ANTP (“Associação Nacional de Transportes Públicos) and CPTM and Metro’s users’perception surveys. The complete analysis can be found in Annex 5. From 2010 until 2012, the Metro and CPTM systems were perceived by users as the transport modes with most improvements, when compared to the bus system. Approval rates ranged from 50 to 70% for CPTM and from 50 to 80% for the Metro. Reduction in waiting times, decrease in trip times, the provision of new and modern cars, enhancement of train stations, increased speed, and the operation of new metro lines were cited as the main reasons. In all surveys, the most quoted complaint was related to overcrowding of the systems followed by the need for building new metro and rail lines.
A double difference analysis was conducted for the CPTM and Metro lines and the results indicate positive results that can be attributable to the Trains and Signaling project. Although the approval rates for Metro lines have been decreasing, mostly because of overcrowding, this analysis indicated that the lines improved under the project had much lower declines in perception than the control line. Moreover, for the CPTM lines, besides an overall increase in approval rates for the targeted lines, the improvement was considered higher for these lines than for the control line.
It is important to highlight, however, that data from the ANTP 2015 survey (not yet publicly released), indicate an increased dissatisfaction with public transport services in Sao Paulo. The worst evaluation was obtained for the bus systems, where some important interventions of bus corridors have been implemented. Specialists point out that the systems are still crowded, and average speeds have not yet consistently changed. Moreover, the higher awareness about the subject of public transport, which was the main complaint in the 2013 demonstrations in the city, meant more demanding customers who will assess more critically the level of service being offered. Finally, the overall image of CPTM and Metro, although declining, is still rated highly positive, indicating a general satisfaction with the systems and a strong beneficiary support.
4. Assessment of Risk to Development Outcome Rating: Moderate
The risk to development outcome of this operation is moderate for the following reasons: a) Technical: as presented above, the signaling systems contract was not concluded and there is uncertainty in terms of when the CBTC technology (or any similar technology) will be able to fulfill the level of service requirements. Moreover, improvements in the permanent 18 ways and overhead cables, although not particularly complex, will likely still take time to be completed (1-2 years). While the development objectives are mostly but not fully met and the benefits already incurred are likely to be permanent, the non-completion of the smaller headways between trains will limit the capacity of the network to offer users with adequate levels of service, especially if the demand continues to grow. However, as noted above, shifts in the distribution of trips have attenuated these effects and currently Metro Lines 1 and 2 are offering adequate levels of comfort, despite the growth in demand. Metro’s plans for the next years in terms of providing a solid expansion of the network will likely contribute to a redistribution of flows, reducing the need for lower headways in the current lines. For Lines 3 and most CPTM Lines, comfort levels have already reached the limit (in some cases 8 passengers/m2 in the peak period), so improvements in the level of service are still strongly needed to improve the lives of the transport users, in particular low-income users. High risks of not sustaining the development outcomes will arise if these improvements are not met, and, given the current economic situation, the likelihood of these improvements not happening is moderate. b) Social: the project has contributed to improving the lives of low-income passengers, but a lot remains to be done, especially in terms of improving the levels-of-service. CPTM has been able to gain increasing community support by providing gradually higher levels of service but this support is at risk because of the crowdedness of the system and the uncleanliness of tracks. Despite the services being considered good by 44% of the users (according to the CPTM customer satisfaction survey), this number has been recently declining. The company’s management system has been working with the community and has trained more than 3,000 collaborators since 2010 to improve the cleanliness of the station and tracks, and employees are oriented on how to improve passengers’ awareness in terms of their behavior and care for the railway. c) Financial: there is moderate risk that the continued expansion of the Metro and CPTM network under the current fare structure (flat fares with BUI) could upset further the equilibrium of operating revenues in the metropolitan network, negatively impacting Metro and CPTM operations in the future. Despite the public transport system being crucial to improve accessibility to opportunities for a high share of the low-income population, the decision to subsidize the system must be accompanied by a compensation mechanism to guarantee its financial sustainability, and by a strong effort to increase efficiency in operations and possibly explore other sources of revenues. One of the possible mitigations is to make the fare structure less rigid, for example by gradually introducing zonal fares or more targeted subsidies designed to minimize any negative impact on low-income passengers in the periphery that currently benefit from flat fares. There is a modest risk of government not being able to continue or develop the necessary adjustments to the fare to provide fiscal sustainability, since decisions on fares are commonly influenced by political factors. There is also a modest risk of not achieving optimal efficiency in operations, to the extent that this may require some cuts in personnel, which tend to face strong resistance by unions and some other stakeholders. d) Economic: the current risk of macroeconomic or fiscal conditions adversely affecting the conclusion of this project and future operations is moderate. Significant additional investments in rolling stock, stations, and system upgrades are needed to increase operating capacity in the SPMR and alleviate the continued growth in congestion. These investments in transport infrastructure are among the highest priorities for municipal and state
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governments in SPMR. However, because of the macroeconomic scenario, there is a modest risk of government not being able to commit to the necessary investments to the network. e) Institutional support: Metro/CPTM have committed to implement an extensive expansion to the system. However, the pace of implementation of these investments has been slow, and there is a strong societal demand to deliver these projects more efficiently. Therefore, the implementing companies are likely to suffer from negative public opinion claiming lack of capacity to deliver these projects. Options of other forms of financing from public- private partnerships are currently being explored, such as the MIP (Manifestação de Interesse da Iniciativa Privada) programs used for Lines 6 and 18. The MIP legislation allows private initiative to kick-start the process for a new project and was designed as a means to accelerate project preparation and investment, as well as to address the lack of available “shovel-ready” engineering designs for priority infrastructure projects for the State. The Bank supported this effort through a RAS, and while the process potentially generates efficiency in streamlining rigid procurement processes in Brazil, there are several risks associated with the complexity of implementing rail projects that should be mitigated by the public sector (e.g., related to resettlements, interferences with utilities, environmental permits, traffic permits) or there will be low interest from the private sector. Alternatively, the risks should have to be counter balanced by higher premium rates.
5. Assessment of Bank and Borrower Performance
5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Satisfactory
At entry, the project was designed as an urban transport operation completely aligned with the long-term transport plan for the SPMR but also with the urgent needs for better quality of transport for users, especially low-income users. The strategy to upgrade the quality of the suburban rail entailed taking advantage of a 315 km of existing network so that growth could be directed to where infrastructure, although degraded, already existed. The fare integration (metro-rail integration occurred in 2006) had allowed for reducing the costs of travel, but the low-income population was still bearing the brunt of extreme overcrowding and long work journeys, both of which increase the generalized cost of traveling, leaving the poor with few alternatives and inducing a growth in motorcycle and car ownership, with high impacts on congestion and on the environment.
In this context, the Bank and the Borrower prepared the project by: (i) carrying out a solid background analysis; (ii) evaluating lessons learned from previous operations and appropriate alternatives; (iii) holding detailed missions with specialized teams of consultants; (iv) designing a technically well-conceived project based on data and information available at the moment; (v) evaluating a range of foreseeable risks and proposing appropriate mitigation measures; (vi) paying attention to institutional aspects, such as ensuring that the project had support from the Metro Employee Union as well as from all São Paulo political parties; and (vii) ensuring the availability of the necessary funding for the project. While some implementation problems, such as delays and the lack of readiness of the technology, in retrospect could have been evaluated further by the Bank
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during preparation, these risks ultimately had to be borne by the implementing agency. In fact, the Bank team successively suggested that the implementing agency adopted a sequential approach, which in the end, during implementation, was the approach adopted. Additionally, although some of the upgrades could not be completed by the closing date of the Loan, these activities are still relevant and will continue to be pursued by the companies.
