Document of The World Bank

FOR OFFICIAL USE ONLY Public Disclosure Authorized

ReportNo. 11445-VE

STAFF APPRAISAL REPORT

VENEZUELA Public Disclosure Authorized

URBAN TRANSPORT PROJECT

sEPTEMBER 30, 1993 Public Disclosure Authorized

Infrastructure Operations Division Country Department I Public Disclosure Authorized Latin America and the Caribbean Regional Office

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCYEOUIVALENTS

Currency Unit = Bolivar (Bs) US$1.00 = Bs. 63 (September92) US$1.00 = Bs. 85.9 (April 93) US$1.00 = Bs. 97.1 (September93)

WEIGHTS AND MEASURES

Metric system

FISCALYEAR

January I to December31

ABBREVIATIONSAND ACRONYMS

CAMETRO - Caracas Metro Company CBV - Central Bank of Venezuela CVT - VenezuelanTransport Council CVTT - National Traffic Police CORDIPLAN - Ministry of Coordinationand Planning DGSTT - Land Transport Directorate FONTUR - NationalUrban Transport Fund (FondoNacional de TransporteUrbano) FUDECO - Foundationfor the Developmentof MidwestRegion (Fundaci6npara el Desarrollo de la Regi6n Centro - Occidental) FUNDACOMUN - Foundation for Community and Municipal Development (Fundaci6n para el Desarrollode la Comunidady Fomento Municipal) GOV - Government of Venezuela IDB - Inter-American Development Bank LCA - Local Coordination Agency LORM - MunicipalLaw (Ley Organica de RegimenMunicipal) MINDUR - Ministry of Urban Development MTC - Ministryof Transport and Communications PERL - Public Enterprise Reform Loan PMU - Project ManagementUnit PTS - Public Transport Study UNDP - United NationsDevelopment Programme UT - Urban Transport VOC - Vehicle Operating Costs FOR OMCIAL USE ONLY VENEZUELA

URBANTRANSPORT PROJECT

STAFFAPPRAISAL REPORT

Table of Contents

Page No.

PROJECTSUMMARY ...... iii

I. BACKGROUND...... 1 A. Project Background...... 1 B. The Urban Sector ...... 1 C. Municipal Government in Venezuela...... 2 D. GOV's DecentralizationStrategy ...... 3

II. THE URBANTRANSPORT SECTOR .. 3 A. Overview .3 B. Urban Transport Characteristics.4 C. Institutional Framework.4 D. Regulatory Framework .6 E. Cost Recovery, Pricing and Subsidies.7 F. Sectoral Issues. 9 G. Lessons Learnedfrom Past Projects .12 H. Towards a Better Managed Urban TransportSystem .13

Ill. THEPROJECT ...... 14 A. Origin ...... 14 B. Rationaleand Objectives ...... 15 Rationalefor Bank Involvement...... 15 Objectives ...... 15 C. Description ...... 16 Part A - Institutional Developmentand Policy Programs...... 16 Part B - Infrastructure and EquipmentInvestment ...... 19 D. Project Costs ...... 23 E. Indicative Investment Needs...... 24

This report is based on the findings of an appraisal mission which visited Venezuela in September, 1992. Mission members included: Messrs. Jorge Rebelo, (Task Manager, Sr. Transport Planner); GerhardMenckhoff, (Sr. Urban Transport Specialist);Gerard Uautaud, (Highway Engineer);and John Cracknell,(Consultant, Traffic Engineer). Messrs. RichardScurfield and John Flora provided the Peer Review. Messrs. Asif Faiz, Orville Grimes and Rainer B. Steckhan are respectively the managing DivisionChief, ProjectsAdvisor and DepartmentDirector for the operation. Ms. Allison Tumer assisted in producingthis report.

This documenthas a restricteddistribution and may beused by recipientsonly in the performance of their officialduties. Its contentsmay not otherwisebe disclosedwithout World Bank authorization. ii Table of Contents

PageNo.

F. Financing ...... 24 G. Project EconomicEvaluation H. EnvironmentalAspects ...... 27 I. Project Risks...... 28

IV. PROJECTIMPLEMENTATION ...... 29 A. Institutional Responsibilities...... 30 B. Contractual Arrangements...... 30 C. ImplementationSchedule ...... 30 D. ImplementationArrangements ...... 30 E. ImplementationProgram ...... 32 F. Procurement ...... 33 G. Disbursements ...... 35 H. Auditing ...... 36 I. Monitoring, Reportingand Supervision...... 36

V. AGREEMENTSTO BE REACHEDAND RECOMMENDATIONS...... 37

ANNEXES:

1. Lessons LearnedFrom Past Projects...... 40 2. The Executing Agency: FONTUR...... 48 3. Municipal Financesin Venezuela.53 4. Subproject Eligibility Criteria .62 5. CompletedSubproject Appraisals.65 6. FONTURInstitutional Strengthening Program.72 7. National Training Program.77 8. Institutional DevleopmentPolicy Component Studies .82 9. Traffic Police Component.92 10. Road Maintenance Component ...... 95 11. EconomicEvaluation ...... 103 12. Detailed Project Costs ...... 112 13. Project Implementationand Monitoring...... 118 14. Urban Transport Characteristics ...... 131 15. Documentsin the Project File ...... 145

TABLES:

Table 1.1 Populationof PrincipalCities .2 Table 3.1 Bank and IDB Projects .21 Table 3.2 Summaryof Project Costs .24 Table 3.3 Project FinancingPlan .25 Table 3.4 Summary of Quantified Subproject Benefits.27 Table 4.1 ProcurementArrangements .34 Table 4.2 DisbursementProfile by Category .35

MAPS: MAP: IBRDN° 22154 iii VENEZUELA

URBANTRANSPORT PROJECT

LOAN AND PROJECTSUMMARY

Borrower: Republic of Venezuela.

Executina Aaencies: National Urban Transport Fund IFONTUR)and the Ministry of Transport and Communications(MTC).

Amount: USS 100 million equivalent.

Terms: Repaymentin 15 years, including five years of grace, at the Bank's standard variable rate.

Project Obiectives: The proposed Urban Transport Project aims at improving the quality and efficiency of urban transport in Venezuelancities. To assist in achieving this goal, the primary objectiveof the project is to improveand strengthen national and local institutions engagedin the planning,financing, design, and operation of urban transport systems. In addition, the project will help to increase the efficiency of traffic and transport operations, to preservethe urban transport infrastructure through better maintenance and consequently to assist in reducing user costs and deferring new transport investments. The project is also expected to contribute to poverty alleviation by facilitating access to public transport by the poor. Project Description: The project consists of two parts: Part A - an institutional development and policy program and Part B - an infrastructure and equipment investment program at the municipallevel. Part A accountsfor some 17% of the project cost (US$ 34.8million) and consists of the following components: i) an institutional strengthening program for FONTUR, ii) an institutional strengthening program at the municipal level, iii) a national urban transport sector training program, iv) a traffic police program, v) policy studies and v) preparationof city subprojects. Part B, which representssome 83% of project cost (USS 165.2million), would provide resourcesto individual municipalities for urban transport subprojects. Municipal subprojects will comprise investments in traffic and transport infrastructure and equipment, and associatedmaintenance programs.

Project Benefits: The main benefits of Part A (Institutional) will stem from enhancedcapabilities of FONTURto influenceurban transport developmentthrough the allocation of resourcesto well-conceivedprograms and project schemesat the local level, and from increasedmunicipal capabilities. The national training program will strengthen technical capabilities of the municipalities and the technical assistance program for traffic police will begin to bring about better use of existing infrastructure through more effective traffic law enforcement. Part B of the project will ensure that municipalities can effectively discharge their responsibilities arising from the Government's decentralization policy. The iv investment programsfor infrastructureimprovements and maintenanceshould improve the efficiency and quality of urban transport operations. The quantified benefits are in terms of reduced vehicle operating costs and travel time-savingsthrough reducedtraffic congestion. Reductionsin congestionwill make a significant contribution to the environment and hence to the quality of urban life. The poor should benefit from the improved public transport performance because of shorter travel times to and from places of employment.

Project Risks: New policies and directions in urbantransport are being envisagedunder the project to be pursued by nascentagencies, and the main implementationrisk is clearly institutional. To reduce this risk, the project places great emphasis on institutional aspects including the strengthening of FONTUR,a national training program for national and local level traffic planners, technical assistance for traffic police, and training and technical assistance for participating municipalities. Completionof the selection process for FONTUR technical assistance is a condition of loan effectiveness. Weak municipal financial capacity and insufficient budgets could result in counterpart funding problems. To mitigate this problem during the transition to decentralized provision of urban transport and to ensure that municipalities allocate their 25% share of subproject costs, the municipalities will be: li) subject to a financial review and (ii) requiredas part of the subproject agreementto commit funds in a timely manner.There are also policy risks. While it is accepted that lack of realistic tariffs has contributed to a decline in the public transport fleet/supply and costly subsidies to urban transport by GOV, it would be unrealistic to expect those problemsto be resolved quickly. The Project will contribute to clarification and eventualresolution of the subsidy issue through: li) a continuing dialogue with the GOV during project implementation and particularly at the mid-term review, which will assess the progress made by each municipality with respectto the recommendationsof a Public Transport Study for the municipality; and (ii) studies and pilot programs (e.g. in the municipalityof Maturin)to developimproved targeting of subsidies.The project risks are expected to be manageableand project conditionality has been designedto contain them within acceptablelimits. v

Estimated Project Costs IUSS million)

I Local Foreign Total % of Total

PART A - INSTITUTIONALDEVELOPMENT AND POUCY

Part Al - FONTURstrengthening 1.54 2.30 3.84 1.9

Part A2 - Municipal strengthening 2.27 2.08 4.95 2.5

Part A3 - National Training Program 2.91 4.31 7.22 3.8

Part A4 - Traffic Police Program 2.9e 8.22 11.17 5.6

Part A5 - Policy studies 1.31 1.31 2.e3 1.3

Part AO - Project preparation 2.50 2.50 5.00 2.5

Sub Total Part A 13.49 21.32 34.81 17.4

PART B - INFRASTRUCTUREAND EQUIPMENT

Part Bl - Traffic and infrastructure 67.39 38.97 104.35 52.2

land expropriation Part B1 1.08 0.00 1.08 0.5

Part B2 - Deferred Maintenance 12.16 6.29 18.45 9.2

Sub Total Part B 80.83 43.2e 123.88 81.9

BaeeCosts 94.12 e4.58 158.09 79.3

Physical Contingencies 10.11 5.54 15.65 7.8

Sub Total 104.23 70.12 174.34 87.2

Price Contingencies 15.28 10.39 25.86 12.8

Total Project Costs lexcluding taxes) 119.51 80.51 200.00 100

Taxes 19.02 0.00 19.62 9.8

Total Project Costs (including taxes) 139.13 80.51 219.62 109.8

FinancingPlan (US$ million) Sourceof Funds Local Foreign Taxes Total % Total

World Bank 19.49 80.51 - 100.00 44.9

GOV (FONTUR) 67.3 - 19.62 86.92 38.3

Municipalities 32.7 -| 32.70 16.8 Total 119.49 80.51 19.62 219.62 100

Loan DisbursementSchedule (USS million)

Bank Fiscal Year 1994 1995 | 1998 1997 1998 1999

Annual 18 18 27 18 17 4

Cumulative 18 36 63 79 98 100

Rate of Return: The estimated economic rate of return for the first year program of Investments In traffic Infrastructure and equipment program (amountingto about 50% of total project investments) is 32%. The economic rates of ratum for the remairninginvestments ae expected to range from 12% to about 100%, with most of thti exceeding 30%.

VENEZUELA

URBANTRANSPORT PROJECT

I. BACKGROUND

A. Proiect Backaround

1.1 This project has its origins in two major developmentswithin Venezuela:the growing urbantransport sector crisis in major cities of the country which, in February1990, erupted into violent riots and bus strikes; and the Government'sefforts to decentralizethe responsibility of basic urban transport servicesto the municipal level in accordancewith the country's Constitution and the 1990 DecentralizationLaw.

1.2 Early in 1990, the Government of Venezuela (GOV) began a review of its urban transport policies as part of its overall economic reform program. It requestedthe Bankto review the short-term measuresit had designedto soften the impact of fuel price adjustments (the price of diesel in Bs. doubled from December1988 to February 1989) on public transport users and private sector operators. A Bankmission visited Venezuelain April 1990, reviewed the measures,and advised the Govemment to consider these short-term actions in the context of a longer-term strategy for the sector. The mission also emphasizedto the Government the importance of creating a coherent institutionalframework (in order) for overseeingpolicy formulation and implementation. In April 1990, the Government established a Steering Group on Urban Transport under the Venezuela Transport Council (CVT) to define sector objectives and priorities, to review the institutional and regulatory framework in order to evaluate sector policies and to make recommendationson reform, and to formulate the Government'sshort and medium-termsector strategy with technical assistancefrom the Bankand other internationalagencies. In February1991, GOV requestedBank and IDBassistance for an urban transport program to support the improvement of urban transport services in Caracas and other metropolitan areaswith more than 100,000 inhabitants.

B. The Urban Sector

1.3 Main Features: Venezuelais highly urbanized. An estimated88 percent of Venezuela's population lives in urban areas, the highest rate in the Americas, and one of the highest in the world. With an annual growth of 3.3 percent, urbanization is expected to continue, and UN HABITAT projections indicate that, by the year 2025, 93 percent of Venezuela's population will be urban. Caracas is the largest urban center in the country, with a metropolitan population of 2.8 million in 1990, but it neither approachesthe scale of the region's megacities, e.g. Mexico City and Sio Paulo, nor dominates the national urban system as Buenos Aires and Montevideo do in their respective countries. Important secondarycenters, notably Maracaibo (pop. 1.4 million) and Valencia (pop. 1.0 million) are potential counter-weights to Caracas. The rapid growth of Venezuelancities can be appreciatedfrom the fact that in 1950, there were only two cities in the country with populations in excessof 200,000, namely Caracaswith 680,000 and Maracaibowith 239,000. Today there are ten (see Table 1.1).

1.4 Venezuela'surban population has increasedrapidly (from 4.5 to 5.0 percent per annum during the 1950-1980 period); by 2010, it will have an urban population more than ten times larger than in 1950. Currently, the annual urban population growth has fallen to 2.5 percent, but it is still one of the highest rates in the region. In addition, Venezuela'surbanization has been driven by the establishment and growth of urban service centers, rather than through the traditional process of industrializationas the principal drive behindurbanization. The rapid urbanizationprocess in Venezuela 2 has resulted in a major network of urban centers, whose importance is reflected by their size (Table 1.1). Although Caracasis a large agglomerationby any standard, it does not dominatethe country's urban system. Approximately half the country's urban population lives in the ten largest cities listed in Table 1.1, while the other half is concentrated in smallercities with less than 200,000 inhabitants. The majority of the urban population lives in the coastal zone between Caracasand Maracaiboin the west, an urban axis of some 500 kilometers in length.

1.5 Urban growth in Venezuela has led to the rapid expansionof barrios. While this Table 1:1 Vezitueil - Pop, tof PrincipalCities. is a phenomenon that is widespread in Latin 1990 America and most of the developingworld, the scale and growth of these settlements in :Caracas 2.784.042 Venezuelais almost without parallel. When first Maracaibo' 1.363.803 established,barrios consist of ranchos or shacks Vlencla: .031.941i constructed with shoddy materials. As the Maracay 799 884: barrios becomemore consolidated, even without Barqulslmeto 745.444 services, residents improvetheir dwellings with C' d'dd d''t--i 6 46 730 the use of more permanent materials. In this Barloay Pt Crur. .L 429.072 way, single-roombrick dwellingsare established, Sa CristXb'l 3 00 as in the case of Caracas. Most cities lack a Maturin: 257.683 rational delivery system to plan and increase .6Bivar i-iii24 .593 ii coverage of water supply, sanitation, electrical M6rda 23:7.575 energy, transportation, and community services Cumana l ' 23' for these barrios. In the absenceof an adequate Guarena/Guate 227.610 formal supply of urban infrastructure and C:iudad&s -a 2122 4- housing, barrios became the only feasible A Araua 208.0 location for low income populationsto find and cabqua 197.613 establish shelter in Venezuelancities. Clearly, Valera .. . -169211: there is a need to develop appropriate delivery Barinas 1 mechanisms, commensuratewith the financial, Los Te1ques 15.261 economic and institutional capabilities of the Punto.Fib 153.205 country. Puerto Cabello 145.759 Coro 144.006 C. Municipal Governmentin Venezuela

1.6 Venezuela has 269 municipalities,of which 76 have populations exceeding50,000. Regardlessof their population size, municipalitiesin Venezuelahave traditionally been very weak. Though the 1961 Constitution granted to municipalities a wide range of fiscal authority and functional responsibilities --e.g. for water, sewerage, drainage, the distribution and sale of gas and electricity, and for public transport-- in practice, the Central government actually assumed responsibility for these functions. The municipalitieshave mostly been responsiblefor solid waste collection and disposal,public markets,fire fighting, cemeteries, and limited public works, including barrio upgrading and water connections.

1.7 Municipalitieshave traditionally relied heavilyupon centralgovernment transfers, rather than their own revenue,to finance their expenditures. In 1986, municipalexpenditures accounted for 9.1 percent of total public sector spending, but own-source municipal revenue represented only 4 percent of total govemment revenues. The bulk of central governmenttransfers are provided under a 1976 statute on revenue-sharingcommonly referred to as the situado law, whereby a specified percentageof central governmentrevenues is transferred to state and municipal governments. The situado transfers to municipalities(0.75 percent of central government revenuesprior to the 1989 3 revisions)represent on average35 to 40 percent of all municipalrevenue (seeAnnex 2). The transfers are allocatedas follows: 50 percent in equal allotments to all municipalities,and 50 percent on a per capita basis. The result is that smaller municipalities receive significantly higher per capita transfers than larger municipalities. For example, the nation's largest municipality, Libertador (with 1.8 million people, including Caracas proper), received situado transfers of roughly US$9 per capita in 1991, whereassmaller municipalitieswith populationsunder 100,000 receivedUS$12 to US$15 per capita.

1.8 Although the Constitution and the MunicipalLaw (Ley Organicade RegimenMunicipal, LORM, enacted in 1979) provide municipalitieslegal authority to raise revenue from a wide range of sources,two municipal taxes account for 90 percent of own-source revenue:the businesstax (65%) and property taxes (25%). The businesstax (PatenteIndustria y Comercio)consists of a low rate tax on gross sales, generallybetween 0.2 and 1.0 percent, coupled with a minimumtax and a licensefee. Propertytax revenuetends to be modest, accountingfor roughly 15 percent of total municipalrevenue, including transfers. Generally, rates are low, properties are systematically underassessed,and tax evasion is widespread.

D. GOV's DecentralizationStrateav 1'

1.9 Beginningin 1989, the Government launcheda far-reachingdecentralization program aimed at significantly strengthening the role and responsibilitiesof state and municipal governments. The 1989 revisionsto the Municipal Law (LORM)and the 1990 DecentralizationLaw have formed the cornerstoneof this strategy. The 1989 revisionsto the Municipal Law introducedimportant electoral reforms, whereby mayors (who were previously appointed by state governors) would be directly elected, and council members (who were previously elected from closed party lists) would be elected representativesof their districts. Municipal elections were held on this basis in late 1989 and 1992. The 1990 DecentralizationLaw authorizedthe transfer of a number of expenditureresponsibilities to the state governments and also substantially increased central government transfers to state and municipalgovernments. Underthe DecentralizationLaw, the central governmenttransfers to municipal governments will increaseby 300 percent over four years, from 0.75 percent of central government revenuesin 1989 to 3.0 percent by 1994. In 1991, transfers to the 76 largest municipalities (with populationsexceeding 50,000) totalled US$120 million equivalent.

II. THE URBANTRANSPORT SECTOR

A. Overview

2.1 An overview of urban transport in Venezuelareveals serious institutional bottlenecks, poor cost recovery policies and financial management,and weak integration between transport and land use planning, which are common to many of the country's urban areas and which should be addressedexpeditiously. This urbanizationpattern andthe rapidgrowth of urban populations,together with a considerableincrease of car ownership and use fostered by low fuel prices and poor public transport, have resulted in chronic road congestion, mainly in Caracasbut increasinglyin a numberof other cities.

1/ 'Venezuela: Decentralizationand FiscalIssues", IBRD Report No. 11160-VE, by LAt IN datedOctober 27, 1992has a gooddiscussion of GOV'sdecentralization program. 4 B. Urban Transport Characteristicsand OraanizationZ'

2.2 Venezuelahas an estimated fleet of 2.0 million vehicles (1990), of which 73% are private cars, 6% are vehiclesused for public passengertransport, and the rest are motorcycles, trucks, trailers and semi-trailers. The Capital Region has 42% of the country's cars, and 39% of its public transport vehicles. In addition to those modes, Caracas has a metro (CAMETRO)with two lines totalling 40 km. More than 95% of the public transport fleet is privately owned and consists of buses, por puestos (paratransit services with small or medium-sizedbuses) and jeeps. The modal share of urban buses and por puestos ranges from 40% in Maracaibo to nearly 60% in Merida; walking accounts for about 13-16% of all trips in most cities, and private cars for 29-42%. Other than walking, there is little non-motorizedtransport, partly because the hilly topography makes it difficult to operate bicycles. In Caracas,the metro accountsfor nearly 15% of the trips, other public transport for 28%, cars for 41% and walking for roughly 16%; there is also a growing use of motorcycles.

2.3 In urban areas other than Caracas,a typical home-to-work trip requires transfers between por puestos and can take as much as 1-2 hours each way. Since the por puesto tariffs are not integrated, many passengersmust pay multiple fares; in these cases, poor peopleare obliged to pay a high proportion of their disposableincome on transport. In Caracas,the lowest income users live in ranchos(areas marginales) on the hillsideswhich can only be servedby four wheel drive vehicles (jeeps),since gradients are steep and other vehiclescannot maneuversafely. A typical home-to-work trip for a rancho dweller consists of climbing down a hillside stairway to a jeep stop, taking the jeep to a por puesto stop and transferring to a por puesto to reach the metro. Due to the long distances and the relatively high traffic congestionin Caracas,it is not uncommonfor trips to take over 2 hours each way. The service level of road-basedtransport has deterioratedconsiderably due to lower speeds caused by traffic congestion. Frequenciestend to be low, reliability is poor, and conditions of comfort and safety are bad. Furthermore,the lack of appropriatetraffic managementsystems coupled with poor parking policies and unsafe driving results in an high number of accidents, especially at intersections. Traffic safety enforcement is generally absent and some improvements could significantly reduce the number of accidents.

C. Institutional Framework

2.4 At the federal level, the Ministry of Transport and Communications(MTC), through its National Directorate for Land Transport (DGSTT) is responsible for formulating, planning, and implementingthe federal policy in urban transport. In April 1990, in responseto the urban transport related riots, GOV set up an advisory body, the Consejo Venezolanode Transportes (CVT) with representatives from government (Ministries of Finance, Development, Labor, Transport and CORDIPLAN),operators (CAMETRO,FEDETRANSPORTE, FERROCAR), industry (FEDECAMARAS), municipal government (AVECI) and the users to advise on the sector objectives and priorities. Consciousof the need for a more permanentstructure, GOV, in September1991, created the National Fund for Urban Transport (FONTUR)which is responsiblefor channeling federal funds budgeted for urban transport to the municipalities. FONTURis also responsiblefor promoting and implementingthe decentralizationof urban transport responsibilitiesfrom the federal government to the municipalities (Annex 2). However, the formulation of urban transport policies continues to be the responsibility of the DGSTT based on FONTUR's recommendations. There are a number of semi-autonomous institutions under the MTC. The most important in terms of investment in urban transport is CAMETRO. Another agency for which the MTC is responsible is the Traffic Police ("Cuerpo de Vigilancia del Transito Terrestre") which is under the DGSTT.

Z/ Annex14 givesa detaileddescription of urbantransport modes in the majorVenezuelan cities. 5 2.5 The Ministry of Urban Development(MINDUR) is authorizedto plan the development of the urban road network in coordination with MTC but invests little in urban transport. The Interior Ministry is involved indirectly through its relationship with the state governments. The state governmentsin Venezuelainvest substantial amounts on transport, mostly through what is known as the Situado Coordinado, i.e., joint programs financed by transfers and undertaken by means of an agreement("Convenio") between each state and the MTC. Small amounts, mostly dedicated to road maintenance,are also spent out of the states' own budget ("PresupuestoOrdinario-).

2.6 The 1961 Constitutionattributes to the municipalitiesthe responsibilityfor the provision of a number of services, including urban transport. However, insufficient financial resourcesand the lack of administrative and professionalcapacities at the local level, usually create a situation in which these services are provided with assistance from the state and/or federal governments. While the states and municipalities are free to make their own arrangements, most municipalities are still dependent on the MTC or the state governmentfor the maintenanceof their traffic lights and urban street network. Construction and financing of new roads in municipalitiesare often the responsibility of the states, usuallythrough MTC. Traffic managementwas until recently (andstill is in Caracas)the responsibilityof the FederalGovernment and regulationof bus servicesand concessionsin urban routes are the responsibility of the municipalities. The larger the city, the greater is the tendency for the municipal governmentto assumethe responsibilityfor road construction and traffic management.

2.7 The Ley OrganicaMunicipal, revised in 1990, seeks to decentralizeresponsibilities and to strengthen local organizations, particularly at the municipal level, as it is felt that this leads to improved responsivenessto local needs and better accountability. Organizationsthat exist at the municipal level to handle urban transport vary from a simple traffic and transport division (Merida) to an Autonomous Transport Institute (Maracaibo)created by the municipalitiesfor that effect. Due to the lack of definition of the role of each level of government, FONTURundertook a study on 'The Role of Government' in the planning, maintenance,regulation, financing and delivery of urban transport servicesas part of the preparationfor the proposedproject. The study recommendedthree types of model organizationsin staffing for traffic, transport and road maintenancefunctions at the municipal level based on the population of the municipality. Assistance to set up municipal-levelorganizations basedon these modelsis provided underthe technical assistance component of the proposedproject.

2.8 For large cities such as Caracasand Barquisimeto,the responsibilityfor transport and traffic regulation, traffic engineering, traffic law enforcement, and short and medium range land use/transportplanning is divided among agenciesat federal and municipal level, or between different departments within individual agencies or even between different municipalities within the same metropolitan area. This diversity sometimes results in agencies with shared responsibilitieshaving conflicting policies for a particular activity.

2.9 The extent and quality of urban transport coordination and planning vary among the different regions but all are faced with a similar problem -- (a) how to plan, manage and maintain a transport system in a metropolitan region consisting of many municipalities, each with its own administrative powers, when the necessaryinputs for, and effects of, this transport system extend well beyond the administrative boundaries of any one municipality; and (b) how to finance urban transport projects. A possible solution would be to create metropolitan-wide transport coordinating/regulatoryagencies, which would requirespecial enabling legislation. In some Venezuelan metropolitan areas,an adaptation of this type of institution already exists and, in others, plans (or, in some cases, draft legislation)exist to create them.

2.10 In Brazil, for example, such organizationsare referred to as EmpresaMetropolitana de Transportes Urbanos (EMTU). In addition to regulation and coordination, some of the existing organizationsare also involved in the operation of transport enterprises. This practice tends to create 6 a conflict of interest, and it is generally undesirablefor such organizationsto becomedirectly involved with the ownership or operation of transport enterprises. One of the most urgent issues to be addressedin urbantransport in Venezuelais the sector organizationat the three levels of government. Without a clear definition of roles and the creation of coordinatingentities in the metropolitan regions, the sector will continue to suffer from lack of modal integration, investment duplication and uncoordinated policies which are, in the end, detrimental to the users and costly to each level of government.

2.11 Most cities other than Caracas should have no major problems in creating a Local CoordinationAgency (LCA, Mancomunidad)for urban transport, either becausethey consist of only one or at the most two municipalities. In Caracas, however, the five existing municipalities are reluctant to share municipalcommon services and have not yet come to terms to create a joint LCA. Attempts to force the creation of such an agency as a condition of the Bank loan are likely to be unproductive. An alternative proposal is to finance demonstration projects such as HOV (High Occupancy Vehicle) corridors, transport improvements in areas marginales, and public transport terminals while at the same time initiating the process for the creation of some type of LCA. This should evolve from a consensusamong the municipalities concerned. To assist in this process, the proposed project includes a Metropolitan Transport CoordinationStudy.

2.12 Traffic enforcementis the responsibilityof the traffic policewhich was createdin 1956. It is attached to the MTC. Its officers are drawn from the National Guard. In general, enforcement of traffic regulations has been largely neglected in Venezuela. The traffic police currently has a force of 4,000 persons, which is only two-thirds of the number in 1979. Pay is extremely low, and the Traffic Police corps has been generallystarved of funds so that it is poorly equipped. Reportedly,no funds have been available for uniforms in the last five years, and some 70 percent of the corps' vehicles are out of commission.

2.13 Enforcementof traffic regulations is also difficult because the Traffic Law (ley de transito) is outdated. Legislationhas been submitted to the Congresson a numberof occasions but no thorough overhaulof the regulationshas been achieved. This situation is unfortunate becausemany of the most promising options for improving urban transport in cities with more than 200,000 inhabitantsare unworkablewithout an efficient system of enforcement. This includes parkingpolicies, bus priority measuresand other aspects of traffic management. Not only are such policies often extremely effective but they are generally not costly to implement. The traffic police has formulated proposalsto strengthen the corps, including increasingthe pay, improving the working conditions and purchasing new equipment. Such measures could make an important contribution to the implementationof effective urban transport policies and could, in addition, be self-financing through increased collection of traffic fines. Technical assistance, training and some infrastructure and equipment are included under the proposedproject to strengthen the traffic police corps.

D. ReaulatorvFramework

2.14 According to the law, there are no restrictions to the entry of new bus or porpuesto operators into the market. However, in practice, an operator who is not part of the route association for a certain area is unlikely to get a concessionto operate in that area. Therefore, the restrictionsto market entry are in fact imposed by the associations, which act basically as cartels. Concessionsto operate on a certain route for both buses and por puestos are awarded by the municipalitiesif the routes are within one municipality. If the route crosses more than one municipality the concession shouldtechnically be awardedby a local coordination agencyfor both municipalities('mancomunidad') or if the latter does not exist, by the MTC (DGSTT). By law, the concessionto operate on a certain route should be awarded on the basis of public bidding, but this is rarely done. Faresare regulated by 7 the municipalitiesfor the urban routes (within one municipality) or by the MTC (DGSTT)for routes servingmore than one municipality. There is no structured procedureto update fares in either the MTC or the municipalities. Fareincreases are normallyforced by the buslporpuesto owners through political pressureor strike threats, and are not related to increasesin the input costs. The power to regulate taxis, like that of the por puestos, has been exercised by the MTC but is to be transferred to the municipalities. Metro and metrobus fares are regulated by the MTC since Metro routes link two or more Caracasmunicipalities.

E. Cost Recovery.Pricina and Subsidies

2.15 Government raises revenuesfrom road users through:

(a) LicenseFees. There are two annuallicense fees for the right to use a vehicle on a public road, one national and the other municipal. The national fee is set at Bs 300 annually and is a flat fee for all vehicle types. The municipal fee, which is payableevery three months, is fixed by the municipality. Typical fees range from about Bs 30 to around Bs 130 in Libertadoresand Sucre (i.e. metropolitan Caracas). Licensefees are thus low and do not produce significant revenue for the public sector;

(b) FuelTaxes. Thesetaxes are low by internationalstandards and amount to Bs 2.10 (USC3) per liter of gasoline and Bs 1.39 (USC2.2) per liter of diesel. Retail prices including taxes at the pump in July of 1992, were USO8.1 per liter of regulargasoline and US¢ 7.0 per liter of diesel (US$ 0.31 and 0.26 per US gallon respectively). With the devaluation of the bolivar and the price freeze, the reported prices per US gallon of regulargasoline and diesel were, as of June 1993, US$ 0.23 and US$ 0.19. This compares with prices per US gallon of US$ 1.55 and US$ 1.51 respectivelyfor regular gasolineand diesel in Canada,and US$ 1.99 and US$ 1.24 in Brazil. In general, prices of petroleum products are very low in Venezuela;they average about one-half of international parity prices (Annex 14). Agreement was first reachedwith the Government under the Structural Adjustment loan on a plan to progressivelyraise the prices of petroleum products to international levels (100% of export opportunity cost). This program of phasedprice increaseswas to continue under the Public EnterpriseReform Loan (3223-VE). Progresswas made underthis plan until March 1992, when prices reached a level equivalent to about 50% of the international border prices. However, the strong public reaction to these price increasesand the political crisis that ensued led the Governmentto postpone and slow down further price adjustments.

(c) Vehicle Sales Taxes. In 1989, the sales tax amounted to 2% of the price of private vehicles up to Bs 240,000. For more expensivevehicles, 3% had to paid above this figure. For public transport and goods vehicles, the salestax is a flat 1.5% of the price. It is expected that these taxes will be replacedby a value added tax, which will likely be set initially at a flat 10%; and

(d) Customs Duties. Importers pay customs duties of 50% for fully built vehicles; duties are variable (below 50%) for knocked-down vehicles and spare parts. Most imported vehicles are assembledin Venezuela.

The recently approved Highway ManagementLoan (3553-VE) requires MTC to undertake a road cost recoveryand maintenancefunding study which will review existing road user chargesand proposethe necessaryadjustments.

2.16 Present bus and por puesto fares are lower than total vehicle operating costs. Since fares do not cover depreciation and cost of capital, replacementof the fleet is only possible when 8 grants or financingare availableat subsidizedrates. GOVhas promoted such financing schemesa few times on the grounds that they are a compensationfor the low fares imposed on operators. This practice can only be eliminated when fares are deregulatedor set at a level which covers long run variablecosts. However, the travel cost for low-income personsfor work trips would rise to morethan 15% of their income, if such a policy were to be fully implemented.

2.17 While subsidiesshould be phasedout from a strictly economicviewpoint, the social and political reality requires a gradual approach. In the short run, mechanismsmust be found to target subsidiesto the poor while setting fares at a level which allows the operatorsto be financially healthy. The proposedproject thus includespublic transport studies for each participatingmunicipality, whereby issuesrelated to market entry, fare and route deregulationand subsidieswill be examined. The studies will recommendspecific measuresto the municipalities, and FONTUR will take into account the progressmade in implementingsuch recommendationswhen deciding whether to finance future urban transport investments in a municipality as part of the project's mid-term review.

2.18 The central government also imposes specific public service obligations, such as the transport of students at half fares or less. Operators are paid a student subsidy which, however, is not directly relatedto the numberof students actually carried. In fact, drivers often do not stop to pick up students because they prefer to board full-fare passengersand still collect the student subsidy, which they receive from Government on the basis of seats offered. Lack of enforcement and of accountability have led to major clashes between students and drivers. FONTURhas proposed a different system by which the subsidy would be paid directly to the students in the form of tickets which the operator would ultimately use as proof of transport when collecting his subsidy. GOV has also started to transfer to municipalities the responsibility of administering this federal subsidy. A study on subsidies, undertaken during the preparation of the proposed project, recommendedthe system describedabove. Those recommendationsare now being implementedin a pilot city (Maturin). This is an attempt to increasethe accountability of bus operators and yet provide low transport fares to the student population. If successful, the schemewill be applied in other cities. It is estimated that GOV spent US$ 83 million on this type of subsidy in 1991 (Annex 14).

2.19 Another type of subsidy paid by GOV and private employersto employeeswho earn less than 15,000 Bs per month (US$ 230) is the 'bono de transporte' which amounts to 800 Bs per month. While this subsidy was introduced to help defray the transport costs of the low-income population, it is only paid to formal employeesand is paid irrespective of whether they travel by public transport or not. In other words, it has become a tax-free salary addition to low-income employees and can no longer be regardedas a transport subsidy in the true sense. In 1991, the GOV paid an estimated $US 100 million to its employees, while the private sector paid roughly US$ 320 million. This subsidy paid by the private sector, entails a loss of tax revenuesestimated annually at US$ 96 million. Therefore, the GOV spends roughly US$ 196 million per year on this type of subsidy.

2.20 The 'bono de transporte" is a targeted subsidy but unlike the Brazilian 'vale-de- transporte' which stipulates that employersmust pay the difference between urbantransport fares and 6% of the wage, it needs to be adjusted periodically for inflation. It also needs to cover a wider spectrum of the population than the Braziliansystem, such as autonomous employees,the informal sector and the unemployed. The above mentioned study proposes the introduction of a "boleto de transporte' for the latter groups, through a system of coupons which would be availablefrom a social security office. This office would buy the tickets at full price from the operator.

2.21 As indicated in para. 2.15, fuel prices average about one-half of international parity prices and GOV had instituted a program to bring them up to world levels, through periodic adjustments. This program is uncertainin view of recent political developments. In particular, the poor (70% of urban householdsearn less than 3 minimum salaries)are dependent on public transport and 9 the fare increasesdemanded by operators, which in general are proportionally much higher than the impact that the periodicfuel price increaseshave on their operating costs, have sparkedviolent riots in the last three years. It should be noted that gasolinecomprises only 15% of estimated operating costs of the "porpuestos". In the case of diesel powered vehicles, fuel represents only 3% of the per kilometer cost. Nevertheless,the issue of fuel prices continuesto be extremely sensitive becausefuel is perceivedas having a greater weight in total costs than it actually has. Given its small weight in the total operating cost, increasesin fuel prices should not affect "por puesto' fares significantly. This conclusion is reinforced when it is rememberedthat the proportion of diesel vehicles in the fleet has been increasingrapidly. On the other hand, an increasein gasolineprices may reduce some of the off- peak travel by autos, and at some point, divert some of the home-to-work peak hour trips to urban transport. This will further overload the public transport system. Therefore, in the short-term, it is important that public transport capacity be increasedto absorbthe additional users diverted from the automobile.

2.22 With the objective of renewing the over-age (and polluting) urban bus fleet and promoting affordable public transport without the need for recurrent subsidies, FONTURinitiated in early 1992 a scheme to support the acquisition of new vehicles by private operators. After the operator contributes at least 7% of his own funds for the purchaseof the vehicle, FONTURprovides a credit equal to 50% of its purchase price, which over a 5-year period is gradually converted into a grant if the vehicle provides urban passengertransport and if the operator complies with several conditions related to service quality, insurance and vehicle inspection. This scheme is supported by eight commercialbanks which provide a loan (repayableover five years, at commercialinterest rates) for the balance of the purchaseprice. By December 1992, FONTURhad received applicationsfor a contribution of US$ 33 million to support the purchaseof vehicles, of which US$ 6 million had been approved.

F. Sectoral Issues

2.23 There are a number of key sectoral issues which must be addressedto improve the supply of urbantransport servicesand to guaranteetheir orderly developmentand sustainability in the long term. These concerns may be divided into two categories: (i) planning and operational issues related to transport planning, maintenance, institutional capabilities, congestion ,safety and the environment; and lii) policy issues such as regulations, fuel pricing and user charges, cost recovery, fares and tariffs, financial managementand subsidies. Eachof these issues is examined below:

{i) Transoort Plannins. There is a need to strengthen the municipalities' capabilities in transportation planning,traffic managementand the economicand financial evaluation of new investments. Major problems are: (i) the limited availability of professional staff with adequate technical skills, especially at the municipality level and (ii) inadequatemaintenance organizations and budgets. At both the centraland city levels, urbantransport matters are handledthrough organizationalarrangements that are often inadequate.The formation of new, or the strengthening of existing planning andtraffic engineeringunits in fast growing medium-sizecities would permit better planningand use of the transport system. A crucial component of the project pertains to institutional strenathenina.technical assistanceand trainina which will ensurethat both FONTURand the traffic and transport agenciesat the municipality level are adequately staffed to handletheir transport planning responsibilities(Annexes 6 and 7). FONTUR will be staffed with key internationally and locally recruited personnel prior to negotiations and the municipalities will not proceed with civil works before key technical assistance is in post. 10

(ii) Maintenance. The state of road and street maintenancevaries between municipalities, but lack of adequatemaintenance is fairly common. Maintenanceactivities have less political visibility than new construction, and are among the first to be reduced in times of financial austerity. Most municipalities are not well organized to deal with maintenance of roads or traffic signals. Improvement of the maintenance of these assets will be an essentialcomponent of the subproject for each municipality. In most cities, two agencies with maintenance responsibilities are likely to require strengthening; the local agency for road maintenance and the traffic engineering agency or traffic police for traffic signals. As far as possible, maintenanceoperations will be contracted to the private sector, as there is evidencethat this is a more efficient solution, and there is ample capacitv in the country to provide such services. The proposed project would attempt to develop the capabilities of the city maintenance orcanizationsto glan, manaoe and supervisethe maintenanceworks (Annex 10).

(iii) Institutional Manaaementand Coordination. The main concernsare: (a)the fine-tuning of relations between central, state and municipal governments and a clear definition of their respective roles in the financing, planning and operation of urban transport services in accordance with the 1990 DecentralizationLaw; (b) the creation of an entity which is formally empowered by each metropolitan region for planning, coordinating and setting priorities for new investments and modal integration including tariff setting and cost sharing, in order to assure a minimum of planning continuity. During project preparation,a study on the 'Role of Government' has clearly definedthe responsibilities of each level of government and has proposed the type of local agencies which are best suited for municipalities with populations of less than 100,000, between 100,000 and 250,000 and more than 250,000. Furthermore, FONTUR has initiated another study in which consultants and staff from the municipalitieswill propose a specific organizationfor each of the municipalitiesincluded in the first year program and a plan for its implementationunder the project.

(iv) Traffic Connestionand Safety. The critical need is to increasethe supply of adequate cost-efficient peak hour capacity in order to reduce congestion and guarantee an acceptable level of service to the average commuter, under reasonable safety conditions. This can be done by: (a) rehabilitatingexisting systems and building new ones which prove to be the least-cost alternative from the technical, economic and, especially, financial standpoint; (b) improving traffic managementthrough appropriate traffic engineering equipment, in order to better manage available road space and reducecongestion; and (c) reducingtraffic and transit accidentsthrough a combination of safety education campaigns, law enforcement and appropriate traffic engineering. Low cost solutions (such as traffic managementmeasures, parking policies, busways, bus route rationalization,pedestrian streets, intersectionimprovements) are not widely applied to resolve urban transport problems. The proposed project has already made progress in bringingto the notice of the municipal authorities cost effective solutions to reduceconaestion and enhancesafety. (Annex 5). In addition, the proposedproject includes a component to strengthen the traffic police at the national and local levels to ensure improved traffic law enforcement (Annex 9).

(v) Urban Environment. The main concern is the reduction of air and noise pollution in urban areasthrough cleanerand quieter systems. The transport-inducedenvironmental problems in most cities are presently much less severe than in Caracas, which confronts uniquetopographical conditions and a high concentrationof population and vehicles. Nevertheless,the problemsare of concernand will tend to get worse as the cities' motorization levels grow. There is evidence that, in Caracas,internationally 11

accepted air quality standards for lead, CO and particulate matter are already being exceeded,particularly in the central area. The proposed project will include a motor vehicle emissionscontrol study for Caracas. Three types of measuresto reducetraffic induced pollution will be studied in the proposedproject: the regulation and control of vehicle emissions, traffic and transport demand managementand encouragementof non-motorizedtransport. With the benefit of experiencefrom the implementation of pollution control measuresin Caracas,it will be possible to determine how best to control such emissions in the other cities. Reduction of pollutant emissions from vehicles should also result from the expected reduction in traffic congestion and increased vehicle speeds anticipated as a result of the implementationof the traffic engineering and road improvement components of the proposed project. Where feasible, the developmentof bikeways will be considered. In central areas, pedestrian malls will be used to make walking more pleasant and safe. The usefulnessof similar measures in other medium cities will be reviewed in the city studies and where appropriate, proposalsfor their implementation will be included in the subprojectsfor each municipality. Finally, the creation of an environmentalunit in FONTURstaffed with an environmentalspecialist (para. 3.41) will help to ensure that environmental impact assessmentsare preparedfor all for major urban transport investments.

