Document of The World Bank Public Disclosure Authorized ReportNo. 15951 AR

STAFFAPPRAISAL REPORT

Public Disclosure Authorized ARGENTINA

BUENOSAIRES URBAN TRANSPORT PROJECT

April 11, 1997 Public Disclosure Authorized

Infrastructureand Urban DevelopmentDivision CountryDepartment I Latin America andthe CaribbeanRegional Office Public Disclosure Authorized CURRENCY EQUIVALENTS

Currency Unit = Peso US$1 = 1 Peso

WEIGHTS AND MEASURES

Metric System

FISCAL YEAR

January 1 - December 31

PRINCIPAL ABBREVIATIONS AND ACRONYMS

AMBA - Buenos Aires Metropolitan Area (Area Metropolitana de Buenos Aires) ATAM - Metropolitan Area Transport Authority (Autoridad de Transporte del Area Metropolitana) CONAMBA - National Comission for the Buenos Aires Metropolitan Area (Comisi6n Nacional Area Metropolitana de Buenos Aires) CoNTA - National Commission for Motor Transport (Comisi6n Nacional de Transporte Automotor) EA - Environmental Assessment FA - Argentine Railways (Ferrocarriles Argentinos) FEMESA - Metropolitan Railways (Ferrocarriles Metropolitanos, S.A.) GFCNRT - Successor to UCPF (Gerencia Ferroviaria de la Comisi6n Nacional de Regulaci6n de Transporte) ICB - International Competitive Bidding IERR - Internal Economic Rate of Return MCBA - Municipality of the City of Buenos Aires NCB - National Competitive Bidding NGO - Non-Governmental Organization NPV - Net Present Value OCRABA - Agency responsible for urban motorway concessions PIP - Project Implementation Plan PPF - Project Preparation Facility Pre-ATAM - Technical group, conceived as precursor to Metropolitan Area Transport Authority (Apoyo a la Creaci6n de la Autoridad de Transporte del Area Metropolitana) SBASE - Buenos Aires Subway (Subterraneos de Buenos Aires, S.E.) SOPyT - Secretariat of Public Works and Transport (Secretarfa de Obras Publicas y Transporte) TBA - Suburban Railway Company (Trenes de Buenos Aires) TUAMBA - Transport Planning Unit - Successor to Pre-ATAM (Transporte Urbano del Area Metropolitana de Buenos Aires) UCP - Project Coordination Unit - (Unidad Coordinadora del Proyecto) UCPF - Coordination Unit for the Railway Restructuring Program (Unidad de Coordinaci6n del Programa de Restructuraci6n Ferroviaria) UEP - Project Implementation Unit (Unidad de Ejecuci6n del Proyecto)

Vice President Shahid Javed Burki Director Gobind T. Nankani Division Chief Asif Faiz Task Manager Gerhard Menckhoff ARGENTINA BUENOS AIRES URBAN TRANSPORT PROJECT

STAFF APPRAISAL REPORT

TABLE OF CONTENTS Page No. LOAN AND PROJECT SUMMARY ...... ;

I. THE URBAN TRANSPORT SECTOR ...... I A. BACKGROUND...... 1 B. INSTITUTIONALFRAMEWORK ...... 2 C. SECTOR ISSUES...... 2 D. LESSONSLEARNED IN PAST BANK PROJECTS...... 3 E. RATIONALEFOR BANK INVOLVEMENT...... 3 F. SECTORSTRATEGY ...... 4 II. FRAMEWORK OF URBAN RAIL CONCESSIONS ...... 6 A. BACKGROUND...... 6 B. THE CONCESSIONPROCESS ...... 6 C. INITIALBENEFITS OF CONCESSIONINGURBAN RAIL SERVICES...... 9 D. REGULATORYISSUES ...... 10 E. THE METROVIASCONCESSION ...... 10 III. THE PROJECT ...... 12 A. PROJECTOBJECTIVES ...... 12 B. PROJECTDESCRIPTION ...... 12 C. PROJECTCOSTS AND FINANCING...... 15 D. PROJECTRISKS AND BENEFITS ...... 15 E. ECONOMICEVALUATION ...... 17 F. FINANCIALEVALUATION ...... 18 G. ENVIRONMENTALIMPACT ...... 19 H. PUBLICPARTICIPATION ...... 20 IV. PROJECT IMPLEMENTATION ...... 21 A. INSTITUTIONALRESPONSIBILITIES ...... 21 B. IMPLEMENTATIONSCHEDULE ...... 21 C. PROCUREMENT...... 22 D. DISBURSEMENTSAND SPECIALACCOUNT ...... 24 E. AUDITING...... 25 F. PROJECTMONITORING AND REPORTING...... 26 G. PROJECTSUPERVISION ...... 26 V. AGREEMENTS REACHED AND RECOMMENDATION ...... 27

This reportis basedon the findingsof an appraisalmission which visited Argentina during October 1996. The missioncomprised Messrs. GerhardMenckhoff (Task Managerand UrbanTransport Specialist, LA3EI), Moazzam Mekan (Financial Analyst, LA1IU), Juan Quintero (EnvironmentalSpecialst, LATEN),Llvo Pino (FinancialManagement Specialist, ACTCO); BernardMontava (consultant), and Frank Raltek(consultant). Ms. SabineCornelius (Economist, AFTUI), andMessrs. Ken Gwilliam (Economist, TWUTD), Jorge Rebelo (Transport SpeciaUst,LA1 IU), LouThompson (Railways Adviser, TWUTD), and Surhid Gautam (consultant) also particpated In the preparationof the project.Messrs. Jitendra Bajpai (EAI IN) andJohn Flora(TWUTD) are the PeerReviewers. Mr. CraigLeisher edited the report.Ms. Sandra Albortaand Mm.. MargaritaLannon assisted in the productionof the report.Messrs. Asif Faiz, OrvilleGrimes and Gobind T. Nankaniare respectivelythe managingDivision Chief, Projects Adviser, and Department Director. ANNEXES: Page No. A. Transportin MetropolitanBuenos Aires-Issues and Outlook ...... 29 B. ProjectImplementation Plan, as Defined by the Borrower ...... 37 C. Detailed ProjectCosts ...... 45 D. ImplementationSchedule, Monitoring Indicators, and Project Supervision...... 47 E. Disbursementand ProcurementSchedules ...... 53 F. Summaryof Urban TransportStudy Terms of Reference...... 55 G. EconomicEvaluation ...... 59 H. FinancialEvaluation ...... 70 1. EnvironmentalAspects ...... 75 J. Air Pollutionin BuenosAires ...... 79 K. Selected DocumentsSent to the ProjectFile ...... 83

MAPS:

SuburbanRailways Operated by PrivateConcessionaires - IBRD No. 28384

BuenosAires SubwaySystem - IBRD No. 28385 -i-

ARGENTINA BUENOSAIRES URBANTRANSPORT PROJECT

LOAN AND PROJECTSUMMARY

Borrower: ArgentineRepublic

Implementing Agency: Public Works and TransportSecretariat (SOPyT) of the Ministry of Economy and Public Works and Services

Beneficiaries: Residents of the Buenos Aires MetropolitanArea, particularly those who use public transport.

Poverty: Not applicable.

Amount: US$200million (includingup to US$20million in retroactivefinancing).

Terms: Repaymentin 15 years, including five years of grace, at the Bank's standard interestrate for variable LIBOR-basedUS Dollar single-currencyloans.

Commitment Fee: 0.75 percenton undisbursedloan balances,beginning 60 days after signing, less any waiver.

Onlending Terms: Not applicable.

Financing Plan: See para. 3.13.

Net PresentValue: At 12 percent: US$239million for the Metrovias concession;US$338 million for subway Line A; and between US$0.68 million and US$24.82 million for the road/rail gradeseparations. Staff Appraisal Report: No. 15951-AR,dated April 3, 1997.

Maps: IBRD No. 28384 and IBRD No. 28385

Project ID: AR-PA-39584

1.THE URBAN TRANSPORTSECTOR

A. Background

1.1 Argentina is one of the most urbanizedcountries in Latin America. Over 87 percent of the total population lives in urban areas of 2,000 or more inhabitants. Despite its high level of urbanization,Argentina is still experiencingsignificant growthin its urban population.Between 1980 and 1991 urban areas grew from 23.2 million to 28.4 million inhabitants(1.9 percent per year). Today 12.4 million persons,or almost 38 percent of the country's population,are concentratedin the BuenosAires MetropolitanArea (AMBA).1Population densities are high with nearly 14,800persons per km2in the city of BuenosAires (roughly the same as Paris). The city population(3 million) is growing at a rate of 0.7 percent per year. Yet some of the suburban municipalitiesare growing at a rate ten times faster (17 percentper year). Sound urbantransport managementis criticalfor meetingthe growingtransport needs of the AMBA.

1.2 There are nearly 6.5 million motor vehicles in Argentina.On the average week day, 2.5 million cars circulate in the AMBA alone. Private car ownershiphas been on the rise, with about 150,000 vehicles being addedto the fleet in the AMBA every year. Largely becauseof the rapidly increasingcar ownership,the share of public transportationin the AMBAhas fallen from 75 percent of motorizedtrips in 1970to 61 percent in 1994. On the other hand, trips by car have increasedfrom 2.7 million trips per day in 1970to 4.5 million per day in 1991,a 60 percent increase.

1.3 The sharp increase in traffic in the city of BuenosAires, particularlyin the central area's narrow streets, has led to growing congestion,rising air pollution,and an increasingnumber of traffic accidents.As a result, the National Congressannounced a state of traffic emergencyfor the city of Buenos Aires in 1994 and created a special committee comprising representativesof the Transport Secretariatand the Municipalityof BuenosAires. Since then several measureshave been implemented to help alleviate the rising congestion problem. Most cars, for example, are now restricted from circulatingin the centralarea (Microcentro)during the hoursof 10 a.m. to 8 p.m. These measures,had a marginal impact in the Microcentro,but car congestionaccentuated by 10,000 buses and 40,000 taxis persistsin most other parts of BuenosAires. Substantialsocial costs are generatedby travel delays, fuel consumption, and health problems from air pollution and traffic accidents. Strengthening public transportationis a crucial step in reducingthese costs.The subwayand suburbanrailways have a strong potentialfor alleviating many traffio-relatedproblems in the AMBA.

1.4 Public transportationin the AMBA is provided by 15,000 private buses, by a 44-km subwaynetwork, and by seven suburbanrailway operations900 km in length.The rise in the number of privatecars and the deteriorationof the subwayand suburbanrail servicesled to a drop in the numberof peopleusing public transportation.Between 1984 and 1993, suburbanrail usage droppedmore than 30 percent;the numberof subwaypassengers decreased by morethan 20 percentduring the same period.

1.5 Until 1993, unreliable schedules and security concems contributed to the decline in ridership.Compounded by inefficient management,the results were unsustainableoperating deficits. At US$150-250million per year, operating losses on the AMBA suburban railway accounted for 25-40 percent of the entire annualdeficits for the FerrocarrilesArgentinos, the Governmentorganization that operatedall the railways in Argentina.With a view towards reducingoperating subsidies by increasing efficiency, quality and thus ridership,the Argentine Govemment decided in 1991 to concessionboth FerrocamlesArgentinos and the Subterrfneos de BuenosAires (the subway)to private operators.

1.6 The state-ownedFerrocamles Argentinos used to be the sole provider of both railway passengerand cargo services. In 1991 the Govemment called for bids on operating concessionsfor various rail packagesas a means of introducing private sector participationin Argentine railways. The privatization program included six inter-urban rail packages (mostly freight) and seven suburban

The BuenosAlmes Metropolitan Area, as definedby "Pre-ATAM," includes the municipalityof BuenosAires and 36 other municipaltesboated within a 60-kmradius. passenger packages in the AMBA. By mid-1993, most inter-urban passenger rail services were discontinued.The responsibilityfor those which remainedwas transferredfrom the NationalGovemment to the provincialgovemments.

1.7 Passenger service in the AMBA, including the subway, was reorganized under the Coordination Unit for the Railway RestructuringProgram (UCPF). The privatization of commuter rail service in the AMBA was initiated by subdividingthe networkinto seven packagesto be concessioned together with the five subway lines and the pre-metro2line. It was envisagedthat the concessionaires would operatethe awardedlines and executethe capital investmentsspecified in the contract.Under the concession,the Govemment would continue to own the infrastructure and rolling stock, and would finance investmentsto modemizeantiquated parts of the system.

1.8 As detailed in Chapter II, bids for 10-year concessions(20 years for the subway and Urquiza line) were solicited based on service parametersset by the National Govemment, including frequency, capacity and fares. The winning bidder was the one requiring the lowest Govemment payment on a net-present-valuebasis. In January 1994 a 20-year concessionbecame effective for the subwayalong with the suburbanUrquiza line (havingthe same track gauge as the subwaysystem). With the transfer of the Mitre/Sarmientosystems in May 1995,the entire passengerrail system of the AMBA is now operatedby the privaitesector.

1.9 The initial results of private operation are encouraging. In 1996 suburban passenger volumes were 95 percent above the level of 1993, and subway ridershiphad increasedby 37 percent. While some of the increasein paying passengersis attributableto a reductionin fare evasion, the net increaseis primarilydue to improvedservice quality.

B. Institutional Framework

1.10 Transportationin the AMBA is subject to the regulatoryand fiscal policies of the national, provincial and municipal govemments.The National Govemment is responsiblefor constructionand maintenanceof national highways,for financing investmentsand operating subsidiesfor the suburban railways and the subway, and for regulating the 147 commuter bus lines (connecting the city with suburban districts of the AMBA) which representroughly half of the 15,000 buses that operate in the AMBA, and for regulatingthe approximately3,000 buses operating entirely within the city of Buenos Aires. Furthermore,the National Govemment'sTraffic Police Division is responsiblefor traffic control and enforcement.

1.11 The Provincial Govemment of Buenos Aires is responsiblefor the constructionand maintenanceof provincial roads and for the rail passengerservices between BuenosAires and Mar del Plata. It also controls59 provincial (inter-municipal)bus lines which accountfor about 20 percent of the AMBA bus fleet. The Municipality of the City of Buenos Aires (MCBA) is the owner of the subway infrastructureand rolling stock and is in charge of road and traffic managementwithin the boundariesof the city.

1.12 One of the major sourcesof existing inefficienciesin the AMBA transport system is the lack of coordinationand planning among the various jurisdictionsand among the agenciesresponsible for road management and public transport provision. The results are high social costs from the congestion, pollution, traffic accidents, uneconomic investment programs, and decreasing levels of service in many areas.

C. Sector Issues

1.13 Institutional Issues. Variousattempts have been made to improve coordinationamong the three independentjurisdictions. To date, however, the AMBA is still lacking a consistent, coherent and cooperative approach to urban transport management.The quality, regulations (including motor

2 S Nhe it railtrarsit. vehicle emissionstandards), enforcement and administrationvary widely among the three jurisdictions. In addition, neither intermodalnor intramodalfare integrationhas been achieved,resulting in avoidable costs and travel time increases.

1.14 Proposalswere formulated in 1991to create a multi-jurisdictionalentity to facilitate joint planning,regulation and control of urbantransport in the AMBA. Based on an agreementsigned by the Mayor of BuenosAires and the Minister of Economy,a working group called Apoyo a la Creaci6nde la Autoridad de Transportedel Area Metropolitana(Pre-ATAM) was created to define and develop an autonomousMetropolitan Area Transit Authority (ATAM). The ATAM would have been responsiblefor planningand regulatingthe AMBA transportsystem. The political environment,however, was such that the bill to create the ATAM failed to be passed by the Argentine Congress.The Pre-ATAM by default assumedsome of the functionsof the proposedATAM, althoughwith a much more limited mandate, and grew into a widely respectedentity of transportspecialists. It was recently converted into a Transport PlanningUnit (TUAMBA)under the Ministry of Economyand Public Works and Services.

1.15 Financial and Economic Issues. Priority investmentsto rehabilitateand modemizethe subway and suburban railways were identified, and a detailed investment program for each line was included in the concessionagreements. The concessionairesare undertakingthe physicalimprovements on a repaymentbasis as specified in those agreements.As Governmentpayments for completedworks lag some 30 days behind the concessionaires' expenses for the improvement programs, the concessionairesare obliged to bridge the financinggap from their own resourcesduring this time. The main financial issues relate to the successfulcontinuation of the concessionsand the availability of the resourcesnecessary to further modemizeand expandthe systems.This may requirethe renegotiationof the concession contracts to extend them beyond their current duration, taking into account the experiencegained by the concessionairesand Govemment.

1.16 Environmental Issues. A recent World Bank Study3 concludedthat traffic-generatedair pollution has become a major problem in the inner sections of Buenos Aires. One of the study's recommendations,to establish a modem system of air pollution monitoring, is the basis of the project componentdescribed in AnnexJ.

D. Lessons Learned in Past Bank Projects

1.17 Bank Experience in the Argentine Railway Sector. To date, the Bank has undertaken three lendingoperations in the Argentinerailway sector.The first two operationsfocused on investments in infrastructureand rolling stock. One of the main lessonsemerging from these operationsis the need for demand-orientedinvestment planning. In both cases, neglect of demand factors adversely affected cost recovery.The third lendingoperation, the Public EnterpriseReform Adjustment Loan (Ln. 3291-AR), helpedin restructuringthe Argentinerailways while providinga safety net for about 70,000 redundancies.

1.18 Bank Experience with Similar Projects Elsewhere. Bank-wideexperience with private railway concessions is still quite limited. There is, however, significant experience from Brazil in formulatinga comprehensiveurban transport approach from whichthe following lessonscan be gleaned: (a) lack of counterpartfunds is one of the primary causes of project delays; (b) effective regulatory agenciesare critical to private sector participation;(c) clear institutionalresponsibilities greatly improve the effectivenessof implementation;and (d) proposedinvestments and institutionalchanges should be compatiblewith an overall regionaltransport plan.

E. Rationale for Bank Involvement

1.19 The Bank'scountry assistancestrategy discussed at the Board on May 4, 1995, and an update, discussed on April 25, 1996, aim to: (a) consolidatemacroeconomic reforms, particularly by strengtheningweak public institutions;(b) rebuild deteriorated infrastructure;and (c) help Argentina's pooradjust to the country'sfast-paced changes. The proposedproject would directly addressthe first two

3 WorldBank 1995, Arentinan-Manalng Environmental Poluion: Issues and OpOons, Report 14070-AR, Washington, D.C. objectives by supporting recent reforms in the AMBA's urban transport sector and by financing the rehabilitationof long-neglectedtransport infrastructure.Further, it would deepen the Bank's previous involvement,through the Public EnterpriseReform Adjustment Loan, in the privatizationof the Argentine railways.Buenos Aires is now in the forefront of private masstransit, but its reforms are still quite recent and potentiallyfragile. The Bank's continuedsupport could be vital for the viability of increased private sector participation in urban rail services-an approach that could be replicated in other large urban areas, fitting with the proposedCAS, which highlightsprovincial reform and developmentas one of the three currentkey developmentobjectives.

F. Sector Strategy

1.20 BuenosAires has no urbantransport sector strategyper se. There is no single institution responsible for urban transport planning in the metropolitan area. The proposal to create such an authority (ATAM) failed to gain political support.The body set up as a precursor(pre-ATAM) has been acting successfully as an informal coordination group, achieving positive actions such as the implementation of reserved bus lanes; it was recently renamed Transporte Urbano del Area Metropolitanade Buenos Aires (TUAMBA)with a view to establish it as a permanentplanning group under the Secretariat of Public Works and Transport (SOPyT) within the Ministry of Economy. Responsibilityfor the elementswhich together determinethe nature of urban transport in BuenosAires remains fragmented. There is relatively little formal collaborationor coordination of policy in areas in which the jurisdictions overlap. For example, public transport and some major road investments in the AMBA are the responsibilityof SOPyT, while investmentsand maintenanceof the vast majority of the road networkare handledby the provincialor municipalgovemments.

1.21 The issues arising from rail privatizationat the national level have been analyzed in a recent Bankreport. 4 Those issueswhich relate to the BuenosAires subwayand suburbanrailway system were taken into account in the preparationof this project.As there are no recent evaluationsof the other aspects of urban transportin the AMBA, the Bank's projectpreparation team conductedan independent assessmentwhich is describedin AnnexA and summarizedbelow.

1.22 From the viewpoint of the Bank's experiencein the urbantransport sector,the transport characteristicsof the AMBA present a mixed picture. The emphasison private rail and bus operation compareswell with internationalexperience on supply efficiency in urban transport.The existence of competitionbetween overlapping routes in a regulatedframework for the bus industry also appearsto be a good practice.

1.23 What is missing at present is any effective planning and implementation of traffic management, any coordination of road traffic and public transport policy implementation, and any concerted effort to deal with the safety and environmental problems associated with metropolitan transport. To some extent that is a matter of intemal coordination between the Transport and Public WorksAgencies. One of the aims of the projectis to improvethat relationshipthrough associationin the managementof a technicalgroup for metropolitantransport planning.

1.24 Despite the constraints on what is immediately possible, the case for improved interfunctionaland interjurisdictionalcoordination remains. The philosophyof the project is therefore to help introduce measuresaimed at increasingcommitment to a greater level of metropolitantransport coordination. It is believed that this can best be achieved by demonstrating the possibilities and advantages of coordinated action, based on strong technical capability, to deal with commonly recognizedproblems. The strategyof the projectis to encouragethis in three ways:

(a) the development of a core group of technical skills in metropolitan transport planningto ensurea sound technical basis for the design and implementationof metropolitantransport and traffic measures;

4 World Bank1996, Argenbn,-Transport Pnvaizabon and Regulaton: The Next Waveof Chalenges.Report 14469-AR, Washington,D.C. (b) the carryingout of an urbantransport study which would requirethe cooperation of diverse agencies throughout the metropolitan area, and produce planning tools and projectionsuseful to all of them; and

(c) the creation of a managementcommittee, which would include representatives of the different functionsand jurisdictionallevels, to identify problemscommon to the separatejurisdictions and to provide policy guidanceto the technical core group.

1.25 The development of the technical capacity to adequately address the complex interactions within the urban transport system is at the center of the strategy for institutional strengthening.The first part of the strategy is to establish a project implementationunit for the World Bank project, which would be technically oriented and have close links with the new core group developedfor metropolitantransport planning.These groups would be the agenciesresponsible for the assembly of the metropolitan transport data base and analysis capability and would have staff representationfrom road and transportagencies.

1.26 The second part of the strategyis to associatethose entities, who would benefit from a more coordinatedapproach, in the managementof the technical group and the urban transport study. The purpose of the management committee (representingthe various functional and jurisdictional authorities)would be to identify issuesof commonconcern suitable for analysis at the metropolitanlevel; to addressthese issuesthe skills of the technicalgroup would be made available.The initial approachto coordination is thus problem-oriented,boUtom-up," but with a long-term view of converting the committeeinto a permanentbody responsiblefor transportplanning for the entire metropolitanarea. - 6 -

II. FRAMEWORKOF URBANRAIL CONCESSIONS

A. Background

2.1 The AMBA is among the world's largestmetropolitan areas. In 1991 nearly 5 billion trips were generated in the area, of which 3.4 billion were by public transport. Passengerrailway services carried 209 million passengersannually in 2,000 trains over a network of 900 km and 267 stations. The AMBA's 44-km subwaysystem servedanother 144 million annualtrips.

2.2 Prior to the Govemment'sdecision to restructure the suburban rail services through concessionsin 1990, the network had been in rapid decline. Between 1970 and 1991, while the population of the metropolitan area rose from 8.4 to 10.9 million people, both the subway and the suburbanrailways lost nearly half of their passengers.

2.3 Since 1961, passengerservices had been organized under Fefrocamles Argentinos (FA). Under this arrangementeach of the six divisions operating in BuenosAires was responsiblefor freight and passengerservices. This latter category of service had grown to nearly 500 million paying passengersper year at the time of FA's creation. For most people, the railwayswere the predominant mode of transportation.

2.4 The reasonsfor the decline suffered by the passengerservices were similar to those experiencedby Argentina'srailway system as a whole. Dueto a lack of a commercialoutlook, the focus was more on productiontargets than on satisfyinguser needs.Management was also heavily influenced by the interests of labor unions and equipment suppliers.There were too many employees,outdated operating practices,little maintenance,and no new investments.Even though the potential market for mass transit had grown and services had been attractively priced, the progressive deterioration of service quality, reliability and security led to a rapid decline in passengersfrom the 1960s onwards.

2.5 By the end of the 1980s,FA passengerservices had become unreliable, stations had deteriorated, fare evasion was extremely high, and grade-crossing accidents were increasing in frequency.In March 1990, at the height of a 75-day railwaystrike which virtually paralyzed all passenger services, MetropolitanRailways (FEMESA) was created as a state-ownedcorporation separate from FA. FEMESA's objective was to provide commuter services within the AMBA. Subsequently, the Govemmentdecided to privatize FEMESA.

B. The Concession Process

2.6 The concessionprocess was set in motion with the passage of the State Reform and Public EnterpriseRestructuring Law in 1989. The law's aim was to reducethe public deficit and revitalize the economy by encouragingprivate sector operation of major state-ownedenterprises. Of all state enterprises, FA was responsiblefor the largest drain on the national treasury-about US$1.4 billion annually, of which approximately US$465 million was incurred by the Buenos Aires suburban rail network. Reducing the losses represented the main motivation for restructuring the railways by concessioningtheir operationto the privatesector.

2.7 The suburban railway serviceswere groupedinto seven different rail networksthat had existed in the 1950s before the creation of FA: Mitre, Sarmiento,Urquiza, Roca, San Martin, Belgrano Norte and Belgrano Sur. The subway, consisting of five undergroundmetro lines and a surface light railway line, and owned by the MunicipalGovernment's Subtejrrneos de BuenosAires S.E. (SBASE), was placed in a bidding package with the Urquiza line which shares the same track gauge and is physicallyconnected with the subway.

2.8 The concessioningof BuenosAires' subwayand suburbanrailways was unique.There is no precedentin the world of using the concessionapproach for a loss-makingurban rail transit system. BuenosAires' subwaysystem is old and obsolete,with several original sectionsdating from its opening in 1913. Since the 1950s there have been few improvements.When the decision to concessionthe - 7 - subwaywas made, the systemwas in need of a completerehabilitation, including tracks, communication, signalingsystems, escalators and cars.

2.9 After the multi-faceted evaluation method used for concessioningthe freight railways proved controversial, the Govemment adopted a single quantifiable parameter for awarding the concessionsfor the suburban railways and the subway. Followingan intemationalcompetitive bidding process,the concessionaireswere selected based on the lowestGovemment paymentrequested in the bid to operatethe line and undertakethe specified investment program.5 Under this arrangement,the concessionairesoperate the lines and the Govemment (i.e., FEMESA in the case of the suburban railways and SBASE in the case of the subway) continuesto own the infrastructureand rolling stock. Table 2.1 summarizesthe main featuresof the metropolitanrailway concessions.

Table 2.1: Features of the Metropolitan Railway Concessions Length 10 years (20 years for the subwayand the Urquiza line) plus optional 10-year extensionsindefinitely. Ownership The NationalGovemment (the City in the caseof the subway) remainsthe owner of the fixed facilities, includingtrack, stations,and rolling stock. Labor Concessionairescan introducewhatever labor practicesthey consider necessaryto increaselabor productivity.Labor redundancy was financedby the Govemment. Operations and All operationsare performedby the concessionaires,who are also Maintenance responsiblefor the maintenanceof track and rolling stock. The concessionaireseither receivean operatingsubsidy or pay a 'fee' for the use of the infrastructure.The Govemmentsets minimum service level and service quality for each concession. Tariffs The Govemmentsets maximumfares which are subjectto automatic increasesaccording to the service quality achievedand increasesin the cost of providingthe service. Non-achievementof quality levels results in financial penalties. Capital Investment Concessionairesundertake project-specific annual investments as specified in the terms of the concessionbut financed by the Government(except for Line A). Line A investmentsare to be financedand undertakenby the Government. Financial Net monthlysubsidy/fee payments defined for each service corridorfor the Performance entire concessionperiod.

Source: World Bank, 1996, Argenna- Transport Pnvatizaton and Regulaton: The Next Wave of Chalenges, op. cit.

2.10 The Govemment accepted from the start that public financing would be required to operate passengerrail services and undertakethe investmentsneeded to rehabilitate the system. For each corridorthe Govemmentdefined both maximumfares and minimum service frequencies.The latter were defined in terms of rail cars per hourfor each 24-hour service cycle and for each day of the week. In addition, service quality standardswere defined for each corridor, including percentageof on-time trains and percentage of canceled trains. If concessionairesreached or surpassed these service standards, they would be entitled to increase tariffs beyond authorized maximum levels, as a performanceincentive. Chronic failure to complywith service standardscould result in specific penalties.

The rehabilitationof subway Line A was left out of the concession process due to legal problems. An Italian firm had alreadysigned a contractto rehabilitateLine A, butirregularities sent the involvedparties to arbitration.(In the end,the casewas decidedIn the Govemmenfs hfvor and the planned works were not carried out). While the rehabilitation of Line A had to be excluded from the subway and Urquiza concession, the tender documents and subsequentlythe concession agreement between the Government and the concessionaire committed the Government to separately rehabilitate Line A by December 1997, in addition to its other obligations. - 8 -

2.11 Accordingto the terms of the concessions,the Govemment was to own the rolling stock and infrastructure,all of which would be assignedto the concessionaire.The concessionairewould have full responsibilityfor all rail activities, ranging from marketing to maintenance of rolling stock and infrastructure.A key design feature in concessioningthe suburban railways and the subwaywas that a monthly payment(combining operating subsidies and investmentsfor the rehabilitationprogram) was to be made to the successful bidder for each service corridor over the entire terms of the concession contract.The scheduleof monthly payments,adjusted for inflation, was negotiatedLip-front,"before the concessionwas awarded.

2.12 Concessionairesassumed the risks inherent in most businessactivities. For example, if actual ridership (and revenues) exceeded estimates, incremental net income accrued to the concessionaires.If, on the contrary, actual numbersproved lower than estimatesmade at the time the contract was finalized, concessionairesabsorbed the resulting loss and were not entitled to additional subsidy.The same principle applied to operatingexpenses. Cost savingswould accrueto the benefit of concessionairesand cost overruns to their detriment. Concessionaires,however, could not attain lower costs by compromisingthe levels of service to which they were contractually committed. Concession contracts included several mandatoryservice standards,such as number of cars to be dispatched per hour, maximum allowable canceled and delayed trains, and equipment maintenance and availability standards.In fact, concessionaireshad a strong incentiveto exceedthese service standards.Only then could they claim a fare increase.

2.13 The characteristicsof the successfulbids for each railway package are summarized in Table 2.2. The calls for bidswere staggered;first, the Mitre, Sarmientoand Urquiza/Subway;second, the Roca and San Martin lines; and finally the BelgranoNorte and BelgranoSur lines. On January31, 1992, seven consortia consisting of 114 local and foreign companiessubmitted qualifying bids. Construction firms with no previous railway operatingexperience were the most prevalent bidders. Companieswith rail operatingexperience accounted for only 26 percent of those who bid. In all winning consortiathere was a significant participationof private bus companiesor groups associatedwith them. Table2.2: Winning Bids for the Metropolitan_Railway_Concessions Oper. Subsidy Est. Passengers in Line Concessionaire Takeover Date No. of bids or (Fee) Capital Investment Year 5 Proposed (US$million) (US$million) (million) Staffing Mitre TBA 5/27/95 3 84.1 221.2 63.9 1,660

Sarmiento TBA 5/27/95 3 (177.9) 193.2 106.1 1,528

Urquiza Metrovlas 1/1t94 3 101.7 37.8 26.0 697

Subway Metrovias 1/1/94 3 (438.4) 399.2 171.0 2,129

Roca Trainmet 1/1/95 4 (70.0) 136.0 150.5 2,062 SanMartin Trainmet 4/1/94 4 (44.7) 62.7 63.7 867

BelgranoSur Trainmet 5/1/94 3 166.1 43.8 19.1 788

BelgranoNorte Ferrovfas 4/1/94 2 196.7 58.7 28.2 830 Total (182.4)_ 1,152.6 628.5 10,561

2.14 By the end of 1992, three consortia were selected for the seven service packages: Metroviasfor the concessionof Mitre, Sarmiento,and Urquiza/Subway;Trainmet for Roca, San Martin, and Belgrano Sur; and Feffovias for Belgrano Norte. The investors for Metrovias later on divided themselves into two groups, Metrovias and Trenes de Buenos Aires (TBA) responsible for the Urquiza/Subwayand Mitre/Sarmiento concessions respectively. The total amount of Govemment paymentrequested by the winningconsortia amounts to about US$1 billion (June 1992 USS value). Most -9 - of this amount is intended for capital investment, as opposedto the Government subsidies before privatization which mostly financed operational deficits. The real estate assets necessary for the operationof the concessions(e.g., platforms,ticketing, etc.) were transferredto the concessionaires.All other assets remained with FEMESAwho becamecustodian of these assets until their final disposed. FEMESAis exploringa number of possibilities,including expanding the use of these assets throughthe involvement of the private sector to construct shopping malls similar to Union Station in Washington, transferstations, etc.