Finally, the project development objectives were comprehensive and flexible enough to remain valid.
(b) Quality of Supervision Rating: Satisfactory
Bank supervision is rated “Satisfactory” on the following basis: (i) frequent supervision missions (15 ISRs filed between June 2008 and March 2015, or more than 2 per year, not including FM, safeguards, and procurement supervision missions which took place twice a year); (ii) prompt identification of implementation problems such as delays in contracts with appropriate responses, including additional reporting and supervision requirements from the Borrower with the support of the PMOC; (iii) high-quality advice and support to the Borrower during the entire process, especially with specialists to assist in disputes between the implementing unit and its providers; and (iv) Bank follow-up actions to deal with unexpected implementation problems in a timely and appropriate manner, for example by approving the Additional Financing that enhanced the impact of the project. Overall, the Task Team demonstrated sensitivity and responsiveness to the client’s needs, excellent engagement, and appropriate adaptation of the project to ensure maximum relevance and achievement of PDOs, in light of changing conditions and delays mostly outside the Bank’s control. By the mid-term review (in April 2011), the main concerns were issues largely out of the control of the Bank: the non-delivery of the CBTC system and the financial difficulties that some contractors were facing because of high labor costs, among others. The Bank team, however, kept assisting Metro in all of those aspects, providing the international experience required for Metro to design locally acceptable options, serving as an intermediary in the discussions among stakeholders.
(c) Justification of Rating for Overall Bank Performance Rating: Satisfactory
The Bank helped the Borrower in the adequate preparation of the project and provided instrumental assistance in implementing project. The Bank also actively addressed implementation problems thanks to a careful, versatile and proactive supervision. This helped adapt the project to changing circumstances and resulted in the achievement of most of the PDO targets.
5.2 Borrower Performance (a) Government Performance Rating: Moderately Satisfactory
SSP was effective in providing counterpart funds, which have proven to be a major problem in recent Bank-funded operations. However, delays in the engagement with the Regional Transport Coordination Commission (CDTI) and in the preparation of procurement documents, delayed the implementation of the Long Term Transport Plan (PITU). Additionally, the scope covered in the 21 PITU, despite being an important step towards updating the overall plan, could have been more comprehensive.
(b) Implementing Agency or Agencies Performance Rating: Moderately Satisfactory
Metro is an experienced organization with a department dedicated to supervising this project. Metro has always run project management in-house, while CPTM relied more on outside consultants because of a leaner management structure. Both formed Project Management Units (PMUs) focused on institutional, financial, fiduciary, reporting and safeguards requirements of the Bank loan. CPTM has a greater challenge because of a much larger and complex network to supervise. The PMUs were supported by a Project Management Oversight Consultant (PMOC) financed by the loan, which issued monthly and ad hoc reports to the State Secretary of Metropolitan Transport (STM-SP) and to the Bank. Finally, there was a additional Project Coordination Unit (PCU) reporting to the STM-SP Secretary and to the Governor on strategic aspects of the project.
The project underperformed in terms of the schedule and technical difficulties that will end up having longer-term impacts on cost. During the Project implementation, CPTM was unable to secure sufficient time windows for companies to perform at an adequate speed and was slow to resolve physical interferences with the Concessionaire for freight transport that uses the same right of way. Both CPTM and Metro did not succeed in enforcing companies to provide more detailed schedules that would allow quicker implementation. The contracts did not have sufficient mechanisms to enforce the companies so as to generate effective recovery of delays.
Delays also occurred because of contractual disputes in the two major signaling contracts. Although the companies tried to follow sound procedures, neither the conflict resolution nor the international arbitration allowed for resolution within the Loan period. The process of resolving these disputes required multiple approvals in different departments which resulted in lengthy processes. Having all documents in English was a burden and time-consuming exercise for Metro. However, national litigation processes may suffer from the potential influence of contractors in the domestic market.
These problems, while never entirely preventable, could have been better anticipated by the implementing agencies by designing better contracts and by producing more detailed implementation schedules. Moreover, both CPTM and Metro were slow in terms of identifying possible alternate solutions when contracts started to underperform.
(c) Justification of Rating for Overall Borrower Performance Rating: Moderately Satisfactory
The overall Borrower performance is Moderately Satisfactory based on the performance of the SSP, Metro and CPTM. Despite a significant delay in project completion and other implementation problems, main project outputs were delivered and outcomes were substantially achieved.
22 6. Lessons Learned The project was strategic in terms of improving transport quality and taking advantage of a vast rail network to transport passengers of the SPMR in an efficient, environmentally friendly way. The main lessons learned are described below:
Implementing rail projects in brownfield is substantially more complex than in greenfield, and require longer implementation schedules. The project included upgrading the existing signaling systems and civil works for railway lines under operation. These lines carried more than 1 million passengers daily, so an interruption in operations was not a feasible option. It is important for all parties in future projects of this type to carefully analyze all the detailed ramifications of implementing upgrades while systems remain under operation and to translate these assessments into realistic time frames, with contingencies.
New (signaling) technologies should be deployed gradually to mitigate risks. The current level of service provided by the metro system in Sao Paulo, measured in terms of headways (interval between trains) seems to have reached the ceiling. Few, if any, systems in the world have been able to deliver such small headways for such a large demand. This has been achieved along the years by a strong operations team in Metro that has worked to optimize operations by introducing changes to the off-the-shelf products that signaling systems providers offered. Metro specified this time even more stringent requirements, to a technology that until this point has not shown sufficient results. However, technicians all over the world were (and are) confident that this technology will eventually be made robust enough to set the standard for the future. Even so, it would have been sensible to implement the technology in stages, focusing the resources of both contractors and Metro’s supervision team on a smaller scope.
Schedule of payments in contracts should minimize the risks of incomplete deliveries. One of the problems that arose during implementation was that the systems contracts specified large payments for the delivery of equipment and components. This decision was based on the fact that these expensive components have a large weight in the financial proposal, so the logical decision was to set the schedule of payments accordingly. However, in terms of complexity of the activities involved, installation can be the critical part. Since providers were paid a large percentage of the contract value towards components’ deliveries, the installation phase might have become less attractive, especially when considering the low availability of labor force during times of heated economic. The solution is to design payment schedules that incentivize successful installation, not just equipment provision.
Indicators of reliability and safety should be incorporated into the results framework. The project incorporated upgrading permanent ways, signaling, energy, and auxiliary systems. Although not fully achieved, improvements in those systems have conferred a higher level of service to the rail system that was not evidenced by the chosen indicators. Indicators of reliability, directly related to these improvements, can be proposed as a measure of quality of service being delivered. Indicators related to service stoppages (in units/month or hours/month) and punctuality/regularity (in percentage of on-time trips or coefficient of variation of the headways offered) are good examples of possible indicators. These improvements have an effect on the attractiveness of the system and influence the outcomes related to demand. Indicators related to
23 safety could also be included since, besides being a desirable outcome per se, have an impact in the long-term image of the system.
