FILE COPY DOCUMENT OF INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION Public Disclosure Authorized Not For PubliuUse ReportNo. 158 a- IRN Public Disclosure Authorized IRAN APPRAISAL OF THE TEHRAN URBAN TRANSPORT PROJECT Public Disclosure Authorized July 18, 1973 Public Disclosure Authorized Urban Projects Department This report was prepared for official use only by the Bank Group. It may not be puL or cited without Bank Group authorization. The Bank Group does not accept responsibuiyT6y accuracy or completeness of the report. CURRENCY EQUIVALENTS (As of February 13, 1973) Currency unit = Rials (Rls) US$ 1.00 - Rials 68.2 Rials 1 = US$ 0.01h7 US$ 1 million = Ri71s 68.2 million Rials 1 million = US$ 1h,651 MEASURESEQUIVALENITS 1 kilometer (km) = 0.621 statute mile 1 square kilometer (km2) 0.386 square miles EISCAL YEAR Ends M4arch 20th LIST OF ABBREVIATIONS,ACRONYMS AND DEFINITIONSUSED a' THF.REPORT CIF - Cost, lnsurance and Jieight Dioub _ Ditch along a street, used for limited drainage and once used to provide poor house- holds, water for domestic needs Doxiadis - Doxiadis AssociatesInternational - Consultantson Developmentand Ekistics FY - Fiscal Year PO - Plan Organization SOFRETU - Societe Francaise d'Etude et du Realisationde TransportUrbajn IRAN APPRAISAL OF THE TEHRANURBAN TRANSPORT PROJECT TABLE OF CONTENTS Pa e No. SUMMARY AND CONCLUSIONS...... *...... i ... - iv I. INTRODUCTION...... ***..**..**..o*.**ee.***e 1 Ao The Economy ................... *..... 2 B. Urbanization in Iran and Tehran ......... 3 C. Urban Transport - Present Situation ........... 5 III. URBAN GROWTHAND TRANSPORTPOLICY IN TEHRAN- MAIN ISSUES 8 A. Past Approaches and Present Conflicts ......... 8 B. Alternatives and Growth Options .......... 9 C. The Tehran Development Council .-.. -... 10 D. Towards a Transport Policy for Tehran 12 IV. THEPROJECT r .to.......................... 14 -Bo Main Features ... 14 C. Cost Estimates ............ 18 D. ProjectFinancing Plan ...................... 20 E. Organizationand Management ....... 20 F. Procurement ..............-................. 22 G. Disbursement . 22 R. Training ..... 23 I. Ecology ......... ........ 23 V. FINANCIAL ASPECTS OF THE UNITED BUS COMPANY ..o..... 24 A. Past FinancialPerformance ............. c 24 B. Present Financial Position .................... 25 C. FinancingPlan .............................. 26 D. FutureOperating Results ...... o............. 28 E. FutureFinancial Position .................. 29 F. Monitoring - Financial and Operating Targets .. 29 The report is based on the findingsand reconmendationsmade by the consult- ants SOFRETUand on the findingsof a Bank appraisalmission which visited Tehran from February16 - March 3, 1973,and was composedof Messrs.R. A. Sison,P. Ljung (UrbanProjects) and Messrs.K. Hansen,G. Hughes,K. Strong and Ms. M. 0. Smith (Consultants).Messrs. R. Venkateswaran(Urban Projects) and M. G. S. Aiyer (EMEMA,Programs I) assistedin the missionduring appraisal, and Ms. I. Ozusta (Consultant)assisted in the preparationof the final report. TABLE OF CONEZTS - Continued Page No. Vi. PROJECTJUSTIFICATION ............. ..... 32 A. General. ............ 32 B. Objectives ..... 33 C. Rate of Return .... ... 33 D. Other Benefits -..... 34 VII. AGREMEENTS REACHED AND.RECOMYENDATIONS .. 36 ANNEXES 1 - Factors'-GuidingUrban- Growth in Tebran (Present Trends and Basic Data) 2 - The United Bus, Company of Tebran- 3 - Notes and Assumptlons on Financial Statements . 4 - United Bus Company - Income Statement 5 - United Bus Company - Balance Sheet 6 - United F:;usCompany.- Source and .Appolication of Funds- 7 - Advisory Services to-the Tehran Development Council - Suggested Terms- of Reference, 8 - Long Term:Transport Studies - Suggested: Terms of Reference 9 -; The Economic and Technical Advisory Group - Suggesited Terms of Reference 10 - Traffic Circulation and-Egineering Improvements8 11 - Work Program for Traf-ficCirculation and-Engineerng -Improvements 12 - Estimated.Cost of Proposed Depot: 13 - Tra<fic Plannin- Manager-- Suggested-Termsa of Reference 14 - Estimated Schedule of Disbursements, 15 - Methodology for Estimating Economic; Rates of Return- 16 - Demand Forecasts- for Public Transport q CYARTS 7658 - City of Telran. 7667 - Organization of the United Bus Company MAPS 10355 - Present Land Use - 10389 - Major Street System 10361 - Traffic ImprovementProposals 10362R - Detailed Traffic Improvement Proposal - ---- L~~~~~~~~......