(vi) Public Transport Regulations. Existing regulations require modifications including the elimination of regulatory barriers which prevent free entry and/or competition in the market for provision of public transport services (especially bus services). Routeand fare regulations need to be reformed. During the preparationof the proposed project, the operation of por puestolbus systems has also emergedas an issue. Some of the most common problems include: (a) regulatory units do not operate effectively, are under-funded and the staff are under-trained; (b) fare policies are guided by social objectives, which result in fares which are insufficient to generate net revenuesto finance bus renewal; no allowance is made for higher quality services operated at higher than minimum fares; (c) bus routes are slow to adapt to changing patterns and levels of demand and the growth of the city; (d) while most bus services are provided by the private sector, entrance to markets is restricted and route concessions are awarded in a non-transparent manner. Local monopolies prevent the award of concessionsto new operators. Lack of effective competition leads to inefficient bus operation; (e) bus fleets are often in poor condition and bus standards provide little comfort and convenience;and (f) buses have an adverseimpact on the environment (noise and exhaust/smoke emissions); these problems are worst in central areas of cities, where traffic congestionoccurs. The proposedproject is only expected to make a modest contribution to the progressivederegulation of the public transport systems. It appearsthat presentfare levels do not usuallyallow for an adequateoperating profit, as many bus operators are not undertaking fleet renewal and the level of service is generally poor. On the other hand, the tradeoff between price and quality is legitimate, and recommendationsfor tariff and quality of service reform should relate to the conditions prevailing in each city. To deal with these issues, the first action included in the proposed project is a mandatory Public Transport Study in each participating municipalitywith specific recommendationson how to create an enabling environment to foster bus competition and eliminate regulatory or local monopoly barriers which negativelyaffect the level of service provided and the financial health of the operators (Annex 8). The second action will be a mid-term review of the progress made by the municipalitiestowards implementationof the recommendationsproposed by the study and accepted by the municipality. This review may recommend canceling any outstanding investments and technical assistance if a participating municipality does 12

not agreeto an action plan to eliminateregulatory barriersand adequatecost-recovery mechanisms.

(vii) Fuel Pricino and User Charnes. Agreement to progressively increase fuel prices to levels which reflect their export opportunity costs was first reached under the Structural Adjustment Loan and was to continue under the Public EnterpriseReform Loan. In the latter, it was a condition for the releaseof the third tranche. However, since March 1992, fuel prices have been frozen and due to the devaluation of the bolivar, they are at present, below 50% of their internationalparity prices. An increase in fuel prices would, at some point, act as a disincentive for the use of private automobiles,diverting some demand from auto to public transport. The latter does not have the capacity to absorb a significant increase in demand and, therefore, its capacity should be expanded. An increase in fuel prices would also be used by operators as a justification to demand higher fares. Based on past experience, the increasesdemanded by operators would be proportionately higher than the impact of fuel price increaseon operating costs. In the past, this has generateda violent reaction from the low income users and from students who are alreadyspending close to 15% of their incomes on home-to-work trips. An increaseof fuel taxes could also provide the revenuesto fund urban transport, but unless they are earmarkedfor that purpose, they will most likely be used in other sectors. An appropriate system of road user charges as required in the Highway Management Loan (3553-VE) will provide the meansto raise revenuesfor road rehabilitationand maintenance. The proposedproject includesstudies of resource mobilizationand allocation proceduresat the nationallevel and of resource mobilization, collection mechanisms and cost recovery at the local level, (para. 3.10). These studies will take into account the recommendationsof the road user charges study financed under the Highways Management Loan, which started in June 1993.

(viii) Cost recovery and Financial manaoement. There is a need to addresscost recovery from a morecommercial oriented standpoint by: (a) setting tariffs which, when added to subsidies, cover at least the long run variable costs (defined as out-of-pocket costs plus depreciation of equipment and cost of capital) of the service provided; (b) controlling fare evasion; and (c) using appropriate peak and off-peak pricing. The financial managementof the systems will be improved by fostering cooperatives or other associations which will decrease administrative and other costs incurred by individualowner operatorsand by revampingfunding mechanismsin order to guarantee adequate financing for the implementation of new mass transit systems and the sustainability of the existing systems. Allocation formulas will be reviewed to ensure that they are fair and representative. These aspects will also be covered in the Public Transport Study described in Annex 8.

(ix) Allocation of Resources. There have been no guidelinesfor the allocation of federal resourcesto the states and cities to help finance urban transport projects, though modest amounts of assistance have been provided for maintaining urban streets and traffic lights. After a particular urban transport project is identified, the municipality or state often lobbies the federal government for direct financial assistance. These requestshave been handledon an ad hoc basis. Sincefederal grants are not allocated exclusively on the basis of the economic merits of the projects, there has been little incentive for the municipalities to develop comprehensive transport policies or to evaluate projects using sound methodologies. FONTUR has already started the preparationof standard allocation formulas which take into account variablessuch as total population, number of public transport vehicles per inhabitant, ratio of student

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population to total population, and the ratio of city generated revenues to its total revenues.These variableswere used for the allocation of funds for fleet renewal. The proposed project will include a resource mobilization study to identify and propose funding mechanismsat the central level and will review the rules for allocationof these resources.

(x) Taraetino of Subsidies. Urban householdshave been spending increasingproportions of their incomes on transport (10-23% for the low income groups earning up to two minimum salaries). The appropriatetargeting of urban transport subsidies and their extension to the informal sector and the unemployedwhich are not presently covered by mechanismssuch as the "bonode transporte' is a major issue which needs to be addressedin the short term. Appropriate mechanismsfor financing such subsidies (tariff differentiation,contracted budgetarytransfers, etc) and channelingthem (tokens, multimodal passes, differential tariffs) will be reviewed under the project. At the municipal level, a detailed subsidyreview will be included in the Public TransportStudy (Annex 8, Att.1).

G. LessonsLearned from Post Proiects

2.24 The Bankhas financed no urban transport projects in Venezuela. However, the design of the proposed project takes into account the experience of other Bank-financedurban transport projects: The 'lessons learned' are based on fifteen Project CompletionReports and/or Project Audit Reports (PCR/PPAR)for urban transport operation with an allowance made for trends and changesin project design since the PCR/PPARswere completed. The main lessons identified and the related actions in the proposed project are given below:

(i) Institutional Strenothening. The organizationsdealing with urban transport, tend to be weak and technically deficient at the federal, state and municipallevels and should be reorganizedand strengthened;

lii) Lack of counterpart funding has greatly influencedthe pace of project implementation and in extreme cases has led to cancellation of project components. The promotion of sound financial practices in participating cities should take into consideration the lack, at least in the short term, of financial resources. The financial mix described in paragraph1.20 andAnnex 10 (25%-50% federal grant, 0%-25% city participationand 50% Bank loan) will reduce the scale of municipal counterpart funding to a realistic level and provide the incentives for active municipal participation in the project.

(iii) Slow implementationhas been a frequently recurringtheme. Reasonshave included: lack of familiarity with Bank procedures,overoptimistic schedulingat appraisal,lack of final engineeringdesigns at appraisaland changes in political commitment and lack of counterpart funds. These problems should be mitigated in the proposed project by such measuresas: (i) strengtheningFONTUR's capacity for financial managementand implementationof Bank procedures,(ii) requiring final engineeringdesign for first year components, for which technical assistance will be available, as a condition of disbursement to any city and, (iii) a grant element in the financing, which will encourage cities to continue their participation in the program, regardlessof political changes.

(iv) Weak institutional cagacitv for the planning, design and implementationof traffic and highway projects has been a common feature of many projects. In the proposed 14 project, cities will need to demonstratean acceptable organization and capacity to fulfill these functions on a permanent basis before project funds are transferred to them.

(v) Lack of enforcement of traffic regulations, coupled with poor maintenance, are additional reasons why some schemes failed to achieve their full potential. In the proposedproject, schemeswill be designedto be, as far as practical, 'self enforcing". Physical rather than regulatory meanswill be encouragedin the design. Participating municipalities will need to demonstrate that components involving traffic regulation enforcement include operational specifications which are acceptable to the traffic police and that the police are preparedto undertake enforcement. If necessary,the municipal subprojects could include financing of equipment for enforcement; and

(vi) Public transport has received increasingemphasis in Bank projects and it will be an important aim of this project to improve public transport operations. Eachsubproject will help to improve the regulatory framework to encourageefficient and competitive bus operationsand upgradethe infrastructure (paving, traffic schemes,etc.) to enable buses to operate at an acceptablelevel of service. The system of route licensing as operatedin most cities is inflexible and slow to react to changingpatterns of demand. The public transport studies will include reviews of the licensing system and of the finances of public transport operationsand include recommendationsto improve the efficiency of public transport.

H. Toward a Better Manaaed Urban Transport System

2.25 Urban transport policies formulated by FONTURwould be gearedtowards efficient and equitable provision of urban transport servicesthat are necessaryto restore the economic efficiency of cities and to respond to the transport needs of low-income groups. Policies would be consistent with the broader transport sector objectives, as well as with the objectives of the urban sector. In consonancewith the 1990 DecentralizationLaw, urban transport policies will support decentralization of urbantransport servicesfrom the central governmentto the states and municipalitiesto allow local interests to respond morequickly to the changing demands;and simultaneouslyaddress the needs of major metropolitan regions (Caracas, Ciudad Guyana, Merida, Valencia, Maracaibo, Maturin, Barquisimeto)where urban transportation problems, especially peak hour capacity, congestion and pollution are becoming serious. The general approach would be to restore incentives to permit privately-owned systems to operate under competitive conditions. Re-designedregulations and concessionary agreements, and improved bidding processes would promote competition in the provision of bus services; and rates would be gradually liberalized in the corridors where there is effective competition. Appropriate tariffs and financing mechanisms would enable the efficient operation and developmentof public transport systems. Local governmentswould focus attention on traffic regulation and management,including managingthe demand for road use, improving traffic managementand street maintenance, controlling air and noise pollution, monitoring the effects of regulationsand taxation, and promoting integration of the various transport systemsand coordination with land-usedevelopment. 15

III. THE PROJECT

A. Backaround

3.1 In early 1990, the Bankcarried out a Public Sector Investment Review, which included the urbantransport sector (Report 8588-VE). The review identified serious institutional bottlenecks, poor cost recovery policies and financial management,and weak integration between transport and land use planning, in most of the urban areas in Venezuela. In April 1990, a Bank mission visited Venezuelato assistGOV in a review of its urbantransport policiesand progress. The Bankemphasized the importanceof creating a coherent institutional framework for urbantransport policy and resource allocation to the urban transport sector. In January 1991, GOV requestedassistance from the Bank and IDB for the preparationof an urban transport project. A Technical Assistance Loan-TAL(Ln No. 3225-VE), approved by the Bank in June 1991, provided the resourcesfor project preparation and technical assistancein the establishmentof appropriatenational institutions. In November1991, GOV createda FondoNacional de TransporteUrbano (National Fund for UrbanTransport-FONTUR) with the responsibility for channelingfinancial resourcesand technical assistance to municipalities for urban transport development. To fulfill this role, FONTURwas provided with a technical secretariat and designatedas the agency responsiblefor project preparationand execution. The project was prepared with extensive assistance provided by consultants, funded both by the TAL and by FONTUR'sown resources. Appraisal took place in September 1992 and negotiations were held in Washington in March 1993.

B. Rationaleand Obiectives

3.2 Rationalefor Bank Involvement. The Bank's strategy in Venezuelais to support policy reform and priority investments to stimulate economicgrowth and social development in the context of macro-economicstability. The Bank has emphasized efficient resource allocation, increased efficiency in the public sector, and appropriatetargeting and delivery of support systems to the poor. Within the urban transport sector itself, GOV has taken positive steps to implement such a strategy through: (i) the creation of FONTUR to improve the efficiency of resource allocation, (ii) the decentralizationof urban transport functions to the municipal level to increasethe responsibility and accountability of local administrationsand to improvethe cost effectiveness and delivery of services, (iii) the strengtheningof local and national institutions involved in the sector to enablethem to plan and maintain urban transport infrastructure and services, (iv) the introduction of cost-effective traffic managementmeasures to alleviatetransport problems;and (v) the reform of subsidy policiesto ensure appropriate targeting and increased transparency of resource allocation. The proposed project is consistent with the agreedcountry strategy. GOV's urbantransport sector strategy conforms to Bank policies in the sector and will be supported through the implementationof the proposedBank project. Bank participation has drawn on and incorporate in the proposed project, the experiencegained and lessons learned from Bank-assistedurban transport projects in other countries (see para. 2.24 and Annex 1).

3.3 Obiectives. The main purpose of the proposed urban transport project is to improve the quality and efficiency of urban transport in Venezuelancities. To achieve this goal, the primary objective of the project is to improve and strengthen national and local institutions engaged in the planning, financing, design and operation of the urban transport systems. Secondaryobjectives will be: (i) to increasethe efficiency of traffic and transport operationsand (ii) to preserve,through better maintenance,urban transport infrastructure and reduce user costs. The project is also expected to contribute to poverty alleviation by improving public transport servicesfor the urban poor. 16

C. DescriDtion

3.4 The proposedProject would be an integral part of FONTUR'sinvestment program and would comprise two parts: Part A - an institutional development and policy program and Part B - an investment program for infrastructure and equipment at the municipal level. In parallel with the Bank project, IDB also intends to participate in the FONTURprogram. Both the Bankand the IDB projects have the same overall objectives, and will contain similar components but due to different procedural and procurementrequirements will require separateloan agreementswith the Government. While the two projects have been designedto function independentlythey will support investments in different cities and contain elements of a common institutional development and policy program to ensure the successful implementationof each project.

PARTA - Institutional Developmentand PolicyProaram

3.5 PartA will account for some 17 % of the proposedBank project financing IUS$ 34.8m) and is directed at the achievementof the primary institutional building objective and as such is the core of the project. It would consist of the following components: (i) an institutional strengtheningprogram for FONTUR,(ii) an institutional strengtheningprogram at municipal level, (iii) a national urbantransport sector training program, (iv) a traffic police program, (v) policy studies at the national level; and (vi) city subproject preparationand policy studies at the municipal level. For all technical assistance (TA) components (either at FONTURor municipal levels), initial contracts will be for 1 year. Performance and effectiveness of the various TA teams will be reviewed by FONTURand the Bank at 9 months after the start of each contract. The TA contracts will be extended or modified as a result of the review.

3.6 PART Al - FONTURStrenothenina Comoonent. FONTURV'is responsible for the implementation of national urban transport policy in Venezuela to be achievedthrough FONTUR's control of allocation of all GOV funds to the sector4-'. FONTURwill provide funds for investment in transport infrastructure(including roads, public transport infrastructureand traffic schemes),equipment (including traffic control devices and buses) and for institutional strengthening. As the executing agency for any urban transport investment involving central government, including the Bank project, FONTURwill be responsiblefor city subprojectappraisal, supervision, coordination and monitoring and for investment agreementswith the cities. To help FONTUR fulfill this national role, the institutional strengtheningprogram will comprise: (i) the provisionof internationaltechnical assistanceto FONTUR to enableit to becomefully establishedand to developworking methodsand procedures,(ii) equipment and software for the efficient conduct of its operations and, (iii) the provision of consultant services for engineeringdesign and supervision of city subprojects and for special studies. So that FONTUR remainsa streamlinedagency (seeAnnex 2 for the FONTURorganization chart), day-to-day subproject supervisionactivities will be contracted out to private sector consultants. Projectfunding will provide resourcesfor the first two years of supervisionactivities but financing will be increasinglytaken over from FONTUR'sresources as the proceduresbecome established. This componentwas agreed upon at appraisaland is describedin detail in Annex 6, with implementationtargets shown in Annex 13. It will be a condition of effectiveness that the international technical assistance to carry out this component has been selected (para. 5.2.(c)). This TechnicalAssistance is classified as Institutional Development (CapacityBuilding) Technical Assitance (IDTA).

3/ DGSTTis responsiblefor the formulationof nationalurban transport policy (Chapter 11).

41/FONTUR is not responsiblefor the allocationof subsidiesbut is responsiblefor the developmentof subsidy policy(Chapter II). 17 3.7 PART A2 - Municioalitv Strenathenina Comoonent. To support decentralization of urban transport services as mandated by LORMand the DecentralizationLaw, this component will assist in strengthening municipal agencies in the planning, design, management, operation and maintenanceof traffic and transport systems in the cities. It is a criterion of subproject eligibility (Annex 4) that each municipality has established,or will strengthen, agenciesfor traffic and transport planning, maintenanceand public transport regulation. These municipal agencieswill carry out traffic and transport planning, bus system reorganization, concession revisions, tariff revisions and maintenance programs for urban streets and traffic control equipment and devices. Precise organizationalarrangements will respond to local circumstancesand various forms of structure are possible. For example, combined Traffic and Transport and Bus Regulatory Units may be formed in some cities, in others, "Institutes" for traffic planning exist and will be strengthenedunder the project. It is planned that maintenance activities will be carried out by the private sector and that a Maintenance Unit (or its equivalent) will be formed or strengthenedin each participating city so that it can carry out contract supervision,training andprogram planningin an effective manner. The project will support these institutional developmentsthrough: (i) international technical assistance resident in each city (two specialists in Barquisimetoand Maracaibo,and one in each of Maturin, Merida and CiudadGuayana) for a two year period to assistin establishingthe new city agencies,defining working practices, providing on-the-jobtraining to municipalstaff, (ii) permanent,national technical assistance in each project city over the complete period of implementation of the project to work with the municipal teams and the international consultants; the national consultants will be middle-level or freshly qualified professionals and will in fact work as counterparts to the international consultants and/or supplementregular staff in each of the agenciesinvolved, while the latter are being trained; this procedureensures that there will be a number of qualified venezuelannationals, at the local level, to absorb the transfer of knowhow; and (iii) equipment for traffic operations and maintenance quality control and testing. Municipal permanent and supplementarystaff will be eligible for, and will be required to attend, the national training program (see Part A3). A detailed description of the Municipality Strengthening component is given in Annex 6. It is a condition of disbursementto the municipalitiesthat the international technical assistance provided under this component is in place (para. 5.2 (c)). This TechnicalAssistance falls under the category of Capacity Building (IDTA).

3.8 PARTA3 - National Trainino Proaramfor Urban Transoort ComDonent. The objective of the national training program is to increase the capabilities of staff now working in the urban transport sector in the disciplines of traffic and transport planning, project evaluation, project execution, traffic operationsand maintenance. The program will benefit staff from the municipalities and from national agencies;local consulting firms may participate on a fee paying basis. The elements of the training program will be: (i) a national level, 4 month intensive course at "post-graduate' (or equivalent practical experience) level for traffic and transport engineers, economists and urban planners; the course will be held in Venezuela, annually, for 3 years (1994-96); (ii) transport familiarization courses, held on a regional basis, for city managers to enable them to improve their understanding of national and local urban transport policies and practices; (iii) technician training courses and logistic courses (computer applications), held on a regional basis, to expose junior technical staff to transport and traffic planning and operations techniques; (iv) courses for public transport operators to provide a background in efficient public transport operation; and (v) overseas post-graduatestudies for a selected groupof students from the initial intensivecourse and for FONTUR personnelto providea core of urbantransport specialistsin the country. The scopeof the coursesand the proposed organization,implementation arrangements and frequency of the coursesare described in Annex 7. The actions necessaryfor the next steps are shown in the Action Plan (Annex 13). Projectfinancing has been included for the coursesand for the necessaryequipment for their delivery (computers,visual display equipmentand generaloffice equipment).Given the importanceand scope of this component FONTURhas appointed a Training Coordinator to manage the overall training program and head the Human ResourceDevelopment division (seeAnnex 2). It will be a condition of 18 effectivenessthat the internationaltechnical assistanceto carry out this componenthas been selected (para. 5.2.(b)). This TechnicalAssistance falls under the Capacity Building category (IDTA).

3.9 PARTA4 -Traffic Police ComDonent.The FONTURprogram and the city projects place great emphasis on cost-effective traffic managementmeasures. To ensure that such measuresare successful in operation, good enforcement of traffic regulations is essential. Part A4 comprises a program at the national and local levels to assist in improving the effectiveness of the traffic police. At the national level, the program will include: (i) refurbishment, expansion and equipment for the traffic police training school; (ii) intensive training for traffic police instructors including study tours to police academiesin other countries; and (iii) technical assistancefor the review and preparationof new curricula at the traffic police training school. At the local level, for cities participating in the traffic subprojects, the police program will include: (i) equipment to assist traffic regulation enforcement (such as communications,vehicles, etc); and (ii) technical assistanceto assist the effective utilization of the new equipment and to improve operational practices. Estimates have been made of the resources necessary for the program (Annex 9). A final draft of a study examining traffic police capabilities,organization, resources, procedures, and proposinga detailed programfor this component was completed prior to negotiations(para.5. 1 (I)). The TechnicalAssistance sub-componentis of the IDTA type.

3.10 PARTA5 - Institutional and Policy Studies Component. This componentwould include financing for key policy studies in the transport sector at the national level. The main studies are as follows, and outline terms of referenceare given in Annex 8.

(a) A5.1 - Review of FONTURorganization and staffing; (b) A5.2 - Review of DGSTTorganization and function; (c) A5.3 - ResourceMobilization and Allocation Proceduresat the National Level; (d) A5.4 - Review of National Transport Subsidies; (e) A5.5 - Review and Revisionof the "Ley de Transito"; (f) A5.6 - Study and Action Plan to Implement and Monitor Targeted Public Transport Subsidiesin a Pilot City (Maturin); (g) A5.7 - Development of Resource Mobilization, Collection Mechanisms and Cost Recoveryat the Local Level; (h) A5.8 - Pilot Study for the Establishmentof a Legal Framework for Transport at the Local Level; {i) A5.9 - Design and Implementationof a ManagementInformation System for Urban Transportin a Pilot City; (j) A5.10 - Motor Vehicle EmissionsControl Study for Caracas;and (k) A5.1 1 - CaracasMetropolitan Area Transport CoordinationStudy.

3.11 Studies A5.1 to A5.6 addressseveral issuesdiscussed in para. 2.23 and are essential for the design of new institutional, regulatory and resource allocation proceduresat the national level; they must be completed not later than 18 months after loan effectiveness. Studies A5.7 to A5.9 should propose models which can be used by the municipalitiesfor cost recovery, for the definition of a legalframework andto set up their urbantransport related managementinformation systems;they must be completed not later than 24 months after loan effectiveness. Studies A5.10 and A5.1 1 are specific to Caracasand must be completed not later than 36 months after loan effectiveness (para. 5.1 (m)). Given the importance and scope of the policy studies component at the national level, FONTURhas appointeda Policy Studies Coordinatorwho will be part of the Project ManagementUnit (PMU). The TechnicalAssistance requiredfor this component is classified as Substitution Technical Assistance (STA). 19

3.12 PART A6 - City Preparation Studies Comoonent. Eligibility criteria for cities to participate in the FONTURprogram have been defined (Annex 4) and 25 cities meet the criteria. To maintainthe momentumof the FONTURprogram, it is proposed to finance preparationstudies up to an aggregateamount of US$ 2.5 million under the project. The component will provide for FONTUR to finance 100% of the cost of the studies while municipalities will provide office facilities and counterpart staff. Annex 8 provides outline terms of referencefor city level preparationstudy which will include four integrated sub-studies: (i) Traffic Systems Management,(ii) Public Transport, (iii) Institutional Development and (iv) Road Maintenance. The cities already appraised (Barquisimeto, Maracaibo,Maturin, Merida and Ciudad Guayana)have completedthe Traffic Systems Management element and must complete the Public Transport Study not later than 14 months after signing the relevantsubproject agreement(para.5.1 (n)). This study will recommendan action plan which should include, amongothers, measuresto improvethe financial sustainability of urbantransport systems and the targeting of subsidies. Duringthe secondannual review after effectivenessand subsequentannual reviews, the Bankwill evaluate the progress made by the municipalitiesin the implementation of the action plan. For cities with more than 500,000 population (except Caracas which will be included in the IDB project), the component will finance Strategic Transport PlanStudies to assessthe need for masstransit systems in the mediumand long term; acceptanceby FONTURand the Bankof the results of the study will be necessarybefore the city can proceed with feasibility and engineeringstudies of the proposedtransit systems. The Technical Assistance required in this component is classified as Substitution Technical Assistance to assist with appraisal and functional design of the proposed subprojects. Annex 12, Table 12.1A summarizesthe types of technical assistance included in the project and their respectivecosts.

PARTB - Infrastructure and EnuiDmentInvestment Proaress

3.13 Part B, which representssome 83% of project costs (US$166m), would provide resourcesto individualmunicipalities for urbantransport subprojects. City subprojectswill comprise investment in traffic and transport infrastructure and equipment and related maintenance programs. Related institutional strengthening is included in Part A.

3.14 PARTB1 - Traffic and TransportInfrastructure and EquigmentComponents. In the first phase,the five cities of Barquisimeto,Maracaibo, Maturin, Meridaand CiudadGuayana will participate in Part B of the project. The components in each city will seek to improve the efficiency and quality of the traffic system. This objective will be met mainly through traffic managementschemes, policies and operationalmeasures aimed at making the most effective use of the existing road network and facilities. Emphasiswill be placed on measureswhich assist the performance, reduce the costs of operation,and increasethe efficiency and quality of road based public transport. Schemesand policies will be amenableto expeditious implementationand will alleviate immediateand short term problems. However, where justified, infrastructure improvements and new construction have been included. Such infrastructure may include new roads or road paving and widening to increasecapacity, correct structural weaknesses, and to overcome discontinuities in road networks primarily to improve bus performance,quality and penetrationto areas currently not well served by public transport. Typical measuresare described in the following paragraphsand detailed in Annex 5, for each of the five appraisedcities:

(a) Traffic Systems - Investments would focus on making the best use of the existing transport system through traffic managementmethods. Typically, this component would include the application of traffic mnanagement techniques to key routes, corridors, and central areas particularly to city centers. The needs of pedestriansand, where they exist, cyclists would be considered. Typically, investments include: (i) comprehensivetraffic scheme for the central areas involving traffic circulation, bus 20

priority, pedestrianmeasures, control of street markets/sellersand parking schemes; (i) corricor improvement programs on main routes including junction improvements, public transport (bus, taxis) priority, pedestrian measures and limited widening to eliminate bottlenecks; iii) traffic sinnals improvement programs would be integrated with central areas and corridors, (iv) iunction imorovements at congested sites or accident blackspots,and (v) where necessary,lane markings and signing programs;

lb) Road Infrastructure - Selective investment would be included in new roads to correct deficienciesin the network (missing links") or to overcomespecific capacity problems or to allow public transport operations to be improved on adjacent roads. In some cities, paving of roads to increasebus accessto low income, usually peripheralareas and to reduce bus operating costs, has been included.

Cc) Public Transoort Facilities - This component will include some investment in public transport facilities to improve quality of service such as local terminals, bus stops etc. Institutional measures to improve the quality, supply, and economic and financial viability of bus services are included in Part A6. FONTURhas a subsidizedprogram to assist private operators and municipal bus companies with bus replacement and renovation;neither the Banknor the IDBwill participate in the financing of this program (pars. 2.22). However, this program is expectedto improvethe quality and operational conditions of the bus, minibus and jeep fleets.

3.15 PART B2 - Maintenance - This component would help to maintain and preserve transport infrastructure and facilities (roads, traffic signals and traffic control devices). Basedon a condition survey of main roads in the appraisedcities (mainly routes carrying public transport vehicles) an estimate is available of the deferred maintenanceneeds. The Project proposesto fund deferred maintenance such that conventional routine and periodic maintenance can proceed as a normal maintenance activity. The institutional measures proposed under Part A2 (Municipal Technical Assistance) will assistwith the transition of road maintenance responsibilities from MTC to municipalities. Annex 10 describesthe deferred maintenanceprogram and institutional arrangements for each of the five appraisedcities. The deferred maintenanceprojects will be carried out by contract.

3.16 Part B3 - Caracas. Transport problems in the metropolitan area of Caracas are of greater magnitude and complexity than in other Venezuelancities. Issues include public transport subsidy, public transport supply, the role of Metrobus, intense traffic congestion, past reliance on capital intensive solutions, low quality public transportation for the poor and lack of institutional coordination between the three (soonto be five) constituent municipalities. Resolutionof these issues will take time and it is not possibleto addressall these issues in the present project. However, it is of crucial importance that improved coordination in transport matters be achievedbetween the five municipalities comprising the Caracas metropolitan region. Thus, under Part A5, the project will finance a metropolitan areatransport coordination study. A selective approachhas been adopted to physical works which involves: Ci)the developmentof traffic managementdemonstration projects to show what might be achieved in critical areas in the short term and to provide prototype measures which may be appliedmore widely with resourcesoutside the project, {ii) improving accessto "areas marginales' (low income housingareas, usually located on steep unstable terrain) and (iii) formulation of policies to address key transport issues including a Short Term Strategic Transport Investment Review. This component will be financed through a proposed IDB loan.

3.17 Division of Responsibilities between Bank and IDB. The agreed division of responsibilitiesbetween the Bank and IDB ensuresthat: (i) each project can function independently,as a self-standingunit, while maintainingthe integrity of the FONTURprogram;(ii) only one bank (either the Bank or IDB) will participate in Part B in any one city and (iii) the schedulesof project preparation 21 and loan processingare independentof each other. The proposeddivision of responsibilitiesis shown in Table 3.1.

3.18 Status of Preoarationof PartA. Part Al: the FONTURstrengthening program has been defined and terms of reference for technical assistance are given in Annex 6. The component will include international technical assistance and it will be a condition of NeOotiationsthat contract proceduresfor the internationaltechnical assistancehave been completed. Outline terms of reference for the remainderof Part Al are given in Annex 6 and key dates are shown in the Action Plan(Annex 13). For Part A2: the municipal strengthening program scope and terms of reference have been defined in Annex 6 and key implementation key dates are given in the Action Plan (Annex 13). For Part A3: the national training program has been defined and the scope and the procedures for implementationare given in Annex 6 and key dates are given in the Action Plan. For Part A4: the traffic police program has been defined at a concept level andthe next stages are definedin the Action Plan (Annex 13) and in a report preparedby FONTURwith the assistance of specializedconsultants. For Part A5: the outline terms of referencefor some of the proposedpolicy studies, are given in Annex 8. For Part A6: preparation studies outline terms of reference are given in Annex 8; the studies will include the substudies not alreadycompleted in the five project cities and the Action Plandefines that the public transport studies must be completed not later than 14 months after signing of the relevant subproject agreement(para 5.1 (n)).

Table 3.1: BANK AND IDB CONTRIBUTIONSTO THE FONTURPROGRAM

Inter American Development Component World BankI~~ (IBRD) Contribution Bank Contribution- PART A Institutional Al - FONTUR Entire component None Developmentand Pollcy Program strengthening

A2 - Municipal Barquisimeto, Maracaibo, Maturin, Caracas, Maracay, Barcelona- strengthening Meride and C Guayana P.de la Cruz

A3 - National Entire component None training

A4 - Traffic police Natlonal program (training school, Possibly Caracas and other Instructor training and technical cities to be decided assistance) and local program in 5 citis appraised (equipment and technical assistance)

AS - Policy Studies Entire component none

AO - Preparation New cities to be decided; residual new cities to be decided studies substudhesIn 5 project cities

PART B - Infrastructure and Bi - Traffic 5 projoet cities appraised and Caracas,Maracay, Barcelona- Equlpment Investment Program Infrastructure and others which comply with P de la Cruz and others which Equlpment eligibility criteria comply with eligibility criteria

B2 - Deferred 5 project cities appraised and Caracas, Maracay, Barcelona- Maintenance others which comply with P de la Cruz and others which eligibility criteria comply with eligibility criterd

B3 - Demonstratlon none Entire component Projects and Areas Marginales in Caracas 22 3.19 Status of PreDarationof Part B. For Part B1, subproject preparationstudies for traffic and transport infrastructure and equipmenthave been undertakenin five cities proposed for inclusion in the Bank project, namely, Barquisimeto,Maracaibo, Merida, Maturin and Ciudad Guayana. The studies were carried out by consultants, supervisedby FONTURwith the aid of technical assistance provided under the Bank Technical Assistance Loan (Ln 3225-VE), and were appraisedby the Bank. City appraisalsand the detailed engineeringdesign and bidding documentsfor the first year investment program were completed and reviewed by the Bank. Part B2, deferred maintenance, has been identified at program level in each of the five participating cities. The proceduresfor implementation are given in the Action Plan, Annex 13.

3.20 Traffic Infrastructure and EauiDment. Traffic and infrastructure improvements in the five cities appraised,amounting to US$ 47 million (Annex 12), have been fully evaluated. The final engineeringdesign and bidding documents for the first year program of this component have been completed and reviewed by the Bank. Other traffic infrastructure investments in the five cities appraisedhave been identified but not yet fully evaluated. As part of each annualreview, FONTUR will propose to the Bank the traffic and infrastructure program for the following year with a full justification of all the components. The project includes an additional sum of US$ 55 million (Annex 12), estimated on the basis of preliminaryreviews and extrapolation,to finance additionaleconomically viable projects in any of these 5 cities. In addition, these funds can be used to finance traffic infrastructure and equipment in other cities which comply with the eligibility criteria and project preparation requirements. FONTURwill request approval from the Bank for any new scheme in the original cities or any new city participating in the project.

3.21 Eligibility. City participation in the projects will requirepolitical commitment from the relevant city authorities to strengthen their organizationsand addressimportant sectoral issues. The commitment would be reflected in the acceptanceby the cities of a series of eligibility conditions for participation. The eligibility criteria will be incorporatedinto the OperationalManual and consequently in FONTUR'ssubproject agreements with each city. It will be a condition of effectivenessthat at least one city has signed the FONTURagreement (para. 5.2). Key conditions are summarizedbelow with a full scheduleof conditions given in Annex 4): (a) the development of an integrated transport policy which will define policies and actions for traffic and transport strategy, public transport (regulation, fares, routes etc), institutional arrangements for the sector and urban transport infrastructure maintenancestrategy; (b) strengtheningof local institutions to handleurban transport responsibilities. Municipalities will agree to form or to strengthen permanent local units to deal with traffic management,road maintenance,maintenance of traffic control devices and planning and regulation of public transport. The type of organizationof the units will depend on city size and existing structure and will follow modelsdefined by FONTUR;(c) an agreement("convenio') between FONTURand each participating city, the key provisions of which would require cities to, inter alia:

(i) allocate within their annualbudgets, adequate resourcesfor maintenanceof road and traffic control devices and for counterpart funds for the sub-project. Road and traffic signals maintenancewill require a plan of action and compliancewith the plan will be monitored during project implementationand would be a condition of accessto further disbursement;

(ii) ensure, for any scheme, that any significant negative environmental impacts are identified and necessarymitigating measuresproposed;

(iii) seek the approval of FONTURand the Bank before initiating any investment in the transport sector with a total cost of morethan an amount equivalentto three times the aggregateof the approved grants to such eligible municipality or an amount equivalent to US$ 5 million, whichever amount is higher; 23 (iv) reduce the risk of slow implementation by completing final engineering and documentationfor componentsto be implementedfor the first year of the sub-project, prior to signing the "convenio";

(v) participating municipalitiesadhere to the FONTUROperating Manual(para. 3.22).

3.22 ODeratina Manual. FONTUR has prepared an Operating Manual which sets out proceduralguidelines to ensure participating municipalitiesare fully aware of all proceduresnecessary for participating and, technical guidelines which will ensure consistency of approach in project preparation for participating municipalities. The Manual also includes the eligibility criteria for municipalities,draft subproject agreementsand draft contracts to be utilized. A final version of the OperationalManual was reviewed by the bank and it is being tested by the participating Municipalities in the implementationof FONTURfinanced projects.

D. ProiectCosts

3.23 A summary of the project costs is given in Table 3.2. The Bank project will finance US$ 34.8 million equivalent for Part A and US$ 165.2 million equivalent for subprojects in the five participatingcities in Part B. This gives a total project estimated cost of US$ 200 million equivalent excluding duties and taxes; the latter are estimated at US$ 19.62 million. The Bank loan will be for US$ 100 million. The foreign exchangecost of the Project is estimated at US$80.51 million, about 41 % of the total project cost. Basecosts were estimated, at prevailingSeptember 1992 prices. Price contingencieswere calculated with anticipated international price escalation rates of 3.7% per year for the six year project implementation period.

3.24 For Part A, 70% will be for consultant services (for FONTURstrengthening, for municipalitystrengthening, for traffic police technical assistanceand for the national training program), 25% for equipment (for the traffic police and FONTUR)and 5% for infrastructure required for institutional development. Within Part B, the estimated costs for traffic and transport infrastructure, public transport and deferred maintenance are about US$ 124 million (60% of the project cost). Physicalcontingencies were estimated dependingupon the appraisedsub-projects and the extent of preparationof the components: 10% for works which final engineeringand specifications have been prepared;15% for preliminaryengineering/feasibility study level and 25% for all conceptual proposals.

3.25 A loan of about US$ 100 million is expected from the IDB to finance projects in Caracas,Barcelona-Puerto de La Cruz, Maracay,Valencia and other cities which comply with the city eligibility criteria (para. 3.21 and Annex 4). 24

Table 3.2: SUMMARYOF PROJECTCOSTS (US$ million)

I Local Foreign I Total % of Total

PART A - INSTMTUTIONAL DEVELOPMENT AND POLICY

Part Al - FONTUR strengthening 1.54 2.30 3.84 1.9

Part A2 - Municipal strengthering 2.27 2.69 4.95 2.5

Part A3 - National Training Program 2.91 4.31 7.22 3.6

Part A4 - Traffic Police Program 2.96 9.22 11.17 5.6

Part A5 - Policy studies 1.31 1.31 2.63 1.3

Part AS - Project preparation 2.50 2.50 5.00 2.5

Sub Total Part A 13.49 21.32 34.81 17.4

PART B - INFRASTRUCTURE AND EQUIPMENT

Part 81 - Traffic and infrastructure 67.39 36.97 104.35 52.2

- land expropriation Part B1 1.08 0.00 1.08 0.5

Part B2 - Deferred Maintenance 12.16 6.29 18.45 9.2

Sub Total Part B 80.63 43.26 123.98 61.9

,ees Ceet. .4.58 84.12 ¶5I.69 78.3

Physical Contingencies 10.11 5.54 15.65 7.8

Sub Total 104.23 70.12 174.34 87.2

Price Contingencies 15.28 10.39 25.66 12.8

Total P etjctCostsexiudig taxl X 119.51 80.51 200.00 100

Taxes 19.62 0.00 19.62 9.8

Total Project Costs (including taxes) 139.13 80.51 219.62 109.8

E. Indicative Investrnent Needs

3.26 The Bank and IDB projects will finance about 45% of the proposed FONTUR national program. FONTUR will receive resources from GOV to finance roughly 38% of the program and the remaining 17% will be financed by the municipalities included in the project.

F. Financina

3.27 The proposed Bank loan of US$ 100 million would finance about 50% of the total project cost (excluding land acquisition) net of taxes and duties. About 35.1 % of the net project cost is estimated as foreign exchange; funding of some local costs is justified in view of the beneficial institutional, social and environmental impact of the project. The project financing plan is shown in Table 3.3. 25

Table 3.3: FINANCINGPLAN (US$ million)

Source of Funds Local Foreign Taxes Total % Total

World Bank 19.49 80.51 100.00 44.8

GOV (FONTUR) 67.3 - 19.62 86.92 33.3

Municipalities 32.7 .- 32.70 16.3

Total 119.49 80.51 19.62 218.62 100

3.28 The proposed loan would finance 100% of foreign expenditures and 50% of local expenditures for the training and consultant services required in Part A, excluding engineering design/supervisionservices which will be financed at a rate of 33% of the expenditures incurred by FONTUR.The goods and equipment requiredfor the implementationof Part A will be financed at 50% of ex-factory cost. The remainder of Part A would be financed by FONTUR. For Part B of the Program,the proposedloan would provide 50% (ex taxes and duties) of the costs of all components.

3.29 The remainderof Part B, would be financed as follows: FONTURwould finance 25% of the cost of a subproject which would be matched by a 25% contribution from the investment budget of the participating municipalities. The proposed system of matching grants is justified at present in view of the following circumstances:

{i) FONTUR'sfunds originate from fuel taxes and are thus paid by users of services in the municipalities.The PublicTransport Systems (PTS)of most of the municipalitiesother than Caracas have benefitted very little from such user charge revenues, which are collected and allocated to FONTURby the central government;

(ii) unlike public utilities which can recover costs associated with Infrastructure improvements through rate increases, the municipalities can only pay for PTS infrastructure improvementsthrough an increasein specific municipal taxes. This will become a practical option when the municipal institutions are built-up, the decentralizationprocess is completed and fiscal responsibilitiesare clearly defined. It is doubtful if the current revenue base is sufficiently large or stable in participating municipalitiesto permit major infrastructure investments;

(iii) in the past, municipalitieshave receiveddirect transfers in the form of grants to finance PTSinfrastructure; the proposed matching grants system will bring financial discipline to this process, increaseaccountability in the use of such funds and give time to the municipalitiesto mobilize local resources and establish sound financial management practices. Following the initial subprojects funded under the Bank loan, all future financial assistancefrom FONTURto the municipalitieswill be provided on commercial on-lendingterms;

(iv) the need for rapid and effective support for the decentralizationof urban transport responsibilitiesto the municipalitieswhich otherwise would be delayed becauseof the weak revenue base of the municipalities;and

(v) the need to correct the past bias in urban transport investments which were heavily weighted in favor of Caracasfor large capital-intensivesolutions. 26 3.30 The proceedsof the Bank loan would be transferred to FONTURby MTC. FONTURis not a banking institution and administration of loan proceedswould be dealt with through commercial banks. While FONTURwould retain the power of approval for loan withdrawals by municipalities, FONTURwould establish agreementswith commercialbanks to deal with flows of funds. FONTUR provided the Bank with full details of loan transfer proceduresto the municipalities (para. 5.1 (e)).

3.31 In some cities, more than one municipality will be involved. The eligibility criteria (Annex 4) requirethat municipalitiesreach an agreementon the composition of the sub-project, how funds will be apportionedand the relative responsibilitiesfor providing the 25% counterpart funding. Prior to disbursing funds to participants a subproject agreement will have been executed with a participating city which, inter alia, will confirm any inter-municipality agreements.

G. Proiect EconomicEvaluation

3.32 Traffic conditions vary considerablyin the participating cities and at this stage, traffic congestion is not overly severe. However, vehicle/parking/pedestrianconflicts are increasingand congestion does occur in central areas and at specific junctions. In many cities, the basic transport infrastructure is satisfactory but the systems lack management (traffic circulation systems, well designed junctions and traffic signals etc) and traffic law enforcement to enable the full potential capacity to be fully utilized. In some cities, there are specialproblems which influencetraffic efficiency such as Maracaibowhere the central area is congesteddue to street markets and where the majority of public transport is supplied by 5-seat cars. In other cities, there are deficienciesand discontinuities in the road network arising from factors such as the past lack of funds and difficult terrain. Some road maintenanceproblems exist and could worsen as responsibilityis devolvedfrom the local MTC offices to the municipalities. Accidents are often reported as a problem although inadequatedata exist to provide reliable indices to classify the problemsagainst recognizedinternational norms. The number of standard busesappears to be diminishingbut althoughquality of public transport in the participating cities is declining, it is not certain that overall capacity is decreasing. In all cities, the responsibilityfor alleviating all transport sector problems now falls on the municipalities. As the cities grow, even with the relatively modest growth rates anticipated, the problemswill worsen and the municipalagencies do not have the manpower resources,in quantity and quality terms, to deal adequately with them.