Having strong institutional support is a crucial point for sustainability of the transport system. The long term plan (PITU) and the land use and transport model that supports the PITU policies and guidelines are important instruments for consideration when planning for new infrastructure, since they allow for a comprehensive view of the Metropolitan area’s challenges and opportunities. The dynamics of population across the territory, especially considering low- income population access to employment and services, are aspects that have been incorporated into the metropolitan region planning and new important policies, such as densification around metro stations, were proposed as a result of these models. Moreover, issues related to affordability and the financial sustainability of fare schemes are a crucial theme that have been in the center of the discussion in several fora, especially in Brazil where physical integration has been pursued and successfully achieved in some situations. São Paulo, through this loan, has developed a tool that allows for simulation of different fare schemes, and although proper action towards changes in fare structure is constrained by political pressure to keep fares low, this tool allows planning agencies to foresee impacts of possible fare schemes and propose actions to mitigate problems.
24 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies The borrower raised some inconsistencies in the indicators and dates that were appropriately revised. The borrower also observed that the ratings of project implementation were downgraded to moderately unsatisfactory during the last 3 months. The Bank team clarified that the rating reflects the difficulties in resolving the contractual disputes with the systems suppliers’ thus jeopardizing full achievement of target indicators, but noted that the overall project rating is Moderately Satisfactory.
(b) Cofinanciers No comments were provided.
(c) Other partners and stakeholders No comments were provided.
25 Annex 1. Project Costs and Financing
(a) Project Cost by Component (in USD Million equivalent) Component Appraisal Appraisal Actual Actual Appraisal Total Percentage Estimate Estimate Original Additional total Variation Additional Loan Financing of Financing Appraisal Infrastructure and Equipment – Part A CPTM Trains 600 150.57 358.1 151.04 750.57 509.14 -32% METRÔ Trains 208.36 141.02 208.36 141.02 -32% - - CPTM Systems and Assoc. Civil Works 332.22 - 369.37 - 332.22 369.37 11% METRÔ Systems and Assoc. Civil Works 297.64 - 439.57 - 297.64 439.57 48% Institutional and Policy Develop. - Part B Administration/Supervision CPTM 18 2.45 19.64 4.23 20.45 23.87 17% Administration/Supervision METRÔ 4.59 - 23.01 - 4.59 23.01 401% Technical Assistance CPTM 4 0.36 0.17 - 4.36 0.17 -96% Technical Assistance METRÔ 4 - 0.06 - 4 0.06 -99% PMU Operating Cost - METRÔ 3 - 3.13 - 3 3.13 4% SPMR Policy Development 0.5 - 0.34 - 0.5 0.34 -31% Total Baseline Cost 1,472.31 153.38 1,354.41 - 1,625.69 1,354.41 -17% Physical Contingencies 8.34 3.84 - - 12.18 - - 100% Price Contingencies 67.98 3.97 - - 71.95 - - 100% Total Project Costs 1,548.63 161.19 1,354.41 155.27 1,709.82 1,354.41 -21% Front-end Fee 1.37
Total Project Costs 1,550.00 161.19 1,354.41 155.27 1,709.82 1,354.41 -21% Obs: Data obtained in the PAD and provided by STM/Metro/CPTM.
26 (b) Financing
Total Actual/Latest Appraisal Type of Co- Estimate Percentage Source of Funds Estimate financing (USD of Appraisal (USD millions) millions) Borrower 513.50 513.50 100.00 International Bank for Reconstruction Co-financing 662.90 662.90 100.00 and Development JAPAN: Japan Bank for International Co-financing 535.00 510.00 .00 Cooperation (JBIC)
27 Annex 2. Outputs by Component % Sub- Loan Output Indicators Target Comments (including reasons for changes) Component achieved Part A: Infrastructure and Equipment Investment (+ Additional Financing) Acquisition of forty Electrical Multiple Units Original (EMUs) of 8 cars each and accessories for a total 100% Completed. Loan of 320 cars to be used in Lines A (20) and F (20); Acquisition of seventeen Electrical Multiple Original Units (EMUs) of 6 cars each and accessories for 100% Completed. Loan Trains a total of 102 cars to be used in Lines 1 (7) and 3 (10) Acquisition of at least (9) nine trains (Electrical Multiple Units, EMUs) of eight cars each and Additional related accessories for CPTM to increase the 100% Completed. Financing level of service on Line 11-Coral. This component accounts for about 98% of the loan.
Supply and installation and rehabilitation of traction electrical power systems for the substations of Line A and Line F; installation Reasons for delays were detailed above and include and/or rehabilitation of the electrical cabinets of Original technical and legal aspects. Metro is resuming these Systems Line A and Line F; auxiliary power lines for 76% Loan activities but finalization is pending. The cost for this Lines A and F; installation of a signaling system component was severely underestimated by appraisal. operated from the Operations Control Centre (OCC) and supply and installation of an electronic telecommunication systems.
28 Annex 2. Outputs by Component (cont.) % Sub- Loan Output Indicators Target Comments (including reasons for changes) Component achieved Part A: Infrastructure and Equipment Investment (+ Additional Financing) Supply and installation of a new signaling system Reasons for delays were detailed above and include known as Communication Based Train Control technical and legal aspects. Metro continues to (CBTC) in Lines 1, 2 and 3 of the network; Original implement CBTC for Line 2 but finalization is pending. acquisition of a Telecommunication Systems, 75% Loan Only when fully operational for Line 2 Metro will Access Control System (ACS); Platform Screen expand to Lines 1 and 3. The cost for this component Doors (PSD) and modernization of the existing was severely underestimated by appraisal. Operational Control Centre (OCC).
PART B: Institutional and Policy Development Component Original Consolidating the CDTI for the SPMR 100% After initial delays, meetings with CDTI were resumed. Loan Updating the current integrated transport policy, land use and air quality management strategy After initial delays, the project was conducted and the Original (PITU) for the SPMR to meet both transport and 100% final results were properly disclosed among the main Loan air quality targets and to introduce sound cost- stakeholders, including the CDTI. recovery, tariff, regulatory and subsidy policies Technical Providing an action plan to review the funding of The studies were completed and provided a platform for Original Assistance the urban transport system in the SPMR in view 100% testing different policy and integration strategies that are Loan of the adoption of the BUI available for policy recommendations. Carrying out of studies on evaluating the outsourcing to the private sector of selected Original services including but not limited to maintenance 0% These studies were not developed. Loan of track and systems, rolling stock and other operational services
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Annex 2. Outputs by Component (cont.) % Sub- Loan Output Indicators Target Comments (including reasons for changes) Component achieved PART B: Institutional and Policy Development Component
Both CPTM and Metro have regular user satisfaction and Assessing the impact on affordability, passenger profile surveys in which the share of low Original accessibility, availability and acceptability of the 0% income population is assessed. Metro is conducting Loan project on the low income urban rail transport specific impact evaluation studies under the scope of 2 users other loans - Lines 4 and 5.