C. Initial Benefits of Concessioning Urban Rail Services

2.15 The concessioningprocess for the suburban railway system and the subway which started in October 1991 finally concludedon May 27, 1995with the transfer of the Mitre and Sarmiento lines to TBA. Based on the performanceof the concessionsso far, they are generally consideredto be a huge success.Recent data for the revenue passengerscarried indicate an impressivegrowth rate over the last three years. An important reasonfor this immediateimprovement has been the anti-fare evasion measures adopted by all private operations. However, even in the case of the subway where fare evasionwas a relatively minor problem, 1996 ridershipwas up by 37 percentcompared to 1993,the last year before its concession.The traffic gains have also been fostered by the improvementsin service reliability and security, particularlyat stations. Other service indicators,such as punctuality,interruptions and cancellations,also show major improvement.A survey conductedfor the Governmentin early 1995 found that 96 percent of the travelers on four suburbanlines felt the service was as good or better than before, with a majority stating that it was better. Furthermore, unlike other privatizations, railway consumersdid not have to pay higher pricesfor this quality improvement.

Table 2.3: Evolution in Passenger Volumes and Service Quality (January-DecemberComparison) Passengers(in million) Capacity(in million car-km) On-time Operation Suburban....Ra..lway...... 1993 1996 A% 1993 1996 A% 1993 1996 A% Mitre 34.4 69.8 103% 16.3 21.7 33% 76% 96% 26% Sarmiento 60.5 99.3 64% 20.3 23.7 17% 73% 95% 30% Urquiza 16.8 24.7 47% 8.5 9.7 15% 92% 94% 2% Roca 64.9 136.0 110% 26.0 43.1 66% 81% 96% 19% SanMartin 21.7 43.5 101% 13.5 15.6 16% 83% 90% 8% BelgranoNorte 11.8 28.8 144% 8.5 10.5 24% 85% 85% 0% BelgranoSur 2.0 11.1 462% 2.1 6.4 206% 46% 95% 107% Passengers(in million) Capacity(in million car-km) Minutesof Disruption ...... Subway 145.3 198.9 37% 20.1 26.8 33% 23,165 9,013 -61%

2.16 From the Govemment's financial perspective, the implications of the restructuring processcan be evaluated based on a comparisonof the total subsidiesin the concessioncontracts with the actual deficits before restructuring.The operatingdeficit of the suburban railway in 1993 alone was estimated to be US$465 million. Additionally, the subway was losing US$40 million per year. In comparison, the Government payment required to operate all the systems over the life of the concessionsamounts to US$680 million in present value terms (in 1992 US$). The main portion of this payment (US$560 million) goes toward capital improvementfor rolling stock, track, communications, signalingsystems, and stations, and only US$120million representsan operatingsubsidy. At the end of the concessionperiod (20 years for the subway and Urquiza, and 10 years for the other lines), the Governmentis expectedto have saved US$5.5 billion in paymentsand in the processhave acquiredan improvedand well-functioningpassenger railway system.

2.17 Another benefit of the restructuringprocess has been a reductionin the economiccosts of operation,mainly through increasedlabor productivityand more efficient use of capital. FEMESA,at its creation in 1991, employedabout 16,000people to carry a volume of 209 million paying passengers. -10-

In 1996,the suburbanrailways carried 413 million passengerswith about 8,400 employees.Thus, labor productivityincreased nearly four-fold: from 13,000passengers per employeeto 49,000 passengersper employee.

D. Regulatory Issues

2.18 The Government'searly attempt to createa regulatoryagency (ATAM)to oversee urban transport in the AMBA, including the railways, did not materialize. In practice, the concessionsare regulated by the Unidad de Coordinaci6ndel Programade RestructuracionFerroviana (UCPF) of the SOPyT, which had been responsiblefor the design and implementationof the concessionprocess. The main role of the UCPF is to enforcethe terms of the contractand to monitor and certify the progressof the government-financedinvestment program. The ultimate authority regarding contractual and tariff changes rest with the Minister of Economy. Since the concessioncontracts restrict the ability of the concessionaireto raise tariffs and require minimum service standards,the approach not only provides simplicityfrom the perspectiveof regulationbut also provides a strong incentive for the concessionaires to increaseridership.

2.19 As the concessionprocess has matured, several issues have arisen which were not foreseendue to the pioneeringnature of the process.The growth in ridershiphas been beyondexpected levels, and there is little provision in the existing contractsto accommodatethis rapid growth in traffic. The investments are fixed in time and can only be brought forward at the concessionaire'sexpense. Since the concessionairesdo not own the assets,they find it difficult to obtain financial resourceswithin the short time frame of the concessions.Since the ridershippattern changed,there is a need to modify the govemment-financedinvestment program to undertake more efficient investments in responseto increasingridership. To addressthese problems,the bicameralcommission of Congressresponsible for overseeing the nation's privatization process gave the Government permission in April 1996 to re- negotiatethe contractswith private concessionairesto allowfor a changein the terms of the contractas well as to extend the length of the contract. TBA, the concessionairefor Mitre and Sarmiento lines, already has prepared an ambitious program of investmentequivalent to US$900 million, which would completely revamp its networkwith new cars, electrification,signaling, communicationsand elimination of at-graderoad/rail crossings.

2.20 Another issue is the inability of the Governmentto meet some of the conditions in the concessioncontract in a timely manner. The delays stem from higher-than-expectedridership, worse- than-expectedcondition of the rolling stock and facilities, and a lack of funding for the rehabilitationof Line A. While the proposedproject would help alleviate some of the delays, there is still the issue of the extent to which the concessionairesshould be compensatedfor these delays. In the case of the so-called "automatictariff increases"that are triggeredby changesin the cost of service, delays are commonand there is no clarity on the compensationto the concessionairefor the delays in paymentdue to the time it takesthe Govemmentto institutethe changesin the contractto permit a tariff or subsidyincrease.

E. The Metrovias Concession

2.21 The original Metrovias consortium was selected for the subway/Urquiza,Mitre, and Sarmientoconcessions which togetheraccount for over 50 percentof all metropolitanrail passengers.Its ownerswere a large constructioncompany (Benito Roggio y Asociados,33.33 percent),a consortiumof bus operators (Cometrans,30.33 percent), a rolling stock manufacturer (Morrison KnudsenArgentina S.A., 16.67 percent), a foreign operator (BurlingtonNorthem, 16.37 percent), and a small construction firm (SKS, 3.00 percent). During the final stages of contract negotiationsfor the Mitre and Sarmiento concessions,Cometrans, Morrison Knudsen and BurlingtonNorthern formed the new consortiumTrenes de Buenos Aires (TBA) and releasedsome of their shares in Metrovias to Benito Roggio. Likewise, Benito Roggio transferredits interest in Mitre and Sarmientoto Cometrans.Metrovias is now majority ownedby Benito Roggioy Asociadoswith small participationfrom Cometransand others.

2.22 The concessionheld by Metrovias for the BuenosAires subway and the Urquiza line began on January 1, 1994. This concessiondiffers from other passengerrailway concessionsin that it is -11- for a period of 20 years insteadof 10. The increasedlength of the concessionwas based on the amount of the investmentprogram (US$493million plus about US$120 million for Line A), and Includes some technologicalchange. Under the contract,Metrovias will receive decreasingoperational subsidies for the first five years of the concession(until 1998). Starting in 1999, it will begin making payments (fees or canon) to the Govemmentwhich increaseevery year until the terminationof the concessionin 2013.

2.23 Over the 20-yearlife of the concession,Metrovias will pay the Govemmentabout US$26 million for the concessionand receive about US$208 million in Govemment paymentsfor undertaking the specifiedinvestment program 6 . In addition,the Govemmentwill provide about US$120million worth of improvementsin Line A. This is advantageousto the Govemment,considering that in 1993 alone the subwayand the Urquiza line incurredan operationaldeficit of US$54 million. Metrovias' offer was based on an expectedincrease in traffic of 60 percentover the length of the concessioncompared to 1993. In the same period, expenseswere projectedto decreaseby 36 percent.

2.24 Given that the concessionhas now been under private operation for more than three years, a clearer understandingof its results is available.Prior to the takeover, traffic on the Urquiza line was declining at a rate of 4.7 percent per year; the decline in the subwaywas 2.7 percent per year. By 1996, ridershipon the subwayhad increasedby 37 percentcompared to 1993; on the Urquiza line it was up by 47 percent during the same period. By the end of 1996, the subwaytraffic had surpassedyear eight forecastfor the traffic as included in the concessiondocuments (see Chart 2.1). On the other hand, ridershipon the Urquiza line grew slightly less than expectedduring this period. Nonetheless,Metrovias total revenues were up by more than US$20 million in 1995 compared to the projections in the concessioncontract.

Chart 2.1: Passenger Projections for Metrovias Concession

350 e Startof PrivateConcession:,.- 325 - Actual | January1, 1994 - - 300 - RevisedProjection _ --. ConcessionCortract

250-

1980 85 90 95 20D0 5 10

AssumpUons:an nualgrowth of 6 percentIn 1996-7which decreases to 4 percentduring 198 99 becauseof the planned resbliatalonof UneA. Fadlowingtre rehabilitaoonperiod, total ridership is epected to bounceback to a grpwthof 6 prcent In 2000.Thereater, growth in traffic is sxpectedto slowdown gradually to I percentby 2005. Between 2005 and 2013,tratfic is projcted to growby I percenteach year which is slightlyabove the norrnalgrowth rate of population(0.67%) in the municipalityof BuenosAJres.

In prent vle terrn at a discountrate of 12 percert. -12-

III. THE PROJECT

A. Project Objectives

3.1 The Project's objectives would be to: (a) support the private-public partnership in improvingthe service quality and coverage of mass transit; (b) supportthe infrastructureimprovements defined in the concessionagreement between the Govemment and the private sector; (c) assist in improving the conditions of traffic safety and environmentalquality; and (d) help in developing an integratedurban transport (road and rail) systemfor the AMBA.

B. Project Description

3.2 The project would comprise a package of actions and investments aimed at the following:

(a) finance the rail equipmentand infrastructurewhich are critical for the upgradingof public transportservices;

(b) promotethe integrationof the transportsystem by upgradingtransfer stations among rail lines, building better transfer facilities between rail and road-based transport, and generallyimproving road accessto rail stations;

(c) improve traffic safety and environmentalconditions through the constructionof grade separationsat high-volume crossings,the enhancementof controls at road/rail grade crossings,the developmentof a complementaryprogram of road safety actions, and the introductionof systematicair pollution monitoring;and

(d) strengthenthe institutionalframework which would ensure the continuedoperation of an economicallyand environmentallysustainable transport system in the metropolitanarea.

3.3 The proposedworks, goods acquisitionand technical assistancehave been groupedinto the followingfive subprojects:

(a) support of the basic investmentprogram of the Metroviasconcession (36 percentof total projectcosts net of projectadministration); (b) rehabilitationof subwayLine A (31 percent); (c) integrationof the transportsystem (9 percent); (d) environmental monitoring and traffic safety program, including road/rail grade separations(16 percent);and (e) strengtheningof the institutionalframework (8 percent).

3.4 Basic Investment Program of the Metrovias Concession: The 1992 tender documentsfor the subway/Urquizaconcession included a detailed investment program, which is now part of the Govemment's concessionagreement with Metrovias. A $142.9 million slice (about three years, 1997-1999)of that programwould be consideredpart of the project; $50 million of this would be funded from the World Bank loan. In accordancewith Article 3.13(a) of the procurementguidelines, works and goods requiredfor the basic investmentprogram would be procured by Metrovias, using its own procedures.

3.5 The specific improvementswould include: Rehabilitationof subwayLines B, C, D and E, including:(a) partial track renewal; (b) renovation of electric substationsand transmissionsystems; (c) automatic signals and operations control center; (d) station improvements and the rebuilding of escalators; (e) workshop improvements;and (f) renewal of ventilation and drainage systems. Slightly over 10 percentof the total would be for similar improvementson the Urquizaline. -13-

3.6 Rehabilitation of Subway Line A. This subprojectwould include the complete renewal of track, three new electric substations,renewal of the power transmission system, renovation of the signal and communicationssystem, installationof a new controlcenter, replacementof drainage pumps, new ventilation systems, renewal of station escalators,and the integration of the existing Lima and Piedrasstations at a location whichwould greatly improvetransfer conditionswith subwayLine C. These works would be grouped into five contracts for (a) track renewal; (b) other civil works; (c) electrical equipment;(d) signalsand communications;and (e) expansionof the traffic control center.

3.7 Integration of the Transport System. This subprojecthas been defined as a sectoral program.The specific criteria and procedures,including those relatedto environmentalassessment and consultation with neighboring communities and businesses,are currently being defined and will be contained in an Operational Manual, the approval of which would be a condition for civil works disbursementsunder this subproject.

3.8 The subprojectwould complement civil works at transfer stations which have already been agreed under the concessionagreement. It would include the works and actions detailed below, which aim to achieve bettersynergy amongthe existingrail and road-basedservices.

(a) Transfer centers at or near major rail stations where transfer conditions for public transport passengerswould be greatly improved through the incorporationof off-street bus terminals, pedestrianfacilities, car parks, and drop-off areas. Preliminary analyses have been carried out for an initial 14 locations, identifying the main issues and recommendingimprovements. Feasibility studies are underway, including preliminary cost estimatesand the preparationof traffic circulationplans. It is expectedthat, by loan effectiveness,preliminary engineering will be completedfor eight stations; final designs and biddingdocuments will be preparedthereafter.

(b) Improvementsnear outlying rail stationsto ease the accessfor buses,pedestrians, cars and/or bicycles. These would largely consist of road and traffic engineering improvements,such as bus priorities,traffic signals,geometric changes to providespace for passenger drop-offs or to correct traffic bottlenecks near the station, walkways, sidewalk improvementsand bicycle facilities. Such schemes would be designed by SOPyTand be implementedin close collaborationwith the municipalitiesconcemed.

(c) Some station improvementswould include secure facilities for bicycle parking. In this regard, a promotional program would be developed to encourage bicycle access to outlying railwaystations. Increasedbicycle use at these locationsis expectedto raise rail ridershipas the area of influenceof those stationswould be expandedand benefit some low-incomerail customerswho could save the additional fares needed for feeder bus services.

(d) Other station improvements,especially where improvedtransfer conditionsbetween two rail lines or between rail and road-basedtransport would yield significant benefits to passengersand thus make masstransit more attractive.

3.9 Environmental Monitoring and Traffic Safety Program. This subproject would combine the initiation of air pollution monitoringwith an action plan that SOPyT has defined to reduce the high number of traffic accidents at road/rail crossings.The air pollution monitoring component is describedin Annex J. With regard to the traffic safety program, environmentalassessments and public participationexercises were carried out for two proposedroad/rail grade separations,selected from an initial list of 20 schemes on the basis of economic retum. This experience is being incorporatedan OperationalManual, the approvalof which would be a conditionfor civil works disbursementsunder this subproject;it would include the following components: -14-

(a) construction of ten to twelve grade-separatedroad crossings over/under suburban railwaylines;

(b) development of a comprehensivestrategy to improve the safety at grade crossings betweenthe road and the rail systems on the basis of a study to be funded under the project;and

(c) improvementsto the system of barrier-controlledroad/rail crossings.

3.10 Strengthening of the Institutional Framework. A key element of the overall project would be the strengtheningof coordinatedtransport planning at the metropolitanlevel, and support for the creation of a Transport Planning Unit which would be responsiblefor the formulation of common policies on pricing, financing, project evaluation and selection. It would also aim to develop policies which improve cost recoveryand increasethe long-termfinancial sustainabilityof the operatingagencies involved.The activitiesbelow would be included.

(a) Preparationof a transport model suitable for testing altemative transport investments, rail integration projects, bus route franchising options, tariff policies, and street congestionpricing. The last comprehensivesurvey of travel characteristicswas carried out more than 25 years ago, and is no longer a useful basis for investment and policy decisionsregarding transport in GreaterBuenos Aires. Numerousand often contradictory proposalsare being promoted by various agenciesand intereststo extend the subway system, upgrade suburban railways beyond the scope currently envisaged in the concessions,and to further enlarge the system of urban motorways. The proposed transportsurvey and model would establisha sound footing on which the feasibility and relative prioritiesof these (and other) proposalscan be determinedon a quantifiedbasis. The study, to be conductedby a consultingfirm jointly with a govemmentteam forming the nucieus of a permanent transport planning unit (see (d) below), would receive guidancefrom a steeringcommittee which would be composedof representativesof key agenciesresponsible for metropolitantransport and roadplanning and management.

(b) Formulationof a program to improve the city's traffic and street environment, which could include such aspects as: (i) updating of the street hierarchy, especially in the micro-center where through traffic, buses, trucks, and pedestrians could be better separated;(ii) definition of a traffic calming program for selected streets or areas; (iii) consideration of area-wide traffic demand management through regulatory, pricing and/or physical measures; and (iv) improvement of pedestrian facilities, such as additionalpedestrian streets, sidewalk widening and repairs, and better refuges, signals, and markingsat intersections.

(c) Technicalassistance to SOPyTto provideadvice on technical, financial, environmental, and social aspectsduring projectexecution.

(d) Establishmentof a TransportPlanning Unit (TUAMBA),funded by the Govemment and primarily consisting of personnel previously working for the Pre-ATAM, which would initially constitutethe counterpartstaff of the transport study consultantsand, after the study's conclusion,be responsiblefor continued transport planning in the metropolitan area.

(e) Training to professionalsof the national, provincial and municipalgovemments in such fields as urban transport planning and economics, environmental management,and especiallytraffic engineeringand traffic safety management. -15-

C. Project Costs and Financing

3.11 While the Line A rehabilitationconsists of a numberof dearly definedworks with a distinct cost estimate (US$81.9 million net of contingenciesand taxes), the other project components are ongoingor future programswhich would be supportedunder the proposedWorld Bank loan. This permits a certaindegree of flexibility in defining the size and financing of individual project components,taking accountof the followingfixed points:

(a) the proposedloan would total US$200million, of which US$50million would be allocated to the basic investmentprogram of the Metrovias concession;and

(b) the Govemmentwould providecounterpart funding in an amount equal to the Bank loan.

3.12 The following cost table presentsthe overall projectfinancing plan, which was confirmedat negotiations.

Table 3.1: Project Cost Estimate (US$million) Subprj WorldBank Government Total ...... n ...... Metrovias Concession 50.0 92.9 142.9 Rehabilitationof SubwayLine A 64.8 17.1 81.9 TransportSystem Integration 13.6 11.9 25.5 EnvironmentalMonitoring and Traffic Safety 24.3 20.6 44.9 InstitutionalFramework 16.4 6.9 23.3 ProjectAdministration 6.7 - 6.7 Subtotal 175.8 149.4 325.2

Taxes -- 35.8 35.8 Contingencies 24.2 14.8 39.0 Total 200.0 200.0 400.0

3.13 The total project costs are Table 3.2: Financing Plan estimatedat US$400million includingtaxes - _ and contingencies,with an estimated foreign Source Local Foreign Total % of Total cost of US$157million or about 39 percent of Government 200 -- 200 50 the total cost (Table 3.2). Taxes and duties World Bank 43 157 200 50 are expected to account for approximately9 Total 243 157 400 100 percent of the total cost, or US$35.8million equivalent.Physical contingencies amount to 20 percentfor Line A (allowingfor lack of experiencewith similar contracts),0 percentfor the concessionbecause of its fixed price, and 10 percentfor all others. Price contingenciesamount to 2.3 percent per year. Base costs are expressedin December1996 prices.

D. Project Risks and Benefits

3.14 Risks. To some degree,the usual risks associatedwith investmentprojects-cost and time overruns-apply to this project. They are partly offset, however, by the fact that the largest component(Metrovias concession) is alreadybeing implementedon the basis of agreedprices laid down in the concessionagreement.

3.15 The investment is in well-known technology, available from many sources. Little technological risk is therefore involved. Commercially, the contractually agreed fixed terms of remunerationfor the concessionaireshift any financial risk associatedwith the basic investmentprogram of Metroviasto the concessionaire.The risksthus becomethe risks of the concessionfailing. Three main -16- reasons may be suggested for failure of the concession, namely: (a) financial failure of the concessionairedue to commercial eventualities;(b) failure due to default by the Govemment on its payment obligations; and (c) withdrawal of the concessionairefrom the concession agreement for reasonsother than direct financialfailure.

3.16 In respect of the financial viability of the concession,the evidence available so far indicatesthat traffic and revenue are substantiallyhigher than anticipated.There is also some anecdotal evidence that concessionairesare obtaining supplies at prices lower than those anticipated in their concessionbids. The increase in aggregate costs being quoted appears to be primarily related to increasedquantity of service supplied.Given the growingpassenger demand for rail transportin Buenos Aires, the risk of direct financial failure appearssmall.

3.17 In respectof Govemmentdefault on its obligations,there is also no immediatereason to view the risk as high. The NationalGovemment has so far made paymentsto all the rail concessionaires fully and on time. The most significant problem was the fact that the Line A rehabilitationwould not be completedby December 1997, the deadline providedfor in the concessioncontract. However, because of the inclusion of that componentin the project,a modificationof the concessionagreement was signed on January 22, 1997, which indicatesJune 1999 as the new estimated completiondate for the Line A rehabilitation.

3.18 A less direct risk of the contract being upset may be associated with the changing political status and managementof the Municipalityof the City of Buenos Aires (MCBA). Although the concessioncontract for the subway is between the concessionaireand the National Govemment, the subway is formally owned by the Municipality.Last year's move to local democratic election of the mayor, in place of direct appointmentby the National Govemment, opens up the possibility that the managementof the subwaycould becomea direct political issue. If, for example, responsibilityfor public transport fare controlwere to pass to the Municipalityof BuenosAires (as is formally the case for the municipalitieswithin the Province of BuenosAires), there would be a possibility that the Municipality might introducefare constraintsor policies which underminethe contract. Even in the event of such a transfer of responsibility,however, it seems unlikely that the Municipalitywould wish to underminethe concessionso long as the financingof the concessionremains a NationalGovemment responsibilityand the average subwaytariff remainsbelow the bus tariff. Maintainingthis responsibilitythus seems to be the best way of mitigatingthis risk.

3.19 The risk of the investment being invalidated due to the concessionairevoluntarily abandoningthe concessionconcems the possibilitythat, at some early stage of the concession,before the presentvalue of the contractto the Govemment had becomepositive, the concessionairewould find it more attractive to withdrawthan to remain in the concession.In practice, the phasing of the financial flows under the concessioncontract are such that at all times during the life of the concessionthe present value of the payments under the concessionis less than expected Govemment payments without the concession.In the event of terminationof the concessionthe investmentwould revert to the Govemment. The Govemment would then have enjoyed a positive value of financial flows during the concession,and a higher capital stock at the terminationof the concessionthan would have occurred without the concession.Experience with other rail companiessuggests that it would also then be possible for the Govemment to relet the concessionto mutual advantage.Regardless, the investment program underthe concessionmainly materializestowards the middleto later part of the concessionperiod, thus making it unlikely for the concessionaireto walk away from the concessionafter reapingthe profits from the investmentphase of the concession.

3.20 Benefits. Quantifiable and non-quantifiablebenefits are expected from the proposed project, including cost savings, time savings for the users, and fewer accidents and fatalities. By supporting private sector participationin Argentina'srailways, the proposedproject would decreasethe financial burdenon the Govemment.In addition,there would be a positiveenvironmental impact through the reductionof fossil fuel consumptionand motor-vehiclerelated emissions,the introductionof an air pollution monitoringsystem, and the reductionin road congestionwith a consequentimprovement in air quality and noise pollution. -17-

E. Economic Evaluation

3.21 The Subway Investments. The concession awarded to Metrovias involved the rehabilitationand operation,over a periodof 20 years, of the subwaynetwork and the Urquiza suburban railwaywhich connectswith it. One of the terms of the concessionwas that Line A of the subwaywas to be rehabilitatedon the Govemment'saccount. The presentproject consists of the investmentsnecessary for the Govemmentto meet that obligation.If the investmentwere not to be made, the whole concession would be at risk. Economic evaluationwas thus applied both to the concessionas a whole and to the Line A rehabilitationItself.

3.22 The basic assumption made in the appraisal of the concession is that, without the concession,the subwaywould continueto run at the initial level of service, with annual expendituresby Govemment equal to those made in the final year before concessioning.This is treated as the "do- nothing" case. In the year prior to concessioningthe subwaycarried 145 million passengersand required US$40 million in operatingsubsidy. In addition,the Urquiza line, with which the subway is linked in the concession,was losing over US$11million a year, giving a total cost to Govemmentof US$51 million. It has been assumedthat these losseswould continuein the absenceof the concession.

3.23 In the years before concessioning,the cost to Govemment had been increasing,while the level of service and of patronage had been declining. Moreover, maintenanceexpenditures were being deferred so that the likely future expendituresto keep the system in operationwould have had to increase in any event. In the case of Line A, the oldest line, it is estimated that inability to maintain obsolete equipmentwould have led to closure within five years. The "constant cost to Govemment" assumptionfor the status quo is thus very conservative.

3.24 The net presentvalue of the stream of paymentsby Govemment on the assumptionof constantsubsidy in the absenceof the concessionagreement amounts to US$401million at a 12 percent discount rate. The stream of payments under the concession (adding together operating subsidies, capital expendituresand the fees payableby Metrovias)has a net present value of US$162 million. The net benefit in presentvalue terms is thus estimatedto be US$239million (see Annex G).

3.25 There are three logical limitations to relying solely on the financial evaluations of the concession.The first is if there are externaldisbenefits of the concession,the overall social benefit of the concessionmight be negative notwithstandinga financial benefitfor the Govemment.The second is that even in the context of a successfulconcession, it would not be desirable for the Bank to finance a specific investmentwhich was not economicallyviable. The third is that there might be a possibilityto retain the overall concessionbenefits by substituting some alternative investment program mutually acceptableto the Govemment and the concessionaires.All three of these issuesare addressedthrough an economicevaluation of the Line A rehabilitationinvestment itself (see below).

3.26 Line A. The evaluationprocedure used is a conventionalcost-benefit analysis in which the level and performanceof traffic in the affectednetwork is estimatedwith and without the investment under considerationover the effective life of the project (taken in this instanceto be the 20 years of the concession).The basic calculation only covered a single direction of traffic-outward along Avenida Rivadavia.The total benefits of the projectshould be at leastdouble this becausethe inwardjoumey in the corridoris forced to use parallel streetsof lower capacity,for which exclusive bus lanes to improve performanceare not feasible.

3.27 The assumptionsof this appraisalwere that without investment,Line A would collapse after a period of five years (some sensitivity tests were undertakento allow for a longer period before total collapse).With the abandonmentof service on the line, the traffic would be carried predominantly by public bus service. Given the limited road capacity in the Line A corridor (Avenida Rivadavia) this would involve slower joumey times for those transferredfrom subwayto bus, increasedcosts of bus operation,and increasedjoumey time for privatetransport travelers in the corridor. -18-

3.28 The economic evaluation considered a number of altematives, with and without the proposed project to determine the correct level of investment and "project". Even though the rehabilitationof Line A was thought to be the optimal project, other complementaryinvestments were consideredon Avenida Rivadaviawhere it is possibleto introducean exclusive bus lane, regardlessof whetherLine A is closed.

3.29 Because the bus lane improves traffic flow in any event, the effect of introducing it reducesthe calculatedrate of return on keeping the Line A open. A range of altematives for the bus lane, both with and without the subway, were considered. The calculated NPV for one-direction movement along Rivadavia only, varies betweenUS$334 million (assumingno bus lane either with or without the subway) and US$168million (assumingthat an exclusive bus lane was introducedover the whole route whether or not the subwaywas maintainedin operation).The results of the investigation demonstratethat the altemative project(implementing a bus lane) would still be beneficial even if Line A was rehabilitated.The Line A project,however, is shownto be superiorto the altemative(bus lane) since the NPV, calculated for the project comparedto the without situation that includes a full bus lane, is higherthan the NPV obtainedfor just introducingthe bus lane.

3.30 Assumingthat inboundtraffic would generateat leastthe same benefits as the outbound traffic on Rivadavia (actually the benefits will be more because there is no good altemative on the parallel streets for retuming traffic), net benefits in present value terms exceed any other possible altemativeby at least US$340million. It is worth noting that these calculationsexclude any evaluationof environmentalbeneft associatedwith traffic taken by subway rather than by road vehicle. They are, therefore,extremely robustfor the Line A investment.

3.31 Grade Separations. A detailed scheme of economic evaluation has also been establishedfor the proposedroad/rail grade separations.This evaluationprocedure calculates time and operatingcost savingsfor road and rail operatorsand passengers,as well as accident cost savings.The calculationsalso includethe effects on both road and rail system users during the period of construction, includingthose of reduced speed of rail operation and diversion of road traffic to other crossingsin the interim period. Details of the evaluationprocedure are containedin Annex G.

3.32 The economic evaluations completed under these conventions adopted give intemal economic rates of return in the range of 14 to 90 percent and NPV at 12 percent between US$0.68 million and US$24.82 million. However,the results are conservativedue to the way in which accident impacts are estimated (on the basis of averagesunrelated to volumes of various traffics at the specific sites) and evaluated(on the basis of lost future eamingsassociated with deathsand injuries). In addition, the economicbenefits resulting from higher rail frequencydue to completeelimination of grade crossings on the Roca line between Plaza Constituci6nand Temperley were also estimated to be about US$7 million per year starting in the third year of the completion of the grade separations (against a total investmentof US$9 million). Due to the rapid increase in ridershipsince the concessionswere let, the barrier down-timeshave exceededthose stipulatedin the concessionagreements. This meansthat the impact of site-specifictraffic conflicts is likely to be under-represented,and that the level of rates of return is thus likely to be underestimated.

F. Financial Evaluation

3.33 Metroviaswas awardedthe concessionfollowing a competitiveprocess which rankedthe bids on the basis of minimum net present value7 of the Govemment payments (operatingsubsidy and capital investment)required to operatethe system at a definedtariff and service level. Since tariffs are fixed by the Govemmentand cannot be changedby the concessionaire,the profitability of the business dependson Metrovias' abilityto lower its operatingcosts and to generatenew traffic. In order to take into accountthe effect of rising pricesover the long concessionperiod, the contractprovides for an automatic adjustment in the subsidy/tariff level (choice of the Govemment)based on an increase in the cost of providingthe contractuallevel of service.

7 Calculatedat a discountrate of 12 percent. -19-

3.34 Metrovias is a private company which holds a 20-year concession for operating the BuenosAires subwayand the Urquiza line. Accordingto the terms of concession,Metrovias is to receive declininglevels of operatingsubsidy during the first five years of its concession.During the next 15-year period, Metrovias must make paymentsto the Govemmentfor the use of infrastructureon an increasing basis. Over the life of the concession,Metrovias is to make paymentsequivalent to US$360 million and receive from the GovemmentUS$65 million in operatingsubsidies 8. In 1993, the year before Metrovias took over the control of the system, the Governmentpaid out US$54 million in operating subsidies for the subwayand the Urquiza line.

3.35 The financial and operatingresults for the first two years of private operations(Annex H), 1994-1995,show the concessionto be a successthus far. Total revenueswere up by about 25 percentin each of the operatingyears. In 1996,total ridershipwas up by 37 percentover 1993. In fact, the level of ridershipattained in 1996 for the subwaywas equal to that of year eight (2001) of the proposal.On the Urquiza line, passengervolumes in 1996were 48 percent above the 1993 level. Total revenuesin 1995 surpassedthe forecastby about US$21 million. Metroviasalso did well on non-operatingrevenue which, in 1995,was morethan doublewhat was includedin the concessionproposal.

3.36 The high growth in ridership and the requirementsfor taking over the concession increasedthe cost of providingthe service. In 1995, labor costs of US$61 million were up by 14 percent when comparedto the projections.Similarly, energycosts also increasedby about 40 percent during this period. On the other hand, maintenancecosts were nearly half of the projection. The biggest increase, by about US$14 million, was in the expense category 'other expenses" which is probably used to balance the difference between revenues and expendituresto the levels indicated in the concession agreement.Based on the financial performanceso far, there is very little likelihood that Metroviaswould abandonthe concession.

G. Environmental Impact

3.37 The rapid increase in motorized traffic and an accompanyingreduction in all public transport modes, especially rail-based,has led to a deteriorationin the urban environmentdue to an increasein air and noise pollutionand congestion.Although a favorablewind regime has helped to keep air pollution relatively low in the AMBA, traffic fumes accumulateto unhealthy levels during working hours in narrow, heavily traveled streets of the city center. While air pollution is primarily an inner city problemfor workers,shoppers and residentswho are subject to vehicle pollution,other externalitiessuch as accidents, noise pollution and congestionare rampant problems in many parts of the metropolitan region and have contributedto the degradationof urbanspace.

3.38 Unfortunately,a system to monitor the level of air pollution does not exist in Buenos Aires. It is, therefore, difficult to develop effective policies and practices aimed at limiting pollution without knowingthe seriousnessof the problem. As part of project preparation,an air quality and noise monitoring program has been defined for Buenos Aires. The proposed project would support the implementationof the recommendedmonitoring system, including procurementand installation of the monitoringequipment and an associatedtraining program at an approximatebase cost of US$2 million (see AnnexJ).

3.39 In the case of the traffic safety subproject,a preliminaryenvironmental screening was conductedfor all proposedroad/rail crossings (see Annex I). None of the proposedcrossings was found to have adverseenvironmental impacts. No residentialresettlement is envisioned,neither for the traffic safety nor for any of the other subprojects.However, the operationalmanuals for the traffic safety and transport integrationsubprojects would set out the proceduresto deal with impacts on commercialand residential properties, in accordance with a declaration of principles contained in a Social and EnvironmentalLetter, which was agreedduring loan negotiationsand issued by SOPyT in March 1997. Govemmentpayments required in this respectwould be consideredpart of projectcosts (see Table 4.2).

8 Theseare contractualobligations which differ slightly from the Metroviasinitial proposal. -20-

Moreover, the institutional subproject would include technical assistance to provide advice on environmentaland social aspectsof projectexecution, under terms of referenceacceptable to the Bank.