3.33 ProiectBenefits. The main benefitsof PartA (Institutional) will stem from the increased capabilitiesof FONTURto influence urbantransport through the allocation of resourcesto well planned and conceived programsand schemesat the local level and of increasedcapabilities at the local level itself. The national training program should begin to deal with the problem of technical capabilitiesof the municipalities, and the traffic police program should begin to enable better use to be made of existing infrastructure through better traffic law enforcement. Part B of the Project will ensure that municipalitiesbegin to use the institutional strengthening included in the project, to take over their responsibilities arising from decentralization. The traffic and infrastructure and the deferred maintenance investment programs should improve urban transport operations. The quantifiable benefits, used to justify the physical investments, are in terms of reduced vehicle operating costs, but just as important in terms of their impact will be time-saving benefits through reduced traffic congestion. Reductions in congestion will make a significant contribution to the environment and hence to the quality of urban life. The poor should also benefit from road paving and consequent improvedpublic transport accessto low income areas and shorter travel times to/from places of work. FONTURhas encouragedcities to include in their subprojects solutions which foster non-motorized modesof transport such as bicyclesand walking. These solutions will principally be of benefitto poorer users of the urban transport system. 27 3.34 As part of the subproject eligibility (Annex 4), subproject components should have internal rates of return of at least 12% (the estimated cost of capital) and the economic evaluation should show that each proposedcomponent is an efficient solution to the identified problem. For the economic evaluationof components, FONTURdeveloped evaluation guidelines and standardizedurban vehicleoperating costs. These proceduresare incorporatedinto the FONTUROperational Manual and will be periodically revised as necessaryduring the execution of the project.

3.35 From the appraisal of the five city subprojects, the project is estimated to have an overall economic rate of return (ERR,weighted by the investment costs) of about 32%. If time savings are added, the ERRincreases to 79%. This ERRexcludes the costs and benefits of the institutional strengthening program of FONTUR,of the national training program,the traffic police program and the benefits derived from reductionof accidentsand environmentalimprovements. All these benefits are important and vital to the success of the programs but quantified evaluation is not possible. The averagerates of return obtained in the evaluatedcomponents in the five city subprojectswhich have been appraisedand a sensitivity analysis reflecting the impact of higher costs and/or lower benefits are summarizedin Table 3.4 and described in more detail in Annex 11.

Table 3.4: SUMMARYOF QUANTIFIEDSUBPROJECT BENEFITS (EconomicRate of Retum (%))

Benefits-25% Benefits Benefits - + Costs Base +25% 25% +25% OCS OCS OCS OCS + OCS + OCS + OCS OCS only TS only TS only TS only + TS Barquisimeto 35 73 47 92 23 52 15 40 Maracaibo 37 92 49 117 24 67 15 52 Maturin 27 89 38 113 15 64 8 48 Merida 17 41 25 53 9 28 4 20 Ciudad Guayana 20 65 26 82 13 49 8 38 Total Part B 32 79 44 100 21 57 13 44

OCS- OperatingCost Savings TS - Time Savings

H. EnvironmentalAsDects

3.36 The project will have a beneficial impact on the environment. Traffic management investments would help relieve congestionin major transport corridors and central areas, resulting in lower emission of pollutants per vehicle-kilometer. Junction improvements and pedestrian schemes will improve safety and quality of life. Wherepaving or resurfacingof accessroads has been included, this will reduce the incidenceof airbornedust. Public transport system improvementswill contribute to promote a more efficient form of urban development resulting in a further reduction of travel and 28 emissions. The redesignof urban roadsproduces opportunities for tree planting, an activity which was included in the terms of referencefor the final engineeringdesign of the first five cities.

3.37 Some road works may have localizedadverse impacts, mainly related to excavation for construction materialsand disposalof work site wastes. The problemsof excavatedmaterial are likely to be less than in an inter-urban project as the road developments in the project will mostly be to existing roads for which no further earthworks will be required. Measuresto mitigate such impacts would be specified in the bidding documents for works.

3.38 In general, land and/or property expropriation should be small as proposed project components are expected mainly to consist of improvements within existing rights of way, traffic management measures, paving of streets, and road maintenance. However, in some cities, the proposed subproject may include construction of new road links or major intersections; in such cases a need for relocation of existing residents may occur. In the case of relocationthe Bankguidelines will be strictly followed. It is a part of city eligibility criteria (Annex 4) that in the event that any component involves displacementof population, FONTURwould notify the Bank, and would present a resettlement plan, satisfactory to the Bank, prior to implementation.

3.39 The OperationalManual includes Annex on EnvironmentalImpact Assessment which describes how to identify, assess and propose mitigating measuresfor the most common types of environmental impact. Terms of Reference for preparing the final engineering designs of the infrastructure improvementsproposed require that existing environmentalroad conditionsbe reviewed and that the final designs include specific measuresfor alleviating conditions where they fail to meet existing or proposed standards. In addition, an environmental assessment will be required for all proposalsfor new works, indicating any adverseenvironmental consequences and proposingmeasures to eliminatethem or at least reduce their impact to internationally accepted levels. Theseassessments and proposalswill relate principally to vehicle emissions,vehicle noise, visual intrusion and community severance.

3.40 To ensure that environmentalimpacts are properly evaluated and adequatemitigating measuresare proposed, FONTUR'sprogram's division is staffed with an environmentalspecialist in charge of reviewing all phasesof subproject preparation and implementationfrom the environmental standpoint. More specifically, the specialist's responsibilitieswill include: (i) ensure that terms of reference (TOR)for feasibility studies include an environmental impact evaluation of the proposed solutions; (ii) review the feasibility studies and determine, according to good environmentalpractices, whether a specific environmentalimpact assessmentsuch as a resettlementplan is required,and hire consultants to carry out such analysis and propose mitigating measures;(iii) in the latter case, seek the Bank's approvalfor the proposedmeasures; (iv) includethe proposedmeasures in the TORfor final engineeringdesign; review the final engineeringdesign from the environmentalstandpoint and clear the project for implementation;and iv) supervisethe implementationof the project to ensurethat the municipalities are carrying out their implementation in accordance with the design approved by FONTUR. Since all the preparationstudies under Part A6 will be financed and approvedby FONTUR, it is expected that this arrangementwill ensure that subprojects will be carried out according to environmentalpractices acceptableto the Bank.

1. Proiect Risks

3.41 The proposed project is the first urban transport lending operation in Venezuela. The project places great emphasison institutional strengthening and on managementof systems, on cost- effective schemes-- the latter measuresgenerally new to the participating cities. Also, the project will be implemented in a climate of decentralization of responsibilities to municipalities and those 29 municipalitieswill take time to becomefully establishedand effective. Indeed, FONTURitself, a new agency will also take time to become established. Thus, in summary, new policies and directions in urban transport are being pursued by new agencies and the main implementation risk is clearly institutional. The project has placed great emphasis on these aspects and includes FONTUR strengthening,national training (for national and local technical staff) for traffic planners,traffic police technical assistanceand training and technical assistanceto participating municipalities. It will be a condition of effectiveness that the contract negotiations for FONTURtechnical assistance will be completed. Finally, at negotiations, FONTURconfirmed that it will have an environmental specialist in its ProgramsDivision to review the environmentalimpact of any project proposed by the cities.

3.42 Counterpart funding could prove a risk from two aspects. Firstly, weak municipal financial capacity and consequent lack of budget. To mitigate this problem in this time of transition to decentralization,the municipalitieswill receive75% grant for the investmentcomponent(50% Bank loan and 25% FONTURgrant). To ensure municipality allocation of their 25%, the municipalitieswill be: (i) subject to financial review and (ii) required as part of the subproject agreement to commit funds. Secondly, changes in political commitment at the municipality level could influence the availability of counterpart funds and thus implementation. This has been mitigated by: (i) the use of eligibility criteria which apply to all FONTURfunding -thus municipalitiesmust comply with the criteria even if projects are not financed by the Bank loan; (ii) the incentive provided by the nature of the financing plan which places a heavy emphasison grants to the municipalities;and (iii) by limiting the scale of individual components such that they can be implemented within 18 months (part of the eligibility criteria - Annex 4) and are thus less likely to political influence.

3.43 There are policy risks; it is accepted that lack of realistic tariffs has contributed to (i) a decline in the public transport fleet/supply and (ii) costly subsidies to urban transport by GOV. It would be unrealistic to expect this problem to be resolved in the immediate term. FONTURitself proposesto increasethe supply of busesthrough the provisionof a line of credit, with a one-time, 'up- front" subsidy to operatorsand thence allowing operatorsto charge commercialfares. The Bank will not participate in this program. However, the project will contribute to the resolution of the subsidy issue through: (i) continued dialogue with the GOV at the annual review and particularly during the mid-term review which will assess the progress made by each municipality towards the recommendationsof its Public TransportStudy for the municipality, and (ii) through studies to develop improvedtargeting of subsidies and for monitoring pilot targeted subsidy systems (Maturin).

3.44 In view of the considerationsoutlined, the risks are expectedto be manageableand the conditionality has been designed to contain them within acceptable limits. Offsetting these risks are the benefits expectedfrom the project and particularlyfrom its institutional strengtheningcomponents. If these componentsare successful,the benefits in term of improvedresource allocation would go well beyondthe direct benefits estimated. 30

IV. PROJECTIMPLEMENTATION

A. Institutional ResDonsibilities

4.1 The Republic of Venezuela will be the Borrower. FONTURwill be responsiblefor implementing the project, in accordance with: (a) contractual arrangements (section IV.B); (b) implementation schedule (section IV.C); {c) implementation arrangements (section IV.D); (d) implementationprogram (section IV.E); (e) procurement arrangements(section IV.F); (f) disbursement arrangements(section IV.G); (g) auditing arrangements(section IV.H) and (h) monitoring and reporting arrangements (section IV.1) which will be confirmed during negotiations, and for which detailed guidelineswill be provided in the OperationalManual, satisfactory to the Bank. The Bankwill monitor and supervisethe implementationof the project in accordancewith a monitoring and supervision plan (section I and Annex 13).

4.2 For both Parts A (excludingpart A4) and B, FONTURwill be the implementingagency and will assumeoverall responsibilityfor continued subproject preparation,appraisal and supervision. The implementationof the Traffic Police program (Part A4) is the responsibility of MTC (DGSTT)(see implementationarrangements) but shall be carried out under FONTUR'ssupervision. To help FONTUR strengthen its operations and to carry out its obligations, an institutional strengthening program has been devised (Annex 6). Within individual municipalities,it will be a condition of eligibility, inter alia, that traffic and transport, public transport andmaintenance capabilities be createdand/or strengthened. These strengthenedunits will be responsiblefor the day-to-day implementation of the subproject at local level. It will be a condition of disbursementof Loan funds to the cities that FONTURsubmits evidence to the Bank that the institutional arrangements required in the city eligibility criteria are formally establishedand satisfactory to carry out the subproject implementation (para. 5.3 (c)); and a condition of effectiveness that the international technical assistance provided under Part A2 is in place (para. 5.2 (c)).

B. Contractual Arrsnaoments

4.3 The following contractual arrangementswill be necessaryfor the implementationof the project: (i) agreementbetween MTC and FONTURto carry out part A4 of the project which deals with the nationalTraffic Police program;(ii) agreementbetween MTC and municipality to carry out the local portion of the Traffic Police program;(iii) a participation agreementbetween FONTURand each of the municipalities involved to set forth the general obligations of both parties in the project; and (iv) a subproject agreementbetween FONTURand each municipality establishingthe terms and conditions of each subproject and the respectivegrant to be made by FONTUR. Priorto negotiations,at least four municipalitieshad alreadysigned participation agreements(Maracaibo, Merida, Ciudad Guayanaand Maturin).

C. ImplementationSchedule

4.4 The proposedproject is expected to be implementedand the loan disbursedover a six year period. This is slightly shorter than the conventional seven years in the region but is justified in view of (i) the status of preparationof participating cities, and (ii) the relatively low-cost nature of the works proposed. The project would be completed by June 30, 1999, and the Closing Date would be December30, 1999. 31

D. ImDlementationArranasments

4.5 Proiect ManaaementUnit. FONTURwill establish and maintain a Project ManagementUnit (PMU)headed by a ProjectCoordinator, to managethe implementationof the several components of the Bank project. The Project Coordinator will report directly to FONTUR'sExecutive Director (see Annex 2) and participated in the negotiationsof the loan. One of the international consultants financed under Part A of the project will act as a full time advisor to the Project Coordinator to provide the technical support and cross-country experiencerequired for managingthe project. In addition to the ProjectCoordinator who will be responsiblefor the overall financial managementof the project, PMU will include: (i) a transport economist and policy studies coordinator responsiblefor the institutional strengtheningprogram (PartsAl and A2) and overseeingthe execution of all the studies and transport economics aspects of Part A5 of the project; (ii) an engineer, with experience in procurement, to coordinate Part B of the project; and (iii) a managementinformation systems specialist responsiblefor the reporting and supervisionof the project. PMU will be supported by a small secretariat which will include an accountant responsiblefor project disbursement.

4.6 Traffic Police ProoramUnit. Since the Traffic Policeis a division of the DGSTTof MTC, the actual implementationof the Traffic Police program (Part A4) will be managed by a special Traffic Police Program Unit (TPPU) of the Traffic Police section of DGSTT, under the PMU's overall supervision. MTC and FONTURwill sign an agreement which will define the responsibilitiesof each party in the execution of Part A4 of the project. The same TPPU will be responsible for the implementationof the local portion of Part A4 always under PMU's supervision. It will be a condition of disbursementof Loan funds related to the local portion of the Traffic Police program that each municipalityand MTC sign an agreementestablishing the responsibilitiesof each party in the execution of the project (see para. 5.4).

4.7 City Proiect ManaaementUnit. The execution of the city subprojects (Part B) will be governed by the following arrangements: Each city will establish and maintain a city project managementunit (CPMU)responsible for the implementationand supervision of the city subproject. This unit could be part of one of the agenciesrequired in the city eligibility criteria (para. 4.2). The unit will be headed by a Project Manager (CPM), responsible for the overall management of the city subproject, the coordination of all the municipal agenciesinvolved and the interface with FONTUR. He will be an experienced project manager,preferably a professionalengineer, appointed by the mayor and reporting directly to him. In addition to the project manager,the CPMU will be staffed with an engineerwith experiencein design,construction supervisionand procurementand supported by a local consultant financed through the municipal strengthening program. It will be a condition of disbursementof Loan funds to any municipality subproject that the CPMU has been established,the CPM has been appointed, the international technical assistance (Part A2) is in place and that the municipality has satisfactorily compliedwith the institutional arrangementsincluded in the conditions of eligibility (para. 5.3 (c)). During preparationall the municipalitiesappraised have designateda CPMU and a CPM. However, since subproject implementationwill involve other agenciesin the municipality which didnot participate in project preparation (e.g., the construction and procurement directorates), it is important that the present set up be formalized to ensure efficient coordination.

4.8 The preparation of the subprojects (economic feasibility study, environmental assessment, preliminary design, final engineering design and preparation of specifications and bid documents) will be financed under the project (Part A6) and carried out by consultants selected according to Bank Guidelinesfor consultants. The CPMU will actively participate in the drafting of terms of reference, evaluation of consultants, preparation of the feasibility study and engineering designs. This process was followed in the case of the five cities appraisedand it is crucial to stress 32 the senseof ownershipof the project. The overall preparationprocess will comply with the procedures described in the Operational Manual. Once the subproject has received FONTUR'sapproval for implementation, CPMU will call for bids, evaluate the proposals according to the procurement proceduresdescribed in the Operational Manual, and submit its evaluation and recommendationto FONTUR'sPMU. After receiving PMU's approval to award the project, CPMU will notify the winner and prepare a contract based on a standardcontract approved by FONTUR. FONTURshould receive copies of the contract for its files. The CPMUwill be responsiblefor the supervisionof the subproject and FONTURwill also carry out periodic supervision,at least for the first lots under implementationto ensure compliance with the agreed design or specifications. At mid-term review, the Bank will evaluateways to simplify this process based on the performanceof the municipalitiesin the first two years.

E. ImDlementationProaram

4.9 The key actions and respective dates of the ImplementationProgram are:

(a) FONTURstrengthening (Part Al)- The international technical assistance consultants must be selected prior to loan effectiveness (paras. 3.6 and 5.2 (c)).

(b) Municipal strengthening (Part A2)- The international technical assistance consultants must be in post before any contracts for goods and works are contracted (para. 3.7 and 5.3 (b)).

(c) National Training (Part A3)- The selection of the technical assistancefor the Intensive Courseof the NationalTraining Programmust be completed prior to loan effectiveness (paras.3.8 and 5.2 (b)).

(d) Traffic Police Program(Part A4)- Final draft of the study on the Traffic Police Program was ready prior to Negotiations. (paras. 3.9 and 5.1 (I)).

(e) Policy studies (Part A5)- Studies A5.1 and A5.2 must be ready, respectively, 1 and 3 months after loan effectiveness; studies A5.3 and A5.4 must be completed not later than 10 months after loan effectiveness and study A5.5 must be completed not later than 12 months after loan effectiveness. Studies A5.10 and A5.11 are specific to Caracas and must be completed not later than 36 months after loan effectiveness. (paras.3.11 and 5.1 (m)).

(f) Preparationstudies (Part A6)- The Public Transport Study for any of the participating municipalitiesand an action plan based on its recommendations,must be completed 14 months after signing of the relevant subproject agreement. Progress in the implementation of the action plan will be reviewed during the second annual review, (mid-termreview) and in subsequent annualreviews (paras.3.12, 5.1 (n) and 5.1 (q)).

(g) Traffic Infrastructure and equipment (Part B1)- Final engineering design, bidding documents and equipmentspecifications for the first year program were completed as prior to negotiations (paras.3.14 and 5.1 (o)).

(h) Deferred Maintenance (Part B2)- Final engineering design, bidding documents and equipment specifications for the first year program were completed prior to negotiations (paras.3.15 and 5.1 (o)). 33 li) Annual Programfor Part B- At each annual review, FONTURwill present the program for the following year and seek approvalfrom the Bankto proceed with its preparation and implementation(paras. 4.19 and 5.1 (p)).

(j) Mid-TermReview- This review will take place 24 months after loan effectiveness,and will assess the overall performance of the implementation agency and the progress madeby the municipalitiestowards the recommendationsmade in the Public Transport Study. Basedon this evaluationit will proposea revisedaction plan and any corrective measuresnecessary to ensurethat the project meets its main objectives (paras. 4.20 and 5.1 (q)).

F. Procurement

4.10 Bankprocurement guidelines will be followed for the proposedproject. The Venezuelan procurement law (Ley de Licitaciones,August 1990) contains provisionsexempting all contracts (civil works, goods, and services) relating to projects partially or entirely funded by international financing agencies,from complying with its provisions,ruling that in such cases the applicationof the respective agreementswill prevail. Civil works under the project would account for about 67 percent of total project costs, equipmentand materialsabout 7 percent; and consulting servicesabout 26 percent. The estimated project cost breakdown by procurement method is presented in Table 4.1 below.

4.11 Civil Works. Contracts exceedingthe equivalent of US$ 2 million would be procured on the basis of International Competitive Bidding (ICB). It is expected that three contracts with an aggregatevalue of about US$ 39 million may fall into this category. Most other works ($91.6 million) are of a dispersednature with contract amounts between US$ 0.75 to 2.0 million and thus would not be suitable for ICB; therefore, they would be awarded according to local competitive bidding (LCB) proceduresacceptable to the Bank, and nationally advertisedto ensureadequate competition. Foreign bidderswould be allowed to participate in the bids, and this would be explicitly stated in the General ProcurementNotice which will be publishedinternationally after credit negotiations. The bulk of civil works contracts would be improvementsto existing traffic infrastructure, including roads, traffic signs and signals. The provision and installation of traffic signals, estimated to cost an aggregate of $8 million, would be integrated into the respective civil works contracts to ensure properly coordinated implementation of the traffic schemes, but in the larger cities ICB is proposed. Small works, with contract values under $100,000 up to an aggregatetotal of $ 2 million, would be procured by local shopping based on price quotations from at least three bidders. To avoid fragmentation of civil works procurement, contracts below $25,000 would not be eligiblefor financing.

4.12 Land Acauisition. In a few instances,especially the construction of missing links in the road system, the acquisition of land may be required. Paymentsfor this item, estimatedto cost a total of US$ 1.21 million equivalent, would be based on national proceduresfor land expropriation and be financed entirely out of project counterpart funds; therefore, no Bankproceeds would be used for this purpose.

4.13 Eauipmentand Materials. Contracts estimatedto cost morethan $200,000 equivalent would be procured on the basis of ICB. It is expected that goods costing a total of US$ 10 million (55% percent of all goods procured under the project) would fall into the ICB category. Contracts below $200,000 with an aggregatevalue of US$ 7.6 million, would be procured in accordancewith LCB proceduresnationally advertised and subject to Bank's approval. Contracts for equipment and materials costing less than $25,000 could be procured through local or international shopping, up to an aggregatetotal of $270,000. 34

Table 4.1: PROCUREMENTARRANGEMENTS (in US$ million equivalent)

Procurement Method

ICB LCB Other N.B.F. TOTAL

1. CIVILWORKS

Part A-Intrastructure for Inst. 1.79 1.79 Development (.89) (.89)

Part B-Traffic Infrastructure 38.98 71.97 1.00 b/ 111.95 (19.49) (35.99) (.50) (55.98)

Part B-Deferred Maintenance 17.85 1.00 b/ 18.85 (8.92) (.50) (9.42)

Part B- Land Acquisition 1.21 1.21

2. EQUIPMENTAND MATERIALS

Part A - Inst. Development (inc. 7.23 2.38 9.61 vehicles) (3.61) (1.19) (4.80)

Part B - Traffic Infrastructure 2.91 5.18 .27 b/ 8.3e (1.45) (2.59) (.14) (4.18)

3. CONSULTINGSERVICES */

Part A - Training 8.11 8.11 (9.11) (8.11)

Part A-Technical Assiatance 11.03 11.03 (5.52) (5.52)

Part A - Studies 8.57 8.57 (4.29) (4.29)

Part B-Engineering/ Supervision 20.53 20.53 (6.84) (6.84)

TOTAL 49.12 99.17 50.51 1.21 200.00 (24.55) (49.58) (25.90) (100.0)

NOTE: Figures in parentheses are the respective amounts financed by the Bank loan. N.B.F.: Not Bank-Financed. */ Services to be procured in accordancewith World Bank Guidelines: Use of Consultants by World BankBorfowers and by the World Bank as Executing Agency (Washington, DC, August 1981). b/ Localfinternational shopping

4.14 ConsultinaServices. Consultingservices would be procuredin accordancewith World Bank guidelinesfor consultants. These services, which include studies, technical assistance,training, engineeringdesigns and construction supervision,are estimatedto cost an aggregateof US$ 48 million of which US$ 21 million are for engineeringdesign and supervision services. Foreign consultants would not be subject to prior registration as a condition for being eligible in the selection process. However, registration would be a pre-conditionof being contracted for consulting services, although not of selection. Foreignfirms would have to comply with registration proceduresafter being notified of contract award. The registration proceduresentail submissionof standard forms, provided by 35 FONTUR,in which details about the background,specific experienceof the firm and financial statementsfor the last three yearsare requested.The registrationprocedure is free of chargeand takesless than threedays.

4.15 ProcurementReview. All biddingpackages above US$500,000 for civil works, andall biddingpackages above US$200,000 for equipmentand materials,would be subjectto the Bank's priorreview of advertising,bidding documents, bid evaluation and contract awards. The above process would cover about 50% of the estimatedtotal costs for civil works, equipmentand materials. However,in orderto ensurethat adequateprocurement procedures are followed, the first LCBcontract for eachmunicipality would be subjectto the Bank'sprior review, irrespectiveof the amount. All otherprocurement documentation would be subjectto selectiveex-post review, at a ratio of not less than one for every five. FONTURwould retain documentationfor these contracts for periodic examinationby Bankstaff. 4.16 Coordinationof Procurement.As executingagency, FONTUR would assumeoverall responsibilityfor procurement,although the individualmunicipalities and the Borrower(MTC-Traffic Police)would be responsiblefor procuringthe items of their respectiveproject components. The OperatingManual spells out the detailedprocurement procedures and containsstandard bidding documentsand evaluation guidelines to be usedin the procurementof civil works,goods and services. It alsospecifies the documentswhich shouldbe submittedto FONTURfor prior andex-post review. FONTURwould also ensurethat the aggregatetotals for local and internationalshopping not be exceeded.To avoid unnecessary delays in the implementationof the project,especially during its initial phase,the projectincludes 24 monthsof advisoryservices to FONTUR,the municipalitiesand the Traffic Police,to assistin the procurementprocess.

G. Disbursements 4.17 Table4.2 presentsthe percentageto be disbursedby loan category. Table4.2: LOANDISBURSEMENT BY CATEGORY (US$)

Amount DIsbusement Rate

Civil Works for Parts A.4 (local) and B 5b870.000 87% of amounts disbursed by FONTUR

Civil Works for Part A.4 Inationall 1.000.000 50% of total expenditures

Equipmentand Goodsfor PartsA.2, A. (local) 4.180.000 87% of amountsdisburmed by FONTUR and B

Equipmentand Goodsfor Parts A. 1 A.3 and A.4 3.800.000 100% of foreignexpenditures and (national) 60% of local expenditures

Consultantservices and Trainingfor PartsA.1 (i). 12.120.000 100% of foreign expendituresand A.3 A.4 (national)and A.S 50% of localexpenditures

ConsultantServices for PartA. 1 0ii (engineering 6,840,000 33% of total expenditures design/supervision)

ConsultantServices for Part A.2 andA.6 58800.000 100% of amountsdisbursed by FONTURfor foreignexpenditure and 50% of amounts disbursedby FONTURfor localexpenditure

Unallocated 10.3900000

Total 100,000.000 36 All disbursements under contracts up to USS500,000 equivalent for works and US$200,000 equivalent for goods would be made on the basis of certified statements of expenditures (SOEs) preparedby FONTUR. Supporting documentation for the SOEs would be retained by FONTURand made available for examination by Bank staff during supervision missions. To expedite project execution, a SpecialAccount would be opened in the Central Bankof Venezuelawith a deposit of up to US$5.0 million equivalent. This account will be replenishedfor the amount of withdrawals on account of eligible expenditures. Authorization is sought for retroactive financing of up to US$10 million equivalent (10% of loan funds) in accordance with Bank standard guidelines. Claims for retroactive financing would have to be made no later than 12 months before the date of the signature of the loan (expecteddate October 30, 1993). The disbursementarrangements were discussed and agreedduring negotiations (para. 5.1 (e)).

H. Auditina

4.18 Auditina. FONTURwould prepare financial statements, audited SpecialAccount and audited SOE's using external auditors acceptableto the Bank. The Bank would review the external auditors' terms of reference. FONTURin turn, would require each implementingagency to engage external auditors satisfactory to FONTUR to audit their subproject accounts, which should be separately maintained. FONTURwould review the audits of the subprojectsand report to the Bankon the status and the remedial actions taken, if required. The reports of the subprojects would be furnished by municipalitiesto FONTURwithin five months of the close of the fiscal year. FONTUR's audit report and its report of the subproject audits would be presented to the Bank annually no later that June 30. The project auditing arrangementswere discussed and agreed (para 5.1 (d)).

1. Monitorina and Reoortina

4.19 Annual Review and Proiect Plan of Action. In Novemberof each year that the project is being executed, the Bank and the GOV would conduct a formal joint review of the progress made in reachingthe objectivesand in the implementationof the proposedproject. The annualreview would provide an opportunity to discuss project issues, in particular: compliance with sub-loan covenants; institutional development advancements and performance of FONTURand city agencies and the technical assistanceat national and local levels; executionand analysis of further needsof the training program; the quality of subproject implementation, including environmentalanalyses; implementation of studies, sector policies and actions; implementationof a monitoring program (proposedmonitoring indicators are presentedin Annex 13). The discussionand analysis of the issuesfaced during the year under review, would lead to the formulation of adjustments and, if necessary, remedial actions satisfactory to the Bank. The timing and scope of the annual review was confirmed during negotiations (para.5.1 (p)).

4.20 The project places great emphasison institutional development in the sector and as such, implementationmust be closely monitored and successevaluated. It is proposedthat a mid term review of the project be held 24 months after loan effectiveness. At the review, the performance of the project will be assessed and the second period implementation program will be amended as necessarybased on the results of that evaluation (para.5.1 (q)).

4.21 Reportino. It was agreed during Appraisal, and was confirmed at Negotiations,that FONTURwith the assistanceof participating municipalities,would prepare bi-annualprogress reports for the semesters endingon June 30 and December31. The reports would be furnishedto the Bank within 60 days of the end of the semester. The progress reports would cover past institutional development and project execution achievements and compare them with appraisalprojections and goals set forth in the Action Plan(Annex 13), and presenta critical assessmentof problemsand issues arising during project execution. The reports would also discuss compliance with subproject 37 conditionalityby each municipality and actions taken to enforce compliance. In casesof unsatisfactory progress,the reports would also detail proposalsfor adjustmentsand remedial actions. The case for more periodic (quarterly)reporting would be reviewed at the mid term review. To facilitate adequate monitoring of the project FONTURagreed to install not later than ninety days after loan signing a managementinformation system to track the physical, financial and environmental status of each component of the project (para. 5.1 (f)).

4.22 ProiectSupervision. The responsibilitiesfor supervisingproject implementation and a supervisionplan are shown in Annex 13. It is expected that at least three supervision missions per year staffed by an urban transport engineer/plannerand a transport economist will be required to supervisethe proposed project during the first three years of execution (1 993-1996). In addition, specialists in traffic engineering,training and procurement may accompanythe supervision missions as required. Supervisionrequirements are expected to be intensive, particularly in the initial years, as Bank missions would plan to visit every participating city at least once a year. For the first two or three years, the supervisionrequirements are estimated at about 15 staff-weeks reducing to 13 staff- weeks in the fourth year, 12 staff-weeks in the fifth and 8 staff-weeks in the last year.

V. AGREEMENTSREACHED AND RECOMMENDATION

5.1 Following are the agreementsreached at negotiations:

A. Proiect Mana ement:

(a) that the Project ManagementUnit (PMU) be structured and adequately staffed and otherwise supported in the implementation of its responsibility under the project; FONTURappointed the head of the Project ManagementUnit prior to negotiations (para. 4.5);

(b) that Procurementbe carried out in accordance with Bankguidelines, including (i) the use of standard bidding documents for the procurement of goods and works, under LCBand ICBprocedures; (ii) use of Bank's guidelinesfor the selection of consultants; and (iii) the procurement limits (paras. 4.10 to 4.16);

(c) that a Special Account in the Central Bank of Venezuela be opened and maintained (para. 4.17);

(d) that the Special Account and Statements of Expenditures (SOEs) (i) be audited accordingto procedures,and by independentauditors, acceptableto the Bank,and (ii) that audits be submitted annually no later than June 30 (para. 4.18);

(e) detailed proceduresfor the transfer of loan funds to participating municipalities were agreed with the Bankat negotiations (para.3.30);

(f) that (i) a Project Monitoring ManagementInformation System satisfactory to the Bank be installed ninety days after loan signing; (ii) that agreed institutional, physical, operational and financial performance targets be included in semi-annualand annual reports to the Bank (para. 4.21);

(g) that the project be executed, and the system subsequently operated in accordance with environmentalpractices satisfactory to the Bank; should implementation of any 38 proposed subproject investment require displacement of population, FONTURwould notify the Bank thereof, and upon the Bank's request would present a resettlement plan, satisfactory to the Bank, prior to implementation (para. 3.40);

(h) the final version of the project OperationalManual was completedand submitted to the Bank (para. 3.22).

B. Institutional Developmentand Policy

(i) the letter of invitation, terms of reference, evaluation criteria and draft contract to invite proposals for the international technical assistance for FONTURstrengthening (Part Al), as described in Annex 6, were completed prior to negotiations (para. 3.6);

(j) the letter of invitation, terms of reference, evaluation criteria and draft contract to invite proposals for the international and local technical assistance for municipal strengthening (Part A2), as describedin Annex 6, were completedprior to negotiations (peara.3.7);

(k) the letter of invitation, terms of reference, evaluation criteria and draft contract to invite proposals for the international technical assistance to carry out the Intensive Course of the National Training Program were completed prior to negotiations (para.3.8);

(I) the draft final study on the Traffic Police Programwas completed prior to negotiations (para.3.9);

(m) that studies A5.1 and A5.2 be completed respectively 1 and 3 months after loan effectiveness; studies A5.3 and A5.4 be completed not later than 10 months after loan effectiveness; study A5.5 be completed not later than 12 months after loan effectiveness and studies A5.10 and A5.1 1 be completed not later than 36 months after loan effectiveness (para. 3.1 1);

(n) that the Public Transport Study for the participating cities including cost-recovery mechanisms and provisions for targeted subsidies be completed not later than 14 months after signing of the relevant subproject agreement; that an action plan to implement the recommendationsof such study be submitted not later than 60 days after the Bank provides its comments; and that the progress in the implementation of such action plan be reviewed during the second annualreview and subsequentannual reviews (para.3.12).

C. Traffic Infrastructure and Eauipment

(o) the final engineeringdesign, bidding documents and equipment specificationsfor the first year of the Traffic Infrastructure and Equipmentprogram (Part B) were completed before negotiations (para.3.14).

D. Annual and Mid Term Review

(p) that at each annual review, FONTURwill present the program for the following year and seek approval from the Bank to proceed with its preparationand implementation (para. 4.19); 39 (q) that a Mid-TermReview take place 24 monthsafter loan effectiveness, and will review agreedinstitutional, operationaland financial performanceindicators, compliancewith covenants and the recommendationsmade in the Public Transport Study for each participating city. Based on this evaluation prepare a revised action plan and any corrective measuresnecessary to ensure that the project meets its main objectives (para. 4.20).

E. Eliaibility Criteria and Contractual Arranaements

(rl the city and project eligibility criteria as described in Annex 4 have been adopted by FONTUR(para.3.21);

(s) that the draft contracts to be used for the participation, subproject, MTC/FONTUR, MTC/municipalityagreements are submitted to the Bank (para.4.2);

(t) that not later than 60 days after loan effectiveness, MTC and FONTURshould sign an agreementto carry out the national portion of the Traffic Police program (para. 4.2).

5.2 Following are the Conditions of Effectiveness:

(a) the executionof acceptableparticipation and subproject agreementsbetween FONTUR and at least one municipality (para. 4.2);

(b) the selection of the consultants to carry out the Intensive Urban Transport Courseas part of the National Training Program(part A4) (para.3.8);

(c) the selection of consultants to provide the technical assistance for the FONTUR strengtheningprogram (Part Al),(para.3.6);

(d) evidence that GOV's counterpart funds have been made available to FONTUR (para.3.27).

5.3 Priorto disbursementsof Loan funds to any municipality, FONTURwould submit to the Bank:

(a) signed participation and subproject agreementswith that municipality (para. 4.2);

(b) evidencethat a City Project ManagementUnit has been establishedand staffed, and the City Project Managerhas been appointedand the international technical assistance is in place (paras.4.2 and 4.7);

(c) evidence that the municipality has satisfactorily complied with the institutional arrangementsincluded in the conditions of eligibility (para. 4.2).

5.4 As a condition of disbursementof funds related to the national portion of the Traffic PoliceProgram, FONTUR would submit to the Bankan agreementbetween MTC and FONTURsimilarly, as a condition of disbursement of funds related to the local portion of the Traffic Police Program, FONTURwould submit to the Banka signed agreementbetween MTC and the municipality (para. 4.6).

5.5 Retroactivefinancing of up to US$ 10 million for expenditures made after October 30, 1992 is recommended(para. 4.17).

5.6 Recommendation.With the above agreements,the project would be suitable for a Bank loan of US$ 100 million equivalent for a period of 15 years including 5 years of grace at the Bank's standard variable interest rate. 40 ANNEX 1

VENEZUELA URBANTRANSPORT PROJECT

LessonsLearned from OtherUrban TransDort Proiects

Backaround

1. In 1985, the Bank reported' that it had participated in 17 urban transport projects and 32 urban development projects with an urban transport content. Since 1985, other urban transport projects have been commenced or completed, including Mexico First Urban Transport Project (UTP), Urban Streets and Transport Project (Chile), Bogota UTP (Colombia),Kingston UTP (Jamaica),Lima Metropolitan DevelopmentProject (Peru),Taegu UTP(Korea), Shanghai (PRC) and Fourth UTP (Brazil), and other projects are in the course of preparation. Project Completion Reports and/or Project PerformanceAudit Reports (PCR/PPAR)are available for a total of 15 urban transport projects and urban developmentprojects where transport components representedmore than 30% of total costs. The relevant projects are summarizedin Table 1.1.

2. This review is based on analysesincluded in the 15 available PCR/PPAR'sfor urban transport projects (Table 1.1), on current trends in urban transport projects and on experiencefrom the First Urban Transport Project in Mexico.

Relevanceof PCR/PPAR's

3. Table 1 shows that no project for which a PCR/PPARis available, began after 1981 -10 years ago- and some projects extend back to 1972 - 19 years. Over these time periods, there have been significant changes both in the emphasis of urban transport policy and in traffic transport related technology.

4. 'Policy' changes include, for example, increasing recognition that road traffic is a major contributor to air pollution, that maintenanceis of crucial importance and that there is an increasing trend towards deregulation and privatization of public transport (bus operation). The PCR/PPAR projects rarely included such policies.

5. With respectto technologythere have also beenchanges. Typically, 20 years ago, traffic signal control systems were mainly based on large computer systems which not only posed procurement problems but were not always appropriatefor the problems faced by, or consistent with capabilities of, developingcities. Use of personalcomputers for traffic and transport planning and for operational applications(e.g., traffic and accident data bases)is now commonplaceand has changedthe methods of working. Again, in the area of traffic managementdesign, much has been achievedwith busways (and busways are actively considered now in most projects) but only four of the PCR/PPARprojects included such techniques (Brazil I and 11,and Ivory Coast I and 11).

6. It is also noted that at least 5 of the cities in Table 1.1 are very large (populationexceeding 5 million), hence not all "lessons learned" may be applicableto the present project.

7. Thus, the PCR/PPAR'sare not ideal as a source of data for the design of current projects. Clearly, some useful lessons are highlighted and indeed, some have already been incorporated into more recent projects; for example, over-optimistic project schedules(see below) are not now used and maintenanceis the norm. Additionally, PCR/PPAR'swere generally completed.

1/ "Urban Transport" - A World Bank Policy Study, 1986. 41 ANNEX 1

Table 1.1: Lessons Learnedfrom Other Urban Transport Projects

LOANI DATE LOAN CREDIT POPULATION, LOAN AMOUNT REF COUNTRY - --- T Iion) SIGNED US$ - -- l~~~~~~~~~~~~~~~~~~~~million)-

851 Malaysia Kuala Lumpur 1.0 Jun. 1972 16.00 937 Tunisia Tunis 1.2 Oct. 1973 18.00 952 Iran Tehran Dec. 1973 42.00 1214 Malaysia Kuala Lumpur 1.0 Feb. 1976 26.00 1282 Phillippines Manila 5.9 May. 1976 32.00 1347 Cote d'lvoire Abidjan 1.7 Dec. 1976 44.00 1355 India Bombay 8.5 Dec. 1976 25.00 687 India Madras 5.2 Apr. 1977 24.00 1491 Costa Rica San Jose 0.6 Nov. 1977 16.50 1563 Brazil 5 Metropolitan Areas (1) 1.5-9.0 May. 1978 88.00 1638 Thailand Bangkok 5.2 Dec. 1978 16.00 1033 India Calcutta 9.5 Jun. 1980 56.00 1839 Brazil Porto Alegre 1.5 May. 1980 159.00 1965 Brazil 14 Conurbations(2) Mar. 1981 90.00 2048 Cote d'lvoire Abidjan, Daloa & 1.7 Aug. 1981 51.00 Korhogo Notes: 1. Curitiba, Porto Alegre, BeloHorizonte, Recifeand Salvador 2. BaixadaSantista, Distrito Federal,SO Luis, Cuiaba, Florianopolis,Goiania, Macei6, Natal, Jo5o Pessoa,Vale do Ago, Aracaju, Teresina, Manausand Victoria about 10 years after the commencementof projects so the time lag diminishes the usefulnessof the lessonslearned.

Performanceof ComDletedProiects

8. Table 1.2 gives major items of key data for the PCRIPPARprojects; the general performance trends are consideredto be:

(a) with the exception of two projects 1' loans were near-fully disbursed (100% - 80%);

(b) final project overall costs generally were in the range 80% to 120% of appraisal estimates, although changes in scope occurred in a number of projects;

Ic) the project implementationschedules estimated at appraisalwere always too optimistic - loan extensions took place for every project; final implementation times were between about one-and-ahalf-times to three-timesthe original appraisalschedule estimate; and

2/ (1) Teheran which was a 'problem project" and the loan canceled, and (2) Bangkok, which was changed greatly in scope. 42 ANNEX 1

(d) final IRR's given to PCR/PPAR'sshow somewhat lower values than appraisalestimates 3/. However, the data should be treated with great caution and the differences are not too significant. Urban transport projects involve a wide range of actions within one project - infrastructure, traffic management and control, public transport facilities (including buses), paving, maintenanceand rehabilitation; single, project-wide IRR's are difficult to define either at appraisalor in a PCR.

9. Thus, quantitative indicators present a moderately successful group of projects, except for implementationperiods which were clearly too optimistic.

'Lessons Learned"as Presentedin PCR/PPAR's

10. Projects contain a wide range of components - both physical and institutional. This, and the different mannerin which the PCR/PPAR'spresent the 'lessons learned' make generalizationsdifficult. Table 3 summarizesthe main findings from each PCR/PPARproject O' and, insofar as there are general themes, they are consideredto be the following:

(a) with the exception of the BangkokUTP which was significantly changedin scope, most projects implementedmost of the proposedphysical works. While some changesdid take place (e.g., the inclusion of a major, non-appraisedbus terminal in Salvadorunder Brazil I) and while some components were poorly planned (e.g., the Western Busway in Cote d'lvoire 11),the physical components proposed at appraisal appear to have been: (i) feasible, (ii) acceptableto decision makers, and (iii) overall estimated project costs were mostly of the right order, although wide variation in individual components occurred. Thus, Bank appraisal procedures for physical works, in the case of the PCR/PPAR projects, appearedto work reasonablywell;

(b) institutional arrangements and components were considerably less successful than physicalmeasures. Many projects established"traffic and transport units' to plan, design and superviseschemes. The PCR/PPAR'smake reference to the "political' problemsof maintaining the units, of giving the units sufficient authority to act, of staffing the units, of obtaining adequately trained staff and of sustaining those units after the implementation of a project. The institutional problem of sustaining traffic management momentum and capabilities has not yet been solved. Perhaps Brazil came the closest. In the period mid-1970's to mid-1980's, the BrazilianUrban Transport Company EBTU, Brazil channelledfederal and Bank (Brazil UTP I, IlIl and IV Projects) resourcesto urban transport investment and was thereby able to promote innovative urban transport schemes and assisted greatly in establishing sound directions for urban transport in Brazilian cities (although later there was a tendency for EBTU to expand bureaucratically!'). However, following central government policy to decentralize transport investment decisions, EBTUwas disbanded;

2/ The major exception was Brazil UT II (Porto Alegre suburban train), where the internal rate of return was negative but, to date, the project is atypical of urban transport projects in general and unlike the proposed project in particular.

4/1(1) Teheran is omitted since the problems were unique and are not repeatedin any other project and (2) Brazil Second Urban Transport Project (Porto Alegre suburban train) is omitted as it is not relevant to Venezuela's Urban Transport Project.