After several delays, in the first semester of 2015 CPTM has contracted a comprehensive environmental management plan that includes diagnosis, development of norms and procedures for environmental Carry out studies, in accordance with terms of Additional management, a plan to occupy the territories affected by reference acceptable to the Bank, for the design of 0% Financing the network, GIS support system and technical capacity a climate change strategy building. The studies have just started and there are no actual results. Metro did not develop this study and is procuring, under a different loan (Line 5), a climate change mitigation plan. Original Management and supervision of the 100% Loan implementation Original Provision of financing for the operating costs of Management 100% Loan and SP Metro PMU. Supervision Manage and supervise the additional financing Additional including with respect to the manufacturing and 100% Financing implementation of the new trains
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Annex 3. Economic and Financial Analysis An incremental cost-benefit analysis of the existing and proposed investments was undertaken to evaluate the economic feasibility of the project, taking in account modifications incurred of the initial scope of projects. 1. The demand and transport economics study review involved the following activities: a) a review estimating passenger stations in the 2010-2014 during project implementation and demand projection of the period 2014-2038; b) Investment flows as reported by the PMU; c) Calculation of the internal rate of return considering updated unit costs and operational parameters of the transport system.
2. The methodology used consisted in comparing the situation with and without project and quantifying the benefits due to time savings for users of all public modes, operating cost savings for all modes, road maintenance cost savings, accident savings, air pollution savings and the investment and operating costs. The demand for each mode was determined using a demand model which estimated the passenger-hours and passenger-km saved by mode with the project for without and with scenarios.
3. The main benefits considered were:
• Operating cost savings resulting from the lower costs of operating all modes with and without the project through estimates of passenger-km with and without the project which are multiplied by the respective estimated operating costs; • Travel time savings estimated by determining the passenger-hours saved, by type of trip (home-to-work, business or other) and multiplied by the value of time for each mode according to each scenario with and without project; • Reduction in road maintenance costs due to the reduction of bus-km with the project (minor); • Reduction in the bus system managing costs due to avoided costs of expanding the existing public management structure; • Reduction of air pollution costs due to reduction in bus-km with project (minor). To be conservative the costs of avoided investments in the do-nothing situation were not considered; • Reduction of accidents costs estimated by multiplying the average cost per accident per 1000 passenger-km with and without project and are a function of the number of bus-km saved (minor).
4. The main costs considered were:
• Investment costs for the acquisition of trains, partial costs for systems upgrading and consulting and management services and • Operating costs including personnel, consumption and maintenance of Railway infrastructure, fleet and systems.
5. The project decreased the number of bus-km and bus passenger-hour traveled on the urban network through the construction of a new subway line. The bus-km saved per year are estimated by the demand model. The main beneficial impacts of the project under evaluation 31 are reduced congestion (mainly due to less buses on the street), reduction in traffic-related accidents, reduced vehicular air pollution, reduced noise due to less buses on the street and economic savings from reduction of travel time.
6. The above are all quantifiable and were used in the economic analysis. There are, however, a great number of non-quantifiable benefits which cannot be captured in a standard cost- benefit analysis but are worth noting:
• Improvement of travel level of service: (i) Train occupation rates decreased due to the expansion of the network and services within the metropolitan area; (ii) Comfort level improvements on railway services are difficult to measure benefits and will lead to higher utility levels of travel consumption and associated benefits. • Avoidable costs in building up urban road infrastructure capacity – several investments on roadway infrastructure were avoided or postponed by the enhancement of the proposed railway services. • Employment Generation: the project promoted the creation of jobs with multiplier effects in several sectors of the economy.
32 COSTS AND BENEFITS US$ Mil DIRECT BENEFITS EXTERNALITIES TOTAL INVESTIMENTS AND COSTS TOTAL BENEFITS Project Calendar TRAVEL OPERATING TRACK BUS COSTS AIR BENEFITS SALARIES OTHERS COSTS - COSTS Year Year TIME COSTS MAINTEN. OPERAT. ACCIDENTS POLLUTION (A) INVEST. & TAXES COSTS (B) (A - B) 1 2008 0 0 0 0 0 0 0 239,832 0 0 239,832 -239,832 2 2009 0 0 0 0 0 0 0 190,134 2,375 1,099 193,608 -193,608 3 2010 0 0 0 0 0 0 0 486,373 6,911 12,848 506,132 -506,132 4 2011 146,093 -59,127 2,474 4,157 980 1,940 96,517 391,498 17,960 51,834 461,292 -364,775 5 2012 292,186 -118,255 4,947 8,315 1,960 3,881 193,034 123,004 22,226 53,416 198,646 -5,612 6 2013 438,279 -177,382 7,421 12,472 2,940 5,821 289,552 122,593 22,885 55,088 200,566 88,985 7 2014 584,372 -236,509 9,895 16,629 3,921 7,762 386,069 60,852 26,096 56,847 143,795 242,274 8 2015 590,216 -238,875 9,994 16,795 3,960 7,839 389,929 29,260 26,096 56,847 112,203 277,727 9 2016 596,118 -241,263 10,094 16,963 3,999 7,918 393,829 26,096 56,847 82,943 310,886 10 2017 602,079 -243,676 10,195 17,133 4,039 7,997 397,767 26,096 56,847 82,943 314,824 11 2018 608,100 -246,113 10,296 17,304 4,080 8,077 401,745 26,096 56,847 82,943 318,802 12 2019 614,181 -248,574 10,399 17,477 4,121 8,158 405,762 26,096 56,847 82,943 322,819 13 2020 620,323 -251,060 10,503 17,652 4,162 8,239 409,820 26,096 56,847 82,943 326,877 14 2021 626,526 -253,570 10,608 17,829 4,203 8,321 413,918 26,096 56,847 82,943 330,975 15 2022 632,791 -256,106 10,715 18,007 4,245 8,405 418,057 26,096 56,847 82,943 335,114 16 2023 639,119 -258,667 10,822 18,187 4,288 8,489 422,238 26,096 56,847 82,943 339,295 17 2024 645,510 -261,254 10,930 18,369 4,331 8,574 426,460 26,096 56,847 82,943 343,517 18 2025 651,966 -263,866 11,039 18,553 4,374 8,659 430,725 26,096 56,847 82,943 347,782 19 2026 658,485 -266,505 11,150 18,738 4,418 8,746 435,032 26,096 56,847 82,943 352,089 20 2027 665,070 -269,170 11,261 18,925 4,462 8,833 439,382 26,096 56,847 82,943 356,439 21 2028 671,721 -271,862 11,374 19,115 4,507 8,922 443,776 26,096 56,847 82,943 360,833 22 2029 678,438 -274,580 11,487 19,306 4,552 9,011 448,214 26,096 56,847 82,943 365,271 23 2030 685,222 -277,326 11,602 19,499 4,597 9,101 452,696 26,096 56,847 82,943 369,753 24 2031 692,075 -280,099 11,718 19,694 4,643 9,192 457,223 26,096 56,847 82,943 374,280 25 2032 698,995 -282,900 11,836 19,891 4,690 9,284 461,795 26,096 56,847 82,943 378,852 26 2033 705,985 -285,729 11,954 20,090 4,737 9,377 466,413 26,096 56,847 82,943 383,470 27 2034 713,045 -288,586 12,073 20,291 4,784 9,471 471,077 26,096 56,847 82,943 388,134 28 2035 720,176 -291,472 12,194 20,494 4,832 9,565 475,788 26,096 56,847 82,943 392,845 29 2036 727,377 -294,387 12,316 20,699 4,880 9,661 480,546 26,096 56,847 82,943 