___ IRAN APPRAISALOF THE TEHRANURBAN TRANSPORT PROJECT SUMMARYAND CONCLUSIONS i. For the lower income segment of Tehran's population, the infra- structure shortages that have arisen as a result of heavy concentrations of people and economic activities within Tehran are approaching critical pro- portions. Nowhere is this more evident than for transport. The transport system is only adequate although increasingly overloaded for the 15% who ac- tually own a car; the system is seriously inadequate for all others. They must choose between a very poor bus service or a taxi service that is too expensive for daily use. The net result of such a choice has been the diver- sion of probablyas many as 400,000lower incomepassengers a day over the last three years. Loss of mobilityand access to the occupational,cultural, recreational and educationalaspects of Tehran'slife are a disproportionate hardship on the low income worker. ii. Tehran is a large city, not only measured by its population of 1.8 million,but in physicalsize. The urbanizedarea has sprawledto 350 kmh and the center city, where modern and traditional zones of commerce, finance and business, as well as goversment administration are clustered, is concen- trated in an area 5 km east-west by 6 km north-south. Industrial zones have developedalong the access roads outside the centercity. The scale of the city and its haphazardlydeveloped physical layout mean that commutingis a necessityfor the bulk of the labor force. Inadequatepublic transportation imposesnot merelyphysical constraints and loss of time but also a financial burden to the commutingurban poor on a day-to-daybasis. In the long run inadequatetransport impairs labor market flexibilityand reinforcesoccupa- tional, income and residential stratification that already exists to a marked extent. iii. Falteringpublic transitservice is the most obvioustransportation defectresulting from rapid and unplannedurbanization. Another problem is the road systemwhich is basicallyrelatively adequate in structurebut de- ficientfor the presentheavy flows of predominantlyautomobile traffic. Poorly interconnected radial roads into Tehran and an incomplete orthogonal road grid within Tehran cause almost constant congestion in the city. The projected net addition of some 275,000 passenger cars within the next ten years to the present level of 140,000 will, if unconstrained undoubtedly produce chaotic traffic conditions. Structural changes are necessary in the street network to decongest certain particularly poor areas. In the long run, major transport policies are required to halt the cycle of increased conges- tion, poorer public transit services and increased auto usage. The opportunity for positivepolicy on privateauto restraint,however, is dependenton in- creasedefficiency in and price competitivenessby public transport. - ii - iv. Orderly and equitable growth of the transport system, in the long run, involves determination about the social, economic and physical future of Tehran. Decisions to be taken on transport development, as on sewage, storm water drainage, housing and water supply recuire an adequate urban planning framework beyond that contained in the Master Plan of 1966. The Plan was predicated on arbitrary and artificial limitations on population growth, city size and new industrial investments - limitations which were difficult to enforce and which have been eroded by ad hoc decisions taken to relieve critical conditions in the short run and a continuing population growth well above that foreseen. Decisions taken in the absence of an ade- que.teurban planning framework have had only temporary results in meeting serious urban infrastructuraldeficiencies, and have prompted ever heavier concentrationsof people and economic activity in the centra-.area of Tehran. The city has grown concentricallyintensifying central area pressure, and conflicting with the westward growth of the city by stages envisaged in the 1966 Master Plan. Such a fundamental conflict between actual and intended growth points up the need to assess in depth alternative growth strategies for the Tehran urban region, and to plan future urban investments on a sys- tematic basis within t'aeframework of new urban guidelines. v. The Government of Iran's commitment to the positive development o' Tehran and to the formulation of an urban strategy that can tie together and rationalize development efforts is articulated in the Fifth Five Year Develop- ment Plan's proposed Tehran Development Council. The establishment of the Council is of immediate and overriding importance to t1he Government as a result of-the pressure of forthcoming critical infrastructural developments, of which transport development is one. Accordingly, in June 1973, a bill establishing the Tehran Development Council was presented to Parliament for enactment. Because of the urgent need to establish a comprehensive planning capability the Government has requested that assistance to the Council and developmentof an urban strategy be a part of a short term program of urban