Document of The World Bank

FOR OFFICIAL USE ONLY Public Disclosure Authorized

Report No: 54311-CO

PROJECT APPRAISAL DOCUMENT

ON A

PROPOSED LOAN Public Disclosure Authorized IN THE AMOUNT OF US$250 MILLION

TO THE

CORPORACIÓN AUTÓNOMA REGIONAL DE CUNDINAMARCA

WITH A GUARANTEE FROM

THE REPUBLIC OF

Public Disclosure Authorized FOR A

RÍO BOGOTÁ ENVIRONMENTAL RECUPERATION AND FLOOD CONTROL PROJECT

November 11, 2010

Sustainable Development Department Country Management Unit Latin America and the Caribbean Region

Public Disclosure Authorized

This document is being made publicly available prior to Board consideration. This does not imply a presumed outcome. This document may be updated following Board consideration and the updated document will be made publicly available in accordance with the bank’s Policy on Access to Information. CURRENCY EQUIVALENTS

Exchange Rate Effective May 31, 2010

Currency Unit = Colombian Peso (CO$) CO$1,975 = US$1

FISCAL YEAR January 1 – December 31

ABBREVIATIONS AND ACRONYMS

BOD5: 5-Day Biochemical Oxygen Demand BOT: Build-Operate-Transfer CAR: Corporación Autónoma Regional de Cundinamarca (Regional Autonomous Environmental Agency of Cundinamarca) CGR: Contraloría General de la República de Colombia (General Controller for the Rupublic of Colombia) CONPES: Concejo Nacional de Política Económica y Social (National Political and Economic Council) CRA: Comisión de Regulación de Agua Potable y Saneamiento Básico (Commision for the Regulation of Water Supply and Basic Sanitation) DNP: Departamento Nacional de Planeación (National Planning Department) EA: Environmental Assessment EAAB: Empresa de Acueducto y Alcantarillado de Bogotá (Bogotá Water Supply and Sewerage Company) EMGESA: Empresa de Energía de Bogotá S.A. (Bogota Energy Company Limited) EMP: Environmental Management Plan FIAB: Fondo para las Inversiones Ambientales en el perímetro urbano de Bogotá (Fund for Environmental Investments in Urban Perimeter of Bogota) IADB: Inter-American Development Bank IFRs: Interim Financial Reports IGAC: Instituto Geográfico Agustín Codazzi (Geographic Institute of Agustin Codazzi) MAVDT: Ministerio de Ambiente, Vivienda y Desarrollo Territorial (Ministry of Environment, Housing, and Regional Development) MWs: Megawatts NGO: Non-governmental Organization PA: Plan de Acción Cuatrienal de la CAR (CAR’s Four Year Action Plan) PGAR: Plan de Gestión Ambiental Regional de la CAR (CAR’s Ten Year Regional Environmental Management Plan) PMAR: Plan de Manejo de las Aguas Residuales (National Plan for Municipal Wastewater Management) POT: Plan de Ordenamiento Territorial (Regional Land Use Plan) POMCA: Plan de Ordenamiento y Manejo de la Cuenca (River Basin Management and Land Use Plan) PSMV: Plan de Saneamiento y Manejo de Vertimientos (Plan for Sanitation and Wastewater Discharge Management) RAP: Resettlement Action Plan SDA: Secretaría Ambiental de Bogotá (Environmental Secretariat for the District of Bogotá) SDAS: Subdirección de Desarrollo Ambiental Sostenible (Sustainable Environment Development Subdirectorate) SIL: Specific Investment Loan SINA: Sistema Nacional Ambiental (National Environmental System) SOEs: Statements of Expenditures SSPD: Superintendencia de Servicios Públicos Domiciliarios (Superintendent of Public Service Enterprises) TSS: Total Suspended Solids UEP: Unidad Ejecutora del Proyecto (Project Executing Unit) WWTP: Wastewater Treatment Plant

Vice President: Pamela Cox Country Director: Gloria M. Grandolini Sector Director: Laura Tuck Sector Manager: Guang Zhe Chen Task Team Leader: Greg Browder/Carmen Yee-Batista

COLOMBIA RÍO BOGOTÁ ENVIRONMENTAL RECUPERATION AND FLOOD CONTROL PROJECT

CONTENTS

Page

I. STRATEGIC CONTEXT AND RATIONALE ...... 1 A. Country and sector issues...... 1 B. Rationale for Bank involvement ...... 4 C. Higher level objectives to which the project contributes ...... 5

