Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No. 10832 PROJECT PERFORMANCE AUDIT REPORT BRAZIL THIRD URBAN TRANSPORT PROJECT Public Disclosure Authorized (LOAN 1965-BR) RECIFE METROPOLITAN REGION DEVELOPMENT PROJECT (LOAN 2170-BR) PARANA MARKET TOWNS IMPROVEMENT PROJECT (LOAN 2343-BR) NORTHEAST URBAN FLOOD RECONSTRUCTION PROJECT (LOAN 25n-BR) Public Disclosure Authorized JUNE 26, 1992 0.331 , Type - ODD13 Report 1fl 110 / 7:073 / Public Disclosure Authorized Operations Evaluation Department This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. ABBREVIATIONS AND ACRONYMS AGLURB Urban Agglomerations Program BANESTADO Banco do Estado do Parana BNH National Housing Bank CEF Caixa Economica Federal CNDU National Urban Development Council CNPU National Ccmmission on Urban Policy and Metropolitan Regions CORABs State Housing Ccmpanies CUC Curado Urban Center DEAIN Department of International Affairs EBTU Brazilian Urban Transport Enterprise FAMEPAR Parana State Secretariat of Planning, Parana Municipal Assistance Foundation FIDEM Recife Metropolitan Region Development Foundation IBAM Brazilian Institute of Municipal Administration ICM Goods Circulation Tax MDU Ministry of Urban Development and Environment MEFP Ministry of Economy, Finance and Planning MINTER Ministry of the Interior PLANASA National Sanitation Plan PCR Project Completion Report PRAM The Parana Market Towns Improvement Project PPAR Project Performance Audit Report PROENE The Northeast Urban Flood Construction Project PROPAV Program for Low-Cost Paving in Low Income Areas RMRDP The Recife Metropolitan Region Development Project SAR Staff Appraisal Report SDU Undersecretariat of Urbaa Development SEPL Planning Secretariat SEPLAN Executive Secretariat Ministry of Planning SUDENE Superitendency for the Development of the Northeast UT-III The Third Urban Transport Project FOR OFFICIAL USE ONLY THE WORLD BANK Washington, D.C. 20433 U.S.A. Office of Drector-General Operstms Evalutiki June 26, 1992 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Performance Audit Report on Brazil Third Urban Transport Project (Loan 1965-BR) Recife Metropolitan Region Development Project (Loan 2170-BR) Parana Market Towns Improvement Project (Loan 2343-BR) Northeast Urban Flood Reconstruction Project (Loan 264*-BR) Attached, for information, is a copy of a report entitled "Project Performance Audit Report on Brazil - "Third Urban Transport Project (Loan 1965- BR); Recife Metropolitan Region Development Project (Loan 2170-BR); Parana Market Towns Improvement Project (Loan 2343-BR); Northeast Urban Flood Reconstruction Project (Loan 2545-BR)" prepared by the Operations Evaluation Department. Attachment This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. FOR OFFICIAL USE ONLY PROJECT PERFORMANCE AUDIT REPORT BRAZIL: EXPERIENCE WITH URBAN DEVELOPMENT THIRD URBAN TRANSPORT PROJECT (LOAN 1965-BR) RECIFE METROPOLITAN REGION DEVELOPMENT IROJECT (LOAN 2170-BR) PARANA MARKET TOWNS IMPROVEMENT PROJECT (LOAN 2343-BR) NORTHEAST URBAN FLOOD RECONSTRUCTION PROJECT (LOAN 25*S-BR) TABLE OF CONTENTS Page No. Preface ..................................... ........ i Basic Data Sheets ................................................... ii Evaluation Summary .................................................. x 1. BACKGROUND .................................................... 1 A. Introduction ............................................... 1 B. Bank Country and Sector Lending Strategies ................. 3 C. Sector Background ................................ 3 D. Urban Policy ............................................... 4 E. The Evolving Institutional and Political Context ........... 4 F. The Macroeconomic Context .................................. 6 II. THE PROJECTS ...................................... 7 A. Project Origins, Preparation, and Appraisal ................ 7 1. The Third Urban Transport Project (Ur-III) .............. 7 2. The Recife Project (RMRDP) ......... ..... .. 9 3. The Parana Project (PRAM) ............................... 13 4. The Northeast Urban Flood Reconstruction Project (PROENE) 15 B. Project Objectives and Description ................ 16 1. UT-III .................................................. 16 2. RMRDP ................................................... 18 3. PRAM .......................................... 22 4. PROENE .............................. 25 III. PROJECT IMPLEMENTATION AND RESULTS ....... ............. 27 A. Time Delays, Cost Variations, and Revisions .......... 27 1. UT-I .................... ....... ....... ..... 