Document of The World Bank FOR OFFICIAL USE ONLY ReportNo. 11445-VE STAFF APPRAISAL REPORT VENEZUELA URBAN TRANSPORT PROJECT sEPTEMBER 30, 1993 Infrastructure Operations Division Country Department I Latin America and the Caribbean Regional Office 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. Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized
Transcript
Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No. 11445-VE
STAFF APPRAISAL REPORT
VENEZUELA
URBAN TRANSPORT PROJECT
sEPTEMBER 30, 1993
Infrastructure Operations DivisionCountry Department ILatin America and the Caribbean Regional Office
This document has a restricted distribution and may be used by recipients only in the performance oftheir official duties. Its contents may not otherwise be disclosed without World Bank authorization.
CAMETRO - Caracas Metro CompanyCBV - Central Bank of VenezuelaCVT - Venezuelan Transport CouncilCVTT - National Traffic PoliceCORDIPLAN - Ministry of Coordination and PlanningDGSTT - Land Transport DirectorateFONTUR - National Urban Transport Fund (Fondo Nacional de Transporte Urbano)FUDECO - Foundation for the Development of Midwest Region (Fundaci6n para el
Desarrollo de la Regi6n Centro - Occidental)FUNDACOMUN - Foundation for Community and Municipal Development (Fundaci6n
para el Desarrollo de la Comunidad y Fomento Municipal)GOV - Government of VenezuelaIDB - Inter-American Development BankLCA - Local Coordination AgencyLORM - Municipal Law (Ley Organica de Regimen Municipal)MINDUR - Ministry of Urban DevelopmentMTC - Ministry of Transport and CommunicationsPERL - Public Enterprise Reform LoanPMU - Project Management UnitPTS - Public Transport StudyUNDP - United Nations Development ProgrammeUT - Urban TransportVOC - Vehicle Operating Costs
FOR OMCIAL USE ONLY
VENEZUELA
URBAN TRANSPORT PROJECT
STAFF APPRAISAL REPORT
Table of Contents
Page No.
PROJECT SUMMARY . ................................................... iii
I. BACKGROUND ................................................. 1A. Project Background ............................................. 1B. The Urban Sector ............................................. 1C. Municipal Government in Venezuela ................................... 2D. GOV's Decentralization Strategy ..................................... 3
II. THE URBAN TRANSPORT SECTOR .. 3A. Overview .3B. Urban Transport Characteristics .4C. Institutional Framework .4D. Regulatory Framework .6E. Cost Recovery, Pricing and Subsidies .7F. Sectoral Issues. 9G. Lessons Learned from Past Projects .12H. Towards a Better Managed Urban Transport System .13
Ill. THE PROJECT .................................................. 14A. Origin .... .................................................. 14B. Rationale and Objectives .......................................... 15
Rationale for Bank Involvement ................................... 15Objectives ................................................. 15
C. Description ................................................... 16Part A - Institutional Development and Policy Programs .................. 16Part B - Infrastructure and Equipment Investment ...................... 19
D. Project Costs .................................................. 23E. Indicative Investment Needs ........................................ 24
This report is based on the findings of an appraisal mission which visited Venezuela in September,1992. Mission members included: Messrs. Jorge Rebelo, (Task Manager, Sr. Transport Planner);Gerhard Menckhoff, (Sr. Urban Transport Specialist); Gerard Uautaud, (Highway Engineer); and JohnCracknell, (Consultant, Traffic Engineer). Messrs. Richard Scurfield and John Flora provided the PeerReview. Messrs. Asif Faiz, Orville Grimes and Rainer B. Steckhan are respectively the managingDivision Chief, Projects Advisor and Department Director for the operation. Ms. Allison Tumer assistedin producing this report.
This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization.
V. AGREEMENTS TO BE REACHED AND RECOMMENDATIONS .................... 37
ANNEXES:
1. Lessons Learned From Past Projects ..................................... 402. The Executing Agency: FONTUR ...................................... 483. Municipal Finances in Venezuela .534. Subproject Eligibility Criteria .625. Completed Subproject Appraisals .656. FONTUR Institutional Strengthening Program .727. National Training Program .778. Institutional Devleopment Policy Component Studies .829. Traffic Police Component .9210. Road Maintenance Component ................................. 9511. Economic Evaluation ................................. 1031 2. Detailed Project Costs ................................. 11213. Project Implementation and Monitoring ................................. 11814. Urban Transport Characteristics ................................. 13115. Documents in the Project File ................................. 145
TABLES:
Table 1.1 Population of Principal Cities .2Table 3.1 Bank and IDB Projects .21Table 3.2 Summary of Project Costs .24Table 3.3 Project Financing Plan .25Table 3.4 Summary of Quantified Subproject Benefits .27Table 4.1 Procurement Arrangements .34Table 4.2 Disbursement Profile by Category .35
MAPS:MAP: IBRD N° 22154
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VENEZUELA
URBAN TRANSPORT PROJECT
LOAN AND PROJECT SUMMARY
Borrower: Republic of Venezuela.
ExecutinaAaencies: National Urban Transport Fund IFONTUR) and the Ministry of Transport and
Communications (MTC).
Amount: USS 100 million equivalent.
Terms: Repayment in 15 years, including five years of grace, at the Bank's standardvariable rate.
ProjectObiectives: The proposed Urban Transport Project aims at improving the quality and
efficiency of urban transport in Venezuelan cities. To assist in achieving thisgoal, the primary objective of the project is to improve and strengthen nationaland local institutions engaged in the planning, financing, design, and operationof urban transport systems. In addition, the project will help to increase theefficiency of traffic and transport operations, to preserve the urban transportinfrastructure through better maintenance and consequently to assist inreducing user costs and deferring new transport investments. The project isalso expected to contribute to poverty alleviation by facilitating access topublic transport by the poor.
ProjectDescription: The project consists of two parts: Part A - an institutional development and
policy program and Part B - an infrastructure and equipment investmentprogram at the municipal level. Part A accounts for some 17% of the projectcost (US$ 34.8million) and consists of the following components: i) aninstitutional strengthening program for FONTUR, ii) an institutionalstrengthening program at the municipal level, iii) a national urban transportsector training program, iv) a traffic police program, v) policy studies and v)preparation of city subprojects. Part B, which represents some 83% of projectcost (USS 1 65.2million), would provide resources to individual municipalitiesfor urban transport subprojects. Municipal subprojects will compriseinvestments in traffic and transport infrastructure and equipment, andassociated maintenance programs.
ProjectBenefits: The main benefits of Part A (Institutional) will stem from enhanced capabilities
of FONTUR to influence urban transport development through the allocation ofresources to well-conceived programs and project schemes at the local level,and from increased municipal capabilities. The national training program willstrengthen technical capabilities of the municipalities and the technicalassistance program for traffic police will begin to bring about better use ofexisting infrastructure through more effective traffic law enforcement. Part Bof the project will ensure that municipalities can effectively discharge theirresponsibilities arising from the Government's decentralization policy. The
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investment programs for infrastructure improvements and maintenance shouldimprove the efficiency and quality of urban transport operations. Thequantified benefits are in terms of reduced vehicle operating costs and traveltime-savings through reduced traffic congestion. Reductions in congestion willmake a significant contribution to the environment and hence to the quality ofurban life. The poor should benefit from the improved public transportperformance because of shorter travel times to and from places ofemployment.
ProjectRisks: New policies and directions in urban transport are being envisaged under the
project to be pursued by nascent agencies, and the main implementation riskis clearly institutional. To reduce this risk, the project places great emphasison institutional aspects including the strengthening of FONTUR, a nationaltraining program for national and local level traffic planners, technicalassistance for traffic police, and training and technical assistance forparticipating municipalities. Completion of the selection process for FONTURtechnical assistance is a condition of loan effectiveness. Weak municipalfinancial capacity and insufficient budgets could result in counterpart fundingproblems. To mitigate this problem during the transition to decentralizedprovision of urban transport and to ensure that municipalities allocate their25% share of subproject costs, the municipalities will be: li) subject to afinancial review and (ii) required as part of the subproject agreement to commitfunds in a timely manner. There are also policy risks. While it is accepted thatlack of realistic tariffs has contributed to a decline in the public transportfleet/supply and costly subsidies to urban transport by GOV, it would beunrealistic to expect those problems to be resolved quickly. The Project willcontribute to clarification and eventual resolution of the subsidy issue through:li) a continuing dialogue with the GOV during project implementation andparticularly at the mid-term review, which will assess the progress made byeach municipality with respect to the recommendations of a Public TransportStudy for the municipality; and (ii) studies and pilot programs (e.g. in themunicipality of Maturin) to develop improved targeting of subsidies. The projectrisks are expected to be manageable and project conditionality has beendesigned to contain them within acceptable limits.
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Estimated Project CostsIUSS million)
I Local Foreign Total % of Total
PART A - INSTITUTIONAL DEVELOPMENT AND POUCY
Part Al - FONTUR strengthening 1.54 2.30 3.84 1.9
Part A2 - Municipal strengthening 2.27 2.08 4.95 2.5
Part A3 - National Training Program 2.91 4.31 7.22 3.8
Part A4 - Traffic Police Program 2.9e 8.22 11.17 5.6
Part A5 - Policy studies 1.31 1.31 2.e3 1.3
Part AO - Project preparation 2.50 2.50 5.00 2.5
Sub Total Part A 13.49 21.32 34.81 17.4
PART B - INFRASTRUCTURE AND EQUIPMENT
Part Bl - Traffic and infrastructure 67.39 38.97 104.35 52.2
land expropriation Part B1 1.08 0.00 1.08 0.5
Part B2 - Deferred Maintenance 12.16 6.29 18.45 9.2
Sub Total Part B 80.83 43.2e 123.88 81.9
Baee Costs 94.12 e4.58 158.09 79.3
Physical Contingencies 10.11 5.54 15.65 7.8
Sub Total 104.23 70.12 174.34 87.2
Price Contingencies 15.28 10.39 25.86 12.8
Total Project Costs lexcluding taxes) 119.51 80.51 200.00 100
Taxes 19.02 0.00 19.62 9.8
Total Project Costs (including taxes) 139.13 80.51 219.62 109.8
Financing Plan(US$ million)
Source of Funds Local Foreign Taxes Total % Total
World Bank 19.49 80.51 - 100.00 44.9
GOV (FONTUR) 67.3 - 19.62 86.92 38.3
Municipalities 32.7 -| 32.70 16.8
Total 119.49 80.51 19.62 219.62 100
Loan Disbursement Schedule(USS million)
Bank Fiscal Year 1994 1995 | 1998 1997 1998 1999
Annual 18 18 27 18 17 4
Cumulative 18 36 63 79 98 100
Rate of Return: The estimated economic rate of return for the first year program of Investments In traffic Infrastructure and equipmentprogram (amounting to about 50% of total project investments) is 32%. The economic rates of ratum for the remairning investments aeexpected to range from 12% to about 100%, with most of thti exceeding 30%.
VENEZUELA
URBAN TRANSPORT PROJECT
I. BACKGROUND
A. Proiect Backaround
1 .1 This project has its origins in two major developments within Venezuela: the growingurban transport sector crisis in major cities of the country which, in February 1990, erupted into violentriots and bus strikes; and the Government's efforts to decentralize the responsibility of basic urbantransport services to the municipal level in accordance with the country's Constitution and the 1990Decentralization Law.
1.2 Early in 1990, the Government of Venezuela (GOV) began a review of its urbantransport policies as part of its overall economic reform program. It requested the Bank to review theshort-term measures it had designed to soften the impact of fuel price adjustments (the price of dieselin Bs. doubled from December 1988 to February 1989) on public transport users and private sectoroperators. A Bank mission visited Venezuela in April 1990, reviewed the measures, and advised theGovemment to consider these short-term actions in the context of a longer-term strategy for thesector. The mission also emphasized to the Government the importance of creating a coherentinstitutional framework (in order) for overseeing policy formulation and implementation. In April 1990,the Government established a Steering Group on Urban Transport under the Venezuela TransportCouncil (CVT) to define sector objectives and priorities, to review the institutional and regulatoryframework in order to evaluate sector policies and to make recommendations on reform, and toformulate the Government's short and medium-term sector strategy with technical assistance from theBank and other international agencies. In February 1991, GOV requested Bank and IDB assistance foran urban transport program to support the improvement of urban transport services in Caracas andother metropolitan areas with more than 100,000 inhabitants.