II. PROJECT DESCRIPTION ...... 5 A. Lending instrument ...... 5 B. Project development objective and key indicators ...... 5 C. Project components ...... 6 D. Lessons learned and reflected in the project design ...... 6 E. Alternatives considered and reasons for rejection ...... 7

III. IMPLEMENTATION ...... 8 A. Partnership arrangements (if applicable) ...... 8 B. Institutional and implementation arrangements ...... 8 C. Monitoring and evaluation of outcomes/results ...... 8 D. Sustainability...... 9 E. Critical risks and possible controversial aspects ...... 9 F. Loan/credit conditions and covenants ...... 11

IV. APPRAISAL SUMMARY ...... 12 A. Economic and financial analyses ...... 12 B. Technical ...... 13 C. Fiduciary ...... 14 D. Social...... 15 E. Environment ...... 16 F. Safeguard policies ...... 18 G. Policy Exceptions and Readiness...... 18 Annex 1: Country and Sector Background ...... 19

Annex 2: Major Related Projects Financed by the Bank and/or other Agencies ...... 27

Annex 3: Results Framework and Monitoring ...... 28

Annex 4: Detailed Project Description ...... 30

Annex 5: Project Costs ...... 34

Annex 6: Implementation Arrangements ...... 36

Annex 7: Financial Management and Disbursement Arrangements ...... 39

Annex 8: Procurement Arrangements ...... 45

Annex 9: Economic and Financial Analysis ...... 50

Annex 10: Safeguard Policy Issues ...... 78

Annex 11: Project Preparation and Supervision ...... 98

Annex 12: Documents in the Project File ...... 99

Annex 13: Statement of Loans and Credits ...... 101

Annex 14: Country at a Glance ...... 103

Annex 15: Maps IBRD 37322, 37168, 37483 ...... 106

PAD DATA SHEET

Colombia Río Bogotá Environmental Recuperation and Flood Control Project

PROJECT APPRAISAL DOCUMENT

Latin America and the Caribbean Region Water and Urban Unit

Date: November 11, 2010 Sector(s): Sewerage (70 percent); Flood protection Country Director: Gloria M. Grandolini (30 percent) Sector Director: Laura Tuck Sector Manager: Guang Z. Chen Theme(s): Pollution management and Team Leader(s): Greg J. Browder and environmental health (50 percent); Water resource Carmen Yee Batista management (25 percent); Other urban development Project ID: P111479 (25 percent) Lending Instrument: Specific Investment Loan EA Category: A-Full Assessment Project Financing Data: Proposed terms: The lending instrument will be a Specific Investment Loan (SIL) with an amount of $250 million to the CAR with a guarantee by the Republic of Colombia. The loan will be fixed spread over LIBOR with a maturity of 14 years, 4.5 year grace period, with a front-end fee of 25 basis points, and no commitment fee. The CAR has specified a tailored repayment schedule to meet its financial needs. [ X ] Loan [ ] Credit [ ] Grant [ ] Guarantee [ ] Other: Source Total Amount (US$M) Total Project Cost: 487 Cofinancing: Borrower: 237 Total Bank Financing: 250

IBRD 250 IDA New Recommitted

Borrower: Corporación Autónoma de Cundinamarca (CAR) Responsible Agency: Corporación Autónoma de Cundinamarca (CAR) Carrera 7 No. 36-45, Bogotá, Colombia Contact Person: Edgar Alfonso Bejarano Méndez Director, Corporación Autónoma Regional de Cundinamarca, (CAR) [email protected] Phone: 57-1-320-9000 Website: http://www.car.gov.co

Estimated Disbursements (Bank FY/US$m) FY 2011 2012 2013 2014 2015 2016 Annual 2 10 50 60 80 48 Cumulative 2 12 62 122 202 250

Project Implementation Period: March 1, 2011 to June 30, 2016 Expected effectiveness date: March 1, 2011 Expected closing date: June 30, 2016 Does the project depart from the CAS in content or other ○ Yes x No significant respects?

If yes, please explain:

Does the project require any exceptions from Bank policies? ○ Yes x No Have these been approved/endorsed (as appropriate by Bank ○ Yes ○ No management? Is approval for any policy exception sought