3.40 Positiveenvironmental impacts would result from a reductionin cars and bus traffic and thus a reduction in air pollution, noise levels, traffic congestion,and road accidents. Other positive impacts include the decreaseof fatal accidentsresulting from the constructionof grade separationsat the most dangerousroad/rail crossings.

H. Public Participation

3.41 The final designs for most transfer centers and road/rail grade separationswould be developedwith the participationof the affected population.Summarized in paras. 6 and 7 of Annex I, this processwould be detailed in the operationalmanuals for these subprojects,taking account of a successfulpilot consultationexercise carried out prior to appraisalfor one road/rail crossingsite. With regardsto the road/rail crossingcomponent, once the grade separationshave been ranked accordingto the selection criteria based on maximum economicrates of return, 10 - 12 crossingsout of the total 20 studied would be presentedto the affected communitiesas possible projects. If any crossingswere to require residentialresettlement or otherwiseface strong oppositionby the affected communities, they would be replaced by others on the list. On the other hand, if the communitieswere to object to the design and not the crossing itself, the design details would be modified by the municipalities in consultationwith the affected population. Two aspects of design would be especially important: (a) providing acceptableaccess to the propertiesadjoining the roads which lead to the underpassesbelow the railway track; and (b) provisionfor the use of the crossing by pedestriansas well. To addressthe former design issue,service roads would normally be providedadjacent to the underpassramps. In the latter case, pedestrianpassages would need to be well-lighted,secure, and easily accessiblein order to maximizetheir utility. Similar criteria would applyto the transfer centercomponent. -21-

IV. PROJECTIMPLEMENTATION

A. Institutional Responsibilities

4.1 The Govemment of Argentina would be the Borrower. Metrovias would implement its basic investment program in the same way as it currently does. The other components would be implementedby SOPyT,which would also be responsiblefor overall project coordination.To this effect, SOPyT would create a Project ImplementationUnit (Unidad de Ejecuci6n del Proyecto- UEP) which would report to the Subsecretaryof Table 4.1: Implementin A enc for Each Sub roect Metropolitan and Long-Distance Transport. The Bank would Implementing monitor the implementationof the ...... So,e9j..cO.A...... p..r geny.. project in accordance with a BasicInvestment Program of MetrovfasConcession Metrovfas monitoring and supervision plan Rehabilitationof SubwayLine A UEP (Annex D). Integrationof TransportSystem UEP 4.2 Project EnvironmentalMonitoring & TrafficSafety Program UEP would be responsible for general Strengtheningof InstitutionalFramework UEP project coordination. It would act as the liaison with the World Bank, periodicallyupdate the work plan, coordinateall technical consultants,oversee procurementpractices, and act as the focal point for national, provincial and municipal interaction. It would be staffed by a General Coordinator in charge of overall operations, a Technical Coordinator in charge of technical analysis and assistance,a Project WorksCoordinator responsible for the bidding, selectionand award of civil works subprojects, and an Administrative Coordinatorin charge of the selection of consultants, acquisitionof goods,contracting of work, administrationof projectfunds, and providing periodicprogress reportsto the World Bank. The UEP would be established,and its coordinatornamed, shortly after loan approval.The satisfactoryfunctioning of the UEP would be a conditionfor loan effectiveness.

4.3 Metrovias. All the investmentsincluded in the concessioncontract are the responsibility of Metrovias,which generallysubcontracts the works to third parties.The National Govemment'sSOPyT provides independent oversight, certifies the amount of work finished each month, and authorizes paymentsto Metrovias for completedwork. The amountsfor each part of the basic investmentprogram have been fixed in the concessioncontract, with a formula to adjust costs based on changes in the ConsumerPrice Index of the United States.

B. Implementation Schedule

4.4 The loan is expected to be signed betweenJune and August 1997. The Govemment estimatesthat the project would be completedwithin four years after loan signing. Completion in four years is possibleif there are no delays. However,the bidding processfor each bid may take from 7 to 12 months, including the approval of bidding documents, advertisementin the Development Business joumal and local press, bid evaluation, recommendationsfor award, contract signature, and contract effectiveness.The Bank thus estimatesthat seven years will be required for project completion;this would be more realistic,taking into accountthe average disbursementprofiles of Argentina and of the Latin America and the CaribbeanRegion. Therefore,the expected project completiondate is June 30, 2003 and the closingdate is December31, 2003.

4.5 The Bank's participation in financing Metrovias' basic investment program would terminate in about 1999, when the US$50 million allocated in the proposed loan is expected to have been disbursed.

4.6 If the Govemment exercisesthe option of carrying out advanced contractingfor Line A and some road/rail crossings,the first contractcould be tendered in June 1997 and contracts could be signed in October 1997. Terms of Referencefor the transportstudy and the rail barrier study could also -22- be issued in June 1997,giving at least four monthsfor consultantselection and contractsigning beforeto the loan becomeseffective.

C. Procurement

4.7 Procurementwould be in accordance with the Bank Guidelines for Procurementof Goods and Works (January 1995, revised January and August 1996) and the Bank Guidelinesfor the Use of Consultants(August 1981). Standardbidding documentsissued by the Bank would be used for the procurement of goods and works by International Competitive Bidding (ICB). The Bank-issued standard contractfor consultantservices would be used for major consultants'contracts. In the case of procurement under National Competitive Bidding (NCB), standard bidding documents agreed by the Bank would be used, taking account of the recommendationsof the recent Country Procurement AssessmentReview (May 1996). A General ProcurementNotice was published on January 16, 1997. The procurementarrangements are summarizedin Table 4.2. All procurementaspects were confirmed during negotiations. Table 4.2: Procurement Arrangements ...... (Estimatedcost in UIS$milli2n)- ExpenditureCategory ICB NCB Other N.B.F.-b Total A. MetroviasConcession - - 142.9 - 142.9 (50.0) (50.0)

B. Works - Line A 117.1 - 1.2.Q' - 118.3 (76.1) (0.8) (76.9) C. Works- TransportIntegration 10.0 21.4 0.5 - 31.9 (4.0) (8.7) (0.2) (12.9) D. Works- Environmentand Traffic Safety 10.0 39.1 1.5 - 50.6 (4.0) (15.7) (0.6) (20.3) E. Equipmentfor Air PollutionMonitoring 2.9 - - - 2.9 (2.0) (2.0) F. Other Equipment 0.6 1.8 1.0 - 3.4 (0.4) (1.3) (0.7) (2.4) G. Supervision, Other Technical Assistance and Training ly - - 33.7 - 33.7 (27.9) (27.9) H. Transport Planning Unit - - - 7.7 7.7 (0.0) (0.0) I. Project Administration - - 7.6 - 7.6 (7.6) (7.6) J. Impacts Caused by Transfer Centers and Grade Separations - - - 1.0 1.0 (0.0) (0.0) Total 140.6 62.3 188.4 8.7 400.0 (86.5) (25.7) (87.8) (0.0) (200.0) Figuresin parenthesesare the respective amounts financed by Bank loan. b'Not Bank Financed. d Expansionofsignal control center through direct contracting. y Servcesto beprocured in accordancewIth World Bank Guidelines: Use of Consultantsby WoddBank Borrowersand by the Wodd Bankas Execu0ngAgency (Washington, DC, August 1981).

4.8 Concession for Subway and Urquiza Line. The ROT (Rehabilitate-Operate-Transfer) concessionwas tenderedinternationally in 1992and awardedto Metrovias in 1993. The Bank carriedout a detailed evaluationof that processand concludedthat the tenderingand selectionprocedures satisfied the Bank's criteria of transparency, efficiency and free access for potential bidders. Therefore, in accordancewith paragraph3.13(a) of the procurementguidelines, goods and works specifiedin the basic -23- investment program of the Metrovias concessionwould be procured from eligible sources, using the proceduresof the concessionaire.

4.9 Rehabilitation of Subway Line A. In 1992 the Govemment expected to receive bilateral funding (which later failed to materialize) for the rehabilitationof subway Line A. Thus the concessiontenders specified that the Govemmentwould separately carry out those works, outside the basic investment program. Most of the rehabilitationworks would be carried out under the proposed project through four large contracts: (a) track replacementand associated civil works; (b) other civil works; (c) signals and communications;and (d) electricalsubstations and associatedworks. The works would be let by SOPyT as lump-sum ICB contracts, and their execution would be supervised by consultantsengaged by SOPyT.The role and collaborationof Metroviaswas confirmedin an agreement signed prior to loan negotiations.Shareholders of Metroviaswould be eligibleto participatein the bidding for physicalworks, but could not at the same time be selected for constructionsupervision. In addition, the expansionof the signal control center to accommodateLine A would be contracteddirectly with the firm that Is currently assemblingthe control center for the other subway lines. Direct contracting (for about US$1.2 million) is necessaryto achievetechnical uniformitywithin the control center.

4.10 Other Components. SOPyT would let about twenty contracts between US$2 and US$10 million to build grade separationsat road/rail crossingsand to build transfer centers. In addition, there would be relatively minor works and equipment acquisition under the project. Procurement proceduresfor these would be as follows:

(a) contracts for goods estimated to cost US$350,000 equivalent or more, and contracts for works estimatedto cost US$8 million equivalentor more, would be procuredthrough ICB proceduresin accordancewith Bank guidelines; (b) contracts for goods estimated to cost between US$100,000and US$350,000, and contracts for works estimated to cost between US$350,000 and US$8 million would be awardedthrough NCB procedures.Standard NCB documents acceptableto the Bank would be included in the operational manuals prepared for the road/railcrossing and transportsystems integration components; and (c) contracts for goods estimated to cost US$100,000or less would be procured through local or international shopping, up to an aggregate amount of US$1 million; civil works costing US$350,000or less, up to an aggregate amount of US$2 million, would be procured under lump-sum contracts awarded on the basis of quotationsobtained from at leastthree qualified contractorsin response to written invitations. 4.11 Procurement Review. All contracts for goods estimated to cost the equivalent of US$350,000or more, and all contracts for works estimatedto cost the equivalent of US$8 million or more, would be subject to the Bank's prior review of the procurement documentation (advertising, bidding documents,bid evaluation,and contract award).The first two NCB contractsfor goods and the first two NCB contracts for works would also be subject to the Bank's prior review. For consultants services, all terms of referencewould be subject to the Bank's prior review. Subject also to the Bank's prior review would be all consulting firm contracts above US$100,000,all consulting firm contracts selected on a sole-sourcebasis, and all contracts with individual consultants above US$50,000.The thresholdsfor the Bank's prior review are shown in Table 4.3. -24-

Table 4.3: Procurement Thresholds

Description Typeof Procurement PriorReview ContractValue ...... Works ICB All NCB Firsttwo contracts 350to 8,000 (PriceQuotations from at None < 350 least3 Bidders) Goods ICB All NCB Firsttwo contracts 100to 350 (PriceQuotations from at None < 100 least 3 Bidders)..100 ConsultingServces Firms All > 100 Firms TORonly upto 100 Individuals All > 50 IndividualsTOon Uto5

D. Disbursements and Special Account

4.12 The bulk of the proceeds of the proposed loan, primarily related to Line A and the Metrovias concession,are expectedto be disbursed over a period of four years. Another three years would be required to disburse the rest of the loan proceeds especially for traffic safety, transport integration,and institutionaldevelopment components.The disbursementperiod, equal to the average seven-yearprofile for Latin America,was determinedafter taking into account:(a) contractualobligations of the Governmentto undertakethe railway-relatedinvestments according to a specifiedschedule; and (b) ability to use §3.13a of Bank procurementguidelines for contracts covered under the Metrovias concession(Basic InvestmentProgram). Table4.4: Allocation of Disbursements ExpenditureCategory Amount in % of Expendituresto be US$ million Financed A. Merovias Concession 50.0 35% B. Works- Line A 65.0 65% C. Works- TransportIntegration 11.0 40% D. Works - Traffic Safety 19.0 40% E. Equipmentfor Air PollutionMonitoring 1.5 70% F. Other Equipment 1.7 70% G. TechnicalAssistance and Training 22.0 100%net of taxes H. TechnicalAssistance for ProjectAdministration 6.3 100%net of taxes I. PPF 1.5 J. Unallocated 22.0 Total 200.0

4.13 The allocation of loan amount and disbursementpercentages is summarized above in Table 4.4. Disbursementsin respectof civil works contracts over US$8 million, goods contracts over US$350,000,contracts with consultingfirms over US$100,000and contractswith individual consultants over US$50,000would be fully documented;so would be the first two NCB contractsfor works and for -25- goods. All other disbursemeietswould be made on the basis of Statements of Expenditures(SOE) certified by the UEP. Relevantdocumentation in support of SOEs would not be submittedto the Bank, but would be retainedby the UEP for the review of Bank supervisionmissions. 4.14 The paymentfor works completed under Category A would be made pan passu with Certification and Payment Process the Govemment on the basis of work certificates 1. The concessionaireseeks the approval of SOPyT (Certificados de Obra), issued by the SOPyT. For to beginthe agreedwork by submittingActa de all other categories,disbursements would be made Comienzo,which includes details of the followingstandard Bank procedures.During project implementation,benchmarks for gauging preparationthe accounting and approval process progress,and a paymentschedule linked to the related to the preparation of the work certificates benchmarks. was reviewedand found satisfactory. 2. A SOPyTinspector is permanentlyassigned to the workand is responsiblefor measuring the 4.15 Project Preparation Facility. progressagainst the establishedbenchmarks by Disbursements of up to US$1.5 million are certifyingmonthly work progress through Actas de expected prior to loan effectiveness through a Medici6n. Project Preparation Facility (PPF) advance which was signed in August 1996. The PPF, whichwill be 3. Paymentrequests are madeby theconcessionaire used almost exclusively for project preparation on monthlybasis by submittingto SOPyT design consultants, and other forms of technical Certificadosde Obra(work certificates) which assistance, has a 100% disbursementrate net of includeUS inflation-related price adjustments and taxes. the inspectedmonthly progress reports. 4. The SOPyTreviews and approves the work 4.16 Retroactive Financing. Retro- certificatesand forwards them for furtherreview active financing up to US$20million (10 percentof andpayment to the Ministryof Economy.Five the loan amount) would be sought for project percentof the invoiceis withheldto bepaid at the expenditures incurred in accordance with Bank completionof the work. procurementguidelines. This retroactivefinancing 5. Treasurymakes the paymentwithin 30 working would be for expenditures made primarily under daysof the dateof thework certificate after categoryA after July 1, 1996 or one year prior to approvalfrom the Contra/orla. loan signing, whichever is later. Claims for retroactivefinancing of eligible expenditureswould 6. At the conclusionof thework, the concessionaire be submitted to the Bank no later than 90 days recoversthe fivepercent withheld amount. after loan effectiveness.Agreement was reached during negotiationson the retroactivefinancing arrangements.

4.17 Special Account. To facilitate timely project implementation,the Govemment would establish,maintain and operate,under terms and conditionssatisfactory to the Bank,a specialaccount in US dollars at a commercialbank acceptableto the Bank. The Bank would make an initial deposit of US$2 million into the SpecialAccount, risingto US$10million after withdrawalsand commitmentshave reached US$25 million (including payments for retroactive financing). Replenishmentof the Special Account would be made in accordancewith standardBank procedures. Documentation would be retained by the Borrowerand would be made availablefor periodic inspectionby the Bank.

E. Auditing

4.18 Agreement was confirmed during negotiationsthat the UEP would maintain adequate records to reflect its operating and financial situation, in accordancewith sound accounting principles applied consistently.The project's accountswould be available for inspection by the Bank. The UEP would have its accounts,including those kept for the purposesof the project, the SpecialAccount, and the statementsof expenditureaudited annually by independentauditors acceptable to the Bank. These auditswould be presentedto the Bank no later than six monthsafter the close of the fiscal year. -26-

F. Project Monitoring and Reporting

4.19 The Govemment through the UEP would be responsible for (a) monitoring the Implementationof all project components;(b) evaluatingthe impact of the measuressupported by the proposed project; (c) reporting to the Bank; (d) disbursementarrangements; and (e) preparing the ImplementationCompletion Report. The projectperformance and monitoringindicators are described in Annex D.

4.20 In about Novemberof each year, the Bank and the Governmentwould conduct a formal joint review of the progress made in reachingthe project objectives and in the implementationof the proposedproject. The annualreview would providean opportunityto discuss project issues,in particular compliance with covenants, technical assistance, traffic safety, and the quality of subproject implementation;it would concludein a set of updatedmonitoring targets and any remedial actions that may be required.

4.21 A Mid-Term Review would be held with the participation of the Government and Metrovias no later than November 1999. The Mid-TermReview would undertake an in-depth interim assessmentof progress in implementingproject components,based on the implementationindicators. Basedon its assessment,the Mid-TermReview would concludewith an agreementon changesin project implementationand a schedulefor their implementation,if required.

4.22 Reporting. The UEP would submit to the Bank semi-annual project implementation progressreports relating to January-Juneand July-Decemberperiods no later than 30 days after the end of each semester.The progressreports would describeadvances made in implementationof the project againstthe appraisalestimates. They would presenta critical assessmentof problemsand issuesarising during project execution. The reports would also discuss compliance with the covenants of the Loan Agreement and other conditionsand actions taken to enforce compliance. In cases of unsatisfactory progress, the reports would also describe proposals for adjustments and remedial actions. The ImplementationProgress Reports would include updates of the key hidicators of project performance. The UEP would also submit a projectcompletion report not later than six monthsafter the closing date of the loan.

G. Project Supervision

4.23 Bank supervision of project execution would be particularly important during the first three years of the project, when significant institutionalstrengthening and policy decisions would be occurring.The bulk of disbursementsis also expectedduring these initial years. The Bankwould conduct two supervision missions each year; the second of these missions would coincide with the planned annual/mid-termreviews. Staffing for these missions would normally include the task manager, a financial analyst, a transportplanner, and a procurementspecialist. A total of about 50 staff-weekswould be requiredeach year for the first two years, thereafterdecreasing to 25 staff-weeksin the third year and 15 staff-weeksin the fourth year until the end of the project. -27-

V. AGREEMENTSREACHED AND RECOMMENDATION

5.1 The followingactions were taken prior to negotiations:

(a) the Govemment and Metrovias signed an agreementwhich inter alia: (a) changedthe currentdeadline for the rehabilitationof subwayLine A; and (b) confirmedthat Metrovias will collaboratewith the contractorsand supervisionconsultants which the Govemment will engage(paras. 3.17, 4.9);

(b) the Govemment confirmed its readiness to establish the UEP and to appoint its coordinatorspeedily after loan approval(para. 4.2);

(c) the Govemment submitted a plan for the establishmentof a Steering Committee to guide the preparationof a transportmodel for the AMBA and other aspects of the urban transportstudy (para. 3.10 (a)); and

(d) the Govemment submitted a letter of policy on how the UEP and the Steering Committee would evolve into metropolitanentities responsiblefor transport planning (paras.1.20 - 1.26,3.10 (a), and 4.2).

5.2 The followingassurances were obtainedat negotiations:

(a) that the Project ImplementationUnit (UEP) will be structuredand adequatelystaffed and otherwisesupported in the implementationof its responsibilityunder the project (para. 4.2);

(b) that procurementwill be carriedout in accordancewith Bank guidelines,including: (i) the use of standardbidding documents for the procurementof goods and works, under NCB and ICB procedures;(ii) use of Bank'sguidelines for the selectionof consultants;and (iii) specific procurementlimits (paras.4.7, 4.10, 4.11);

(c) that a SpecialAccount in a commercialbank will be openedand maintained(para. 4.17);

(d) that the Special Account and Statements of Expenditures (SOEs): (i) will be audited accordingto procedures,and by independentauditors, acceptableto the Bank; and (ii) auditswill be submittedby June 30 of each year (para. 4.18);

(e) that the projectwill be executedin accordancewith sound environmentalpractices and with the Bank's policyon resettlement(para. 3.39);

(f) that the UEP will send the Banksix-monthly progress reports within one month from the end of each semester(para. 4.22);

(g) that the UEP will send the Bank a project completion report not later than six months after the closingdate of the loan (para.4.22);

(h) that annual reviewswill be carried out to assessprogress and, as necessary,agree on remedialactions (para. 4.20);

(i) that a Mid-term Project Review will take place no later than November 1999 to review pre-agreed institutional, operational and financial performance indicators, and compliancewith covenantsof the Loan Agreement,to assessproject performanceand, as necessary,agree on remedialactions (para.4.21); and -28-

(D that the Govemment will make its payments to the concessionairesof urban and suburban rail services in a timely fashion, as specified in the concessionagreements (paras.2.9 - 2.14).

5.3 The following conditionsfor loan effectivenesswere agreedat negotiations:

(a) establishmentand appropriatestaffing of the UEP (para. 4.2);

(b) establishment and appropriate staffing of the core group for metropolitan transport planning(paras. 1.24, 1.25 and 3.10 (d)); and

(c) legal opinion confirming the validity of the Government'sagreement with Metrovias mentionedabove (para. 5.1 (a)).

5.4 The followingconditions for disbursementswere agreedat negotiations:

(a) preparing an operational manual satisfactory to the Bank, setting out the criteria and proceduresto be followedin the implementationof the road/rail crossings(paras. 3.8 (a), 3.39, 3.41 and 4.10 (b)), is a conditionfor disbursementfor civil works to carry out the traffic safety subproject;

(b) preparing an operational manual satisfactoryto the Bank, setting out the criteria and proceduresto be followed in the implementationof the transport systems integration component (paras. 3.7, 3.8 (a), 3.39 and 4.10 (b)), is a conditionfor disbursementfor civil works to carry out the transportintegration subproject;

(c) compliance with the relevant resettlement, public participation and institutional requirements spelled out in the Social and Environmental Letter (para 3.39) is a condition for disbursementfor individual major works under the traffic safety and transportintegration subprojects; and

(d) signing an agreement satisfactory to the Bank with the agency selected for the maintenanceand operationof the air pollution monitoringsystem (para. 3.9 and Annex J) is a conditionfor disbursementfor the air pollutionmonitoring component.

5.5 Retroactive Financing of up to US$20 million (10 percent of loan funds) is recommendedfor expendituresmade after July 1, 1996 and up to 12 months prior to loan signing. Retroactivefinancing would include items such as preparation of final engineeringdesigns and particularly the ongoing investmentsof the Metrovias concession.Claims for retroactive financing would have to be made no later than three monthsafter loan effectiveness.

5.6 Recommendation. With the above agreementsand conditions,the proposedproject would be suitable for a Bank loan of US$200million to the ArgentineRepublic. - 29 - ANNEXA

BUENOSAIRES URBANTRANSPORT PROJECT

ANNEX A: TRANSPORTIN METROPOLITANBUENOS AIRES-ISSUES AND OUTLOOK

A. Basic Transport Conditions in the Buenos Aires Metropolitan Area

1. The metropolitan area of Buenos Aires exhibits several characteristics which make the maintenanceof high-qualitytransport inherently difficult. First, it is large. It has a total populationof over 12 million and covers an areaof over 16,000km 2. No city of this size in the world is without transportand traffic problems. Second, it has a difficult shape. Being boundedon one side by the River Plate, and having the main administrativeand businesscenters located close togetherby the river, its road and rail transport networksand flows take the form of a 1800fan with very heavy concentrationsof traffic on the main radials.Third, it is administrativelycomplex. It is comprisedof the Municipalityof BuenosAires and 36 other municipalities in the Province of Buenos Aires, which share responsibilitiesfor transport provisionwith some executiveagencies of the NationalGovemment.

2. Road congestionis perceivedas increasingwithin the city, althoughthere are no reliable direct statistics either on levels of traffic or on average traffic speeds. Neverthelessit is estimated that the national vehicle stock has increased by 1.7 million vehicles in three years. Over a longer period, the proportionof trips by private car in BuenosAires has increasedfrom 15 percent in 1970 to 35 percent in 1995. Congestion has had a serious effect on the operation of the bus service. One bus operator estimatedthat he had increasedhis fleet size from 72 vehicles to 104 vehicles over a period of 25 years in order to maintainthe same specified frequencies.More recently it has been estimatedthat there has been a loss of 5-7 percenton vehicle kilometersbetween 1992 and 1995 due to increasedcongestion.

3. Rail passengertransport in the metropolitanarea is providedon a networkof 37 km of subway,7 km of surfacelight rail transit, and 900 km of suburbanrailway. There are proposalsunder consideration for two further metro lines within the central area and for the electrification of some sections of the suburban railways. Service is provided entirely by private sector consortia operating a government- ownedsystem under concessions.The concessionsvary in duration and were subject to a procedureof competitive bidding. In all cases,the concessioninvolves a commitmentto provide a minimum level of service at a specified fare (with adjustmentarrangements specified), as well as undertakinginvestment programs defined in the concessioncontracts. The concessionsprovide for capital payments for the investmentprogram, operating subsidies (particularly in the early years of the concessions)and canons (royalty payments to the Govemment, usually in the later years of the concession).In the case of the subway,the contract provided for some infrastructureto be rehabilitateddirectly on the Government's account (Line A). Contractswere awardedon the basis of the lowestnet present cost to the Government of the financialflows proposed.

4. Bus services (colectivos)within the BuenosAires MetropolitanArea (AMBA) are also provided entirely by the privatesector. About 15,000vehicles operatelegally within the region. Service is provided on the basis of route franchises granted either to single companies or to associationsof operators working as a single "empresa"(company) for regulatorypurposes. Although originally the system had a very fragmentedownership, only about five percentof the total capacity remainsin the hands of owner- drivers. Each route (which may have several variants at its peripheries)is granted as a monopoly franchise, but there is extensive overlap between routes to create and maintain a high level of competitionin operation. In addition to these vehicles in public service, a further 1,500 vehicles are licensedto providevarious forms of limited availability and charterservice.

5. The size of the bus fleet has remained approximatelyconstant over the last 25 years. The amount of seat-kilometersavailable is also estimatedto have changedrelatively little as a consequence of the rough balance between increased average number of buses and reduced average operating speedsdue to congestion.Vehicle size has increasedby about 30 percent over 25 years, with 8.5-meter vehicles being progressivelyreplaced by 11-metervehicles. ANNEX A 30 -

6. Conditionsof employmentin the industryare strictly regulated. Labor is normally employedon contractsinvolving a driving day of eight hours,with vehicles operatedon multi-shiftsystems. Split shifts are not normally permissibleso that inter-peak service is maintained at relatively high levels. Some flexibility has been introducedrecently with legal permissionfor employment of new staff on a 5-hour shift basis, and there has been a progressiveelimination of "extra workWarrangements. Recent changes have included the obligatory use of farebox systems for fare collection and European Union environmentalstandards for newvehicles.

7. Taxis dominate the central city, where in the central zonesthey comprise nearly 50 percent of the traffic flow. There are about 40,000 licensedtaxis in the Municipalityof BuenosAires alone. There are also many taxis operating illegally.Unemployment has contributedto this excessivesupply.

S. Some modal integrationhas already been stimulated by market pressures.For example, the pattem of bus routes in the corridorof subway Line A / Rivadavia clearly shows the density of services concentratingon the outer terminusof the rail route.Moreover, some restructuringof bus routesto serve rail heads is possibleand has been occurringunder the present regulatoryarrangements. In many such cases, however, there has been no explicit planning of the infrastructureto facilitate the interchange. Where major traffic routes are involved,this resultsin heavy pedestrianflows across dense, high-speed traffic flows with serious safety implications. Lack of coordination or collaboration among disparate agenciesis a primary reasonfor this situation. B. Current Institutional Arrangements

9. There is no metropolitan-leveljurisdiction and hence there is no single institutional focus for urban transport planning in the city region. The agreementbetween the Minister of Economy and the Mayor of Buenos Aires, signed in 1991, set up a precursorof an autonomous agency. Although the legislation to create a permanent autonomous agency (ATAM-Autondad del Transporte del Area Metropolitana)was passed by the Senate, it failed to gain broad political support and is unlikely to materialize.

10. The body set up as a precursor(pre-ATAM) has developed into a competent planning unit. It performsplanning, design and assessmentfunctions for metropolitantransport, particularlyin respectto matters which fall within the nationaljurisdiction, but also, to a lesser extent, in collaborationwith other jurisdictions. In late 1996, it was converted into new unit (TUAMBA-Transporte Urbano del Area Metropolitanade BuenosAires) with the objective of maintainingit as a core for metropolitantransport planning.

11. Responsibilityfor the elementswhich together determine the natureof urbantransport in Buenos Aires remainsfragmented. In some casesthe same functionis performedby a different institutionallevel in different parts of the metropolitan area. In many cases functions which interact are exercised by different jurisdictions or agencies,with little formal collaborationor coordination of policy in areas in which the functional or jurisdictional interests overlap. Even within the national jurisdiction there has been little coordination between the secretariats of public works and of transport in respect to metropolitantransport responsibilities.In June 1996, the public works and transport functions were merged into a single Secretariat.Partly in responseto suggestionsmade by the pre-appraisalmission, the Subsecretariatof Metropolitanand Long-DistanceTransport has been given road planning functions, in additionto those of public transportplanning.

12. Major road investments-particularly the constructionof radial motorway accessinto the city - used to be the responsibilityof the public works secretariatwithin the Ministry of the Economy before it was merged into SOPyT. New constructionis mainly being undertakenby the private sector under toll road concessions.This is managed by OCRABA,a special agency of the public works secretariat(and now SOPyT). For the most part, schemesfor the major access links are already committed through concessionagreements, though in some importantcases the works have not yet been designedin detail. - 31 - ANNEX A

13. Maintenance and managementof the local road network within the city region fall to the provincial or municipal governments.However, many provincial roads are maintained by the regional offices of the nationaljurisdiction.

14. Road safety and traffic enforcementis the responsibilityof the police, under the Ministry of the Interior.Road safety programsare also preparedby a specialpurpose unit (Conamba).There is no local control of this policing function. Administrationof road safety appears to be very lax, with an absence even of adequateaccident recordsand statistics.

15. Road traffic management is a municipal function. This includes not only responsibility for signaling and general management of street traffic but also specific measures such as the implementationof bus lanes. Parking policy and implementationis also formally a municipal function, though there is no well-articulatedpolicy on either the quantity of parking provision or on charges for parking.The most important functions of city center traffic managementthus fall to the Municipalityof the City of BuenosAires (MCBA),which has not been able to prevent the deteriorationof city-center traffic conditions.The situation was consideredto have reached such a bad state that the National Govemmentestablished a Traffic EmergencyCommittee in late 1994 to develop immediatemeasures to improve the situation. A scheme was introducedto protect the micro-centerfrom through traffic, and some exclusivebus laneswere designedand implementedas part of this initiative. In some cases (as for example the bus lane on Avenida C6rdoba)the Municipalitysought the technical advice of the national administration(in this case pre-ATAM)in the designof schemes.

16. Metropolitanrail transport is provided by the subway and suburban railways. The former is technically owned by the Municipality of BuenosAires and the latter by the National Govemment. In practice all metropolitanrail transport has becomethe responsibilityof the nation (through the national financing and managementof the passengerrail concessions,managed by an agency of the SOPyT). The concession contracts were supervised by the Coordination Unit for the Railway Restructuring Program (UCPF), which in late 1996 was converted into the Gerencia Ferroviaria de la Comisi6n Nacional de la Regulaci6nde Transporte(GFCNRT). It is responsiblefor all aspects of the planning, regulationand control of rail transport.

17. Rail fares are specified in real terms within the concessioncontracts, with provisionsfor fares to be adjustedto accountfor inflation or in responseto achievementsof levels of service in excess of those specified within the contracts. Complex formulationshave been developed for the calculation of these contractuallypermissible fare increases.In practice,the base level of rail fares is very low. Particularly for long-distancemovements, rail fares are less than half those of the buses(see Table Al).

18. Increasesin rail fares to bring them more in line with bus rates might assistsome bus operations which are in direct competitionwith rail routes,attenuate the peak demand on rail capacitywhich is often stretched, and generate revenues which might be devoted either to direct reduction of rail subsidy payments through renegotiation of the concession contracts or to Table Al: FareComparisons for Some Long-Distance financing a Metropolitan Transport Metropolitan Public Transport Trips Fund to be invested in whatever Trains Buses yields the highest social return. In Origin/ Distance Fare Distance Fare Ratio any event, it is desirable that the Destination (km) ($) (km) ($) impacts of public transport fare CF-Lujan 66.5 1.5 70.5 3.7 2.43 changesbe examinedin the context 80.5 4.2 2.76 of developing a consistent and CF-Mercedes 98.1 2.3 114.9 5.8 2.58 cornprehensive urban transport CF-Zhrate 91.4 2.2 90.0 4.7 2.13 comraehesve ubn rnsotCF-Escobar 51.3 1.2 49.6 2.7 2.25 strategy. 67.5 3.0 2.50 49.6 2.5 2.08 19. Bus regulation is divided CF-LaPlata 52.5 1.2 61.0 3.3 2.75 among three jurisdictional levels. 82.0 4.1 3.42 Within the Municipality of Buenos CF-Lobos 99.0 2.3 106.0 5.5 2.44 Aires, and for servicesinto and out CF=Federal Capital, i.e., the Municipalityof BuenosAires ANNEX A - 32 - of the Municipality,the jurisdiction is national,and is implementedby the NationalCommission for Motor Transport(CoNTA), which controls about 10,000 of the 15,000 licensedbuses in the metropolitanarea. Buses operating betweenmunicipalities in the Province of BuenosAires are a provincial responsibility, operated by 114 separate route operators. About 1,000 buses operating entirely within individual municipalities in the Province (excluding the Municipality of Buenos Aires) are purely a municipal responsibility.Policies on bus licensingare much more liberal in some of the outer municipalitiesthan in the nationaljurisdiction. Fares for bus serviceswithin the nationaljurisdiction are set by the Secretaryof Public Works and Transportwithin the Ministryof Economy.Although bus fares for the otherjurisdictions are formallywithin the local jurisdictionalcompetence, de facto they follow nationaljurisdiction fares.

