The World Bank Kandy Multimodal Transport Terminal Development Project (P172342) Public Disclosure Authorized Public Disclosure Authorized Project Information Document (PID) Appraisal Stage | Date Prepared/Updated: 26-Feb-2020 | Report No: PIDA28437 Public Disclosure Authorized Public Disclosure Authorized Feb 13, 2020 Page 1 of 18 The World Bank Kandy Multimodal Transport Terminal Development Project (P172342) BASIC INFORMATION OPS_TABLE_BASIC_DATA A. Basic Project Data Country Project ID Project Name Parent Project ID (if any) Sri Lanka P172342 Kandy Multimodal Transport Terminal Development Project Region Estimated Appraisal Date Estimated Board Date Practice Area (Lead) SOUTH ASIA 19-Feb-2020 24-Sep-2020 Transport Financing Instrument Borrower(s) Implementing Agency Investment Project Financing Democratic Socialist Ministry of Urban Republic of Sri Lanka Development, Water Supply and Housing Facilities Proposed Development Objective(s) The Project Development Objective (PDO) is to enhance accessibility, efficiency, and safety for public transport users of the Kandy Multimodal Transport Terminal. Components Development of Kandy Multimodal Transport Terminal (KMTT) Urban integration and road safety improvements around KMTT Institutional strengthening and capacity building PROJECT FINANCING DATA (US$, Millions) SUMMARY-NewFin1 Total Project Cost 75.00 Total Financing 75.00 of which IBRD/IDA 75.00 Financing Gap 0.00 DETAILS-NewFinEnh1 Feb 13, 2020 Page 2 of 18 The World Bank Kandy Multimodal Transport Terminal Development Project (P172342) World Bank Group Financing International Development Association (IDA) 75.00 IDA Credit 75.00 Environmental and Social Risk Classification Substantial Decision The review did authorize the team to appraise and negotiate B. Introduction and Context Country Context 1. Sri Lanka has shown steady growth over the last decade although key macroeconomic challenges persist. Sri Lanka is an upper middle-income country with a GDP per capita of USD 4,102 (2018) and a total population of 21.7 million people. Following 30 years of civil war that ended in 2009, Sri Lanka’s economy grew at an average 5.6 percent during the period of 2010-2018, reflecting a peace dividend and a determined policy thrust towards reconstruction and growth. However, economic growth witnessed a slow- down in the last few years. 2. The country’s economy is transitioning from a predominantly rural-based economy towards a more urbanized economy oriented around manufacturing and services. Social indicators rank among the highest in South Asia and compare favorably with those in middle-income countries. Economic growth has translated into shared prosperity with the national poverty headcount ratio declining from 15.3 percent in 2006/07 to 4.1 percent in 2016. Extreme poverty is rare and concentrated in some geographical pockets. However, a relatively large share of the population subsists on slightly more than the poverty line. Female Labor Force participation (FLFP) at 34.9 percent was less than a half of men (73.4 percent) by 2019 and needs to increase to facilitate sustained economic growth1. 3. Low fiscal revenues combined with largely non-discretionary expenditure in salary bill, transfers, and interest payments have constrained critical development spending on health, education and social protection, which is low compared to peer countries. Public debt levels are high while the overall debt portfolio indicate some important challenges. In view of the Easter bombings of April 2019, the economic outlook is subject to heightened uncertainty. 1 Department of Census and Statistics, Sri Lanka, http://www.statistics.gov.lk/samplesurvey/2019Q1report.pdf Feb 13, 2020 Page 3 of 18 The World Bank Kandy Multimodal Transport Terminal Development Project (P172342) Sectoral and Institutional Context 4. A city of strategic importance. Located in central Sri Lanka, Kandy city region is known both for its natural and cultural attractions and its strategic geographic location. The Kandy district has a population of 1,375,382 (2012)2 spreading across a land area of approximately 1,940 square kilometers. Kandy is the capital city of the Central Province of Sri Lanka, which is the second biggest contributor to the country’s economy with a share of 10.7 percent3 of the GDP. The city’s central location with road access to all other regions of the island positions it with the potential to become a residential and commercial hub. Kandy has been identified as a World Heritage Site by UNESCO in 1988 and is a major tourist attraction of the country. Thus, the city region stands to benefit significantly with a well-planned urban transport network which could enhance accessibility to and from the city, efficiency of mobility within the city region and its attractiveness as a tourist destination. 