./ The Fourth Brazil Urban Transport Project (later canceled)included proposalsfor reform of EBTU. 43 ANNEX 1

Table 1.2: Summaryof Key Data From PCR's and PPAR's

APPRAISAL FINAL LOAN CITY LOAN AMOUNT AMOUNT PROJECT PROJECT PERCENT CREDIT AMOUNT DISBURSED DISBURSED COST US$ COST US$ TOTAL REF. (for country - see Table 1i USe Millions US$ Millions 1% (million) (Mill.) COST

861 Kuala Lumpur 18.00 16.00 100% 31.61 41.18 130% 937 Tunis 18.00 17.86 99% 28.62 63.43 187% 962 Tehran 42.00 24.20 58% 65.90 N/A N/A 1214 Kuala Lumpur 28.00 22.00 85% 72.00 67.82 94% 1282 Manila 32.00 39.50 123% 66.00 91.80 141% 1347 Abidian 44.00 39.70 90% 122.30 103.90 86% 1365 Bombay 25.00 25.00 100% 50.51 45.04 89% 887 Madras UD 24.00 24.00 100% 62.00 62.30 120% 1491 San Jose 16.60 16.50 100% 31.50 32.10 102% 1583 6 Metropolitan Areas 88.00 88.00 100% 248.90 242.30 97% 1638 Bangkok 16.00 7.60 48% 34.00 12.50 37% 1033 Calcutta 56.00 44.80 80% 121.70 98.30 81% 1839 Porto Alegre 159.00 133.00 84% 312.80 249.40 80% 1965 14 Conurbations 90.00 90.00 100% 257.00 200.70 78% 2048 Abidjan, Dalea and Korhogo 51.00 50.90 100% 104.00 B8.60 86%

LOAN MONTHS FOR MONTHS FOR INCREASE CREDIT CITY COMPLETION COMPLETION IN IRR IRR REF. Ifor country-ses Table 1I APPRAISAL ACTUAL TIME APPRAISAL FINAL

851 Kuala Lumpur 51 66 39% 37% 6%-30% 937 Tunis 24 96 300% 18%-17% 10% 952 Tehran 36 N/A N/A 28% N/A 1214 Kuala Lumpur 64 72 33% 31% 31% 1282 Manila 48 84 76% 22% 8%-29% 1347 Abidjan 48 84 75% 43% 38% 1366 Bombay 32 80 160% 26%-40% 10%-40% 887 Madras UD 54 69 28% 21% 21% 1491 san Jose 45 76 67% 37% 25% 1683 Met Aresa 42 89 84% 23%-60+ % 10%-60+% 1638 Bangkok 42 93 121 % 142% 128% 1033 Calcutta 61 69 18% 23% ve 1839 Porto Alegre 50 74 48% 19% 11% 1966 14 Conurbations 42 90 114% N/A 11 N/A 2048 Abidjan, Dalon and 42 6e 63%-86% 16%-41 % Korhogo

(c) transport policy measures feature in some, but not all, PCR/PPARprojects and their success varies. For example, some failures were recorded in:

Kuala Lumpur II and Bangkok with respect to road pricing;

* Calcutta and Cote d'lvoire 11with respect to bus fares; and

* Brazil UT and IlIl studies regarding bus deregulation and maintenance; but some policy measureswere, at least partly, successfully achieved; for example:

Kuala Lumpur II increasesin bus fares;

Bombay and Madras increases in bus fares, although not enough to meet covenanted agreementsregarding revenue/cost ratios (see below). 44 ANNEX I

(d) enforcementof traffic regulationsis an integral part of any traffic managementsystem. Few of the PCR/PPARprojects mention involvement of, or project components for, the traffic police - only San Jose, Bombay,Brazil I and Bangkok (in which police equipment was included, but not procured, and some overseas'study visits' took place). Many of the PCR/PPARcite lack of enforcementas reasonfor individual scheme failure;

(el despite the implementationof physical schemes,there are indications that there was a lack of long term commitment by some cities to accept traffic managementmeasures or that subsequently changed administrations rejected the traffic managementapproach, e.g.:

* Bangkok never implemented the full program and those measures which were implemented,were not enforced and were allowed to decay;

* Kuala Lumpur 11high-occupancy vehicles (HOV) and bus priority lanes were not enforced and disappeared;the existing traffic warden force was disbanded;

Manila public transport lanes were not enforced and disappeared;

* Cote d'lvoire bus lanes were not always enforced and disappeared;

Tunis bus lanes were not enforced and disappeared;

Costa Rica did not finalize corridor schemesuntil public and Bankpressure forced the issue; and

* even in Porto Alegre (Brazil1), innovative busways are declining in standards and effectiveness due to apparentneglect.!'

(f) a numberof projects (Bombay,Madras, Cote d'lvoire and Calcutta)invested in public bus monopoly operations (often buying buses). Except in Calcutta, all the companiesare relatively efficient with, for example, out-turns of 90 + % of the fleet and reasonable staffing ratios and all companies made operational improvements during project implementation. Nevertheless,there was "government' reluctance to allow bus fares to rise adequatelyto meet agreed revenue cost ratios (covenanted under the loan) and for financial targets to be met. The "political" difficulties of intervening in publically owned bus companiesare evident; and

(g) as noted in para 8.(c),project schedules were always too optimistic at appraisal. This appears to result from some, or all, of the following factors: (i) the difficulties of implementingtraffic schemes - often involving coordinated action between the "public works department", the traffic police, the public transport regulatory authority, public transport operators,the new traffic unit and other agencies- appearto have been under- estimated, (ii) the lack of final designsin a timely manner, (iii) lack of familiarity with Bank procurement procedures,and (iv) the lack of counterpart funds.

Trends Since Comoletionof the PCR/PPARProiects

11. Since the PCR/PPARprojects were completed,trends in urbantransport project preparationand scope have been:

_/ Not included in the PCR/PPARbut observedfrom subsequentvisits. 45 ANNEX 1

(a) street maintenance components are now the norm (particularly for the LAC region projects) and components have been, or were, included in Bogota, Kingston, Lima, Brazil IV (now canceled)and in the First Mexico Urban Transport Project;

(b) project implementationschedules are geared to the Bank's average regional profile;

(c) as far as possible, the final designs for at least the first year of implementation are requiredfor appraisal;and

(d) the role of the private sector in the provision of public transport services (mainly buses) and infrastructuremanagement and maintenance(maintenance by contract) is given major emphasis.

12. Within the LAC region, only three PCR/PPARprojects are available (San Jose, and Brazil I and l1l) but many other urban transport projects are under preparation, in progress, or are completed, including Bogota UTP,Lima MDP (suspended),Brazil IV UTP (canceled),First Mexico UTP, Street and MaintenanceProject for Santiago,Kingston UTP,the Mexico MediumSized Cities UTPand the Mexico City Transport RelatedAir Quality ManagementProgram (AQMP Mexico City). In addition to the points noted in para 11, a number of common characteristics or directions ("lessons") are noted:

(a) basedon successfulprograms in BrazilI and IlIl,most of the projects include a low income area paving program to improve bus accessibility to reduce bus operating costs and to have a poverty impact; and

(b) transport related air quality problems are being increasingly considered and form an important objective of the Santiagoproject and will be the primary objective of the AQMP Mexico.

'Lessons Learned" and the ProDosedVenezuela Urban TransDortProiect

13. The proposed urbantransport project is the first to be consideredin Venezuelaand thus, there is no "in-country" experienceto draw upon. The design of the proposed project has attempted to recognizethe findings and experiencefrom similar projects outlined in this Annex. The main features of the proposed project which respond to the "lessons learned" are described in the following paragraphs. Particularattention has been paid to the Brazil IlIl UTP which involved 14 medium sized cities and conurbations and, to the Mexico Medium Sized Cities UTP (more than 10 medium sized cities) which was approvedby the end of 1992. Both projects have direct parallels to the Venezuela Urban Transport project.

14. Institutions A successful institutional arrangementwill be the key to project success and to project sustainability. In the past in Venezuela,there has been little incentive for cities/municipalities to undertake cost-effective transport planning and investment and cities have been starved of resourcesfor transport investment. The creation of FONTURis a major advance. In addition to providing much neededresources, FONTUR's key role will to guide transport investmentin cities. This guidance will be exercisedthrough the eligibility criteria for city participation (Annex 4) will govern investment of FONTURfunds (includingBank project funds as an integral part of FONTUR'sprogram) and through FONTUR'sappraisal and supervision of city projects. The creation of FONTURwill do much to create a new attitude to transport planning at the national and local level. PresentFONTUR trends are encouraging. It has been noted in para 10.(b) that was a tendency for EBTU (Brazil) to expandbureaucratically; FONTUR is envisagedas a compact agency which will (as now) use pribvate sector expertise under contract for day-to-day project monitoring, special tasks and supervision. Specific technical assistanceand training programsfor FONTURhave been included in the project. 46 ANNEX 1

15. At the local level, the design and operation of traffic and transport projects require expertise which is currently largely absent from most medium sized Venezuelancities. To assist in overcoming this deficiency, it will be a requirementof project participation (and of the FONTURprogram generally) that a Traffic Engineering/TransportPlanning Unit exists, or will be formed, in each city. Experience shows that it takes time to build up expertise and to establish effective units; thus, each sub project will incorporatetechnical assistance to aid cities in establishingthe units.

16. To further assist the long term development of traffic and transport planning, the project will includea nationaltraining program for traffic and transport professionals. Staff from participatingcities and national agencieswill benefit from the training.

17. Maintenance. Maintenanceis now a standard component for urban transport projects and the VenezuelaUT project will be no exception. During project preparation,an initial review of maintenance requirements and activities was carried out in the cities which have been appraised. The review enabledmaintenance components to be defined with accuracyand permitted the preparationof model terms of referencefor developmentof maintenancecomponents for other cities. Within the appraised cities, the scope of maintenancecomponents will be follows:

(a) it will be a condition of participation that each municipality/city has, or will create under the Project, a competent road and "traffic control device' maintenance planning and implementationcapability. To realizethis aim, the sub projects will include (i) technical assistanceto support the creation of the maintenanceunit, and liii) equipmentnecessary to establish maintenance management (such as testing equipment and personal computersfor inventoriessince it is anticipatedthat most maintenancewill be carried out by contract procedures);

(b) maintenancefails since it is often the first activity to be cut in times of financial restraint and it will be a condition for participation that each municipality/city will undertake to include within their annual budgets, adequate funds for the maintenance of works executed under the sub projects; and

(c) to enable the new maintenance units to initiate their activities against a sound background, each city/municipality sub-project is likely to includefinancing of civil works to correct problems of deferred maintenance,

18. Counterpart Fundina. In Venezuela,devolution of responsibilitiesto cities/municipalitiesis a relatively recent policy. At the moment, financial resource mobilizationof cities is weak and the ability of cities to find counterpart funds is severely limited. It would be unrealistic for an urban transport project, with relatively low investments in any city, to correct the resource mobilization weakness. Thus, to limit the demand for counterpart funds and to ensure that the necessarycounterpart funds are availablefor successfulimplementation, the project proposes(i) to use a system of matching grants rather than loans for each city (municipalities will match FONTUR'scontribution), (ii) to place an emphasison low cost schemesto reduceoverall investmentrequirements, and (iii) to requirethat cities include a commitment in their annual budgets necessaryto meet counterpart funding needs.

19. ImplementationSchedule. Long implementation, and thus slow disbursements, have been problemsin previous projects. This may be traced to:

(a) lack of familiarity of local staff with Bank procedures. This will be particularly acute in the mediumsized cities. A training program is proposedbut training programstake time for benefits to be realizedand, even then, there is no substitute for practical application. Much will depend on the capabilities of FONTURas supervisingagency. The project will require that FONTURincreases its staffing, employ technical assistance and provide a "consultancy" service to medium sized cities in the preparation of data necessaryfor 47 ANNEX 1

processinga Bank project. A ProceduralManual is also proposed to assist familiarize cities with the proceduresand responsibilitiesinvolved in sub project implementation;

(b) lack of political commitment. If implementation times become protracted, political changesmay occur in a city and implementationcould be jeopardized. However, planning and design of traffic projects is always complex, involves many agenciesand takes time. These factors must be balanced. While it is a major objective of the sub projects to promote an "integrated approach" to transport planning, cities will be urged to keep sub projects as simple as possible, consistent with resolving transport problems. Short implementation periods will be preferred. To further ensure commitment, it will be necessaryfor cities to demonstrate,at appraisal,a consensusof view on the sub projects among the involved agencies (public works, police, planning group, public transport operators and "political decision makers");

(c) lack of final engineeringdesigns for physical works. It is proposedthat any participating city should have the first year (or 25% of the sub project whichever is the minimum)of final engineering designs (including bidding documents) available (i) by the time of presentation of the Project to the Bank's Board (for the first six cities which have been appraised)and, (ii) by the time of FONTUR'sappraisal and Bank review for subsequent sub projects.

20. Enforcement. A number of the previous PCR/PPARprojects listed enforcement problems as: (i) the reasonsfor the failure of scheme operations, and (ii) a contributory reason for the decay and eventual disappearanceof traffic schemes. In the proposed project, schemeswill be designedas far as practicable, to be "self enforcing", and physical rather than regulatory meanswill be encouraged. Moreover,under the proposedProject it will be necessaryfor any participating city to demonstratethat componentsinvolving traffic regulation enforcementare acceptableto the local traffic police and that the police are preparedto undertake enforcement.

21. However, the Projectrecognizes the unique problems of traffic law enforcementin Venezuela and includesa significant national componentto assist in improving the currently poor situation. The component will comprise (i) national training and technical assistance and (ii) equipment, such as communicationsand vehicles). The latter would be gearedto the participating cities.

22. Environment. It will be a condition of participationthat cities/municipalitiesundertake to adopt, and to comply with, the Article 38 of the Venezuela Municipal Government Act. This requires municipalitiesto protect the environment and it will be necessaryfor municipalitiesto take all actions to implement the law in respect of traffic related environmental impacts. Within each sub project evaluation,an assessmentof traffic related environmentalimpacts was conducted. If serious adverse impacts are identified, remedialactions were requiredprior to acceptanceof the relevantcomponent. 48 ANNEX 2

VENEZUELA URBANTRANSPORT PROJECT

The ExecutinaAgency: FONTUR

1. FONTUR (Fondo Nacional de Transporte Urbano - National Urban Transport Fund) was established on September 5, 1991, by Decree No. 1827 of the National Executive. FONTURwas created as a non-profit Public Foundationwith the objective of promoting, developingand supporting the implementationof urbantransport programsand projectsaimed at contributing to the improvement of the quality of life of the urban population especiallyof the low-income groups.

2. The primary objectives of FONTUR,as outlined in the abovementioneddecree, are to:

* Identify and mobilize financial resources from several sources with the objective of chanellingthem into urban transport;

* Promotethe financing of programsand transport projectstargeted primarily at the low income population groups;

= Providespecialized technical assistance and promote institutional strengthening and training for institutions participating in its projects and programs.

* Promotethe development and implementationof techniques, methodologies,systems and procedures which support the rationalization of investment processes and expendituresin urban transport.

3. FONTUR'sfirst operation in 1992 was a public transport vehicle fleet renewal and upgrading program. This program provides financing to private bus/por puesto/jeep companies and/or owner/operatorsregistered with the municipalitiesas public transport operators.The financing consists of a one time grant of approximatelly 50% of the cost of the vehicle, a commercialbank loan at market rates for the other 47% and a down payment by the operator for the balance.The operator is required to maintain the vehicle in public service for the duration of the loan to prevent him from buying the vehicle through this mechanism and, afterwards, shift it to uses other than urban transport. The municipality is requiredto enter in an operating contract with the operator. This contract will include the requirements for provision of efficient level of service, a periodic tariff review plan, subsidy mechanismsand schemeswhich will allow the operator to operate in conditions which account for depreciationand cost of capital. The 50% grant to the operator is seen as a one time only grant from GOV to compensateoperators for tariffs which have been traditionally lower than the long run variable costs and which did not allow for renewal or expansionof the fleet creating, thereby, serious peak hour capacity problemsand rundown vehicles.

4. FONTURis alreadyproviding financing for a numberof short term or emergencyimprovements in the major municipalitiesof the country. This short term improvement program is going on while FONTURworks with the IBRDand IDB in the preparation of the medium and long term program to improve the quality of urban transport in municipalities with more than 100,000 inhabitants. In addition, FONTURis working with the mayors to implement the transfer of responsibility for the administration of student susbsidies from MTC to the municipalities. Furthermore, in the city of Maturin, FONTURis testing a new system to increasethe accountability of operators in the collection of student subsidies.

5. FONTURhas hired local consultants to design its organization (seechart pg. 52). FONTUR's managementis well aware of the experiencesin Brazilwith EBTUand is making a conscious effort to 49 ANNEX 2 keepits size and staffing low and to create an image of a non political body with transparent programs, to add credibility to any financial allocation responsibilities. The Projectitself will aim at strengthening the existing structure of FONTUR,by providing appropriate training and technical assistance at all levels.

6. Although this is its first Bank-financedproject, FONTURis not a newcomer to international relations. FONTURhas maintainedclose links with ABC (BrazilianAgency for Cooperation)with which it has mounted a number of joint events. The program with ABC, which precedes the official establishmentof FONTUR,has offered a seriesof short courses and seminarsto FONTUR'sstaff and representativesof the municipalitiesin areas such as traffic engineering,transport planning, reserved bus lanes, subsidies and financing mechanisms.FONTUR has also invited representativesof the US FederalHighway Administrationto get their advice in severalareas related to urbantransport. Exposure of FONTURto the municipalities has been increasing steadily through the short term emergency program and there is a constant interface between FONTUR'stechnical personneland the technical units in the main municipalities.

7. Currently FONTUR has a staff of 35 of which 33% are technical; all are based at the headquartersin Caracas. In order to build up operationalteams directly responsiblefor implementing the Project, FONTURwill receivetechnical assistance and training. Furthermore,FONTUR will set up a ProjectImplementation Unit (PIU)conversant with Bank procurement,supervision and disbursement procedures. Prior to negotiations, FONTURwill produce a Project Operational Manual which will describethe proceduresto be followed by the municipalitiesparticipating in the proposed Credit.

8. FONTURhad a total 1992 budget of 2.7 billion bolivars (US$ 43.5 Million) of which 70% were used to finance the upgrading and acquisition of buses/por puestos/jeeps, a major priority for the government;4% for technical assistanceand institutional developmentof municipalities;25% for short term improvementsto urban transport in municipalities and 1% for FONTUR'sstaff salaries, office equipmentand provisions. FONTUR'srevenues are not earmarkedalthough they come from fuel taxes. FONTURmust every year present a program and request a budget from the Executive Branch with a clear justification of the areas of application of these funds. A study to review existing resource mobilizationmechanisms and innovative allocation formulas is included in the proposed project.

9. Figure 1 shows FONTUR'sorganization and in the next paragraphsa description of of the functions of the divisions which are more likely to affect the proposed project.

ProaramsDivision (Gerenciade Proaramas)

10. The objective of this division is to undertake the identification, preparation,appraisal and selection of programs, submitted by the municipalities, in infrastructure, public transport and institutional strengtheningin order to ensuretheir compliance with the goals set by FONTUR's management. More specifically its functions are:

* to undertake the technical, economic, environmentaland financial evaluation of the projects submitted to FONTURto assesstheir feasibility.

* to develop methodologiesfor the formulation, evaluationand managementof urban transport projects, infrastructure, public transport and institutional strengthening.

* to preparetechnical assistance,consulting services and training programs in urban transport projects.

* to offer guidelinesfor the preparation and presentation of programsto FONTUR. 50 ANNEX 2

* to present and propose to the technical committee the projects which comply with the prerequisitesapproved by FONTURand financial institutions.

11. The ProgramsDivision has 3 units: Infrastructure, Public Transport and Institutional Strengthening.

Ooerations Division (Gerenciade Operaciones)

12. The objectives of this division are to promote FONTUR'sprograms with the municipalities and municipal bodies as well as to ensure that the projects to be financed comply with all prerequisitesfor their approval. Once the project is approved, to carry out the implementation, follow up and technical control of the project from the central government standpoint and its ex- post evaluation. More specifically, the main functions of this division are:

* to promote FONTUR'sprograms and projects at the municipal level.

* to assist the municipalities, municipal agencies,and operators.

* to participate in the supervision of works and projects under implementation.

* to undertake the technical follow-up of the contracts for studies and/or services signed with FONTURand dealing with pre-investment, technical assistance,training, and to clear the payment of invoices by the treasury.

* to carry out the follow-up and monitoring of the physical execution and operations managementof the projects basedon the scheduling agreed.

* to coordinate with the managementof the Programsdivision managementthe supervision, technical evaluation and preparationof progress reports to verify the compliance with targets, budgets and terms of the signed agreements.

* to undertake the ex-post evaluationof projects financed by FONTURand prepare a project completion report describingthe lessons learned.

* to identify the technical assistance neededto promote the strengthening of the organizationsin charge of executing the programs and/or projects in urban transport.

* to keep records on the status of each project under implementation, especially physical execution and disbursements.

The Operations Division has three geographicalunits: Western, Central and Eastern.

Administration Division (Gerenciade Administracion de Covenio)

13. The objective of this division is to establishthe interface with the financial institutions which provide resourcesfor the FONTURprograms and projects, by providing them with reports on the operating and financial progress of the projects. It will also ensure the timely flow of funds between FONTURand the executing agencies.

* It will administer the "convenios" with the financial institutions.

* It will enforce the covenants agreed with those financial institutions. 51 ANNEX 2

* It will produce and mail the follow-up reports to the financial institutions.

* It will coordinateand monitor from the financial and treasury standpoints the "fideicomisos" in which FONTURparticipates.

* It will undertake all the necessarysteps with the financial institutions to ensure the timely flow of funds to the programsand projects handledby FONTUR.

* It will keep the records on the status of the 'convenios" both on its physical implementationas well as on its financial progress.

* It will develop the administrative proceedureswhich will govern the operations and dealings of FONTURwith the financial institution in each 'convenio".

This Division has 2 units: BilateralAgreements and FiduciaryTrusts. 52 ANNEX 2

FONDONACIONAL DE TRANSPORTE URBANO (FONTUR) ORGANIGRAMAGENERAL

JUNTADIRECTIVA

DIRECCIONEJECUTIA]

CONSULTORIA _T JURIDICA _ CONTRALORIA INTERNA

RELACIONES -::0:000- :0:;j: GERENCUADE k ;77 INSTITUCIONALES _ t;... ti tt; 0 -ti- i DE FINANCIAMIENM

PROWECTMANAaEME T

GERENCIADE ADMINI8TRACION

I I __ I T

GERENCIA DE GERENCUADE GERENCIA DE OPERACIONES _PROGRAMAS DE CONVENIOS

REGION PROGRAMA OCCIDENTAL DE DIVISION _ _ ~~~~INFRAESTRtUCTURA FIDEICOMISOS

REGION § | PROGRAMA DE TRANSPORTE PUBUCO |REGION PROGRAMA DE FORTALECIMIENTO INSTrTUCfONAL 53 ANNEX 3

VENEZUELA URBANTRANSPORT PROJECT

Municipal Financesin Venezuela

1. This annex presents a view of municipal finances in Venezuela; Section A describes the structure of municipal finances; Section B outlines the debt-capacity limitations to be used under the project and provides calculations for potential borrowing as of 1991; and Section C presents the financial situation of the five municipalitieswhich will be included in the project's first year program.

A. The Structure of Municipal Financesin Venezuela

2. In 1989, municipal revenues in Venezuela were roughly equally divided between central governmenttransfers, representing49.7% of total revenues,and own revenues,representing 50.3% of total revenues.

Transfers

3. Giventhe high degreeof dependenceon the petroleumsector, intergovernmentaltransfers from the national to subnationalgovernments play a large role. Municipal transfers are comprised largely of the situado municipal, part of the situado constitutional, which is a grant program funded out of generalgovernment revenuesand distributed to the states according to a formula that specifies that 70% of funds are allocatedon a per capita basis, with the rest allocated equally across the states. As stated in the DecentralizationAct, the amount of the situado constitutional is increasingsince 1989 by one percentper year to 20% of central governmentrevenues by 1994; moreover,50% of the funds are supposedto be used for investment projects.

4. Situado Municipal. Part of the situado constitutional is passed on to municipalities. Up to 1989, municipalities had access to 5% of the situado constitutional (i.e., 10% of the 50% of the situado the states could use to finance recurrent expenditures;the remaining 50% was to finance investment programs). This amount was distributed among the municipalitiesin the same way as the situado constitutional: 70% on a per capita basis; and 30% allocatedequally across the municipalities. The amendment of the LORM (the municipal law) increased the municipal situado which is now computed as a percentageof the total constitutional situado. That percentagein increasingfrom 10% in 1989 to 20% in 1999 (1 % a year).

5. The 'situado' is a transparent way of distributing central government revenuesto the states but is still far from being an efficient distributive process. It is true that the 30% equal allocation across the states serves to increase slightly the redistributive impact of this grant program, as the population of the low populationstates is disproportionatelypoor. However, a better way to pursue this effect could be achievedincluding explicit measuresof need --e.g., per capita income--and of tax effort in the allocation formula. It seemsthat as the terms of the situado constitutional are set in the constitution, and that its basic structure could be difficult to change. To pursue more focussed distribution programs,the governmentis consideringa temporary redistributionfund. However, it may be worth to considera change/improvementin the formula of the situado constitutional and to avoid the proliferationof paralleldistribution funds. The main problem at present is however the lack of basic economic data at state level that could be used in the improved formula for the situado. 54 ANNEX 3

Own Revenues

6. The Business Tax on Industry and Commerce(PIC): The primary source of revenuesat the municipio level is a tax on local businesses-- the Patente Industria y Comercio (PIC). In the largest municipalities,the PIC accounts for about 60% of the local revenues.The basic structure consists of a low rate tax on gross sales, coupled with a minimumtax and a licensefee; rates in the communities visited were in the neighborhoodof 0.2-1.0% of sales. Despite some proposals (e.g. FUDECO)to exclude from the base the purchase of goods on which the tax was already paid, the PIC remainsa transactionstax, that is, a tax on gross sales by all enterprises.

7. The Property Tax: The second major sourceof revenue at the local level is the property tax. The structure and problems of the property tax in Venezuelaappear to be typical of many developing countries. The tax is generally assessedon both residentialand non-residentialproperty, and the latter type of property often faces differentially high rates. Rates are low, properties are systematically underassessedand evasion is widespread.Local governmentshave understood this situation and are committed to improving the tax base. In severalmunicipalities visited by the project team, (e.g. Punto Fijo), efforts were being devoted to creating or improving computer-basedcadastral surveys in order to make assessmentscorrespond more closely to market values. Two problems were noticed. The first one is that local jurisdictions have little if any power enforce the property tax (in contrast to the PIC, in which case non-paying businesses can be shut down). It would be urgent in these circumstances to provide local governments with such power, including the right to foreclose on properties that are sufficiently delinquent in their tax payments.

8. The second problem is the political incentive to raise taxes. To address this aspect, the government is considering ways to include in the situado a measure of tax effort (or the relation between tax collection and tax capacity) so as to 'reward' the local governments who are doing better in terms of tax collection. This is a very interesting point which the final report will address in detail with examplesfrom other countries with reset to the design of the incentive scheme. There is significant potential for increasinglocal revenuesthrough improved collection and increased rates. Using a residentialproperty tax to finance local servicesis widely viewed as desirable. Taxes on non-residential property can also be justified to some extent as benefit taxes; indeed, for the reasonsnoted above, replacingthe PIC with the propertytax would be desirableas long as taxes were at least loosely related to benefits received.

9. Land Taxes. Local governments rely to a small extent on separate land taxes (sometimes conditionedon the land being vacant). In addition, some times, land values are determinedseparately from the values of capital improvements. This suggestssome potential for increasedrevenues from increasedland taxes (includingreassessments). Land taxes are desirableon efficiency grounds to the extent they are used to finance 'pure' rather than congestedlocal public services and if they offset increasesin property values attributable to public services; in addition, they are desirable on equity grounds to the extent that land ownership is concentratedamong the rich. Increaseduse of land taxes is an option at the local level, although the base is relatively small to make land taxes a major source of revenue.

10. The Motor Vehicle Tax (MVT). The MVT, (leviedon vehicle ownership) is very commonin most parts of the world. It is easy to collect and to enforce. It can be a local tax providedtax rates do not vary too much acrossjurisdictions --large differences tend to favor displacement of enterpriseswith large vehicle fleets-- and that the revenuesare associatedwith the benefits, e.g., resourcesused to finance urban/local road infrastructure.'

lin developingand transition countries, the Vehicle Tax has another advantage. In countries where income tax evasion is widespread and car ownership is low, a high rate Vehicle Tax on private cars has a strong redistributive affect. 55 ANNEX 3

11. In Venezuela,the MVT or Patente de Vehfculos"is a municipal tax. In large municipalities, it is the third source of tax revenue though at a great distance from the business tax and the property tax. The tax base is a function of the size and use of the vehicle. Table 3.1 shows the tax rates for the various types of vehicles. Public administration vehicles, as well as the vehicles of welfare and cultural associationsare exempted. The tax is collected quarterly.

TABLE3.1: VEHCLE TAX RATESACCORDING TO TYPES OF VEIICLE Quarterly tax rates

Base Rate AdditionalRate

Carsunder 1000kg 25 Bs + 5 Bs per additional500kg Trucks under 2000kgload capacity 40 Bs + 10 Bs per additional2000kg Pickup trucks under 2000kgload capacity 35 Bs +40 Bs above 2000kg Trailersunder 5000kgload capacity 65 Bs + 10 Bs per additional1000kg Public Iransportbuses under 30 seats 60 Bs + 8 Bs per additionalseat Privatetransport buses under 30 seats 30 Bs +40 Bs above 30 seats Motorcycles 15 Bs

Note: In January 1992the exchangerate was US$ 1 = 62 Bs. In September 1993, USS 1 = 97.1 Bs. Source: OrdenanzaSobre Patente de Vehfculos,Gaceta Municipal,Santiago Mariiio, 19 Deciembre 1987, Art. 9.

12. Venezuela'sMVT suffers from two major problems at present: it has not been updated in the last 30 years and is difficult to enforce. The MTC is a flat rate defined in terms of vehicle size. In the sixties, when the average cost price was about 15,000 Bs, the owner would have paid 100 Bs a month or the equivalentof a sales tax of 0.67%. In 1992, the same car may cost 1,500,000 Bs. The annualtax remainsat the same 100 Bs (US$ 1.61), which is equivalentto a tax rate of 0.0067%. At such low rates, the tax yields and so low that do not pay collection. Incentivesof local governments to enforce tax collection is minimal and tax evasionis rampant. The mission estimated that the MTV's yields would increase2.5% becausethe account of better enforcementand 100 times if rates were updated to the real level of 30 year ago. In these conditions, the MVT would be the most important municipal revenuesource after the situado.

13. To 'rehabilitate' the MVT as a local revenue source, four steps would be necessary: (a) enforce compliance; (b) update tax rates; (c) update information/register on the base (vehicle fleet); and Id) improve tax effectiveness. The details are explainedbelow.

(a) Enforcementcompliance -- evasion of the MVT (motor vehicle tax) is widespread. Estimates for the municipality of Valencia (table 3.2) suggest that actual tax revenue is less than one- third of its potential if evasion were eliminated. The first condition for this to become reality would be for local governmentsto gain easy accessto an updated register. Before 1987, any renewal of license plates (by the Direccion Nacional del Trdnsito), was conditional upon proof of payment of the Municipal Vehicle Tax in the last five years. In 1987, the law changed. Since then plate renewal is no longer conditional on the payment of tax. In addition, the new law has establisheda national registration fee (without the Municipal VehicleTax), since the new national registration tax was consideredto be a substitute to the local Vehicle Tax. As a result, the periodic renewal of license plates no longer exists. Evenwhen the car is sold, vehicle owners no longer have to pay their overdue Vehicle Tax. The requirement that the municipal Vehicle Tax should have been paid prior to any registration renewal should be brought back into the law. 56 ANNEX 3

(b) UpdateTax Rates -- the current tax rate is low (25 Bs, or US$0.40 for a car). If tax rates were updated to their real level 30 years ago revenueswould increase40 times the current level. (And still be lower than in many other countries). (See Table 5.9) This increase in tax rates together with full compliancecould make the VehicleTax the first source of tax revenuesfor the municipalities. Any increase in rates should be determinedat the central level to avoid wide variations across localities. One suggestion would be to establish a minimum standard and a margin of variation for local governments to fix their rates within a 10-20% margin.

(c) Update Information on Tax Base -- At present, Venezuela's municipalities have no way to identify the vehicle owners who failed to register their vehicle with the local Treasury department,for they have no access to the NationalPermanent Register for Vehicles (Registro Automotor Permanente),under the responsibilityof the Direcci6n Nacionaldel Trdnsito (in the MTC). A recent study (Acedo & Barrientos, 1991) proposed that the information of the national register should be made available to the municipalitiesto allow them more efficiency in collecting the Vehicle Tax.

(d) Design a more effective system -- Since municipalities have no way to find the tax evaders through the NationalPermanent Register for Vehiclesand annualregistration no longer present an opportunity to recover overdue Vehicle Tax. The only policy tool available to the municipalitiesis on-the-streetcontrols. In most countries where vehicletaxes exist, the control is carried out by the traffic police, which has also supervisionresponsibilities for drivers' license and car insurance. In Venezuela,VT monitoring is not a responsibility of the national police. Municipal fiscal agents could monitor but they are not authorizedto stop cars in the streets. To deal with this problem, the municipality of Santiago Mariiio issued warnings through propagandaon the local radio broadcastnetwork. The revenuesfrom the VehicleTax doubled.

14. However, the nationalregister has several problems. Priorto 1987, the owner of a new vehicle had to apply for a new registration card to get his/her licenseplates. The fee for registeringa car was about 80 Bs. Both the registration and the license plates had to be renewed every 5 years, which permitted updating information on the fleet. In 1987, the system changed. The registration system becamenational and private cars were levied with a national tax of 250 Bs (US$ ) in addition to the registration fee. Unfortunately, the new system was found unconstitutional and never worked. The final result was that both the annual and the 5-year renewal scheme disappeared. The information availableon the vehicle fleet at present comes from the registration of transactions on new and used cars, but it is impossibleto know whether vehicles are registered and if they are still on the road. 57 ANNEX 3

Table 3.2: Potential and Actual Revenues of the Vehicle Tax (Valenia Municipality in 1989)

Carabobo Stste 1,453 VehicleFleet (1000vh) 136 6 37 1 17 197 Valencia Municipalit Population1990 " 916

BEsatited fleet (1000vh)21 105 5 28 1 1 152 Tax Rates(Bs/Yer) 31 100 200 240 240 60 Potentialrevenue (1000 Bs) 10,494 968 6811 260 766 19,299 Actual revenue (1000 Bs) 7,146 Actual as % of Potential 37%

Sources: Carabobovehicle flet- OCEI, Anuarioestadfstco 1990, p.4 3 2. "Population= Census 1990 Particular,AIquiler, Carga, Colectivo,Motocicleta. vValencia vehicle fleet has been calculad on the asumption that motorizationrates ae twice as high in the municipalitythan they ae in die rest of the State Tax rates - Municipiode SantiagoMarijio.

15. Rehabilitatingthe VehicleTax requiresthat state police control and enforce payment. The fine for default could enter the state budget to help finance enforcement. To help the processtwo systems could be used: one is a tag on the license plate, as in Brazil, or a sticker on the windshield like in Moroccoand in France. Similarstickers, called 'calcomanles' were used in Venezuelauntil some years ago. However, as inflation erodedthe nominal value of the MTV, the cost of producing the stickers became greater than the net revenue of the Vehicle Tax. The practice of the sticker would be appropriatebut the tax rates must be updated first.

16. Vehicle Tax -A Municipaltax? There are strong arguments for the MTV to be a municipal or a state tax. In line with the benefit principle, The allocation will dependon which level of government will have the responsibilitiesfor road construction and maintenance. Our opinion is that the MVT in Venezuela should be organized so as to reflect the share of local responsibility and financing of different levels of government. Unfortunately there are no good data that would allow us to make this estimate in this report but those values exist in the country and could be used to justify an efficient sharingmechanism to help states and municipalitiesto finance road-relatedexpenditures. Rates should not vary too much across states in order to minimize allocative inefficiencies. Enforcement costs would remainlow if it were possibleto have the state police with the responsibilityfor its enforcement.

17. Table 3.3 comparesthe potential revenuesaccruing from the state VehicleTax to the present Situado. With 'reasonable rates* and normal enforcement the MTV could increasestates' revenues by more than 70 times. This assumes the MVT on private cars, taxicabs and public transport minibuseswould increase increase 100 times (to compensatefor inflation in the last 30 years); rates on trucks motorcycles and buses, 50 times. Since the user charges on trucks are grossly 58 ANNEX 3 underestimatedin Venezuela,as compared to their cost in terms of road deterioration, it would be reasonableto increasethe VT rates as function of axle load capacity.

Table 3.3: Potential Revenuesfrom a Stae Vehide Tax

TaxRates (Bs/Year) | 100 200 240 T 240 | 60 ll Proposed Tax Rates (Bs/Year) 10,000 20,000 12,000 12,000 3,000 Actual Revenue (Mbs) 148 20 107 5 18 297 Estimated Potential Revenue (Mbs) 14,840 1,960 5,340 228 876 23,24 Situado Constitucional 1990 (Mbs) I 66,562

Sources: Vehicle Fleet = OCEI, Anuanio Estadfsico 1990, p.432. Tax Rate- Municipio de Santiago Marino Mission estimates.

18. The following table comparesthe potential revenuesfrom a state VehicleTax with a higher rate on trucks (48,00OBson the average)to the present Situado by state. In this case the revenuefrom the tax will almost doublethe disposablebudget of the states with the largestpopulations and, on the average, increasestate budgets by 60%. 59 ANNEX 3

Table 3.4: Potential Vehicle Tax Revenues by State, 1990 (In Mbs)

State Vehicle Tax Situado T/S

Distrito Federal 7,171 7 490 96% Zulia 4,620 6 230 74% Miranda 4,796 5 414 89% Carabobo 3,311 4 265 78% Lara 2,444 3 890 63% Aragua 2,487 3 720 67% Anzoategui 2,071 3 057 68% BoUlvar 1,929 3 048 63% Tachira 1,850 2 980 62% Sucre 683 2 742 25% Falcon 1,120 2 480 45% Mdrida 1,156 2 337 49% Trujillo 832 2 255 37% Portuguesa 976 2 227 44% Guarico 865 2 126 41% Monagas 664 2 116 31% Barinas 618 1 911 32% Yaracuy 570 1 829 31% Nueva Esparta 486 1 499 32% Apure 283 1 486 19% Cojedes 342 1 297 26% TF.Amazonas 42 1 073 4% TF.Delta Amacuro 63 1 088 6% Total 393,761 66 562 59%

Sources: Fleet = OCEI, Anuario Estadistico 1990, p.4 3 2. Tax Rates Municipio de Santiago Marifio.

19. The above estimatesare only indicative of the potential revenuethat could be obtained from a more effective Motor Vehicle Tax. More detailed analysis would be requiredto: identify the potential legal and political impediments of assigning a Vehicle Tax to the states; to analyze other developingcountries experienceand their adaptability to the Venezuelanexperience and to assessthe potential revenue expected from various systems.

Fundingof Road Maintenance

20. Road Cost Recovery and Demend Management. Road user charges in Venezuelaconsist essentiallyof a tax on petroleum products, tolls on some expresswaysections and major bridges, and a vehicle ownership tax, which is levied by municipalities.Tolls, which until recently were exclusively collected by the central government, have not been updated since these roads were opened; toll revenues therefore are insignificant. Similarly, vehicle ownership tax rates are outdated; the municipalities'revenues from these taxes contribute only a share of their expenditureson urban street networks. Revenuesfrom the tax on petroleum products have, as an average over the recent years, exceededall Central governmentexpenditures on roads. However, prices of petroleum products are very low in Venezuela (Annex 14, Table 14.2b). If one consider this factor, there is virtually no recovery of road costs and an implicit subsidy to road users. Agreement was first reached with the Government under the Structural Adjustment Loan on a plan to progressively raise the prices of 60 ANNEX 3 petroleum products to international levels. This program of phased price increaseswas to continue under the Public EnterpriseReform Project (Loan No. 3223-VE). Progresswas made under this plan until January 1992, when prices reached over 50% of the international levels. However, the impact of these price increaseson the net disposableincome of a large proportion of the population has led the Governmentto postponeand slow down further increases.

21. Fuel Taxes. Fuel taxes could be important revenue sources for municipalities (and states). From an economicpoint of view they should be benefit-related-- that is, their proceedsshould be used to finance road-relatedprograms such as construction and maintenanceor to finance pollution control projects (to internalizethe costs of environment degradation). The tax could have three components, central, state, and local, which would make it politically more attractive (as local governments would be able to used it) and economicallymore efficient.

22. The allocative impact of petroleum subsidies is essentially on the use of private cars versus public transport. The impact on the inter-modalallocation of freight is insignificant since there are no alternative to trucking in general. The impact is therefore on traffic congestion and capacity investments, particularly in urban areas, rather than on pavementmaintenance. Within this context, the main elementsof an adequate road cost recovery and demand managementpolicy would be to: (a) aim to at least recover the short term marginal cost of road use by the different categories of vehicles, by maintaining appropriate road user charge levels through a combination of taxes on petroleum products and on vehicleuse and/or ownership; (b) charge appropriatetolls on expressways, preferably through concessions to private operators, responsible for operation and maintenance, capacity investmentsand relatedfinancing; (c) use market prices,in particular for petroleum products, in evaluating and selecting the investments to be included in the annual highway programs; and (d) disseminateadeqwuate policies and measures,including parking restraint and traffic management,to improvethe managementof demandfor road use in urban areas. The Highways Managementproject would help the Government to develop and implement elements (a) to (c). The presently proposed Urban Transport project would help to implement element (d).

23. Highway MaintenanceFunding. Largelyinsufficient resourceshave, in the past, beenallocated to road maintenance,which led to the deterioration of the network. The 1992 budget, however, includes much increased allocationsfor road maintenance.In order to secureappropriate, permanent funding for road maintenance,the Governmenthas presented to Congressa proposalto create a Road Fund (Fundo Vial) which would receive part of the proceeds of gasolinetaxation and be used partly for the maintenance of the primary road network. Congress, however, has not yet acted on the proposal. If the proposal would not be approved by Congress, alternative permanent funding mechanismswould be developed under the project, considering in particular alternative sources of revenuessuch as tolls, vehicle use tax, etc., and their redistribution to the states in accordance with their expenditure responsibilities,and establishedin accordancewith an agreedtimetable.

B. Debt CaDacityof ParticiDptinaMunicipalities

24. The Low Income Barrios Project ( Ln 3495-VE) examinedthe debt capacity limitations of 76 municipalities to assume, manage and repay loans for infrastructure investments. Assuming near market rates, and medium-to long-termperiods (10 years), sensitivity analysis was done to show that even under conservativeassumptions about exogenousand other factors municipalitieswould be able to repay these loans. The analysis demonstrated that an annual debt service limit of 15% of total revenueswould enable municipalitiesto repay loans and remainfinancially healthy. 61 ANNEX 3

C. FinancialSituation of First Year MuniciDalities

25. The financial situation of the five municipalitieswhich will participate in the first year program --Maturin, Merida, Ciudad Guayana, Maracaibo, Barquisimeto and 40 other municipalities were reviewed in the context of 'The Low Income Barrios Improvement Project", Loan #3495 and are describedin the Annex 2 of the IBRDreport # 10401-E. All the municipalitieshave the capacity to providethe counterpart funds required for their subprojects. 62 ANNEX 4

VENEZUELA URBANTRANSPORT PROJECT

SubDrolectEliibility Criteria

Introduction

1. Urban transportation involves an integrated system of roads, traffic policies and measures (parking, traffic management, tariffs, etc.), private modes, public transport, goods transport, pedestrians and in some cases, railways and metros. A change in one component of an urban transport system affects other components; to improve sector efficiency and quality, it is necessary to adopt a systematic approach to planning and investment. It is FONTUR's aim to promote improvements in the Venezuelanurban transport sector through well planned, well directed and justified investment programs. To this end, FONTURhas establishedcriteria for the selection of cities to participate in its investmentprograms and has also establishedscheme investment eligibility criteria. The criteria are described in the following sections.