B. The Urban Sector
1.3 Main Features: Venezuela is highly urbanized. An estimated 88 percent of Venezuela'spopulation lives in urban areas, the highest rate in the Americas, and one of the highest in the world.With an annual growth of 3.3 percent, urbanization is expected to continue, and UN HABITATprojections indicate that, by the year 2025, 93 percent of Venezuela's population will be urban.Caracas is the largest urban center in the country, with a metropolitan population of 2.8 million in1990, but it neither approaches the scale of the region's megacities, e.g. Mexico City and Sio Paulo,nor dominates the national urban system as Buenos Aires and Montevideo do in their respectivecountries. Important secondary centers, notably Maracaibo (pop. 1.4 million) and Valencia (pop. 1.0million) are potential counter-weights to Caracas. The rapid growth of Venezuelan cities can beappreciated from the fact that in 1950, there were only two cities in the country with populations inexcess of 200,000, namely Caracas with 680,000 and Maracaibo with 239,000. Today there are ten(see Table 1.1).
1.4 Venezuela's urban population has increased rapidly (from 4.5 to 5.0 percent per annumduring the 1950-1980 period); by 2010, it will have an urban population more than ten times largerthan in 1950. Currently, the annual urban population growth has fallen to 2.5 percent, but it is stillone of the highest rates in the region. In addition, Venezuela's urbanization has been driven by theestablishment and growth of urban service centers, rather than through the traditional process ofindustrialization as the principal drive behind urbanization. The rapid urbanization process in Venezuela
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has resulted in a major network of urban centers, whose importance is reflected by their size (Table1 .1). Although Caracas is a large agglomeration by any standard, it does not dominate the country'surban system. Approximately half the country's urban population lives in the ten largest cities listedin Table 1 .1, while the other half is concentrated in smaller cities with less than 200,000 inhabitants.The majority of the urban population lives in the coastal zone between Caracas and Maracaibo in thewest, an urban axis of some 500 kilometers in length.
1.5 Urban growth in Venezuela hasled to the rapid expansion of barrios. While this Table 1:1 Vezitueil - Pop, tof Principal Cities. is a phenomenon that is widespread in Latin 1990America and most of the developing world, thescale and growth of these settlements in :Caracas 2.784.042Venezuela is almost without parallel. When first Maracaibo' 1.363.803 established, barrios consist of ranchos or shacks Vlencla: .031.941iconstructed with shoddy materials. As the Maracay 799 884:barrios become more consolidated, even without Barqulslmeto 745.444services, residents improve their dwellings with C' d'dd d''t--i 46 6 730the use of more permanent materials. In this Barloay Pt . .L Crur 429.072way, single-room brick dwellings are established, Sa CristXb'l 3 00as in the case of Caracas. Most cities lack a Maturin: 257.683rational delivery system to plan and increase .6 Bivar i-iii24 .593 iicoverage of water supply, sanitation, electrical M6rda 23:7.575energy, transportation, and community services Cumana 23' l 'for these barrios. In the absence of an adequate Guarena/Guate 227.610formal supply of urban infrastructure and C:iudad&s -a 212 2 4-housing, barrios became the only feasible A Araua 208.0location for low income populations to find and cabqua 197.613establish shelter in Venezuelan cities. Clearly, Valera .. . -169211:there is a need to develop appropriate delivery Barinas 1mechanisms, commensurate with the financial, Los Te1ques 15.261economic and institutional capabilities of the Punto.Fib 153.205country. Puerto Cabello 145.759
Coro 144.006
C. Municipal Government in Venezuela
1.6 Venezuela has 269municipalities, of which 76 have populations exceeding 50,000. Regardless of their population size,municipalities in Venezuela have traditionally been very weak. Though the 1961 Constitution grantedto municipalities a wide range of fiscal authority and functional responsibilities --e.g. for water,sewerage, drainage, the distribution and sale of gas and electricity, and for public transport-- inpractice, the Central government actually assumed responsibility for these functions. Themunicipalities have mostly been responsible for solid waste collection and disposal, public markets, firefighting, cemeteries, and limited public works, including barrio upgrading and water connections.
1.7 Municipalities have traditionally relied heavily upon central government transfers, ratherthan their own revenue, to finance their expenditures. In 1 986, municipal expenditures accounted for9.1 percent of total public sector spending, but own-source municipal revenue represented only 4percent of total govemment revenues. The bulk of central government transfers are provided undera 1976 statute on revenue-sharing commonly referred to as the situado law, whereby a specifiedpercentage of central government revenues is transferred to state and municipal governments. Thesituado transfers to municipalities (0.75 percent of central government revenues prior to the 1989
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revisions) represent on average 35 to 40 percent of all municipal revenue (see Annex 2). The transfersare allocated as follows: 50 percent in equal allotments to all municipalities, and 50 percent on a percapita basis. The result is that smaller municipalities receive significantly higher per capita transfersthan larger municipalities. For example, the nation's largest municipality, Libertador (with 1.8 millionpeople, including Caracas proper), received situado transfers of roughly US$9 per capita in 1991,whereas smaller municipalities with populations under 100,000 received US$12 to US$15 per capita.
1.8 Although the Constitution and the Municipal Law (Ley Organica de Regimen Municipal,LORM, enacted in 1979) provide municipalities legal authority to raise revenue from a wide range ofsources, two municipal taxes account for 90 percent of own-source revenue: the business tax (65%)and property taxes (25%). The business tax (Patente Industria y Comercio) consists of a low rate taxon gross sales, generally between 0.2 and 1.0 percent, coupled with a minimum tax and a license fee.Property tax revenue tends to be modest, accounting for roughly 1 5 percent of total municipal revenue,including transfers. Generally, rates are low, properties are systematically underassessed, and taxevasion is widespread.
D. GOV's Decentralization Strateav1'
1.9 Beginning in 1989, the Government launched a far-reaching decentralization programaimed at significantly strengthening the role and responsibilities of state and municipal governments.The 1989 revisions to the Municipal Law (LORM) and the 1990 Decentralization Law have formed thecornerstone of this strategy. The 1989 revisions to the Municipal Law introduced important electoralreforms, whereby mayors (who were previously appointed by state governors) would be directlyelected, and council members (who were previously elected from closed party lists) would be electedrepresentatives of their districts. Municipal elections were held on this basis in late 1 989 and 1 992.The 1 990 Decentralization Law authorized the transfer of a number of expenditure responsibilities tothe state governments and also substantially increased central government transfers to state andmunicipal governments. Under the Decentralization Law, the central government transfers to municipalgovernments will increase by 300 percent over four years, from 0.75 percent of central governmentrevenues in 1989 to 3.0 percent by 1994. In 1991, transfers to the 76 largest municipalities (withpopulations exceeding 50,000) totalled US$120 million equivalent.
II. THE URBAN TRANSPORT SECTOR
A. Overview
2.1 An overview of urban transport in Venezuela reveals serious institutional bottlenecks,poor cost recovery policies and financial management, and weak integration between transport andland use planning, which are common to many of the country's urban areas and which should beaddressed expeditiously. This urbanization pattern and the rapid growth of urban populations, togetherwith a considerable increase of car ownership and use fostered by low fuel prices and poor publictransport, have resulted in chronic road congestion, mainly in Caracas but increasingly in a number ofother cities.
1/ 'Venezuela: Decentralization and Fiscal Issues", IBRD Report No. 111 60-VE, by LAt IN dated October 27,1992 has a good discussion of GOV's decentralization program.
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B. Urban Transport Characteristics and OraanizationZ'
2.2 Venezuela has an estimated fleet of 2.0 million vehicles (1990), of which 73% areprivate cars, 6% are vehicles used for public passenger transport, and the rest are motorcycles, trucks,trailers and semi-trailers. The Capital Region has 42% of the country's cars, and 39% of its publictransport vehicles. In addition to those modes, Caracas has a metro (CAMETRO) with two linestotalling 40 km. More than 95% of the public transport fleet is privately owned and consists of buses,por puestos (paratransit services with small or medium-sized buses) and jeeps. The modal share ofurban buses and por puestos ranges from 40% in Maracaibo to nearly 60% in Merida; walkingaccounts for about 13-16% of all trips in most cities, and private cars for 29-42%. Other thanwalking, there is little non-motorized transport, partly because the hilly topography makes it difficultto operate bicycles. In Caracas, the metro accounts for nearly 15% of the trips, other public transportfor 28%, cars for 41% and walking for roughly 16%; there is also a growing use of motorcycles.
2.3 In urban areas other than Caracas, a typical home-to-work trip requires transfersbetween por puestos and can take as much as 1-2 hours each way. Since the por puesto tariffs arenot integrated, many passengers must pay multiple fares; in these cases, poor people are obliged topay a high proportion of their disposable income on transport. In Caracas, the lowest income userslive in ranchos (areas marginales) on the hillsides which can only be served by four wheel drive vehicles(jeeps), since gradients are steep and other vehicles cannot maneuver safely. A typical home-to-worktrip for a rancho dweller consists of climbing down a hillside stairway to a jeep stop, taking the jeepto a por puesto stop and transferring to a por puesto to reach the metro. Due to the long distancesand the relatively high traffic congestion in Caracas, it is not uncommon for trips to take over 2 hourseach way. The service level of road-based transport has deteriorated considerably due to lower speedscaused by traffic congestion. Frequencies tend to be low, reliability is poor, and conditions of comfortand safety are bad. Furthermore, the lack of appropriate traffic management systems coupled withpoor parking policies and unsafe driving results in an high number of accidents, especially atintersections. Traffic safety enforcement is generally absent and some improvements couldsignificantly reduce the number of accidents.
C. Institutional Framework
2.4 At the federal level, the Ministry of Transport and Communications (MTC), through itsNational Directorate for Land Transport (DGSTT) is responsible for formulating, planning, andimplementing the federal policy in urban transport. In April 1990, in response to the urban transportrelated riots, GOV set up an advisory body, the Consejo Venezolano de Transportes (CVT) withrepresentatives from government (Ministries of Finance, Development, Labor, Transport andCORDIPLAN), operators (CAMETRO, FEDETRANSPORTE, FERROCAR), industry (FEDECAMARAS),municipal government (AVECI) and the users to advise on the sector objectives and priorities.Conscious of the need for a more permanent structure, GOV, in September 1991, created the NationalFund for Urban Transport (FONTUR) which is responsible for channeling federal funds budgeted forurban transport to the municipalities. FONTUR is also responsible for promoting and implementing thedecentralization of urban transport responsibilities from the federal government to the municipalities(Annex 2). However, the formulation of urban transport policies continues to be the responsibility ofthe DGSTT based on FONTUR's recommendations. There are a number of semi-autonomousinstitutions under the MTC. The most important in terms of investment in urban transport isCAMETRO. Another agency for which the MTC is responsible is the Traffic Police ("Cuerpo deVigilancia del Transito Terrestre") which is under the DGSTT.
Z/ Annex 14 gives a detailed description of urban transport modes in the major Venezuelan cities.
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2.5 The Ministry of Urban Development (MINDUR) is authorized to plan the developmentof the urban road network in coordination with MTC but invests little in urban transport. The InteriorMinistry is involved indirectly through its relationship with the state governments. The stategovernments in Venezuela invest substantial amounts on transport, mostly through what is known asthe Situado Coordinado, i.e., joint programs financed by transfers and undertaken by means of anagreement ("Convenio") between each state and the MTC. Small amounts, mostly dedicated to roadmaintenance, are also spent out of the states' own budget ("Presupuesto Ordinario-).
2.6 The 1 961 Constitution attributes to the municipalities the responsibility for the provisionof a number of services, including urban transport. However, insufficient financial resources and thelack of administrative and professional capacities at the local level, usually create a situation in whichthese services are provided with assistance from the state and/or federal governments. While thestates and municipalities are free to make their own arrangements, most municipalities are stilldependent on the MTC or the state government for the maintenance of their traffic lights and urbanstreet network. Construction and financing of new roads in municipalities are often the responsibilityof the states, usually through MTC. Traffic management was until recently (and still is in Caracas) theresponsibility of the Federal Government and regulation of bus services and concessions in urban routesare the responsibility of the municipalities. The larger the city, the greater is the tendency for themunicipal government to assume the responsibility for road construction and traffic management.
2.7 The Ley Organica Municipal, revised in 1990, seeks to decentralize responsibilities andto strengthen local organizations, particularly at the municipal level, as it is felt that this leads toimproved responsiveness to local needs and better accountability. Organizations that exist at themunicipal level to handle urban transport vary from a simple traffic and transport division (Merida) toan Autonomous Transport Institute (Maracaibo) created by the municipalities for that effect. Due tothe lack of definition of the role of each level of government, FONTUR undertook a study on 'The Roleof Government' in the planning, maintenance, regulation, financing and delivery of urban transportservices as part of the preparation for the proposed project. The study recommended three types ofmodel organizations in staffing for traffic, transport and road maintenance functions at the municipallevel based on the population of the municipality. Assistance to set up municipal-level organizationsbased on these models is provided under the technical assistance component of the proposed project.
