Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No: 54311-CO PROJECT APPRAISAL DOCUMENT ON A PROPOSED LOAN Public Disclosure Authorized IN THE AMOUNT OF US$250 MILLION TO THE CORPORACIÓN AUTÓNOMA REGIONAL DE CUNDINAMARCA WITH A GUARANTEE FROM THE REPUBLIC OF COLOMBIA Public Disclosure Authorized FOR A RÍO BOGOTÁ ENVIRONMENTAL RECUPERATION AND FLOOD CONTROL PROJECT November 11, 2010 Sustainable Development Department Country Management Unit Latin America and the Caribbean Region Public Disclosure Authorized This document is being made publicly available prior to Board consideration. This does not imply a presumed outcome. This document may be updated following Board consideration and the updated document will be made publicly available in accordance with the bank’s Policy on Access to Information. CURRENCY EQUIVALENTS Exchange Rate Effective May 31, 2010 Currency Unit = Colombian Peso (CO$) CO$1,975 = US$1 FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS BOD5: 5-Day Biochemical Oxygen Demand BOT: Build-Operate-Transfer CAR: Corporación Autónoma Regional de Cundinamarca (Regional Autonomous Environmental Agency of Cundinamarca) CGR: Contraloría General de la República de Colombia (General Controller for the Rupublic of Colombia) CONPES: Concejo Nacional de Política Económica y Social (National Political and Economic Council) CRA: Comisión de Regulación de Agua Potable y Saneamiento Básico (Commision for the Regulation of Water Supply and Basic Sanitation) DNP: Departamento Nacional de Planeación (National Planning Department) EA: Environmental Assessment EAAB: Empresa de Acueducto y Alcantarillado de Bogotá (Bogotá Water Supply and Sewerage Company) EMGESA: Empresa de Energía de Bogotá S.A. (Bogota Energy Company Limited) EMP: Environmental Management Plan FIAB: Fondo para las Inversiones Ambientales en el perímetro urbano de Bogotá (Fund for Environmental Investments in Urban Perimeter of Bogota) IADB: Inter-American Development Bank IFRs: Interim Financial Reports IGAC: Instituto Geográfico Agustín Codazzi (Geographic Institute of Agustin Codazzi) MAVDT: Ministerio de Ambiente, Vivienda y Desarrollo Territorial (Ministry of Environment, Housing, and Regional Development) MWs: Megawatts NGO: Non-governmental Organization PA: Plan de Acción Cuatrienal de la CAR (CAR’s Four Year Action Plan) PGAR: Plan de Gestión Ambiental Regional de la CAR (CAR’s Ten Year Regional Environmental Management Plan) PMAR: Plan de Manejo de las Aguas Residuales (National Plan for Municipal Wastewater Management) POT: Plan de Ordenamiento Territorial (Regional Land Use Plan) POMCA: Plan de Ordenamiento y Manejo de la Cuenca (River Basin Management and Land Use Plan) PSMV: Plan de Saneamiento y Manejo de Vertimientos (Plan for Sanitation and Wastewater Discharge Management) RAP: Resettlement Action Plan SDA: Secretaría Ambiental de Bogotá (Environmental Secretariat for the District of Bogotá) SDAS: Subdirección de Desarrollo Ambiental Sostenible (Sustainable Environment Development Subdirectorate) SIL: Specific Investment Loan SINA: Sistema Nacional Ambiental (National Environmental System) SOEs: Statements of Expenditures SSPD: Superintendencia de Servicios Públicos Domiciliarios (Superintendent of Public Service Enterprises) TSS: Total Suspended Solids UEP: Unidad Ejecutora del Proyecto (Project Executing Unit) WWTP: Wastewater Treatment Plant Vice President: Pamela Cox Country Director: Gloria M. Grandolini Sector Director: Laura Tuck Sector Manager: Guang Zhe Chen Task Team Leader: Greg Browder/Carmen Yee-Batista COLOMBIA RÍO BOGOTÁ ENVIRONMENTAL RECUPERATION AND FLOOD CONTROL PROJECT CONTENTS Page I. STRATEGIC CONTEXT AND RATIONALE ................................................................. 1 A. Country and sector issues.................................................................................................... 1 B. Rationale for Bank involvement ......................................................................................... 4 C. Higher level objectives to which the project contributes .................................................... 5 II. PROJECT DESCRIPTION ................................................................................................. 5 A. Lending instrument ............................................................................................................. 5 B. Project development objective and key indicators .............................................................. 5 C. Project components ............................................................................................................. 6 D. Lessons learned and reflected in the project design ............................................................ 6 E. Alternatives considered and reasons for rejection .............................................................. 7 III. IMPLEMENTATION ...................................................................................................... 8 A. Partnership arrangements (if applicable) ............................................................................ 8 B. Institutional and implementation arrangements .................................................................. 8 C. Monitoring and evaluation of outcomes/results .................................................................. 8 D. Sustainability....................................................................................................................... 9 E. Critical risks and possible controversial aspects ................................................................. 9 F. Loan/credit conditions and covenants ............................................................................... 11 IV. APPRAISAL SUMMARY ............................................................................................. 12 A. Economic and financial analyses ...................................................................................... 12 B. Technical ........................................................................................................................... 13 C. Fiduciary ........................................................................................................................... 14 D. Social................................................................................................................................. 15 E. Environment ...................................................................................................................... 16 F. Safeguard policies ............................................................................................................. 18 G. Policy Exceptions and Readiness...................................................................................... 18 Annex 1: Country and Sector Background .............................................................................. 19 Annex 2: Major Related Projects Financed by the Bank and/or other Agencies ................. 27 Annex 3: Results Framework and Monitoring ........................................................................ 28 Annex 4: Detailed Project Description ...................................................................................... 30 Annex 5: Project Costs ............................................................................................................... 34 Annex 6: Implementation Arrangements ................................................................................. 36 Annex 7: Financial Management and Disbursement Arrangements ..................................... 39 Annex 8: Procurement Arrangements ...................................................................................... 45 Annex 9: Economic and Financial Analysis ............................................................................. 50 Annex 10: Safeguard Policy Issues ............................................................................................ 78 Annex 11: Project Preparation and Supervision ..................................................................... 98 Annex 12: Documents in the Project File ................................................................................. 99 Annex 13: Statement of Loans and Credits ............................................................................ 101 Annex 14: Country at a Glance ............................................................................................... 103 Annex 15: Maps IBRD 37322, 37168, 37483 ........................................................................... 106 PAD DATA SHEET Colombia Río Bogotá Environmental Recuperation and Flood Control Project PROJECT APPRAISAL DOCUMENT Latin America and the Caribbean Region Water and Urban Unit Date: November 11, 2010 Sector(s): Sewerage (70 percent); Flood protection Country Director: Gloria M. Grandolini (30 percent) Sector Director: Laura Tuck Sector Manager: Guang Z. Chen Theme(s): Pollution management and Team Leader(s): Greg J. Browder and environmental health (50 percent); Water resource Carmen Yee Batista management (25 percent); Other urban development Project ID: P111479 (25 percent) Lending Instrument: Specific Investment Loan EA Category: A-Full Assessment Project Financing Data: Proposed terms: The lending instrument will be a Specific Investment Loan (SIL) with an amount of $250 million to the CAR with a guarantee by the Republic of Colombia. The loan will be fixed spread over LIBOR with a maturity of 14 years, 4.5 year grace period,