City Elioibility Criteria

2. The threshold criteria of eligibility for a city to participate in the Urban Transport Programto be financed either with FONTUR'sown resourcesor with resourcesfrom World Bankor IBD loans have been defined and the conditions, with which a city is obliged to comply, are:

(a) a municipality should have a population in excess of 100,000 inhabitants; exceptions can be consideredfor cities with lower populationsif they are of vital economic, social or territorial importance to Venezuela. In cases where a city includes more than one municipality or is a metropolitanarea, the populationof the most important municipality shall be more than 100,000;

(b) the municipalitiesshall develop an mintegrated urbantransport strategy" covering short and medium term actions for both private and public transport. The strategy shall be in accordancewith sectoral objectivesand priorities establishedby MTC and for which, FONTURhas the responsibility for implementation. In cases where more than one municipality or a metropolitan area is involved, a common strategy between municipalitiesshall be adopted. The strategy will be developed through an integral transport study which will be carriedout in accordancewith TOR agreedby FONTUR. The strategy will include proposalsfor:

li) a transport infrastructureand traffic strategy (parking,traffic managementand other policies);

lii) a public transport strategy aimed at improving the efficiency of the public transport system and increasingfinancial viability of the sub-sector; and

(iii) an institutional development strategy for traffic and transport planning and operations;and

(iv) a maintenancedevelopment strategy.

In the cases of Barquisimeto,Maracaibo, Maturin, Merida and Ciudad Guayanaonly parts (ii),(iii) and (iv) are required; 63 ANNEX 4

(c) the creation and/or strengthening of permanent local agencies, units or groups' with responsibilities for traffic management, road maintenance, maintenance of traffic control equipment and control and planning of public transport. In cities with more than one municipality, effective mechanisms will be required to coordinate separate municipality actions and the creation of a 'metropolitan" agency is the preferred option;

(d) an agreement("convenio") between FONTURand the municipality shall be established in which:

(i) the municipality agreesto allocate sufficient resourcesfor the program. Annual budget allocations will include adequate budget for the maintenance roads, public transport facilities and traffic management systems and, adequate budget for the counterpart funds necessary for the implementation of FONTUR/Bankprojects. In cities with more than one municipality, all municipalitieswill allocate sufficient resources in the appropriate categories. To assist in mobilizing the resources,the municipalitieswill review and revise vehicle and other transport taxes within their competence and establish mechanismsfor collection and for transfer to the sector;

(ii) the municipality(ies)will take all actions necessaryto protect the environment from the adverse impacts of transport and to control vehicle emissions in accordancewith VenezuelanLaw (Art 38, Ley Organicade RegimenMunicipal and, in the case of vehicle emissions, by application of the Ley Organicadel Ambiente y sus Reglamientos);and

(iii) the municipality(ies) will have completed final engineering designs and documentationfor those components which are to be implementedin the first year of the FONTUR/WorldBank/inter American Development Bank sub-project;

(iv) the municipality will adhere and comply with FONTUR'sOperations Manual.

(v) the municipality(ies)will sign an agreement("convenio") with the Traffic Police (Direccionde Vigilanciade Transito Terrestre de la Direccion GeneralSectorial de TransporteTerrestre del MTC), following model terms preparedby FONTUR, in which a clear commitment is made to carry out the necessarytraffic law enforcement functions and to provide the necessary human and material resourcesto enablethose functions to be performed;

(vi) the municipality(ies) will devise and carry out a monitoring and ex-post evaluation program;and

(vii) the municipality(ies) will seek approval of FONTUR before initiating any investment in the transport sector with a cost of more than US$ 3 million.

(e) in the case of the Metropolitan Area of Caracas,for criteria (d), only items (i), (ii), (iii), (iv) and (v) will apply.

the organizationalstructure will follow one of the models developedby FONTURas appropriate for municipalitiesof varying sizes. 64 ANNEX 4

Proiect Investment Criteria

3. Any urban transport investment shall be considered eligible for financing under the Urban Transport Program,either with FONTUR'sown resources or with BID/Bankresources, provided the following criteria are met. The proposedinvestment shall:

(a) be in accordancewith the policies and sectoral objectives establishedby MTC, and for which FONTURis the executing agent and, should form part of a city integrated transport strategy acceptableto FONTUR;

(b) be subject to an economicand operationalevaluation which shows that the proposed component is an efficient and effective solution to the identified problem.

(c} have an economic rate of return of at least 12%;

(d) have been subject to an environmentalassessment. In the case of negative impacts, appropriate mitigating measuresshould be devised and included. In the case that re- settlement of peopleis involved, a re-settlementplan acceptableto FONTUR,the World Bankand the IDB shall be included;

(e) includes any necessary complementary institutional and policy action plans for successful implementationand operation;

(f) no single component shall have an implementation period greater than 18 months, unless otherwise agreedby the FONTUR;

(g) include maintenanceprogram associated with the investment to be executed under the program. 65 ANNEX 5

VENEZUELA URBANTRANSPORT PROJECT

SamDleof a SuborooectADoraisal 1

City Traffic and Transport PreparationStudies

1. The proposed Bank Project will be an integral part of the FONTUR'sNational Urban Transport Program. Eligibility criteria for city participation and for investment in traffic and transport components have been defined in Annex 4. The Project has broader objectives than improvement of traffic conditions in the participating cities. The primary objective of the Project is to improve the capabilitiesand effectiveness of both local and national institutions involved in traffic and transport planningand operations. This will be achievedthrough primarily through technical assistanceto FONTUR,municipalities and traffic police and through national and local training programsfor professionalsand technicians in the sector. Thus, while important traffic operational and efficiency gains will be made from the city transport investments, the city sub projects are also mechanismsto assist the general development of the urban transport sector. Given the current stage of developmentof city capabilities in the sector and the current level of traffic problems in the cities, each city sub project concentrates on relatively simple measureswhich can be implemented rapidly. Thus city sub projects are not comprehensivetransport programs and do not addressall issuesin the urban transport sector in each city.

2. Five cities have prepared,or in the process of preparing,sub projects. The current results of the preparationstudies and the recommendedinvestment proposalswere presented to the Bank at Appraisal. The status of the preparation studies is as follows:

(a) the sub project preparationstudies for traffic and transport measureshave been in progress since about May 1992 in the cities of Barquisimeto,Maracaibo, Merida, Maturin and Ciudad Guayana;

(b) while various technical comments remain, the sub project preparationstudy in Barquisimetohas been completed;

(c) the sub project preparationstudy is nearingcompletion in Maracaibo;

(d) while the studies have defined investments in Ciudad Guayana, Maturin and Merida, some additional work is required to establish the feasibility and costs of proposed investments with greater confidence.

3. The actions requiredto complete the subprojects such that they can be include in the Project are outlined in the Action Plan (Annex 13);

City MaintenanceComDonent Preparation

4. In parallelwith the traffic and transport preparationstudies, an assessmenthas been made in each city of road maintenance requirements(see Annex 10). The assessmenthas enabled a draft deferred maintenanceplan to be establishedfor each city.

1/ A subprojectdescription is availablefor eachof the citiesappraised but giventheir lengthonly a sample is includedin the appraisalreport. All the otherswill be in the projectfile. 66 ANNEX 5

City Institutional DeveloDment

5. As part of the traffic and transport sub project preparationstudies, the consultants formed a view on the institutional needs in each city to implement a successful traffic and maintenance program. In parallel, FONTURhave carried out a broadly based institutional study (the Role of GovernmentStudy) which established model traffic and transport organizationsfor municipalitiesof varying size. Basedon these two areas of work, a technical assistanceprogram for the municipalitieshas been defined by FONTUR(see Annex 6).

City Traffic and Transport Sub Proiects

6. The basic population, travel characteristicsfor each city, and a description of the transport conditions and subprojectsfor each city are included in Attachments (see project file) similar to Attachment A below for Barquisimeto. 67 ANNEX 5f

ATTACHMENTA - BARQUISIMETOSUBPROJECT

Part A - Urban Development

1. Location and FeaturesThe Metropolitan Area includesthe cities of Barquisimeto (Municipality of Iribarren)and Cabudare(Municipality of Palavecino). The areais located 255 km west-south- west of Caracas. The Metropolitan Area is referredto as Barquisimetoin the present description.

2. Spatial Develoomentand City Form Urbanizeddevelopment in Barquisimetoextends over about 21,705 ha. The city of Barquisimetois broadly linear in form and is located between the Rio Turbio (in the south) and high ground (to the north). The older, central area of the city comprisesa closely spaced, regular grid of narrow streets with a central plaza; land use is mixed commercial, retail and lower income residential. An industrial area is located in the north west of the city and an expanding residentialareas to the west. Cabudare,5 km to the south east, is a dormitory area for Barquisimeto. The center of the Barquisimetois by-passedin the north by the major east-west Caracas-Valencia-Barquisimetohighway Ruta No. 1 (Ave. Libertador),and continues westward via Carora to Maracaibo,although the road has becomeincreasingly urban in character north of Barquisimeto. A further east-west road, Ave. Riberehia,by-passes the city to the south; the road has poor connections to the city, largely as result of topography. Within the Barquisimeto area there are few north-south road connections and some major east-west roads are discontinuous. Barquisimetoand Cabudareare linked by Ave. IntercomunalBarquisimeto-Cabudare and Ave. Ribereffa.

3. PopulationThe population of the Metropolitan Area in 1990 was 745,000: Barquisimetois about 602,000 (80%) and Cabudareabout 143,000. Between 1980 and 1990 a growth rate of about 2.6 % per year was experiencedand this rate is expected to continue with a population prediction of 935,000 by 2000. Populationgrowth trends are towards the northeast and northwest sectors of the metropolitan area.

4. Main EconomicActivity Barquisimetois an important regionalservice and commercial center, and its citizens consider it the "fourth city in Venezuela",behind Caracas, Maracaibo, and Valencia; industrially the city is expanding and includes major industrial zones to the northwest and west, with railway transportation facilities.

Part B - Urban Transport Sector

5. Motorization and Mobility Motorized trips number about 850,000 million per day. Public transport (bus and por puesto) carry about 52% and private car about 48% of trips. Of the public transport sector, buses carry 60,000 passengersper day (21 %), and por puestos carry 226,130 passengersper day (79%). The public transport fleet includes 1778 24-passengerpor puesto vehicles, and 77 70-passengerbuses.

6. Traffic and Transoort Conditions Traffic congestion in Barquisimetois not yet all pervasive or severe;it is most often located at particular main junctions causingjourney times to vary wiely; traffic and junction problemsexist on Av Libertador (52,000 vpd, speedsfrom 8 to 40 kph), Av Vargas (26,000 vpd, speedsfrom 4 to 34 kph), Av Venezuela(central area 44,500 vpd, speeds from 10 to 58 kph) and similar conditions apply to other roads; various main junctions also experiencecongestion - Los Leones, Cabudareand Pate'Palo. Congestionalso occurs in the vicinity of the inter-urban/urbanbus terminal. Traffic accident deaths are reported at 68 in 1987 and 27 in 1988. 68 ANNEX 5

7. Traffic managementis of a relatively good standard but the staff team in the municipality is small and lacks resources;the traffic control system (signals)is outdated and unresponsiveto traffic. Roadmarkings are soon destroyed as conventional road paint is used.

8. Road Maintenance The road network comprisesabout 200 kms and is maintained by the MTC delegation. Road maintenancestandards are reasonable;a sample of roads was reviewedfor Sub Project preparationshowed that 67 km were in unacceptablecondition and required some form of rehabilitation. Particular problemsoccur on Avenida Libertador in the left turn lanesdue to high traffic volumes and tracking. There is no systematic maintenanceplanning, programmingor budgeting. In the expanding areas of the city, some bus routes in residentialareas are unpaved.

9. Public Trainsort In 1992, the public transport system in Barquisimetocomprised about 77 conventional buses (typical seating capacity of 45) and 1680 minibuses/porpuestos (23 seats). Recently, the state government introduced 40 buses at a subsidized fare of 60% of the existing service. However, the public transport system is private sector owned and operated and comprises 21 owner-organizations. The bus fleet is not of high quality and offers little passengerattraction or comfort. A flat fare system operates at 8B (US$ 0.1 1). There has been a trend for many years (1979 to 1990) for the number of buses to decline (179 to 77) and por puestos to increase(1007 to 1680); the number of 'seats' offered has probably increased by about 35% in this period.

10. The bus system is currently regulated by the transport and traffic unit office. Franchise conditions cover fares and routes. Although the system allows for periodic franchise renewals and for sanctions against operators who do not comply with the conditions, actions of this nature are rarely, if ever, taken. The public transport system has developed in an uncoordinatedand inefficient manner and there is agreementthat reform is probably best dealt with at the Municipal level. This will be carried out through a public transport study under the Project.

11. Traffic and TransportInstitutions Road,traffic and transport matters in Barquisimetoare the responsibility of the municipal Office of Metropolitan Traffic and Transport; the office has three divisions (i) engineering,(ii) planning and studies and, (iii) control. The total staff of OMTT comprises4 professionals. OMPU and MTC also have some roles in the sector (planningmajor roads, road maintenanceetc).

Part C - Urban Transoort Issues and Obiectives

12. Traffic and transport problems in Barquisimetocan be summarizedas:

(a) institutional - a lack of professionallyqualified staff engaged in traffic and transport matters and in road maintenance;the situation will worsen as decentralization becomesa reality;

(b) public transPort - poor levels of service arising from a combination of factors including outdated and inappropriateregulatory framework, unrealistic tariffs which contribute to a low quality service and a complex and outdated route structure; lack of paving of bus routes in some outer areas increasesoperating cost;

(c) road maintenance- a lack of systematic planning which will worsen as MTC hand over responsibilitiesto the municipality;

(d) traffi - although congestion and safety are not yet severe, some problemsexists and significant benefits can be achievedwith well directed, cost-effective and managementmethods. 69 ANNEX 5

13. The objectives of the BarquisimetoSub Project are those of the Project in general, namely to improve the operationalefficiency of the traffic system, to improve the institutional capabilities of Barquisimetoin the sector and to improve maintenanceof urban transport infrastructure and facilities.

Part D - Sub Proiect Institutional Comoonent

14. Annex 6 describesthe institutional strengthening (TA and equipment)program in which Barquisimetowill participate. Additionally, it is proposedto include a public transport study (TOR see Annex 8);

Part E - Traffic and Transgort Infrastructure and EuuiomentsComoonent

15. The componentwill assist in improving the operationalefficiency of the system by alleviating traffic congestion and by assisting public transport operationson a series of corridors and in the central area. Works involved include traffic management(improved junction layouts, traffic signals, revised circulation etc) applied at particular junctions or comprehensivelyalong corridors, bus and pedestrianpriority (in the central area), new road connectionsto correct deficiencies in the network, paving of bus routes and a program of marking and signing. The proposalsare summarizedas follows:

(a) Corridors The objectives of the schemesare to improve the level of service, efficiency of traffic flows and increasesafety of traffic operationson major corridors. The type of works on each corridor are similar and include a program of signing, repaving, thermoplastic road marking, channelizationand modification of junctions, bus stop relocation, new traffic signals (mostly linked) and controllers at junctions and revised timings. The corridors proposed and their costs are (costs include design, supervision, works, equipment and physical contingencies- the schemeshave been design to avoid any expropriation);

v Ave. Libertador -- east-west corridor between Calle 33 to the east and Ave. Los Leonesto the west. (Estimated cost: US$ 2.2M.) * Ave. Venezuela-- east-west corridor through the CBD between Calle 42/Ave. Romulo Gallegoswith its connection with the Autopista Centro Occidental on the east side. (Estimatedcost: US$ 1.2M.) * Ave. Vargas -- corridor serving north-south traffic on extreme east side of the city, from Carrera16 north to Ave. Libertador. (Estimatedcost: US$ 0.6M.) Intercomunal Barquisimeto-Cabudare-- principal connector between Barquisimetoand Cabudarefrom Cabudareto conection with the Autopista Centro Occidental at the roundabout; includes Ave. Lara segment from Calle2 to Intercomunal. (Estimatedcost: US$ 1.3M)

(b) Conflict Points (Intersections) The objectives of the schemes are to reduce congestion and increasesafety of traffic operations at major intersections on the main corridors. The works involved at each intersection include widening approach lanes, new traffic signals, controllers and timings, modification to traffic circulation. The intersections proposed and are as follows (costs are included in the relevant corridor):

X Ave. Libertador/Calle22 (Pata e Palo)(Costs included with costs for Corridor Ave. Libertador, above.) X Ave. Venezuela/AvLas Leones/Capanapro/AutopistaCentro Occidental. (Costs included with costs for Corridor Ave. Venezuela,above.) 70 ANNEX 5

IntercomunalBarquisimeto Cabudare/Ave. La Mata (Costs included with costs for IntercomunalBarquisimeto-Cabudare, above.)

(c) Bus Terminal Area The bus terminal area is congested and buses experiencedifficulty in gaining accessat Calle42. In the short terms, it is to introduce a seriesof traffic managementmeasures including an exclusive bus access lane and revised traffic circulation pattern for buses and traffic to ease the congestion problem. The works involve changes in traffic flow directions, new road markings and signing, new traffic signals and controllers, and new bus routes. (Estimatedcost: US$ 0.3M.)

(d) Central Area Traffic SchemeThe objectives of the scheme are to improvethe level of service of traffic operationsand to improve bus operations and pedestrianconditions. This will be achievedthrough a series of measuresincluding revised traffic circulation, new traffic signals system (includingcoordination), introduction of exclusive bus/pedestrianstreets, relocation of bus stops, reconfiguration of road cross sections and other minor traffic managementworks. (Estimatedcost: US$ 2.1 1M.)

(e) Access to Av Riberena The main highway to the south of the city is not used effectively due to poor access. It is proposedto utilize the full potential of the road by improving the access/connectionsto the existing road network and by improving the junctions. Works will involve limited road construction through difficult terrain. Geometricswill not be ideal since Av Riberenais at a low level and accessto the existing network will involve a relatively steep gradient; preliminary investigations show the design to be acceptablein urban conditions but will be verified at final design stage. (Estimatedcost: USS 2.52M.)

(f) Public Transoort Imorovement Two categories of measureare proposed. First, with the objective of reducingthe costs of operation of buses/por puestos, it is proposed to pave some 28 kms of bus routes - presently unpaved. Second, it is proposedto improve the quality of bus services by introducing bus stop shelters. (Total cost of the component is estimated at: US$ 4.9M.)

Part F- Maintenance Comoonent

16. See Annex 10

Part G - Proiect Costs and Financing

17. Cs The BarquisimetoSub Project total cost is estimated as US$ 15.6M. The Sub Project cost estimates (Oct 1992) have been based on feasibility plans (1:1000 scale) for physical works and estimates for equipment; physical contingencieshave been allocated at 15%; price contingencieshave been based on projected international inflation rates of 3.7%/year. No expropriation is involved in the project.

18. FinancinaPlan The financing plan would be the same as for the Project in general (see Table 3.3, Chapter3).

Part H - SubProiect Evaluation

19. Economic Benefits for the majority of components (90% of total Sub Projectcosts) have been quantified in accordancewith the methodology and principlesdescribed in Annex 11. It is 71 ANNEX 5 estimated that, based on vehicle operating costs savings, component IRR's range from 10% to 56% with an overall figure of 27%. If time savings are included, the IRR's rise to 37% to 120% with an overall value of 73%. It is estimated that about 19% of the benefits accrue to the urban poor.

20. Environmental. Environmentalconditions are not believed to be affected greatly in Barquisimetoby transport factors. In general it is assessedthat the Sub Projectwill have a neutral impact on (i) noise, (ii) segregationof communities and (iii) urban heritage. In the case of accidents and vehicleemitted pollution, the impacts should be positive as in the former case, improved junction an road layout should lead to safer traffic operations and in the latter case, improve traffic operationsshould lead to less congestion and thus less vehicle emitted pollutants under idling conditions.

Part I - SubProiectExecution

21. Proiect Organizationand Manaaement As defined in the SAR, FONTURwould be responsible for overall Projectsupervision. The Municipality of Barquisimetowould be responsiblefor day-to- day SubProjectimplementation matters through the strengthenedTraffic and Transport Planning Unit. The head of the Unit would also be designated as SubProjectManager.

22. ImDlementationSchedule The physical works of the Sub Project will be implementedover 4.5 years.

PartJ - Proiect Risks

23. The major Sub Project risk is institutional. Traffic and transport planning are relatively new fields of activity in Barquisimetoand staff involved are inexperienced. It is proposedto minimize the risk by: (i) the creation of a Traffic and Transport Unit to provide the focus for traffic and transport actions, (ii) ensuring adequate staff numbers, (iii) providing of full time technical assistance to support and train the staff Isee Annex 6) , and (iv) by the provision of a National Training Program(Part A of the Project) in which Barquisimetostaff must participate in order to qualify for the Municipal StrengthingComponent. 72 ANNEX 6

VENEZUELA URBANTRANSPORT PROJECT

Institutional Strenathenina ProaraM for FONTUR and Municipalities

Backaround

1. Until recently, the transfer of central government funds to local entities for urban transport improvementswas primarily a subject for negotiation between the central governmentand the local agenciesinvolved. Only limited evaluation of projects was carried out. With the creation of FONTUR, the procedures of allocating federal funds to municipalities (for transport infrastructure and traffic systems) and to the private sector (for the enhancementof the public transport fleet, mainly buses), are undergoingchange. To qualify for federal funds, projects will have to be subject to evaluationand only those which meet acceptabletechnical, economic,financial, environmentaland social evaluation standards. Projectsmust also form part of an acceptableurban transport strategy developedfrom an integrated urban transport study of the municipality concerned.

2. The responsibilities and role of FONTUR in this process has been described in Annex 2. However, the role includes the promotion of national urban transport policy, the technical evaluation of projects for eligibility under the National Urban Transport Program(and thus the Bankproject since it is an integral part) and to assist in the decentralizationof urban transport functions by strengthening municipalities. The structure of FONTURand the responsibilitieshave been fully described in Annex 2. Broadly, FONTURhas been organizedinto three basic divisions:

(i) Operations- responsiblefor promotion of municipal programs,coordination of programs, supervision of progress of programs, progress reporting to FONTURmanagement and identification of technical assistanceneeds at local level;

(ii) Programs- responsiblefor technical, economicand financial evaluationof projects to be financed from FONTURresources, development of methods suitable for the analysesof projects in the Venezuelanurban context, supervision of preinvestment work )studies, preparationof projects and so on);

(iii) "Convenios" (Agreement) - responsible for administration of the "convenios" with agenciesreceiving funds, supervision of agency compliance with convenio agreements and financial supervision. agencies;

3. FONTURis a new agency and staff at this stage lack experience in the sector. Additionally, systematic planning of urban transport, apart from CaracasMetro, does not have a strong tradition in Venezuela. Thus, it will be necessaryto support and strengthen FONTURduring the next few years to enableit to fulfill its functions effectively. It is not intendedthat FONTURbecome a large unwieldy bureaucracyand much of the routine work (such as project supervision)will be contracted to private sector consultants. Thus, a strengthening program has been defined comprising: (a) technical assistance- international, (b) technical assistance- national, (c) equipment(computers, software etc), (d) consultant supervisionprogram and, (e) studies. Details are as follows.

TechnicalAssistance. Consultant Servicesand Eauipmentfor FONTUR

4. Technicalassistance will be provided under the Project to assist FONTURin the key technical areasof traffic engineering,transport planning, public transport operations,infrastructure maintenance 73 ANNEX 6

management and transport economics. The technical assistance will assist FONTURto develop methodologies,processes, work programs and appropriatemethodologies to be used throughout the Program,the Bank project and municipality studies. A primefunction will be to assist in the evaluation of municipalitytransport investmentsproposed for financingunder FONTUR'sprogram and the Project.

5. InternationalTechnical Assistance. 162 staff months of technical assistancehas been allocated to the three FONTURoperating divisions at an estimated cost of US$1.92 million. This level of technical assistance is proposed over the first 2 to 3 years of the Project. Since this is a large program, it is necessaryto monitor closely its effectiveness and success. In the first instance, it is proposed that the technical assistance core team be contracted over 12 months (that is for 60 staff months) and that at the first Annual Review Meeting of the Projector 9 months after the appointment of the technical assistance (whichever is the earliest), FONTURwith the participation of the Bank would evaluate progress. It would then be decided (i) if the team as constituted is effective and if it should continue unchanged or if it should be subject to change of skills or personnel and (ii) if the additionalstaff resources(102 staff months) should be committed and to which skill areaand for what period. Thus, the program is:

Additional Allocation subject Technical Assistance Initial Contract to review (SpecialistArea) (Staff months) (Staff months) PROGRAMDIVISION Transport Planner 12 12 Traffic Engineer 12 12 Transport Economist 12 12 OPERATIONSDIVISION ProcurementAdviser 6 0 SupervisionAdviser 6 12 CONVENIO DIVISION 12 FinancialAdviser 1 12 FinancialAdviser 2 0 24 Contingency 0 18 TOTAL 60 102

6. Terms of reference for the initial 12-month period, including general profiles for specialists in each technical assistancearea are included in the project file and will be confirmed at negotiations.

7. Proposalsfor the technical assistance will be solicited internationally (Venezuelanconsultants will be eligible) in accordancewith Bank guidelinesfor consulting services.

8. It will be essential, if the technical assistance team is to be effective, that FONTURis fully staffed in the relevant divisions; thus, at effectiveness assurancesshould be received that FONTUR have appropriatestaff levels.

9. Consultant SuDervisionProaram. FONTURproposes to superviseprojects through the use of local consultants. US$1.72 million has been allocatedfor the first two years of the Project, which is equivalentto 172 staff months. After this time, it is anticipatedthat FONTURwill carry out the work, using local consultants, with their own resources. Specimenterms of reference are included in the 74 ANNEX 6

project file; these will be modified by the FONTURinternational technical assistance team as each specific city project or study arises and requiressupervision.

10. Eauipment. An allocation of US$200,000 has also been made to provide FONTURwith office equipment such as personalcomputers, traffic and transport planning software and video equipment.

TechnicalAssistance for Municipalities,,

11. FONTURis aware that: li) municipalitieshave little capability in the urban traffic and transport sector, (ii) national consultants have little experience in the sector, and (iii) technology transfer to municipalitiescan only take place if there is a permanent technical assistance presence within the municipalitiesby a combined program of national and international technical assistance. The program is described below.

12. International TechnicalAssistance would comprise a group of seven international consultants contracted for two years (168 staff months) as follows:

(a) a team of two in each of the larger cities of Maracaiboand Barquisimeto;and

(b) one in each of the medium-sizedcities of Merida, Cuidad Guayanaand Maturin.

13. The two-man internationaltechnical assistanceteam in the cities of Maracaiboand Barquisimeto will comprise:

(a) a public transport specialist (24 staff months); and

(b) a traffic/transport planner (24 staff months).

14. The technical adviser in Merida, Cuidad Guayana and Maturin will comprise a transport planner/engineerwho, typically, will be experienced in working in a number of traffic/transport departmentsof a large city. Thus, 24 staff-months over two years will be requiredfor each of the tree medium-sizedcities (a total of 72 staff-months).

15. The technical assistanceadvisers in each city will (i) deal with day-to-day project problems such as scheme design and planning, (ii) establish working practices in the cities, set up data bases, (iii) conduct seminars for local staff and consultants, and (iv) provide on-the-job training to the national consultants (see below) allocated to each city.

16. To ensure consistency of approach in each of the cities and to provide skills which may be lacking in the relatively small local teams, it will be a duty of the FONTURinternational technical assistanceto provide back-up services to the municipalities.

17. Proposalsfor the technical assistancewill be sought internationally (Venezuelanconsultants will be eligible) in accordancewith Bank guidelines. Given the dispersed nature of the team throughout the 5 cities, an allocation of 6 staff months has been included to enablethe selected firm to coordinate the activities of the staff in each city. As with the FONTURteam, the municipalinternational technical assistance will be subject to review after the first year; thus, the contract will be for an initial 12

,, Termsof Referencefor the TA are availablein the projectfile 75 ANNEX 6

month period (a total of 84 staff months) and will be subject to review and changefor the second 84 staff months.

18. National TechnicalAssistance The national technical assistanceteam will comprise 3 staff for each city over a period of 4 years. The teams will be in the nature of supplementarystaff for each city for the 4 years. After that time, municipalities will take over the financing of their own staff. Thus, the Projectwill include financingfor 144 staff months for each city giving a total of 720 staff months. Staff will be mid-rangeor newly qualified transport specialists (e.g., with a mastersdegree but without extensive operational experience) who will gain practical experience and guidance from the international municipal technical assistance. The following specialist areas are proposed:

(a) a public transport planner;

(b) a traffic engineer/planner;and

(c) a maintenanceengineer

19. Proposalsfor the technical assistance will be solicited nationally since it is aim to transfer technology to local personnel. As with the FONTURand municipality international team, the technical assistancewould be subject to review after the first year and the technical assistance contract would be for the initial 12-month period and subject to review and changefor the subsequentperiod. Terms of referencefor this technical assistance have been preparedand discussed with the Bank.

20. Eauipment An allocation of US$ 1.2 million (240,000 for each city) has been made for equipment,computers and traffic, transport and maintenanceplanning software. Final needs will be determinedby the international technical assistanceteam as a matter of priority.

21. Study Tours. Much has been done within Latin America in the context of urban transport, including public transport operationsand planning,infrastructure maintenanceand traffic management particularly, for example,in Brazil,Argentina and Chile. It is proposed to arrange study tours to each of these countriesto review appropriatemeasures. The program would be devised by the international consultants. Tours could also be made to relevant cities in Europeand the USA to complement Latin American experiencein traffic management,public transport planning and operation and maintenance management. Costs are estimated at US$ 390,000 for study tours for staff from all 5 municipalities to other countries.

Structure of Municipalities

22. During sub project preparation in each city, the consultants carried out an initial review of the type of organizationnecessary for the successfulimplementation of a sub project. In parallel,FONTUR has carried out a broadly based institutional study (the Role of the Government)which, inter alia, defines model organizationsin the traffic and transport sector for municipalitiesof varying size. It is a condition of city eligibility under the project that each municipality must have or strengthen appropriatetraffic, public transport and maintenanceor strengthen appropriatetraffic, public transport and maintenanceunits. Municipalitiesface problems in that there is a shortage of specializedstaff. In the short term, it is proposedthat (i) the recommendedFONTUR structure be legally established; (ii) that the head of the relevant units (traffic, maintenance and public transport as appropriate)be designated;and (iii) the national consultants (see para 15) providethe counterpart staff capability. In the medium term and before, or by the time of the mid term Project review, the municipality must appoint local counterpart staff at a level approved by the Bank. 76 ANNEX 6

Costs of the Proaram

23. Costs of the program are estimated as follows in Table 6.1:

Table 6.1: SummaryCost Estimates, Insttutional Strengthening (US$ million)

Staff Months 1993 1994 1995 1996 1997 1998 Total

FONTUR Intenational TA 162 1.22 1.22 2.44

FONTUR Consultant Services 172 0.86 0.86 1.72

FONTUR Equipment N/A 0.125 0.075 0.20

FONTURSub Total l 2[21 2.16 | 44 37 ||

Municipality Intenationel TA 168 2.10

Municipality National TA 720 0 36 0.36 0.36 0 36 0 36 0.36 2.16

Municipality Equipment N/A 0 60 0.60 1.20

Municipality Study Tours N/A 0 195 0.195 0.39

| Municipality Sub Total 888 2.21 | 2.21 | 0.36 0.36 1 0.36 | 036 5.S5 77 ANNEX 7

VENEZUELA URBANTRANSPORT PROJECT

The NationalTrainina Proaram

Backaround

1. It is FONTUR'saim to promote improvementsin the Venezuelanurban transport sector through well planned,well directed and justified improvementprograms. This will be achievedthrough the MTC UrbanTransport Programfor which FONTURis the executingagency. The Programwill provide federal (FONTUR)grants to cities on the condition that cities, inter alia, prepare an transport investment program and undertake an institutional strengthening program aimed at improving the professionallevel of engineers and managers involved in the provision and maintenance of urban transport services.

2. Urban transportation planning and management in Venezuelan cities is not carried out systematically. The cities lack not only appropriateorganization, but most importantly, lack personnel with the ability to plan systems, to analyze alternative solutions and investment programs, to manage and to maintain transport systems. In order to improve the level of urban transport planning and managementin Venezuelanurban areas generally and in the 20 cities which FONTURhas identified as first priority, a training program has been defined and will be implemented under the Programand within the Bank project.

National Trainino ProaramObiectives

3. The objectives of the National Training Program(NTP) are as follows:

(a) to train, in a short time, a nucleus of professionals such that they have understandingof urban transport issues, urban transport planning, methodologies for analyses(operational, economic, etc) of alternativetransport and traffic actions and such that they are able to prioritize transport investments;

(b) to develop the staff capabilities required to improve urban traffic planning, engineeringand managementpractice, and;

(c} to promote and strengthen the technical staff capabilitiesin the urban traffic and transport sector through permanenttraining programs.

4. To accomplish the objectives, an integrated National Training Program (NTP) is program is envisaged. The NTP will cover training for professionals,training for administrators and managers, training for technicians and for public transport operators. The program is describedas follows.

Intensiveand FoundationCourses

5. The Intensive Course - intensive courses of about 4 months duration are proposed aimed at engineers,economists and urbanplanners with the objective of providing basic training in planningfor urban transport, including public transport. The courses will be devised and run by experienced professionalswith practical knowledge in the field and participants will be drawn from FONTURand the municipalities. 78 ANNEX 7

6. The IntensiveCourse will comprisefive modules: i) Transport Planning, (ii) Traffic Engineering, (ONiTraffic Management,(iv) Transport Economics,(v) Public transportation. Each module would be divided into a series of lectures on specific subjects. Details of the modules are:

(a) Transoort Plannins- the module would cover the following aspects: objectives of urban transport; aims of regional and urban planning and their interaction; urban transport planning methodologies; modeling urban transport demand characteristics and flow; considerationfor modelselection; data needsand geographicconsiderations; surveys and sampling; preparation of alternative scenarios and characteristics of urban transport systems; available software evaluation; comprehensiveplanning output; evaluation and the preparationof investment programs; workshops would be expected in all areas;

(b) Traffic Enaineerino- the modulewould cover the basicsin: the design of urban roads and expressways;traffic surveys and methodsof application; traffic flow characteristics;road and signalized intersection capacity and intersection design (priority, grade separated, signalized); the use of state of the art software for calculation of levels of service; demonstrationand exercisesin use of software packages;workshops would be expected in all areas;

(c) Traffic Manaaement- the course would cover the traffic administrationaspects including: road traffic safety data and planning; signing and marking; design and policy planningfor parking; priorities and reserved systems for road based public transport; pedestrian schemes;bicycle schemes;planning for goods vehicles; software and its application for short term planning; workshops would be expected in all areas;

(d) Public Transoort - the module would cover the basics in: characteristics of public transport systems, (taxis, por-puestos,buses, light rail, metro systems);definition of level of service; public transport route planning;public transport line planning; public transport operations; regulation and privatization issues within the Venezuelan regulation framework; public transport company operation considerations (operations, tariff structures and profitability); workshops would be expected in all areas; and

(e) TransoortationEconomics - the modulewould cover the basics in: methodsfor evaluating projects; vehicle operatingcosts and time relatedbenefits; externalities; with and without evaluation process and considerations; sensitivity analysis; growth consideration; the evaluationof single projects; first year benefits, net present value, internal rate of return; priorities and the preparationof investment programs; workshops would be expected in all areas

7. Each module would contain lectures, workshops, exercises and laboratory sessions and, if appropriate, field exercises.

8. The duration of the IntensiveCourse would be 4 months with a regime of 40 hours of lectures, exercises,workshops and laboratorieseach week. Thus, each module is estimated to be of about 100 hours duration for an Intensive Coursetotal of 500 hours. The final preparation and delivery of the course will be contracted and final details will be determinedby the contracted course presenters.

9. FoundationCourse A foundation coursewill be providedfor participantsof the IntensiveCourse. The course will of about 160 hours duration and thus last about 4 weeks. The course will include an introduction to personalcomputers, the use of basic software packages, basic statistics and basic economics. The FoundationCourse will be developed and presented by the same providers as the Intensive Course. 79 ANNEX 7

10. Intensive Course and FoundationCourse Procurement Final development and provision of the two courseswill be sought from qualified organizationson a competitive basis. The proceduresto be followed are set out in Attachment A, 'Prequalification of Organizations for the Development of Foundationand Intensive Coursesfor the national Training Program'. Proposalswill be sought from national and international organizations. So that technology transfer is achieved, international organizationswill be requiredto seekactive participationof a Venezuelanuniversity (or similar institute or organization). The procedures would be in accordance with the Bank procedures for the procurementof consultant services.

Manaaers/AdministratorsCourses

11. The courses would be aimed at supervisorsand managersin municipalitiesand in FONTUR.The aim is to providea greater understandingof urbantransport issuesand procedures. The courses would cover managementand administrationof transport projects, preparationof budgets, project execution, structure and legislative organizationof the sector. Courses would be limited to 25 participants and would have a duration of about 40 hours.

Technician Courses

12. The courses would be at city level and would be aimed at techniciansin the sector with the aim of developingfamiliarization with basic techniques used in the analysis of the sector. The courses would cover geometricdesign and channelization,analysis of road and signalscapacity, road marking, signing, accident analysis, parking control, bus operations, public transport tariffs, financing urban transport priority for public transport, managementof public transport. The course would be about 80 hours duration.

Loaistics Course

13. The course would be at city level and would be aimed at technicians. The course would cover use of microcomputers, traffic surveys and control and operation of public transport. The course would be about 40 hours duration.

Public Transport OperatorTrainins

14. The course would be aimed at administrators, operators and those responsible for the maintenance of the public transport fleet. The course would cover bus company administration, personnel management, routine company operations, defensive driving, basic mechanical understanding, public relations, transport legislation, and municipal legislation affecting public transport. The course would be of about 40 hours duration.

ProaramEvaluation

15. The Bankproject would finance an Evaluationof the National Training Programto determine the impact of the various courses. The aim would assess the success of courses and allow for their adjustment and improvement during and after the program. 80 ANNEX 7

Traininn Abroad

16. The objective of training abroadis to increasethe specialistskills in urbantransport planningand traffic engineeringin Venezuelaand to assist the development of the profession in the sector. The areasof specializationand the location of overseastraining would be determinedby FONTUR,with the assistance of their technical assistants, during the Project implementation period. At this stage, training of about 3 months duration is proposedfor each of about 16 professionals. The professionals will be selected for the program by a committee established by FONTURfor this purpose. It is proposedthat a participant should enter an obligation to work for two years in the organization from which they come once the training has been completed.

17. Selected successful participants from the intensive course or professionals with comparable backgroundfrom FONTURwould be eligiblefor overseasstudy specializein specific sector areas such as transport economics, urban roads, public transport operations, transportation modeling, etc.

Executionof the Courses

18. The courses would be initiated in 1994 and repeatedin 1995 and 1996. Details of the proposed chronogramand participants are as follows:

(a) Intensiveand FoundationCourses - to be held three times, once in 1994, in 1995 and 1996. Thirty professional would participate in each year; they would stay in the city (locationto be decided)where the courseswas deliveredfor the full duration of 5 months and attend all lectures, practical, workshops and laboratories;

(b) Manauers/AdministratorsCourses - the courses would be held regionallyin Venezuela(in the centre, east and west), once per year for three consecutive years starting in 1994. Participants would stay throughout the course in the selected city; places would be offered to all municipalitiesin the regionat the beginningof the year and FONTURwould prepare a basic program including selected city, detailed contents, duration etc;

(c) Technician Courses - the courses would be held regionally in Venezuela(in the centre, east and west), once per year for four consecutive years starting in 1994. A city would be selected for the courses and participants would stay throughout the course in the selected city; the number of places would be determined on the basis of municipality demand; FONTURwould prepare the program at the beginningof each year;

(d) Logistic Courses - the courses would be held in 20 cities in Venezueladuring 6 years, with 5 cities per year. In 1994, the courses would be held in the 5 cities within which Bankprojects are to be executed.

(e) Public Transport OoeratorTraining - the courses would be held in 20 times 4 times per year throughout 6 years from 1994 to 1998. It is programmedto give the course to about 25 personson each occasion. 81 ANNEX 7

ResDonsibilitiesfor Mananement.Preparation and Delivery of Courses

19. Responsibilitiesare as follows:

(a) Mananement- FONTURwill be responsiblefor (i) preparation of all terms of reference, short listing procedures,evaluation of proposals,contract negotiationsetc for consultants to prepareand deliver the courses, (ii) all course administration such as publicizing with municipalities, selection of participants, selection of regional centres for the courses. arranging participant accommodation, program planning and scheduling and (iii) the procurement of all hardware required by the course (such as visual display equipment, computersetc) unlessotherwise specific din the consultantsterms of reference. FONTUR will be assisted in these tasks by the their technical assistance team;

(b) PreDarationof Curriculaeand Course Contents - consultants (organizationsor firms or universities)would prepareall courses in responseto FONTUR'sterms of reference;and

(c) Deliverv - consultants (organizationsor firms or universities)would prepareall courses in responseto FONTUR'sterms of reference. The delivery would include the provision of all course material specific to the course such as lecture notes, workshop materials etc.

Costs of Courses and Proiect Particioation

20. It is proposedto fund all courses under the Bank project. The exception will be that the Project will not fund salaries of participants; these will be met by the parent organization. Based on this principle the costs of the program are estimated as follows;

Table 7.1: Summmaryof National Training ProgramCosts (US$ Millions)

Expensesfor Expensesfor Number Total TRAINING COLURE Preparation Delivery Delivery Participants Courses Cost

Intensive and Foundatlon 0.066 0.132 0.036 0.590 3 2.34

Management/Administration 0.004 0.008 0.001 0.027 9 0.82

Technician 0.008 0.016 0.002 0.049 12 0.82

Logistic Development 0.004 0.008 0.001 0.027 30 1.08

PublicTransport Operator 0.004 0.008 0.001 0.027 60 2.16

TOTAL OF PROGRAM 7.22 82 ANNEX 8

VENEZUELA URBANTRANSPORT PROJECT

Institutional Developmentand Policy Component Studies

1. The Institutional and Policy component of the proposed project will be undertakenboth at the central government level {Parts Al and A5) as well as at the municipality level (Part A3,B4). These studies will recommendplans of action which are necessaryto ensurethe policy reforms sought with the project. Next, an outline of the studies planned is given.

A. Studies at the Central Level

2. The studies required at this level are intendedto strengthen FONTURas a central agency for financing urban transport, to provide recommendationson how to mobilize and allocate resourcesfor funding of future projects, to review the federal subsidy policies and recommendchanges, to review and recommendchanges in DGSTT'Sresponsibilities for urban transport,to recommendchanges in the transit law.

Reviewgf FONTUR'sOrcanizational Structure

3. Although FONTUR'sorganizational structure described in Annex 2 respondsto the immediate needsof an organizationof this type, it is recommendedthat foreign consultants who worked in similar organizations in their countries, prepare a review and detailed analysis of the functions and job descriptions for the key divisions and posts of the organization.This review and fine tuning will take into account that FONTURshould be a small organization,with very transparent proceduresto allocate funds to municipalities and capable of evaluating with authority from the technical, economic and financial standpoints the proposalssubmitted by the municipalities.The study will also propose how FONTURshould function to carry out its evaluation and supervision tasks, whether it should do it in house or through consultants. FONTURhas hired a local firm to prepare its original organization but it is felt that the team lacked specialists in central organizationsof this type. This review should not require more than 8 person weeks and must be ready prior to negotiations for approval by the Bank.