5. Traffic congestion poses a major constraint to the city’s development potential. The Kandy city region attracts many commuters for employment, shopping, education, services, cultural and entertainment purposes. Under the World Bank’s Strategic Cities Development Project (SCDP), a comprehensive traffic analysis was conducted within the Kandy city region to identify major bottlenecks for transport and passenger commuting4. Despite the relatively small local population, the study finds that nearly 389,000 commuters (more than 2 times the local population) enter into the city on a typical weekday through different transport modes for various purposes (27 percent for employment and 19 percent for education purposes). Around 58 percent of these commuters use public transport to enter into the city and around 15 percent of the commuters use private vehicles and 8 percent of commuters use para-transit (mostly three- wheelers/tuk-tuks) modes. The share of passengers using non-motorized transport (NMT) such as biking is extremely insignificant (0.03 percent) and tourist vans, school vans and other transport modes such as tractors makes up for the rest of the share of passenger transport. The high volumes of vehicle and passenger flows into the city region has resulted in significant levels of congestion in the heart of the city during peak hours, leading to inefficiency, loss of productivity as well as air pollution. 6. Lack of adequate transport infrastructure has aggravated traffic congestion in the city. The main mode of public transport in Kandy is bus transport, with 500-600 busses operated by the state-owned Sri Lanka Transport Board (SLTB) and around 1,900 busses operated by private bus operators. The city center has one large bus terminal – the Goods Shed – and two main bus stations (smaller scale) - Clock Tower and Torrington - (referred collectively as the ‘terminals’ herein), which are used by both public and private bus operators for both inter-provincial and intra-provincial services. They attract nearly 80 percent (or 165,000) of the 209,000 bus commuters entering the city daily through approximately 5,000 bus trips. With an equal number of outbound bus travelers, a total of nearly 330,000 passengers (served by 10,000 bus trips) use the three terminals on a daily basis. The Goods Shed terminal attracts the majority of the passenger flow being the largest terminal and given its proximity to the Kandy railway station. Nearly all bus trips (97.4 percent 2 Public Transport Design & Operations Management Plan & Strategic Traffic Demand Management & Design Plan for Kandy 3 Central bank of Sri Lanka, Annual Report 2019 4 Public Transport Design & Operations Management Plan & Strategic Traffic Demand Management & Design Plan for Kandy – Integrated Strategic Public Transport Plan (ISPTP) and Strategic Traffic Management and Traffic Circulation Plan Report for Kandy CBD Feb 13, 2020 Page 4 of 18 The World Bank Kandy Multimodal Transport Terminal Development Project (P172342) of the 5000 trips) into the Kandy city region terminate at these three terminals (69 percent of the 5000 trips terminating at the Goods Shed) with only 2.6 percent of inter-provincial trips bypassing or passing-through the city for onward journey (touch-and-go - TnG). 7. The terminals lack critical infrastructure such as adequately planned bus bays, parking areas for buses, passenger waiting and queuing areas, adequate sanitation facilities and centralized ticket/information counters, to accommodate the high volume of bus and passenger traffic. Passenger queues can most often be seen spilling over to the road due to the lack of adequate space. The lack of segregation of bus and pedestrian movement around the area poses significant safety risks for the pedestrians. The large number of bus trips terminating at the three terminals has led to abnormally high requirement of dispatch and parking bays, spill-over parking on the road around the terminals, long layovers, and congestion around the three terminals. Facilities provided in the existing three terminals and in parking places in the surrounding areas are not sufficient to meet the current bus-parking requirements. Organized off-street bus parking is available only at two venues - Bogambara and Kandy South Depot - for 70 and 30 buses respectively and are far fewer than required. Furthermore, the high level of passenger flows around the terminals coupled with pedestrians within the city results in heavy pedestrian movement around the city area. Lack of safe walking paths and pedestrian-friendly infrastructure has added to the traffic congestion in the city as well create safety risks for pedestrians. 8. Existing terminals do not provide adequate