2.8 For large cities such as Caracas and Barquisimeto, the responsibility for transport andtraffic regulation, traffic engineering, traffic law enforcement, and short and medium range landuse/transport planning is divided among agencies at federal and municipal level, or between differentdepartments within individual agencies or even between different municipalities within the samemetropolitan area. This diversity sometimes results in agencies with shared responsibilities havingconflicting policies for a particular activity.
2.9 The extent and quality of urban transport coordination and planning vary among thedifferent regions but all are faced with a similar problem -- (a) how to plan, manage and maintain atransport system in a metropolitan region consisting of many municipalities, each with its ownadministrative powers, when the necessary inputs for, and effects of, this transport system extendwell beyond the administrative boundaries of any one municipality; and (b) how to finance urbantransport projects. A possible solution would be to create metropolitan-wide transportcoordinating/regulatory agencies, which would require special enabling legislation. In some Venezuelanmetropolitan areas, an adaptation of this type of institution already exists and, in others, plans (or, insome cases, draft legislation) exist to create them.
2.10 In Brazil, for example, such organizations are referred to as Empresa Metropolitana deTransportes Urbanos (EMTU). In addition to regulation and coordination, some of the existingorganizations are also involved in the operation of transport enterprises. This practice tends to create
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a conflict of interest, and it is generally undesirable for such organizations to become directly involvedwith the ownership or operation of transport enterprises. One of the most urgent issues to beaddressed in urban transport in Venezuela is the sector organization at the three levels of government.Without a clear definition of roles and the creation of coordinating entities in the metropolitan regions,the sector will continue to suffer from lack of modal integration, investment duplication anduncoordinated policies which are, in the end, detrimental to the users and costly to each level ofgovernment.
2.11 Most cities other than Caracas should have no major problems in creating a LocalCoordination Agency (LCA, Mancomunidad) for urban transport, either because they consist of onlyone or at the most two municipalities. In Caracas, however, the five existing municipalities arereluctant to share municipal common services and have not yet come to terms to create a joint LCA.Attempts to force the creation of such an agency as a condition of the Bank loan are likely to beunproductive. An alternative proposal is to finance demonstration projects such as HOV (HighOccupancy Vehicle) corridors, transport improvements in areas marginales, and public transportterminals while at the same time initiating the process for the creation of some type of LCA. Thisshould evolve from a consensus among the municipalities concerned. To assist in this process, theproposed project includes a Metropolitan Transport Coordination Study.
2.12 Traffic enforcement is the responsibility of the traffic police which was created in 1956.It is attached to the MTC. Its officers are drawn from the National Guard. In general, enforcementof traffic regulations has been largely neglected in Venezuela. The traffic police currently has a forceof 4,000 persons, which is only two-thirds of the number in 1979. Pay is extremely low, and theTraffic Police corps has been generally starved of funds so that it is poorly equipped. Reportedly, nofunds have been available for uniforms in the last five years, and some 70 percent of the corps'vehicles are out of commission.
2.13 Enforcement of traffic regulations is also difficult because the Traffic Law (ley detransito) is outdated. Legislation has been submitted to the Congress on a number of occasions butno thorough overhaul of the regulations has been achieved. This situation is unfortunate because manyof the most promising options for improving urban transport in cities with more than 200,000inhabitants are unworkable without an efficient system of enforcement. This includes parking policies,bus priority measures and other aspects of traffic management. Not only are such policies oftenextremely effective but they are generally not costly to implement. The traffic police has formulatedproposals to strengthen the corps, including increasing the pay, improving the working conditions andpurchasing new equipment. Such measures could make an important contribution to theimplementation of effective urban transport policies and could, in addition, be self-financing throughincreased collection of traffic fines. Technical assistance, training and some infrastructure andequipment are included under the proposed project to strengthen the traffic police corps.
D. Reaulatorv Framework
2.14 According to the law, there are no restrictions to the entry of new bus or porpuestooperators into the market. However, in practice, an operator who is not part of the route associationfor a certain area is unlikely to get a concession to operate in that area. Therefore, the restrictions tomarket entry are in fact imposed by the associations, which act basically as cartels. Concessions tooperate on a certain route for both buses and por puestos are awarded by the municipalities if theroutes are within one municipality. If the route crosses more than one municipality the concessionshould technically be awarded by a local coordination agency for both municipalities ('mancomunidad')or if the latter does not exist, by the MTC (DGSTT). By law, the concession to operate on a certainroute should be awarded on the basis of public bidding, but this is rarely done. Fares are regulated by
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the municipalities for the urban routes (within one municipality) or by the MTC (DGSTT) for routesserving more than one municipality. There is no structured procedure to update fares in either the MTCor the municipalities. Fare increases are normally forced by the buslpor puesto owners through politicalpressure or strike threats, and are not related to increases in the input costs. The power to regulatetaxis, like that of the por puestos, has been exercised by the MTC but is to be transferred to themunicipalities. Metro and metrobus fares are regulated by the MTC since Metro routes link two ormore Caracas municipalities.
E. Cost Recovery. Pricina and Subsidies
2.15 Government raises revenues from road users through:
(a) License Fees. There are two annual license fees for the right to use a vehicle on a public road,one national and the other municipal. The national fee is set at Bs 300 annually and is a flatfee for all vehicle types. The municipal fee, which is payable every three months, is fixed bythe municipality. Typical fees range from about Bs 30 to around Bs 130 in Libertadores andSucre (i.e. metropolitan Caracas). License fees are thus low and do not produce significantrevenue for the public sector;
(b) Fuel Taxes. These taxes are low by international standards and amount to Bs 2.10 (USC 3) perliter of gasoline and Bs 1.39 (USC 2.2) per liter of diesel. Retail prices including taxes at thepump in July of 1992, were USO 8.1 per liter of regular gasoline and US¢ 7.0 per liter of diesel(US$ 0.31 and 0.26 per US gallon respectively). With the devaluation of the bolivar and theprice freeze, the reported prices per US gallon of regular gasoline and diesel were, as of June1993, US$ 0.23 and US$ 0.19. This compares with prices per US gallon of US$ 1.55 andUS$ 1.51 respectively for regular gasoline and diesel in Canada, and US$ 1.99 and US$ 1.24in Brazil. In general, prices of petroleum products are very low in Venezuela; they averageabout one-half of international parity prices (Annex 14). Agreement was first reached with theGovernment under the Structural Adjustment loan on a plan to progressively raise the pricesof petroleum products to international levels (100% of export opportunity cost). This programof phased price increases was to continue under the Public Enterprise Reform Loan (3223-VE).Progress was made under this plan until March 1992, when prices reached a level equivalentto about 50% of the international border prices. However, the strong public reaction to theseprice increases and the political crisis that ensued led the Government to postpone and slowdown further price adjustments.
(c) Vehicle Sales Taxes. In 1989, the sales tax amounted to 2% of the price of private vehiclesup to Bs 240,000. For more expensive vehicles, 3% had to paid above this figure. For publictransport and goods vehicles, the sales tax is a flat 1.5% of the price. It is expected that thesetaxes will be replaced by a value added tax, which will likely be set initially at a flat 10%; and
(d) Customs Duties. Importers pay customs duties of 50% for fully built vehicles; duties arevariable (below 50%) for knocked-down vehicles and spare parts. Most imported vehicles areassembled in Venezuela.
The recently approved Highway Management Loan (3553-VE) requires MTC to undertake a road costrecovery and maintenance funding study which will review existing road user charges and propose thenecessary adjustments.
2.16 Present bus and por puesto fares are lower than total vehicle operating costs. Sincefares do not cover depreciation and cost of capital, replacement of the fleet is only possible when
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grants or financing are available at subsidized rates. GOV has promoted such financing schemes a fewtimes on the grounds that they are a compensation for the low fares imposed on operators. Thispractice can only be eliminated when fares are deregulated or set at a level which covers long runvariable costs. However, the travel cost for low-income persons for work trips would rise to more than15% of their income, if such a policy were to be fully implemented.
2.17 While subsidies should be phased out from a strictly economic viewpoint, the social andpolitical reality requires a gradual approach. In the short run, mechanisms must be found to targetsubsidies to the poor while setting fares at a level which allows the operators to be financially healthy.The proposed project thus includes public transport studies for each participating municipality, wherebyissues related to market entry, fare and route deregulation and subsidies will be examined. The studieswill recommend specific measures to the municipalities, and FONTUR will take into account theprogress made in implementing such recommendations when deciding whether to finance future urbantransport investments in a municipality as part of the project's mid-term review.
2.18 The central government also imposes specific public service obligations, such as thetransport of students at half fares or less. Operators are paid a student subsidy which, however, isnot directly related to the number of students actually carried. In fact, drivers often do not stop to pickup students because they prefer to board full-fare passengers and still collect the student subsidy,which they receive from Government on the basis of seats offered. Lack of enforcement and ofaccountability have led to major clashes between students and drivers. FONTUR has proposed adifferent system by which the subsidy would be paid directly to the students in the form of ticketswhich the operator would ultimately use as proof of transport when collecting his subsidy. GOV hasalso started to transfer to municipalities the responsibility of administering this federal subsidy. Astudy on subsidies, undertaken during the preparation of the proposed project, recommended thesystem described above. Those recommendations are now being implemented in a pilot city (Maturin).This is an attempt to increase the accountability of bus operators and yet provide low transport faresto the student population. If successful, the scheme will be applied in other cities. It is estimated thatGOV spent US$ 83 million on this type of subsidy in 1991 (Annex 14).
2.19 Another type of subsidy paid by GOV and private employers to employees who earnless than 15,000 Bs per month (US$ 230) is the 'bono de transporte' which amounts to 800 Bs permonth. While this subsidy was introduced to help defray the transport costs of the low-incomepopulation, it is only paid to formal employees and is paid irrespective of whether they travel by publictransport or not. In other words, it has become a tax-free salary addition to low-income employeesand can no longer be regarded as a transport subsidy in the true sense. In 1991, the GOV paid anestimated $US 100 million to its employees, while the private sector paid roughly US$ 320 million.This subsidy paid by the private sector, entails a loss of tax revenues estimated annually at US$ 96million. Therefore, the GOV spends roughly US$ 196 million per year on this type of subsidy.
2.20 The 'bono de transporte" is a targeted subsidy but unlike the Brazilian 'vale-de-transporte' which stipulates that employers must pay the difference between urban transport fares and6% of the wage, it needs to be adjusted periodically for inflation. It also needs to cover a widerspectrum of the population than the Brazilian system, such as autonomous employees, the informalsector and the unemployed. The above mentioned study proposes the introduction of a "boleto detransporte' for the latter groups, through a system of coupons which would be available from a socialsecurity office. This office would buy the tickets at full price from the operator.
2.21 As indicated in para. 2.15, fuel prices average about one-half of international parityprices and GOV had instituted a program to bring them up to world levels, through periodicadjustments. This program is uncertain in view of recent political developments. In particular, the poor(70% of urban households earn less than 3 minimum salaries) are dependent on public transport and
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the fare increases demanded by operators, which in general are proportionally much higher than theimpact that the periodic fuel price increases have on their operating costs, have sparked violent riotsin the last three years. It should be noted that gasoline comprises only 15% of estimated operatingcosts of the "porpuestos". In the case of diesel powered vehicles, fuel represents only 3% of the perkilometer cost. Nevertheless, the issue of fuel prices continues to be extremely sensitive because fuelis perceived as having a greater weight in total costs than it actually has. Given its small weight in thetotal operating cost, increases in fuel prices should not affect "por puesto' fares significantly. Thisconclusion is reinforced when it is remembered that the proportion of diesel vehicles in the fleet hasbeen increasing rapidly. On the other hand, an increase in gasoline prices may reduce some of the off-peak travel by autos, and at some point, divert some of the home-to-work peak hour trips to urbantransport. This will further overload the public transport system. Therefore, in the short-term, it isimportant that public transport capacity be increased to absorb the additional users diverted from theautomobile.