Reviewof DGSTT's OrganizationalStructure

4. DGSTT is the MTC directorate in charge of land transport and its three divisions (ing. de transito, transporte and vigilancia) have responsibilitiesin urban transport which are not very clear since the decentralizationof responsibilitiesto municipalities took place. In addittion, the DGSTT's planning office is responsiblefor the formulation of policies. This study will review the existing structure and propose changes in the attributions of DGSTT, ensure a formal coordination with FONTURand will recommendafter discussionswith DGSTTand FONTURthe basic text for ammending the reglamento organico of the MTC. This study should not require more than 3 person months with 1 person month of an expatriate consultant with experiencein this area. The study should be ready prior to effectiveness.

ResourceMobilization and Allocation Procedures

5. FONTUR'scapability in mobilizing funds and its transparencyin allocating and chanellingthem to the municipalitieswill be two of the main aspects by which its credibility will be judged. FONTUR's 83 ANNEX 8

funds are not earmarkedand therefore every year FONTURmust prepare and justify a budget to be discussedwith Congress. This might be an unreliablesource of funds. How can a minimum amount be guaranteedfor urbantransport? Oncethe funds are obtainedthe problem is how to allocate them. The criteria and allocation formulas must be carefully studied to ensure equity between the several parts of the country, to promote public transport rather than the automobile, to favor private versus public ownership, to foster environmentallyfriendly solutions and to reward municipalitieswhich take steps towards reducing regulatory barriers. This study will require not more than 12 person months of which 6 person months of expatriate inputs by specialists with experiencein this area. The study should take place after effectiveness but be ready not later than 12 months after signing.

Review of National Subsidies

6. During the preparationof the proposedproject, a quick study of subsidieswas undertakenand some of its recommendations,especially those concerning the student subsidy, are being tried on a pilot city. However, the fact remainsthat there are a number of national governmentsubsidies such as the student subsidy, the specialfares for military and old age citizens, the bono de transporte, the grants to finance acquisition of new vehicles, the payment of depreciation and cost of capital of the metro system, and the fuel subsidy. Although some of these subsidies might be justified in the short run, their gradual elimination in the long run will be desireable. A review of the subsidy policy from the macroeconomicstandpoint and its weight on the national budget is necessary. To protect the low incomeclasses for which home-to-work-tripsmay cost a sizeablepercentage of their householdincome the targeting of some subsidiesmight bejustified. But what cannot continue is a system in which fares are set below costs and both users and operators are subsidized. This study will investigate in detail the validity for and costs of the existingsubsidies, will propose ways to increasetheir targeting or their elimination and will recommendan action plan and timetable for the proposed measures. The study will analysethe relation between variablessuch as fares, vehicle operating costs, household income, minimum salary, typical home-to-work trips, fuel costs, etc. This study would be carried out by a recognizedworld specialist in this areaand should take 12 person months of which 6 person months of a local specialist. This study should be ready not later than 12 months after the signing of the loan.

Reviewof the 'Lev de Transito"

7. The presentLey de Transito is outdated and needsto be revisedto allow effective enforcement of traffic regulations. Previousattempts to ammendthe law were not successful, may be becausenot adequate time and expertise was dedicated to update that law on th basis of experiences in other countries. This study will produce a draft of the new law for discussion and all the supporting documentationrequired for the hearings. This study will require a maximum of 12 person months and should be ready not later than 18 months after signing.

National ManaaementInformation System for Urban TransDort

8. This study will consist in the design and pilot implementation at the national level, of a managementinformation system on urbantransport. The system will include a data base of statistical, operating and financial information provided by the municipalities on the basis of standard questionnaireswhich will be updated on a period basis. This data base will allow FONTURto measure the progress achievedby the municipalitiestowards agreed goals and will serve as an input for the annualallocation of funds. The study is expected to require 12 person months and be preparedover a 3 month period. 84 ANNEX 8

B. Studies at the Municipal Level

Integral Plans

9. The centerpiece of the studies at this level is the Integrated Urban Transport strategy which includes: il a traffic managementstudy with the identification, selection and technical and economic evaluation of the low cost measures required for improvement of the traffic conditions in the municipality; ii) a public transport study which will addressall the regulatory aspects of public transport in the municipality such as market entry, route and fare regulation, subsidy policy, service to sparsely populated areas, type of vehicles, private versus public organization, to mention only some; iii) an institutional study which will address the type of organizationalunits which must be set up at the municipality level to handletraffic management,public transport and road maintenance/construction; and, iv) a detailed study of the deferred road maintenanceneeds of the municipality and of the road paving and new construction required in the municipality.

10. For the cities alreadyappraised only part {i) above was done. As a condition of elegibility the other parts must be completed and discussedand approvedby the municipalities6 months prior to mid term review. At mid term review, FONTURand the Bank will examinethe progress and willingness of the municipalityto implementthe recommendationsof the study. For the new municipalitiesapplying to the program,the preparationof the integrated urban transport strategy is a requirementto qualify for any funding. The integralurban transport strategy should not require morethan 12 person months for cities other than Caracas broken down as follows: part i) 4 person months; part ii) 3 person months; part iii) 2 person months; part iv) 3 person months. Of the total 12 person months at least 50% of parts i),ii) and iii) must be done with expatriate consultants with experiencein Bank projects. The cost of each integral urban transport strategy should not exceed US$ 150,000. institutional Study for The Caracas MetroDolitanRenion

11. The existenceof 5 municipalitiesin the Caracasmetropolitan region, without a common body in charge of joint traffic and transport coordination, is one of the reasons why tariff and modal integration are difficult if not impossible. The only exception to this are the federally owned Metro/Metrobussystems which are not underthe jurisdiction of a single municipality. This study will consist of a thourough review of the institutional framework in the CaracasMetropolitan Region and the recommendation of an agency with proportional representation which would coordinate the planning, financing and operation of urban transport in the Caracas Metropolitan Region. This study will be undertakenover a 12 month period and will require 18 person months.

Motor Vehicle EmissionsControl Study

12. This study will evaluatethe present situation and trends in air quality and transport related air pollution in Caracas; develop an integrated transport air quality managementstrategy and prepare selected elementsof the strategy for possible financing by the World Bank,the Global Environmental Fund and/othermultilateral and bilateral sources. This study is expected to require 15 person months over a period of one year.

Leaal Frameworkfor Public Transport

13. This study will design the legal framework for public transport at the local level. In fact, although the municipalitiesare responsiblefor urbantransport, there is no basic legalframework at the 85 ANNEX 8

municipality level to define the responsibilities of the municipalities and of the operators. This study will produce legal texts which could be used as models by the municipalities to create the legal framework required for the provision of urban transport services. This study is expected to require 1 2 person months.

Accident ReDortina System

14. This study will define the accident reporting systems to be used in each municipality by the the traffic police and the type of annual reports to be prepared to identify areas for improvement. This study is expected to require 6 person months.

Table 8.1: Summaryof Institutional and Policy Component Studies

Number Name of person Estimated Cost To be completed by months in $ 1000's

CENTRALLEVEL

FONTURorganization 2 24 Negotiations

DGSTT organization 31 Effectiveness

Resource Mobilization and allocation 12 120 8 months after effectiveness

Review of National Subsidies 12 120 8 months after effectiveness

Review of Ley de Transito 12 9S 12 months after effectiveness

UT Management Information System 12 9e 8 months after effectiveness

MunicipalIty Level l

Integral plans:

Cities already appraised 6-9 640 13 months after signing of subproject agreement

Cities not yet appraised 8 12 864 13 months after signing of subproject agreement

Institutional study for the Caracas 18 270 36 months after loan effectiveness Met. Region l

Caracas Motor Vehicle Emissions 10 250 36 months after loan effectiveness Control

Public Transport Local Legal 12 144 to be discussed Framework

Accident Reporting System 8 72 to be discussed

TOTAL 221 2827 86 ANNEX8

VENEZUELA URBANTRANSPORT PROJECT

ATTACHMENT1- Public Transoort Study - Outline Terms of Reference

Backaround.

1. In late 1989, the VenezuelanGovernment began to transfer various responsibilitiesto the state and municipal Governments, in accordance with its policy of power decentralizationand the new municipallaw. In September1991, it created the National Fundfor UrbanTransport (FONTUR),which is now responsiblefor the developmentof national urban transport strategies and for the allocation of Governmentfunds budgeted for urban transport.

2. Public transport in Venezuela'scities is providedby a large number private operators, who are groupedinto trade associationsfor bus and por-puesto (minibus and passengercar) owners. Faresare now controlled by local Government;in order to keep them low, the national Governmentgives grants for vehicle purchasesand monthly operating subsidiesand, in about 5 cities, local Governmentowns and operates subsidizedpublic transport services. This is at odds with an overall policy to gradually remove subsidies and other measureswhich cause price distortions and inefficiencies in Venezuela's economy.

3. One of FONTUR'sconcerns is to reconcilethe transport needs of the urban poor and the long- existing custom of subsidizedfares with the requirementsof a modern market economy and the need to provide adequate and sustainable urban transport. In collaboration with the World Bank and the Inter-American Development Bank, it has developed a $300 million program of urban transport improvements. The study specified in these terms of reference is a part of that program; the conclusionsto be drawn from the study will be a key element of the Mid-Term Review of the World Bank supported project. Currently scheduledfor September 1995, the mid-term review will examine the achievementsof the project's first two years and confirm (or modify) the overall project scope thereafter.

Study Obiectives.

4. The study will focus on municipal governmentpolicies regardingthe creation of an enabling environment (regulatory and cost-recoveryframework, etc.), which is required for the development and sustained operation of a predominantly privately owned public passengertransport system in (name of city) Its principal goal will be to assist the municipal authorities in developing a short-term action program which will be discussed with FONTURand the World Bank at the Mid-Term Project Review in about September 1995. Its specific objectives are:

a. to review the existing public transport characteristicsin (nameof city) and define short- term strategies to:

i. ensure adequateand competitive public transport serviceson a financially and operationallysustainable basis;

ii. reduce government subsidies over a 3-year period by a combination of (a) reduced operating costs, (b) fare restructuring and/or deregulation, (c) cross- subsidies from within the urban transport sector, and (d) if needed, targeted Governmentsubsidies to needy users of the public transport services. 87 ANNEX 8

iii. maximizesafety; and

iv. minimize air pollution and other negative effects on environment.

b. to define and evaluate 2-3 policy options for reforming public transport in Iname of city) and desrcibethem in such a manner that the municipal Governmentcan make a rational selection and decision; and

c. to develop an implementation program and monitoring system for transitioning to the reformed public transport framework selected by the municipal Government.

Basic Study Anoroach and Timetable.

5. The study will consist of three phases which are divided by short periods during which the municipal Government,FONTUR, the unions, users associations and the World Bank will review and comment on the consultant's interim reports. They are:

PhaseA: Data collection and detailed study design. Inception Report, to be submitted 2 months after study begins. About 20% of total study effort should go into this phase (Months 1-2).

Comments: Within 1 month, the Municipality, FONTUR,unions, user associationsand the World Bank will provide comments on Inception Report (Month 3).

PhaseB: Evaluationof public transport characteristics,regulations and financial aspects. Definition of 2-3 policy options for review and selection by Government. EvaluationReport, to be submitted 3 months after PhaseB begins. About 60% of total study effort should go into this phase (Months 4-6).

Comments: Within 1 month, the Municipality, FONTUR,unions, user associationsand the World Bank will provide comments on Evaluation Report. Within a further month, Government will decide which policy option it wishes to pursue. FONTURwill authorize consultants to begin with next phase (Months 7-8).

PhaseC: Developimplementation program and monitoring system. Submit Final Report 1 month after PhaseC begins. About 20% of total study effort should go into this phase (Month 9).

ScoQeof Study.

6. The study's scope of work will comprise at least the following items:

PhaseA:

a. From existing statistics and other availabledata, prepare an inventory of the current public transport situation, including: - route structure and travel demand - users' profile (incomeetc.) - modal split by public transport type trip purpose - overall origin-destinationpattern 88 ANNEX 8

vehicle fleet vehicle ownership operational data accidents/safety management fares operating costs for different vehicle types finances (including subsidies) programmedimprovements. b. Describethe existing regulatory framework. c. Describeand assessthe role of Government,at national, state and municipal levels. d. Describe and assess the role of unions, route associations and other trade organizations. e. Estimate revenues (taxes etc.) and expenses (subsidies, investments etc.) of the national, state and municipal Governmentsfor public transport in (name of city) for 1989, 1990, 1991, 1992, 1993 (actuals), 1994 (estimated)and 1995 (budget). f. Analyze the conclusions of the Review of National Subsidies, scheduled to be completed in September 1994. g. ProduceInception Report (in Spanish),describing results of data collection and outlining work program for PhaseB (takinginto account the National review mentioned above).

Phase 8: h. Evaluatestructure of public transport industry. i. Evaluatecapacity and economic effioiency of public transport system. j. Evaluate safety aspects of public transport. k. Evaluateenvironmental aspects of public transport; consider possiblefiscal policies to achieve environmentalobjectives.

I. Conduct affordability analysisfor low-income users. m. Define fare and subsidy policy options such as: reduce government subsidies over 3 years, considersystem of variablefares and variableservice standards, assess methods for targetting subsidies, etc. n. Define options for regulatory structure: define functions of regulations (safety - emissions- service standards- tariffs - cross-subsidymechanisms etc.). Define roles of various government agencies and trade associations. Define enforcement and taxation mechanisms. Address such issues as market entry and possible cartel formation. Suggest how cartels can be avoided.

0. Evaluatethe above options, accordingto such criteria as sustainability (operationaland financial), environment, safety, public acceptability, adaptability to long-range plans (such as busways), traffic congestion, economicefficiency, etc. 89 ANNEX 8

p. Formulate2-3 policy options (and decribetheir expected implications)for decision of the local government.

q. Describefindings of PhaseB in EvaluationReport (in Spanish).

PhaseC:

r. Identify and define steps to implement policy reforms selected by local Government.

s. Agree with local Government on a timetable (not exceeding 3 years) to implement reforms and phase out subsidies.

t. Estimate budget requirementsof the local and national Governmentsfor that 3-year period.

u. Define monitoring mechanism.

V. PrepareFinal Report (in Spanish, with Englishsummary).

Study Arranaements:

7. The study will be conducted by a team of two transport consultants, (onefrom Venezuelaand one from abroad),assisted by staff from FONTURand the relevant municipality. The two consultants will be contracted individually by FONTUR,who will use its best judgment to select two competent and compatible professionals. They will be jointly responsiblefor the quality and timeliness of their reports.

8. The Venezuelanexpert should have an academicdegree in a related subject and have at least 5 years experiencein transport planning or operations. He should be familiar with conditions in the city of (insert name).

9. The foreign expert should have an academicdegree in a related subject and have at least 10 years experiencein the policy aspects of urban public transport operations. He should be personally familiar with the World Bank's urban transport criteria and/or recent deregulation measuresin foreign countries. He should be able to conduct technical conversations in Spanish.

10. Three freestandingstudies of this type are envisaged: (a) for Maracaibo, (b) for Barquesimeto and Merida, and (c) for Ciudad Guyana and Maturin. The consultants will establish their respective study offices in one of these cities to ensure frequent contact with the city's decision-makersand transport operators. Each of the three study budgets would allow for 3-5 months for the foreign expert (three trips to Venezuela),3-5 months for the Venezuelanexpert, and a modest amount for data collection and report production. In addition, similar studies will be made in the context of larger-scale urban transport studies envisagedfor further cities, yet to be selected. 90 ANNEX 8

VENEZUELA URBANTRANSPORT PROJECT

ATTACHMENT2 - Outline TOR for the Motor Vehicle EmissionsControl Study for Caracas

Obiectives

1. The main objectives can be described as follows:

li) to evaluate the present situation and trends in air quality and transport-related air pollution in Caracas

(ii) to develop an integrated transport air quality managementstrategy

(iii) to prepareselected elementsof the strategy for financing under a future Transport Air Quality ManagementProject, the Global EnvironmentalFund, and/or other multilateral and bilateral sources.

Scope of Work

2. Collect, review, and compile available data on the following as they apply to Metropolitan Caracas:

- air pollutant concentrations and air quality - air pollutant emission inventories - emissioninventories of global warming gases * vehicle populations and growth rates by vehicle type - vehicle-kilometerstravelled by vehicle type - vehicle emission factors by type * vehicle fuel consumption - fuel composition and characteristics - refining industry structure and characteristics,as these relate to ability to produce and costs of producing reformulated fuels - usage and economics of alternative fuels, specifically natural gas, LPG, methanol, ethanol, and ethers

Identify gaps or shortcomings in the data, and recommend additional studies or research necessaryto fill these gaps.

3. Evaluatethe feasibility, costs, effectivenessfor reducingemissions of air pollutants and global warming gases,and cost-effectivenessof potential motor vehicle emissioncontrol measures,including (but not limited to):

- emissions standardsfor new vehicles and engines; - gasoline vapor recovery; - changesin gasoline formulation (lead, oxygenates, sulfur, volatility); - changes in diesel fuel formulation (sulfur, aromatics); - retrofit of existing high-usevehicles; - replacementof existing high-usevehicles; - use of alternative fuels with appropriateemission controls; 91 ANNEX 8

- vehicle inspectionand maintenance(I/M); - traffic management; - improvementsin public transport; and - fuel taxes, vehicle emissions taxes, and other economic instruments.

Identify areas of uncertainty in the evaluation, and specify research needed to resolve this uncertainty.

4. Basedon the results of the evaluationsin Task 2, the consultant shall recommendand justify an integrated transport air quality management strategy, comprising a set of cost-effective and mutually-reinforcing emissions control measures,together with any necessary improvements in air quality monitoring and modeling,emissions inventories, and other improvementsneeded to support the air quality managementprogram. The consultant shall documentthese recommendationsin an interim report. This report shall be discussed with the Government and the World Bank, and agreement reached on a strategy and program before proceedingwith the remainderof the tasks.

5. In consultation with the Governmentand the World Bank, the consultant shall identify from among the components of the program developed in Task 3: (a) a subset of measures - primarily investments - to be financed by the World Bank under the proposed Caracas Transport Air Quality Management Project; (b) a subset of measures to be proposed for financing by the Global Environmental Fund; (c) a subset of measures to be proposed for funding under other available multilateral and bilateral assistanceprograms.

6. For each of the measuresidentified in Task 4, the consultant shall carry out the necessary preparatory steps for funding. For investment measures, the consultant shall prepare detailed equipmentspecifications and procurementplans; for technical assistance and studies, the consultant shall develop detailed Terms of Reference.

7. The consultant shall prepare a comprehensivefinal report.

Qualifications

8. The consultant staff assigned to the project, especially the Project Director, should have demonstratedextensive experiencerelated to motor vehicleemissions control, air quality planning, and strategy development. Specific, demonstratedexperience is required in evaluating costs, emissions impacts, and cost-effectivenessof vehicle emissionscontrol measuressuch as emissions standards, I/M, fuel reformulation, and alternative fuels. The consultant should also have demonstrated experience in evaluating economic and policy instruments relating to vehicle emissions, such as gasoline taxes, and in planning and preparation of emission control programs. Experiencein these areas in one or more developingcountries is strongly preferred. Demonstratedfamiliarity with World Bank proceduresand requirementsfor project preparationis required.

Budoet and Schedule

9. Approximately 6 months from contract signing to the interim report at the end of Task 3. Six more months for completion of Tasks 4-6. Labor requirementsare about 24 person-months,for a budget of approximately USS 250,000. 92 ANNEX 9

VENEZUELA URBANTRANSPORT PROJECT

Traffic Police Componentfor the Cuerpode Vicilancia de Transito Terrestre (CVT)M

Backaround

1. The Bank Project, and the FONTURtransport program in general, places emphasis on traffic managementschemes. Schemes include new traffic signal systems, parking controls, on-street bus operationalcontrols, measuresto improvethe accident records at critical junctions and similar actions. Such measuresrequire a high level of traffic law enforcement. Although progress has been made in the last few years on improving CVTT's organization, as a result of enlightened management, the CVTT still lacks investment in basic equipment,in infrastructure and in training; operationalexpertise, methods and training are also in need of modernization. As decentralizationof traffic functions to municipalitiestakes place, there is also a greater need for traffic police to decentralize their own activities and thus to be in a position to respond more readily to local traffic problems. This has been recognizedby FONTURand as part of city eligibility criteria for participation in the Project, and as part of the FONTURprogram, it will be necessaryfor each city to sign an agreement('convenio') with the national CVTT to form a municipal-basedtraffic police force.

2. The Project has recognizedthe essential need to improve CVTT in Venezuelancities as key factor in achieving achieving success for measuresto be implemented under the Project and for FONTURprogram. Thus, the Project will support the improvement of CVTT through an investment program in training courses, in training facilities and in equipment.

Obiectives

3. A FONTUR study is in progress: li) to review the present CVTT training procedures and facilities, lii) to review CVTT facilities and traffic regulation enforcement equipment and, (iii) to determine CVTT training and equipmentneeds. The CVTT study has completed its preliminary stages and has identified the general scopeof the CVTT program. In generalterms, the study has determined that over the next 5 years, an investmentprogram (not recurrentexpenditure) of about US$ 70 million will be required by CVTT. Since the CVTT study has yet to be completed and since some of the identifiedinvestments are basic requirementswhich must the responsibilityof any moderntraffic police force, it is not realistic to commit Projectfunds to the full investment program. However, it is essential to improve CVTT performanceto ensure the success of traffic policies and to support the proposed traffic managementinvestments proposedunder the Project. Thus, Project funds will be committed to supporting CVTT with the objectives:

(a) to improve the general level of CVTT training and expertise; and

(b) to improvethe CVTT performancein the specific Projectcities (of Barquisimeto,Maturin, Merida, Ciudad Guayana and Maracaibo) such the full potential of the proposed investment in traffic managementschemes can be realized and permanent. 93 ANNEX 9

The Proaram

4. The programproposed underthe Projectwill comprise investments in the CVTT national training program and in equipment and technical assistance in each of the five project cities. Details are as follows.

5. National CVTT Investments The CVTT has a national training school but the facilities are outdated, requireexpansion, require modern equipment for the delivery of courses (instruction material, audio visual equipment etc) and accommodationfor participants. Additionally, the expertise level of instructors must be improved and the content of training courses themselves should be revised to ensure that they respond to present traffic needs. Thus the program will comprise:

(a) Training School Facilities- funds will be provided underthe Project to modernize,expand the training school, participant facilities and provide adequate teaching equipment;

(b) TraininaSchool Courses- funds will be providedunder the Projectfor technical assistance to prepare new course curriculaefor delivery at the CVTT training school; and

(c) Trainina of Instructors - it is proposedto provide funds for training of CVTT instructors. This will involve either the attendanceof CVTT officers at overseastraining schools or the provision of expatriate training personnel to provide courses in Venezuela. The precise program will be determinedby negotiations.

6. LocalLevel CVTT Investments Locallevel support will be provided by investment in each of the five Projectcities (Barquisimeto,Maturin, Merida, Ciudad Guayanaand Maracaibo). Thus the Project will fund:

(a) Traffic Law Enforcement Equipment - the provision of equipment for traffic law enforcement(such as patrol vehicles,tow trucks, communicationsequipment etc) in each city;

(b) Administrative Eauipment- the provision of equipment for day-to-day administration of city CVTT units (such as personal-computersfor accident recording and analysis); and

(c) TechnicalAssistance - the provisionof technical assistanceto each city to establishthe local CVTT unit (arisingfrom the completionof the 'convenio' between the municipalities and the CVTT) and to guide the local CVTT unit in the effective use of the new equipment.

Status of Preparation

7. The current estimates of needs and investments are based on the preliminary CVTT study; the study is not yet complete. Fundswill not be disbursedfor this component until the study is completed, and the needs and cost estimates of the Project components are confirmed and that the results are acceptableto the Bank.

8. The actions necessaryto operationalizethe component are set out in the Action Plan in Annex 13 key dates in the chronogramare:

(a) preparationof a detailed implementationprogram for the Project components: 94 ANNEX 9

(b) final report on the Training School expansionand equipment;

(c) prepartion of the TOR for the TA to the Training School to prepare the new course curriculae;

(d) commencementof overseastraining for the selected personnel.

Costs Estimates

9. The base costs of the component are as follows:

Table 9.1: CVTT Component CostEstimates (US$ millions)

COMPONENT TYPEACTIVMTY TOTAL

NATIONALCOMPONENT __l_l Expansionof the CVTTtraining school and provision Civil works 1.594 of participantaccommodation CVTTinstructor training (either in Venezuelaor Training 1.179 overseas) Technicalassistance for preparationof CVTTTraining Technical 0.500 SchoolCourses assistance SUBTOTAL NATIONAL (PART A) 3.273

LOCALCOMPONENT __l_= =_ Equipmentfor on-streettraffic law enforcementin 5 Equipment 6.621 cities(patrol cars, motorcycle, tow trucks, etc) Communicationsequipment and computers for 5 cities Equipment 0.530 Technicalassistance for supportto the establishment Technical 0.750 of localCVTT units in eachof 5 cities assistance

SUB TOTAL LOCAL(PART B) _ 7.901 TOTAL 11.174 95 ANNEX 10

VENEZUELA URBANTRANSPORT PROJECT

RoadMaintenance Comoonent

MAINTENANCECOMPONENT

1. Extent and Classification of the Network The network concerned by the Program comprise essentiallythe roads which carry public transport vehiclesand they are generallythose with the highest volume of traffic. They have been classified into 4 categories, namely: a) Expressways;b) Arterial Roads; c) Collector Roads,and d) Local Streets. Selected on the basis of discussions held with local MTC officials and municipalities, the total extension of this Primary network, for the five cities, representapproximately 1,406 km. Both in terms of total present value and traffic volumes, they constitute the top priority network on which investments for carrying out deferred rehabilitation and maintenanceactivities should be concentrated.

2. Accurate inventoriesof the total length of the whole urban road networks in the cities have not yet been madebut availableinformation do suggestthat the Publictransport main road system account approximatelyfor 10 to 20% of the total urban road network. The following table shows, for each city, and by functional category, the extent of the Primary road network consideredunder the Program.

Table 10.1: Extent and Classification of Primary Public Transport Road Network

MARACAIBO BAROUISIMETO CDAD.GUAYANA MATURIN MERIDA TOTAL

CLASSIFICATION Km. % Km. Km. % Km. % Km. % Km. %

PAVED I

Expressways 41 a8 0 0 41 10 0 0 0 0 82 5.8

Arterials 120 24 91 46 32 8 34 31 58 33.5 335 23.8

Collectors 90 19 90 45 136 32 41 37 35 21 393 28

Locals 240 48 17 8 213 50 34 31 79 45.5 583 41.4

Sub Total 491 98 198 99 421 100 109 99 173 100 1393 99

UNPAVED 10 2 2 1 0 0 1 1 0 0 13 1

TOTAL 501 100 200 100 421 100 110 100 173 100 1406 100

3. As can be seen, the selection of the main Public transport road network is distributed as follows: A)ved: i) Expressways,5.8%; ii) Arterial Roads, 23.8%; iii) Collectors, 28.0%; iv) Local, 41.4%; B) Unoaved,1.0%

4. Assessmentof Network Condition. As part of the initial study carried out to provide preliminary estimatesof the needs for deferred maintenanceactivities, a visual assessmentof the condition of a suitable sample of the Primary network has been undertaken. Within the time scale available, the 96 ANNEX 10 sample size varied from one city to another rangingfrom 40% to 100% of the total extension of the network. The visual survey classified the pavementcondition into four main categories: A) Category 1: Good or excellent surfacecondition, showing negligibleor no defects; B) Category 2: Regularor fair surface condition with local, minor defects only; C) Category 3: Bad condition showing significant surfacedefects; and D) Category4: Very bad surfacecondition characterizedby extensivedeformation such as deep rutting, alligator cracks or complete wearing course desintegration over a major proportion of the total pavement area.

5. Expandingthe assessedsample (65%) to the entire main road network, the following distribution of surface condition has been obtained: A) Pavementsin good condition, category 1, 55.39%;B) Pavementsin fair condition, category 2, 28.2%; C) Pavementsin bad condition, category 3, 11.0%; D) Pavementsin very bad condition, category 4, 5.5%. As far as pavement type is concerned, the great majority are of the flexible type with asphaltic concrete wearing course, the proportion of rigid concrete pavement amounting to only 1% (mainly in Merida). The following table gives for each category of road and per city, the extent and the proportion of the network falling under each class of surface condition rating.

6. During the detailed engineering studies aiming at providing more accurate information on maintenanceor rehabilitationneeds on a yearly basis an extensive pavementcondition survey is to be carried out to show not only pavementdistresses by type and magnitudebut also structural capacities thus enablingappropriate repair measuresto be defined and properly quantified and costed. Similarly, additionalinformation on cross section characteristics,on drainage,curbs and gutter conditions as well as on sidewalks and public utilities shall be included in the survey in order to best define overall condition and priorities. Indeed, apart from sheer surface condition evaluation, this initial study did identify the overwhelming importance of a number of specific problems or issues such as drainage deficiencies(in Maracaibo,particularly), inadequateconstruction on maintenancepractices (in Merida), bad asphalt mix design (in Guayana)upon which more detailed investigation must focus.

7. Considerationson Traffic Volumes and EauivalentAxle Factors. It was not intended, during this first phase study, to carry out traffic counts using appropriateprocedures designed to furnish suitable data for pavement rehabilitationdesign. However, some information availablefrom other consultants studies on the problem of traffic managementdo yield interesting results regardingtraffic volume and characteristics over the primary network carrying public transport: a) daily traffic intensities can be quite considerable,reaching up to 10,000 vehicles on the most heavily trafficked lanes; b) even on local access roads either to industrial, residential or marginal areas, the average traffic volumes of buses may be of the order of 200 to 500; c) except for the heavily traveled thoroughfares where overloadedcommercial vehicles are most likely to be expected, the majority of the primary network is traveled by buses having 2 single axles, the maximum load of which would generally be less than 10 tons. A typical exampleof traffic volumedistribution over the primary road network of the city of Barqusimetois as follows: Table 2: SURFACECONDITION RATING OF PRIMARYPUBLIC TRANSPORT ROAD NETWORK

____~ LI II'-I Iz -I Ii zi'1' 11:11 1- IIL CLASS OF ROAD MARACAIBO BAR1SIMFI CaUAD WItAYANA MATUPB [N MERDA TOTAL

I2T3 4 I 2 3 4 1I 22 13 3T4 I 4 12 1 3 4 I 1 2 3 4

Eotm.,ac Km. Exui- Xm. EXIeOD 1-. Exetwin Km. Ext-ami. Kti. Exit. ioa Km.

PAVED

EXPRESWAYS 41 O OjO 0 0 0 0 41 0 0 0 0 0 0 0 0 0 O 82 0 0 0

ARTERIAIS 120 0 0 0 55 12 _ 6 32 10 0 0 21 12 1 0 37 20 1 0 275 54 10 6

COLLECTORS 45 30 15 0 33 22 19 Is 122 3 1 0 1s 22 0 0 23 12 1 0 241 89 35 iS

LOCAL 0 140 60 40 4 5 1U 0 134 50 28 0 5 27 2 1 35 31 10 3 117 253 |108 | 1

SUB-TOTAL 206 170 75 40 102 39 35 22 329 63 29 0 45 61 3 1 95 63 12 3 776 396 154 66

UNPAVED 0 0 0 10 0 0 0 2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 13

|TOAL 206 170 73 so 102 39 35 24 329 63 29 0 43 61 3 1 95 63 12 3 776 396 154 79

% Z 341 1lo41 91051 17.512 78 15 7 0 40 55 3 1 5 35 7 2 55.3 28.2 5.5

I1. GoodtoVay Good 2. Fmk to RcgW 3. Bed 4. VatyrBId 98 ANNEX 10

Daily Traffic Volume % of Network Concerned

> 40,000 13 20,000 to 40,000 38 10,000 to 20,000 24 5,000 to 10,000 14 1,000 to 5,000 12

Representativevehicle distribution on main public transport corridors in Merida is: a) Cars, 67%; b) Buses, 13%; c} Trucks, 20%. For pavement designpurposes, the detailed engineering studies must necessarilyinclude traffic counts enabling a better assessmentof daily volumes, vehicles types distribution and axle load factors for each road segment included in the program, as well as the probable rate of increase over the next 10 years.

8. Maintenanceand Rehabilitation Strateaies. It was not envisaged,during the preliminary study, to extensively define the various maintenanceand rehabilitation techniques to be implementedin the course of the program. As a first approach, the following strategies have been assignedto each of the four categories of surface condition rating: A) Pavementsin good or excellent condition, falling under cateory 1. would only require routine maintenancecomprising essentially very localized and minor skin patching, cleaningof drainage system, vegetationcontrol, sweepingof pavementsand local repairs of curbs and gutters; B) Pavementsin fair condition, pertaining to cateaor 2. would be subject to minor corrective maintenanceincluding some skin or deep patching, cracks sealing and any other local repairs or cleaningof drainage,curbs, gutters and sidewalk systems; C) Pavementsin relatively bad condition, belonging to cateaory 3 would require maior maintenance comprising substantial patching, repairs, surface dressing or thin overlay applications over relatively large areas, complemented by all additional works necessary to restore the drainage system and operational efficiency of sideways structures such as curbs, gutters and sidewalks. D) Pavementsin very poor condition, falling under cateaoy would necessitate rehabilitation works including either thick overlays, recycling or indeedreconstruction.

9. In the case of earth roads in need of upgrading and paving, rehabilitation would also, and necessarily, include geometricalimprovement as well as the prior installation of an adequate drainage system. During detailed engineeringstudies, the exact types and most cost effective maintenanceor rehabilitation activities, taking into account all construction constraints applicable, will be adequately defined for each road section pertaining to the program. At present,and basedupon the visual survey, the extent of application of each one of the above described strategies, under the program, is as follows:

Strateav Extent of Network Concerned

Km. % PayedRoads:

EmergencyRoutine Maintenance 776 55.2 Minor Corrective Maintenance 396 28.2 Major Maintenance 154 11.0 Rehabilitation 66 4.7

Unoaved:

Paving 13 0.9

10. Maintenance and Rehabilitation Unit Costs. The following table shows a preliminary assessment of unit costs applied to each maintenance strategy. These figures have been used to 99 ANNEX 10 grossly estimate the total cost of the Program. However, a more preciseanalysis is deemednecessary at final engineering stage to take into account the specificities of the network in each city, and particularly:

i) materialsavailability (in Maraibo for example,the nearest rock quarry is located at some 100 km. of the city center); ii) range of rehabilitation techniques (whether recycling, overlaying, removal and reconstructionwork); iii) the gravity of the drainage problem; iv) the presenceof public utilities within or below the pavement, etc.

Table 103: Unit Costs of Defenred Maintenane Activities

MAINTENANCE AVERAGE UNrI COST PER KILOMETER (US$) STRATEGY CLASS OF ROADS

ARTERIALS COLLECTORS LOCAL UNPAVED EXPRESSWAY

Emerg. Routine Maint. 2,000 2,000 2,000 1,500

Minor Correct. Maint. Not applicable 8,000 7,000 4,000 Not applicable

Major Maintenance Not applicable 70,000 60,000 30,000 Not applicable

Rehabilitation Not applicable 100,000 90,000 60,000 Not applicable

Upgrading & Paving Not applicable Not applicable Not applicable Not applicable 110,000-145,000

______I______(M erida)-(M aracaabo)

N.B. For normal routine maintenance, an average consant value of $1,500/Km has been asumed.

11. Sub-oroiects Quantities and Cost Estimates. The following table is a summary of the total deferred maintenanceneeds occurring under the program. Costs are expressedin US$ million. 100 ANNEX10

Table4: SUB-PROJECTQUANTMES AND COSTESTIMATES FOR DEFERREDMAINTENANCE

MARACAIBO B2QIIEO CDAD.WAAN MAUI MERIDA TOTAL Km. cost Km. Cost Krn. Cost Km. Cost Km. Cost Km. cost

,R habilntfion__ _ Expressways 6 0 0 0 0 0 0 0 0 0 0 0 Artcrials 0 0 5 0.6 0 0 0 0 0 0 a 0.6 Collcctors 0 0 16 1.44 0 0 0 0 0 0 16 1.44 Locals 40 2.4 0 0 0 0 1 0.06 3 0.18 44 2.64

Milor Maintenanc Expresways 0 0 0 0 0 0 0 0 0 0 0 0 Artsrals 0 0 8 0.56 0 0 1 0.07 1 0.07 10 0.7 Collsctors 15 0.9 19 1.14 1 0.06 0 0 1 0.06 36 2.16 Locals 60 1.S a 0.24 28 0.84 2 0.06 10 0.3 108 3.24

MinorCorract. Meint. Exprccxways 0 0 0 0 0 0 0 0 0 0 0 0 Arterias 0 0 12 0.0o6 10 0.8 12 0.0o0 20 0.16 54 0.43 Collectors 30 0.21 22 0.154 3 0.021 22 0.154 12 0.084 89 0.52 Locals 140 0.55 5 0.02 so 0.2 27 0.108 31 0.124 253 1.01

Emera. Routne Maint. Expressways 41 0.082 0 0 41 0.082 0 0 0 0 82 0.16 Artsrlals 120 0.24 6s 0.13 32 0.084 21 0.042 37 0.074 275 0.55 Collectors 45 0.09 33 0.006 122 0.244 1 8 0.036 23 0.046 242 0.48 Locals 0 0 4 0.006 134 0.201 5 0.007 35 0.07 178 0.29

SubTotal 6.28 4.45 1.79 0.63 1.17 14.32

Pavinc t 0 1.1 2 0.22 0 0 1 0.11 0 0 13 1.43

SubToti 501 7.38 200 4.67 422 1.79 110 0.74 173 1.17 1406 15.75

Studie 5% 0.37 0.23 0.09 0.04 0.0o 0.79 SupervisIon7% 0.52 0.33 0.13 0.05 0.08 1.11 Contingancies-Physical 0% 0.81 0.51 0.2 0.08 0.13 1.73 Costs 3.9% 0.35 0. 0.09 . 0.06 0.75

TOTAL -3--0.4 S 0 23.0.13 101 ANNEX 10

INSTITUTIONALCOMPONENT

Oraanizationof a Road Maintenance Unit in a Municigality

12. Functions of the Road Maintenance Unit. The functions of a road maintenance unit are manyfold: a) identifying and evaluating the street maintenance and rehabilitation programs; b) prioritizing and budgeting the needs in annual and pluri-annual plans; c) assigning the routine maintenanceactivities, on an annual basis, to the force-account unit - if any- and managing the execution of such works; d) procuring and contracting as well as supervisingall major rehabilitation or new construction works to the private sector.

13. Organizationof a RoadMaintenance Unit. To fulfill the above functions a road maintenanceunit should normally comprise: a) a section in charge of studies, planning and budgeting; b) a section responsiblefor the executionof routine maintenanceactivities by force account; c) a section devoted to deal with the contracts and the monitoring of all major works, let to the private sector. The 'Studies and Planning" section identifies the needs on the basis of an adequate and updated street and traffic inventory, as well as on the definition of the levels of service required and the elaboration of designs and specifications enablingthe service levels to be attained. Its prioritizing and budgeting functions stem from the knowledge he must have of unit costs and from its expertise or good diagnosis of problems. It is normally within this section that the core of a Pavement Managementsystem should be installed.

14. The "Routine MaintenanceActivity" section is responsiblefor carrying out by force account all the minor recurrentworks involved in the daily maintenanceof the streets and other relevant urban features. It must have adequate capabilitiesfor managing personnel,maintaining the equipmentand properly executingthe works. The "Rehabilitationor new Construction" section essentiallydeals with all works that are important enough to warrant contracting to the Privatesector. This section should be able to preparetender documents, analyzeoffers, procurethe works and control quality, quantities and costs.

15. Staffing of a Road Maintenance Unit. Obviously, the quantity and quality of staff requiredto managea road maintenanceunit will dependon the density of the network, on the relative importance of the maintenanceprograms and on the eventual sharing of responsibilitiesbetween municipalities, statesand local government. Assumingan urbannetwork density of below 3.000km with a population of the order of 500,000 and besides the Director (and his administrative staff) who is responsiblefor the generalpolicy of maintenancewithin the municipality (i.e. objectives, organization, researchand distribution of credits among the sections, personnel problems and career or promotion), a typical staffing for the three above mentioned operational sections would be as follows:

a.Studies and PlanninnSection

Activity Personnel

Section Manager: 1 qualified road engineer, 1 technician + team for traffic counts. Network Inventory: 1 junior engineer, 1 technician + team for pavement inventory. Interpretations, Design, 1 experiencedengineer, 1 computer technician. Specification: Costing and Budgeting: 1 specialist. 102 ANNEX 10

b.Routine MaintenanceActivity

Activity Personnel

Section Manager 1 qualified engineer. EquipmentManagement 1 specialist + 1 computer technician + maintenanceteam. Site Work 3 foreman + teams (pavement, drainage, appurtenances, [variable item]).

c.RehabilitationActivity

Activity Personnel

Section Manager 1 qualified engineer. Procurement 1 specialist. Quality Control 1 laboratory engineer + equipment + site team. Cost Control 1 specialist. d*.Summary

1 Director + administrative staff or secretariat. > 5 years experience 3 qualified engineers in charge of the 3 sections + individual secretariat.

< 5 years experience 3 junior engineers(network monitoring plus design and specification, plus materials). 4 specialistsIcosting and budgeting, plus equipment,plus procurement and cost control). 5 technicians(traffic plus inventory, plus 2 computers,plus laboratory). 3 foreman. Total 19

16. If the municipality decides not to have force account, the basic personnelneeded is the one listed for the studies and planningsection plus a procurement specialistplus a small unit dedicated to roadtesting and inventory. This is the preferred organizationstaffing for the municipalitiesin the first year program. 103 ANNEX 11

VENEZUELA URBANTRANSPORT PROJECT

EconomicEvaluation

A. BASIC METHODOLOGYUSED IN THE EVALUATION

General

1. A conventional approachwas used for the evaluationof traffic schemeswithin each city sub- project. In general, benefits/disbenefitswere assessedin monetary terms as a result of:

a. savings in Vehicle OperatingCosts (VOC) as a result of reductions in delay/increases in speed;

b. changes in VOC as a result of changes in distance travelled, if any, arising from a scheme. Most schemes will not cause traffic to change routes but, some schemes may cause diversionof traffic to new routes. The changesof routing could have two effects: (i) there will be changesin distance travelled by vehicles and, (ii) there will be an impact on speeds/delayson the routes from/to which vehicles are diverted. Both effects will have an impact on overall costs of operation of the system. Evaluations assessedthe impacts of both the changes in distance travelled and the changes in speeds/delayson the diversion and existing routes. The evaluation of the scheme involvedthe same volume of total vehiclesin the "with scheme' and 'without scheme' scenarios;

c. savings in personal travel time arising from decreasedjourney times for users of the transport system; and

d. improvements in street surface condition which affect the VOC will be taken into account for specific appropriatecomponents (e.g. deferred road maintenance).

2. In some schemes,there were disbenefits to some traffic/users as well as some benefits to other traffic/users. The evaluation took into account the total impacts (benefits and disbenefits) of schemes. The effects of changes of routes have been noted above but other typical examples of 'disadvantages":

a. corridor improvementsmay involve provisionof additional traffic capacity (eg. 'green time") at intersections on a main corridor thus resulting in benefits to the main corridor traffic; however, traffic on minor/crossing roads may be provided with less capacity ("green time") and disbenefits could occur for this traffic. Both effects should be assessed;and

b. an exclusive busway/bus lane may result benefits to busses/publictransport vehicles, but may result in disbenefits to private traffic on the same route; both effects should be assessed.