397,603 30 2037 734,651 -297,331 12,439 20,906 4,929 9,758 485,351 26,096 56,847 82,943 402,408 - - 31 2038 741,998 -300,304 12,564 21,115 4,978 9,855 490,205 321,650 26,096 56,847 238,707 728,912 IRR 15.30% NPV 10% 720,993 33 Annex 4. Bank Lending and Implementation Support/Supervision Processes (a) Task Team Members Responsibility/ Names Title Unit Specialty Lending Armando Ribeiro Araujo Consultant GGODR Daniel R. Gross Consultant AFCE3 CESOP - Daniel A. Gross Summer Assistant HIS Paul Procee Program Leader EACCF Jorge M. Rebelo Consultant MIGES Supervision/ICR Georges Bianco Darido Lead Urban Transport Specialist GTIDR Team Leader Etel Patricia Bereslawski Senior Procurement Specialist GGODR Procurement Aberboj Bianca Bianchi Alves Urban Transport Specialist GTIDR Urban Transport Bernardo Guatimosim Alvim Consultant GTIDR Urban Transport Catarina Isabel Portelo Senior Counsel LEGLE Legal Daniel R. Gross Consultant AFCE3 Safeguards Hanayo Taguchi Program Assistant GTIDR Team Member Karina de Souza Marcelino Program Assistant LCC5C Team Member Paul Procee Program Leader EACCF Safeguards Ralf-Michael Kaltheier Senior Transport Economist GTIDR Team Member Susana Amaral Senior Financial Specialist GGODR Team Member (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage of Project Cycle USD Thousands (including No. of staff weeks travel and consultant costs) Lending FY07 0 7.37 FY08 14.58 144.86 Total: 152.23 Supervision/ICR FY07 0.00 FY08 0.45 FY09 9 69.74 FY10 17.90 112.01 FY11 17.77 5.45 FY12 24.70 89.12 FY13 31.7 144.29 FY14 14.05 62.99 FY15 31 131.98 Total: 616.03
34 Annex 5. Beneficiary Survey Results The current analysis of users’ perception is based on information from three different data sources; i) for general conclusions, the main data source is the survey conducted by ANTP (“Associação Nacional de Transportes Públicos) from 1985 to 2012, ii) for the analysis of the metro system, the information was provided by Sao Paulo Metro for the 2008-2014 period, and iii) for the train system, information was provided by CPTM for the 2010 to 2014 period. Since 2008, ANTP surveys included household-based surveys (around 1,300 in Sao Paulo) and onsite intercept surveys’ (around 100 for EMTU). Confidence index for these surveys was 95% and sampling error 2.0%. CPTM’s database included a perception’s survey of more than 3,500 users from 2010 to 2014. The confidence index is 95% and sampling error vary between 4.5% in 2010 to 3.6% in 2014.
1. General user’s perceptions
From 2010 until 2012, according to ANTP data, Metro and CPTM systems were perceived by users as the transport modes with most improvements. In 2010, among the reasons reported by users, the most significant is the reduction in train waiting times. Other reasons were the decrease in in-vehicle trip times and the provision of new and modern cars, both for Metro and CPTM systems. In 2012, the reasons were mainly related to the enhancement of train stations, the acquisition of new and modern trains, the increased speed, and the operation of new metro lines. In all surveys, the most quoted complaint is related to overcrowding of the systems followed by the need of building new metro and rail lines.
2. Perceptions about the Metro System
The graph below show the evolution metro users’ perception by line. It considers the percentage of Good and Very Good answers. The graph depicts the answers for Metro lines affected by the project and for the system as whole. It is important to highlight that the answers for the whole system are not an average of the answers of each line, but the actual percentage of “Good/Very Good” answers to the question addressed specifically to evaluate the metro system as a whole.
Users perception of the Metro Percentage of "Excelent/Good" answers 75 70 65 60 % 55 50 45 40 2008 2009 2010 2011 2012 2013 2014
Whole Metro system Line 1 -BlueYear Line 2 - Green Line 3- Red
35 Lines 1 and 2 are constantly rated better than the whole metro system; however, line 3 is repeatedly rated worse. Surveys do not provide specific information about the reasons behind the answers specifically addressed for each of these lines. However, this difference might be related to the fact that when a specific line is being addressed, the user makes stricter judgement of the quality of service, while when analyzing the whole system the user tends to judge the overall adequacy of the metro systems, including a policy bias. The highest perception ratings of the Metro system and its different lines occurs in 2009, when the project had not yet produced any effects.
Between 2008 and 2011, over 60% of line 1 respondents and over 65% percent of line 2 respondents rated the service as very good or good. However, in 2012 and 2013 there was a sharp decline of very good and good answers which have not been recovered yet. Finally, line 3 is constantly rated worse than the system as whole. Between 2008 and 2011 the percentage of very good and good answers were over 55% and again after 2012, there has been a sharp decrease in the quality of service perception, which can be attributed to overcrowding.
The figure below includes the perception of users from 2010 to 2014 for all Lines and the system as a whole. As seen, Line 5 presents in general the highest approval rates and was not part of the Trains and Signaling project, while Line 3 has the lowest approval rates.
USERS` PERCEPTION-2010-2014 PERCENTAGE OF GOOD AND VERY GOOD (%)
2010 2011 2012 2013 2014 70.00 70.00 68.00 68.00 63.00 62.00 61.00 61.00 60.00 60.00 60.00 58.00 58.00 57.00 56.00 55.00 55.00 55.00 55.00 55.00 53.00 52.00 52.00 49.00 45.00
METRO LINE 1 LINE 2 LINE3 LINE 5
To assess if the project has produced positive results according to the metro users, we conduct a double difference between the intervened lines and line 5, which has no intervention and is considered the “control” line. Table below presents the results. Since we do not have specific data on approval rates, we have considered the percentage of Good and Very Good answers as the values of users’ approval.
36 Double Diff Analysis Treatment/Control Lines 2010 2014 (2014) – (2010) Line1/Line5 (7,00) 1,00 8,00 Line2/Line5 (2,00) 5,00 7,00 Line3/Line5 (15,00) (5,00) 10,00
The first column presents the difference in ratings from the intervened lines and Line 5. As can be seen, the difference in approval rates in 2010 between Lines 3 and 5 is high; of 15 points (Line 5 had higher approval rates). The same happens in 2014; nevertheless, this difference is now smaller, indicating that Line 3 has improved more than Line 5. The same is true for lines 1 and 2. In these cases, in 2014 their approval rate is higher than the one for Line 5, improving 8 and 7 percent points respectively during the period.
3. Perceptions about the CPTM System
Users’ approvals rate of the CPTM rail system as a whole is higher than the average of all the lines between 2010 and 2014. In 2012, there was a pronounced fall in the approval rate of the system, which was more accentuated for lines 7 and 12. This could be due to the fact that the interviews were conducted at the same time the modernization interventions were intensified which affected the operation of lines especially at the end of the weed and during weekends. Besides, other non- frequent incidents have been also reported by CPTM during interviewing days (falling tree over line 7 which caused performance difficulties and delays and a train failure in line 12 which also caused delays). Approval rates were rapidly recovered in 2013 and Line 12 surpassed the CPTM whole system levels. Excluding 2012, the approval rate for the lines improved by the project is over 55%.