20. Taxi regulationis exclusivelya municipalfunction throughout the metropolitanarea. Particularly in the Municipalityof BuenosAires, implementationof taxi licensing policy has been "liberal", with an estimated 20,000 vehicles operating illegally in addition to the legally licensed stock of about 40,000. Taxi fares also fall within the municipaljurisdiction. The taxi businessappears also to have considerable political weight; for example, it was able to persuadethe Municipalityto allow taxis accessto the newly- created bus lane on Avenida C6rdobavery soon after its introduction.

C. Recent Changes and Their Effects on the Transport Sector

21. There is considerabletalk of a trisis"in urbantransport in BuenosAires and of the need to re- organizetransport arrangements to meet the crisis. However,in consideringthe currentproblems of the transport industry,the depth of the current recessionin activity is the dominatingfactor to be bome in mind. Unemployment is officially declared as being 16.4 percent, but popularly believed to be considerablyhigher. This has direct effects on the demandfor all modes.Gasoline consumption fell by 5 percent in 1995, and has continuedto fall slightly in 1996.The effect of recessionhas been particularly severe on the buses, which lost 22 percent of their traffic in 1994 and 1995. In 1996, the traffic loss continued,though at what appearsto be a reducedrate. Studies undertakenby CoNTA, as well as the views expressedby bus operatorassociations, attribute the bulk of this decline to the recession.

22. There has been some responseto the decline in demand by bus operators,both in reductionsin frequency and some route restructuringto take account of rail service improvements (bus service changes have to be approved by CoNTA). Surprisingly,there have been few bankruptcies, partly becauseof increasesin the minimumbus fare from 35 cents to 40 cents in August 1993, and to 50 cents in August 1994. It is suggestedthat there has been some consolidationamong the buses, as well as some deferment of vehicle replacement.However, there is no strong statistical evidence for either of these trends.

23. The recessionhas also had some direct effects on supply. Unemploymentappears to have led to an expansionboth in the legally licensed'remise"(hire car) business,of which there are now estimated to be about 12,000 operatingas taxis or public transportvehicles. There are also about 500 buses and minibusesoperating as legal charter services and probably another 1,000 engaged in the operation of illegal, unfranchisedbus operations.This appears to have been of particular importancein the outer municipalitiesof the AMBA where competitionis particularlyfierce and, in some cases, clearly condoned by the local political authority. The licensed buses find this form of competition particularlydifficult to respondto in areaswhere enforcementis lax.

24. Since the concessioningof urban railway services,there has been a substantial increasein rail patronage.Because of the high level of fare evasion beforethe concessioning,and the absenceof direct counts, it is not possibleto state with accuracywhat has happenedto the "actual" level of ridership. Improved service has undoubtedlyattracted many new riders, though the increased attention to fare recoveryhas almost certainlydriven some former non-payingpassengers away. It is estimated,however, that real traffic (as opposedto the numberof passengerspaying) has risen by at least 30 percent over a two-yearperiod.

25. Once reliable rail service has been re-established,direct competitionon line haul between rail and buses is likely to diminish. An example of what might be expected to occur can be seen in the - 33 - ANNEXA experienceof one bus operation in the corridor of the Roca line. Before electrificationof the rail line in the 1980s,the bus operated200 of its 240 vehicles in service directly competingwith the railway.After electrificationonly 90 of the vehicles operateon competitive routings,and 150 operateservices that are feedingthe rail system.

D. Identified Problems

26. Road Congestion. Road congestionis perceivedas a growing problem, yet traffic restraint is virtually non-existent outside the micro-center. Responsibility for traffic management falls to the municipalitieswhich are not well staffed to perform the function, and traffic managementwithin the metropolitanarea is generallyconsidered poor. It is, therefore,important to develop skills both of design and implementationat the appropriateinstitutional level.

27. In the longer term it would be desirableto introduce measuresof traffic restraint. A consultant employed by the Subsecretariatof Metropolitanand Long-DistanceTransport recommendedthat this possibility be further explored. In the interim some surrogate instrument,such as parking pricing or quantitativerestriction in parkingavailability is desirable.But the currentinstitutional arrangements make this unlikely in the nearfuture. In that instance,there is a case for the introductionof a fuel tax surcharge within the metropolitanarea as a proxy. While fuel tax is not a very good instrumentto proxy for a congestioncharge, it is betterthan nothing.In the currentcircumstances it would not only have some- albeit very modest-impact as a constraint on use of roads, but would also have the advantage of generatingresources for a MetropolitanTransport Fund which might be used to fund metropolitanlevel expenditureson the improvementof the sector as a whole.

28. Bus priority schemes would appear to be justified by the volumes of traffic in a number of corridors.Some limited schemeshave beenintroduced by the Municipalityof BuenosAires. The fact that so little has been achievedso far is partly becauseresponsibility for introductionof such schemesrests with the municipalitieswhich are not well staffed for the design and implementationof such schemes, while the regulation of buses using the lanes is the responsibilityof CoNTA (at least in the national jurisdiction).A broadersystem of bus lanes has been designed,but is not being implementedbecause of the lack of commitmentby the jurisdictionsresponsible for implementation.

29. Bus Operations. Fare collection is commonly perceived as a problem. Because many routes are long, a flat fare system is not appropriate.In the case of the buses,the introductionof the "farebox" system of coin payment, considerednecessary to secure revenues with one-personoperation of the vehicles, has had the effect of making fare payment a relatively slow process. At stops with high boarding rates, this causes delay to the vehicle and congestionof the traffic flow of which it is a part. There is an interestin the developmentof more technologically-advancedmethods of fare collection.As part of project preparation an intemational consultant was engaged by Govemment to advise on altemative means of electronicfare collection and verification. In the first instance the emphasisis on the identificationof a commonstandard for the separate rail enterpriseswhich would ultimately allow common ticketing. Some of the bus managers are also interested in the possibility of smart-ticketing systems as a means of improving efficiency of operation. This is another area where ensuring coordinationbetween the actions of separateagencies may have a high pay-off, irrespectiveof whether implementation powers are centralized or not. It is also an area in which the basis for securing coordinationis the developmentof a center of technical advice on a metropolitanscale.

30. Some bus industry re-organizationwould be necessaryin responseto changes in demand. In particular, where demand is falling due to improvement of rail service this would require route restructuringto concentrateon feeder services rather than trunk haul. This has already happenedin a numberof cases. It may create difficulties for the operator where there is need to shift from a service whichfalls underone jurisdiction (servicesinto the Municipalityof BuenosAires) to one which falls under another(services within an outer municipality).Some coordinationof action betweenjurisdictions is then required. Even where the changefalls entirely within one jurisdiction,the process may be complex if a change of route increasescompetition with existingoperators. Similar issues might arise if some roads were closed to bus traffic as part of general traffic managementor environmentalprotection actions. In ANNEXA - 34 - all these cases the problemsare inherentin the kind of managed-competitionsystem which has been so successful in the past in maintainingpublic bus services in Buenos Aires. It is not a reason for any fundamentalinstitutional change. But it does indicate the need for better collaborationbetween agencies and a better basis for understandingthe effects of changeover a wider area.

31. Environmental and Safety Impact. The environmentalimpacts of transport currently receive little attention. The buses, which might be viewed as beneficial because they obviate the need for increased use of cars in the city, seem to be regarded somewhatsuspiciously because of the very obvious phenomenonof smoke emissionsof the worst vehicies. CoNTAis addressingthis by imposing European Union environmentalstandards on new bus purchases.In contrast, taxis and private cars, which make much more prodigal use of roadspace, are very liberallytreated. There is currently neither any direct chargingfor the congestionimpacts of these vehicles nor any satisfactorysurrogate measure (such as restrictiveparking or regulatorypolicies for vehiclesoperating in the centralarea).

32. There appearto be a numberof reasonsfor this neglect of environmentalsustainability in urban transport. First there is a lack of information, with no program of monitoring of transport-related environmentalimpacts and hence no basis on which to develop a strategy.This would be one of the early priorities of the technical group to be developedunder the project. Second,there appearsto be a lack of appreciation at the highest levels of the national administrationthat environmental protection requiresa close coordinationof the design of infrastructureand its managementas well as control of the vehicles operating on it. Third, the fragmentationof responsibilitiesfor the various aspects which contributeto environmentalmanagement in urbantransport prevents the emergenceof a comprehensive policy.

33. Road safety is also severely neglected.The assignmentof responsibilitiesto Conamba,within the Ministry of Interior,inevitably separates the issuefrom the administrationof local traffic management and infrastructuredesign which are important contributorsto better safety performance.In this area of environmentalconcem, as with air quality, the necessaryinitial steps are the organizationof a reliable data base for the identification of topics for priority attention and the establishment of a locus of responsibilityfor traffic safety which can bring together a range of actions in a comprehensivepolicy. Weaknessesin inter-agencyand inter-jurisdictionalcollaboration clearly need to be addressed.

34. There are over 700 at-grade crossingsof railways by roads in the metropolitan area, 500 of whichare protectedby manuallyor automaticallyoperated barriers. Accident rates at these crossingsare already high. Delays to road traffic are large and are increasingas rail service frequency improves.A concertedeffort to improve this situation is being supported by the project. However, it is important to emphasize that effective action in this area, as in many others in Greater Buenos Aires, requires improved collaboration between the agencies and jurisdictions (national transport jurisdiction, municipalities, railway concessionaires,police, etc.). Defining a focus for this collaboration and establishinga capabilityto prioritizeand designschemes is an importantrequirement.

35. Railway Development and Modal Integration. The concessioningof the railwayswas achieved rapidly and is already demonstrablysuccessful in improving rail patronage and reducing operating subsidy.But it is the inevitable consequenceof the speed of the processthat some of the investment programswhich were included in the concessioncontracts are not consideredby the concessionairesto be the best possibleuse of resources.Replanning of the investment program and renegotiationof the contractsis therefore necessary.The establishmentand maintenanceof a strong technical base for the Govemmentresponsibilities as a ucustomer' is criticalto the successof this further development.

E. The Government Strategy for Urban Transport

36. There are two main policy elements of a strategic nature which have been applied fairly consistently:the successfuloperation of transport services though the private sector, and the rather inefficient coordinationof strategictransport planning and traffic managementin the metropolitanarea. -35- ANNEX A

37. Private sector participationin supply, which has long existed in the bus and taxi industry, has been extendedover the last four years to the whole of the urban and suburbanrail network and to some trunk road accessesinto the city throughthe concessionprocess. Moreover, in the bus, rail and toll road sectors there are National Govemment agenciesfor managementof the competitive market (National Commissionfor Motor Transport-CoNTA, CoordinationUnit for the Railway RestructuringProgram- UCPF, and the agencyresponsible for urbanmotorway concessions-OCRABA) to award and supervise the concessionsystems.

38. The Government maintainscontrol over prices for all transport modes, despite the move to privateoperation. In most instancesthis controlis exercisedcentrally, at the highest level, and has been usedto keep transportfares low.

39. Despite these central strategic elements, in identifying current problems it is clear that a substantialpart of the problemsarise where the jurisdictions overlap without adequate collaborationor coordination of action. What is missing in the existing framework is any effective planning and implementationof road traffic management,any coordinationof road traffic and public transport policy implementation,and any concertedeffort to deal with the safety and environmentalproblems associated with metropolitantransport, including the absenceof any strategyfor traffic restraint.To some extent that is a matter of intemal coordinationbetween the transportand public works secretariats.One of the aims of the project is to improve that relationshipthrough associationin the managementof the technical group for metropolitantransport planning.

40. To some extent, however, the lack of coordination is a matter of the fragmentation of responsibilityover fields in which there is substantialinteraction. Separation of responsibilitywithin the Municipalityof Buenos Aires for bus lanes (municipaljurisdiction) and bus route regulation (national jurisdiction)is a case in point. The direct election of the mayor of the Municipalityopens up the possibility of metropolitantransport policy becominga sourceof political conflict betweenauthorities under different political control. The transfer of responsibility to an overarching metropolitan level agency, with appropriatepowers and financial resources,would almost certainly be seen as a means of reducingthe powersof the democraticallyelected municipal governmentand is thus unlikely to be achieved in the short term.

F. The Philosophy of the Project

41. From the viewpoint of the World Bank's experience in the urban transport sector, the current situation in BuenosAires presentsa mixed picture,including some dimensionsin whichthe city has been outstandinglysuccessful and othersin which it appearsto be relatively backward.

42. The institutionswhich have been put in place do seem to have come to grips with the problem of creating an economicallyand financiallysustainable basis for public transportoperations. The emphasis on private sector operation accords well with intemational experience on supply efficiency in urban transport.The existenceof competitionbetween overlapping routes in a regulatedframework for the bus industryalso appearsto be structurallygood practice. Institutionsfor supervisionof both bus franchising and railwayconcessions appear to be reasonablyeffective.

43. The problemsof social sustainabilityare also being addressedthrough the measuresto ensure the maintenanceand financing of an extensive and affordable public transport system. Insofar as this involves direct subsidy of public transport, the specificationof fare levels within the rail concession contracts clearly separates Govemment strategic control over fares from company management responsibilityfor supply.This is also a generallyadvisable structure where transportsubsidies are part of Govemmentpolicy.

44. The major weaknessconcems environmental sustainability. In this dimensionthere appearsto be an absenceof any appreciationof the need for the operationalinteractions between modes to be taken into account. In particularthe failure to recognizethe strategic importanceof public sector planning and management of road infrastructure and road traffic threatens ever-increasingroad congestion and ANNEXA -36 - environmental deterioration (especially as the economy recovers and incomes, car ownership, and vehicle use increase).This failure of vision is reflectedin the absenceof appropriateinstitutions.

45. The main initiative which is currently helping to protect the environment is the emphasis on refurbishingthe metropolitanrail network(although this was stimulatedas much by immediate financial and social pressures as by environmental objectives). In this context there are some physical investmentsin the public transportsystem which shouldbe beneficialeven in the absenceof appropriate policies for road transport. These include the major rehabilitationof the subway Line A, which would collapse without an urgent investment program. Indeed, in this particular case the benefit of the investmentwould be even greater in the absenceof efficient measuresof road traffic managementthan with them. The investmentsin the grade crossingsand transfer facilities also support increaseduse of the improvedrail network.While these are subject to-and satisfy-the normal economictests, for the most part their benefitsare also not dependenton the achievementof any specific institutionalreforms.

46. For many of the problems identified above, particularly those which have environmental significance, the absence of coordination between agencies,and the lack of an adequate knowledge basis for the design and implementationof policies and instruments,is either critical or at the very least unhelpful. The challengein designing a project is, therefore, to attempt to find ways of developing a broader political appreciationof the importanceof a more comprehensiveapproach to the problemsof urbantransport as a basisfor creatingappropriate coordination of policiesand institutions.

47. The philosophy of the project is therefore to help introduce measures aimed at increasing commitmentto a greater level of metropolitantransport coordination. It is believed that this can best be achieved by demonstratingthe possibilities and advantages of coordinated action, based on strong technical capability, to deal with commonly recognized problems. The strategy of the project is to encouragethis in threeways:

(a) the development of a core group of technical skills in metropolitantransport planning to ensure a sound technical basis for the design and implementationof metropolitantransport and traffic measures;

(b) the carrying out of an urban transportstudy which would require the cooperationof diverse agencies throughout the metropolitan area, and produce planning tools and projections usefulto all of them; and

(c) the creation of a management committee, which would include representativesof the different functions and jurisdictional levels, to identify problems common to the separate jurisdictionsand to providepolicy guidanceto the technicalcore group.

48. The developmentof the technicalcapacity to adequatelyaddress the complex interactionswithin the urbantransport system is at the center of the strategyfor institutionalstrengthening. The first part of the strategy is to establisha project implementationunit for the World Bank project, which would be technicallyoriented and have close links with the new core group developed for metropolitantransport planning.These groups would be the agenciesresponsible for the assemblyof the metropolitantransport data base and analysis capabilityand would have staff representationfrom road and transportagencies.

49. The second part of the strategy is to associate those entities, who would benefit from a more coordinatedapproach, in the managementof the technical group and the urban transport study. The purposeof the managementcommittee (representing the various functionaland jurisdictionalauthorities) would be to identify issuesof commonconcem suitable for analysisat the metropolitanlevel; to address these issues the skills of the technical group would be made available. The initial approach to coordination is thus problem-oriented,bottom-up," but with a long-term view of converting the committeeinto a permanentbody responsiblefor transportplanning for the entire metropolitanarea. 37 - ANNEX B

BUENOSAIRES URBAN TRANSPORT PROJECT

ANNEX B: PROJECTIMPLEMENTATION PLAN

(ASDEFINED BY THE BORROWER)

A. Government Strategies on Subways/Metropolitan Railways

1. The capital of Argentina,Buenos Aires, is a major urbancenter where most of the economicand financial activities of the countrytake place. It is estimatedthat more than 50 percent of the economic activities of the country develop in Buenos Aires and vicinities, and its population is over 10 million people. Urban transport presents several areas that need improvement to cope with the growing demand, but the current situation is not as critical as in other cities in the world of comparablesize and activity.

2. In 1989, the Government passed Law 23696 (Ley de Refonmadel Estado) which laid the foundationfor a major reform program in the public sector. It declared 'subject to privatization"many public enterprisesand services,which among others includedsurface and undergroundrailway services, for passengersas well as cargo. The strategy for concessioningthe metropolitan passenger railway system to the private sector was establishedin 1991, when explicit subsidies and public financing of works were allowedto be offeredto future concessionairesto encouragetheir participation.For political reasons,tariffs are kept at a low level, and consequentlythe concept of subsidizedconcessions was the only commerciallyviable option to privatizethe service.

3. The suburbanrailway surface system was then divided into seven lines or groups of services, and in one of them, the Urquiza line, the subway was also included becauseof technical compatibility reasons.The Governmentdefined the minimum service to be providedby the concessionaire,and the standardsof service quality. Moreover the Governmentdefined a plan of investments(track renewal, rolling stock, signaling, telecommunications,electric systems, shops, etc.) to be implemented in each line to be concessioned.

4. Parties interested in becoming concessionaireshad to bid, under a competitive framework, specifyingthe requestedsubsidy (whichcould eventuallybeen either positive or negative)to operatethe service during the concessionperiod (10 years for six suburbanlines, 20 years for the Urquiza Line - Subway), and the requested amount to be received from the Govemment for executing the predeterminedworks. The selectioncriterion was to award the contractto the bidder that requestedthe minimum amount from the Govemment,measured as the Net PresentValue at 12 percent interestof all requestedamounts.

5. By 1995, the system was completelyprivatized. Initial results are encouraging.For passenger railway traffic: (a) the passengervolume has almost doubled in 1996 as compared with the volume transportedin 1993, the last year the system was 100 percentpublicly run; (b) the percentageof on-time trains as comparedwith the total plannedtrains, was about 95 percent in 1996, while it had been 77 percent in 1993; (c) canceledand delayedtrains were about 7,500 in the first quarter of 1996, compared to 37,000 for the same period in 1993;and (d) coach-kilometersincreased 27 percent betweenthe same two years. In the subway, passengertraffic volumes increased by 37 percent, minutes of interruption were loweredby 61 percent,and coach-kilometersincreased by 33 percent betweenthose periods.As a result, the general public opinion is very positive.

B. Project Objectives

6. The Project's general objectives would be to: (a) support the private-public partnership in improving the service quality and coverageof mass transit; (b) supportthe infrastructureimprovements defined in the concessionagreement between the Govemment and the private sector; (c) assist in improving the conditions of traffic safety and environmentalquality; and (d) help in developing an integratedurban transport (road and rail) system for the AMBA. ANNEX B - 38 -

7. The specific projectobjectives would be to:

(a) financethe rail equipmentand infrastructurewhich are critical for the upgradingof public transportservices; (b) promotethe integrationof the transportsystem by upgradingtransfer stations along rail lines, building better transfer facilities between rail and road-based transport, and generally improvingroad accessto rail stations; (c) improvetraffic safety throughthe enhancementof controls at road/rail grade crossings, the constructionof grade separationsat high-volume crossings,the development of a complementaryprogram of road safety actions, and the introduction of systematic air pollution monitoring;and (d) strengthen the institutional framework which would ensure the operation of an economicallyand environmentallysustainable transport system in the metropolitanarea.

C. Overall Project Implementation

8. The Borrower would be the Republic of Argentina, and the Executing Agency would be the Secretariatof Public Works and Transport(SOPyT) in the Ministry of Economy and Public Works and Services.The Secretaryof Public Works and Transportwould be the National Project Director with the Subsecretaryof Metropolitanand Long-DistanceTransport as Altemate Director, and would provide the necessarypolicy and strategic decisions to facilitate project implementation.The Secretary and Sub- secretarywould maintain periodiccontacts with the Bank during projectexecution to reach agreementon key mattersand would exercise overall supervisionof project implementation.

9. The management of day-to-day matters related to all stages of project preparation is the responsibilityof a Project CoordinationUnit (UCP - Unidad Coordinadoradel Proyecto). After loan approval,the UCP would be transformedinto a Project ImplementationUnit (UEP - UnidadEjecutora del Proyecto)which would be responsiblefor project implementation.Main specific tasks of the UEP would be to: (a) coordinateall activities relatedto the project; (b) assist the National and Altemate Directors in monitoring project activities, and in his relationswith the Bank,other Secretariatsof State, municipalitiesof the AMBA, Province of BuenosAires, concessionaires and other privategroups; (c) establishand implement a permanentsystem to link project activities with other agents involved,such as municipalitiesand concessionaires; (d) take the necessaryactions to ensure compliancewith Bank requirementsin all aspects of the project; (e) prepareperiodic reports to the Bank as required; (f) prepareterms of referenceto hire consultantsand monitorthe entire process,including their selection; (g) coordinateactivities performedby intemationaland national consultants,together with the requiredlocal counterparts,and review, comment and discuss draft and final reports being preparedby them; (h) monitor and update the Project Work Plan, and take necessaryactions to correct any deviations; (i) oversee, with likely help by consultants, the technical activities related to project preparationand execution;

0) take all necessaryactions to ensuretimely availability of funds from different sources; - 39 - ANNEX B

(k) produce and interpret, periodically, the agreed monitoring indices to assess project impacts; (I) monitorall activitiesrelated to any procurementprocess; and (m) manage all projectaccounting activities, includingSpecial Account, disbursements,and auditing reports. 10. The UEP would be headed by a General Coordinator, assisted by a Technical Assistance Coordinator,a ProjectWorks Coordinator,and an AdministrativeCoordinator. In each of the three areas, permanentstaff and individual consultantswould be hired as required by the work load. It is expected that the permanentstaff of the core unit may be composedof seven senior professionals,five medium- level professionals,five junior professionalsand five support staff, who would be complementedby non- permanent staff, as required. For the technical area, where a major study would be developed, the proposal is that personnel formerly working for Pre-ATAM (recently renamed TUAMBA - Transporte Urbanodel Area Metropolitanade BuenosAires) would be contractedby the Govemmentfor the duration of the loan. The final compositionof the UEP would be agreed prior to loan effectiveness.Procurement and works supervision would be carried out by the Project Works area of the UEP. There is also a possibility of contracting the services of specialized agents, acceptable to the Bank, to manage procurementactivities for civil works, goods and/orconsultants.

11. In accordance with the concession contract, the concessionaire Metrovias would act as executingagent for the InvestmentProgram of the Metrovias Concession.

D. Rehabilitation of Subway Line A

12. This program would include: (a) the complete renewal of track; (b) new ventilation systems, replacementor installationof mechanicalescalators, replacement of drainage pumps,and consolidation in one place of two existing subway stations at Lima and Piedras; (c) three new electric substations, renewalof the powertransmission system and improvementof the contact line; and (d) renovationof the signal and communicationsystem. It has been agreed that these works would be carried out in four packagesof contracts,one for each component.In addition, the contractor currently modernizingthe train controlcenters for Lines B, C, D and E would be appointedto carry out the same work for Line A.

13. As specified in the concessioncontract with Metrovias,the Govemmentwas to rehabilitateLine A by the end of 1997.The estimatedbase cost is approximatelyUS$82 million which, after addingtaxes, contingencies,and constructionsupervision, results in an overall cost of about US$121 million. Cost estimatesare based on preliminaryengineering data, cost amountsquoted by different concessionaires at the time of presenting their proposals, unofficial insight of some recent bid results obtained by Metroviasfor other subway lines for similar type of works under lump-sumarrangements, and previous subwayexperience in lump-sumcontracts; they also take accountof the requirementthat the work has to be done while maintainingtraffic during regularservice hours (6 a.m. to 10 p.m.). It is estimatedthat the contractwould last two years.

14. Becauseof the technical need for compatibilitywith the same kind of systems being installedin Lines B, C, D, and E, and with the purpose of later permitting operation as one integrated system, it would be preferablefor component(d) in para. 12 to have exactly the same technical characteristicsas the systems being installed in the other four lines. This is true for both the signaling and telecommunicationaspects.

15. SOPyT,through the UEP, would be the executingagent of the four main componentsof Line A. As such, it would be responsiblefor the preparationof bidding documents;it would managethe whole procurementprocess; it would select the winning proposaland sign the contract with the contractor; it would approve detailed engineeringplans; it would supervise project execution with the assistanceof outside consultants;and it would issue monthly paymentcertificates. The UEP would have to closely coordinatewith Metrovias,which is responsiblefor the day-to-dayoperation of Line A. This is spelled out in an agreementbetween Metrovias andthe government,prepared prior to loan negotiations. ANNEX B - 40 -

16. Economic Costs. Line A was open to traffic in 1913, and very little upgradinghas been carried out since. Therefore, the current conditionsare totally unsatisfactory,and it is understoodthat without major improvements, total collapse is likely. For the economic analysis of this subproject, it was assumedthat in the without-projectsituation, the line would have to close in about five years. It was not simple to define the with- and without-projectsituations, because of political uncertaintiesof relevant final decisions,and becauseof the complicatedinterrelations that exist among different variables in the subway and in the avenue on top of it. Clearly, surface transportation and the subway act as an integratedsystem, diverting traffic volumes from one to another as a result of operating conditionsin both. Consequently,the following scenarios were analyzed: (a) with exclusive bus lanes on avenue Rivadavia,located right over the subwayalignment, for the same total length of Line A (Plazade Mayo - Primera Junta); (b) the same arrangementbut for half of the total length (Plazade Mayo - Pueyrred6n); and (c) without exclusive bus lanes. These three cases were consideredfor both the with- and without- projectsituations, which makes a total of six scenariosanalyzed. The lowest Internal Economic Rate of Returnwas 20 percent for the scenariowith total exclusive bus lane in both with- and without-project situations.The otherscenarios gave resultsbetween 25 percent and 74 percent.

E. Investment Program of the Metrovias Concession

17. The 1992 tender documentsfor the subway/Urquizaconcession included a detailed investment program, which is now part of the Government'sconcession agreement with Metrovias. A US$142.9 million slice (about three years, 1997-1999)of that program would be consideredpart of the project, of which US$50 millionwould be funded from the proceedsof the World Bank loan. In accordancewith the concessioncontract, US$399 million is the amount Metroviaswill receive for the completionof the 20- year investmentprogram, regardless of the actual amount it would have to pay to the contractors.That amountwas part of Metrovias' proposal,and it was presentedin a competitiveenvironment. There is no adjustmentfor taxes or physicalcontingencies, and only price contingency,based on the variation of the Consumer Price Index of the USA, is allowed. In accordance with Article 3.13 (a) of the Bank ProcurementGuidelines, works and goods requiredfor the basic investmentprogram would be procured by Metrovias, using its own procedures,because the selection of that concessionairehad been done by the Govemment, in a manneracceptable to the Bank, followinga competitive process.

18. The basic investmentprogram which would be supported by the World Bank loan spans from 1994, the beginning of the concession,to 1999, its sixth year. It includes 49 components:30 for the subway and 19 for the Urquiza railway line. The total amount is US$248 million (as presented in the proposaland agreed thereafter),with a clear predominanceof the subwaysystem (US$220 million, 88 percent of the total). Out of this program, the Bank-financedslice would include components to be executedbetween the second half of 19961and 1999,either alreadyunder constructionor to be started.

19. The specific improvements,for both the subway (Lines B, C, D and E) and the Urquiza railway line, would include: (a) partial track renewalon subwaylines B, C and E and along 24 km of the Urquiza Line; (b) renovation of electric substations and transmission systems; (c) automatic signals and operations control center; (d) subway station improvements,including the installation or rebuilding of escalators, improvements of ventilation and drainage systems, construction of a new technological center, improvementsof transfer centers; and (e) repair and reconstructionof eight electric coaches in the Urquiza railwayline.

20. The improvementsunder the basic investmentprogram are being implemented by Metrovias, either with its own resources or subcontractingwith others. Metrovias presents monthly to the Govemment certificates of constructionwork and goods delivered, which should be approved by the Gerencia Ferroviaria de la Comision Nacional de Regulaci6n de Transporte. Once approved, the Govemment pays Metrovias. All paymentshave been made in a timely manner since the beginningof the concession.Supervision, certification and paymentswould continueto be done in the same fashion and providethe basis for financingby the Bank.

Rroactive financingof upto US$20million would pay for expendituresincurred after July 1, 1996or oneyear prior to loansigning, whihwer is lter. -41 - ANNEX B

21. The Bank would finance 35 percent of each certificateup to a total aggregateamount of US$50 million, and the Govemment would finance the rest. Based on the expected work scheduling, it is estimatedthat the Bank loan for this program would be exhaustedin 1999, and after that thereafterthe Govemmentwould have to finance 100 percentof the certificates.

22. The economic evaluation of the whole package of concessionsby Metrovias (Urquiza railway line and the subway) aims to evaluate, in a global way, the advantages of private over public managementof business. This comparisonwas carried out between the With' and Without'project situations, taking as the project, the concessionprogram itself. The Without"situation was devised assuminga continuationof public managementduring the 20-year concession.The assumptionsfor this case were based on the performanceof the subwayand Urquiza Line during the last 10 years beforethe concessionstarted. Between 1984 and 1993 (Metrovias started the concessionon January 1, 1994) traffic demand for the Urquiza line dropped from 27.3 million to 16.8 million paying passengers,at an annual rate of -4.7 percent, while for the subway it came down from 191 million to 145 million, or an annual decrease of -2.7 percent. For the evaluation, in the Without' case it was assumed, conservatively,that the 1995volumes would remain constantfor the concessionperiod. The With"case includes projectionsand financial results presentedby Metroviasin its economicproposal at the time of bidding.

23. The Net Present Value, at a 12 percent discount rate, of Govemment expensesduring the 20- year concessionperiod in the Without'situationamounts to US$401million, while in the With'situation the comparableamount is US$162million, whichgives an attractive differenceof US$239million.

F. Integration of the Transport System

24. This program aims to help develop an integrated urban transport system in Buenos Aires, through improvementsin the vicinity of certain railwaystations. This programwould complementworks at transferstations which have alreadybeen agreed underthe concessionagreements; it would include: (a) improvements near outlying rail stations in the Municipality of Buenos Aires, where street and pedestrianaccess investmentsare likely to yield high retums; (b) improvementsnear rail stations in the Province of BuenosAires to ease the accessfor buses, cars, pedestrians,and bicycles,and, eventually, provide adequate parking facilities for them; and (c) other station improvements, especially where improvedtransfer conditionsbetween two rail lines or betweenrail and road-basedtransport would yield significantbenefits.

25. Improved integrationwould permit: (a) passengertime and cost savings; (b) increasesin the ridershipof masstransit as opposedto the utilization of private cars; (c) attainmentof higher utilization factors of vehicles providing feeder services to railways; (d) increase the traffic demand of the concessionedrail services;and (e) improvementsin the overall efficiency of urbantransport services.

26. Fourteenrail stationshave been pre-selectedto improvethe transfer conditionsamong different modes.A preliminaryanalysis has been carried out for each pre-selectedstation, broadlyidentifying the main issues, and making some preliminary recommendationson possible improvements. By loan effectiveness, it is expected that eight sketch plans and functional standards would be defined. Preliminary engineeringstudies, including preliminary cost estimates and traffic regulation, are under preparation.Feasibility studies and preparationof biddingdocuments would be carried out during project implementation.

27. This subprojectwould be defined as a sectoral program;that is, each componentdoes not need to be preciselydefined before loan approval,but the selectionand evaluation criteria should be agreed beforehand,including the main parametersto be considered.The set of criteria and proceduresto appraiseeach componentwould be defined in an OperationalManual, to be agreedwith the Bank prior to subprojectimplementation. The Manual'smain objectivewould be to guide the UEP in appraisingthis program. This group of componentswould comprise high-priority,transfer station-relatedinvestments already identifiedby the Govemment, but requiringfurther studies to confirm their technical, economic, operational,environmental and financialjustification. A comprehensiveunderstanding between the Bank ANNEX B - 42 - and Govemmentwould be reachedand describedin the OperationalManual on how this kind of project would be selected,appraised, prepared, contracted and executed.

