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Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No: 50987-BR PROJECT PAPER ON A Public Disclosure Authorized PROPOSED ADDITIONAL LOAN IN THE AMOUNT OF US$112.91 MILLION TO THE STATE OF SÃO PAULO, BRAZIL WITH THE GUARANTEE OF THE FEDERATIVE REPUBLIC OF BRAZIL Public Disclosure Authorized FOR A SÃO PAULO TRAINS AND SIGNALING PROJECT August 11, 2010 Sustainable Development Department Brazil Country Management Unit Latin America and Caribbean Regional Office Public Disclosure Authorized This document is being made publicly available prior to Board consideration. This does not imply a presumed outcome. This document may be updated following Board consideration and the updated document will be made publicly available in accordance with the Bank’s Policy on Access to Information. FOR OFFICIAL USE ONLY CURRENCY EQUIVALENTS (Exchange Rate Effective November 2009 – July 2010) Currency Unit =Brazilian Real (R$) R$1.77 = US$1 FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS AF Additional Financing loan ATC Automatic Train Control 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) EA Environmental Assessment EIRR Economic Internal Rate of Return 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) IBRD International Bank for Reconstruction and Development (World Bank) ICB International Competitive Bidding ICMS Circulation Tax on Goods and Services (Imposto de Circulacão sobre Mercadorias e Serviços) IERR Internal Economic Rate of Return JBIC Japanese Bank for International Cooperation i METRO São Paulo Metro Company (Companhia do Metropolitano de São Paulo). Same as CMSP MS Minimum salary, as defined by the Brazilian Government OP/BP Operational Procedure/Bank Policy 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 SEAIN Federal Secretariat for Foreign Affairs (Secretaria de Assuntos Internacionais) SMA Secretariat for the Environment (Secretaria do Meio Ambiente) SOE Statement of Expenses SPM São Paulo Municipality SPMR São Paulo Metropolitan Region SSP State of São Paulo SMTSP São Paulo Municipal Secretariat for Transport (Secretaria de Transportes da Prefeitura do Município de São Paulo) STN Secretariat of the National Treasury (Secretaria do Tesouro Nacional) STM São Paulo State Secretariat for Metropolitan Transport (Secretaria dos Transportes Metropolitanos de São Paulo) TOR Terms of Reference Vice President: Pamela Cox Country Director: Makhtar Diop Sector Director: Laura Tuck Sector Manager/Sector Leader: Aurelio Menendez/Sameh Wahba Task Team Leader: Georges Darido 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. ii BRAZIL: SÃO PAULO TRAINS AND SIGNALING ADDITIONAL FINANCING CONTENTS Page I. Introduction ........................................................................................................................... 1 II. Background and Rationale for Additional Financing ....................................................... 1 III. Proposed Changes ............................................................................................................. 3 IV. Consistency with Country Partnership Strategy (CPS) ................................................ 4 V. Appraisal of Scaled-up Project Activities ........................................................................... 4 A. Institutional and Implementation Arrangements ................................................................ 4 B. Economic and Financial ...................................................................................................... 5 C. Technical ............................................................................................................................. 6 D. Fiduciary ............................................................................................................................. 6 E. Social................................................................................................................................... 7 F. Environment ........................................................................................................................ 8 VI. Expected Outcomes ........................................................................................................... 9 VII. Benefits and Risks ............................................................................................................. 9 VIII. Financial Terms and Conditions For the Additional Financing ............................ 11 Annex 1: Sector and System Background .................................................................................... 12 Annex 2: Results Framework and Monitoring.............................................................................. 20 Annex 3: Project Costs, Financing Plan and Disbursement Schedule .......................................... 22 Annex 4: Financial Management .................................................................................................. 24 Annex 5: Procurement Arrangements ........................................................................................... 29 Annex 6: Economic and Financial Analysis ................................................................................. 34 Annex 7: Safeguard Policy Issues................................................................................................. 52 Annex 8: Documents in the Project File ....................................................................................... 56 Annex 9: Maps .............................................................................................................................. 57 iii BRAZIL: SÃO PAULO TRAINS AND SIGNALING ADDITIONAL FINANCING ADDITIONAL FINANCING DATA SHEET Basic Information - Additional Financing (AF) Country Director: Makhtar Diop Sectors: General transportation (100%) Sector Manager/Director: Laura Tuck/ Themes: Other urban development (P) Aurelio Menendez Environmental category: B Team Leader: Georges Darido Expected Closing Date: Dec. 31, 2012 Project ID: P117122 Expected Effectiveness Date: Jan. 2011 Joint IFC: n/a Lending Instrument: Specific Investment Joint Level: n/a Loan Additional Financing Type: Scale-up Basic Information - Original Project Project ID: P106038 Environmental category: B Project Name: São Paulo Trains and Expected Closing Date: June 30, 2013 Signaling Lending Instrument: Specific Investment Joint IFC: n/a Loan Joint Level: n/a AF Project Financing Data [ X ] Loan [ ] Credit [ ] Grant [ ] Guarantee [ ] Other: Proposed terms: IBRD Flexible Loan (IFL) with variable spread option, payable in 30 years, including a 5-year grace period. Repayment schedule linked to commitment and all the conversion options are selected. AF Financing Plan (US$m) Source Total Amount (US $m) Total Project Cost: 161.46 Cofinancing: 0 Borrower: 48.55 Total Bank Financing: IBRD 112.91 Client Information Borrower: State of São Paulo, Secretaria dos Transportes Metropolitanos (STM) Contact Person: Humberto Kimura Telephone No.: 55-11-3291-2231 Fax No.: 55-11-3291-2191 Email: [email protected] Responsible Agency: Companhia Paulista de Trens Metropolitanos (CPTM) Contact Person: Afonso Bissoli Telephone No.: 55-11-3101-7141 Fax No.: 55-11-3107-2040 Email: [email protected] iv AF Estimated Disbursements (Bank FY/US$m) FY 2011 2012 2013 Annual 28.11 74.35 10.45 Cumulative 28.11 102.46 112.91 Project Development Objective and Description Original project development objective is: a) to 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 CPTM and Lines 1, 2 and 3 of the São Paulo Metro Company (Metro); and b) to continue the strengthening of the transport management and policy framework in the SPMR. Revised project development objective: The PDO of the original Project is scaled-up to include Line 11-Coral of the CPTM system and no other changes are proposed. Therefore, the objective of the proposed Project including the additional financing is: a) to 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 CPTM and Lines 1, 2 and 3 of the São Paulo Metro Company