Users' Satisfaction Poll - CPTM Approval Rate 75 70 65 60
% 55 50 45 40 35 2010 2011 2012 2013 2014 Year CPTM Whole Line 7- Ruby Line 11 - Coral Line 12 - Sapphire
The survey also provides information about quality of service evolution between 2010 and 2014. As can be seen in the figure below, the vast majority of users think that the quality of the service for the train system as a whole and the lines upgraded by the project is better or stable.
37 Evolution of The Quality of Services 2010-2014
4.1% 3.6% 2.9% 5.7% 4.4% 4.8% 3.1% 5.4% 11.7% 12.1% 16.6% 13.5% 13.0% 12.2% 26.4% 31.4% 34.9% 34.6% 36.3% 37.6% 43.4%
65.3% 53.8% 48.9% 46.2% 46.4% 45.4% 36.4%
CPTM LINE 7 LINE 8 LINE 9 LINE 10 LINE 11 LINE 12
Better Stable Worse Do not know
Line 12 is the one with the best ratings, 53.8% of “better” answer and 31.4% of “stable” answers, followed by Line 11 (45.4% of “better” and 37.6% of “stable” and finally Line 7 (43.4% of “better” and 36.4% of “stable”). Line 12 is better rated than the train system as a whole while Line 7 is worse. Only 12% surveyees think than the lines are today worse than they were before the implementation of the project. Line 7 is the worst rated line with 16.6% of “worse” answers, which can be attributed to overcrowding and low rates of comfort, at 7.2 passengers/m2 in the peak-hour.
USERS` APPROVAL RATE -2010-2014 PERCENTAGE (%) 2010 2011 2012 2013 2014 83.9 78.9 74.8 73.1 72.9 72.6 72.5 71.4 71.3 70 69.6 69.5 68.9 68.7 68.4 67.8 66.7 66.4 66.1 65.2 65 64 62.9 62.7 62.4 59.5 58.2 58.1 56.4 56.1 55.7 55.1 54.4 40.7 40.6
CPTM LINE 7 LINE 8 LINE 9 LINE 10 LINE 11 LINE 12 38 The figure above presents the approval rates from 2010 to 2014 for all Lines and the system as a whole. As seen, Line 10 presents in general the highest approval rates and was not part of the Trains and Signaling project, while the Line 7 has the lowest approval rates.
A double difference analysis was conducted also for CPTM intervened lines. The objective was to assess if, according to the users’ perception, the project has produced positive results. Line 10, which has no intervention, is considered the “control” line. Table below presents the results.
Double Diff Analysis Treatment/Control Lines 2010 2014 (2014) – (2010) Line 7/Line 10 (16.30) (14.90) 1.40 Line 11/Line 10 (11.90) (7.90) 4.00 Line 12/Line 10 (15.70) (3.10) 12.60
The first column presents the difference in ratings from the intervened lines and Line 10. As can be seen, the difference in approval rates in 2010 between Lines 7 and 10 is high, of 16.3 percent points (Line 10 has higher approval rates). The same happens in 2014; however, this difference is now smaller, indicating that Line 7 has improved more than Line 10. The same is true for Line 12, which shows the higher improvement comparing to Line 10, and Line11.
According to users’ perception, although approval rates have been declining over the last 4 years, mainly due to overcrowding of systems, the intervened lines, both for Metro and CPTM, have shown an improvement in approval rates when compared to the control lines, where no intervention was made. Finally, the decline in users’ perception of the quality of service along the last years can also be attributed to a higher standard brought by the inauguration of Line 4 and the overall public dissatisfaction with the limited investment in public transport, as evidenced by the 2013 demonstrations.
39 Annex 6. Stakeholder Workshop Report and Results (none)
40 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR
1. Introduction The basis of the partnership between the State of São Paulo and the Bank in the transport sector was established more than 15 years ago, with the decentralization of state suburban rail system, run by the federal agency CBTU (Companhia Brasileira de Trens Urbanos). The long term strategy was based on 4 pillars: (i) creating a commission of regional coordination with the municipalities, operators and users, (ii) implementing an integrated land use, urban transport and air quality system, (iii) create financial mechanisms to guarantee long term sustainability of the system, and (iv) progressive participation of the private sectors in the operations.
After the successful decentralization of the federal system, the State has asked the Bank to support the integration of the CBTU-SP with FEPASA (suburban train system at the time), promoting physical integration and improving main transfer stations. After that, the Bank supported the implementation of Line 4 phase I and the Trains and Signaling Project, and has been supporting Line 4 phase II with an additional loan and Line 5 with a new loan.
The state has also advanced in the institutional aspects through the creation of the Comission of Coordination of Regional Transport (CDTI), which has been responsible for implementing an integrated fare cheaper than the sum of individual fares. An important consequence of the improvement in the metropolitan system and enhanced physical integration is the dramatic growth in demand, creating an urgent need of improving transport capacity and train frequency, especially during peak-periods, in order to maintain acceptable levels of service and safety. Besides that, the improvement in the system would create positive benefits to the environment by avoiding a larger shift to less efficient transport modes. The project would also increase accessibility of poorer populations to opportunities and contribute to the reduction of poverty.
2. Factors that affected implementation The state has implemented in the last years several improvements in the system that allowed for a greater coverage of the system, a greater usage of the system by low-income population. However, the success of the system has also generated crowdedness, which affects the level of services offered.
The list bellow summarizes the status of the main project contracts:
• The 40 new trains for CPTM were delivered and are fully operational; • The 09 new trains from the additional financing for Line 11 were delivered and are fully operational; • The contract for CPTM signaling, telecommunications and supplies has a physical progress of 57% and is currently paralyzed; • Contracts for permanent way and overhead cables have physical progress ranging from 57% to 72%, and contract for Lot 1 is currently paralyzed; • Diagnosis and Mapping of the Environmental Information and an Environmental Management has just started and is ongoing; • Supervision of trains manufacture and assembly was concluded; • The 17 new trains for Metro were delivered and are fully operational;
41 • The contract for Metro systems has a current financial progress of 61% is ongoing; • The analysis and supervision of detailed design was concluded and the safety analysis of the modernization of systems has physical progress of 94 %; • The analysis of detailed design of the 17 trains was concluded.
The sustainability of the project will depend on the (i) the continuity of the priority of the transport sector by the State, (ii) the implementation and financing of additional improvements to renovate and maintain the infrastructure, (iii) the maintenance of integrated fares. The State has demonstrated to maintain ownership of the project in the last years, even if at some points the implementation and financing has been challenged by fiscal restrictions.
3. Achievement of PDO Objectives and Ratings The achievement of objectives was considered satisfactory. The delays in the delivery of trains were related to the manufacturer delays in resolving pending quality issues and lack of planning from the manufacturer side, but these issues were largely overcome. The financial management of the Project can also be considered satisfactory, and the funds were provided by government during the implementation. The main benefits from the project raised by the beneficiaries are:
• Easier access to/integration of commercial centers and medical facilities; • The constitution of a metro-rail system; • Improved access of low-income population to commercial centers, health centers, education and leisure; • Reductions in travel time between origin and destination pairs, integration with Metro and other modes of transportation.