28. The total project amount includedfor this programwould be US$35.9million, inclusiveof taxes, physical and price contingencies.After a scheme has been appraised and selected for possible execution,based on the relevant contentsof the OperationalManual, final designs and other aspects of detailed project preparation would be carried out, including public participation exercises and discussion/negotiationswith the rail concessionaire,Municipality, and other involved agencies. Once these participants have signed their agreements,which would include, inter alia, maintenance and operation responsibilitiesafter the constructionis finished, constructiontenders would be let on a first- come-first-servedbasis, until the budget is fully committed. The possibility of tendering the specific transfer center for private finance and construction,in exchange for offering those parties privileges in real estatedevelopment, is being analyzedby the Govemment.

29. The UEP, in close contact with representativesof the relevant municipalitiesand the railway concessionaires,would be responsiblefor project preparation,tendering, contractor selection, contract award and supervisionof works. It would also take the lead in negotiatingand formalizing agreements with the municipalitiesand concessionaires.Relevant municipalitiesand the concessionaireswould be invited to participate in the revision of detailed engineering and final bidding documents. During construction, each municipality would take necessarymeasures to facilitate the construction works, including temporary traffic managementmeasures, and would obtain the required work permits. The concessionaireswould committhemselves to take actionto facilitatethe construction.

G. Traffic Safety

30. The objective of this program is to improve traffic safety in several aspects of urbantransport, with the ultimate aim of reducing the number of accidents. Specific objectives are to: (a) reduce vehicularand pedestrianaccidents at the current at-gradecrossings, which would be closed; (b) facilitate uninterruptedroad vehicle traffic by providinggrade-separated crossings; (c) eliminatecurrent at-grade crossing accidents that cause damage to rail equipment; (d) eliminate interruptionsto rail traffic as a result of either accidentsor stoppedvehicles in currentat-grade crossings; (e) reduceair pollutiondue to vehicles stoppedwhile waitingfor the barriersto be lifted; and (f) in some cases, increaserail capacityby providinga whole corridorfree of at-gradecrossings.

31. The program is composedof the followingcomponents: (a) constructionof grade-separatedroad crossingsover/under suburban railway lines; (b) installation of automatic barriers at selected road/rail crossingswhich are now without controls; and (c) technical assistancein the following: (i) definition of a rehabilitationprogram of those grade crossingsthat currently have automatic barriers which do not complywith norms;(ii) preparationof a comprehensivestrategy to improvethe safety at grade crossings betweenthe road and rail systems.

32. The total project amount included for this programwould be about US$60 million, inclusive of taxes, physicaland price contingencies.

33. It is envisaged that 10 to 12 grade-separatedcrossings would be financed with the money availablein the project.They would be selectedfrom a larger list of up to 20 possiblelocations, which is now underevaluation. The economicreturn would be the prevailingcriterion for selectingsites, with due considerationfor the economic consequencesof mitigating environmentaland other deficiencies.An environmentscreening exercise was carried out, and the main result is that, in general, the environment problems identified are likely to be solved by project adjustments, which may impose an extra investmentcost to be reflectedin the economicevaluation.

34. The amount estimated for installing automatic barriers is about US$2.7 million, inclusive of taxes, and contingencies.It would consistof the installationof around 13 automatic barriers,complying with the existing norms in the suburban rail lines that at present lack protection or signaling. The estimated cost includesthe procurementof the electro-mechanicand electronicequipment, minor civil works, and pavementrehabilitation. -43- ANNEX B

35. This subprojectwould also be definedas a sectoralprogram, of the same natureas explainedfor the transport system integration.Most of the aspectscovered in paras.27 through29 apply, and are not mentionedhere to avoid repetition.In particular, it would be necessaryto prepare another Operational Manual, and the agents involved in project implementationwould fulfill exactly the same function as explainedearlier.

H. Strengthening of the Institutional Framework

36. The overall objectiveof this program is to strengthenthe institutionalframework to facilitate the continuousoperation of an economicallyand environmentallysustainable transport system in the AMBA. Five main areas would be included in this program:(a) improvement of the institutionalframework; (b) improvement of air quality; (c) a transport study; and (d) formulation of urban and suburban traffic improvements;and (e) a training program.

37. The lack of coordinationamong the different actors responsiblefor urban/suburbantransport in Buenos Aires has been one of the major problems for years. There have been overlapping responsibilities,contradictions, poor decisions, and areasthat no one is responsiblefor, as a result of the coexistenceof different jurisdictionswith decision power in the city (and sometimes with opposite or contradictory interests).In an aHtemptto improve this situation, a temporary planning unit (commonly known as Pre-ATAM)was created in 1991 to serve as a foundationof a permanententity Autorndadde Transportedel Area Metropolitana(ATAM), which was to be composedof representativesof the National Govemment, the Municipality of Buenos Aires, and the Province of Buenos Aires. ATAM was to be responsiblefor coordinatingpolicies and regulatingthe city transport.The establishmentof ATAM was passedby one chamberof the Congressbut is very unlikelyto be passedby the other.

38. Over the years, Pre-ATAMhas been acting successfullyin an inforrnal way as a coordination entity, with success in specific decisions such as the creationof dedicated bus lanes. However,efforts should be intensifiedto achieve beHtercoordination among entities, such as the National,Provincial and Municipal Secretariats responsible for transport and roads. Positive changes have recently been introduced, such as the merging of the Transport and Public Works Secretariat of the National Govemment into SOPyT, and the creation of the Undersecretariatof Metropolitanand Long-Distance Transport under SOPyT;the Pre-ATAMgroup was recentlyrenamed TUAMBA.

39. The Govemment'sthinking is that the staff of TUAMBA, plus the local counterpartstaff of the urban transport study would become, in the long run, the foundation for the future Urban Transport PlanningAgency. In the short run, the UEP, as part of its role in project implementation,would continue to handlethese maHtersin the context of specific project components,which would serve as a kind of pilot schemesthat in a certainarea would test the best way to achieve coordinationamong the different agencies involved. To provide guidance to the transport study, the Govemment intends to create an inter-agency Steering Committee with a view to strengthen metropolitan transport planning on a permanentbasis.

40. The large increase in vehicle utilization and the accelerateddeterioration of public transport units, especiallyin the high-densityareas, have causeda significant increasein traffic congestion,with the resultingaggravation of environmentalproblems in air quality and noise levels.A recent World Bank study on EnvironmentalProblems in Argentina2 has identifiedthese problemsas serious, and has also indicatedthat relevantinformation is scarceand incomplete.

41. A studywas carried out to assessthe needs to establishan air quality monitoringsystem in the Federal District, recommend a system, and estimate its cost. Also, the study recommended an appropriateinstitutional framework to maintain and operatethe system. The UEP would be responsible for procuringthe monitoringsystem, which is estimatedto cost around US$3 million, inclusive of taxes and contingencies.

2 ArgenIne- Managng Environn7ntal Polutfon: Issues and Opbons. World BankReport No. 14070-AR, Washington, October 1995. ANNEX B - 44 -

42. The last comprehensivetransport study of the AMBA was carried out in 1970, when the overall transport situation was entirely different. Moreover, relevant data have not been, in general, updated since that time, and consequentlythere exists at presenta significantgap that jeopardizesany planning exercise. Consequently,it is essentialto carry out a transport study, including a comprehensiveorigin- destinationsurvey and the developmentof adequate computer models that, when properly calibrated, would representactual behaviorand would permit testing policy strategies.Terms of referenceto hire a consultingfirm for this study have been prepared.The total estimatedcost is US$8-10 million, including taxes and contingencies.The UEP would supervisethis study and contract consultantsin accordance with World Bankguidelines.

43. Another area requiringattention is the improvementof traffic conditionsgenerally, a subjectthat was studied in detail by the Emergency Traffic Committee appointed in 1994 by the National Govemment. Pre-ATAMformulated several recommendationsover the past two years. The technical assistance subproject would support similar analyses that deal with bus priorities, traffic control, managementof traffic demand and improvementin pedestriancirculation.

44. Finally, a training program would be implemented aimed at strengthening the capacity of Argentineprofessionals, through participation in coursesand seminarsabroad as well as in-country.One govemment employee per year would be sent abroad to, inter alia, urban railway agencies, subway companies, and planning agencies. One selected professionalevery two years would be sent to a reputableforeign universityfor postgraduatestudies in urbantransport. Three coursesin Argentinawould be organized covering subjects such as transport planning, operation, institutional arrangements, modeling,safety and the environment.The first of these courseswould be funded by the PPF and be organizedby the UEP. The total estimatedcost of the training programis US$2.8million.

45. The TUAMBAgroup, responsiblefor metropolitantransport planning-initially as counterpartsof the transportstudy-would be financedin its totality by the Government.The World Bank loan would pay for consultants, extemal technical assistance,and training. Total subproject costs are estimated to amount to US$30 million and cover equipment, technical assistance and training, with taxes and contingenciesincluded.

I. Project Management

46. The UEP would include about 20 professionalsand carry out the tasks described in para. 9. above. It would be funded from the World Bank loan at an estimatedcost of US$7.6 million. -45- ANNEX C

BUENOSAIRES URBAN TRANSPORT PROJECT

ANNEX C: DETAILED PROJECTCOSTS

See Next page. Table Ci: Detailed Project Costs Breakrdosiriof TotalCosft Parameters Base CostUS dollar) (In million Cost!:IncudIng aotnnIs(US$ Ilo)(nl.Cninis Pwrcentge Subp e 1997 g1996 1999r2000T2001V2002 203TOTAL 1 1997 109 19920 00 0220 TOMAL For. Local Taxes Total hy. PrimaFor. Tax

1. MetrovlasConcession $70.0 $45.0 $27.9 $0.0 $0.0 $0.0 $0.0 $142.9 $70.0 $46.0 $27.9 $0.0 $0.0 $0.0 $0.0 £4J$60.0 $82.9 -$142.9 42

ConcessionSubtota $70.0 $45.0 $27.9 $0.0 $0.0 $0.0 $0.0 $142.9 $70.0 $45.0 $27.9 $0.0 $0.0 $0.0 $0.0 $142.0 $60.0 $82.9 -$142.9

2. Rehiab,ofUnaeA TrackRenewal $10.1 $10.1 $5.1 $0.0 $0.0 $0.0 $0.0 $26A $14.6 $16.0 $7.7 $0.0 $0.0 $0.0 $0.0 $76 $11.9 $20.0 $5.3 $37.3 20 2.3 32 21 OUtwCivi Works $8.9 $8.9 $0.0 $0.0 $0.0 $0.0 $0.0 $17.6 $12A $13.6 $0.0 $0.0 $0.0 $0.0 $0.0 $26.6~: $4.6 $`17.7 $3.7 $26.0 20 2.3 18 21 Elactric Equipmnent $4.1 $8.2 $6.2 $0.0 $0.0 $0.0 $0.0 $20.1 $6.2 $141.3 $8.9 $0.0 $0.0 $0.0 $0.0 $6R $16.4 $9.7 $4.3 630.4 20 2.3 54 21 Signals& Comm. $0.0 $9.9 $6.6 $0.0 $0.0 $0.0 $0.0 $16.6 $3.3 $11.3 $10.0 $0.0 $0.0 $0.0 $0.0 V241 $14.6 $6.5 $3.5 $24.6 20 2.3 60 21 Total $23.2 $37.2 $19.9 $0.0 $0.0 $0.0 $0.0 $60.3 $36.6 $54.1 $27.5 $0.0 $0.0 $0.0 $0.0 $118.6: $47.5 $53.9 $16.9 $118.3 SuperVisi $0.5 $0.6 $0.5 $0.0 $0.0 $0.0 $0.0 $1.6 $0.7 $0.9 $0.7 $0.0 $0.0 $0.0 $0.0 $4 $0.8 S1.2 $0.3 $2.4 20 2.3 34 21 LineASubtotal $23.6 $37.9 $20.4 $0.0 $0.0 $0.0 $0.0 $81.9 $37.3 $531 $28.3 $0.0 $0.0 $0.0 $0.0 $1201.~ $48.3 $56.1 $17.2 $120.6

3. Transpot,Integration CMlWvorks $2.2 $4.5 $4.5 $4.5 $4.5 $11 $1.1 $22.6 $3.0 $6.2 $6.3 $6.5 $6.6 $1.7 $1.7 69* $9.5 $17.7 $4.7 $31.9 10 2.3 30 21 Total $2.2 $4.5 $4.5 $4.5 $4.5 $1.1 $1.1 $22.6 $3.0 $8.2 $6.3 $656 $6.6 $1.7 $1.7 $211X.$9.5 $17.7 $4.7 $31.9 Supervision $0.0 $0.1 $0.1 $0.1 $01 $0.0 $0.0 $OA $0.0 $0.1 $0.1 $0.1 $0.1 $0.1 $0.1 $01i $0.3 $0.2 $0.1 $0.6 10 2.3 51 21 Total $0.0 $0.1 $0.1 $0.1 $0.1 $0.0 $0.0 $OA $0.0 $0.1 $0.1 $0.1 $0.1 $0.1 $0.1 Kit1 $0.3 $0.2 $0.1 $0.6 TechnicalAssistance $0.8 $0.8 $0.4 $0.0 $0.0 $0.0 $0.0 $2.0 $1.0 $1.1 $0.5 $0.0 $0.0 $0.0 $0.0 $1 $0.7 $1.5 $0.4 $2.6 10 2.3 25 21 Total $0.8 $0.8 $0.4 $0.0 $0.0 $0.0 $0.0 $2.0 $1.0 $1.1 $0.5 $0.0 $0.0 $0.0 $0.0 $1 $0.7 $1.5 $04 $2.6 conmpensation $0.1 $0.1 $0.1 $0.1 $0.1 $0.0 $0.0 $0.6 $0.1 $0.1 $0.1 $0.1 $0.2 $0.0 $0.0 $07 $0.0 $0.7 $0.0 $0.7 10 2.3 Total $0.1 $0.1 $0.1 $0.1 $0.1 $0.0 $0.0 $0.6 $0.1 $0.1 $0.1 $0.1- $0.2 $0.0 $0.0 $07 $0.0 $0.7 $0.0 $0.7 IntegrationSubtotal $3.1 $5.5 $5.1 $4.7 $4.7 $1.2 $1.2 $28.6 $4.1 $7.5 $7.1 $6.7 $6.9 $1.8 $1.8 $69 $10.5 $20.2 $5.2 $35.9

4. Environmentand civi Woiks $3.6 $7.2 $10.7 $7.2 $3.6 $1.8 $1.8 $36.8 $4.8 $8.8 $501.3$5.2 $2.7 $2.7 $60.6 $`15.1 $28.0 $7.5 $50.6 10 2.3 30 21 TraflicSafety Total $3.6 $7.2 $10.7 $7.2 $3.6 $1.8 $1.8 $36.8 $4.8 $9.8 $15.0 $10.3 $5.2 $2.7 $2.7 $601 $15.1 $28.0 $7.5 $50.6 4> Air PollutionEquip. $0.1 $0.7 $0.8 $0.2 $0.1 $0.1 $0.0 $2.1 $0.1 $1.0 $1.2 $0.3 $0.2 $0.2 $0.0 $2.1 $2.4 $0.1 $0.4 $2.9 10 2.3 81 21 Total $0.1 $0.7 $0.8 $0.2 $0.1 $0.1 $0.0 $2.1 $0.1 $1.0 $1.2 $0.3 $0.2 $0.2 $0.0 42A11 $2.4 $0.1 $0.4 $2.9 OtherEquipment $0.1 $0.7 $0.8 $0.2 $0.1 $0.1 $0.0 $2.0 $0.1 $0.9 $1.1 $0.3 $0.1 $0.1 $0.0 $27 $2.1 $0.1 $0.4 $2.7 10 2.3 80 21 Total $0.1 $0.7 $0.8 $0.2 $0.1 $0.1 $0.0 $2.0 $0.1 $0.9 $1.1 $0.3 $0.1 $01 $0.0 $2.7 $1 $0.1 $0.4 $2.7 Supervision $0.1 $0.2 $0.2 $0.2 $00 $0.0 $0.0 $0.0 $0.1 $0.2 $0.3 $0.3 $0.1 $0.1 $01 11 $0.6 $0.3 $0.2 $1.1 10 2.3 60 21 Total $0.1 $0.2 $0.2 $0.2 $0.0 $0.0 $0.0 $0.8 $0.1 $0.2 $0.3 $0.3 $0.1 $0.1 $01 11 $0.6 $0.3 $0.2 $1.1 TechnicalAsslstanoe $1.6 $2.0 $0.4 $0.0 $0.0 $0.0 $0.0 $4.0 $2.1 $2.6 $0.5 $0.0 $0.0 $0.0 $0.0 $6.2: $3.1 $1.3 $0.8 $5.2 5 2.3 59 21 Total $1.6 $2.0 $0.4 $0.0 $0.0 $0.0 $0.0 $4.0 $2.1 $2.6 $0.5 $0.0 $0.0 $0.0 $0.0 £6~.2: $3.1 $1.3 $0.8 $5.2 Cormpensation $0.1 $0.1 $0.0 $0.0 $0.0 $0.0 $0.0 $0.2 $0.0 $0.1 $0.1 $01 $0.0 $00 $00 $0 $00O $0.3 $0.0 $0.3 10 2.3 Total $0.1 $0.1 $0.0 $0.0 $0.0 $0.0 $0.0 $0.2 $0.0 $0.1 $0.1 $0.1 $0.0 $0.0 $0.0 $03 $0.0 $0.3 $0.0 $0.3 Environnmentand TrafficSafety Subtotal $5.6 $10.9 $13.0 $7.7 $3.8 $2.0 $1.8 $44.8 $7.3 $14.6 $18.2 $11.2 $5.6 $3.0 $2.8 $82. $23.3 $30.1 $9.4 $82.8

5. Institutionaland Equipment $0.1 $0.2 $0.2 $0.1 $0.1 $0.0 $0.0 $0.6 $0.1 $0.2 $0.2 $0.1 $0.1 $0.0 $0.0 $0.7 $0.6 $0.0 $0.1 $0.7 10 2.3 81 21 Financial Total $0.1 $0.2 $0.2 $0.1 $0.1 $0.0 $0.0 $0.6 $0.1 $0.2 $0.2 $0.1 $0.1 $0.0 $0.0 $0.7 $6 $0.0 $0.1 $0.7 TechnicalAssistance $1.4 $4.2 $4.2 $2.8 $07 $0.7 $0.0 $14.1 $1.8 $5.6 $5.7 $3.9 $1.0 $1.0 $0.0 $110.C $11.4 $4.1 $3.4 $18.9 5 2.3 60 21 Total $1.4 $4.2 $4.2 $2.8 $0.7 $0.7 $0.0 $14.1 $1.8 $5.6 $5.7 $3.9 $1.0 $1.0 $0.0 $1.111 $11.4 $4.1 $3.4 $18.9 Trans. PlanninigUnit $0.3 $1.1 $1.1 $1.1 $1.1 $1.1 $1.1 $6.7 $0.7 $1.1 $1.1 $1.2 $1.2 $1.2 $1.2 $7.7* $0.0 $7.7 $0.0 $7.7 5 2.3 Total $0.3 $1.1 $1.1 $1.1 $1.1 $1.1 $1.1 $6.7 $0.7 $1.1 $1.1 $1.2 $1.2 $1.2 $1.2 $7.7 $0.0 $7.7 $0.0 $7.7 CapacityBSudding $0.2 $0.6 $0.6 $0.4 $0.1 $0.1 $0.0 $2.1 $0.3 $0.8 $0.8 $0.6 $0.1 $0.1 $0.0 $2.* $1.9 $0.5 $0.4 $2.8 10 2.3 68 21 Total $0.2 $0.6 $0.6 $0.4 $0.1 $0.1 $0.0 $2.1 $0.3 $0.8 $0.8 $0.6 $0.1 $0.1 $0.0 $2.6~ $1.9 $0.5 $0.4 $2.8 Institutionaland FinancialSubtotal $1.9 $6.1 $6.1 $4.4 $1.9 $1.9 $1.1 $23.3 $2.9 $7.7 $7.9 $5.7 $2.4 $2.4 $1.2 $~30.1 $13.9 $12.3 $4.0 $30.1

6. Project Project ExecutionUnit $1.3 $1.3 $1.3 $1.0 $1.0 $0.3 $0.3 $6.7 $1.4 $1.5 $1.5 $1.2 $1.2 $0.4 $0.4 $71 $0.8 $8.8 $0.0 $7.6 5 2.3 10 Administration Total $1.3 $1.3 $1.3 $1.0 $1.0 $0.3 $0.3 $6.7 $1.4 $1.5 $1.5 $1.2 $1.2 $0.4 $0.4 $764 $0.8 $8.8 $0.0 $7.6

GRANDTOTAL $105.6 $106.6 $73.8 $17.9 $11.5 $5.4 $4.4 $326.2 $122.9 $131A $90.9 $24.8 $16.1 $7.6 $6.3 $400.0 $1566.8$207.4 $38.8 $400.0 39 -47- ANNEX D

BUENOSAIRES URBANTRANSPORT PROJECT

ANNEX D: IMPLEMENTATIONSCHEDULE, MONITORING INDICATORS, AND PROJECT SUPERVISION

A. Project Implementation Schedule

1. The implementationplan of individual components is shown in Table Di. Together with the detailed cost table of Annex C, it provides the basis for project monitoring and for the disbursement profile.

2. The UEP will monitor compliancewith the individual implementationschedules by defining target dates for key actions. It will be responsiblefor updating these targets and will discuss the actual implementationprogress along with any changesin the implementationplan in the semiannualprogress reports. These reports should measure advancementin the implementationof the project by linking actual progresswith the updatedplan.

3. To assist itself in monitoringcompliance with the project implementationschedule, the UEP will develop and implementa computerizedproject management system. The system should be user friendly and be updated constantly.The semi-annual progress reports should be based on the outputs of the projectmanagement system.

B. Monitoring and Evaluation of Project Components

4. Monitoring would identify the physical, institutional and financial status of each subproject component,as appropriate,on a periodicbasis. The aim would be to identify implementationproblems and the extent of deviationfrom the previously agreed targets. The results of the monitoring program (the comparison of achieved performancewith agreed targets) will be presented in the semiannual ProgressReports preparedby the UEP. The monitoringof each componentwill provide the basis and informationfor the UEP to prepare measuresand actions to resolve implementationproblems, if any, and at the same time, to update projectcosts, disbursement and implementationschedules, if necessary. Monitoringindicators to be employedwill vary by type of componentbut the general guidelines are set out below:

(a) prepare an implementationschedule which sets out target dates for key actions for physicalworks, equipmentsupply and institutionalcomponents; (b) the target dates would define the start and finish of key actions (to the nearestquarter); (c) for financial performance,give target "percentagecompleted" by quarter. These dates will be used for calculatingdisbursement performance; and (d) to the extent possible, use the performance indicators included in the Metrovias concessionagreement.

5. Ex-post evaluationwould be aimed at determiningthe effectivenessand efficiency of measures in meeting the objectives agreed upon at negotiations.In the event that objectives are not met and previously anticipatedimprovements in performanceare not achieved,the data would be used to: (a) identify why componentshad not been fully successful;and (b) modify future componentsproposed for subsequentimplementation which were based on similar premises.Furthermore, the ex-post evaluation would be used as a major input to the project ImplementationCompletion Report. Tables D2 and D3 show respectivelythe qualitative and quantitative performancemeasures which have been established for the project.

C. Supervision Plan

6. Bank supervisionof projectimplementation would be particularlyimportant during the first three years of the project,when significant institutionaland procurementdecisions would be occurring. The ANNEX D -48 - bulk of disbursements are also expected during the initial years. The Bank would conduct two supervisionmissions each year; the secondof these missionswould be used for the plannedAnnual/Mid- Term Review. Staffing for these missions would normally Include the task manager, a financial analyst/specialist,a transport planner, and a procurementspecialist. A total of about 50 staff-weeks would be required each year for the first two years, thereafterdecreasing to 25 staff-weeksin the third year and 15 staff weeksfor the fourth year until the end of the project.A Mid-TermReview of the project is plannedfor 1999to examine the progressmade, especiallyin the urbantransport study, and policies to assess the relevance of project objectives and actions, and recommendappropriate revisions, as needed. In addition, the UEP staff is also envisionedto visit Washingtononce a year to discuss project related issues and receive guidanceon Bank procedures.A summaryof key inputs is provided in Table D4.

7. The UEP is also expectedto contributeto the supervisioneffort by: (a) being responsiblefor project monitoringand coordination,keeping the Project MonitoringSystem accurate,and following-up and addressing all issues which are brought to attention by the system; (b) properly managing all procurementand disbursementconsiderations, keeping procurementand disbursementrecords up-to- date; (c) submittingprogress reports within one month of the end of June and Decemberof each year, and (d) coordinatingarrangements for the Banksupervision missions. - 49 -

Table DI: Implementation Schedule 36 1997 1998 1999 2000 2001 2002 2 TaskNane 3 14 1 12131411121314111213 441 2 2 |4112 31| 4 11' 2 1. MetrovlasConcesion

2. UneA Rehablitation BidDocuments Ready 41 BidInvitation 6130 Contractsigning * 2/2S Implementation Signallingand Comm. TrackRenewal ElecticalEquipment I OtherCMI Works Supervision

3. TransportIntegration OperationalManual Agreed TransferCenters 1 OtherImprovemeents TechnicalAssistance

4. Environrmentand Safety Air PollutionMonitoring I OMGrade Crossings Constructionof Grade Separatins I I GradeCrossing Strategy Study

BarrierCrossings - i _i

6. InstitutionalFramework TransportStudy . I TransportPlanning Unit OtherTechnical Assistance III I Training I I

6. ProjectAdministration ANNEX D - 50-

Table D2: Summa of Objectives and Ke Performance Indicators Objectives Outputs Assumptions Impacts

Supportthe private- * CompleteRehabilitation * Timely * Successfuldisbursement of the publicpartnership in of LineA. availabilityof Loanrelated to LineA and improvingthe service Implementationof the counterpartfunds. Metroviasconcession. mass and v of BasicInvestment Program * Efficient * On-timeperformance of Urquiza (1996-1999). regulationand line> 98%. * Contributeto the * Successfulcontinuance conflictresolution * Numberof traincancellations < financialobligations which of Metroviasconcession. sysem. 2% of the planned. the Governmenthas assumedunder the * Disbursementof Bank * Metroviasto * Subway/Urquizaridership up by concessionagreements loan. continuewith the thecontractual amounts (defined in withthe privatesector. concession. theconcession agreement). * Govemmentto * Subway/Urquizacar-km increases honorthe as governedby theconcession contractual agreement. agreementwith Metroviasin a * Subwayservice interruptions timelymanner. downto the levelsspecified in the concessionagreement.

* Assistin improvingthe * CompleteAir Monitoring * Coordination * Decreasein the suburbanrailway conditionsof trafficsafety Studyand implement its betweenthe relatednumber of fatalitiesby 25 andenvironmental quality recommendations. participating percent. entities * Constructionof 10-12 (municipalities, * Startmonitoring of air pollutionin road/railgrade rail thecity of BA. separations. concessionaires, * Installationof automatic nationaland barrierson 8-12road/rail provincial at-gradecrossings. governments) * Improvingrail/bus transferconditions in 3-5 stations.

Helpin developingan * Completionof the AMBA * Fullcoordination * Conversionof theUEP into a integratedurban transport O-Dsurveys and transport with all the formalplanning and management (roadand rail) system for study. municipalitiesin agency. AMBA. theAMBA, the provinceof * Conversionof the Steering BuenosAires, and Committeeinto a permanentbody the federal responsiblefor metropolitan govemment. transportpolicy. * Increasedprofessional capacity in * Institutional planningagency. capacitywithin the UEP. * Definedincrease in the useof publictransport by car-owning population(to beestablished by the transportstudy). * Definedincrease in transfers betweenpublic transport modes (to beestablished by thetransport study). -51- ANNEX D

Table D3: Quantitative Performance Targets (Calendar Year 1997 1998 1999 2000 2001 2002 2003 Rehabilitation of Line A Signaling(% of work completed) 60% 40% ControlCenter 20% 80% PermanentWay 54% 46% Substations 69% 31% PowerStations 70% 30% Catenary 40% 60% VentilationSystems 65% 35% Escalators 75% 25% PumpingStations 65% 35% Consolidationof Lima & Piedrasstations 47% 53% Line A PassengerVolume Traffic Speed on Av. Rivadavia Subway (Metrovias) (% of work completed) ControlCenter 30% 40% SignalingSystem Line B 30% 30% SignalingSystem Line C 30% 20% SignalingSystem Line D 32% 25% SignalingSystem Line E 30% 20% SignalingSystem Premetro 100% SubstationItalia/Independencia 40% 60% SubstationM. Fierro 3% PowerStation Line C 26% 39% PowerStation Line E 47% 25% PermanentWay Line B 28% PermanentWay Line C 30% 65% 5% PermanentWay Line E 5% 65% 30% PumpingStations 15% VentilationSystem 20% 40% 40% Seccionadores 60% 40% TechnologicalComplex 2% 10% 15% 31% 15% Tunnel to the CentralControl 26% 74% Closingof PremetroLoop 100% TransferCenter Pellegrini 20% 60% 20% TransferCenter Miserere 67% _ Urquiza Line (Metrovias) (% of work completed) PermanentWay 14% 28% SignalingSystem 65% 35% RadioCommunication 47% 53% Reconstructionof 8 ElectricCoaches 20% 30% 30% 20% Elevators 100% Crane 100% Air Compressors 70% Proof Bank 70% VehicleCrossing 20% 20% 20% 14% 6% Quality of Operations Overall Indicator(Subway) 1.089 1.089 1.089 1.089 1.089 1.089 1.089 Overall Indicator(Urquiza) 1.061 1.075 1.081 1.081 1.105 1.105 1.105 On-timeArrival (Urquiza) 97% 97% 98% 98% 98% 98% 98% ServiceInterruption min. (Subway) Car-km (Subway) 2,392 2,392 2,392 2,392 2,392 2,392 2,392 Car-km (Urquiza) 8,895 8,895 8,895 8,895 8,895 8,895 8,895 NPV of Concession@12% 20 20 20 20 -0 0 20 NPV of Line A @ 12% 20 20 20 0O Ž0 0o 20 Traffic Safety Decreasein fatalities at rail crossings 0% 4% 8% 12% 16% 20% 25% ANNEX D - 52-

Table D4: Bank Supervision Inputinto Key Activities - Apptox KeyAdAtities ExpededS0 Requirements weeks

SupervisionMission TransportPlanner 4/97 (Review.(i) conditionsfor projecteffectiveness; and (ii) 2 termsof referenceand requests for proposalsfor the transportstudy)

SupervisionMission TransportPlanner 11/97 (Projectlaunch workshop, review. (i) LineA procurement;Disbursement Specialist 12 ;Procurement Specialist (ii) OperatingManuals and Monitoring system; (iii) special FinancialAnalyst coordinatingarrangements devised among several EnvironmentalSpecialist sectoralagencies participating in projectimplementation; (iv) existingfinancial and accounting systems/ procedures and(v) selectionof consultants)

SupervisionMission TransportPlanner (ReviewProject Monitoring System, Training/ FinancialAnalyst 4/98 Implementation,institutional development including TrafficSafety Expert 6 trainingprograms)

SupervisionMission TransportPlanner 11/98 (Concentrateon subprojects:(i) contracts;(ii) eligibility/FinancialAnalyst 6 limits;(iii) costs;and (iv) status)

SupervisionMission TransportPlanner 4/99 (Concentrateon disbursements,financial status, Institu- FinancialAnalyst 6 tionaldevelopment, public transport studies)

Mid-termReview TransportPlanner 11/99 FinancialAnalyst 9 (Reviewresults of theproject thus far) ProcurementSpecialist Consultant 2000 TwoSupervision Missions TransportPlanner FinancialAnalyst 12 Consultant

TwoSupervision Missions TransportPlanner 2001 FinancialAnalyst 12 Consultant

Two SupervisionMissions per year until Loan ClosingTransport Planner 2002-03 (Projectclosing) FinancialAnalyst 24

TOTAL 89

t A reversemission consisting ofthe UEP Is planned tovisit Washington each year between July-August. - 53- ANNEX E

BUENOSAIRES URBANTRANSPORT PROJECT

ANNEX E: DISBURSEMENTAND PROCUREMENTSCHEDULES

Table El: Allocation of Disbursements ExpenditureCategory Amount in % of Expendituresto be ... n...... A. MetroviasConcession 50.0 35% B. Works-Line A 65.0 65% C. Works - TransportIntegration 11.0 40% D. Works - Traffic Safety 19.0 40% E. Equipmentfor Air PollutionMonitoring 1.5 70% F. Other Equipment 1.7 70% G. TechnicalAssistance and Training 22.0 100%net of taxes H. TechnicalAssistance for ProjectAdministration 6.3 100%net of taxes I. PPF 1.5 J. Unallocated 22.0 Total 200.0

Table E2: Bank Loan Disbursement Schedule (USS million) BankFiscal Year 1998 1999 2000 2001 2002 2003 2004 ...... A^nnual 30 46 45 41 25 10 3 Cumulative 30 76 121 162 187 197 200

Table E3: Schedule of Estimated Disbursements (US$ million) IBRD FY Semester EstimatedDisbursements per EstimatedCumulative EstimatedCumulative as % Semester Disbursements of Total 1998 December31, 1997 10 10 5% June30, 1998 20 30 15% 1999 December31, 1998 22 52 26% June30, 1999 24 76 38% 2000 December31, 1999 23 99 50% June 30, 2000 22 121 61% 2001 December31, 2000 21 142 71% June 30, 2001 20 162 81% 2002 December31, 2001 15 177 89% June 30, 2002 10 187 94% 2003 December31, 2002 6 193 97% June 30, 2003 4 197 99% 2004 December31 2003 3 200 100% Table E4: Procurement Schedule for Major Contracts o Contract Value Typeof No. of Typeof Documents Bids Prop. Contract Deliveryof Initiationof Subproject (US$ million) Contract Contracts Bidding Ready Invited Signature Goods bi Works Rehabilitationof Line A - Track Renewal 37.3 Works 1 ICB 3/97 4/97 11/97 12/97 - Other Civil Works 26.0 Works 1 ICB 3/97 4/97 11/97 12/97 - Electric Equipment 30.4 Works 1 ICB 3/97 4/97 11/97 12/97 - ControlCenter 1.2 Works 1 Direct 3/97 4/97 11/97 12/97 - Other Signals& Controls 23.4 Works I ICB 3/97 4/97 11/97 12/97 - Supervision 2.4 Services I ! 4/97 5/97 11/97 12/97

TransportIntegration - VirreyesTransfer Center 3.7 Works I NCB 7/97 8/97 2/98 3/98 - G. de LaferrereTransfer C. 6.2 Works I NCB 9/97 10/97 4/98 5/98 - Other Transfer Centers 22.7 Works Several NCB 6/98 7/98 12/98 1/99 - TechnicalAssistance 2.6 Services Several Q! 2/97 3/97 4/97 5/97 1

Env. and Traffic Safety 4 - Air PollutionMonitoring 3.0 Supply/Ser. 1 ICB 5/97 6/97 12/97 7/98 - ItuzaingoGrade Separation 4.3 Works 1 NCB 7/97 8/97 2/98 3/98 - MorenoGrade Separation 3.1 Works I NCB 9/97 10/97 4/98 5/98 - MalvinasArg. Grade Separ. 5.0 Works 1 NCB 1/98 2/98 8/98 9/98 - Other Grade Separations 38.6 Works Several NCB 12/97 1/98 6/98 7/98 - Grade CrossingStrategy 0.6 Services I ! 5/97 6/97 1/98 2/98 - Other Tech. Assistance 4.6 Services Several / 2/97 3/97 4/97 5/97

InstitutionalFramework - TransportStudy 9.0 Services I Q 5/97 6/97 12/97 1/98 - OtherTech. Assistance 10.0 Services Several 9! 2/97 3/97 4/97 5/97 - Training 2.7 Services Several v 2/97 3/97 4/97 5/97 WOf itemsto befinanced under the Bank loan. k Startof delvry. gI Bank'sGuldines for Seleconof Consultants. - 55 - ANNEXF

BUENOSAIRES URBANTRANSPORT PROJECT ANNEXF: SUMMARYOF URBANTRANSPORT STUDY TERMS OF REFERENCE A. Background

1. Buenos Aires is the capital and administrativecenter of Argentina. The MetropolitanArea of BuenosAires (AMBA)holds the main economic,commercial and industrialactivities of the country.The AMBA consistsof the federal capital and 42 other municipalities,covering an area of over 16,000 km'. Its 12 million inhabitants(one-third of the total populationof Argentina) make an estimated total of 18 million daily trips, 60 percent of them using mass transit. The AMBA's 200 non-subsidizedprivate bus companies make up 42 percent of the motorized trips and carry more than 80 percent of public transportationpassengers. 2. Congestionis, however,increasing and spreadingalong the road networkduring peak periods, especiallyin the central area. The car portion of the motorizedtrips modal split has increasedfrom 15 percent in 1970 to an estimated 34 percent in 1995. This trend does not show signs of change; thus congestionwill contributeto further deteriorationof bus operationsand environmentalconditions. 3. Anotherproblem is that the organizationof urbantransport in the AMBA is fragmented.National, provincial and municipal levels of governmenthave overlappingresponsibilities and little coordination. Efforts to developa fully integratedpublic transport system are at an early stage. Apart from the financial limitations,the transportsector suffersfrom the lack of tools and appropriatemethodologies to evaluate altemativepolicies aimed at subsidizingthe decision-makingprocess. 4. Future AMBA urban transport activities will demand a significant improvementin the planning and managementof the metropolitantransport system in order to guaranteeoverall gains in efficiency. 5. Accessibility to crucial trip generating areas has to be improved. New transfer routes providing direct connectionsbetween suburbs will have to be considered.Special attention must be given to the resultingimpacts of transportpolicies, particularlytraffic-related pollution and the disruptionof pedestrian flows within centralareas of BuenosAires.