27 2. RMRDP ........................... 29 3. PRAM .......................... ...... 32 4. PROENE ...contents.ma .not.otherwis....................... 33 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. its contents may not otherwise be disclosed without World Bank authorization. Table of Contents (continued) Page No. B. Project Results ........................................... 34 1. UT-III ................................................. 34 2. RMRDP .................................................. 36 3. PRAM ................................................... 38 4. PROENE ................................................. 40 IV. POINTS OF INTEREST .......................................... 40 A. Physical and Environmental Impact ......................... 40 B. Poverty Impact ............................................ 41 C. Institutional Impact ...................................... 42 D. Financial Performance ..................................... 43 E. Sustainability ............................................ 44 F. Issues of Project Design .................................. 46 G. The Importance of External Factors ........................ 49 V. THE ROLE OF THE BANK ......................................... 49 A. Preparation and Appraisal ................................. 49 B. Supervision ............................................... 50 VI. CONCLUSIONS AND LESSONS LEARNED .............................. 52 A. Conclusions ............................................... 52 1. UT-III ............................................ ..... 53 2. RMRDP .................................................. 53 3. PRAM ................................................... 54 4. PROENE ................................................. 55 B. Lessons Learned ........................................... 56 ANNEXES 1. Comments from Ministerio de Economia, Fazenda e Planejamento... 60 2. Comments from Companhia Paranaense de Saneamento .............. 65 3. Comments from Instituto Brasileiro de Administracao Municipal................................................... 66 4. Comments from Thereza Lobo (Consultant)........................ 68 5. Comments from Arch. Jorge Guilherme Francisconi................ 70 PROJECT PERFORMANCE AUDIT REPORT BRAZIL: EXPERIENCE WITH URBAN DEVELOPMENT THIRD URBAN TRANSPORT PROJECT (LOAN 1965-BR) RECIFE METROPOLITAN REGION DEVELOPMENT PROJECT (LOAN 2170-BR) PARANA MARKdT TOWNS IMPROVEMENT PROJECT (LOAN 2343-BR) NORTHEAST URBAN FLOOD RECONSTRUCTION PROJECT (LOAN 2545-BR) PREFACE 1. This is a Project Performance Audit Report (PPAR) on four urban development operations in Brazil. The Third Urban Development Project was approved on March 31, 1981 and partially financed by Loan 1965-BR for US$ 90zO million. It was fully disbursed. The Recife Metropolitan Region Development Project was approved on June 3, 1982 and was financed by Loan 2170-BR for US$ 123.9 million, of which US$ 15.9 million was later cancelled. The Parana Market Towns Improvement Project was submitted to the Board on August 23, 1983 and was partially funded by Loan 2343-BR for US$ 52.7 million. An unused balance of US$ 773,000 was cancelled at the time of last disbursement. The North .st Urban Flood Reconstruction Project was approved on December 19, 1985 and was supported by Loan 2545-BR for US$ 100.0 million, of which US$ 1.4 million was cancelled. 2. The PPAR consists of an Evaluation Summary and a Project Performance Audit Report (PPAR) prepared by the Operations Evaluation Department Project Completion Reports (PCRs) prepared in all cases by the Infrastructure Optrations Division of Country Department I of the Latin American and the Caribbean Regional Office (LAlIN) were previously submitted to the Board on the following dates: Parana Market Towns Improvement Project (Report No. 9154) - November 30, 1990; Third Urban Transport Project (Report No. 9186) - December 7, 1990; Recife Metropolitan Region Development Project (Report No. 9490) - April 12, 1991; and Northeast Urban Flood Reconstruction Project (Report No. 9491) -April 12, 1991. 3. The PCRs provide accounts of project experiences and indicate their achievements and failures. To give a wider and comparative perspective, OED has provided additional Information about the history of the four operations, their aain implementation problems and outcomes, the issues raised, and the principal lessons learned. The PPAR is based on the aforementioned PCRs, the respective SARs, project files, legal documents, discussions at Board presentation, and other relevant materials. It also drew on