2.22 With the objective of renewing the over-age (and polluting) urban bus fleet andpromoting affordable public transport without the need for recurrent subsidies, FONTUR initiated inearly 1992 a scheme to support the acquisition of new vehicles by private operators. After theoperator contributes at least 7% of his own funds for the purchase of the vehicle, FONTUR providesa credit equal to 50% of its purchase price, which over a 5-year period is gradually converted into agrant if the vehicle provides urban passenger transport and if the operator complies with severalconditions related to service quality, insurance and vehicle inspection. This scheme is supported byeight commercial banks which provide a loan (repayable over five years, at commercial interest rates)for the balance of the purchase price. By December 1992, FONTUR had received applications for acontribution of US$ 33 million to support the purchase of vehicles, of which US$ 6 million had beenapproved.
F. Sectoral Issues
2.23 There are a number of key sectoral issues which must be addressed to improve thesupply of urban transport services and to guarantee their orderly development and sustainability in thelong term. These concerns may be divided into two categories: (i) planning and operational issuesrelated to transport planning, maintenance, institutional capabilities, congestion ,safety and theenvironment; and lii) policy issues such as regulations, fuel pricing and user charges, cost recovery,fares and tariffs, financial management and subsidies. Each of these issues is examined below:
{i) Transoort Plannins. There is a need to strengthen the municipalities' capabilities intransportation planning, traffic management and the economic and financial evaluationof new investments. Major problems are: (i) the limited availability of professionalstaff with adequate technical skills, especially at the municipality level and (ii)inadequate maintenance organizations and budgets. At both the central and city levels,urban transport matters are handled through organizational arrangements that are ofteninadequate. The formation of new, or the strengthening of existing planning and trafficengineering units in fast growing medium-size cities would permit better planning anduse of the transport system. A crucial component of the project pertains toinstitutional strenathenina. technical assistance and trainina which will ensure that bothFONTUR and the traffic and transport agencies at the municipality level are adequatelystaffed to handle their transport planning responsibilities (Annexes 6 and 7). FONTURwill be staffed with key internationally and locally recruited personnel prior tonegotiations and the municipalities will not proceed with civil works before keytechnical assistance is in post.
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(ii) Maintenance. The state of road and street maintenance varies between municipalities,but lack of adequate maintenance is fairly common. Maintenance activities have lesspolitical visibility than new construction, and are among the first to be reduced in timesof financial austerity. Most municipalities are not well organized to deal withmaintenance of roads or traffic signals. Improvement of the maintenance of theseassets will be an essential component of the subproject for each municipality. In mostcities, two agencies with maintenance responsibilities are likely to requirestrengthening; the local agency for road maintenance and the traffic engineeringagency or traffic police for traffic signals. As far as possible, maintenance operationswill be contracted to the private sector, as there is evidence that this is a more efficientsolution, and there is ample capacitv in the country to provide such services. Theproposed project would attempt to develop the capabilities of the city maintenanceorcanizations to glan, manaoe and supervise the maintenance works (Annex 10).
(iii) Institutional Manaaement and Coordination. The main concerns are: (a) the fine-tuningof relations between central, state and municipal governments and a clear definitionof their respective roles in the financing, planning and operation of urban transportservices in accordance with the 1990 Decentralization Law; (b) the creation of anentity which is formally empowered by each metropolitan region for planning,coordinating and setting priorities for new investments and modal integration includingtariff setting and cost sharing, in order to assure a minimum of planning continuity.During project preparation, a study on the 'Role of Government' has clearly defined theresponsibilities of each level of government and has proposed the type of localagencies which are best suited for municipalities with populations of less than100,000, between 100,000 and 250,000 and more than 250,000. Furthermore,FONTUR has initiated another study in which consultants and staff from themunicipalities will propose a specific organization for each of the municipalities includedin the first year program and a plan for its implementation under the project.
(iv) Traffic Connestion and Safety. The critical need is to increase the supply of adequatecost-efficient peak hour capacity in order to reduce congestion and guarantee anacceptable level of service to the average commuter, under reasonable safetyconditions. This can be done by: (a) rehabilitating existing systems and building newones which prove to be the least-cost alternative from the technical, economic and,especially, financial standpoint; (b) improving traffic management through appropriatetraffic engineering equipment, in order to better manage available road space andreduce congestion; and (c) reducing traffic and transit accidents through a combinationof safety education campaigns, law enforcement and appropriate traffic engineering.Low cost solutions (such as traffic management measures, parking policies, busways,bus route rationalization, pedestrian streets, intersection improvements) are not widelyapplied to resolve urban transport problems. The proposed project has already madeprogress in bringing to the notice of the municipal authorities cost effective solutionsto reduce conaestion and enhance safety. (Annex 5). In addition, the proposed projectincludes a component to strengthen the traffic police at the national and local levelsto ensure improved traffic law enforcement (Annex 9).
(v) Urban Environment. The main concern is the reduction of air and noise pollution inurban areas through cleaner and quieter systems. The transport-induced environmentalproblems in most cities are presently much less severe than in Caracas, whichconfronts unique topographical conditions and a high concentration of population andvehicles. Nevertheless, the problems are of concern and will tend to get worse as thecities' motorization levels grow. There is evidence that, in Caracas, internationally
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accepted air quality standards for lead, CO and particulate matter are already beingexceeded, particularly in the central area. The proposed project will include a motorvehicle emissions control study for Caracas. Three types of measures to reduce trafficinduced pollution will be studied in the proposed project: the regulation and control ofvehicle emissions, traffic and transport demand management and encouragement ofnon-motorized transport. With the benefit of experience from the implementation ofpollution control measures in Caracas, it will be possible to determine how best tocontrol such emissions in the other cities. Reduction of pollutant emissions fromvehicles should also result from the expected reduction in traffic congestion andincreased vehicle speeds anticipated as a result of the implementation of the trafficengineering and road improvement components of the proposed project. Wherefeasible, the development of bikeways will be considered. In central areas, pedestrianmalls will be used to make walking more pleasant and safe. The usefulness of similarmeasures in other medium cities will be reviewed in the city studies and whereappropriate, proposals for their implementation will be included in the subprojects foreach municipality. Finally, the creation of an environmental unit in FONTUR staffedwith an environmental specialist (para. 3.41) will help to ensure that environmentalimpact assessments are prepared for all for major urban transport investments.
(vi) Public Transport Regulations. Existing regulations require modifications including theelimination of regulatory barriers which prevent free entry and/or competition in themarket for provision of public transport services (especially bus services). Route andfare regulations need to be reformed. During the preparation of the proposed project,the operation of por puestolbus systems has also emerged as an issue. Some of themost common problems include: (a) regulatory units do not operate effectively, areunder-funded and the staff are under-trained; (b) fare policies are guided by socialobjectives, which result in fares which are insufficient to generate net revenues tofinance bus renewal; no allowance is made for higher quality services operated athigher than minimum fares; (c) bus routes are slow to adapt to changing patterns andlevels of demand and the growth of the city; (d) while most bus services are providedby the private sector, entrance to markets is restricted and route concessions areawarded in a non-transparent manner. Local monopolies prevent the award ofconcessions to new operators. Lack of effective competition leads to inefficient busoperation; (e) bus fleets are often in poor condition and bus standards provide littlecomfort and convenience; and (f) buses have an adverse impact on the environment(noise and exhaust/smoke emissions); these problems are worst in central areas ofcities, where traffic congestion occurs. The proposed project is only expected to makea modest contribution to the progressive deregulation of the public transport systems.It appears that present fare levels do not usually allow for an adequate operating profit,as many bus operators are not undertaking fleet renewal and the level of service isgenerally poor. On the other hand, the tradeoff between price and quality is legitimate,and recommendations for tariff and quality of service reform should relate to theconditions prevailing in each city. To deal with these issues, the first action includedin the proposed project is a mandatory Public Transport Study in each participatingmunicipality with specific recommendations on how to create an enabling environmentto foster bus competition and eliminate regulatory or local monopoly barriers whichnegatively affect the level of service provided and the financial health of the operators(Annex 8). The second action will be a mid-term review of the progress made by themunicipalities towards implementation of the recommendations proposed by the studyand accepted by the municipality. This review may recommend canceling anyoutstanding investments and technical assistance if a participating municipality does
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not agree to an action plan to eliminate regulatory barriers and adequate cost-recoverymechanisms.
(vii) Fuel Pricino and User Charnes. Agreement to progressively increase fuel prices tolevels which reflect their export opportunity costs was first reached under theStructural Adjustment Loan and was to continue under the Public Enterprise ReformLoan. In the latter, it was a condition for the release of the third tranche. However,since March 1 992, fuel prices have been frozen and due to the devaluation of thebolivar, they are at present, below 50% of their international parity prices. An increasein fuel prices would, at some point, act as a disincentive for the use of privateautomobiles, diverting some demand from auto to public transport. The latter does nothave the capacity to absorb a significant increase in demand and, therefore, itscapacity should be expanded. An increase in fuel prices would also be used byoperators as a justification to demand higher fares. Based on past experience, theincreases demanded by operators would be proportionately higher than the impact offuel price increase on operating costs. In the past, this has generated a violent reactionfrom the low income users and from students who are already spending close to 15%of their incomes on home-to-work trips. An increase of fuel taxes could also providethe revenues to fund urban transport, but unless they are earmarked for that purpose,they will most likely be used in other sectors. An appropriate system of road usercharges as required in the Highway Management Loan (3553-VE) will provide themeans to raise revenues for road rehabilitation and maintenance. The proposed projectincludes studies of resource mobilization and allocation procedures at the national leveland of resource mobilization, collection mechanisms and cost recovery at the locallevel, (para. 3.10). These studies will take into account the recommendations of theroad user charges study financed under the Highways Management Loan, whichstarted in June 1993.
(viii) Cost recovery and Financial manaoement. There is a need to address cost recoveryfrom a more commercial oriented standpoint by: (a) setting tariffs which, when addedto subsidies, cover at least the long run variable costs (defined as out-of-pocket costsplus depreciation of equipment and cost of capital) of the service provided; (b)controlling fare evasion; and (c) using appropriate peak and off-peak pricing. Thefinancial management of the systems will be improved by fostering cooperatives orother associations which will decrease administrative and other costs incurred byindividual owner operators and by revamping funding mechanisms in order to guaranteeadequate financing for the implementation of new mass transit systems and thesustainability of the existing systems. Allocation formulas will be reviewed to ensurethat they are fair and representative. These aspects will also be covered in the PublicTransport Study described in Annex 8.
(ix) Allocation of Resources. There have been no guidelines for the allocation of federalresources to the states and cities to help finance urban transport projects, thoughmodest amounts of assistance have been provided for maintaining urban streets andtraffic lights. After a particular urban transport project is identified, the municipalityor state often lobbies the federal government for direct financial assistance. Theserequests have been handled on an ad hoc basis. Since federal grants are not allocatedexclusively on the basis of the economic merits of the projects, there has been littleincentive for the municipalities to develop comprehensive transport policies or toevaluate projects using sound methodologies. FONTUR has already started thepreparation of standard allocation formulas which take into account variables such astotal population, number of public transport vehicles per inhabitant, ratio of student
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population to total population, and the ratio of city generated revenues to its totalrevenues. These variables were used for the allocation of funds for fleet renewal. Theproposed project will include a resource mobilization study to identify and proposefunding mechanisms at the central level and will review the rules for allocation of theseresources.
(x) Taraetino of Subsidies. Urban households have been spending increasing proportionsof their incomes on transport (10-23% for the low income groups earning up to twominimum salaries). The appropriate targeting of urban transport subsidies and theirextension to the informal sector and the unemployed which are not presently coveredby mechanisms such as the "bono de transporte' is a major issue which needs to beaddressed in the short term. Appropriate mechanisms for financing such subsidies(tariff differentiation, contracted budgetary transfers, etc) and channeling them (tokens,multimodal passes, differential tariffs) will be reviewed under the project. At themunicipal level, a detailed subsidy review will be included in the Public Transport Study(Annex 8, Att.1).
G. Lessons Learned from Post Proiects
2.24 The Bank has financed no urban transport projects in Venezuela. However, the designof the proposed project takes into account the experience of other Bank-financed urban transportprojects: The 'lessons learned' are based on fifteen Project Completion Reports and/or Project AuditReports (PCR/PPAR) for urban transport operation with an allowance made for trends and changes inproject design since the PCR/PPARs were completed. The main lessons identified and the relatedactions in the proposed project are given below:
(i) Institutional Strenothening. The organizations dealing with urban transport, tend to beweak and technically deficient at the federal, state and municipal levels and should bereorganized and strengthened;
lii) Lack of counterpart funding has greatly influenced the pace of project implementationand in extreme cases has led to cancellation of project components. The promotionof sound financial practices in participating cities should take into consideration thelack, at least in the short term, of financial resources. The financial mix described inparagraph 1.20 and Annex 10 (25%-50% federal grant, 0%-25% city participation and50% Bank loan) will reduce the scale of municipal counterpart funding to a realisticlevel and provide the incentives for active municipal participation in the project.