B. Introduction

6. Given the size and importance of Buenos Aires along with the scope and time frame of the study, prospective respondents to this invitation for proposals ought to consider this as a major opportunityto foster the advancementof transportplanning and modelingpractice. It is expectedthat the proposedmethodology would maximizequality and resultswithin the budgetand time constraints. 7. These Terms of Reference focus on specifying the expected results rather than setting strict methodological guidelines. Detailed requirements conceming procedures adopted in current best practicesare thus omitted, as these are expectedto be known by the consultants.This approachoffers considerableflexibility to devise a methodologysuitable to attain the desired objectives. Nonetheless,it requires that the proposals contain a complete description and justification of the methodology, addressingits possibilitiesand limitations concemingthe accomplishmentof study objectives. 8. The UEP understandsthat the size and complexity of the study may preclude a detailed description of all aspects of the methodology in the proposal. It thus accepts that only key methodologicalconsiderations will be detailed at this stage, so long as the resulting proposalleaves no room for doubtsas to the quality of the proposedwork and its potentialto fulfill the expectationsdetailed in these Terms of Reference. It must be clear that this approach requiresthat the selected consultants submit further methodologicaldetails for the approvalof the UEP during the courseof the study.

C. Objectives

9. The general objective is to conduct an Urban TransportStudy (URTRAS)for the AMBA. The specificobjectives include: (a) the developmentof a BuenosAires TransportModel System (BATAM); ANNEX F - 56 -

(b) the conductingof a comprehensivehome interview and complementarysurveys in order to provide the updated information required by the different stages of the analysis, modelingand evaluationprocesses; (c) the evaluationof a set of specific strategiesaddressing the major transport issuesin the AMBA including investments in road and rail systems, bus services and network structure, intra and intermodal integration,public and private transport pricing policies (includingcongestion pricing); and (d) the developmentof an institutionalframework for metropolitan-widetransport planning.

10. The study area will comprise the whole of the AMBA, including the federal capital and the 42 other municipalities.Analysis, results and recommendationsfrom the URTRAS must addresstransport problemsin the study area.

D. The Urban Transport Study

11. In order to achieve the objectives, it is expectedthat resultsfrom the URTRAS should at least include: (a) the analysis of current and potential key transportationproblems in the AMBA, with the identificationof their underlyingcauses and the assessmentof their effects on mobility and urbandevelopment; (b) the identification of objectives for the transport system in agreement with the urban developmentand economicscenarios considered; (c) the definition of a common evaluation framework to assess objectives attainment, consideringat least operational,economic, financial, environmental,safety, social and institutionaldevelopment aspects, at different levels of details and time frames; and (d) recommendationsfor the implementation of selected strategies, describing specific actions and their estimatedtime frame and costs. 12. The proposals must explicitly address those key methodological issues of their approach believedto be essentialto achievingthe expectedresults. These should at least include: (a) the procedurefor the developmentof the objectivesfor the transportsystem, considering a wide rangeof aspectsand interests; (b) the procedurefor the generationof altemativetransport strategies potentiallycapable of achievingthe objectives; (c) the procedure for the generation of planning scenarios, in accordance with urban development and economic hypothesesadopted and for dealing with uncertaintiesin these hypotheses; (d) the proceduresfor consistently transforming planning scenarios (usually set at the general level) into inputs to transport modeling and analysis (required at a spatially dissaggregatedlevel); and (e) the overall modeling approach to be adopted for simulating the actions combined in strategies.

E. The Continuous Transport Planning Process

13. Only the implementationof a continuousplanning process in the AMBA will allow transport problems to be monitored and addressed in a systematic and objective-orientated manner. It is envisagedthat this study would be the basis for this continuousprocess. 14. To engage in the activitieswhich will be part of the continuousplanning and managementeffort, the UEP expects that at the end of this study, a local team would be fully capable of: (a) following and anticipatingtrends in urban development;(b) reevaluatingand revising the results of the URTRAS;(c) -57- ANNEX F assistingother agencies;(d) operatingthe BATAM;(e) implementingmodifications in the BATAM; and (f) maintainingand expandingan integratedGIS-oriented transport network.

F. Transport Modeling - BATAM

15. The BATAM should support the development of the URTRAS, including the assessment of transport strategiesand the detailing of actions requiredfor their implementation.BATAM will become the technical backboneof the continuoustransport planningprocess and will also be a tool for the local technicalteam to addressother urbantransport issues from a planningpoint of view. 16. Some of the transportissues to be consideredin developingthe BATAMare: (a) the need to provide additionalroad capacity and improve the overall conditionsof the existing network; (b) the investmentin metro/railtransport, including new lines, extensions,dualing of tracks, electrification,new rolling stock and signaling; (c) the requiredimprovements to bus transportation,including reshapingof the bus network structureand introducinglarge-scale bus priority measures; (d) the requirementto evaluatethe implementationof additionaltransfer terminals and the relocationof public transportstation/terminals; (e) the chance of boostingthe integrationof transportservices, including the metro/rail and feeder buses,park and ride, cycle and ride, etc.; (f) the urgency to define patterns of competition among public transport services and operators,including those of different quality standards; (g) the need to assessalternative fare policies for public transport, including peak and off- peak fares, use of magnetic/smartcards, and specific fare agreementsamong public transportoperators; (h) the opportunity for implementing private transport demand managementand control techniquesincluding road pricing; (i) the importanceof alleviatingcongestion and pollutionas well as improvingsafety; 0) the problemspedestrians face while walking in the central areas;and (k) the introductionof new majortraffic generators(passengers or freight).

G. The Origin-Destination Home Interview and Complementary Data Collection

17. Buenos Aires has not conductedany systematicdata collection on transport for more than two decades.Thus a major data collection effort is consideredan important part of this study. This will be centered on a large-scale origin-destination(O/D) home interview survey, which has to be property completedby additionalsurveys for the purposesof completenessand accuracy. 18. Major objectivesof the data collectioneffort are to: (a) provide a description of person and freight travel pattems in the AMBA with regard to spatial, temporal,socio-economic and transportcharacteristics to supportpolicy analysis and decisionmaking. (b) providebehavioral data for the developmentand estimationof travel demand models; (c) providedata for the developmentand calibrationof computer-basedtransport models; (d) provide up-to-dateestimates of socio-economicand demographiccharacteristics of the populationof the area;and (e) providedata on economicand other urbanactivities in the AMBA. ANNEX F - 58 -

19. The specific objectivesof the O/D survey recognizetwo main uses of the informationcollected: descriptiveanalysis and modeling.It is thus expectedthat the survey provides: (a) a descriptionof socio-economicand demographiccharacteristics at a zone level; (b) a descriptionof travel demand characteristics(e.g., trips by purpose, mode or time of day) at a zone level; (c) a descriptionof trip interchangesat the coarsezone level; (d) detailed socio-economic, demographic and travel activity information for demand modeling;and (e) trip matrices at a detailed zone level to be used as seeds in matrix adjustment procedures. 20. To obtain the required information, data must be collected at four levels: dwelling units, households,individuals and travel activity. Working day travel activity pattems must be measured. Walking and other short distance trips to relevant activitiesmust be recorded.Bidders may considerthe need for a sub-sampleof the sampledhouseholds to be approachedin order to gather more specific data which might be requiredfor modelingor other purposes.

H. Products

21. The products of the study will comprise: reports in Spanish and English; computer models; technical seminars to discuss the work progress; methodologiesand findings on a bi-monthly basis; databasesand manuals;and hardware. 22. The reportswill include inceptionreports, monthlyprogress reports,working notes, intermediate reports,draft final reports,final reports,and summaryreports. - 59- ANNEXG

BUENOSAIRES URBANTRANSPORT PROJECT

ANNEX G: ECONOMICEVALUATION

1. The concessionawarded to Metroviasinvolved the rehabilitationand operation,over a period of 20 years, of the subway networkand the Urquiza suburban railway which connectswith it. One of the terms of the concessionwas that Line A of the subwaywas to be rehabilitated on the Govemment's account. The present project consists of the investmentsnecessary for the Govemment to meet that obligation. If the investment were not to be made, the whole concessionwould be at risk. Economic evaluationwas thus applied bothto the concessionas a whole and to the Line A rehabilitationitself.

2. Line A, which was built in Table GI: Main Assumptions and Results of the Economic 1913, remains in operation with 65- Evaluation year-old track, wooden coaches and DiscountRate 12 percent outdated electrical systems. Although ShadowPricing of ExchangeRate 1 the signaling system was renovated NPVof MetroviasConcession US$239million 20 years ago, it is now technically NPVof LineA Rehabilitation US$338million obsolete and cannot support centralizedtraffic control. FiscalImpact of UrbanRail Concessions 5% of 1995expenses FiscalImpact of Metrovras Concession 0.5%of 1995expenses 3. Line A runs for a distance of approximately 7 ki, mainly under Table G2: Monitoring Indicators for the Economic AvenidaRivadavia, which operates as Evaluation a one-way road running out from the city center. Road traffic in the .Ye.ar!y Mid-Term Completion opposite direction uses other parallel LineA Ridership x x x streets of lower width and capacity. TrafficSpeed on Av. Rivadavia x x The major impact of the Line A NPVof LineA Rehabilitation x rehabilitation would thus be on the NPVof RemainingMetrovfas x x x current (and future) users of the line, Concession and on users of the road corridor PerformanceIndicators of the x x x centered on Avenida Rivadavia- Urqurmane Indicay whetherthey remain road users in the UrquzaLine & Subway future or transfer to the rehabilitated Valueof Timeof Public x subwaysystem. Transeortand Auto Users

4. The project includes total replacementof the rails, renovation of the electrical supply system, renewalof the signalingsystem, installationof forced ventilation,renovation of the pumps, improvement of the tunnelsto take longercoaches, and some minor complementaryworks. Althoughthe replacement of the rolling stock is part of the program to be undertaken by Metrovias under the terms of the concessionagreement, the cost of this rolling-stockreplacement is included in the cost of renovationof the line for the purposesof this economicevaluation.

5. The proposedinvestment program also includesa sum of about US$6 million for the civil works involvedin constructinga new stationto replacetwo existingstations (Piedrasand Lima). The benefitsof this part of the projectwould come partly from improving the interchangebetween Lines A and C, partly from creatingsome opportunitiesfor the exploitationof new commercialspace, and partly from lowering the trains' turn-around time because of the elimination of one scheduled stop in each direction. No separate economic evaluation has been undertakento estimate the additional benefits of the station consolidation.

A. Evaluation of the Metrovias Concession

6. The terms of the concessionas a whole specified minimum levels of service and the fare levels at which that service was to be provided. It also specified a program of investmentsto be undertakenon the account of the concessionaire.Provisions were made for fare adjustmentsto take inflation into ANNEXG -60-

account, and to recognizeimprovements of service quality above the minimum requiredin the contract. Bidderswere requiredto specifytimings and costingfor the programof investmentsand to indicate other paymentswhich they would require(operating subsidies) or are willing to make (canon)during the period of the concession.The concessionwas awardedto the bidder offering the stream of expendituresand revenuesto Govemment involvingthe minimum net presentvalue when discountedat 12 percent which representedthe opportunitycost of capital to the Govemment.

7. The basic assumptionmade in the appraisal of the concessionis that, without the concession, the subwaywould continueto run at the initial level of service, with annual expendituresby Govemment equal to those made in the final year before concessioning.This is treated as the «do-nothing"case. In the year prior to concessioning,the subwaycarried 145 million passengers,generating US$85.39million in traffic revenue, in addition to US$2.53 million of non-traffic revenue. Total revenues were thus US$67.92 million compared with expensesof US$108.22million. The direct cost to Governmentwas thus over US$40 million. In addition,the Urquiza line, with whichthe subwayis linked in the concession, was losing over US$10 million a year, giving a total cost to Govemmentof US$53.72million. It has been assumedthat these losseswould continue in the absenceof the concession.The stream of costs and revenuesto Governmentfor the "with concession'and "without concession"cases are set out in Table G3.

8. In the years before concessioning,the cost to Govemment had been increasing,while the level of service and of patronage had been declining. Moreover, maintenance expenditures were being deferred so that the likely future expendituresto keep the system in operation would have had to increase in any event. In the case of Line A, the oldest line, it is estimated that inability to maintain obsolete equipment would have led to closure within five years. The "constant cost to Government" assumptionfor the status quo is thus very conservative.

Table G3: Evaluation of the Benefit to the Govemment for the Subway/Urquiza Concession (US$ million) WithoutProject With Project Net Year Subsidy Investmenta/ Subsidy Total Benefits 1 (53.72) (11.13) (11.13) 42.59 2 (53.72) (27.11) (7.39) (34.50) 19.22 3 (53.72) (71.12) (3.58) (74.70) (20.98) 4 (53.72) (83.99) (2.21) (86.19) (32.47) 5 (53.72) (85.33) 8.17 (77.16) (23.44) 6 (53.72) (26.21) 13.87 (12.3 41.38 7 (53.72) (15.93) 18.34 2.42 56.14 8 (53.72) (13.10) 20.97 7.87 61.59 9 (53.72) (19.99) 26.66 6.67 60.39 10 (53.72) (20.90) 30.70 9.80 63.52 11 (53.72) (22.48) 33.42 10.94 64.66 12 (53.72) (33.21) 35.05 1.84 55.56 13 (53.72) (32.65) 36.68 4.03 57.75 14 (53.72) (61.79) 38.40 (23.39) 30.33 15 (53.72) (61.79) 39.52 (22.27) 31.45 16 (53.72) (0.11) 42.29 42.18 95.90 17 (53.72) (0.11) 42.41 42.30 96.02 18 (53.72) - 42.59 42.59 96.31 19 (53.72) 43.04 43.04 96.76 20 (53.72) 40.58 40.58 94.30

jl IncludesUne A investment. Net Present Value at 12 percent: -61 - ANNEXG

9. The economicevaluation estimated the discountedexpected net presentvalue of the stream of payments by Govemment on the assumptionof constant subsidy in the absence of the concession agreementamounts to US$401million. The stream of paymentsunder the concession(adding together subsidies,capital expendituresand the canon payable)has a net present value of US$162 million. This gives a net present value to Govemment of the concessionin financial terms of US$239. The rate of retum, while not calculateddue to the multiple possibleresults, is consideredhigh. For the purposesof these analysis, a discount rate of 12 percent was used which has been universally applied by the Govemment in all its concessionsso far, and reflects the opportunitycost of capital in Argentina. It is worth noting that the NPV of the projectwould be positiveat any discount rate due to positivebenefits in the beginning years of the concession. In addition, this analysis is based on the shadow price of exchangeof 1 due to equivalencybetween US$ and ArgentinePeso 3. From the fiscal point of view, the NPV of the concessionrepresents about 0.5 percentof the currentbudget of the Govemment.

10. The economicvalue of the concession(assuming that it was the intention of the Govemment to maintainsubway service if possible)is underestimatedby this calculationin three ways.

11. First, even on the basis of the traffic figures assumedby the concessionairein making the bid, there would be an increase in subway traffic which would, in tum, reduce the need for bus services. Although it would be double counting to include the reduction of costs of bus operation as well as the additionalrevenues to the subwayof traffic diverted,the increase of consumers'surplus for passengers transferringas well as the environmentaland safety benefits associatedwith the reduced levels of road traffic are a net additionto the benefitsof the concession.

12. Second,the effect of the improvedquality of service providedby the concessionairehas already attracted more traffic than forecast. That implies that these additional passengers are also obtaining benefits from transferringto the subway. Passengervolumes on the subway in the third year of the concessionwere equal to the level projectedfor year eight in the concessionaire'sbid. As might be expected,the concessionaireclaims that this has been achievedas a consequenceof increased levels of service provision,which have associatedincreases in operationalexpense, and thus profit has not been increased.

13. Third, it has been proposedthat increasesin subwayfares introducedby Govemment to match increasesin bus fares (but not the increasesassociated with inflation of supply costs or improvementof subway service provided for in the contract) would accrue to Govemment and be paid into an urban transportfund.

14. The main caveat that should be made on these calculations is that it has been assumed throughoutthat the maintenanceof subwayservice at the new level of cost to Govemment is a socially worthwhile expenditure. That supposition has not been tested in the cost-benefit analysis for the concessionas a whole. However,the resultsof the analysisof the investmentin Line A, which do include the costs and benefitsto all users of the urbantransport network in the affected area (but still not any environmentalbenefits to non-users)strongly supportsthe case that the overall benefit of having the subwayis positive.The financial details of the concessionagreement are shownin Table G12.

B. Evaluation of the Line A Infrastructure Investments

15. The evaluation procedure used is a conventional cost-benefit analysis in which the level and performance of traffic in the affected network is estimated with and without the investment under considerationover the effective life of the project (taken in this instance to be the 20 years of the concession).The basic calculation only covered a single direction of traffic-outward along Avenida Rivadavia.The total benefits of the projectshould be at least double this becausethe inwardjoumey in the corridoris forced to use parallel streetsof lower capacity,for which exclusive bus lanes to improve

3 The samearguments for the choiceof the discountrate andthe shadowprice of th, exchangerate arevalid for the evaluationof Une A Investmentsand grade separations. ANNEX G -62- performnanceare not feasible. The full details of the economicevaluation are contained in the report preparedfor the Project CoordinationUnit. 4

16. It is assumedthat the number of trips taken would be the same with or without the subway(i.e., no allowance is made for newly generatedtrips). The subway traffic is assumedto increase over the period by the attractionof passengersfrom the bus mode. The benefit calculation involves estimatesof the total costs of carrying this traffic throughout the study period with and without the Line A rehabilitation.

17. Traffic which would be carried on the subway in the With project"case is all assumed to be carried by bus in the Withoutproject"case. The assignmentof all traffic to the buses is based on the substantialdifference betweenthe costs of subwayand buseson the one hand, and taxis or private cars on the other. If, in the event, some of the traffic whichwould use the subwaywere to be car or taxi traffic the level of congestionin the without project case would be higher, and the rate of return on the project increased.It is assumedthat the extra numberof busesrequired would be determinedby the increasein peak-hourbus demand.The extra numberof busesis thus determinedby the extra number of peak-hour surface travelers divided by 70 (a very high estimate of peak load). The buses thus brought into the system are assumedto operatethroughout the 12-hourday evaluatedand the extra costs of bus service derived from this.

18. The costs of operation of traffic in the Avenida Rivadavia corridor were estimated with and without Line A in operation.The costs includedwere:

(a) costsof operationof roadvehicles on Avenida Rivadavia;

(b) time costs of usersof public and privatetransport on Avenida Rivadavia;and

(c) costsof maintenanceand operationof Line A (for the 'with, projectcase only).

19. The traffic data were convertedinto monetaryterms using standardconventions such as speed- flow relationships, vehicle operating cost estimates, and values of time. In the absence of a comprehensivetraffic model,the analysis providedonly for shifts of traffic betweenmodes (particularly between subway and buses) and between routes (particularly between Avenida Rivadavia and other routes). For the purposesof the estimation,it was assumedthat traffic on Line A continuedto decline at 20 percentper annum as performancedeteriorated over five years, after whichthe Line would be closed.

20. The costs of operationof private vehicles,taxis and buseswere estimatedas a function of travel speed.Conventions for these calculationswere taken from a 1995 study of travel in Buenos Aires. Full details are availablein the projectfiles. 5

21. The unit values of time used in the evaluationwere based on the FIEL study (FIEL, op. cit.). The values of working time calculatedfor auto users was US$7.20per hour and US$2.80 per hour for mass transportusers, giving an average value of US$4.50 for all users. These were used for joumeys in the course of work only. For other journeys (to and from work, and leisure and other trips) a value of 20 percent of the value of workingtime was taken. No statisticalbasis was available for the joumey purpose for the different modes:the assumptionmade in the studywas that 40 percentof auto trips, 35 percent of subwaytrips and 30 percent of bus trips were for work purposes.This gave average values of time for auto users of US$3.74per hour, for subwayusers of US$1.61per hour,and for bus users of US$1.23per hour. Average auto occupationwas 1.8 per vehicle. The value of time used in auto travel was factoredto accountfor that level of occupancy.

4 Proyectode Aodemzacidn dela LinesA deSubterrdneos deis Ciudadde Buenos AJres-Evalueci6n Econ6mcs. April 1996. 5 FIEL Ster, Davbsand Gleave. 1995. Study of MHeFinance of Transportin theMetropoltan Area of BuenosAires. Comments onthe FAne Report. - 63 - ANNEXG

22. Traffic Estimation. The subwaytraffic estimatefor the base year was derived from a censusof passengerson Line A taken by Metrovias in September 1994, which, combined with the results of a study undertaken in 1990 by the Municipality of Buenos Aires, yielded an origin/destinationmatrix. Hourlydistribution of traffic was also providedby Metrovias.

23. Road traffic conditions were analyzed separately for five sections of Rivadavia, currently carryingvarying traffic volumes and modal proportions.Current traffic volumes and capacitiesare shown for these sectionsin Table G4.

Table G4: Characteristics of the Affected Sections of Avenida Rivadavia PeakBus PeakCar Road RoadSection Wdh(nLnghki)Hourly Flow HourlyFlow CapacityW Montevideo/R.PeAa 18.5 2.04 250 2782 5410

Alberti/Saavedra 15.75 1.30 233 3067 4174

S. deLoriaN. Liniers 16.5 2.24 250 3039 4236

Campichuelo/Balcarce 16.5 0.76 238 2934 5858

Parral/Rojas 16.0 0.57 350 2593 4909 t Passengercar equivaleits per hour. 24. The performanceof traffic on Rivadaviawas calculatedusing speed-flow relationships shown in Table G5. It was assumedthat when traffic volumes exceeded those bringing the average speed of traffic downto 5 km per hour,67 percentof the excesstraffic would divert to the nearest parallelstreet in the same direction (Independencia)and 33 percent would divert to the next nearest (PresidentePer6n). The assumptionthat speedswould declineto 5 km per hour beforesubstantial diversion would occur was based on the evidence of other avenues in the city (particularlyC6rdoba) where this has occurred, and on the basis of the low averagespeeds achievable on the parallel roads becauseof their lack of capacity andthe frequencyof intersections.

Table,G5:Speed-Flow-Conventions Aplied to Traffic in the Corridor Formulaefor Speed(km/hr) Calculation

Typeof Avenue FreeFlow Congested

LessThan Four Lanes 33.1- 23.2x (WC) 124.7- 114.4x (V/C)

FourLanes or More 35.5- 26x (V/C) 140.4-131x (V/C)

Streets 20.7 - 14.4x (V/C) 76.7 - 70.4 x (V/C)

25. The benefit calculationswere undertakenon the basis of 12 hours per day. Observedtraffic is relatively stable through the main working hours; the average hourly traffic over the period being assumedto be 0.93 times the peak-hourtraffic. The calculationwas based on 273 days per year. This number of days representedthe working days (excludingthe weekends and the summer months of Januaryand Februarywhen traffic volumesare lower) and for which no traffic benefitswere assumed.

26. A 'hatural rate of growth*of traffic was allowed for in the calculations.This was taken to be 0.6689percent per annum. ANNEX G -64-

27. Evaluation Results. The Table GG:Comparison of Altemieives economic evaluation considered a Case ScenanoDescrption NPV numberof altematives,with and without USs MdL the proposedproject to determinethe no. ith (Project) VUthout(Do Nothing) at 12% correct level of investment and mprojecr. Even when the rehabilitation I LineARehabilitation As is (absolutelydo 338 of Line A was considered to be the Only(BaseCase) nothinno buslane) optimal projects, other complementary It LineA Rehabilitation Full BusLane 202 investmentswere consideredin the Avenida Rivadavia. On Rivadavia it is . possibleto introduce an exclusive bus ll LineA Rehabilitation PartialBus Lane 328 lane. This could be done whetheror not IV Full BusLane Only As is (absolutelydo 163 Line A was closed.Recent experience (AbsoluteAltemative) nothing-no buslane) with other roads (notably C6rdoba) suggests that this fomn of traffic senerntsin one direction only. separationand managementwould be introducedin the near future, at least for the inner portion of the route. In the case where an exclusive bus lane was assumed, it was also assumed that stop spacing would be increased to 350 meters from the existing range of 200-250 meters. Table G6 shows the altematives consideredand their respective results. These results are based on a discount rate of 12 percentwhich was calculatedto be the opportunitycost of capital to the Govemment and was previously used in award of the railwayconcessions. The labor cost was calculatedat its shadow price.

28. Because the bus lane improves flows in any event, the effect of introducing i reduces the calculatedrate of return on keepingthe Line A open. A range of altemativesfor the bus lanes, both with and without the subway,were considered.Table G7 showsthe economicevaluation results of the base case.The calculatedIERR for one-directionmovement along Rivadaviaonly, varied between74 percent (assumingno bus lane eitherwith or without the subway)and 20 percent(assuming that an exclusive bus

Table G7: Cost and Benefit Streams for Line A Investment: (Base Case)! (US$ million Costs Benefits Net Year Une A Rolling Journey Total Operating Time Total Benefits ______Rehab. Stock Costs Cost 1996 55.69 17.06 72.75 5.57 52.60 58.17 (14.58) 1997 26.59 50.00 17.06 93.65 7.09 54.86 61.95 (31.70) 1998 50.00 18.76 68.76 9.16 70.17 79.33 10.57 1999 35.00 20.64 55.64 10.76 84.16 94.92 39.28 2000 21.67 21.67 12.38 92.43 104.81 83.14 2001 22.75 22.75 12.72 94.99 107.71 84.96 2002 23.89 23.89 12.94 97.76 110.70 86.81 2003 24.13 24.13 13.14 98.80 111.94 87.81 2004 24.37 24.37 12.98 99.91 112.89 88.52 2005 24.61 24.61 13.12 99.37 112.49 87.88 2006 24.86 24.86 12.63 98.10 110.73 85.87 2007 25.11 25.11 12.09 95.31 107.40 82.29 2008 25.36 25.36 11.85 91.56 103.41 78.05 2009 25.61 25.61 11.69 84.33 96.02 70.41 2010 25.87 25.87 11.47 79.34 90.81 64.94 2011 26.13 26.13 11.90 78.40 90.30 64.17 2012 26.39 26.39 12.04 78.44 90.48 64.09 2013 26.65 26.65 12.21 81.37 93.58 66.93

InternalRat of Return: NPVX 12%(USS Mil.):

Evalutionhor ono dWretion only. -65 - ANNEX G lane was Introducedover the whole route whetheror not the subwaywas maintained in operation).The results of the investigationdemonstrate that the altemative project (exclusive bus lane) would still be beneficial even if Line A was rehabilitated.The project, however,was consideredmuch superior to the alternative since the NPV calculatedfor the project even when compared to the without situation that included a full bus lane was higher that the NPV obtained for just putting the bus lane. It is worth remembering,the base case NPV is based on one direction only where as direction does not matter in the altemativecase. If the two caseswere equalized,and assumingthe inboundtraffic would generateat least the same benefits as the outboundtraffic on Rivadavia (actually the benefits would be greater becauseof no good alternativeon the parallelstreets for retuming traffic), the base case and altemative projectwould produceUS$676 and US$336million in net benefits (in presentvalue terms) respectively.

29. Sensitivity Analysis. The estimated net present value (and internal rate of retum) for the rehabilitation is particularly Table G8: Analysis of Sensitivity of IERRto Traffic Loss and sensitive to two different sets of assumption. The first is the E B speed with which the system LineA traffic LineA traffic woulddeteriorate in the absence Scenarios decliningat 20%per constantunti of the investment, and yearuntil closure closure associatedwith that the extent to ...... whichtraffic would be divertedto Nobus lane without project 128% 32% surfacetransport in the absence No bus lane with project of the investment.The sensitivity to this assumption is shown by Full buslane without project 50% 30% assuming that, without the Partialbus lane with project rehabilitation, although it would still not be possible to operate Full buslane without project 56% 30% the subway for more than five Nobus lane with project more years, during that interim period no traffic is lost to the Fullbus lane without project 39% 25% surface modes. The second set Fullbuslanewithproject of assumptionsconcems whether Partialbus lanewithout project a partial or full exclusive bus N'obus lane with project 98% 36% lane is provided, in both the without and with project cases. The estimatedintemal rates of returnfor various altematives,combined with the different assumptionsof interim traffic diversionto surfacemodes, are shown in Table G8. In this table, benefitsare estimatedfor both directions of movement, on the conservative assumptionthat the benefits for the inbound flow would be equivalentto those for the outboundflow.

30. No estimationhas been made of the environmentalimpact of the investment.With the present poor state of control of gaseousemissions from buses,this is also likely to be high. The introductionof improvedbus technologiesand controls in the future would of course reducethe extra benefitthat could be attributedto the subwayline on environmentalgrounds.

31. Other potentialbenefits from the rehabilitationof the line include the avoidanceof lossesthrough accidents.These take two forms. First there is the possibilityof a major accident on the subway in the years during which an unrefurbishedsubway line is assumed to continue in operation before its final closure. Second, given the much higher rate of accidents per passenger kilometer as road traffic increases,the shift of movementsfrom roadto rail in comparingthe "with subway"and "withoutsubway" caseswould also be likely to yield substantialbenefits.

32. The assumptionsof equal benefits for the movementin the return direction and the omission of any safety or environmentalbenefits to the Line A rehabilitationare thus very conservative. However, even with those very conservative assumptionsthe estimate of the IERR on the subway investment would be 148 percent.This appearsat first sight to be a very high rate of return in comparisonwith the ANNEXG -66- evidenceof retums on other subwayinvestments in the range of 10-15 percent.6 However,this does not seem so surprising when it is rememberedthat anything up to 80 percent of the costs of subway constructionare accountedfor by the costs of tunneling, not needed in this case. Moreover, the line under considerationis also a central area line where both prospectivetraffic volumes are high and the congestionreduction impact of the diversionof traffic from the surface system (albeit in buses)is also likely to be high.