An important institutional component related to the PITU was fully achieved. The work developed is a step towards the development of a new strategic plan, which is a continuous planning process that in the next steps should include new planned bus corridors, the Arco do Futuro project, amongst others. One important achievement is that now the PITU includes both the aggregate demand transport planning but spatially disaggregated with an EMME model and a more spatially aggregated but demand disaggregated with a TRANUS model. The TRANUS model evidenced the need to include in the set of actions measures to contain demand for car use, since that even with massive investments in mass transit there is a strong tendency of shift to private modes. The urban operations and transit-oriented developments alike should then be strongly pursued.
4. Lessons Learned The main lessons learned are:
• Long term financial mechanisms and institutional body are necessary to allow for the sustainability of projects, including the financial sustainability of the urban transport system of São Paulo; • The Project monitoring using performance indicators allow for project supervision of the improvement of public transport systems and accessibility of low-income population related with the measurement of the generalized cost of travel.
42 • The implementation on brownfield has proven to be extremely complex, since works have to occur without interrupting operations, so the schedules have become longer than expected. • The Metro Signaling System has reached its limit, but very few systems in the world are capable of delivering these headways given the level of transported demand. This situation is possible due to the performance of the operations team of Metro, who has been working to improve products purchased from signaling companies. • The technology provided by the vendor has not proven sufficient results yet. Technical analyses from around the world confirmed that the future technology is CBTC and the vendor has signed a contract confirming the intention to deliver the stringent requirements. However, it is possible that a phased approach of this new technology would have been a better option. • The payment flows in contracts had to respond to the difficulties, since signed contracts had a large payment towards delivery of equipment and components, minding the financial equilibrium of contracts. However, it became clear that installation is the critical part, and vendors were less interested in developing this phase. • PITU and transport models that support policies are important instruments in planning new infrastructure, since they allow for an overall view of the challenges and opportunities of a Metropolitan Region. The dynamics of population along the territory, especially considering the low-income populations to opportunities were incorporated to the metropolitan plans and new and important policies, like densification around metro stations, were proposed based on those models. Accessibility and sustainability are crucial aspects, and physical integration has been pursued and achieved in some situations.
5. Performance of Bank, Borrower and Implementing Agencies The Bank has provided financial resources according to projected cash-flow and the task team had active participation with regular missions.
The State of Sao Paulo, as the Borrower, represented by its Secretaries, has performed with agility in the provision of loan funds and counterpart funds.
CPTM and Metrô, as the implementing agencies, had a decisive role in the implementation of the Project, providing high performance teams for monitoring the contracts, reacting promptly for the solution of pending issues.
43 Annex 8. Comments of Co-financiers and Other Partners/Stakeholders
No comments were provided.
44 Annex 9. Impact assessment of Sao Paulo Trains and Signaling Project on traffic volumes, travel times and emissions
After the implementation of the project, 1.35 million new users were added to the rail system (96% of the 1.4 million target), of which more than 51% come from the lowest income groups (monthly income of 4 or less minimum salaries). Average speeds of the urban rail system increased from 19.7km/h and 29.3 km/h to 25.9km/h and 37.7 km/h for metro and rail respectively8. Although it is not possible to determine exact prior mobility patterns of these new users, this analysis provide different counterfactuals in order to assess the range of project impacts.
1. Methodology In order to calculate the impacts of the project, differences between the current scenario and the counterfactual regarding traffic volumes (V), travel times (T) and CO2 emissions (E) were calculated. The number of trips, the average trip length, and the average speed define scenarios for each of the transport modes.
Project impacts|V,T,E = Current Scenario|V,T,E – Counterfactual|V,T,E
Traffic volumes [veh-km/day] are calculated multiplying daily trips and the average trip distance, and dividing by the occupancy rate or IPK (Index Passenger-Km), depending on the case. Values and sources for occupancy rates and IPKs are presented in the table below. Travel times [pax- hour/day] are calculated multiplying number of trips and the average trip time per mode. Finally, CO2 emissions [ton/day] are calculated multiplying the traffic volume and the Emission Factors by transport mode provided by the Urban Mobility Observatory of the Development Bank for Latin America, - CAF9- database for Sao Paulo 2007 (for car, moto and bus). For trains and subway, emissions are calculated based on energy efficiency indicators and Brazil’s electricity generation efficiency.
Mode Occupancy IPK (b) (b) Energy (c) Brazil Electricity Rate (pax/veh- Emission efficiency generation Emissions (pax/veh) km) (b) Factor [kWh/km] Efficiency (a) [g/vkm] [kgCO2/kWh] Walk 1 - - n/a n/a Bike 1 - - n/a n/a Moto 1 - 82 n/a n/a Car 1.4* - 188.8** n/a n/a Bus - 1.7* 972*** n/a n/a Metro - 6.5 n/a 3.51 0.093 Train - 2 n/a 3.51 0.093
8 Adapted from PDO indicators, dividing average trip length for metro and train by Travel Time + Waiting Time. Table (a) of Framework analysis page 7 9 Observatorio de Movilidad Urbana (CAF, 2007). URL: http://www.caf.com/es/temas/o/observatorio-de-movilidad- urbana/ciudades/sao-paulo/
45 (a)Mobility Survey 2012. (b) CAF, 2007 , (c) http://ecometrica.com/assets/Electricity-specific-emission-factors- for-grid-electricity.pdf (*) Own calculation based on data from CAF 2007. It is an average value for all the different types of buses in SP weighted by their traffic volumes. (**) Own calculation based on data from CAF, 2007. Average value taking into account that 80% of the car fleet composition are gasoline cars with an EF of 196gCO2/veh-km and the remaining 20% are alcohol cars with an EF of 160 gCO2/veh-km. (***) Own calculation based on data from CAF 2007. It is an average value for all the different types of buses in SP weighted by their traffic volumes.
2. Current scenario assumptions To define the current scenario, information from the Mobility Survey of 2012, data from the CAF database for Sao Paulo, and specific information from the project implementation were used. The current scenario is defined as follows:
Mode Trips/day(a) Average trip length [km](a) Average speed [km/h](b) Walk 13,708,187 1.15 4.6 Bike 267,788 3.69 12.0 Moto 1,039,000 5.06 35.4 Car 12,486,000 6.02 16.9 Bus 11,784,000 7.73 21.7 Metro 3,219,000 16.3 25.9* Train 1,141,000 17.48 37.7* (a)Mobility Survey 2012, only main trips were considered. (b) CAF, 2007, (*) Data from project implementation
3. Counterfactual general assumptions To define the counterfactual some general assumptions were taken into account:
• 1.35 million users (passengers) per day have been added to the system of which more than 51% are from the lowest income groups; • 52.5% of the new users are metro users and 47.5% of new users are train users10; • The average trip length of the current urban rail systems is 16.9 km11. • The average speeds considered for the counterfactual scenario would be the same as for the current scenario, except for the metro and train modes, that would be the ones existing before the implementation of the project (19.7 km/h for metro and 29.3 km/h for train). Since speeds would be expected to decrease when adding trips and not modifying capacity, we can consider this a conservative assumption.