(iii) Slow implementation has been a frequently recurring theme. Reasons have included:lack of familiarity with Bank procedures, overoptimistic scheduling at appraisal, lack offinal engineering designs at appraisal and changes in political commitment and lack ofcounterpart funds. These problems should be mitigated in the proposed project bysuch measures as: (i) strengthening FONTUR's capacity for financial management andimplementation of Bank procedures, (ii) requiring final engineering design for first yearcomponents, for which technical assistance will be available, as a condition ofdisbursement to any city and, (iii) a grant element in the financing, which willencourage cities to continue their participation in the program, regardless of politicalchanges.
(iv) Weak institutional cagacitv for the planning, design and implementation of traffic andhighway projects has been a common feature of many projects. In the proposed
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project, cities will need to demonstrate an acceptable organization and capacity tofulfill these functions on a permanent basis before project funds are transferred tothem.
(v) Lack of enforcement of traffic regulations, coupled with poor maintenance, areadditional reasons why some schemes failed to achieve their full potential. In theproposed project, schemes will be designed to be, as far as practical, 'self enforcing".Physical rather than regulatory means will be encouraged in the design. Participatingmunicipalities will need to demonstrate that components involving traffic regulationenforcement include operational specifications which are acceptable to the trafficpolice and that the police are prepared to undertake enforcement. If necessary, themunicipal subprojects could include financing of equipment for enforcement; and
(vi) Public transport has received increasing emphasis in Bank projects and it will be animportant aim of this project to improve public transport operations. Each subprojectwill help to improve the regulatory framework to encourage efficient and competitivebus operations and upgrade the infrastructure (paving, traffic schemes, etc.) to enablebuses to operate at an acceptable level of service. The system of route licensing asoperated in most cities is inflexible and slow to react to changing patterns of demand.The public transport studies will include reviews of the licensing system and of thefinances of public transport operations and include recommendations to improve theefficiency of public transport.
H. Toward a Better Manaaed Urban Transport System
2.25 Urban transport policies formulated by FONTUR would be geared towards efficient andequitable provision of urban transport services that are necessary to restore the economic efficiencyof cities and to respond to the transport needs of low-income groups. Policies would be consistentwith the broader transport sector objectives, as well as with the objectives of the urban sector. Inconsonance with the 1990 Decentralization Law, urban transport policies will support decentralizationof urban transport services from the central government to the states and municipalities to allow localinterests to respond more quickly to the changing demands; and simultaneously address the needs ofmajor metropolitan regions (Caracas, Ciudad Guyana, Merida, Valencia, Maracaibo, Maturin,Barquisimeto) where urban transportation problems, especially peak hour capacity, congestion andpollution are becoming serious. The general approach would be to restore incentives to permitprivately-owned systems to operate under competitive conditions. Re-designed regulations andconcessionary agreements, and improved bidding processes would promote competition in theprovision of bus services; and rates would be gradually liberalized in the corridors where there iseffective competition. Appropriate tariffs and financing mechanisms would enable the efficientoperation and development of public transport systems. Local governments would focus attention ontraffic regulation and management, including managing the demand for road use, improving trafficmanagement and street maintenance, controlling air and noise pollution, monitoring the effects ofregulations and taxation, and promoting integration of the various transport systems and coordinationwith land-use development.
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III. THE PROJECT
A. Backaround
3.1 In early 1990, the Bank carried out a Public Sector Investment Review, which includedthe urban transport sector (Report 8588-VE). The review identified serious institutional bottlenecks,poor cost recovery policies and financial management, and weak integration between transport andland use planning, in most of the urban areas in Venezuela. In April 1990, a Bank mission visitedVenezuela to assist GOV in a review of its urban transport policies and progress. The Bank emphasizedthe importance of creating a coherent institutional framework for urban transport policy and resourceallocation to the urban transport sector. In January 1991, GOV requested assistance from the Bankand IDB for the preparation of an urban transport project. A Technical Assistance Loan-TAL (Ln No.3225-VE), approved by the Bank in June 1991, provided the resources for project preparation andtechnical assistance in the establishment of appropriate national institutions. In November 1991, GOVcreated a Fondo Nacional de Transporte Urbano (National Fund for Urban Transport-FONTUR) with theresponsibility for channeling financial resources and technical assistance to municipalities for urbantransport development. To fulfill this role, FONTUR was provided with a technical secretariat anddesignated as the agency responsible for project preparation and execution. The project was preparedwith extensive assistance provided by consultants, funded both by the TAL and by FONTUR's ownresources. Appraisal took place in September 1992 and negotiations were held in Washington inMarch 1993.
B. Rationale and Obiectives
3.2 Rationale for Bank Involvement. The Bank's strategy in Venezuela is to support policyreform and priority investments to stimulate economic growth and social development in the contextof macro-economic stability. The Bank has emphasized efficient resource allocation, increasedefficiency in the public sector, and appropriate targeting and delivery of support systems to the poor.Within the urban transport sector itself, GOV has taken positive steps to implement such a strategythrough: (i) the creation of FONTUR to improve the efficiency of resource allocation, (ii) thedecentralization of urban transport functions to the municipal level to increase the responsibility andaccountability of local administrations and to improve the cost effectiveness and delivery of services,(iii) the strengthening of local and national institutions involved in the sector to enable them to plan andmaintain urban transport infrastructure and services, (iv) the introduction of cost-effective trafficmanagement measures to alleviate transport problems; and (v) the reform of subsidy policies to ensureappropriate targeting and increased transparency of resource allocation. The proposed project isconsistent with the agreed country strategy. GOV's urban transport sector strategy conforms to Bankpolicies in the sector and will be supported through the implementation of the proposed Bank project.Bank participation has drawn on and incorporate in the proposed project, the experience gained andlessons learned from Bank-assisted urban transport projects in other countries (see para. 2.24 andAnnex 1).
3.3 Obiectives. The main purpose of the proposed urban transport project is to improvethe quality and efficiency of urban transport in Venezuelan cities. To achieve this goal, the primaryobjective of the project is to improve and strengthen national and local institutions engaged in theplanning, financing, design and operation of the urban transport systems. Secondary objectives willbe: (i) to increase the efficiency of traffic and transport operations and (ii) to preserve, through bettermaintenance, urban transport infrastructure and reduce user costs. The project is also expected tocontribute to poverty alleviation by improving public transport services for the urban poor.
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C. DescriDtion
3.4 The proposed Project would be an integral part of FONTUR's investment program andwould comprise two parts: Part A - an institutional development and policy program and Part B - aninvestment program for infrastructure and equipment at the municipal level. In parallel with the Bankproject, IDB also intends to participate in the FONTUR program. Both the Bank and the IDB projectshave the same overall objectives, and will contain similar components but due to different proceduraland procurement requirements will require separate loan agreements with the Government. While thetwo projects have been designed to function independently they will support investments in differentcities and contain elements of a common institutional development and policy program to ensure thesuccessful implementation of each project.
PART A - Institutional Development and Policy Proaram
3.5 Part A will account for some 17 % of the proposed Bank project financing IUS$ 34.8m)and is directed at the achievement of the primary institutional building objective and as such is the coreof the project. It would consist of the following components: (i) an institutional strengthening programfor FONTUR, (ii) an institutional strengthening program at municipal level, (iii) a national urban transportsector training program, (iv) a traffic police program, (v) policy studies at the national level; and (vi)city subproject preparation and policy studies at the municipal level. For all technical assistance (TA)components (either at FONTUR or municipal levels), initial contracts will be for 1 year. Performanceand effectiveness of the various TA teams will be reviewed by FONTUR and the Bank at 9 monthsafter the start of each contract. The TA contracts will be extended or modified as a result of thereview.
3.6 PART Al - FONTUR Strenothenina Comoonent. FONTURV' is responsible for theimplementation of national urban transport policy in Venezuela to be achieved through FONTUR'scontrol of allocation of all GOV funds to the sector4-'. FONTUR will provide funds for investment intransport infrastructure (including roads, public transport infrastructure and traffic schemes), equipment(including traffic control devices and buses) and for institutional strengthening. As the executingagency for any urban transport investment involving central government, including the Bank project,FONTUR will be responsible for city subproject appraisal, supervision, coordination and monitoring andfor investment agreements with the cities. To help FONTUR fulfill this national role, the institutionalstrengthening program will comprise: (i) the provision of international technical assistance to FONTURto enable it to become fully established and to develop working methods and procedures, (ii) equipmentand software for the efficient conduct of its operations and, (iii) the provision of consultant servicesfor engineering design and supervision of city subprojects and for special studies. So that FONTURremains a streamlined agency (see Annex 2 for the FONTUR organization chart), day-to-day subprojectsupervision activities will be contracted out to private sector consultants. Project funding will provideresources for the first two years of supervision activities but financing will be increasingly taken overfrom FONTUR's resources as the procedures become established. This component was agreed uponat appraisal and is described in detail in Annex 6, with implementation targets shown in Annex 13. Itwill be a condition of effectiveness that the international technical assistance to carry out thiscomponent has been selected (para. 5.2.(c)). This Technical Assistance is classified as InstitutionalDevelopment (Capacity Building) Technical Assitance (IDTA).
3/ DGSTT is responsible for the formulation of national urban transport policy (Chapter 11).
41/ FONTUR is not responsible for the allocation of subsidies but is responsible for the development of subsidypolicy (Chapter II).
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3.7 PART A2 - Municioalitv Strenathenina Comoonent. To support decentralization ofurban transport services as mandated by LORM and the Decentralization Law, this component willassist in strengthening municipal agencies in the planning, design, management, operation andmaintenance of traffic and transport systems in the cities. It is a criterion of subproject eligibility(Annex 4) that each municipality has established, or will strengthen, agencies for traffic and transportplanning, maintenance and public transport regulation. These municipal agencies will carry out trafficand transport planning, bus system reorganization, concession revisions, tariff revisions andmaintenance programs for urban streets and traffic control equipment and devices. Preciseorganizational arrangements will respond to local circumstances and various forms of structure arepossible. For example, combined Traffic and Transport and Bus Regulatory Units may be formed insome cities, in others, "Institutes" for traffic planning exist and will be strengthened under the project.It is planned that maintenance activities will be carried out by the private sector and that aMaintenance Unit (or its equivalent) will be formed or strengthened in each participating city so thatit can carry out contract supervision, training and program planning in an effective manner. The projectwill support these institutional developments through: (i) international technical assistance residentin each city (two specialists in Barquisimeto and Maracaibo, and one in each of Maturin, Merida andCiudad Guayana) for a two year period to assist in establishing the new city agencies, defining workingpractices, providing on-the-job training to municipal staff, (ii) permanent, national technical assistancein each project city over the complete period of implementation of the project to work with themunicipal teams and the international consultants; the national consultants will be middle-level orfreshly qualified professionals and will in fact work as counterparts to the international consultantsand/or supplement regular staff in each of the agencies involved, while the latter are being trained; thisprocedure ensures that there will be a number of qualified venezuelan nationals, at the local level, toabsorb the transfer of knowhow; and (iii) equipment for traffic operations and maintenance qualitycontrol and testing. Municipal permanent and supplementary staff will be eligible for, and will berequired to attend, the national training program (see Part A3). A detailed description of theMunicipality Strengthening component is given in Annex 6. It is a condition of disbursement to themunicipalities that the international technical assistance provided under this component is in place(para. 5.2 (c)). This Technical Assistance falls under the category of Capacity Building (IDTA).