33. Social Analysis. In the case of the Urquiza line, the increasingnumber of paying passengersis largely due to the crackdownon fare evasion. In the case of the subway,fare evasion was historicallynot a problem. On the other hand, both the Urquiza line and the subway (as well as other urban railway concessions)have benefited highly from increased security in and around stations and in the trains, which has helpedto attract more passengersto their services.The control of fare evasion on the Urquiza line may have affected low-incomepassengers more than others. However,the average eamingsof the poorest 10 percent in the AMBA (US$335per month)7 are relatively high when comparedto other Latin American countries(in Brazil, for example,the minimum monthly salary is only US$112).On the other hand, the AMBA population still enjoys relatively low railway tariffs; on the Urquiza line they are about 25-40 percent below the tariffs of competing road-basedtransport. In the case of Line A, the average hourly wage for is ridershipwas calculatedas US$2.80which suggests the control of fare evasion in the subway has not caused undue hardshipto low-income passengers.Overall, the beneficiaries of the project would be mainly public transport users whose average income is substantially below those traveling by car.

C. Economic Evaluation of the Grade Separations

34. An economic evaluation was performed on 20 prospective road/rail grade separations even though the project is not expected to support more than 10-12 of these. The economicrates of return varied between 4.83 and 89.5 percent, with 14 of the grade separations having an IERR above 12 percent. If the project includes the top 10 grade-separations,the lowest return to be supported by the projectwould be above 20 percent. In terms of NPV (at 12 percent),the cumulativebenefit of the top 10 gradeseparations will be in the order of US$66million with a rangeof US$25 millionto US$0.7 million.

35. Methodology. The road traffic base for the calculationswas obtainedfrom a 24-hour automatic count, supplementedby a one-hourclassified count during a working day. Where these counts were undertakenby a municipalauthority, they were done in conformitywith a guide on countingmethods.

36. The rail traffic base for the study was obtained from the concessionaires.This consists of the timetable of the trains, together with a calculation of numbersof passengersderived from manipulation of an origin-destinationmatrix of passengersobtained from the concessionaire.From the same sources estimateswere made of the times for whichthe barriersare closed to allow the passageof trains.

37. Informationon accidents at level crossingswere obtained from the report Accidents at Level Crossingsin the BuenosAires MetropolitanRegion, as well as from statistics provided by FEMESA or the ArgentineRailways.

38. Costs and benefitswere estimatedseparately for effects duringthe period of constructionof the grade-separatedcrossings, directly associatedwith the construction process, and for the subsequent period of operationof the crossings.

39. Effects During the Period of Construction. The major cost during the period of constructionis the cost of constructionitself.

6 Studyof Mass RapidTransit in Doveloping Countnes by HakcrowFox and Associates, June 1989. Calculatedduring the preparationof the proposedEmployment Support Loan (Board date: June 1997). -67 - ANNEX G

40. Where the location of the new crossingis the same as that of the existingcrossing, that crossing would have to be closed during the period of construction.The calculationincluded the costs associated with extra travel distance incurred when the existing crossing is closed during construction. For this calculation,in the absenceof a comprehensivetraffic model,a simple reassignmentformula was used to assign traffic to alternative crossings. On the basis of this reassignment,the increase in time and operating costs associatedwith the works were calculated. In these cases there is also an associated benefit in that the costs of guardingthe crossingcan be avoided immediately.Costs were also calculated for the reductionin train speeds in the vicinity of the works duringthe periodof construction.

41. Effects During the Period of Operation. The benefits to road users include both vehicle operating costs and time costs of passengers.The operatingcosts were calculatedon the basis of the official Guide on Studies of the Feasibilityof Road Schemes publishedby the National Directorate of Roads. For the time dependent costs, these include 1/3 of the depreciationcosts in the case of cars, salaries of drivers and assistants,interests on the capital cost of the vehicles, insurance and general expenses.

42. Estimates of the value of time savings were derived from the FIEL study Financing of the TransportSector in the MetropolitanRegion of BuenosAires. Both of these representa proportionof the average earningsof car and public transportpassengers based on a weighted average of working time savings,valued at the hourly averagewage rate of the groups concemed,and non-workingtime savings (includingjoumeys to and from work), valued at 20 percentof the wage rate. The treatment of the travel time value of unemployedpersons may appearto be relatively high, but in general the treatment of time savingsis consideredconservative.

43. Accident rates were calculated on the basis of the number of expected accidents without the improvements increasing at the rate of increase of vehicles of 3 percent per annum for vehicular accidentsand at the rate of populationgrowth of 1.4 percent in the case of pedestrianaccidents. These are conservativeassumptions, as they make no allowancefor the increase in the number of potential conflicts which is also a function of the increasing number of trains, and the risk associatedwith a potential conflictwhich is likely to be a function of train speed.

44. The valuation of accident cost Table G9: Accident Valuations savingsis basedon a study of the annual incomes, age and life expectations of Typeof Damage Valuation(SJ those affected.The implication is that the Death 80,208 cost is essentially that of lost eamings. This gives values for a death of Seriousinjury 40,104 US$80,208; of a serious injury of US$40,104 and of a slight injury of Slightinjury 4,812 US$4,812.Vehicle damage is calculated Destroyedroad vehicle 19,290 at US$19,290 for a vehicle destroyed and US$13,500for a vehicle seriously Damagedroad vehicle 13,500 damaged. Vehicle damage to railway Rail damage(Motor coach - AutomaticBarrier) 74,862 equipment is differentiated by type of equipment(motor coach or locomotive Rail damage(Locomotive -Automatic Barrier) 60,040 hauled) and by type of crossing (automaticbarrier or manualbarrier). In Rail damage(Motor coach - ManualBarrier) 30,802 summarythe accident valuations are as Rail damage(Locomotive - Manual Barrier) 16,040 shownin Table G9.

45. Each accident causes an interruptionof the rail service. This interruptionwas estimated,on the basis of historicaldata, to be 58 minutesin the case of a vehicle-relatedaccident and 30 minutes In the case of a passenger-relatedaccident. The numberof trains affectedwas calculated on the basis of the train frequency and the accident type. Passengertime delays were then evaluated on the basis of the average load factors and time values discussedearlier. ANNEX G - 68 -

46. Delaysto vehicles at barrierswere estimatedusing standard formulae reflecting average arrival rates at the barrier, closuretime of the barrier, cycle time, and capacity of the level crossing.Estimates were also made of the increasedoperating costs of vehicles, particularlyfuel consumed,on accountof the low speed of movementinto and acrossthe gradecrossing.

47. Savings on the maintenanceof barriers replaced were estimated as US$33,846per manual barrier and US$6,000per automaticbarrier. Costsof maintenanceof the grade-separatedcrossings were estimatedat US$22,500in years 5 and 15 and US$45,000in years 10 and 20.

48. For the purposeof the economicevaluation, a residualvalue of 50 percent of the original cost of the works was assumed at the end of the period of appraisal (20 years). Sensitivity analyses were undertakenhalving the value of personaltime savings.

49. Evaluation Results. As shown below in Table GIO, 14 grade separationswere identified as being acceptable,based on positive net presentvalues at a discount rate of 12 percent. In the case of the two separationson Roca Line (TMR), Larroque-Chacabuco,and Cenito-Garibaldi,additional benefits were also calculateddue to the fact that with the constructionof these two grade separations,the Roca Line will be able to close all grade crossingsbetween Constituci6n and Temperley stations thus allowing for more frequent rail service. The current level of service is severely constrainedby the concession agreementwhich establishesthe maximum time for barrier closures, a limit which has already been reached.The closure of at-grade crossingswould allow TMR to run an extra 100 trains per day by the year 1999 which would generate an additional capacity of 57,200 passengers per day. Taking into consideration peak and off-peak train frequency, time savings, and feeder services, the extra net benefdswould amountto over US$7 million per year, as shownin Table G 1.

Table GIO: Ranking of Grade Separations by NPV (US$million) Municipality Railway Location Cost NPV IRR 1. La Matanza TBA A. Mayo Guemes 3.00 24.82 89.5% 2. San Fernandofrigre TBA Col6n-Alte.Brown 6.00 10.46 35.59% 3. La Plata TMR Est. Ringuelet 1.89 9.46 71.80% 4. Lomasde Zamora TMR Larroque-Chacabuco 5.10 5.87 24.55% 5. Lomasde Zamora TMR Cerrito-Garibaldi 4.20 5.52 20.26% 6. Mor6n TBA French-Azcu6naga 2.55 3.64 24.43% 7. Ituzaingo TBA Av. Ratti (km. 25180) 3.05 2.98 21.77% 8. MalvinasArgentinas Ferrovfas Est. Pablo Nogues 3.95 2.97 17.87% 9. Avellaneda TMR De La Serna 3.30 2.10 20.27% 10. Moreno TBA Plo XII (Est. Paso del Rey) 2.11 1.74 22.69% 11. 3 de Febrero TBA Palacios(Est. Ciudadela) 3.81 1.54 16.39% 12. Quilmes TMR PlazaSuiza 2.39 1.21 17.14% 13. Berazategui TMR Calle 21 2.59 0.79 15.13% 14. 3 de Febrero TBA 9 de Julio-Porrini 3.70 0.68 13.64%

Table GIl: Extra Benefits of a Segregated Roca Line Between Constituci6n & Temperley Stations (US$ million)------Benefitsor (Disbenefits) Year 1 Year2 Year 3 and Beyond Costof Operationof the Railway (5.76) (5.76) (5.76) Costof Operationof Road-basedvehicles 2.84 5.67 8.54 Time Savings 1.42 2.83 4.26 Total (.51) 2.75 7.02 Table G12: Metrovias Proforma Financial Results (USSMillions)

1993 1994 1996 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Passengers (Mll.) Urquiza 16.79 24.80 25.04 25.28 25.52 26.00 26.50 27.00 27.50 28.00 28.50 28.76 29.02 29.28 29.54 29.80 30.10 30.40 30.70 31.00 31.30 Subway 145.32 151.50 155.90 160.50 166.80 170.20 177.70 185.80 192.90 200.10 207.80 209.70 211.70 213.70 215.70 217.70 219.70 221.80 223.90 226.00 228.10 162.11 176.30 180.94 185.78 192.32 196.20 204.20 212.80 220.40 228.10 236.30 238.46 240.72 242.98 245.24 247.50 249.80 252.20 254.60 257.00 259.40

Revenue Farebox 72.67 77.96 80.03 82.22 85.43 90.77 94.41 98.72 102.50 106.43 110.54 111.58 112.64 113.70 114.77 115.85 116.09 116.33 116.58 116.83 117.08 Other 2.53 2.77 2.84 2.91 2.01 3.20 3.32 3.46 3.58 3.70 3.82 3.86 3.89 3.92 3.96 3.99 3.99 3.99 3.99 3.99 3.99 75.20 80.73 82.87 85.13 87.45 93.97 97.73 102.17 106.07 110.13 114.37 115.44 116.52 117.62 118.72 119.84 120.08 120.32 120.57 120.82 121.07

Expenses Personnel 72.63 54.05 53.40 52.50 51.86 49.09 48.45 48.21 48.15 47.92 46.74 46.43 46.39 46.34 46.30 46.25 44.56 44.51 44.47 44.42 44.38 Materials 12.66 12.05 11.60 12.28 10.99 10.52 10.52 11.56 12.01 12.68 11.38 11.26 11.27 11.24 11.24 10.37 10.54 10.64 10.47 10.47 Maintenance 1.69 1.40 1.28 1.30 1.30 1.36 1.38 1.39 1.41 1.43 1.43 1.44 1.44 1.44 1.44 1.45 1.46 1.46 1.47 1.47 Energy 6.30 6.34 6.34 6.97 6.97 7.45 7.45 7.52 7.52 7.52 7.52 7.52 7.52 7.52 7.52 7.52 7.52 7.52 7.52 7.52 General 3.50 3.52 3.54 3.57 3.59 3.62 3.65 3.68 3.71 3.75 3.76 3.77 3.78 3.78 3.79 3.80 3.80 3.80 3.80 3.80 Mgmt.Fee 2.20 2.25 2.31 2.40 2.56 2.67 2.79 2.89 3.00 3.12 3.15 3.18 3.21 3.24 3.27 3.27 3.28 3.28 3.29 6.58 Other . 11.45 11.29 11.13 11.28 11.30 9.80 9.83 9.91 7.89 8.44 8.35 7.93 7.40 6.81 6.81 6.82 6.82 682 6.82 6.27 126.39 91.86 90.26 88.71 89.65 85.80 83.86 83.83 85.10 83.47 83.67 82.02 81.47 80.94 80.32 80.32 77.79 77.91 77.98 77.78 80.49 aO

Oper.Subsidy/ (51.19) (11.13) (7.39) (3.58) (2.21) 8.17 13.87 18.34 20.97 26.66 30.70 33.42 35.05 36.68 38.40 39.52 42.29 42.41 42.59 43.04 40.58 Cannon

CapitalSubsidy - - (27.11) (50.38) (49.141 (58.74) (26.21) (15.93) (13.10) (19.99) (20.90) (22.48) (33.21) (32.65) (61.79) (61.79) (0.11) (0.11! - - -

TotalSubsidy (51.19) (11.13) (34.50) (53.96) (51.34) (50.57) (12.34) 2.42 7.87 6.67 9.80 10.94 1.84 4.03 (23.39) (22.27) 42.18 42.30 42.59 43.04 40.58

Source: ConcessionAgreement for Group 3 Services

-70- ANNEX H

BUENOSAIRES URBANTRANSPORT PROJECT

ANNEX H: FINANCIALEVALUATION

1. Metrovias began operating and managingthe Buenos Aires subway and the Urquiza line on January 1, 1994 under a 20-yearconcession from the Govemment. Under this arrangement,Metrovias operatesthe subwayand the Urquiza line and the Government(i.e., FEMESA in the case of the Urquiza line and the Municipalityof BuenosAires in the case of the subway) continuesto own the right-of-way, equipment,stations and facilities. Metrovias is expected to manage its affairs as a private enterprise, fully assumingthe commercialrisks associatedwith the business.Metrovias is a privately-heldcompany under Argentine law, and as such, is not requiredto make its financial accounts available for public scrutiny.

2. Metroviaswas awardedthe concessionfollowing a competitive processwhich rankedthe offers on the basis of minimum net present value of the Governmentpayments (operating subsidy and capital investment)required to operatethe system at a definedtariff and service level. Sincetariffs are fixed by the Govemmentand cannot be changedby the concessionaire,the profitability of the businessdepends on the Metrovias' ability to lower its operatingcosts and by generating new traffic. In order to take into accountthe effect of rising prices over the long concessionperiod, the contract,however, provides for an automatic adjustmentin the subsidy/tarifflevel (choice of the Government)based on an increase in the cost of providing the contractual level of service. Metrovias' winning bid of US$130.2 million was 18 percentlower than the second-highestbid by Metrobaires.

3. The revised financial proposalof Metroviasas part of the concessioncontract is shownin Table Hi. According to the proposal,Metrovias would require a decreasing level of subsidy for the first five years of the concession:from about US$21 million in year 1 (1994) to US$2 million in year 5 (1998). Thereafter, Metrovias would provide a fee (canon) to the Governmentfor the use of the infrastructure facilities on an increasingscale: from about US$5 million in 1999to US$32 million in 2012 and US$27 million in 2013. During the concessionperiod, revenuesare expectedto increasefrom US$81 million in 1994to US$121million in 2012.

4. Metrovias, being a private company, is not required under the Argentine law to disclose its financial information. However, Metrovias made available to the Bank its unaudited financial and operating results for the first two years of operation, 1994-1995,which are shown in Table H2. These resultsshow the concessionto be so far a huge success:total revenueswere up by about 25 percent in each of the operating years; and passengerscarried were up by more than 30 percent over 1993. The level of ridership attained in 1996 for the subway was equal to that of year 8 (2001) of the proposal. While traffic on the Urquiza line has been slow to materialize,compared to 1993, it was up by nearly 40 percent in 1995. Total revenuesin 1995 surpassedthe forecast by about US$21 million. Metrovias also did well on non-operatingrevenue which in 1995 was more than double what was assumed in the proposal.

5. The high growthin ridershipand the requirementsfor taking over the concessionalso increased the cost of providing the service. In 1995, labor costs of US$61 million were 14 percent higher than projected,and energy costs were about 40 percent higher. On the other hand, maintenancecosts were almost 40 percentless than projected.The biggestincrease, by about US$13 million, was in the category bther expenses"whichprobably is used to balancethe differencebetween revenues and expendituresto the levels indicatedin the concessionagreement. This balancingbetween revenues and expendituresis made necessaryif the concessionairedoes not wish to disclosethe level of profits from operations.It is interestingto note that in the financial proposalfor the concession,their is no line item directly referring to profit margin, dividends,or retainedeamings. It is thus assumedthat the profitabilityof the concession is built into the "other expense"and 'management fees' categories.

6. An additionalpossible source of revenuefor Metrovias is the savings resultingfrom undertaking the Basic Investment Program on behalf of the Govemment at a price previously defined in the concessionagreement. Insofar as there are savings in undertakingthe InvestmentProgram, they accrue to Metrovias. On the other hand, Metrovias is also exposedto the risk of any cost overruns. While no ANNEX H -71-

good information is available on the overall financial outcome of undertakingthe basic Investment Program,it is believed to be a profitableventure for Metrovias. It is worthwhileto note that the ownership of Metroviasis dominatedby the one of the largestArgentine construction companies, Benito Roggio y Asociados.

7. Ridership. Under the terms of the concession,tariffs are fixed by the Governmentand can be increasedin two ways only: first, by improvementin the service quality, and second, by an increase in the cost of providingthe service. Quality-basedtariff increasesare included in the concessionagreement which quantifiesthe tariff increasewith the level of service. In the case of cost-basedtariff increases,the annual cost estimates included in the concessionagreement are monitored on a monthly basis by multiplying each cost category by previouslydefined indices.The concessionaireis entitled to a tariff increase (or an increasein subsidy) equivalentto 90 percent of the cost increase if total costs increase by at least 6 percent.A cost-basedtariff increaseof about 5¢ due for Metrovias was recognized by the Government in May 1995 and implemented in August 1996. For the period between May 1995-July 1996, Metroviaswas compensatedwith an increasein operatingsubsidy. A quality-basedtariff increase of 15 percentfor the Urquiza line due for Metroviaswas also implementedin August 1995.

8. Projections. Based on the traffic growthexperienced thus far, the traffic forecastswere revised (see Chart H1) based on a growthfactor of 6 percentin 1997, whichdecreases to 4 percentduring 1998- 99 becauseof the planned rehabilitationof Line A. Followingthe rehabilitationperiod, total ridership is expectedto bounce back to a growth of 6 percent in 2000. Thereafter, the annual growth in traffic is expectedto slow down gradually to 1 percent by 2005. Between2005 and 2013, traffic is projectedto grow by 1 percent each year, which is slightly above the normal growth rate of population in Buenos Aires. Based on these projections and assuming an average tariff of US$0.50 for the subway and US$0.37 for the Urquiza line, Metrovias is expectedto earn an additional US$612 million in revenue during its 20-year concession period beyond that which was assumed in its concessionprojections. Increasesin non-operationalrevenue are expectedto increasethe cash intake even further.

9. While increased traffic will certainly require higher expenditures, the overall increase in expensesis expectedto be less than the growthin revenues.While certain categoriesof expensessuch as fuel and energy may rise, substantialsavings are expectedfrom a decreasein the average age of the rolling stock, automationof ticket sales,and a reductionin the labor force.

10. Metrovias is also expected to be compensatedfor the delays in the rehabilitationof Line A, which under the concessioncontract was to be completed by the end of 1997. To make up for these delays, Metrovias has requestedthat the Governmentadvance the procurement of some 84 cars for Line A which were originally scheduledfor year 11 (2004) of the concession.This would decreasethe average age of the fleet considerably.Extensive operating cost savings would also result from the rehabilitationprogram itself, which would reduce the numberof stations by one, refurbish most of the stations,replace the track, and providenew signalingand electric systems.

11. Sensitivity Analysis. Usingthe operatingcost estimatesestablished in the concessioncontract, a sensitivity analysis was undertakento determine the volume of ridership and/or the increase in total expenseswhich may force Metroviasin abandoningthe concession.Assuming that the expense items in the financial forecastdo not include built-in profit margins,the concessionwould becomeunattractive to the Metrovias, i.e., NPV < 0, underthe following three scenarios,or a combination,if during the period 1997-2013:(a) actual traffic is 35 percent less than the revised forecast; (b) total expensesincrease by 50 percent over the forecast; and (c) actual traffic decreases3 percent every year over the life of the remainingconcession. The resultsof the first three years of the concessionsuggest that the probabilityof any of these scenariosoccurring is rather remote. Table HI: Metrovias Contractual Financial Estimates (US$MIHIons)

205 3M4 396 WM6 307 399 30M 2000 2001 2002 2003 2004 2005 2006 2007 2006 2006 200 2011 201 pseeengere (Mil.) Urquiza 24.80 2604 2s2s 26.52 2600 28.50 2700 27.50 28D0 28.50 29.76 29.02 29.28 29.54 29.90 30.0 32A0 30.70 3100 3.30 22600 228.1 SubvAy 15t60 15.90 B.S016.80 170.20 177.70 115.90 1290 200.1I 207.80 209.70 21170 217 21.70 217.70 218.70 221B0 223.90 1e630 1094 15.79 12.32 1W6.20 2420 212.90 220A0 228.2 23630 239As 240.72 242ss 24524 247.50 248.80 292.20 254eo 26700 2590 OA4 OA4 OA4 OA4 O0S O04 OAS OA7 OA7 OA7 OA7 OA7 OA7 OA7 OA7 04 OS OB OA6 OA6 Revenue 11.58 11.93 170g Forebox 779 90.03 92.22 s6A3 90.77 94A1 98.72 WM2.5 6A3 1DM4 16s 112.4 113.70 r477 1s61 11BD9 11.33 Other 2.77 2.84 2.91 2D1 3.20 3.32 3Ao 3.58 3.70 3.82 3.8 3.89 3.92 3.9 399 3.99 39 3.99 3.99 3.99 90.73 82.7 95.13 87A5 93.7 97.73 1o2.7 1e67 1.B n437 1144 11.52 11.02 ns.2 nss 120 0.32 w.7 w02 121O7

Expene*e 44A7 44A2 44.38 P.monnrl 54. 53A0 52.50 51ts 4908 49A6 48.21 48.s 47.92 46.74 46A3 46.3 46.34 46.30 4.25 44.56 44.51 12.54 12.84 12A7 VA7 Materib 1266 1206 118o 1228 ID99 12.52 10.52 n1e 1201 12.88 11.3 1126 1t27 11U24 1124 10.37 48 1A7 1A7 Maintenance 1.69 1.40 129 t10 130 .36 138 138 1A1 143 143 144 1.44 1.4 144 14 1.A 752 7.52 762 Energv 6.30 6.34 6.34 6.7 6.97 7A5 7A5 7.52 752 7.52 7.52 7.62 7.52 7.52 7.52 752 12.71 12.64 14. General 12.A 12.03 11.3 12.53 12.11 111t 114 n14 115 12.73 12.66 12.59 12.61 12.83 12.74 12.55 12.6 Inraence 126 .48 153 159 1e6 172 180 198 1 206 2.06 2D6 2D6 2D6 206 2D6 2D6 2D6 2D0 2D0 329 6.s5 Mgrnt.Fee 220 225 2.31 2A0 2.56 2.67 2.79 2.99 300 3.12 3.15 3.1 321 3.24 3.27 327 3.28 328 612 6.27 Ofer _ 1129 1113 1.2 lt30 9.90 9.83 9.91 78 SA4 8.35 7.93 7AO 6.91 6.91 6.2 6.82 6.2 12171 1202 99.i3 10.20 98 93.14 93.11 94.74 93.27 9.70 92.96 92 91.8 9123 91.33 88.80 9.2 951 88 93.72 - - `0--9 V8 -- "M------'e "" =------31.2 32.13 2735 Oper. Subeidy/ (209 (V381 3ACq (12.75) (201 4.59 90o 134 1B6 1967 224 24.1 26.78 27As 28.51 31A8 31 Cannon

Capital Subsidy (27.11 (5038l .4 (5.74 (26.21 (15231 (13p1 (1) sssi 2sa 332 (3265) (6.79) (81.79) (0..J (o..n

3162 . 2735 Total Subsidy (20.9) (4 ) (63.7 ( (.7) (177) (3.13 ( (002) ( 90 4) (686) (34.3C (33.28) 3137 3139

* Outource maintenance kiwiudespublic service andtame

So urce:Co noresson Agr*ment for Group 3 Service ANNEX H -73-

Table H2: Comparison of Financial Results (USSthousand)

1994 1995 Projected Actual Change Projected Actual Change

Trafflc ('000) Urquiza 24,800 22,464 (9.4)% 25,040 23,140 (7.6)% Subway 151,500 171,154 13.0% 155,900 187,220 20.1 % 176,300 193,618 9.8 % 180,940 210,360 16.3 %

Revenue Farebox 77,960 94,002 20.6 % 80,030 97,327 21.6 % Other 2,768 5,623 103.1% 2,838 5,905 108.1 % 80,728 99,625 23.4 % 82,868 103,232 24.6 %

Expenses Personnel 54,054 61,078 13.0 % 53,403 61,078 14.4 % Materials 12,660 6,550 (48.3)% 12,051 6,550 (45.6)% Maintenancep/ 1,687 873 (48.3)% 1,397 873 (37.5)% Energy 6,302 8,949 42.0 % 6,343 8,949 41.1 % General(taxes, etc.) b/ 12,099 12,099 0.0 % 12,027 12,099 0.6 % Insurance 1,263 4,880 286.4 % 1,483 4,880 229.1 % ManagementFee 2,195 2,195 0.0 % 2,252 2,252 0.0 % Other 11,454 24,125 110.6% 11,293 24,068 113.1% 101,714 120,749 18.7 % 100,249 120,749 20.4 %

Oper.SuTbsidyCanon | (20,986) (21,124) 0.7 % (17,381) (17,517) 0.8%

aI Outsourcedmaintenance */ Includespublic service - 74 - ANNEX H

Chart HI: Ridership Projections

350- 350- > Start~~~~~~~~~of PrivateConcession:

325 - Actual , 300- - --. Redk Projection.- - -- ConcessionConrBact

I 275-

250 _-k : ,,,."' t____- -

225- -e%~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ -

200-

175 -

150 1980 85 90 95 2000 5 10

Assunm: a growthfactor of 6 percentIn 1996-7which decreases to 4 percentduring 199899 becauseof the plannedrehabliatin of LUnA. Followingthe rehabilitationperiod, totl ridershipis expectedto bounceback to a growthof 6 percentIn 2000.Thereafter, the annualgrowth In traffic Is expectedto slow downgradually to 1 percentby 2005. Between2005-2013, traffic Is projectedto grow by 1 percenteach year which Is slightlyabove the normalgrowth rate of population(0.67%) in the municipalityof BuenosAires.

-75- ANNEX I

BUENOSAIRES URBAN TRANSPORT PROJECT

ANNEX 1: ENVIRONMENTALASPECTS

A. Key Environmental Issues

1. Besidesthe ongoingworks underthe Metroviasconcession, most physical improvementsunder the projectconsist of the rehabilitationof existingfacilities, mainly the rehabilitationof subwayLine A. As such, this subproject involves equipment,escalator and workshoprenovation and improvement,track renewal,electrical equipment,signals and communications,and some civil works. Bidding documents will include specific requirementsfor the managementand disposal of constructionwastes, earth cuts and old equipment. 2. The most environmentallysensitive subprojectsare those related to: (a) the construction of grade-separatedroad crossingsover/under suburban railway lines; and (b) the upgrading of transfer stations. These subprojects involve construction works in or near populated areas, with dense commercial or residential activities. The environmentalwork carried out during project preparation involved: (a) environmental screening of a set of proposed road crossings; (b) the design of an environmental assessment (EA) methodology for projects that may require a more-in-depth environmentalassessment; and (c) the designof a communityconsultation methodology for this type of projectin an urban setting.As a pilot test, both the EA and communityconsultation methodologies were applied to selected grade separations before appraisal. All componentsto be financed under those subprojects will be subject to EA screening, EA, and public consultation according to the agreed methodologies.As a result of the pilot EA and consultationexercises, subproject design and construction will also follow: (a) a well-definedset of environmentalcriteria and principles (based on World Bank environmentaland socialpolicies) for the location,design and constructionof road crossingsand transfer stations,and (b) a set of environmentalguidelines for the constructionof such civil works in urban areas. Specificmechanisms for assuringthe applicationand complianceof all environmentalcriteria, guidelines and methodologieswould be spelled out in OperationalManuals, the approval of which by the Bank would be a conditionof civil worksdisbursements for the two subprojects. B. Environmental Screening and Assessment of Road Crossings 3. An environmentalscreening exercise of about 20 proposedrailway-crossing sites was carried out duringthe early stagesof projectpreparation. Most of these projectswhich were then in a pre-feasibility phase, involve the solution of bottlenecks and traffic safety black spots through the constructionof tunnels (two-wayor one-way)and overpasses.The proposedsites were screenedfor: (a) the needfor resettlementof families and businesses; (b) potential interruption or limitation of accesses to dwellings or businesses either permanentlyor temporarily(during construction); (c) encroachment/reductionof green areas,parks, and other recreationalareas; (d) demolitionof buildingsof high architecturalor historicalvalue; (e) potentialdeterioration of urbanquality and propertyvalue in the immediatevicinity of the crossings; (f) the potential for increasedaccidentality in areas with high density of schools, hospitals, and commercialuse; (g) the effect on urban infrastructure(sidewalks, power and telephone lines, water and seweragemains, etc.); and (h) potentially unacceptable nuisances during construction (dust, wastes, and heavy constructiontraffic). 4. The grade separationsschemes were rankedaccording to their environmentalsensitivity for both the construction and operational phases classifying them into: (a) those that require more in-depth ANNEX I -76- analysis during the design phase and must include analysis of altematives and public consultation;and (b) those that require specific environmentalconsiderations during the design and constructionphase. The main conclusionsof the screeningexercise were: (a) all schemeswould be environmentallyfeasible and would solve sensitive urban and traffic problemsat the proposedsites; (b) none of the schemes would entail the resettlement of population nor impact on areas of ecological or historical value; (c) seven schemes required more in-depth environmentalanalysis including analysis of altematives and public consultation;(d) perhapsthe most sensitive environmentalconcem would be the accessibilityto housesand businessesduring constructionand operation; (e) there is a deeply felt communityconcom for seriously consideringpedestrian needs into the overall solution of the railway crossing; and (f) impactsduring constructionmust be properlyaddressed. 5. A methodologyfor carrying out environmentalassessments of this type of works was prepared and appliedto two proposedcrossings: Banfield and Lomasde Zamora. Specific mitigationmeasures for the constructionand operationof these crossings,and environmentalmonitoring programs are identified in the report and will be included in final designs and bidding documents. Both EAs are available in projectfiles.

C. Public Consultation

6. The screeningexercise identified the need for communityconsultation in the area of influenceof particularlysensitive crossings.A communityconsultation methodology was designedwhich includes an opinion survey and a consultationprogram encompassingbroad and specific areas of influence of the crossings.The methodologyincludes specifically designed questionnairesand strategiesfor: (a) public and community organizations; and (b) the community in general. The public and community organizationsto be consulted include: (a) local professionalassociations (including engineering and architecturalassociations); (b) local chambersof commerceand industries;(c) communityorganizations (neighborhoodorganizations) and local NGOs. The public and communityin general are further divided into two groups: (a) public at large in the area of influence;and (b) affectedcommunity in the immediate area of the proposedworks. The consultationprogram involves both formal and informal presentations and meetingswith the target groups, informationdissemination campaigns through fliers, posters, and radio announcements;and an opinionsurvey.

7. The public consultationmethodology was tested on one of the proposedcrossings (Ituzaingo). The results of the consultation program, the consulted organizations, and the main findings and recommendationsfor this specific site are availablein projectfiles. All crossingsto be financed underthe project would required a community consultationprogram accordingto the agreed methodology.The pilot test at Ituzaingohighlighted and confirmedthe benefitsof such consultationprogram through which: (a) there is a broad consensusamong organizedgroups, NGOs and the public at large about the need for such crossing at that site; (b) specific recommendationsfor the crossing location and design (for instance,relocating one of the tunnel entrance 50 meters further would enhanceaccessibility to houses) have been obtained from meetings and surveys; (c) property owners (about 2) whose accessibilityto their houses would be permanentlydiminished have found a mechanismto start a dialogue with the municipalityas to different compensationstrategies; and (d) a sense of ownershiphas been achievedin both the neighborhoodsand the municipal institutions. The report on the Ituzaingo consultation is availablein the projectfiles.