Periodsof Evaluation

3. The following should periods of evaluation were used:

a. oeak hours/off oeak hours - Benefits are most likely to result from improvements in traffic operations in peak periods - lower benefits will arise in other periods. No 104 ANNEX 11

generalizationsare made for the hourly periods to be included in the evaluation. Citv soecific 24 hour traffic counts should be used to identify the traffic distribution throughout the day and to derive the number of hours of each type to be used in the evaluation. It is expected that the evaluation will most likely involve:

* a number of morning peak hours per day;

* a number of evening peak hours per day;

* a number of inter-peak hours per day.

Other hours may show insignificant benefits and may not be worth including in the evaluation. Benefits should be calculated, using the appropriate traffic volumes and speeds/delays,for the number of hours in each category.

There was inadequatetime in the preparation studies to derive special 'peak":"inter peak": 'other' hour relationshipsfor every scheme although different hourly profiles may be applicablefor (say) schemesclose to, and schemesfrom, the city center.

b. days oer year - evaluations were carried out for the number of working days in a year (260 days) unless specific local circumstances and surveys show that Saturdays involve similar traffic volumes to working weekdays; and

c. life of schemes- For short-term schemes,a 5 year project life was assumedand that the period of evaluationwill be the same. For more costly schemes- such as widening of a corridor of the construction of "missing links" or paving of bus accessroutes - a longer life of 15 years was assumedand used as the evaluation period (see below - residual value). Periodic rehabilitationcosts should be included for components with relativelyshort lives (such as traffic signals)which form part of projects evaluated over a longer period.

ResidualValue

4. The residualvalue of schemesvary with type:

a. a 20% residual value was taken after 15 years for the civil works elements of infrastructure schemessuch as new roads, road widening, missing links, paving of bus routes to low income areasetc, and if land/propertyis involved, a 100% residualvalue will be taken for the property/land elements; and

b. a 20% residualvalue was taken after 5 years for managementrelated schemessuch as traffic managementmeasures, traffic signals, etc.

Soeed-flow and/or "Before" and "After" Soeeds

5. The key element in any traffic and road scheme evaluation was the establishment of the "before" and "after' speeds/delays. Speed/delayswill be a function of predictedtraffic volumes and capacity. The study consultants have proposedvarious proceduresto establish "after" speeds/delays and were, of course, free to select their own methodology to relate traffic volumes, traffic capacity and traffic delays in a realistic manner. However, most consultants have proposedto use some form of traffic model for the assessmentof scheme impacts includingTRANSYT 7, PASSER,NETSIM, HCM (intersections),etc. Modelswere calibrated/checkedagainst existing city ("before") conditionsby field surveys of speeds/delaysto enableoutputs to be used with confidencein the specific conditionsfound 105 ANNEX 11 in Venezuelancities. Normally, if a model was used, the delays/speedsassociated with the "before' situation were those estimated by the calibrated model (calibratedfrom field surveys). The following general comments are also made for typical, but not all, schemes:

a. for intersections - benefits will come mainly from reduced delays although accident savings may be possible (see below I and procedures are required which enables individual junction delays to be assessed.

b. for corridors (traffic and infrastructure improvement schemesalong a route) - benefits came mainly from reducedend-to-end travel times and procedureswere requiredwhich enable route speeds to be assessed. Various options are possible depending on the interaction between intersections but assessmentscould be based on: {i) cumulative junction delays along the route using the same procedureas noted in para. 5.a above, or (ii) by use of a route proceduressuch as PASSERor TRANSYT7 (appliedalong the route); the latter may be appropriate if some from of linked signals are proposed;

c. for area wide schemes such as central are or local area traffic management and infrastructure schemes,benefits came mainly from reduction in averagejourney times throughout the network.

It is noted that if measuresare proposed which are 'external' to the traffic system (eg measureswhich benefit pedestriansor bus passengersbut are not specifically aimed at moving traffic/buses), it would be acceptable, in the evaluation, to omit the costs of those measuresin the analyses - in the evaluation, the principle will be to include the costs which produce the operational benefits. Other elements of an integrated scheme, which may produce quality benefits or environmental benefits (such as pedestrianizationor bus stop shelters) may be evaluated in a qualitative way;

d. for sionina and marking programs, no quantified evaluation is proposed.

6. Schemecosts for the evaluationincluded:

a. capital costs for all civil works (including designand supervision),equipment, signing, marking, traffic signalsetc and contingencies;

b. land/property costs if necessaryfor the scheme;

c. specific operating, if any, necessaryfor a scheme (e.g. enforcement costs on a HOV lane); and

d. routine and periodic maintenance costs (an estimate of say 2% per annum of the capital cost of the scheme for routine maintenance and say 5% after 5 years for periodicmaintenance costs if appropriate,would be acceptableunless consultants have specific data).

7. The evaluationused economiccosts. Thus for the evaluation, cost estimatesshould identify, and subtract from market prices all taxes and duties and other government levied surchargeswhilst any subsidies should be included. 106 ANNEX 11

BaseYear

8. The base year for capital costs an vehicle operating costs should be the same. It would be convenient if this base year/date was the same as proposed for the BIRF/BIDappraisal, say, about September1992. However, consultants may estimate costs etc at the date most appropriatefor their particular city study but it would be helpful if they could present an estimated percentageincrease to be applied to bring costs/benefits to August 1992.

Vehicle Ooeratina Costs (VOC)

9. VOC's were estimated by FONTUR/MTCIsee Tables 11.1 and 11.2) in the form of costs per km at various speedsand per hour stopped with motor idling, typical of an urban area. At this stage, it is proposedto prepare data for different VOC'S for:

* private cars; * "standard" medium/largebuses; * "small' por puestos (mini buses)- about 20-24 seats; * 'normal" por puestos (mini buses) - about 30-32 seats; * 'standard" trucks; and * specialcase vehicles such as jeeps in Caracasor 'car/taxi collectivos in Maracaibo.

10. Difficulties occur when V/C ratios are high, speedsdrop (and VOC's rise) and effects such as trip suppressionoccur. The evaluationsneed not consider trip suppressionetc and can assume that once a minimum speed (and thus maximum VOC) has been reached, it will apply thereafter. At this stage is assumed that speeds will cut off at 8 kph even though V/C's may increase (theoretically) considerably beyond 1. If consultants prefer to use a more sophisticated methodology at high congestion levels, this will be acceptablebut should be cleared with FONTUR/MTC.

Evaluationof Time Costs

11. Person time costs - were developed by FONTURfor each specific city base don input values on wage rates to be provided by FONTUR/MTC.It is noted that the costs of vehicle operatives (such as bus drivers, truck drivers etc) will have been included in the VOC above and that person time costs refer only to passengers. The following apply:

a. a single time cost value will be used for all passengerstravelling in non-working time, regardlessof mode;

b. a broad estimate will be made of the number of people travelling in working time (this will be a small numberin the peaksand perhaps a somewhat greater numberin the off peaks). the valuation of the time of these workina time travellers will be modespecific (normallyhigher for higher paid workers who have higher propensity to travel by car) and will be based on the averagewage rate for the city;

c. all other (non working time) adult travellers time will be valued at 30% of the average wage rate for the city; and

d. all children/studentswill be valued at 30% of the 30% average wage rate.

12. Thus, two general values will be derived for person time - one for peak and one for off peak - which account for the different traveller composition at the two times (in working hours, in non working hours, and children/students). Exhaustivefield surveys are not reouiredto determine these data; the consultants best estimate based on (i) previous surveys; lii) exiting census data; liii) 107 ANNEX11 consultationswith the Municipality; and, liv) "standard' approaches,will be adequate.See Table 11. 3 for time costs.

Accidents

13. Some measures(such as intersection improvements)may be aimed at increasing safety at intersections. If data exist on the 'before' situation, the study should attempt to assessthe possible changesin accident occurrenceand attribute a value to the reduction.

Imoact on Low Income Groups

14. For each project, an estimation should be made of the proportion of total benefits directly accruing to low income families which are defined as those whose per capita income is less than 44.267 Bolivarsin values of August 1991. It shouldbe noted that in order to relate this figure to wage rates, it is necessary to multiply by average family size and divide by the average number of economicallyactive personsin each family.

15. Benefits directly accruing to the group are:

a. wages paid to low wage earnersemployed on construction schemesand other related to the project implementation;

b. time savings to low income family membersand

C. 50% of VOC savings of public transport vehicles used by travellers from low income families.

16. Thesebenefits should be assessedin NPVform and expressedas a ratio of the NPV of project implementationcosts. This calculation should be repeatedto test the effect of time savings. 108 ANNEX 11

Vhile 10 km/h 20 km/lh 30 km/ph 40 km/oh 50 km/oh 60 km/oh Private car 8.3323 6.2503 5.6792 5.4134 5.2600 5.1602 Por puesto (car) 7.5858 5.2357 4.2670 4.3497 4.1914 4.0891 RegularBus 25.2355 17.5545 15.5542 14.6413 14.1194 13.7819 Minibus 13.8383 10.0283 9.0076 8.5359 8.2664 8.0908 2 axle gasoline truck 13.6678 9.6201 8.5572 8.0708 7.7923 7.6120 2 axle diesel truck 15.9193 11.3464 10.1566 9.6094 9.2953 9.0915 3 axle truck 31.0328 23.0336 20.8549 19.8441 19.2613 18.8823 3+ axle truck 53.0023 36.5974 32.3471 30.4108 29.3052 28.5905 Long wheelbase jeep 11.7940 8.4780 7.5946 7.1880 6.9546 6.8052 Notes: USS = 58,5 Bolivares The costs exclude: (i) personaltime savings and; {ii) savings due to fleet size reduction, made possible by improvementsto traffic speed.

Table'111.2:esucCstpr KOHVof'HrleVuaH llIp

.VehicleTvoe| No. of oersons in Crew Unit Labor Cost | Cost/ehiclelhour

Privatecar 0 -- -- Por puesto (car) 1 75 75 RegularBus 1 75 75 Minibus 1 75 75 2 axle gasolinetruck 1 75 75 2 axle dieseltruck 1.5 75/60 105 3 axle truck 2 75160 135 3 + axle truck 2 75/60 135 Long wheelbasejeep 1 75 75 Notes: The number of helpers was estimated and a unit hourly cost of Bs. 60 was assumed for them. 109 ANNEX 11

I.-,.~~~~~~~~~~~~~~~~~~~~~~~~ ... i:-' ...... 1''"'' ":""'-': . i.,-...,"i' - '"'"""....'...... |In Citv 1991'""I' Vul..esto

Caracas 90 116 147 Barquisimeto 73 96 131 Valencia 86 111 137 Maturin 80 100 120 CiudadGuayana 93 124 163 Maracaibo 74 94 112 Merida 63 88 107 Notes: 1. Socialsecurity and relatedcosts were assessedat 35% of wagerate. 2. Overheadand related administrative costs borne by the employerwere assessedat 20% of the wagerate of bustravellers, 25% for por puestousers and 30% for car occupants. 3. Wagerates were thosepublished by the OficinaCentral de Estadisticae Informatica, Presidenciade la Republica. 4. Valueswere adjustedto estimatedMarch 1991 equivalentsby the consumerprice index with an extra 2.5% beingadded to allowfor realwage increases. 5. Wagerates for usersof differentmodes were assessedin the followingway. The regionalincome distribution of non-agriculturalworkers was obtainedand the rate for bus userswas takento bethe incomecorresponding to the person25% of the way up the scale,starting from the lowestwage rate; por puestotravellers were assumedto correspondto the medianwage; and car occupantsto the wageof the person75% up the scale. 6. 160 hoursworked per monthper workerwere universallyassumed.

B. ECONOMICEVALUATION RESULTS

17. Economiccosts and benefits were quantified for all project components except Institutional Development, TechnicalAssistance and NationalTraining Program. The benefit-cost ratio (B/C ratio), the net present value (NPV), and the economicinternal rate of return (EIRR)were calculated for each component. The results are presentedin Table 11. 1, consideringas benefits only those resultingfrom the reduction of vehicle operating costs (BRCO).The overall EIRRfor the project, computed by adding the cash flows of all components evaluated, is 32% in the base case. If the benefits due to time savingsare includedthe EIRRjumps to 79% in the base case. Severalsensitivity analyseswere carried out, consideringboth reduction in benefits, increasein costs and a combinationof both The results are listed in table 11.4

18. The economicevaluation was undertakenfor each of the componentsidentified in the first five cities included in the corridor (Maracaibo,Barquisimeto, Merida, Maturin and Ciudad Guayana), for transport corridors and CBD improvements,public transport improvement, traffic management and signal improvement. A list of the corridors evaluatedand their respectiveEIRRs are given in table 11.5. Economic analysis was not done for institutional development, training and technical assistance activities representing 18% of the total costs. Therefore, the economic evaluation understates the economic viability of the project, since there will be benefits that will arise from the institutional development,training and technical assistanceprogram investments.

19. The costs in Bolivareswere converted into dollar costs at the market exchange rate at the time (September1992).

20. Vehicle operating costs (VOCs)were preparedby CEPAL-FONTUR/MTC(Table 11.1) for Venezuelancities based on resource costs adjusted for urban purposesand to the Venezuelan 110 ANNEX 11 commercialvehicles. The VOC comprisethe cost of fuel, engineoil, tires, maintenanceincluding spare parts, depreciation, related to different speeds. Drivers and helpers were computed separately and added to the other costs in order to compute the final VOC. A document describing how the VOCs were determinedis included in the project file.

21. The bus route paving program was evaluated for a minimal viability, based on an average traffic composition, in such a form that the basic data need was the construction cost and the existing microbus traffic per hour or per day. The minimal EIRRof 12% is obtained by a daily traffic of 60 buses, or three round trips per hour. This procedure is the same as the one used in the PROPAV program financed by the World Bank in Brazil in 1981. The deferred maintenance program is also evaluated, for the more peripheral areas, for a minimal viability, which is obtained at the traffic level of 10 microbusesper hour or a total of 100 buses per day per road link.

22. Economicinternal rates of return (EIRR)estimated for individual Investmentsvary widely from the acceptancefloor of 12% to levels beyond 100% (it is consideredthat EIRRsgreater than 60% lose their physical meaningas the IRR algorithm assumesthat benefits are re-invested at the same rate). These findings are normalin traffic schemes,specially where great traffic volumes are addressedwith measuresthat requirevery little in terms of investmentssuch as the traffic light schememanagements adjusted to changesin flow directions.

23. For project which are still being developed, the FONTUROperational Manual, ANNEX 10, covers all steps necessary to clarify methodological procedures acceptable to the Word Bank for economic evaluation.

Table 11.4: Summary of Quantified Sub-project Benefits (EconomicRate of Return (%))

Base Benefits Benefits - Benefits-25% +25% 25% + Costs +25% Ocs ocs ocs ocs ocs ocs ocs ocs only + only + only + only + TS TS I TS I TS Barquisimeto 35 73 47 92 23 52 15 40 Maracaibo 37 92 49 117 24 67 15 52 Maturin 27 89 38 113 15 64 8 48 Merida 17 41 25 53 9 28 4 20 Ciudad 20 65 26 82 13 49 8 38 Guayana Total Part B 32 79 44 100 21 57 13 44 OC&-Operating Cost m TS - Time Savings 111 ANNEX 11

VENEZUELA URBAN TRAN8PORT PROJECT

TABLE 11.5 - ECONOMIC EVALUATION BY CORRIDOR

OCS+TS OCSI+T OCS+TS OCS 8CS OCS

B/C NPV IRR B/C NPV IRR Component (USSmillions) (@12%) (@12%) (%) (Q 12%) (@12%) (%)

LIBERTADOR 2.17 4.66 7705.19 118.02 2.39 2930.30 55.47 VENEZUELA 1.18 3.51 277.86 67.04 1.45 511.85 26.83 VARGAS 0.81 3.48 1448.92 N529 1.60 386.78 31.76 INTERCOMUNAL 1.2a 3.15 26e6.65 76.92 1.77 967.82 36.s8 AREA CENTRAL 2.11 1.86 1963.89 30.19 0.02 -177.10 10.15 AV.RIBERENA-ACI 2.52 3.33 811l63 866.3 2.53 4081.37 42.46 PROPAV 4.90 2.16 1s8.68 33.70 1.01 1.57 12.24 MANTENIMIENTO 7.72 2.55 58.05 so.16 1.04 1.58 13.43

BAROUISIMETO 22.49 23071.07 59.62 8664.17 22.71

AREA CENTRAL 4.38 2.30 5902.21 55.20 1.27 1160.60 21.1e LA LIMPIA 0.99 9.25 7896.63 236.51 4.55 3402.50 114.58 LAS DELICIAS 2.97 3.74 7894.29 82.81 1.63 1527.34 32.67 5 DE JULIO 0.86 4.41 2186.17 110.92 1.93 502.49 41.586 CIRCUNVALACIOI 3.71 8.34 17010.986 90.31 2.23 410.57 36.54 BELLAVISTA 0.88 4.37 2673.16 109.65 2.06 005.42 45.61 GIAJIRA 0.72 2.75 1226.71 65.53 1.22 153.77 19.40 SABANETA 0.51 4.91 2298.61 124.10 2.16 605.35 49.22 PROPAV 2.20 2.16 186.58 33.70 1.01 1.57 12.24 MANTENIMIENTO 6.82 2.55 50.05 60.16 1.04 1.59 13.43

BARQUISIMETO 23.94 47516.39 77.85 13551.51 27.94

AV. LAS AMERICO 0.22 4.22 696.24 108.66 1.36 76.96 23.55 ALTA VISTA 0.45 3.76 1206.62 93.43 1065 33.32 14.51 UNARE 0.29 3.93 660.70 s8.37 1.06 16.04 13.36 COLETORA 28 2.80 4.07 8487.30 57.51 1.54 166s.s6 21.06 MANTENIMIENTO 1.62 2.65 80.05 60.16 1.04 1.68 13.43

CIUDAD GUAYAr 5.37 12290.13 63.75 1798.50 17.92

RSAULLEONI 0.09 6.07 437.55 154.35 2.42 122.90 86.19 ORINOCO/JJUNC. 0.20 2.72 333.93 64.6s 1.06 15.52 14.73 UB.CENTENARIO 0.07 2.91 133.72 70.09 1.14 9.57 16.6 GUARAPICHE.II 0.14 2.61 250.57 67.15 11.3 17.69 16.34 UB.ORINICo II 0.09 4.89 318.17 116.18 1.94 81.16 42.02 AREA CENTRAL - 0.83 3.62 2120.45 89.4e 1.49 394.10 26.03 MANTENIMIENTO 2.43 2.55 80.06 60.16 1.04 1.68 13.43

MATURIN 3.86 363.44 70.71 642.52 18.48

1e DE SETIEMBRL 0.30 2.67 486.96 63.31 1.38 104.59 23.96 LOS CUROS 1.20 2.13 1496.43 30.01 1.48 633.s8 20.06 MEJORAS 1e INTI 1.07 2.00 1123.21 4e.22 1.01 8.12 12.27 MANTENIMIENTO 1.29 2.56 50.05 e0.16 1.04 1.56 13.43

MERIDA 3.8e 3167.67 47.17 746.15 15.99

TOTAL GERAL W.51 809818.70 67.31 25404.94 23.67 112 ANNEX 12

VENEZUELA URBANTRANSPORT PROJECT

DetailedProiect Costs

This annex includes the detailed project costs, namely: i) the project cost summary; ii) the consolidatedcost estimatesby year and semester;iii) the estimated scheduleof disbursements;iv) the traffic and infrastructure investments costs for the five cities appraisedand for the program that were fully evaluated; v) the road rehabilitation and deferred maintenancecosts for the five cities. 113 ANNEX 12

TABLE 12.1 PROJECTS COST SUMMARY Qn US$ MILLION EQUIVALENT)

PROGRAM Component Total % Of Local % of Foreign % ot US$ m Total USS m Total USS m Total instItbonal Al - FONTUR Strengthening ___ _ 3.84 1.9 1.54 0.8 2.30 1.2 Development A2 - Municipal Strengthening 4.95 2.5 2.27 1.1 2.68 1.3 and Policy A3 - National Tralning 7.22 3.6 2.91 1.5 4.31 2.2 Program A4 Traffic Police 11.17 5.6 2.96 1.5 8.22 4.1 (PART A) A5 - Policy Studies 2.63 1.3 1.31 0.7 1.31 0.7 AS Preparatlon Studces 5.00 2.5 2.50 1.3 2.50 1.3 Sub Total Part A 34.81 17.4 13.49 687 21.32 10.7 tnfrastructure B1 - Traflic Intra and Equipment .__ 104.35 52.2 67.39 33.7 36.97 18.5 and Equlpment - - Land Expropriation 1.08 0.5 1.06 0.5 0.00 0.0 Investment B2 - Deterred Malntenance 18.45 9.2 12116 6.1 6f29 3.1 (PART Bl Sub Total Part B 123.88 61.9 80.63 40.3 43.26 21.6 Total BeCodst . =____,58 -.1 56 79- 9412 471 6 - 2 Project Physical Contingencies 1 5.65 7.8 10.11 5.1 5,54 2.8 (Pw A + B Sub Total 174.34 87.2 104.23 52.1 70.12 35.1 Price Contingencies 25.66 12.8 15.28 7.6 10.39 5.2 Total (Excluding taxes) -_:_- ___ 200.0 100.0 119.51 .58 80.51 40.3 Taxes and Duties 19.62 9.8 19.82 9.8 0.00 0.0 Total (Inc taxes) 219.62 109.8 139.13 69.6 80.51 40.3

NOTES Part B2 is a program and thus physical contingencies are not approprlate Tax and duty rates provided by FONTUR

TABLE 12.1 A PROJECT TECHNICAL ASSISTANCE BY TYPE On USS MILUON EQUIVALENT)

PROGRAM Component Technical Total % of LOCAL % of Forelgn % of I______IAssistance USS m Total USS m Total US$ m Total nstituonal Al - FONTUR Strengthening IDTA 3.84 14.7 1.54 5.9 2.30 8.8 Developmrent A2 - Municipal Strengthening IDTA 4.95 19.0 2.27 8.7 2.68 10.3 and Policy A3 - National Training IDTA 7.22 27.7 2.91 11.2 4.31 16.5 Program A4 Tratf c Police IDTA 2.43 9.3 0.49 1.9 1.94 7.4 Sub Total IDTA 18.44 70.7 7.21 27.7 11.23 43.1 (PART A) A5- PolcyStudies SUB.TA 2.63 10.1 1.31 5.0 1.31 5.0 AS Preparation Stucles SUB.TA 5.00 19.2 2.50 9.6 2.50 9.6 Sub Total SUB.TA 7.63 29.3 3.81 14,6 3.81 14.6 I Total TA 26.07 100.0S 11.02 42.3 1 5:041 577

IDTA-insftittonal DevelopmnentTechnicalAssistace SUB.TA- Subsftitton TechnicalAssistance VENEZUELA UPSAN TRANSPOPT PPOJECT

TABLE 12.2 CONSOLIDATED COST ESTIWATES

w j I I M ll 'Ot i A 006Ilg7 1__3__1 1.79 -" TOTA I _ OCA F___ GN____ 1 .8 117 .79~1 l

a25 PaWtAS Tech A~so 2.64 1.31 21.3.1 .1 0.269 .610 0. 0.8 53 08 025 PeilAS mid 5lucpjse 5.200 .0 2 .50 0.5 1.0 100 .5010 100 TA echRAga 34.81 13.4 2.32 0.0 0.48 6.22 6.231 7.17 4.45 5.58 1.24 1997 1.4 00 .2200 02

Equip 1~~.20 0.06 0.60 0.04 0.04 0.07 0.11 0o.16 0.6 011 00.00 .0 __

.1 Pant Al ScFNTUoeolm1et10es5 .8 .0

Padl8 ae n3m erc.cudrdc u toSdoubl counlkig0 .01 . Pua8-rmFnTUCReStuieas .. i i.5 .aU02 115 ANNEX 12

VENEZUELA URBANTRANSPORT PROJECT

Table 12.3: Estimated Scheduleof Disbursements (US$ Million)

IBRD Estimated Estimated Estimated Fiscal Year and Semester. - Cummulative Cummulativeas Semester Disbursements Accounts a % of Total'

1994 _ -- : - -- . -- - . -:- - . . June 30, 1994 18.0 18.0 18

1995 ____ -___-___:- December31, 1994 9.0 27.0 27 June 30, 1995 9.0 36.0 36

1996 -_-- _:- _-.--.--- December31, 1995 15.0 51.0 51 June 30, 1996 12.0 63.0 63

1997 ' , , . ' : ' : " ' " , . - - _ - December31,1996 8.0 71.0 71 June 30, 1997 8.0 79.0 79

1998 December31, 1997 8.0 87.0 87 June 30, 1998 9.0 96.0 96

1999 -' -- ,-' :' :. ------December31, 1998 4.0 100.0 100 June 30, 1999

Assumptions Loan Effectiveness: January 30, 1994 Loan Closing Date : December30, 1999

1/ Including an initial deposit of US$4 million into the SpecialAccount Source: Mission estimates VENEZtUELA URBANTRANSPORT PROJECT

TABLE12.4 TRAFFICAND INFRASTRUCTURE

SUMMARYOF COSTS(ex taxes,US$ millions) 1 2 3 4 5

1 ActMty MERIDA MATURIN CIUDAD BARQUI- MARAC- TOTAL GUAYANASIMETO AIBO

1.01 Design 0.12 0.21 0.13 0.73 1.46 2.65 7.6% 1.02 CMI Works 0.83 0.71 3.23 8.94 17.92 31.63 1.03 Equipment 0.36 0.21 0.37 1.59 0.89 3.42 1.04 Supervision 0.10 0.15 0.36 0.73 1.46 2.80 8.0% 1.05 Sub Total 1.41 1.28 4.09 11.99 21.73 40.50 1.06 Physical Cont 0.35 0.19 0.63 1.81 2.35 5.33 13.2% 1.07 Sub Total 1.76 1.47 4.72 13.80 24.08 45.83 1.08 Expropriation 0.52 0.00 0.00 0.00 0.56 1.08 _n

1 1.C191Total(ex pricecont) 1 2.281 1.471 4.721 13.801 24.64j[ 46.9

Notes Design and supervision average about 8% - same % used for unallocated costs Physical contingencies average 15% - same % used for unallocated costs VENEZUELA URBAN TRANSPORT PROJECT

TABLE 12.5 ROAD REHABILITATION SUMMARY OF COSTS (ex taxes US$ millions)

1 2 3 4 5

1 Actvity MERIDA MATURIN CIUDAD BARQ'METO MARAC'BO TOTA GUYANA

1.01 Design 0.06 0.03 0.09 0.22 0.31 0.72 1.02 CMI Works 1.17 0.63 1.79 4.45 6.28 14.32 1.03 Equipment 0.00 0.00 0.00 0.00 0.00 0.00 1.04 Supervision 0.08 0.04 0.13 0.31 0.44 1.00 1.05 Sub Total 1.31 0.71 2.00 4.98 7.03 16.04 1.06 Physical Cont 0.20 0.11 0.30 0.75 1.06 2.41 1.07 Sub Total 1.51 0.81 2.31 5.73 8.09 18.44 1.08 Expropriation 0.00 0.00 0.00 0.00 0.00 0.00

1.09 Total (ex price cont) 1.51 0.811 2.311 5.73 8.0911 18.44

Assumptions New paving of bus routes etc is included in the traffic and infrastructure works Base cost as Table 4 of Annex 10 but amended for design, supervision and contingencies Design is 5% and supervision 7%o Physical contingencies is 15% 118 ANNEX 13

VENEZUELA URBANTRANSPORT PROJECT

Project ImplementationSchedule. Monitoring, Evaluation and SupervisionPlan

A. Proiect Schedule

1. The project implementationschedule is shown in Figure 1. The scheduleprovides the basis for project monitoring and for the disbursementprofile (Annex 12).

B. Monitorina and Evaluation

Monitorina - Part A National Comoonent

2. Part A (NationalComponent), comprises six components: (i) Part Al - FONTURstrengthening, liil Part A2 - municipality strengthening, (iii) Part A3 - national training program, (iv) Part A4 -traffic police component, (v) Part A5 - studies and, (vi) Part A6 - preparationstudies in additional cities.

3. Monitoring of activities will involve two separatebut closely related activities (i) monitoring of the implementation scheduleand key target dates and (ii) and financial monitoring (expendituresin relation to project costs).

4. ImplementationMonitoring FONTURwill monitor compliancewith the scheduleshown in Figure 1. by defining target dates for key actions. The target dates for key actions for the first year of the project (to about mid 1994) are shown in the Action Planin this Annex. In May 1994, FONTURwill prepare, with the agreementof the Bank, a similar action plan for the second year of implementation, and in May 1995 an action plan for the third year and so on throughout the life of the project. In the event of delays, FONTURwill be responsiblefor identification of the constraint and for devising and executing policies to resolve problems.

5. Part A2 involves municipal strengthening programs; the Action Plans for Part A2 will be adjusted and made moredetailed as each city sub-projectimplementation schedule is finalized. Typical key dates for Part A2 for each city will be developedand will include issue of invitations to technical assistance consultants, and commencementand completion of consultants employment.

6. Financialprogress will be monitored by FONTURin the same way as implementationprogress. Estimatesof costs of Part A have been madebut final costs will be dependenton consultants contracts (for technical assistanceand studies etc) and on bid prices (for equipment etc). Thus, it will be the responsibilityof FONTURto update cost schedulesas contracts and bids are finalized, and to monitor financial progress in relation to the updated schedules.

7. FONTURwill report on both implementation and financial progress in the bi-annualprogress reports. PIG 1: ODWICWAlVE FRO S5IEDUIE

Y_r 1993 1993 1994 1994 1995 1995 1996 1996 1997 1997 1996 1998 1999 1999 So_mer 1 2 1 2 1 2 1 2 1 2 1 2 1 2 PAr! A - UflUI1O8AL DEVmoELO PRO(AM Al FONTIIR Tchnical Ana:L 25% 25% 25% 25S% FONITIR Equipmu 50S 50%

A2Z Mu pl Tchical Ami8u S 8 % 8% 8% 8% C % 8% 8% 8% 8% 8% Muiapl Equzipfarm 15% 2D% 30% 20% 15S|

Al NIP - Iln3euuSA I1S| 33 33%S M? - Mlmpn 8Om EZIS 25% 2 25% MM? - Tecniai Com 17r 17% 17S 17| 17S 17S NM1 - PNubIcT qII |p 17S|| 171 17S 17* 17|r 17

A4 CVIT Scdhd 50%S 59%| CVVITPsdool T6ikn3ml Aaimne9 50% 50l% CVIT Mmm*W Tecnical Amn

A5 Pdiq Studie I0% 2D% 20% IIOS| 2D% 20S%

A6 Pmpamtiin Sinu 0O% 20% 20% 20% 20D IOS

PAST 3 - DRAZ1MUCrU3E AMD DOUDUfT

DI Trfficand7mnumt lnhna99us B1.3 IhrWiim S5 IO 15% 20% 20% 15% 10% 5* _ B1.2 oamikbo 5% 8% 1 25*20% 20% 13% 8% 5% 5% B5.3 turin 10% 15% 25% 25% 15%S 10 % B1.4 |rida I0% 15% 25% 25% 15 1s0 D15 a.xd Gmvm 10% 15% 25% 25% 153% IbS0

B2 Deeimd Wbinlteaae B2.1 lrqwumeto 10% 10% 10% 10% 10% 10% 10% IOS%10% B22 Majumibo 10% lO% 10% 10% 10% 10% 10% 10% 10% 10%q B23 Matwim 10% 10% 10% 10% 10% 10% 10%I0% I0% I0 IOS| B24 hUdsIu 10% 10%1 10*% I0% 10% 10% 10% B2.5 a^db Oum, 10% 10% 10% 10% 10% 10% 10% 10% IO0% 10%I 120 ANNEX 13

Evaluationof Part A

8. Evaluationof Parts Al -A5 of the institutional program will attempt to determine the extent to which objectives are achieved. As with all institutional programs,evaluations will be largely subjective and based on analysis of effectiveness by FONTURand on reviews carried out by experienced personnelduring the mid term project review and during Bank supervisionmissions. The main aspects of the reviews will be as follows:

9. Part Al - international technical assistance is proposed over 2 years. An evaluation will be carried out 9 months after the commencementof the technical assistance contract. The review will be carried out jointly by FONTURand the Bankwith the aims of (i) determining how successful the technical assistance team has been in maintaining project progress and transferring technology to FONTUR,(ii) determining if the team or its composition should be changed for the subsequent year and, (iii) defining the commitment for the subsequentyear. At the end of the FONTURstrengthening program, a final evaluation will be undertakenwhich will assess,inter alia,

* the success of the application of the Operational Manual and the need for development and change; - the time neededto implementa subprojectand the extent to which FONTUR's own staff were able to undertakethe work; * the extent to which the international technical assistance team were able to undertake a technology transfer to FONTURstaff; v the number of FONTURstaff who are able to comply with their professional obligations once the technical assistance was completed; * the use made of the equipment purchasedwith Project funds; * reports from participants will be requiredindicating the experiencethey gained and how it is expected to be useful in their future work with FONTURand other agencies;

10. PartA2 - municipality strengtheningis proposed in each city for 6 years and includesmid-level technical assistance and supplementary staff. Before the end of each year in each municipality, FONTUR,with the help of its international technical assistance team (for the first two years), will review progressof the technical assistance. FONTURwill assess: (i) how successfulthe teams have been in maintaining city sub-project progress, setting up working practices and in transferring technology to city staff, and (ii) if the team or its composition should be changedfor the subsequent year;

11. Part A3 - national training program. The intensive course will be held 3 times (in 1994, 1995 and 1996). The 1994 course will be evaluatedto inform the decision to proceed with subsequent courses. The evaluation will be largely based on questionnairesanswered by the participants, by reports from the principal lecturers and by a review carried out by Bank supervisionmissions. After the intensive courseshave been completed (after 1995), or at the mid term project review (whichever is the sooner)all training courses would be reviewed. This includesthe intensivecourse, the managers courses (held over 3 years),the technician courses (held over 4 years), the logistic courses (held over 6 years) and the public transport operator courses (held over 6 years). The evaluation will be based on comments from the agencies that sponsored participants as well as from the participants themselves. FONTURwill be required to prepare questionnaires,in a format agreed by the Bank, circulate, collect and prepare an analysis report for considerationat the review. A primary aim of the of the review will be to determine if the on-going courses should continue or be modified and to determine if additional courses (such as further presentations of the intensive courses) should be mounted; 121 ANNEX 13

12. Part A4 - traffic police training. The revised police training courses will be assessedin the conventionalway by course presentersthrough questionnairesto participants. At the local level, the traffic police will receive various equipment (communications,vehicles, for accident reporting etc). At the mid term review, FONTURwill furnish a report on the manner in which the equipmenthas been deployedand an assessmentof its effectiveness. In general,however, the most important effect of traffic police training should be improvedon-street traffic operations;this effect will be long-term and extremely difficult to measureand quantify and only qualitative reviews are proposed.

13. PartA5 - policy and other studies. Elevenpolicy and institutional studies are proposed. Target dates are given in Table 8.1 of Annex 8; at the mid term project review, an assessmentwill be made of the success of implementingrecommendations of the studies completed by that and agreements will be reached with GOV, if necessary,on actions to ensure implementation.

C. Monitorino and Evaluationof Suboroiects

14. As a condition of eligibility, each participating city will be requiredto develop and to carry out, a monitoring and evaluationprogram.

15. Monitorins would identify the physical, institutional and financial status of each subproject component, as appropriate,on a periodic basis. The aim will be to identify implementationproblems and the extent of deviation from the targets proposed at appraisal. The results of the monitoring program (the comparison of achieved performance with appraisal targets) will be presented in the SemesterReports for each city subproject, preparedand coordinatedby FONTUR. The results of each city subproject monitoringprogram will providethe basis and information for citiesto preparemeasures and actions to resolveimplementation problems, if any, and at the same time, to update project costs, disbursementand implementationschedules if necessary. Monitoring indicatorsto be employed will vary by type of component but the general guidelinesare set out in the following paragraphs.

16. The following general guidelineswould be followed:

(a) each participating city will prepare, as part of its subproject preparation report, an implementation schedule which sets out target dates for key actions for physical works, equipment supply and institutional components. WVherecomponents are not fully preparedat appraisal, it would be a condition of their subsequent inclusion that an implementationschedule is preparedas an integral part of the component;

(b) for physical works (and equipment)progress; the implementation schedulewill define target dates (to the nearest quarter) for the start and finish of key actions involved in the implementationof physical works ( and supply of equipment). Thus indicators are likely to include:

* start/finish dates for final engineeringdesign and documents for works (or equipment); date for issue of bid documents; * date contract signature and; * start/finish dates for works (or supply of equipment).

(c) for financial performance; since works (or supply of equipment) are likely to extend over some time, the subproject implementationschedule will also be requiredto give target "percentagecompleted' by quarter. Thus target expenditurescan be estimated and will be used to monitor financial (disbursement)performance on a quarterly basis; and, 122 ANNEX 13

(d) for institutional measures(technical assistance,training and studies), the monitoring targets will have been included, as a part of Part A2, in the Action Plans(see para5).

17. Ex-post evaluationwould be aimedat determiningthe effectivenessand efficiency of measures in meeting the objectives determined at appraisal. In the event that objectives are not met and previously anticipated improvementsin performance are not achieved, the data would be used (i) to identify why componentshad not been fully successfuland ii)to modify future components proposed for subsequent implementation which were based on similar premises. Furthermore, the ex-post evaluationwould be used as a major input to the project completion report.

18. As with the monitoring program, definition of the ex-post evaluation program for the componentsin each city subproject would be part of the appraisal. Ex-postevaluation indicators which would be employed will vary with the type of component. Generally,ex-post indicators will be the same as the key indicators which are used in the component evaluation. The city sub-project preparation reports prepared by consultants and reviewed by FONTUR and the Bank, for each participatingcity will set out both the type of proposedex-post evaluation indicators and, the proposed 'before and after' levels for each component. No generalizationscan be made in this latter regard since the level of improvements(e.g., reduction in delay, reduction in accidents)depends on the scale of problemswhich the component sets out to resolve.

19. The following generalcriteria will be applied to each city evaluation program:

(a) in general, the schemes proposed under the subprojects will not require long implementation periods and thus "beforew and 'after' assessments can be made. 'Before' surveys should be carried out as close as possible to the commencementof civil works and wafter" surveys should be carried out a few months after completion of work when traffic conditions have stabilized;

(b) not all schemeswill be subject to monitoring (sincemany minor junction improvements are involved in most cities); in developing their evaluation proposals, each city will define which schemes are to be subject to evaluation and these will be agreed by FONTURas part of the monitoring eligibility criteria;

(c) in caseswhere individual schemesrequire an extendedimplementation period or where a scheme cannot be evaluated as traffic flows will be affected by other schemes, it may not be possibleto carry out closely timed "before" and "after" studies; in these cases, the same indicators, survey proceduresetc will be followed but assessmentwill be made on a "with" and 'without' scheme basis.

20. The following are key indicatorsfor the type of componentswhich are most commonlyincluded in the city subprojects. 123 ANNEX 13

Table 13.1 - Indicatorsfor TSM Corridor Components

INDICATOR DATA REQUIREDFOR "BEFORE" and 'AFTER" SURVEYS 1. Bus journey times or Surveys will be required to determine average speedsover speeds corridors for busesand for private vehicles. Surveys will be and requiredfor a representativeperiod (more than 1 day) in both 2. Private vehiclejourney directionsof travel, in the AM, off- and PM peak periods and on times or speeds weekdays. Travel data should be collected so that intermediate times/delay along the route can be identified. Traffic (by type) volumes and bus passengervolumes will be counted over the same time periods at key route sections. 3. Junction capacity Traffic volumes, traffic turning counts, saturation flows and ("Level of Service") junction delay surveys will be carried out at major junctions along and corridors to enablethe junction indicators to be assessed. 4. Junction delay 5. Accident records Collectionof accident records should be part of the day-to-day work of the city traffic agency. It is necessaryto assessdata over a considerabletime period before trends can be confirmed (although short term accident data can be valuable in resolving immediate problems). Accident data will be collected and analyzed but final trend be finalized until some 2 or 3 years after scheme opening.

Table 13.2 - Indicatorsfor TSM Junction Improvements

INDICATOR DATA REQUIREDFOR 'BEFORE" and "AFTER" SURVEYS 1. Junction capacity Traffic volumes, traffic turning counts, saturation flows and i(Level of Service") and junction delay surveys will be carried out to enablethe junction 2. Junction delay indicatorsto be assessed. Where schemesinvolves diversions, similar indicators should be assessedon diversion routes. 3. Accident records Collection of accident records should be part of the day-to-day work of the city traffic agency. It is necessaryto assess data over a considerabletime period before trends can be confirmed (although short term accident data can be valuable in resolving immediate problems). Accident data will be collected and analyzed but final trend be finalized until some 2 or 3 years after scheme opening. 124 ANNEX 13

Table 13.3: Indicators for Bus Route Paving

INDICATOR DATA REQUIREDFOR *BEFORE" and "AFTER' SURVEYS 1. Bus Speeds Surveys to determine average bus speeds over a sample of project route sections for a represen-tativeperiod Imore than 1 day) in both directions of travel, in the AM, off- and PM peak periodsand on weekdays. Bus volumes would also be counted.

Table 13.4: RoadRehabilitation Components

INDICATOR DATA REQUIREDFOR "BEFORE" and "AFTER' SURVEYS 1. Roughness Using appropriatetechniques, measuresof "before- and "after" roughnessindices will be made for a sample of roads. 2. Vehicle speeds Surveys to determine averagevehicle speeds over a sample of project route sections for a representative period (more than 1 day) in both directions of travel, in the AM, off- and PM peak periods and on weekdays. Traffic volumes should also be counted 125 ANNEX 13

D. Supervision Plan

I. BankSupervision

1. The main emphasisduring the initial project phase would be to: (a) review the developmentand implementationof the project monitoring system; (b) make certain that FONTUR'sstaff is adequately familiar with Bank procurement guidelines, Bank disbursement procedures (i.e. Special Account transactions) and Bank independent auditing requirements; (c) establish a system to evaluate the municipalitiesfor participation in the program; and (d) help FONTUR'sdevelopment of a strategy to properly promotethe projectto eligiblemunicipalities and promotethe project to the Venezuelanpublic. Many of these items would be addressedin the project launch workshop scheduled for September 1993. During project implementation,the supervisionmissions would need to conduct the following activities in the field on a regularbasis in addition to monitoring project progress: (a) review a sampling of contract bids and awards; (b) inspect disbursementprocedures and record keeping; (c) inspect adequacy of supervisionand monitoring of the municipalities and respective subprojects; Id) review performance and accuracy of the Project Monitoring System; (e) complete a mid-term review by Septemberof 1995 to examinethe progress made epecially in the public transport studies, to assess the relevance of project objectives and actions, and recommendappropriate revisions (as needed). Supervisionmissions in the field should attempt to visit one or more municipalities during each trip. A preliminary scheduleof supervisionmissions including key activities is indicated in the table on the following page. The key activities shown are in addition to the regular supervision needs, which include review of: (a) progress reports; (b) procurement issues; (c) disbursements; (e) Project ImplementationPlan; (f) ProjectOperations Manual; (g) yearly independentaudits; (h) correspondence; and (i) unforseen issues.

2. The Bank project team would consist of the Task Manager(Sr. Transport Planner/Economist), a Traffic Engineer,and an Urban Planner. Consultantsare anticipatedto be required on a short term basis to assist in specific areas, such as analysis of monitoring system, review of institutional development programs,etc. Supervisionrequirements for the project are expected to be high due to: (a) the complexity of the institutional arrangements,(b) the anticipated large number of small scale subprojects; (c) FONTUR'slack of experiencewith Bankprocedures; and (d) institutional weakness of FONTUR (requiring significant training and technical assistance). Supervision requirements are anticipated to be about 20 staff-weeks during the first year and about 15 staff-weeks thereafter. A summary of key inputs is provided on the following page.