3.8 PART A3 - National Trainino Proaram for Urban Transoort ComDonent. The objectiveof the national training program is to increase the capabilities of staff now working in the urbantransport sector in the disciplines of traffic and transport planning, project evaluation, projectexecution, traffic operations and maintenance. The program will benefit staff from the municipalitiesand from national agencies; local consulting firms may participate on a fee paying basis. The elementsof the training program will be: (i) a national level, 4 month intensive course at "post-graduate' (orequivalent practical experience) level for traffic and transport engineers, economists and urbanplanners; the course will be held in Venezuela, annually, for 3 years (1994-96); (ii) transportfamiliarization courses, held on a regional basis, for city managers to enable them to improve theirunderstanding of national and local urban transport policies and practices; (iii) technician trainingcourses and logistic courses (computer applications), held on a regional basis, to expose juniortechnical staff to transport and traffic planning and operations techniques; (iv) courses for publictransport operators to provide a background in efficient public transport operation; and (v) overseaspost-graduate studies for a selected group of students from the initial intensive course and for FONTURpersonnel to provide a core of urban transport specialists in the country. The scope of the courses andthe proposed organization, implementation arrangements and frequency of the courses are describedin Annex 7. The actions necessary for the next steps are shown in the Action Plan (Annex 13).Project financing has been included for the courses and for the necessary equipment for their delivery(computers, visual display equipment and general office equipment). Given the importance and scopeof this component FONTUR has appointed a Training Coordinator to manage the overall trainingprogram and head the Human Resource Development division (see Annex 2). It will be a condition of
18
effectiveness that the international technical assistance to carry out this component has been selected(para. 5.2.(b)). This Technical Assistance falls under the Capacity Building category (IDTA).
3.9 PART A4 -Traffic Police ComDonent. The FONTUR program and the city projects placegreat emphasis on cost-effective traffic management measures. To ensure that such measures aresuccessful in operation, good enforcement of traffic regulations is essential. Part A4 comprises aprogram at the national and local levels to assist in improving the effectiveness of the traffic police.At the national level, the program will include: (i) refurbishment, expansion and equipment for thetraffic police training school; (ii) intensive training for traffic police instructors including study tours topolice academies in other countries; and (iii) technical assistance for the review and preparation of newcurricula at the traffic police training school. At the local level, for cities participating in the trafficsubprojects, the police program will include: (i) equipment to assist traffic regulation enforcement(such as communications, vehicles, etc); and (ii) technical assistance to assist the effective utilizationof the new equipment and to improve operational practices. Estimates have been made of theresources necessary for the program (Annex 9). A final draft of a study examining traffic policecapabilities, organization, resources, procedures, and proposing a detailed program for this componentwas completed prior to negotiations (para.5. 1 (I)). The Technical Assistance sub-component is of theIDTA type.
3.10 PART A5 - Institutional and Policy Studies Component. This component would includefinancing for key policy studies in the transport sector at the national level. The main studies are asfollows, and outline terms of reference are given in Annex 8.
(a) A5.1 - Review of FONTUR organization and staffing;(b) A5.2 - Review of DGSTT organization and function;(c) A5.3 - Resource Mobilization and Allocation Procedures at the National Level;(d) A5.4 - Review of National Transport Subsidies;(e) A5.5 - Review and Revision of the "Ley de Transito";(f) A5.6 - Study and Action Plan to Implement and Monitor Targeted Public Transport
Subsidies in a Pilot City (Maturin);(g) A5.7 - Development of Resource Mobilization, Collection Mechanisms and Cost
Recovery at the Local Level;(h) A5.8 - Pilot Study for the Establishment of a Legal Framework for Transport at the
Local Level;{i) A5.9 - Design and Implementation of a Management Information System for Urban
Transport in a Pilot City;(j) A5.10 - Motor Vehicle Emissions Control Study for Caracas; and(k) A5.1 1 - Caracas Metropolitan Area Transport Coordination Study.
3.11 Studies A5.1 to A5.6 address several issues discussed in para. 2.23 and are essentialfor the design of new institutional, regulatory and resource allocation procedures at the national level;they must be completed not later than 18 months after loan effectiveness. Studies A5.7 to A5.9should propose models which can be used by the municipalities for cost recovery, for the definitionof a legal framework and to set up their urban transport related management information systems; theymust be completed not later than 24 months after loan effectiveness. Studies A5.10 and A5.1 1 arespecific to Caracas and must be completed not later than 36 months after loan effectiveness (para.5.1 (m)). Given the importance and scope of the policy studies component at the national level,FONTUR has appointed a Policy Studies Coordinator who will be part of the Project Management Unit(PMU). The Technical Assistance required for this component is classified as Substitution TechnicalAssistance (STA).
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3.12 PART A6 - City Preparation Studies Comoonent. Eligibility criteria for cities toparticipate in the FONTUR program have been defined (Annex 4) and 25 cities meet the criteria. Tomaintain the momentum of the FONTUR program, it is proposed to finance preparation studies up toan aggregate amount of US$ 2.5 million under the project. The component will provide for FONTURto finance 100% of the cost of the studies while municipalities will provide office facilities andcounterpart staff. Annex 8 provides outline terms of reference for city level preparation study whichwill include four integrated sub-studies: (i) Traffic Systems Management, (ii) Public Transport, (iii)Institutional Development and (iv) Road Maintenance. The cities already appraised (Barquisimeto,Maracaibo, Maturin, Merida and Ciudad Guayana) have completed the Traffic Systems Managementelement and must complete the Public Transport Study not later than 14 months after signing therelevant subproject agreement (para.5.1 (n)). This study will recommend an action plan which shouldinclude, among others, measures to improve the financial sustainability of urban transport systems andthe targeting of subsidies. During the second annual review after effectiveness and subsequent annualreviews, the Bank will evaluate the progress made by the municipalities in the implementation of theaction plan. For cities with more than 500,000 population (except Caracas which will be included inthe IDB project), the component will finance Strategic Transport Plan Studies to assess the need formass transit systems in the medium and long term; acceptance by FONTUR and the Bank of the resultsof the study will be necessary before the city can proceed with feasibility and engineering studies ofthe proposed transit systems. The Technical Assistance required in this component is classified asSubstitution Technical Assistance to assist with appraisal and functional design of the proposedsubprojects. Annex 12, Table 12.1A summarizes the types of technical assistance included in theproject and their respective costs.
PART B - Infrastructure and EnuiDment Investment Proaress
3.13 Part B, which represents some 83% of project costs (US$166m), would provide resources toindividual municipalities for urban transport subprojects. City subprojects will comprise investment intraffic and transport infrastructure and equipment and related maintenance programs. Relatedinstitutional strengthening is included in Part A.
3.14 PART B1 - Traffic and Transport Infrastructure and Equigment Components. In the firstphase, the five cities of Barquisimeto, Maracaibo, Maturin, Merida and Ciudad Guayana will participatein Part B of the project. The components in each city will seek to improve the efficiency and qualityof the traffic system. This objective will be met mainly through traffic management schemes, policiesand operational measures aimed at making the most effective use of the existing road network andfacilities. Emphasis will be placed on measures which assist the performance, reduce the costs ofoperation, and increase the efficiency and quality of road based public transport. Schemes and policieswill be amenable to expeditious implementation and will alleviate immediate and short term problems.However, where justified, infrastructure improvements and new construction have been included.Such infrastructure may include new roads or road paving and widening to increase capacity, correctstructural weaknesses, and to overcome discontinuities in road networks primarily to improve busperformance, quality and penetration to areas currently not well served by public transport. Typicalmeasures are described in the following paragraphs and detailed in Annex 5, for each of the fiveappraised cities:
(a) Traffic Systems - Investments would focus on making the best use of the existingtransport system through traffic management methods. Typically, this componentwould include the application of traffic mnanagement techniques to key routes,corridors, and central areas particularly to city centers. The needs of pedestrians and,where they exist, cyclists would be considered. Typically, investments include: (i)comprehensive traffic scheme for the central areas involving traffic circulation, bus
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priority, pedestrian measures, control of street markets/sellers and parking schemes;(i) corricor improvement programs on main routes including junction improvements,public transport (bus, taxis) priority, pedestrian measures and limited widening toeliminate bottlenecks; iii) traffic sinnals improvement programs would be integratedwith central areas and corridors, (iv) iunction imorovements at congested sites oraccident blackspots, and (v) where necessary, lane markings and signing programs;
lb) Road Infrastructure - Selective investment would be included in new roads to correctdeficiencies in the network (missing links") or to overcome specific capacity problemsor to allow public transport operations to be improved on adjacent roads. In somecities, paving of roads to increase bus access to low income, usually peripheral areasand to reduce bus operating costs, has been included.
Cc) Public Transoort Facilities - This component will include some investment in publictransport facilities to improve quality of service such as local terminals, bus stops etc.Institutional measures to improve the quality, supply, and economic and financialviability of bus services are included in Part A6. FONTUR has a subsidized program toassist private operators and municipal bus companies with bus replacement andrenovation; neither the Bank nor the IDB will participate in the financing of this program(pars. 2.22). However, this program is expected to improve the quality and operationalconditions of the bus, minibus and jeep fleets.
3.15 PART B2 - Maintenance - This component would help to maintain and preservetransport infrastructure and facilities (roads, traffic signals and traffic control devices). Based on acondition survey of main roads in the appraised cities (mainly routes carrying public transport vehicles)an estimate is available of the deferred maintenance needs. The Project proposes to fund deferredmaintenance such that conventional routine and periodic maintenance can proceed as a normalmaintenance activity. The institutional measures proposed under Part A2 (Municipal TechnicalAssistance) will assist with the transition of road maintenance responsibilities from MTC tomunicipalities. Annex 10 describes the deferred maintenance program and institutional arrangementsfor each of the five appraised cities. The deferred maintenance projects will be carried out by contract.
3.16 Part B3 - Caracas. Transport problems in the metropolitan area of Caracas are ofgreater magnitude and complexity than in other Venezuelan cities. Issues include public transportsubsidy, public transport supply, the role of Metrobus, intense traffic congestion, past reliance oncapital intensive solutions, low quality public transportation for the poor and lack of institutionalcoordination between the three (soon to be five) constituent municipalities. Resolution of these issueswill take time and it is not possible to address all these issues in the present project. However, it isof crucial importance that improved coordination in transport matters be achieved between the fivemunicipalities comprising the Caracas metropolitan region. Thus, under Part A5, the project willfinance a metropolitan area transport coordination study. A selective approach has been adopted tophysical works which involves: Ci) the development of traffic management demonstration projects toshow what might be achieved in critical areas in the short term and to provide prototype measureswhich may be applied more widely with resources outside the project, {ii) improving access to "areasmarginales' (low income housing areas, usually located on steep unstable terrain) and (iii) formulationof policies to address key transport issues including a Short Term Strategic Transport InvestmentReview. This component will be financed through a proposed IDB loan.
3.17 Division of Responsibilities between Bank and IDB. The agreed division ofresponsibilities between the Bank and IDB ensures that: (i) each project can function independently,asa self-standing unit, while maintaining the integrity of the FONTUR program;(ii) only one bank (eitherthe Bank or IDB) will participate in Part B in any one city and (iii) the schedules of project preparation
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and loan processing are independent of each other. The proposed division of responsibilities is shownin Table 3.1.
3.18 Status of Preoaration of Part A. Part Al: the FONTUR strengthening program has beendefined and terms of reference for technical assistance are given in Annex 6. The component willinclude international technical assistance and it will be a condition of NeOotiations that contractprocedures for the international technical assistance have been completed. Outline terms of referencefor the remainder of Part Al are given in Annex 6 and key dates are shown in the Action Plan (Annex13). For Part A2: the municipal strengthening program scope and terms of reference have beendefined in Annex 6 and key implementation key dates are given in the Action Plan (Annex 13). ForPart A3: the national training program has been defined and the scope and the procedures forimplementation are given in Annex 6 and key dates are given in the Action Plan. For Part A4: thetraffic police program has been defined at a concept level and the next stages are defined in the ActionPlan (Annex 13) and in a report prepared by FONTUR with the assistance of specialized consultants.For Part A5: the outline terms of reference for some of the proposed policy studies, are given in Annex8. For Part A6: preparation studies outline terms of reference are given in Annex 8; the studies willinclude the substudies not already completed in the five project cities and the Action Plan defines thatthe public transport studies must be completed not later than 14 months after signing of the relevantsubproject agreement (para 5.1 (n)).