D. Urban Environmental Principles

8. As a result of the environmentalscreening exercise, the pilot communityconsultation program, and the environmentalassessment of two railwaycrossing sites, a set of environmentalprinciples for the design and construction of such civil works are proposed for the project. These criteria would be described in the OperationalManual in order to be taken into account by stakeholders(municipalities) and would be supervisedby the Project ImplementationUnit. These criteria are summarizedin Box 1. -77- ANNEX I

Box 1: Urban Environmental Criteria for the Desian and Construction of Crossings Railwaycrossing solutions should meet the followingurban and environmentalcriteria: * The designs must avoid/minimizethe need for residentialresettlement of population,as well as minimize or avoid the impact on green and recreationalareas and buildings of historical or architecturalvalue. * Access to dwellings and businesses should be guaranteed for both the construction and operationalphases. Any restrictionor limitation to accessibilityto propertiesshould be properly mitigatedor compensated. * Safe and secure pedestrian and bicycle crossings should be integrated into the design and constructionof the road/rail crossings. * The design should harmonizewith urban surroundingsincluding landscapingand planning for other usesfor all additionallycreated spaces (under-bridges,cul-de-sacs, pedestrian-only streets) in order to minimize negativeimpacts on environmentalquality and propertyvalues. * Altemative solutions and final designs should be subject to public and community consultation with special emphasis on the property owners directly affected, local NGOs and community organizations,and businessand professionalorganizations. * To minimize public nuisances, construction activities should follow strict environmental guidelines. Constructionschedules and the timing of necessaryinterruption of public utilities (electricity,water and telephone)should be informedto the affectedcommunity. * All areas and infrastructureaffected during constructionshould be restored to their original condition,specially sidewalks,green street dividers, gardens, sidewalktrees, utilities, and side streets impactedby traffic diversion. * The designof road/railgrade separationsshould contemplate and stimulatethe better integration of both urbansides of the railway.

E. Environmental Guidelines during Construction

9. A set of environmentalguidelines for the constructionof road/rail grade separationshas been defined for the project. The purpose of these guidelinesis to establish specific rules for contractorsfor minimizing environmentaldamage and public nuisancesduring the constructionof this type of urban infrastructure.Examples of the topics that are included in the guidelines are: (a) traffic and pedestrian safety measuresand signals; (b) carefulwork scheduleand infrastructureplanning in order to guarantee accessibilityto properties;(c) the appropriatehandling of constructionand equipment wastes such as excavatedearth, spoil materials and oily wastes from machinery;(d) noise and dust control measures; (e) informationfor the public about work schedulesand public services interruptions;(f) traffic detours; (g) construction planning, camp location, and rules for workers to minimize public nuisances; (h) stockpilingof materialsand drainage on work sites; and (i) camp dismantlingand abandonment.

F. Transport Integration

10. The project would also include the upgrading and improvement of transfer stations, most of which have been identified (see Annex B). They will be subject to the same screening-EA-public consultationprocess as the railwaycrossings. Most of the sites at the existing stationsare propertyof the railwaysagency, and some of them are occupiedby minor structures(stalls, one-story buildings)which have been leasedto mainly middle classretail, flower, and food vendors.These businessesbid for these spaces on an annual or semi-annual basis. All of them pay a monthly rent to the railway agency. In additionto the screeningand consultationprocess, the OperationalManual would specify the necessary studiesto carry out and conditionswhich will have to be met in order to guaranteeappropriate solutions. The designs should: (a) integrate as much as feasible this type of stalls in the design of the future transfer station;and (b) provideassistance to vendorsto have accessto other sites. ANNEX I -78-

G. Environmental Managementunder Project Implementation

11. The project would provide the necessaryresources and mechanismsto ensure the application and implementationof all environmentalcriteria and guidelines. This assurance would be achieved through: (a) technical assistanceto provide advice on environmentaland social aspects, and urban environmentalregulations during projectexecution; (b) strengthening of the UEP's environmental capability to screen designs and ensure compliancewith environmentalrequirements; (c) training programs in environmentalmanagement of urban infrastructure,targeting the planningand design officials of participatingmunicipalities; (d) environmental criteria, EA and community consuftation methodologies would be specified in the OperationalManual; (e) bidding documentswould include environmentalguidelines for construction,and other environmentalrequirements stemming from the EA or the public consultation;and (f) the OperationalManual would include specific criteria for compensatingany diminished accessibility to dwellings and businesses caused by the construction o f road/rail crossings. 12. In addition to the above mechanisms,the project would finance: (a) the development of a sustainableair quality monitoringprogram; (b) the preparationof a transport model suitable for testing alternativetransport investments; and (c) the developmentof a programto improve the city's traffic and street environment,including pedestrianfacilities, traffic calming, updatingof street hierarchy,sidewalk widening and repairs, and signals and markings at intersections.These components are expected to improveenvironmental management of the metropolitanarea. -79- ANNEXJ

BUENOSAIRES URBANTRANSPORT PROJECT

ANNEX J: AIR POLLUTIONIN BUENOSAIRES

A. Brief Description

1. The rapid increaseof vehicles, togetherwith the deteriorationof public transport, make it clear that the capacity of the roads are insufficient for the number of vehicles in circulation. This situation causes problems of congestion in the densely populated AMBA, air and noise pollution, and road accidents.

2. A recentstudy of the Argentineenvironmental problems conducted by the World Bank found air and noise pollution in urbanareas to be a priority problem and that the informationabout pollution levels to be fragmentedand scarce.

B. Implementation

3. A study is being conductedwhose objectivesare to evaluate the need for air quality monitoring in the federal capital, recommendand estimate the costs for an air quality monitoring network, and recommendappropriate institutional arrangements.

4. A brief summaryof what has been accomplishedup to October1996 underthe "Designof an Air Quality and Noise Monitoring Program for the Buenos Aires MetropolitanArea" technical assistance programis providedbelow.

C. Location of Monitoring Sites

5. The preliminary design of the monitoring system calls for ten fixed sites, plus one mobile monitoring unit and several portable samplers for particulate material. The locations of the fixed sites have been chosento serve the following purposes:

(a) to measure environmentalconditions at some of the locations in the city most heavily affected by noise and air pollutionfrom local traffic. These conditionsare experiencedby most of the ciy's residentsduring part of the day and by some residentsfor much of the day; (b) to measureenvironmental conditions representative of broadareas of the city, which are indicativeof the rangeof averageconditions experiences by the general population; (c) to providethe data neededto validate future air quality modelingefforts; and (d) to provide a baseline for evaluationthe impacts and effectivenessof future air pollution controlefforts.

S. It should be noted that in developing this list of monitoring sites, no attempt was made to characterizethe areas of greatest impactof specific major stationarysources of air pollution,such as the two thermoelectricalplants. Such source-specificmonitoring would be desirable as well (especiallyfor the thermoelectrical plants). It would be most appropriatethat such monitoring be provided by the operatorsof the major fixed sourcesin questionunder the supervisionof the city.

7. The ten fixed sites are proposedto be locatedin the followingareas:

SffesHeavily Influenced by Local Traffic

(a) microcenter(business district)-street canyonswith major influencesby busesand taxis; ANNEXJ -80-

(b) Centro de Transbordo Constituci6n-one of several major transfer centers between commuter rail, buses, and the subway, located in a business/residentialdistrict near downtown; (c) Avenida Rivadavia-street canyon near the center of the city, with one of the heaviest concentrationsof bus routes; and (d) Avenida Cabildo-street canyon in a congestedarea of high-riseresidential apartments, heavilyaffected by public transportand by privateautomobiles.

Sites Representativeof NeighborhoodConditions

(a) Hospital Nacionalde Pediatrla-a sensitive location,located near several other hospitals in a mixed residential/commercialzone, and potentially affected by nearby industry, heavy industry in the adjoiningProvince of Buenos Aires, and a major themnoelectric plant. An altemative location in the adjoining Barracas district (closer to the heavy industrysources) is also underconsideration; (b) Saenz district-mixed residential/industrial,heavily affected by truck and bus traffic and by heavy industryupwind in the adjoiningProvince of BuenosAires; (c) Mataderosdistrict-mixed residential/industrialdistrict on the westem (downwind)side of the city, with heavytruck traffic; and (d) Devoto district-near the geographiccenter of the city, just downwind of the heaviest population concentrations.An altemative location, coincident with the weather station maintainedby the ServicioNacional de Meteorologla,is also under consideration.

BackgroundConcentrations

(a) Pdnton Recalada-floating installation in the Rio de La Plata, permanently stationed about 5 km from the port as a base for the pilots guiding ships into port, also used for weathermeasurements by the ServicioNacional de Meteorologla.

8. This list is subject to possible additions and subtractions,depending on the final budgetary analysis.

9. Other Installations. In addition to the ten monitoring sites, the network would include a laboratory,a data collection and processingcenter, and telecommunicationsto link them together. The data collection and processingcenter would be specified with a view to future expansion, in order to incorporateadditional monitoringsites for a total of around 40. These additional sites could include a contemplatedfuture network in the Province of BuenosAires, as well as any sites required by future source-specific agreements. For instance, environmental covenants associated with multilateral financingof a new tollway may requireair quality monitoringin the vicinity.

D. Institutional Arrangements

10. Under Argentina'sfederal system, the Govemmentof the City of BuenosAires is responsiblefor environmental planning and development of environmental policies for the federal capital. The fundamentalstatute or constitutionrecently adoptedby the city providedthat "every person has the right to enjoy a clean environment,as well as the duty to preserve and defend it for the present and future generations,"and requiresthat the City develop plans for protectingthe environmental,including air and water quality and land use, among many other environmentalconcerns. Overall responsibilityfor urban planning and environmentlies with the Municipal Secretarlade Ambiente Urbano y Medio Ambiente. Within the Secretarfa, responsibilityfor monitoringand regulation of air quality lies with the Direccion Generalde Polfticay ControlAmbiental (DGPCA), which is part of the Subsecretarlade Medio Ambiente. In addition to air quality and water quality, the DGPCA is responsiblefor supervision of pest control -81- ANNEXJ activities and hazardousmaterials. The DGPCA staff in 1996 consisted of approximately 100 people, with a budget of US$300,000.Of these, seven people were working directly in the area of pollution measurements.

11. From 1988 to 1982, the City operated a network of 12 ambient air quality monitoring stations using manual techniques. Due to budgetary restrictions,this network has been reduced to a single monitoringsite at present,which is operatedby the DGPCA.The manualmeasurement techniques used are labor intensive and the equipmentis old. Most of the DGPCA's air quality measurementefforts are devoted to measurementsnear industrial pollution sources, carried out for enforcement purposes in responseto citizen complaints.

12. The newly-electedgovernment of the City of BuenosAires has stated plansto sharply increase the emphasison environmentalquality in the City. In support of this effort, the budget requestedfor the DGPCA has increasedten-fold, from US$300,000to US$3 million. The city is also launchinga number of environmentalinitiatives, among them a system of inspectionand maintenanceof private vehicles, which will also be underthe supervisionof the DGPCA and which is likely to pose significant technical and political challenges.

13. As the institutionresponsible for monitoringand assuring the environmentalhealth of the City, the Govemmentof the City of BuenosAires (GCBA)would be a logical institutionto own and operatethe air quality monitoring network. It has not yet been decided whetherthis network would be operated by GCBA or another agency with qualificationsin this field. Whichever agency is eventually selected, an agreementwill have to be signedwith that agency stating that it will accept legal ownershipof the air quality monitoringand data collection and processingequipment for the network, and that it will assure their physical protection.Funds for operationand maintenanceof the system would initially be provided from the World Bank loan, but these would be replacedwithin a defined period (not to exceed three years) by funds from the agency'sbudget. The final agreementwould also providethat ownershipof the equipmentrevert back to SOPyT if the agencyfails to provide the agreedoperating funds. SOPyT and the agency would jointly constitute a working group, in which other interested parties such as the Universityof BuenosAires and the ServicioNacional de Meteorologlawould also participateas advisors. This working group would oversee the operation of the monitoring network and would collaborateto develop plansand policiesfor air quality management.It is envisionedthat the Province of BuenosAires could also accedeto this working group in the future, in conjunctionwith the expansionof the networkto cover the entire metropolitanarea.

14. Arrangementsfor the day-to-day operationsand maintenanceof the monitoringnetwork would include daily checksof the equipment,daily changesof filters for particulate monitoring,weighing and chemical analysisof the filters, and a continuousreview of incomingdata for quality control and quality assurancepurposes. This is estimatedto require a staff of about ten people, including six technicians, two environmentalchemists, and two data processing/telecommunicationsspecialists. Three vehicles would also be required.

15. Possible network operation arrangements include having the selected agency operate the network with its own personnel, contracting with a private firm or NGO for network operations, or contractingwith anothergovernment agency. Of these, the contractingwith a private firm or NGO would be the best choice. The ArgentineGovemment has a clearly-definedpolicy of privatizationor contracting out activities where possible.Contracting out the daily operation of the networkwould also facilitate the supervisoryfunctions of the working group, since it would be overseeingthe work of a hired contractor, rather than the work of one of its own members. Finally, such contractingwould greatly simplify the arrangementsby which the World Bank loan is to supply the operating and maintenancefunds for the initial periodof operation.

E. Procurement

16. The monitoringequipment, installation, training, and suppliesand sparesfor the initial period of operationwould be procuredas a single packageunder a "tumkey" contract.Procurement would be by ANNEXJ -82- intemationalcompetitive bidding, following World Bankprocedures. Bid specificationsand detailedsiting arrangementsfor the system would be developedby specialistconsultants in early 1997. If it is decided to contract out the daily operationsof the system, then operation for an initial period could also be included in the equipmentcontract (i.e., build-operate-transfer). -83- ANNEXK

BUENOSAIRES URBANTRANSPORT PROJECT

ANNEX K: SELECTEDDOCUMENTS SENT TO THE PROJECTFILE

A. Traffic Management

1. Boletin Oficial de la RepublicaArgentina, Decreto Transitoy SeguridadVial, November 29, 1995 2. Comisi6n Nacional del Transitoy la SeguridadVial, Programade TrabajoAfio 1996,Ministerio de Economfay Obrasy Servicios Publicos 3. Pre-ATAM, Diagn6stico de Situacion del Sistema de Transporte y Transito de la Regi6n Metropolitanade BuenosAires, 1995 4. Gardner, Report of a Review of Traffic, Transportand Road Safety: Buenos Aires, Argentina, TransportResearch Laboratory, March 1994 5. Gabinetepara la Emergenciadel Transito de la Ciudad de BuenosAires, PropuestaGlobal para el Ordenamientodel TransitoVehicular de la Ciudadde BuenosAires, December16, 1994 6. Institutode Seguridady Educaci6nVial, InformeEstadfstico, December 1994 7. Eduardo Bermudez,Silvia Casir6, Cristina Louro, Seminario-Taller: La Seguridad Vial en la Argentina,Coordinaci6n Interinstitucional, /nforme de los Moderadores,April 1996 8. Municipalidadde la Ciudad de Buenos Aires (MCBA), Sintesis de los proyectos para los serviciosde alumbradopublico y seflalizaci6nluminosa, December 17, 1994 9. Ministeriode Justicia,Secretaria de AsuntosRegistrales, Direcci6n Nacional del RegistroOficial, Transitoy SeguridadVial, Ley No. 24.449y Decretoreglamentario No. 779/95,February 6, 1995

B. SuburbanRailways

1. El Poder EjecutivoNacional, Decreto 1143(Presidential Decree authorizing metropolitan railway concessioning),1991 2. Joseph Walsh and John Murphy, Argentina Railroad Privatization - Recommendationsfor Organizationof a Rail SafetyAgency, November1992 3. FerroviasS.A.C., Una Visi6n Objetivadel Pasado,e/ Presentey el Futuro, 1994 4. Grupo Trainmet,Transportes Integrados Metropolitanos, El Desaflo del Transporteen el Tercer Milenio, 1994 5. Javier Cardozo,Concession and Regulationof CommuterRailways and SubwayNetwork in the MetropolitanArea of BuenosAires, Washington,November 1994 6. Jorge H. Kogan and Louis S. Thompson,Reshaping Argentina's Railways, Japan Railway and TransportReview, June 1994 7. Ministerio de Economia y Obras y Servicios Publicos (MEOSP), Fortalecimientode las ConcesionesFerroviarias Suburbanas en /a Region Metropolitanade BuenosAires, 1994 8. MEOSP,Inversiones Complementarias, April 27, 1994 9. Plan Laura,Master2000, 1995 10. ProyectoATAM, Estudiode FactibilidadEcon6mica para la Construccionde Cruces Fefroviales a Distinto Nivel en e/ Area Metropolitanade BuenosAires, October1995 11. Ronald Kopicki, Privatizationof Railways:A ComparativeStudy, Chapter 7: ArgentinaRailways Case Study,to be publishedby World Bank(1995) ANNEXK -84-

12. Juan Pablo Martinez,Accidentes en los Pasos a Nivel del Area Metropolitanade Buenos Aires, XI CongresoArgentino de Vialidady Transito,October 1992 13. TBA, Modemizaciondel SistemaMitre y Sarmiento(3 Volumes),September 1995 14. UCPF, Programade Inversionesy Financiamientodel Transportede la Regi6n Metropolitana, 1994 15. UCPF,Proyecto de Fortalecimientode CofredoresFefroviarios Metropolitanos, 1995 16. UCPF, MiscellaneousFinancial Projections for Urban Rail Concessions,1995.

C. Metroviasand SBASE

1. Ministerio de Economia y Obras y Servicios Publicos, Cronogramade Inversiones,Grupo de Servicios3, 1994 2. Claudio Cirigliano, Jose Barbero, Experiencias y Resultados de la Operaci6n Privada de ServiciosFerroviarios Urbanos, Vienna, October 1994 3. Metrovias,Metro 2000, 1995 4. Metrovias,Centro de TransbordoGeneral Lemos, 1995 5. Metrovias,Centro de TransbordoFederico Lacroze, 1995 6. Metrovias, Private Concessionaireof the Buenos Aires Subway System and one Suburban RailwayUne (F.C. Urquiza),1994 7. MetroviasConcession, Capitulo Xl - Llnea "A" 8. Metrovias,Metro 2000, Programade DesarrolloEstrategico de los Subterraneosy el Fefrocarril Urquiza,Versi6n al 30 de marzode 1995 9. MetroviasS.A., ConcesionarioPrivado de los Subterraneosy del FerrocarrilUrquiza, 1995 10. Subterraneosde BuenosAires Linea A 11. Subterraneosde BuenosAires, Plan de Expansi6n1993

12. Horacio Torcello y Asociados (HT&A) for Metrovias, Analisis de Factibilidad Tecnica - Combinaci6nLineas A y C, April 1996 13. UCPF, Tareasa Ejecutaren los Primeros48 para la Linea "A", 1994 14. Metrovias,June 1996

15. Jose A. Barbero, Resultadosdel Concesionamientode Servicios de TransportePublico en BuenosAires, Viii Congreso Latinoamericanode TransportePublico y Urbano, Curitiba, April 1996

D. Bus Transport

1. Lic. SusanaKralich, Genesisy Reproducci6nReciente de Serviciosde TransporteContratado en la Regi6n Metropolitanade BuenosAires, Secretariade Transporte,Ministerio de Economia y Obras y Servicios Publicos,August 1993 2. Guillermo Krantzer, Jorge Sanchez, Cambio OrganizacionalEmpresano en el Autotransporte Urbanode BuenosAires, 1994. 3. Jose Larocca,Some Facts about the "ColectivoBuses" and the Experiencewith Privatization, about 1994

4. CEPAL,El ContextoInstitucional del Sistemade Colectivosde BuenosAires, September1985 -85- ANNEX K

E. Creationof ATAM,and other InstitutionalAspects

1. pre-ATAM- Apoyo a la Creaci6nde la Autoridadde Transportedel Area Metropolitana,Informe de Avance de las tareas (1 de enero a) 31 de octubre de 1995),1995 2. pre-ATAM,El TransporteUrbano en la Regi6n Metropolitanade BuenosAires, Situaci6nactual - situaci6ninstitucional, 1994 3. CongresoNacional, Camara de Senadores,Orden del Dia No. 183,June 1993 4. Fred Salvucci, Public Transport System Integration, MIT Center for Transportation Studies, Cambridge,September 1992 5. Law Approvedby Senate to establishATAM, February2, 1995 6. Patricia Brennan,Aida Temavasio, Nora Turco, La Creaci6nde /a Autoridadde Transportedel Area Metropolitanade BuenosAires, ATAM, 1993 7. Pre-ATAM, miscellaneous background documents on Creation of Metropolitan Transport Authority 8. Acta-Acuerdobetween national govemment and city of Buenos Aires establishingPre-ATAM, June 14, 1991 9. Proyectode Ley de Creaci6nde la Autoridadde Transportedel Area Metropolitanade Buenos Aires

F. GeneralAspects of Transportin BuenosAires

1. Pre-ATAM,Estudio sobre la Ciudadde BuenosAires (transporte),1992 2. Arquitecturay Urbanismo(ARQUIS), Issue No. 5, May 1995, Universidadde Palermo, Buenos Aires; Three transport-relatedarticles: (a) N6stor Margarifhos,Escenarios Futuros en el Area Metropolitanade Buenos Aires; (b) Nora Turco, La Vialidad,el Transito y el Transporteen la Regi6n Metropolitana;(c) Autopistasdel Sol S.A., Los GrandesEquipamientos de Transporte- Seis Reflexionesy un Emprendimiento-AvenidaGeneral Paz y Acceso Norte. 3. pre- ATAM, Datos Basicos del Sistema de Transportede la Regi6n Metropolitanade Buenos Aires, September1994 4. pre-ATAM,Estudio de /a Estrategiapara el Desarrollo del Sistema de Transporteen el Area Metropolitanade BuenosAires, July 1993 5. Secretariade Obras y Servicios Publicos, Evaluaci6nEcon6mico-Social, Plan de Mejoramiento del TransporteMetropolitano de BuenosAires, September1996 6. EDI MegacitiesSeminar, Washington, City: BuenosAires, City Profiles,April 1991 7. Ing. SusanaArcusfn, Lic. Patricia Brennan,Arq. Afda Ternavasio,Lic. Nora Turco e Ing. Olga Vicente, Desregulaci6ndel Transportey Evoluci6nde la Movilidaden BuenosAires, March 1992 8. Susana Kralich, AccesibilidadHogar-Trabajo en el Gran Buenos Aires, TERRITORIO NO 6, Institutode Geografia,Universidad de BuenosAires, 1993 9. Unidad de Coordinaci6n del Programa de Reestructuracion Ferroviaria, Programa de Inversionesy Financiamientodel Transportede la Regi6n Metropolitana,1994 10. Secretariade Obras y Servicios Publicos,Transporte Metropolitano, June 1996 ANNEX K -86-

G. Proposed Buenos Aires Urban Transport Project - Preparatory Documents

1. InstitutoPro BuenosAires, Fundaci6nArgentina Siglo XXI, Municipalityof the City BuenosAires, various backgrounddocuments on air pollution monitoringin BuenosAires 2. Oscar Figueroa, Diagndsticode los problemasdel Transporteen la Region Metropolitanade BuenosAires y sus implicacionespara el Plande Corto Plazo,Buenos Aires, febrero de 1996 3. Fred Salvucci and Bruno Wildermuth,Recommendation conceming the Applicationfor Approval by TBA of Magnetic TicketingSystem (Memo),January 1996 4. Unidad de Coordinaci6ndel Proyecto (UCP), Programade Pasos Viales a Desnivelen el Area Metropolitanade BuenosAires, Preevaluaci6nEcon6mica, Informe de Avance, April 1996 5. UCP, Programade Pasos Viales a Desnivel en el Area Metropolitanade Buenos Aires, Bajo Nivel Larroque-Chacabuco,Partido de Lomasde Zamora,April 1996 6. UCP, Programade Pasos Viales a Desnivel en el Area Metropolitanade Buenos Aires, Bajo Nivel Cerrito-Garibaldi,Partido de Lomasde Zamora,April 1996 7. UCP, Informe sobre el Programade Instalacionde Barreras en Cruces a Nivel sin Proteccion Activa,April 22, 1996 8. UCP, Proyectode Modernizaci6nde la Llnea A de Subterraneosde /a Ciudadde BuenosAires - Evaluaci6nEcon6mica, April 1996 9. UCP, Proyectode Integraci6nModal, Centros de TransferenciaIntermodal, April 1996 10. UCP, Plan de Implementaci6ndel Proyecto,April 22, 1996 11. BrunoWildermuth, A CommonTicketing System for BuenosAires, February1996 12. Femando Brunstein, Asistencia T6cnica para el Reconocimiento Ambiental y Consulta Comunitariadel Proyectode TransporteUrbano de BuenosAires, SegundaFase-Informe Final, August 1996 13. FIEL and Steer, Davies and Gleave, Study of the Financeof Transportin the MetropolitanArea of BuenosAires, 1995 14. RepublicaArgentina, Plan de Implementaci6ndel Proyecto(PIP), October1996 15. HT&A Horacio Torcello y Asociados,Analisis de FactibilidadT6cnico-Economica, Anteproyecto AvanzadoCombinaci6n Llneas 'A"y 'C", preparedpor Metrovias,September 1996 16. SYSTRA,Modemizaci6n de la Llnea A"del Subterraneode BuenosAires, Informe de la Mision, October1996 17. Toronto Urban Transit Associates Inc., Subterraneosde Buenos Aires, Resignallingof Line A, October1996 18. Christopher S. Weaver, William E. Oslund, Design of an Air Quality and Noise Monitoring Network for the City of BuenosAires, January1997 19. UCP, Centrode Transferencia,Liniers, Memoria Descriptiva, September 1996 20. UCP, Centrode Transferencia,Ciudad Universitaria,Memoria Descriptiva, September 1996 21. UCP, Centrode Transferencia,Jose Le6n Suarez,Memoria Descnptiva, September 1996 22. UCP, Centrode Transferencia,Victoria - Virreyes,Memoria Descriptiva, September 1996 23. UCP, Centrode Transferencia,Moreno, Memoria Descriptiva, September 1996 -87- ANNEX K

24. Unidad de Coordinaci6ndel Programade Reestructuraci6nFerroviaria, Programa de Pasos ViWalesa Desnivelen el Area Metropolitanade BuenosAires, Anexos 1, 2, 3, 4, 5, 6 y 7, October 1996 (3 volumes) 25. Correspondenceand Background Documents related to World Bank Decision on Private Procurement- 1995 and 1996 26. UCP, Estacionamentopara Bicicletasen EstacionesFerrovianas de la Region Metropolitanade BuenosAires, 1995

H. Other

1. Universidadde BuenosAires and INAP, BuenosAires 2000, Plan Estrategicopara la Ciudad de buneosAires diagn6stico,1995 2. Universidadde BuenosAires and INAP, Plan EstrategicoBuenos Aires 2000, Presupuestopars la Etapa de Fijaci6n de Objetivos,Abril 1996 3. Selected papers included in two reports of Urban Transport Congressheld in Buenos Aires (November1994): Congreso LatUnoamericanode Transporte Publico y Urbano (CLATPU) * CarlosA. Badell and Jorge de Mendonca,No pierda e/ tiempo, deje el auto * Vania BarcellosG. Campos,Uma andlisesobre transfer6nciade modalidadee nivel de servico:rodovia x ferrovia * Jos6 A. Barbero, Experienciasy resultados de la operaci6nprivada de servicios fefroviariosurbanos, * Luis Pablo Belenkyand Gustavo Rodolfo Piazza,GUtopfa o realidad?:El desatrollo sostenidode un transportemodemo. Su aplicaci6na la ciudad de BuenosAires . Jorge Blanco and Silvia Pupareli, Las relaciones de competencia y complementariedadentre e/ subtenraneoy e/ transporteautomotor de pasajeros en la ciudadde BuenosAires * Guillermo Brennan, Centrosde transferenciade pasajeros en la ciudad de Buenos Aires. Su problematicay posiblessoluciones * Javier Cardozo, La concesion de subterraneosde Buenos Aires: Antecedentes, logros esperadosy esquemade regulaci6n * Javier Cardozo, Luis Rizzi, and Jorge Sanchez, Inversiones "inercialesT e inversionesde integracionmodal en dreametropolitana de BuenosAires * Amaldo Diano Castillo and Maria del Carmen Calluso, Ideas pare organizar el transportepublico de pasajerosen la ciudadde BuenosAires * Hector C. Collado, La Regi6n Metropolitanade Buenos Aires. Nuevo sistema de percepciontarifaria en autotransportepOblico de pasajeros * Pablo Cortes, SusanArcusin and FabianaZimerman, El manual de capacidad85'y los carrilesexclusivos. Caso estudiociudad de BuenosAires * Martin Dallas and Maria Lorena Pigliacampo, La inserci6n de los discapacitados motricesal sistemade transportepOblico urbano * RobertoDomecq and Ricardo Ferrario,Interaccion entre la normativay los avances tecnol6gicosen los vehlculosdestinados al transporteautomotor de pasajerosen la ANNEX K -88-

Argentina, Congreso Latinoamericanode Transporte Publico y Urbano, Buenos Aires, November1994 * Marcelo Gustavo Hasse and Pablo Horacio Vainberg,Impacto de los cambios del sentidode circulaci6nen las avenidasradiales de BuenosAires, * Jorge H. Kogan, Privatizaci6ndel transporte masivo en el area metropolitanade BuenosAires - Oportunidadesy riesgospara el sector privado * SusanaKralich, La ciudadfuncional y el ambitogeografico del transporteurbano: de pasajeros.Su definici6ny delimitaci6n * David Kullock, Delia Krupnik and Carlos Lamadrid, Polltica y realidad urbana en BuenosAires. Impactoy compatibilidadde los proyectosurbanos en gesti6n * Ronald J. Mackay & Joe Ferretti, Estado y empresa privada: una conjunci6nque puso un servicioen marcha * OsvaldoR. Ramacciottiand HeribertoAllende, Evaluaci6ny propuesta metodol6gica de los centrosde transbordodel Area Metropolitanade BuenosAires * Aida Temavasio de Lamadrid, Transporte y desarrollo urbano en la regi6n metropolitanade BuenosAires - Mark Whitaker, Satisfacciondel usuario:responsabilidad de todos MAP SECTION

ARGENTINA BUENOSAIRES URBAN TRANSPORT PROJECT M SuburbanRailways Operated By Private Concessionaires

S SARMIENTOLINE 0 RAILWAYSTATIONS

>4_ 1 _ _ > A M > MITRELINE RAILWAYS

.ER:l: | Uj URQUIZALINE MUNICIPALBOUNDARIES ER ROCALINE SCM SAN MARTINLINE u8~~><< k1Z <>>SANEMARTiN INE _-. - INTERNATIONAL rM\J.'11EhA% C:'tN'' -|BN BELGRANONORTE LiNE BOUNDARIES(lnset only) ,BS- BELGRANOSUR LINE

'a I.ER-'-77' t- -L'AL, st.7

V71L~~~~~~~~~~~~~~~~~~~~~~~a h1~i

GE~~~~~~~~~~~~~~~LA ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ L L~

20D 7 ,BOLiVIA' 01|Iu R/' 20'7~ IVIA,f60-~ 50" 'o R I% '''N' t *

PACIFI(- PARAGUAY; BRAZIL a a a , At

oc IaX / r oi'at > i\sADS"

ARGENTINA ' 5 1a0 300 300'a4 15 20 '01

J \; URUGUAY; # \ | CH/|LEI Area OIoJENgSAJRES a KILOMETERS

MapJ . 2 , * ' r X TheThzshomop was produced colorsenorn,not,bythe Mop Dvesegn ond onypotherUna of The nMDortoT,-,-World f ank _.~o E 400 -40 ------' .- ¢a.af - A Jlsho,on oL th nrpd rnpy h Hportof The G-p, -y,udq-ognetonth f -no.wtt f6. goon rosso f -yoy t-d-y'e~tryW 0 4 td5r0 -y~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Doo,oc0 nk 70 I o, 70, 60; :ODIt-g/j f5t . endorsementorsecepFnce of bndeoooofhno _80° 1 _70' J 60' 50 .

IBRD28385 This map was produced by the Map Design Un,it of The World BSok. The hoondories, colors. denom-intionsand any other information shown, on this ma do noWInNUE`P imply, on the Part of '"5 The World Bank Group, soy judgmentso the legal ,RI R/OO DE LA ATA sttus of ony territory, P or any endorsement, or acceptanceof such \ SAAVEDP4A X Ot P \;RE\

, )k < / '-S ~R, i

. / st X~~~~~~~\~OLEGIAL.cS iA Ra

PUE_IO 4Ai/tg RR Y\,

.66PUEY'RREDOf-4.t4RTUZAP W)PTE KILOMETEtS

- 1* § | | e$ [LA D.4ERL VK AGObi ~.0 V./ILL...A . ' ' ~(,3 t_ .1

Ri F;AF!tQUE+ GP.A. BRAZIL mO<<.C3NTE d X * / 3 }MEw5E-GRNNo -- -4 AETiNA

FBO RESTAA '14~P ~~ ~ ~ POE~ ~ ~ ~~~~~~~~~ Buno Aires

,VEr.;3A( % J MRC: 199

i r s > *_____I~~~~~~~~~~~~~AVP TO MO~RENO ......

tZ ~~~~V!L. \ i>./tJAAS..

- V > ~~~~~~MtroyfasRail Se _~rvice (I3% C,_'y

- X ViLLA o I , ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~KILOMETERS ,% ( - ~ UEQ,. -S SUURA~~LU.GANO RAILWAY/ ' IMILES

T. Inr-fibrolArof \~~~~~~~~~~~~~~~~~~~~~~~~~AGA(BaRAZIL

ARGENTINA r\AGNIA|EG BUENOSAIRES URBAN TRANSPORT PROJECT- MetroviasRail Services - unsArsCe

. SUBWAYLINE A -OTHER RAILWAYS- _ OTHER SUBWAYLINES * RAILWAYSTATIONS ._

- - - PRE- METRO - INTERNATIONAL BOUNDARIES \. :r - - - URQUIZA SUBURBANRAILWAYi

MARCH1997

IMAGING

ReportNo.: 15951 AR Type: SAR