II. Borrower's Contribution to Supervision

3. Fontur is expected to: (a).be responsiblefor project monitoring and coordination, keepingthe Project Monitoring System accurate, and to follow-up and addressall issues which are "signaled' by the system; (b) be responsiblefor properly managingall procurementand disbursementconsiderations, keeping procurement and disbursementrecords up to date; (c) prepare progress reports in June and Decemberof each year; and (d) be responsiblefor coordinating arrangementsfor the Bank supervision missions. 126 ANNEX 13

Table 13.5: Bank Supervision Input Into Key Activities

Approx. | Key Activities | Expected Skill Staff Dates Requirements Input l I j staff-wks

|12/93 SupervisionMission-Project Effectiveness Sr. Transport Planner 4.5 (review: (i) conditions for project Traffic Engineer effectiveness - PIP, POM, and Monitoring ProcurementSpecialist system; and (ii) specialcoordinating arrangementsdevised among several sectoral agenciesparticipating in project implementationand {ii) existing financial and accounting systems/procedures) 2/94 SupervisionMission Sr. Transport Planner/Economist 5.5 (review Project Monitoring System Traffic Engineer Training/implementation,Institutional Consultant developmentincluding training programs) 6/94 SupervisionMission Sr. Transport Planner 8.0 (Review results of 1st year Independent Traffic Engineer audit) Highway Engineer l 12/94 SupervisionMission Sr. Transport Planner 7.0 (Concentrateon subprojects: i) contracts; Traffic Engineer ii) eligibility/limits; iii) costs; iv) status) 6/95 SupervisionMission Sr. Transport Planner 8.0 (concentrate on disbursements,financial Traffic Engineer status, Institutional development,Public Consultant !______Transport Studies) 12/95 SupervisionMission Sr. Transport Planner 7.0 (concentrateon subproject status, Traffic Engineer implementation of recommendationsof public transport study) 1996 Two SupervisionMissions Sr. Transport Planner 13.0 Traffic Engineer Consultant 1997 Three SupervisionMissions Sr. Transport Planner 12.0 (begin negotiations of follow-up loan, if Traffic Engineer mid-term reviews are favorable) Consultant 1998 Two SupervisionMissions, continue Sr. Transport Planner 8.0 negotiations for follow-up loan) Traffic Engineer

1999 Two SupervisionMissions-Loan Closing Sr. Transport Planner 8.0 (Project closing, Final negotiationsfor Traffic Engineer follow-up loan) ,, . . .=. 127 ANNEX 13

E. ACTION PLAN

The Action Plan is based on the assumption that Board Presentation (Pre) will take place in late October 1993 and the project will be Effective (Eff) on January 1994. The Action Plan represents key actions to be taken in the first year (to about mid June 1994); the second year action plan will be developed in March 1994.

Table 13.6: Project Action Plan

Activity Target Agency Status Date

1. FONTURProcedures ___ 1.01 Final Version of OperationsManual Completedby: March 29, 1993 FONTUR Completed 1.02 Project CoordinatingUnit Formed by: March 29, 1993 FONTUR 1.03 Project CoordinatingUnit Manager nominated& appointedby: March 29, 1993 FONTUR 1.04 Project CoordinatingUnit staff nominated and appointedby: March 29, 1993 FONTUR 1.05 Final Designsfor First Year Componentsfor Part B1: (a) appoint consultants Nov 92 FONTUR (b) finalize designs for first year Jun 93 FONTUR (c) samplecontract docs March 29, 1993 FONTUR 1.06 FONTURorganizational review completed FONTUR by: Jan 93 1.07 City Conveniosaccepting: (a) eligibility criteria * Maracaibo Dec 92 * Maturin Mar 93 * Ciudad Guyana Dec 92 FONTUR * Merida Nov 92 * Barquisimeto Apr 93 (b) subproject * First city by Jun 93 * Secondcity by Jun 93 * All 5 cities by Sep 93 FONTUR/Bank 1.08 ProjectLaunch Seminar- target by: Dec 93 FONTUR 1.09 DetailedAction Plan 1994 - Submit to Bank Dec 93 Table 13.6 (cont'd) 128 ANNEX 13

2. PARTAl - FONTURTECHNICAL ASSISTANCE(TA)

2.01 Select Short List for InternationalTA March 29, 1993 FONTUR Completed 2.02 For International TA, issue invitations and agreedTOR (Bank no objections, evaluate proposals, select, negotiate, obtain Bank objections sign contract) - complete by: Oct 93 FONTUR/Bank 2.03 For SupervisionTA, complete TOR and define proceduresand program for appointment - complete by: Nov 93 FONTUR

3. PARTA2 - MunicipalTechnical Assistance

3.01 For InternationalTA, issue invitations and agreed TOR (Bank no objections, evaluate FONTUR/ proposals, select, negotiate, obtain Bank Dec 93 Municipalities objections sign contract) - complete by: 3.02 For junior national staff, issue invitations and agreed TOR (Bank no objections, FONTUR/ evaluate proposals,select, negotiate, Dec 93 Municipalities obtain Bank objections sign contract) - complete by:

4. PARTA3 - National Training Program (intensiveCourse) 4.01 Appoint consultants to prepareand deliver course including preparationand issue of pre-qualification documents, select short Nov 93 FONTUR list, obtain Bankno objections, request and evaluate proposals,select, negotiate, obtain Bank no objections, sign contract - Completeby: Nov 93 FONTUR 4.02 Make all administrative arrangements, select location and participantsfor first Jan 94 Consultants intensive course 4.03 Deliver First IntensiveCourse Table 13.6 (cont'd) 129 ANNEX 13

5. PARTA3 - NationalTraining Program(other courses) 5.01 FinalizeCurricula of all courses and send to Feb 94 FONTUR Bank (including use of consultants if necessary) Feb 94 FONTUR 5.02 Preparedetailed chronogramfor all courses 5.03 Target dates for the delivery (includingall necessaryselection of locations, participants, etc.) * Managerscourse March 94 Consultants * technician course * logistic course * public transport courses

6. PARTA4 - CVVT Program 6.01 Submissiondraft final report on Bank Project Components Mar 7, 1993 Consultants/ Completed 6.02 Commentson draft final report - completed Mar 29, 1993 Bank by; Mar 29, 1993 FONTUR/Bank 6.03 Final report agreed 6.04 Preparationof detailed TOR for technical assistance for: Nov 93 FONTUR/CVVT * national training school (preparationof and delivery of courses * for municipalities(operations) (including short list, select negotiate and obtain Bank no objections, request and evaluate proposals,sign contracts - Nov 93 FONTUR/CVVT completed by: 6.05 Appoint National Training School Consultants (inc. short list, select negotiate and obtain Bank no objections, request and Nov 93 FONTUR/CVVT evaluate proposals,sign contracts - completed by: Jan 94 Consultants 6.06 Appoint Local Level TA - as for 6.05 above 6.07 PrepareTraining School Improvement Programdetailed proposals Jun 94 FONTUR/CVVT 6.08 Detaileddesign and bidding docs for Sep 94 FONTUR/CVVT Training School civil work (inc appointment of consultants, etc) completed by: Jun 94 Consultant 6.09 Bid Training School civil works Sep 94 FONTUR/CVVT 6.10 Preparefinal specificationsand bid documents for local level equipment Jun 94 FONTUR/CVVT 6.11 Bid local level equipment 6.12 Make all arrangements(inc. Bankno objections for overseastraining - Target date for completion by: Table 13.6 (cont'd) 130 ANNEX 13

7. PARTB1 - Traffic and Infrastructure Components 7.01 Final Designcompletion - See item 1.05 Jun 93 FONTUR Completed above 7.02 Municipalitiessign subprojects Agreements * First City by: * Secondcity by: Nov 93 * Target date for completionfive cities Dec 93 FONTUR/ 7.03 Municipalitiesassign counterpart funds and Feb 94 Municipalities demonstrateto FONTURfor first year * First city by: * Secondcity by: Nov 93 * Target date for completion five cities Dec 93 Municipalities 7.04 Municipalitiesdevelop Maintenance Action Feb 94 Planand demonstrateto FONTUR * First city by: * Secondcity by: Nov 93 * Target date for completion five cities Dec 93 7.05 Municipalitiesto sign Traffic Police Feb 94 Convenio * First city by: * Secondcity by: Dec 93 * Target date for completion five cities Jan 94 Municipalities/ 7.06 Municipalitiesestablish Project Apr 94 CVVT implementationUnit * First city by: * Secondcity by: Nov 93 * Target date for completion five cities Dec 93 Municipalities 7.07 Municipalitiessign undertakingto carry out Apr 94 Public Transport Study * First city by: * Secondcity by: Nov 93 * Target date for completion five cities Dec 93 Apr 94 8. Part B2 - MaintenanceComponents 8.01 Maintenancestudies completed by: * First city by: May 93 Completed * Secondcity by: Jun 93 FONTUR * Target date for completion five cities Jul 93 8.02 MaintenanceContracts bid: * First city by: Dec 93 * Secondcity by: Jan 94 FONTUR/ * Target date for completion five cities Apr 94 Municipalities 131 ANNEX 14

VENEZUELA URBANTRANSPORT PROJECT

Urban Transport Characteristics

1. Venezuelahas an estimated fleet of 2.0 million vehicles (1990), of which 73% are private cars, 6% are vehicles used for public passengertransport, and the rest are motor cycles, trucks, trailers and semi-trailers. The Capital Region has 42% of the country's cars, and 39% of its public transport vehicles. In addition to those modes,Caracas has a metro (CAMETRO)with two lines totalling 40 km. More than 95% of the public transport fleet is privately owned and consists of buses, por puestos (see para.3 below for definition) and jeeps. The modal share of urban buses and por puestos rangesfrom 40% in Maracaiboto nearly 60% in Merida; walking accounts for about 13-16% of all trips in most cities, and private cars for 29-42%. Other than walking, there is little non-motorizedtransport, partly becausethe hilly topographymakes it difficult to operate bicycles. In Caracas,the metro accountsfor nearly 15% of the trips, other public transport for 28%, cars for 41 % and walking for roughly 16%; there is also a growing use of motorcycles.

2. In urban areas other than Caracas,a typical home-to-work trip requires transfers between por puestosand can take as much as 1-2 hours each way. Sincethe por puesto tariffs are not integrated, many passengers must pay multiple fares; in these cases, poor people are obliged to pay a high proportion of their disposablesalary on transport. In Caracas,the lowest income users live in ranchos ('areas marginales')on the hillsideswhich can only be servedby four wheel drive vehicles (jeeps),since gradients are steep and other vehicles cannot maneuver safely. A typical home-to-work trip for a rancho dweller consists of climbing down a hillside stairway to a jeep stop, taking the jeep to a por puesto stop and transferring to a por puesto to reach the metro. Due to the long distances and the relatively high traffic congestion in Caracas,it is not uncommonfor trips to take over 2 hours each way. The service level of road-basedtransport has deteriorated considerably due to lower speeds causedby traffic congestion. Frequenciestend to be low, reliability is poor, and conditions of comfort and safety are bad. Furthermore,the lack of appropriate traffic managementsystems coupled with poor parking policies and unsafe driving results in an high number of accidents, especially at intersections. Traffic safety enforcement is generally absent and some improvements could significantly reduce the number of accidents.

Por Puestos and Jeeos

3. The term 'por puesto' refers to paratransit services provided with small or medium-sized vehicles. About 100,000 por puestos are registered in the country, 39% of which are in the Capital Region. Por puestos are usually driven by their owner who, according to a 1962 law, is only allowed to own one such vehicle. It is, however, permissibleto have more than one driver to operate the same vehicle, and it is reported that this practice is increasingin order to increase revenue.

4. Por puestos originatedas sharedtaxis, and these still predominatein Maracaibo. In most other cities, however, they have been largely replacedby the 32-seat minibus which is the largest vehicle admitted as a por puesto; above this size the vehicle is classified as a bus. The average por puesto size ranges from 24.1 seats in Barquisimetoto 8.1 in Maracaibo. In the Capital Region, the average vehiclehas 17.4 seats; this reflects the relatively large number of 12-seat jeeps which serve the poor neighborhoodsthat have grown on the city's steep mountainslopes. However, the most common por puesto in Caracas are the 32-seat minibuses. With an additional standing capacity of 10-15 passengers,they are competing directly with conventional buses and have taken over some of their market share.

5. Fromthe passengers'viewpoint, por puestos have the advantageof excellentfrequencies, a high density route coverage, convenience (no formal bus stops) and a reasonablelevel of comfort if the 132 ANNEX 14 vehicle is not too old. The success of the por puesto system is also due to the fact that drivers operatetheir own vehicleand thus tend to work longerand take greater care of the vehicle than drivers employed by (bus) companies. However, there are also negative features, including (a) greater disruption to other traffic and moreair pollution than is causedby normal buses; (b) infrequent services in late eveningsand on public holidays; (c) less reliable services at other times, for example during heavy rains; (d) por puesto fares tend to be higher than those for buses; and (e) por puestos are extremely difficult to regulate. The municipalities(MTC until 1990) generallyrequire that por puestos operate on specified routes. The vehicles on each route form an associationand these are grouped into an overall national organization("Central Unicade Asociacionesde Venezuela")which essentially functions as the drivers' union. In other ways, por puesto services are naturally fragmented and difficult for any level of Governmentto control.

6. Unlike fares on most regular buses, por puesto fares are graduated according to the distance travelled. The minimum fare is Bs.7; over this amount it is believedthat fares typically averagearound Bs.0.85 per km. A 1989 analysis revealedthat gasoline comprises only 15% of vehicle operating costs for a 24-seat minibus; in the case of the diesel powered 32-seat minibuses, fuel representedas little a 3%. Nevertheless,the issue of fuel price increasescontinues to be extremely sensitive. One reason for this appears to be a general (but mistaken) perception that fuel carries a great weight in total vehicle operating costs.

Reaular Buse

7. More than 90% of the regular bus services in Venezuelancities are provided by private companies. The principal exceptions to this basic pattern are Ca)the Caracas metrobus operation which carries 110,000 daily passengersin 141 buses (September 1992), (b) the heavily subsidized services provided by the Caracas Municipality of Libertadores,and (c) the recently started operation in Barquisimeto(30 buses in September1992).

8. Until 1975, regular bus companiestended to expand their operations, but in the 1980s were squeezedby increasing costs and falling patronage and, on the other hand, controlled fares which could not be raised in line with inflation. It is generally accepted that their financial position is now in a critical state. In Caracasalone the number of bus companiesand buses in circulation dropped from 41 and 1,473 in 1975 to 24 and 523 in 1989.

9. Busesare regulated by the municipalauthorities, althoughin the smallercities there are basically no regular bus services. Recently, some cities and States have been consideringto buy, and in some cases operate, regular bus services because they argue that they are at the mercy of por puesto associations, and that Government is obliged to provide some form of mobility to the poor. In Barquisimeto,the Governmentof Lara State initiated services in 1992 and intends to expand its fleet of 30 busesto 100.1' Maracaiboplanned to acquire300 busesin 1992 with Governmentassistance, but these were to be operated by a private company.

10. In 1988, about 800 buses servedthe inner part of the Capital Region, and 150 busesthe outer areas. In the inner part, average route length was 27 km, average distance between stops 450 meters, and average commercialspeed 14 km/hour. Average service frequency was about 7 buses per hour. Bus occupancy at the maximum load point was 73 passengersduring the peak hour, and 41 passengersduring the off-peak. Before the introduction of metrobus services the fleet of regular

I/ JaJuw 1992,Ib mivianpmtided by Puladraspolst waried324,000 puaen, of whm 202,000 wre full-payingadub. A bustrip cost WSBSUfor , SB2-SD3for sola, ad was free of chare forpersu bdow 10 andabove 65 yea of age;about 70% of ditect opqent cost exclding cpitl anddepciation werecoveed from fae. 133 ANNEX 14

buses in Caracas was comprised of generally old vehicles. They thus required relatively heavy maintenance,and availability tended to be poor.

11. The main problemsof bus servicesare causedby the generallypoor condition of the fleet, which has resulted from years of neglect. In 1989, only 52% of the Caracas buses were in operation, and of these, one third was judged to be in poor condition. Of the rest, 27% were out of service requiring repairs and 21 % were consideredready for scrapping. As a result of poor maintenance,buses often break down, resulting in unreliable services and a poor image for bus transport. While some of the blame for this situation must be placed on the management of the companies themselves, other problemshave been beyond their control, including: (a) a squeezeon revenuesdue to fare controls; (b) a major loss of passengersdue principally to competition from the por puestos; and (c) difficulties with vehicle maintenance,due particularly to problems in obtaining of spare parts. Profitability had becomeso low by the late 1980s that the disappearanceof private buses was widely regarded as inevitable. Recent fare increasesmay have marginallyimproved that situation.

CaracasMetro

12. The CaracasMetro Company (CAMETRO)was constituted in August 1977 as a state owned company with 99% of the shares held by MTC. It has two lines with a total length of 40 km. The company has a total of nearly 4,000 employees,of whom about 500 work for the metrobus division. The number of passengerstransported by the metro has been growing at about 30% annually, from 55.5 million in 1983 to 260 million in 1989. Traffic on a normal workday in 1991 was estimated to be about 900,000 passengers,of whom nearly one quarter come from car-owning households. About one third reach the metro station by motorizedtransport, primarily por puesto, and the same applies for reaching the final destination. About half of all metro trips are to or from work; 83 percent of travellers use the system regularly, making one or more trips per day. Metro fares are structured so that (in 1991) a trip of up to four stations cost Bs 8.00. Faresincrease by Bs 1.00 for each additional four stations, the maximum fare (beyond 20 stations) being Bs 12.00. It would seem that the fare structure should be reassessed. Most low-income metro passengerslive at the ends of the network and so are penalizedby the present graduatedtariffs. It has beensuggested that future fare increases could be combined with the use of a flat, or at any rate flatter, fare structure which would shield the poor who make long trips from a significant increase,while increasingCAMETRO's total fare revenue.

13. The Caracasmetro system is designed to run at a minimum headway of 90 seconds between trains, i.e., 40 trains per hour. However, CAMETROdoes not feel happy about running trains at such a short interval for periods as long as an hour. A more acceptableestimate of maximum peak hour capacity is 33 trains per hour (i.e. an averageinterval of about 110 seconds). Eachtrain has a nominal capacity of 1,200 passengersbut in practice it has been found that the crush capacity is around 1,800 persons per train. Thus the maximum one-way capacity at the maximum load point is 59,000 passengersper hour. CAMETRO's total 1989 operating revenue was Bs 1.06 billion, 97% from passengerfares. Operating costs totalled Bs 1.18 billion, and administrative and general expenses added a further Bs 198 million, resulting in a deficit of Bs 315 million prior to depreciation and loan amortization. Thesetotalled Bs 294 million so that the operationalresult for the year 1989 was a loss of Bs 609 million, equivalentto 57% of operating revenues.

14. Metrobusesare organizedas a separatedivision within CAMETRO(called Gerencia Ejecutiva de TransporteSuperficial). The first metrobuseswere put into operation in October 1987 at the request of the nation's Presidentto respond to a growing crisis in urban transport in some areas of Caracas. At that time one of the principal functions of the fleet was to provide a service between the stations La Paz(line 2) and Capitolio (line 1) while the final section linking the two metros was being built. As of September1992, CAMETROoperates a fleet of 141 buses which serve a collection and distribution function for metro passengers. Metrobusescurrently operate on 16 routes within Caracasplus two longer routes to Petare/Guarenas.Services are provided from 6AM to 11PM. The total staff of the 134 ANNEX 14 metrobus division is just over 500, with 328 operators and about 170 others, including those responsiblefor maintenance. This is about 3.5 personsper bus, which is low in comparison with most operationselsewhere. Over 90% of all buses are dispatchedfor revenue services, which is also good.

15. Metrobus fares are integrated with the metro routes, i.e. they give the right to continue the trip on the rail system without additional payment. In September 1992, metrobus patronage was about 111,000 passengerson a normal work day, with an average revenue of B$16 per passenger. While this represents a substantial increase over the fares charged earlier, it is clear that the metrobus revenuesdo not cover their operating costs. 135 ANNEX 14

Table 14.1 Venezuela'sVahicl Flet (1990) Cmthouand vehicles)

Region/Ste Private Public Bus Trucb Trailer Semi- Total Cas Trnsport Trailers Vebidlj/ VENEZUELA 1,483 98 19 228 43 173 2,045

CAPITALREGION 622 33 S 48 9 36 763 Distrito Federal 382 27 7 26 4 19 468 Miranda 240 11 1 22 4 16 295

CENTRALREGION 244 9 2 35 6 27 325 Aragus 102 3 1 14 2 10 134 Carabobo 133 5 1 19 3 14 177

Cojedes a 153 - 2 - 1 13

LOSLLANOS REGION 24 67 370 a 1 6 43 Guarico 13 1 - 6 1 5 33

Apure 5 1 - 2 - I 10

CENTROOCCrTAL REGON 146 10 2 34 6 26 227 Falcon 34 3 - 7 1 5 52 Lare 75 4 1 16 3 12 111

Portuguesa 22 1 - 7 1 5 3S Yaracuy 14 1 - 4 1 3 24

ZUuA REGION 146 14 1 29 S 22 219 Zulia 146 14 1 29 5 22 219

LOS ANDESREGION 135 9 2 30 5 22 205

Barinas 14 1 - 4 1 3 24 Merida 35 2 1 7 1 6 54 Tachira 64 3 1 11 2 8 91 Trujillo 21 2 - 5 1 4 35

NOR ORIENTALREGION 87 3 1 24 4 IS 143 Anzoategui 52 4 1 15 2 11 86

Monages 16 1 - 4 1 3 27 Sucre IS I - 4 1 3 29

INSULARREGION 17 2 1 2 1 24

Nueva Bsparta 17 2 1 2 - 1 24

GUAYANAREGION 58 3 1 14 2 10 90 Bolivar 56 3 1 13 2 10 36 F. AmazonaTerntory I I - - I - I F.D. ArnacuroTerritory I - - - I - 2 Source: MTC Statistics I/excluding buwe September 1992 136 ANNEX 14

Table14. - Petrolem Products: Price S^"tru and Adjustent a. Price Structures as of July 10, 1992

Premium Gasoline Regular Gasoline Diesel Oil

Bs % Bs % Bs % Ex-Refinery Price 2.84 49 2.24 43 2.15 48 Consumer Tax 2.10 36 2.10 40 1.39 31 Land Transport & Distribution 0.31 5 0.31 6 0.31 7 Price to Retailer 5.25 90 4.65 89 3.85 86 Retailer's Margin 0.60 10 0.60 11 0.65 14 Retail Price (Bs) 5.85 100 5.25 100 4.50 100 Retail Price (USC) 9.0 8.1 7.0 International Price (USC) 17.0 16.4 14.6

Retail as a percentage of 53 49 48 International Price

b. Price Adjustment, December 1988 - July 1992

Premium Gasoline Regular Gasoline Diesel Oil

I Bs % Bs X Bs %

December 1988 _ 2.40 69 0.38 15

February 1989 --- 2.46 71 0.71 28

February 1990 -- 2.53 73 0.72 29 December 1990 3.45 100 2.43 97 June 1991 3.65 100 3.45 100 2.50 100 August 1991 3.90 107 3.70 107 2.75 110 October 1991 4.40 121 4.20 122 3.25 130 December 1991 4.90 134 4.70 136 3.75 150 February 1992 5.40 148 5.20 151 4.25 170 April 1992 5.75 158 5.20 151 4.40 176 June 1992 5.85 160 5.25 152 4.50 180

Source: Petroleum de Venezuela S.A. Energy Detente 137 ANNEX 14

Table 14.3 - Evolution of Investnent in Roads, 1982-1991 a. (millionBs.)

Year Highways Urban Roads Rural Roads Maintenance Total Exchange Rate 1982 1,679.9 635.8 443.7 262.9 3,022.3 4.3 1983 673.5 339.7 196.3 358.0 1,567.5 4.3 1984 232.8 160.3 7.1 462.1 862.3 7.5 1985 504.9 91.5 125.2 540.7 1,262.3 7.5 1986 2,024.6 401.4 698.3 874.5 4,003.2 14.5 1987 3,075.5 605.5 567.9 622.0 4,870.9 14.5 1988 5,655.6 1,003.3 599.6 294.9 7,549.0 15.8 1989 2,226.6 465.9 45.2 188.3 2,926.0 29.2, 1990 5,684.9 908.1 376.7 1,047.8 8,017.5 41.1 1991 14,432.5 2,361.1 3,067.9 2,076.8 21,938.3 55.2 1992 I/ 18,058.5 2,187.2 - 5,488.0 25,733.7 65.0

b. (USS million)

Year Highways Urban Roads Rural Roads Maintenance Total 1982 390.6 147.8 103.8 61.1 702.8 1983 156.6 79.0 45.6 83.2 364.5 1984 31.0 21.3 94 61.6 114.9 1985 67.3 12.2 16.6 72.0 168.3 1986 139.4 27.6 48.1 60.3 276.0 1987 212.1 41.7 39.2 42.9 335.8 1988 357.9 63.5 37.8 18.6 477.8 1989 76.2 15.9 1.5 6.4 100.0 1990 138.2 22.1 9.2 25.5 195.0 1991 261.5 42.8 55.6 37.6 397.5 1992 j/ 277.9 33.6 - 84.4 395.9

Source: MTC/DGSVT 1/ revised budget data August 1992 138 ANNEX 14

Table 14.4 - Labor Force Global Indicators (1990)

a. Labor Force in Urban Areas

Item Population |% Total Population (Venezuela) 19.622340 100 Urban Population 16.463.651 84 Urban Labor Force 6.054.735 31 Employed Urban Population 5354.667 27 Unemployed Urban Population 700.068 4

b. Levels of Income

Levels of Income Currency % (Bolivar) Up to 4000 Bs/month 418307 12 Between 4001 - 9000 1.244374 35

Between 9001 - 15.000 843.644 24 Between 15.001- 20.000 400.731 11 More than 20.000 502.671 14 Income Not Declared 105.455 3

c. Income per Houshold

ITEM TOTAL URBAN AREAS Households 3.515.182 2.969.649 Aver. Family Income (Bs/month) 12.385 13300 Aver. of Inhab./households 520 5.10 Aver. of Employed/households 1.80 1.80

Source: Social Indicators OCEI 1990 139 ANNEX 14

Table 14.5 - Profile of Urban Areas (1990)

a. Population and area

Cltbee Populat. | %Populat Urban Denelty Total Mettropol. MArzea Are (111/12 Empil Areas JTotal | e. Employed Pop. #hsb |I Venezue. | 2) HMblhe. Populat. Nan

Caracas 2,784,042 14 28,214 99 1,030,096 37

Medda 237,675 1 6,640 36 80,776 34

Matuein 267,683 1 4,769 54 74,728 29

Gusyana 6368606 3 5,600 97 177,047 33

Barqulslmeto 745,444 4 21,706 34 231,088 31

Valencia 1,031,941 5 17.200 60 361,178 3b

Maracalbo 1,363,863 7 23,456 56 40s,15s 30 ...... 1.1. .. ..I.".".'''.".'.'.'.".'.I.' .'.'.'.'.'.'"""""''" 1"'''''"'''''"""'''""""'' ''''' Total 6,967,054 35 I 107,484 6es24,073 Z 34

Total 19.456,420 100.00 .

Source: S.T.C.V.T Obs.: 111OCEI ;12) OMT

b. Composition of Public Transport Feet 11990)

Chhti Total Public T,naport Fleet Fbet by Type Route Average Aveage S - Av*raga V,.k Con MlnlBu* AutoBues lngth I.]CM . :yrVsh

Merida 561 440 109 12 16.18 3.02 422

Maturin 479 71 408 0 29.30 2.90 582

Guayana 1.130 5e 1,074 0 525

Barquisimeto 1,511 483 974 54 42.84 2.90 604

Valencia 2,306 221 1,800 284 28.el 5.75 544

Maracaibo 7,219 6,353 eso 186 20.89 0.20 178

Total 13,205 7.624 6,045 636 Source: O.C.E.I. anJ . XTT c. Total Trip Demand and Modal Split (1990)

Cihes Totl Tripwl Tdpe/ Modal Splt Day Habl Day |%Auto | 6Publie %Walk 11__1_1_ 1_I Transport

Caracas 6.183.65| 2.21 41 43 16

Meida 455,840 1.92 27 59 13

Barqulilmeto | 1 118, 1668 1.60 37 40| 18 |

Valencia 1.682,063 1.63 42 45 14

Maracalbo 1,948,228 1.49 39 39 16

Total 11.367.963 1.92 40 43 1 6 ~5~ ~ ~ ~~~1,e,6 1.2 . .. 140 ANNEX 14

Table 14.6: Caracas Population and Transport Growth

1940 1990 1996 2000 2010

Population IThousands)* 347 2963 3150 3400 4260 Population Donsty Inhabitants/Ha 50 100 106 113 142 Total trips p/day (Thousndsl _ 4740 6040 5440 6800 Metro Share 21 % 30% 35% 40% Metro & Metrobus Trips per day (Thousandel 996 1610 1632 2720

Table 14.7: The Supply of Transportation In Caracns

Transport Mode 1940 1966 1990 1995

Tramway. 55.2% ----- Automobile 16.7% 45.6% 38.7% 33.7% Buses 16.7% 35.6% 9.0% 7.3% Paratrandkt l1.5% 16.3% 35.0% 26.7% Metro & Metrobus ------15.0% 30.3% Others -- 2.5% 3.0% 3.0%

Total 100.0% 100.0% 100.0% 100.0%

Population fthousands) 347 1760 2963 3160 Total trips per day - 2700 4740 6040

Table 14.8: C.A. Metro de Caracas: Mmon Passengers 1983.1991

Yaar Uno 1 Una 2 Subtotal Metrobus Total

1983 S5.1 55.1 - 55.1 1984 80.6 -- 80.6 --- 80.6 1985 95.2 ---- 96.2 96.2 1986 119.7 ---- 119.7 --- 119.7 1987 142.2 4.2 146.4 2.5 148.9 1988 195.5 23.0 218.5 11.5 230.0 1989 215.9 44.1 259.9 11.6 271.1 1990 238.3 43.1 281.4 15.3 296.7 1991 265.3 46.5 311.8 24.0 335.8 Total 1264.9 136.6 1401.4 64.3 1466.8 141 ANNEX 14

Table 14.9: Metro Operating Statistics (1990)

Description Unea Uno 2

Passenger p/KM of line in 11,347,938 2,270.459 Yearly Passengers 238,306,695 43,138,724 Monthly Passengers 19,858,891 3,594,893 Week day Passengers 779,288 136,617

Week day Passengers (Maximum) 1,018,446 180,463 Peak hour passengers 75,000 17,500 Avg. distance traveled/passenger 6.34 Km 9.50 Km Trains in operation - peak hour 33 13 Minimum Headway 2 min 10 sec 4 min Train Crush Capacity (Passengers) 2,100 2,100 Normal 1,280 1,280 Flow of Pasongers (One direction) 20,000 7,700 Most traveled station p/day (boarding and disembarking) 162,106 32,890 Avg passenger density in trains in most traveled inter-station 4.3 pass/sqm N.A. Train kilometers per year 4,233,027 2,307,889 Load factor 33 % 16% Energy Consumption (KWH) Trains 98,131,600 45,387,300 Fixed Installations 76,058,279 46,128,000 Ticket Vending: AutomAtic 70% 84% Counters 30% 16% Suicides 27 4 Handicapped attended 68,058 24,248

Tabbe14.10: Caracas Metro - 991 Expenditue Budget

Million Bolivares Metro Metrobus

Items Construction Oweration ODeration Overhed Total

Personnel 209.7 1,131.9 366.9 493.2 2,201.7 Goods & Services 110.9 2,154.8 236.5 274.2 2,776.4 Capital Investment 7,694.4 407.4 8,101.8

Total 8.013.0 3,286.7 1.010.8 764.4 13,079.9

% of total 61.26 23.13 7.74 5.87 100.00 Employees 343 2,414 734 987 4478 Thousands Bs/ employee 611.4 468.9 499.9 499.7 491.7 Dollars p/man hour 4.7 3.60 3.84 3.84 3.78 142 ANNEX 14

Table I14.1 1 - Metrobus OperatingStatistics (1 991)

Numberof Routes 18 Total Fleet 175 Training & RouteTesting Buses 14 CommercialBuses 161 AvailableCommercial Buses 136 (84%) Actual Utilized CommericalBuses 121 (75%) Short Routes(Average Length Km) 5.4 Long Routes(Average Length Km) 15.0 SuburbanRouth Length Km 59 YearPassengers (1991 Estimate) 27,000,000 WeekdayPassengers (July) 86,261 Passengers/TotalBus Fleet(July) 517 Passengers/OperationalBus Fleet (July) 748 AverageCommercial Speed Short Routes(kph) 7.83 Long Routes(kph) 10.85 Suburban(kph) 24.50 Year Bus-kilometers 6,805,759 Monthly Bus Kilometers 567,146 Weekday Bus Kilometers 21,746 Weekday Passenger/bus-kilometer 5.49 Fuel Consumption 25 liter/i OOkm Personnel/fleet 0.19 Overhead 3.46 Operation 0.53 Maintenance 4.18 TOTAL 143 ANNEX 14

TABLE 14.12 URBAN TRANSPORT COSTS AS A % OF HOUSEHOLD INCOME

Caracas Metropolitan Ragln

Income Average Urban Transpottaton Expenses (2) Brackets Average Household In Minimum Houshold Income (1) Bus Riders Metro Riders Combined ride Wages (MW) Size (US$) (USS) % of Income (USS) . of Income % oat ncome

Up to 2 4.4 478.19 44.25 9.3% 29.50 e.2% 15.5% 2 to 3 4.4 571.43 44.25 7.7% 29.50 5.2% 12.9% 4to 5 4.4 1t071.43 44.25 4.1% 29.50 2.8% 6.9%

Notes: (1) Based on average minimum salary of 7500 Bs./month and US$1 -63Bs. (2) EsUmated assuming 2 rideS per day in the 22 working days of a month per person, besides a coefficlent equal to .8 was applied to account for that not all household members travel. Bus rides include connecting por puesto/leep trips. Combined bus-metro rides are those in which users take both modes

Barquisimeto Metropolitan Re iion

Income Average. Urban Transportation Expenses (2) Brackets Average Househotd In Minimum Household Income {1) Bus Riders Por puesto Ridenr Combined ride Wages (MW) Stze (USS) (USS) % of Income (UBS) %of Income - of Income

Up to 2 5.6 317.46 25.03 7.9% 25.03 7.9% 16.8% 2 to 3 5.6 476.19 25.03 5.3% 25.03 5.3% 10.5% 4to 5 5.6 1,071.43 25.03 2.3% 25.03 2.3% 4.7%

Maracaibo Metro olitan Region

Income Average Urban Transportation Expenseo (2) Brackets Average Household In Mlnimum Household Income (1) Bus Riders Pot pueto Rideir: Combined ride Wages (MW) Size (US$) (US$) % of Income (US$) % of Income % of lncome

Up to 2 5.8 317.46 28.16 8.9% 28.16 8.9% 17.7% 2to 3 5.6 476.19 28.16 5.9% 28.16 5.9% 11.8% 4 to 5 5.6 1,071.43 28.16 2.6% 28.16 2.8% 5.3%

CiudadGusyani Metropolitan Region

Income Average Uroan Transportation Expenses (2) Brackets Average Househotd In Minimum Household Income (1) Bus Riders Pot puesto Riderrs Combined rid, Wages (MW) Size (Us$) (USS) % of income | (US$) % of Income ,oflIcomn%

Up to 2 4.9 317.46 24.64 7.5% 24.64 7.8% 16.5% 2 to 3 4.9 476.19 24.e4 5.2% 24.64 5.2% 10.3% 4 to 5 4.9 857.14 24.64 2.9% 24.64 2.9% 5.7%

Notes: (1) Based on average minimum salary of 8000 Bs./month and US$1 -83B. (2) Estimated assuming 2 rides per day In the 22 working days of a month per person, besides a coefficient equal to .8 was applied to account for that not all household members travel. Bus rides do not Include connecting por puesto/ljeep trips. Combined bus-por puesto rides are those In which users take both modes Table 14.13- SUMMARY OF URBAN TRANSPORTSUBSIDIES

TYPE OF SUBSIDY PAID BY PAID TO ANNUAL Justification Problems Proposals AMOUNT (millions of bolivares)

Student subsidy ( GOV Transport Operators by type of 5.000 ($us 80 Reduce the 1) The allocation of the implementation reduced tariff in all (MTC) vehicles based on monthly million) transportation subsidy is not linked to of a direct the country for all statements. Payment is made through expenses of a the students subsidy to the the students) the associations and unions. non productive transported but instead student as a Approximatelly 60,000 operators sector of the to the capacity of the function of the receive this payment. Bus, Minibus country to allow vehicle number of trips and jeep subsidies are respectively their training and undertaken 8500, 7.400 and 5700 Bs/month. consequently 2) the students are through tickets decrease their considered by the or tokens which education costs, operator as a second would be later class user because he exchanged by doesn't pay full tariff. their full value. For that reason quite cReation of an often the operator does ooficial student not stop to pick up the roster. students.

3) High number of falsified student cards makes % of student ______passengersvery high.

Bono de Transporte GOV (all Civil servants and workers which 6,720 Bs. ($US It complements 1) The subsidy is Establishment ( Salary supplement the gov. make less than 15000 Bs/month. It is 107 million) the very low neither related to the of a direct for workers with offices) paid to approximatelly 700,000 household salary number of trips taken or subsidy scheme low income) people- the monthly allowance isoicome 800 to ensure that to the actual hh. to low Ba. home to work transport costs people similar to trips are paid 2) The subsidy is not the vale de updated automatically transporte for inflation as the vale - which is a de-transporte in Brazil. function of the actual trips and costs through tickets, tokens and not in money terms.

Private office employees and workers who 21,434 Bs ($US Employers make less than 15000 bsl month. 340 million) It is paid to about 1.985 million ______people at 800 Ba/month per parson>

TOTAL ~,626 Bel,onu I 145 ANNEX 15

VENEZUELA URBANTRANSPORT PROJECT

Selected Documentsin the Proiect File

1. Politica Integral de Transporte Publico- ConsejoVenezolano de Transporte 2. An Estimationof the ResourceCosts of Vehicle Operationin VenezuelanCities - Thomson/CEPAL-MTC - FONTUR 3. EstruturaOrganizativa - Fondo Nacionalde Transporte (FONTUR) 4. Programade Financiamientode Vehfculosde Transporte POblicoUrbano - FONTUR 5. Programade Financiamientode Flota de Transporte Publico Urbano- FONTUR 6. Manual de Operaciones - FONTUR 7. Documento para la Precalificaci6nde Organizacionespara el Desarrollode los Cursos de Nivelaci6ne Intensivosde Entrenamientopara el ProgramaNacional de Capacitaci6n- ProgramaNacional de Transorte Urbanopara CiudadesMedianas - FONTUR 8. Programade Preinversi6nen Transporte- Programade las NacionesUnidas para el Desarrollo Documentode Proyecto - Ministerio de Transportey Communicaciones- FONTUR 9. Avance del ProgramaFontur - Presentaci6nal Gabinete Econ6mico- Ministerio de Transporte y Comunicaciones - FONTUR 10. Estudio para el Analisis de EsquemasAlternativos de Gesti6n del Sistema Metrobus - Programade Preinversi6nde Transporte,Transurb Consult - FONTUR 11. Estudio de Administraci6n del Transito del Area Metropolitana de Caracas - Cons6rcio Oficina de IngenieriaEdgar Elias Osuna- FONTUR 12. Estudio de Administraci6n de Transito del Area Metropolitana de Barquisimeto- Cons6rcio Post, Buckley, Schuh y Jernigan, Inc. - FONTUR 13. Estudio de Administraci6n de Transito del Area Metropolitana de Maracaibo- Grupo Consultor Sofretu/BceomfTransplan/Provial- FONTUR 14. Estudio de Administraci6n de Transito del Area Metropolitana de Maturin - D.I.T. Harris, S.A./FredericR. Harris, Inc. - FONTUR 15. Estudio de Administraci6nde Transito en Ciudad Guayana- Urbanismoy Vialidad, S.A. (URVISA)- FONTUR 16. FortalecimientoInstitucional de las Municipalidades- I.R.R.Consultores Asociados, S.A. - FONTUR 17. Diseho del Manualde Operacionesdel FONTUR- ENGENHOConsultoria, Arquitectura e Planejamento - FONTUR 18. Aplicaci6n de la Legislaci6nEspecial en Materia Policial del Transito - E.I.R. Ingenieros,C.A. - FONTUR 19. Programade Apoyo y Asesoria Tecnica a los Municrpiosen Transporte- Ministerio de Transporte y Comunicaciones/MTC- FONTUR 20. ProposedUrban Transport Study - John Cracknell 21. La Soluci6n al Tranporte de Merida - Comici6n Presidencialde Transporte para la Ciudad de Merida - Merida Entidad de Ahorro y Prestamo(MERENAP) 22. 'La Definici6n de las CompetenciasNacionales y Municipalesen Materia de Transporte Terrestre" - Seminario, 'La Gesti6n Municipal en el Transporte Publicoa- PROHOMBRE - Centro de Promoci6ndel Hombre 23. Economicsand Analysis - EconomicEvaluation of Capital Projects 24. Los Castillos de Guayana- ALMACARONI 25. Guayana - ALMACARONI 26. Macagua - Parque la Llovizna - ALMACARONI 27. Estudiosde Tarifaci6n y Subsidios- Willian Alberto Aquino Pereira 28. Deregulationof Urban Transport in Chile: What Have We Learned?- Richard Darbera 29. Plan - Piloto de Subsidio en Transporte Publico Ciudad Maturin - Informe Final - Banco Interamericanode Desarollo - BID - Willian Alberto Aquino Pereira 146 ANNEX 15

30. ProgramaGlobal de Desarrollodel Transporte UrbanoConceptos Bdsicos Preliminares- Misi6n Conjunta- Banco Interamericanode Desarrollo/BID- Banco Mundial/BIRD 31. Proyectode Administraci6nde Transito para el Area Metropolitana de Barcelona- Puerto La Cruz - Terminos de Referenciapara Serviciosde Consultores- Programade Transporte Urbanoen Venezuela 32. Proyoctode Control de Transito en el Area Metropolitana de Caracas - Terminos de Referencia 33. lnventario de la Flota de Por Puestos: * Maracaibo,Zulia * Caroni, Bolivar * Barcelona,Bolivar * Baruta, Miranda * Sucre, Miranda * Libertador, Merida * Barquisimeto,Lara * Barcelona,Puerto La Cruz 34. Diagnosticode la Funci6nde Planificaciones- Ingt ' ElizabethCavallin - Ministerio de Tranporte y Comunicaciones/MTC 35. Competenciasen la Planificaci6n,Organizaci6n, Regulaci6n y Control del Transporte, Transito y Circulaci6n- Ministerio de Tranporte y Comunicaciones/MTC 36. Avances en el Sector Transporte Operacionesde Credito BIRF/BID- Ministerio de Tranporte y Comunicaciones/MTC 37. Programasde Preinversion- Assistencia Tecnica y Proximas Operacionesdel Banco Mundial y del Banco Interamericanode Desarrollo- Ministerio de Transportey Comunicaciones/MTC 38. Centro de Capacitaci6nde Ingenieriade Transito y Transporte Publico: Antecedentesy Estimacionde Custos 39. ConsejoVenesolano de Transporte- Grupo Tecnico de Transporte Urbano,Agenda NO1 y Agenda N° 2. 72' 70',, 66' 64' 6 60' ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~IBRD221

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