Table 3.1: BANK AND IDB CONTRIBUTIONS TO THE FONTUR PROGRAM
Inter American DevelopmentComponent World Bank (IBRD) Contribution Bank ContributionI~~ -
PART A Institutional Al - FONTUR Entire component NoneDevelopment and Pollcy Program strengthening
A2 - Municipal Barquisimeto, Maracaibo, Maturin, Caracas, Maracay, Barcelona-strengthening Meride and C Guayana P.de la Cruz
A3 - National Entire component Nonetraining
A4 - Traffic police Natlonal program (training school, Possibly Caracas and otherInstructor training and technical cities to be decidedassistance) and local program in 5citis appraised (equipment andtechnical assistance)
AS - Policy Studies Entire component none
AO - Preparation New cities to be decided; residual new cities to be decidedstudies substudhes In 5 project cities
PART B - Infrastructure and Bi - Traffic 5 projoet cities appraised and Caracas, Maracay, Barcelona-Equlpment Investment Program Infrastructure and others which comply with P de la Cruz and others which
Equlpment eligibility criteria comply with eligibility criteria
B2 - Deferred 5 project cities appraised and Caracas, Maracay, Barcelona-Maintenance others which comply with P de la Cruz and others which
eligibility criteria comply with eligibility criterd
B3 - Demonstratlon none Entire componentProjects and AreasMarginales inCaracas
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3.19 Status of PreDaration of Part B. For Part B1, subproject preparation studies for trafficand transport infrastructure and equipment have been undertaken in five cities proposed for inclusionin the Bank project, namely, Barquisimeto, Maracaibo, Merida, Maturin and Ciudad Guayana. Thestudies were carried out by consultants, supervised by FONTUR with the aid of technical assistanceprovided under the Bank Technical Assistance Loan (Ln 3225-VE), and were appraised by the Bank.City appraisals and the detailed engineering design and bidding documents for the first year investmentprogram were completed and reviewed by the Bank. Part B2, deferred maintenance, has beenidentified at program level in each of the five participating cities. The procedures for implementationare given in the Action Plan, Annex 13.
3.20 Traffic Infrastructure and EauiDment. Traffic and infrastructure improvements in thefive cities appraised, amounting to US$ 47 million (Annex 12), have been fully evaluated. The finalengineering design and bidding documents for the first year program of this component have beencompleted and reviewed by the Bank. Other traffic infrastructure investments in the five citiesappraised have been identified but not yet fully evaluated. As part of each annual review, FONTURwill propose to the Bank the traffic and infrastructure program for the following year with a fulljustification of all the components. The project includes an additional sum of US$ 55 million (Annex12), estimated on the basis of preliminary reviews and extrapolation, to finance additional economicallyviable projects in any of these 5 cities. In addition, these funds can be used to finance trafficinfrastructure and equipment in other cities which comply with the eligibility criteria and projectpreparation requirements. FONTUR will request approval from the Bank for any new scheme in theoriginal cities or any new city participating in the project.
3.21 Eligibility. City participation in the projects will require political commitment from therelevant city authorities to strengthen their organizations and address important sectoral issues. Thecommitment would be reflected in the acceptance by the cities of a series of eligibility conditions forparticipation. The eligibility criteria will be incorporated into the Operational Manual and consequentlyin FONTUR's subproject agreements with each city. It will be a condition of effectiveness that at leastone city has signed the FONTUR agreement (para. 5.2). Key conditions are summarized below witha full schedule of conditions given in Annex 4): (a) the development of an integrated transport policywhich will define policies and actions for traffic and transport strategy, public transport (regulation,fares, routes etc), institutional arrangements for the sector and urban transport infrastructuremaintenance strategy; (b) strengthening of local institutions to handle urban transport responsibilities.Municipalities will agree to form or to strengthen permanent local units to deal with trafficmanagement, road maintenance, maintenance of traffic control devices and planning and regulationof public transport. The type of organization of the units will depend on city size and existing structureand will follow models defined by FONTUR; (c) an agreement ("convenio') between FONTUR and eachparticipating city, the key provisions of which would require cities to, inter alia:
(i) allocate within their annual budgets, adequate resources for maintenance of road andtraffic control devices and for counterpart funds for the sub-project. Road and trafficsignals maintenance will require a plan of action and compliance with the plan will bemonitored during project implementation and would be a condition of access to furtherdisbursement;
(ii) ensure, for any scheme, that any significant negative environmental impacts areidentified and necessary mitigating measures proposed;
(iii) seek the approval of FONTUR and the Bank before initiating any investment in thetransport sector with a total cost of more than an amount equivalent to three times theaggregate of the approved grants to such eligible municipality or an amount equivalentto US$ 5 million, whichever amount is higher;
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(iv) reduce the risk of slow implementation by completing final engineering anddocumentation for components to be implemented for the first year of the sub-project,prior to signing the "convenio";
(v) participating municipalities adhere to the FONTUR Operating Manual (para. 3.22).
3.22 ODeratina Manual. FONTUR has prepared an Operating Manual which sets outprocedural guidelines to ensure participating municipalities are fully aware of all procedures necessaryfor participating and, technical guidelines which will ensure consistency of approach in projectpreparation for participating municipalities. The Manual also includes the eligibility criteria formunicipalities, draft subproject agreements and draft contracts to be utilized. A final version of theOperational Manual was reviewed by the bank and it is being tested by the participating Municipalitiesin the implementation of FONTUR financed projects.
D. Proiect Costs
3.23 A summary of the project costs is given in Table 3.2. The Bank project will financeUS$ 34.8 million equivalent for Part A and US$ 165.2 million equivalent for subprojects in the fiveparticipating cities in Part B. This gives a total project estimated cost of US$ 200 million equivalentexcluding duties and taxes; the latter are estimated at US$ 19.62 million. The Bank loan will be forUS$ 100 million. The foreign exchange cost of the Project is estimated at US$80.51 million, about41 % of the total project cost. Base costs were estimated, at prevailing September 1992 prices. Pricecontingencies were calculated with anticipated international price escalation rates of 3.7% per yearfor the six year project implementation period.
3.24 For Part A, 70% will be for consultant services (for FONTUR strengthening, formunicipality strengthening, for traffic police technical assistance and for the national training program),25% for equipment (for the traffic police and FONTUR) and 5% for infrastructure required forinstitutional development. Within Part B, the estimated costs for traffic and transport infrastructure,public transport and deferred maintenance are about US$ 124 million (60% of the project cost).Physical contingencies were estimated depending upon the appraised sub-projects and the extent ofpreparation of the components: 10% for works which final engineering and specifications have beenprepared; 15% for preliminary engineering/feasibility study level and 25% for all conceptual proposals.
3.25 A loan of about US$ 100 million is expected from the IDB to finance projects inCaracas, Barcelona-Puerto de La Cruz, Maracay, Valencia and other cities which comply with the cityeligibility criteria (para. 3.21 and Annex 4).
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Table 3.2: SUMMARY OF PROJECT COSTS(US$ million)
I Local Foreign I Total % of Total
PART A - INSTMTUTIONAL DEVELOPMENT AND POLICY
Part Al - FONTUR strengthening 1.54 2.30 3.84 1.9
Part A2 - Municipal strengthering 2.27 2.69 4.95 2.5
Part A3 - National Training Program 2.91 4.31 7.22 3.6
Part A4 - Traffic Police Program 2.96 9.22 11.17 5.6
Part A5 - Policy studies 1.31 1.31 2.63 1.3
Part AS - Project preparation 2.50 2.50 5.00 2.5
Sub Total Part A 13.49 21.32 34.81 17.4
PART B - INFRASTRUCTURE AND EQUIPMENT
Part 81 - Traffic and infrastructure 67.39 36.97 104.35 52.2
- land expropriation Part B1 1.08 0.00 1.08 0.5
Part B2 - Deferred Maintenance 12.16 6.29 18.45 9.2
Sub Total Part B 80.63 43.26 123.98 61.9
,ees Ceet. 84.12 .4.58 ¶5I.69 78.3
Physical Contingencies 10.11 5.54 15.65 7.8
Sub Total 104.23 70.12 174.34 87.2
Price Contingencies 15.28 10.39 25.66 12.8
T otal P etjctCostsexiudig taxl X 119.51 80.51 200.00 100
Taxes 19.62 0.00 19.62 9.8
Total Project Costs (including taxes) 139.13 80.51 219.62 109.8
E. Indicative Investrnent Needs
3.26 The Bank and IDB projects will finance about 45% of the proposed FONTUR nationalprogram. FONTUR will receive resources from GOV to finance roughly 38% of the program and theremaining 17% will be financed by the municipalities included in the project.
F. Financina
3.27 The proposed Bank loan of US$ 100 million would finance about 50% of the totalproject cost (excluding land acquisition) net of taxes and duties. About 35.1 % of the net project costis estimated as foreign exchange; funding of some local costs is justified in view of the beneficialinstitutional, social and environmental impact of the project. The project financing plan is shown inTable 3.3.
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Table 3.3: FINANCING PLAN(US$ million)
Source of Funds Local Foreign Taxes Total % Total
World Bank 19.49 80.51 100.00 44.8
GOV (FONTUR) 67.3 - 19.62 86.92 33.3
Municipalities 32.7 .- 32.70 16.3
Total 119.49 80.51 19.62 218.62 100
3.28 The proposed loan would finance 100% of foreign expenditures and 50% of localexpenditures for the training and consultant services required in Part A, excluding engineeringdesign/supervision services which will be financed at a rate of 33% of the expenditures incurred byFONTUR. The goods and equipment required for the implementation of Part A will be financed at 50%of ex-factory cost. The remainder of Part A would be financed by FONTUR. For Part B of theProgram, the proposed loan would provide 50% (ex taxes and duties) of the costs of all components.
3.29 The remainder of Part B, would be financed as follows: FONTUR would finance 25%of the cost of a subproject which would be matched by a 25% contribution from the investmentbudget of the participating municipalities. The proposed system of matching grants is justified atpresent in view of the following circumstances:
{i) FONTUR's funds originate from fuel taxes and are thus paid by users of services in themunicipalities. The Public Transport Systems (PTS) of most of the municipalities otherthan Caracas have benefitted very little from such user charge revenues, which arecollected and allocated to FONTUR by the central government;
(ii) unlike public utilities which can recover costs associated with Infrastructureimprovements through rate increases, the municipalities can only pay for PTSinfrastructure improvements through an increase in specific municipal taxes. This willbecome a practical option when the municipal institutions are built-up, thedecentralization process is completed and fiscal responsibilities are clearly defined. Itis doubtful if the current revenue base is sufficiently large or stable in participatingmunicipalities to permit major infrastructure investments;
(iii) in the past, municipalities have received direct transfers in the form of grants to financePTS infrastructure; the proposed matching grants system will bring financial disciplineto this process, increase accountability in the use of such funds and give time to themunicipalities to mobilize local resources and establish sound financial managementpractices. Following the initial subprojects funded under the Bank loan, all futurefinancial assistance from FONTUR to the municipalities will be provided on commercialon-lending terms;
(iv) the need for rapid and effective support for the decentralization of urban transportresponsibilities to the municipalities which otherwise would be delayed because of theweak revenue base of the municipalities; and
(v) the need to correct the past bias in urban transport investments which were heavilyweighted in favor of Caracas for large capital-intensive solutions.
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3.30 The proceeds of the Bank loan would be transferred to FONTUR by MTC. FONTUR isnot a banking institution and administration of loan proceeds would be dealt with through commercialbanks. While FONTUR would retain the power of approval for loan withdrawals by municipalities,FONTUR would establish agreements with commercial banks to deal with flows of funds. FONTURprovided the Bank with full details of loan transfer procedures to the municipalities (para. 5.1 (e)).
3.31 In some cities, more than one municipality will be involved. The eligibility criteria(Annex 4) require that municipalities reach an agreement on the composition of the sub-project, howfunds will be apportioned and the relative responsibilities for providing the 25% counterpart funding.Prior to disbursing funds to participants a subproject agreement will have been executed with aparticipating city which, inter alia, will confirm any inter-municipality agreements.
G. Proiect Economic Evaluation
3.32 Traffic conditions vary considerably in the participating cities and at this stage, trafficcongestion is not overly severe. However, vehicle/parking/pedestrian conflicts are increasing andcongestion does occur in central areas and at specific junctions. In many cities, the basic transportinfrastructure is satisfactory but the systems lack management (traffic circulation systems, welldesigned junctions and traffic signals etc) and traffic law enforcement to enable the full potentialcapacity to be fully utilized. In some cities, there are special problems which influence traffic efficiencysuch as Maracaibo where the central area is congested due to street markets and where the majorityof public transport is supplied by 5-seat cars. In other cities, there are deficiencies and discontinuitiesin the road network arising from factors such as the past lack of funds and difficult terrain. Some roadmaintenance problems exist and could worsen as responsibility is devolved from the local MTC officesto the municipalities. Accidents are often reported as a problem although inadequate data exist toprovide reliable indices to classify the problems against recognized international norms. The numberof standard buses appears to be diminishing but although quality of public transport in the participatingcities is declining, it is not certain that overall capacity is decreasing. In all cities, the responsibility foralleviating all transport sector problems now falls on the municipalities. As the cities grow, even withthe relatively modest growth rates anticipated, the problems will worsen and the municipal agenciesdo not have the manpower resources, in quantity and quality terms, to deal adequately with them.