The objective of this analysis is to know what would have happened if the 1.35M new passengers, instead of travelling by metro or train, were travelling by other transport modes. Taking into account that the average trip distance for rail modes is overlong for biking or walking modes, it is unlikely that the average users of the urban rail system would have been non-motorized travelers if the project had not existed. Therefore, we consider that new users would have been users of
10 PDO indicators. Actual value of Incremental Demand in CPTM and Metro. Results and Framework analysis page 7. 11 Source: Mobility Survey 2012. Average trip length in metro 16.3km and average trip length in train 17.5 km. 46 other motorized transport modes (car, moto and bus). Besides, we consider that the average trip length of the 1.35M users would have been the same regardless of the transport mode used before the implementation of the project.
Mode Trips/day(a) Average trip Average speed length [km](a) [km/h](b) Walk 13,708,187 1.15 4.6 Bike 267,788 3.69 12.0 Moto 1,039,000 * (1.35 M * α) 16.9 35.4 Car 12,486,000 * (1.35M * β) 16.9 16.9 Bus 11,784,000 * (1.35M * γ) 16.9 21.7 Metro 3,219,000-(1,35M * 0.525*µ) 16.3 19.7 Train 1,141,000-(1,35M * 0.475*η) 17.48 29.3 (a)Mobility Survey 2012. (b) CAF, 2007, (Italics) Counterfactual assumptions. Note: α,β, γ, µ, η are the distribution rates among the other motorized modes. They will be used to define different counterfactuals for comparison.
4. Sensitivity analysis In order to assess the impact of the project on emissions it is necessary to consider the whole transportation system (including autos and motos), not only bus and railway system. Therefore, in this section, we analyze different hypothesis for the counterfactuals considering the whole transportation system. The first three counterfactuals stablish the most and the less conservative scenarios. The last three counterfactuals consider the modal split previous to the project implementation in different ways and the fact that 51% of the new users come for the lowest income groups.
• C1: all the new users of the train system would had been BUS users, if the project had never been implemented. • C2: all the new users of the train system would had been CAR users, if the project had never been implemented. • C3: all the new users of the train system would had been MOTORCYCLE users, if the project had never been implemented. • C4: new users would have been users of other motorized transport modes (car, moto and bus) preserving the modal split provided by the 2007 Mobility Survey and taking into account income. In this case low income is considered below R$2,48812. • C5: new users would have been users of other motorized transport modes (car, moto and bus) preserving the modal split provided by the 2007 Mobility Survey and taking into account income. In this case low income is considered below R$1,244. • C6: new users would have been users of all the motorized transport modes (car, moto, bus, train and metro) preserving the modal split provided by the 2007 Mobility Survey and taking into account income. In this case low income is considered below R$1,244.
12 2012 Mobility Survey of Sao Paulo provides information about the number of trips disaggregated by family rent in five categories: till R$1,244; between R$1,244 and R$2,488; between R$2,488 and R$4,976; between R$4,976 and R$9,330 and more than R$9,330. C4 ,C5 and C6 calculate modal split for low income and other income trips considering low income below R$2,488 and R$1,244 respectively. 47 5. Results The table below shows the results of the impacts on traffic volume, emissions and travel times of the São Paulo Trains and Signaling Project for the different counterfactual options. Highest reductions in traffic volume occur if, without project implementation, the new users of the urban rail system would have been motorcycle drivers and the lowest if they would have been bus users. In terms of CO2 emissions and travel times savings, the highest savings occur if all the new urban rail system passengers would have been car drivers.
GLOBAL VALUES ABSOLUTE SAVINGS RELATIVE SAVINGS [%]
-
- km] - km] CO2 CO2 CO2 hour] Times Travel Travel Travel Traffic Traffic Traffic Volume Volume Volume [veh [ton/day] [veh [ton/day] emissions emissions Passenger Passenger Passenger Emissions [pax- hour] Times [pax
Act‘12 83,693,863 17,653 29,584,440 C1 84,058,317 18,285 15,969,831 364,454 632 1,122,350 0% 3% 7% C2 99,522,057 20,582 16,270,713 15,828,194 2,929 1,423,232 16% 14% 9% C3 106,025,200 19,379 15,563,378 22,331,337 1,726 715,897 21% 9% 5% C4 91,538,421 19,320 16,086,188 7,844,558 1,667 1,238,707 9% 9% 8% C5 90,451,914 19,165 16,067,549 6,758,051 1,512 1,220,068 7% 8% 8% C6 91,310,380 19,226 16,058,277 7,616,517 1,573 1,210,796 8% 8% 8%
For intermediate scenarios, which are the more realistic since they modify the counterfactual modal split but taking into account the before project modal shares (C4, C5 and C6), savings are lower and similar for the three counterfactuals, but still significant.
Considering C6 the most probable one, where the 1.35M users are distributed among bus (43%), car (42%) and moto (3%), metro (9%) and train (3%), we can estimate that the project have reduced 8% of traffic volume. Specifically for road transport, the reduction in traffic volume (veh-km) accounts for 12% for moto, 12% for car and 5% for buses. It has also provided an 8% reduction in CO2 emissions and another 8% reduction in passenger travel times.
All the counterfactuals considered bring about savings in CO2 emissions: between 3% reduction for the scenario without project with all new passengers in BUS and 14% for the scenario with all passengers in CAR. Regarding traffic volumes, savings vary from a virtual 0% for the BUS option to a 21% for the MOTO option. Finally, travel time savings is the indicator with less variability among counterfactuals, it ranges from a 5% for the MOTO option to a 9% reduction for the CAR.
48 Annex 10. List of Supporting Documents
Project Appraisal Document on a Proposed Loan In the amount of US$550 million to the State of São Paulo, Brazil with the guarantee of the federative Republic of Brazil for a São Paulo Trains and Signaling Project (March 3, 2008). Loan Agreement (Sao Paulo Trains and Signaling Project). Between State of Sao Paulo and International Bank for Reconstruction and Development (June 12, 2008). Project Paper on a Proposed Additional Loan in the Amount of US$112.91 Million to The State Of São Paulo, Brazil with the Guarantee of the Federative Republic of Brazil for a São Paulo Trains and Signaling Project (August 11, 2010). Loan Agreement (Additional Financing for the Sao Paulo Trains and Signaling Project Modernização da linha 11- coral da CPTM). Between State of Sao Paulo and International bank for Reconstruction and Development (October 18, 2010). 2007 Origin-Destination Survey. Companhia do Metropolitano de São Paulo – METRÔ. Brazil São Paulo: Inputs for a Sustainable Competitive City Strategy, World Bank (2007). IBGE – Instituto Brasileiro de Geografia e Estatística. Census 2000 and 2010. Mobility Survey 2012. Companhia do Metropolitano de São Paulo – METRÔ. Monitoramento da demanda – Evolução dos passageiros transportados nas Regiões Metropolitanas de São Paulo, Campinas, Baixada Santista e Vale do Paraíba e Litoral Norte, por modo de transporte (2010 – 2013). Observatorio de Movilidad Urbana (CAF, 2007). Pesquisa de Imagem da Companhia de Trens Metropolitanos – CPTM. Pesquisa de satisfação do usuário da Companhia do Metropolitano de São Paulo – GOP/METRÔ. Presentation: “Gestão do Sistema Tarifário da Rede Metro-ferroviária na RMSP. Documento Preliminar para Discussão.” Relatório de Fechamento Contrato Empréstimo - Versão Preliminar (2015).
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