3.33 Proiect Benefits. The main benefits of Part A (Institutional) will stem from the increasedcapabilities of FONTUR to influence urban transport through the allocation of resources to well plannedand conceived programs and schemes at the local level and of increased capabilities at the local levelitself. The national training program should begin to deal with the problem of technical capabilities ofthe municipalities, and the traffic police program should begin to enable better use to be made ofexisting infrastructure through better traffic law enforcement. Part B of the Project will ensure thatmunicipalities begin to use the institutional strengthening included in the project, to take over theirresponsibilities arising from decentralization. The traffic and infrastructure and the deferredmaintenance investment programs should improve urban transport operations. The quantifiablebenefits, used to justify the physical investments, are in terms of reduced vehicle operating costs, butjust as important in terms of their impact will be time-saving benefits through reduced trafficcongestion. Reductions in congestion will make a significant contribution to the environment andhence to the quality of urban life. The poor should also benefit from road paving and consequentimproved public transport access to low income areas and shorter travel times to/from places of work.FONTUR has encouraged cities to include in their subprojects solutions which foster non-motorizedmodes of transport such as bicycles and walking. These solutions will principally be of benefit to poorerusers of the urban transport system.
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3.34 As part of the subproject eligibility (Annex 4), subproject components should haveinternal rates of return of at least 1 2% (the estimated cost of capital) and the economic evaluationshould show that each proposed component is an efficient solution to the identified problem. For theeconomic evaluation of components, FONTUR developed evaluation guidelines and standardized urbanvehicle operating costs. These procedures are incorporated into the FONTUR Operational Manual andwill be periodically revised as necessary during the execution of the project.
3.35 From the appraisal of the five city subprojects, the project is estimated to have anoverall economic rate of return (ERR, weighted by the investment costs) of about 32%. If time savingsare added, the ERR increases to 79%. This ERR excludes the costs and benefits of the institutionalstrengthening program of FONTUR, of the national training program, the traffic police program and thebenefits derived from reduction of accidents and environmental improvements. All these benefits areimportant and vital to the success of the programs but quantified evaluation is not possible. Theaverage rates of return obtained in the evaluated components in the five city subprojects which havebeen appraised and a sensitivity analysis reflecting the impact of higher costs and/or lower benefitsare summarized in Table 3.4 and described in more detail in Annex 11.
Table 3.4: SUMMARY OF QUANTIFIED SUBPROJECT BENEFITS(Economic Rate of Retum (%))
Benefits-25 %Benefits Benefits - + Costs
Base +25% 25% +25%
OCS OCS OCSOCS + OCS + OCS + OCS OCSonly TS only TS only TS only + TS
Barquisimeto 35 73 47 92 23 52 15 40
Maracaibo 37 92 49 117 24 67 15 52
Maturin 27 89 38 113 15 64 8 48
Merida 17 41 25 53 9 28 4 20
Ciudad Guayana 20 65 26 82 13 49 8 38
Total Part B 32 79 44 100 21 57 13 44
OCS- Operating Cost SavingsTS - Time Savings
H. Environmental AsDects
3.36 The project will have a beneficial impact on the environment. Traffic managementinvestments would help relieve congestion in major transport corridors and central areas, resulting inlower emission of pollutants per vehicle-kilometer. Junction improvements and pedestrian schemeswill improve safety and quality of life. Where paving or resurfacing of access roads has been included,this will reduce the incidence of airborne dust. Public transport system improvements will contributeto promote a more efficient form of urban development resulting in a further reduction of travel and
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emissions. The redesign of urban roads produces opportunities for tree planting, an activity which wasincluded in the terms of reference for the final engineering design of the first five cities.
3.37 Some road works may have localized adverse impacts, mainly related to excavation forconstruction materials and disposal of work site wastes. The problems of excavated material are likelyto be less than in an inter-urban project as the road developments in the project will mostly be toexisting roads for which no further earthworks will be required. Measures to mitigate such impactswould be specified in the bidding documents for works.
3.38 In general, land and/or property expropriation should be small as proposed projectcomponents are expected mainly to consist of improvements within existing rights of way, trafficmanagement measures, paving of streets, and road maintenance. However, in some cities, theproposed subproject may include construction of new road links or major intersections; in such casesa need for relocation of existing residents may occur. In the case of relocation the Bank guidelines willbe strictly followed. It is a part of city eligibility criteria (Annex 4) that in the event that anycomponent involves displacement of population, FONTUR would notify the Bank, and would presenta resettlement plan, satisfactory to the Bank, prior to implementation.
3.39 The Operational Manual includes Annex on Environmental Impact Assessment whichdescribes how to identify, assess and propose mitigating measures for the most common types ofenvironmental impact. Terms of Reference for preparing the final engineering designs of theinfrastructure improvements proposed require that existing environmental road conditions be reviewedand that the final designs include specific measures for alleviating conditions where they fail to meetexisting or proposed standards. In addition, an environmental assessment will be required for allproposals for new works, indicating any adverse environmental consequences and proposing measuresto eliminate them or at least reduce their impact to internationally accepted levels. These assessmentsand proposals will relate principally to vehicle emissions, vehicle noise, visual intrusion and communityseverance.
3.40 To ensure that environmental impacts are properly evaluated and adequate mitigatingmeasures are proposed, FONTUR's program's division is staffed with an environmental specialist incharge of reviewing all phases of subproject preparation and implementation from the environmentalstandpoint. More specifically, the specialist's responsibilities will include: (i) ensure that terms ofreference (TOR) for feasibility studies include an environmental impact evaluation of the proposedsolutions; (ii) review the feasibility studies and determine, according to good environmental practices,whether a specific environmental impact assessment such as a resettlement plan is required, and hireconsultants to carry out such analysis and propose mitigating measures; (iii) in the latter case, seekthe Bank's approval for the proposed measures; (iv) include the proposed measures in the TOR for finalengineering design; review the final engineering design from the environmental standpoint and clearthe project for implementation; and iv) supervise the implementation of the project to ensure that themunicipalities are carrying out their implementation in accordance with the design approved byFONTUR. Since all the preparation studies under Part A6 will be financed and approved by FONTUR,it is expected that this arrangement will ensure that subprojects will be carried out according toenvironmental practices acceptable to the Bank.
1. Proiect Risks
3.41 The proposed project is the first urban transport lending operation in Venezuela. Theproject places great emphasis on institutional strengthening and on management of systems, on cost-effective schemes --the latter measures generally new to the participating cities. Also, the project willbe implemented in a climate of decentralization of responsibilities to municipalities and those
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municipalities will take time to become fully established and effective. Indeed, FONTUR itself, a newagency will also take time to become established. Thus, in summary, new policies and directions inurban transport are being pursued by new agencies and the main implementation risk is clearlyinstitutional. The project has placed great emphasis on these aspects and includes FONTURstrengthening, national training (for national and local technical staff) for traffic planners, traffic policetechnical assistance and training and technical assistance to participating municipalities. It will be acondition of effectiveness that the contract negotiations for FONTUR technical assistance will becompleted. Finally, at negotiations, FONTUR confirmed that it will have an environmental specialistin its Programs Division to review the environmental impact of any project proposed by the cities.
3.42 Counterpart funding could prove a risk from two aspects. Firstly, weak municipalfinancial capacity and consequent lack of budget. To mitigate this problem in this time of transitionto decentralization, the municipalities will receive 75% grant for the investment component(50% Bankloan and 25% FONTUR grant). To ensure municipality allocation of their 25%, the municipalities willbe: (i) subject to financial review and (ii) required as part of the subproject agreement to commitfunds. Secondly, changes in political commitment at the municipality level could influence theavailability of counterpart funds and thus implementation. This has been mitigated by: (i) the use ofeligibility criteria which apply to all FONTUR funding - thus municipalities must comply with the criteriaeven if projects are not financed by the Bank loan; (ii) the incentive provided by the nature of thefinancing plan which places a heavy emphasis on grants to the municipalities; and (iii) by limiting thescale of individual components such that they can be implemented within 18 months (part of theeligibility criteria - Annex 4) and are thus less likely to political influence.
3.43 There are policy risks; it is accepted that lack of realistic tariffs has contributed to (i)a decline in the public transport fleet/supply and (ii) costly subsidies to urban transport by GOV. Itwould be unrealistic to expect this problem to be resolved in the immediate term. FONTUR itselfproposes to increase the supply of buses through the provision of a line of credit, with a one-time, 'up-front" subsidy to operators and thence allowing operators to charge commercial fares. The Bank willnot participate in this program. However, the project will contribute to the resolution of the subsidyissue through: (i) continued dialogue with the GOV at the annual review and particularly during themid-term review which will assess the progress made by each municipality towards therecommendations of its Public Transport Study for the municipality, and (ii) through studies to developimproved targeting of subsidies and for monitoring pilot targeted subsidy systems (Maturin).
3.44 In view of the considerations outlined, the risks are expected to be manageable and theconditionality has been designed to contain them within acceptable limits. Offsetting these risks arethe benefits expected from the project and particularly from its institutional strengthening components.If these components are successful, the benefits in term of improved resource allocation would go wellbeyond the direct benefits estimated.
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IV. PROJECT IMPLEMENTATION
A. Institutional ResDonsibilities
4.1 The Republic of Venezuela will be the Borrower. FONTUR will be responsible forimplementing the project, in accordance with: (a) contractual arrangements (section IV.B); (b)implementation schedule (section IV.C); {c) implementation arrangements (section IV.D); (d)implementation program (section IV.E); (e) procurement arrangements (section IV.F); (f) disbursementarrangements (section IV.G); (g) auditing arrangements (section IV.H) and (h) monitoring and reportingarrangements (section IV.1) which will be confirmed during negotiations, and for which detailedguidelines will be provided in the Operational Manual, satisfactory to the Bank. The Bank will monitorand supervise the implementation of the project in accordance with a monitoring and supervision plan(section I and Annex 13).
4.2 For both Parts A (excluding part A4) and B, FONTUR will be the implementing agencyand will assume overall responsibility for continued subproject preparation, appraisal and supervision.The implementation of the Traffic Police program (Part A4) is the responsibility of MTC (DGSTT) (seeimplementation arrangements) but shall be carried out under FONTUR's supervision. To help FONTURstrengthen its operations and to carry out its obligations, an institutional strengthening program hasbeen devised (Annex 6). Within individual municipalities, it will be a condition of eligibility, inter alia,that traffic and transport, public transport and maintenance capabilities be created and/or strengthened.These strengthened units will be responsible for the day-to-day implementation of the subproject atlocal level. It will be a condition of disbursement of Loan funds to the cities that FONTUR submitsevidence to the Bank that the institutional arrangements required in the city eligibility criteria areformally established and satisfactory to carry out the subproject implementation (para. 5.3 (c)); anda condition of effectiveness that the international technical assistance provided under Part A2 is inplace (para. 5.2 (c)).
B. Contractual Arrsnaoments
4.3 The following contractual arrangements will be necessary for the implementation of theproject: (i) agreement between MTC and FONTUR to carry out part A4 of the project which deals withthe national Traffic Police program; (ii) agreement between MTC and municipality to carry out the localportion of the Traffic Police program; (iii) a participation agreement between FONTUR and each of themunicipalities involved to set forth the general obligations of both parties in the project; and (iv) asubproject agreement between FONTUR and each municipality establishing the terms and conditionsof each subproject and the respective grant to be made by FONTUR. Prior to negotiations, at least fourmunicipalities had already signed participation agreements (Maracaibo, Merida, Ciudad Guayana andMaturin).
C. Implementation Schedule
4.4 The proposed project is expected to be implemented and the loan disbursed over a sixyear period. This is slightly shorter than the conventional seven years in the region but is justified inview of (i) the status of preparation of participating cities, and (ii) the relatively low-cost nature of theworks proposed. The project would be completed by June 30, 1999, and the Closing Date would beDecember 30, 1999.
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D. ImDlementation Arranasments
4.5 Proiect Manaaement Unit. FONTUR will establish and maintain a Project Management Unit(PMU) headed by a Project Coordinator, to manage the implementation of the several components ofthe Bank project. The Project Coordinator will report directly to FONTUR's Executive Director (seeAnnex 2) and participated in the negotiations of the loan. One of the international consultants financedunder Part A of the project will act as a full time advisor to the Project Coordinator to provide thetechnical support and cross-country experience required for managing the project. In addition to theProject Coordinator who will be responsible for the overall financial management of the project, PMUwill include: (i) a transport economist and policy studies coordinator responsible for the institutionalstrengthening program (Parts Al and A2) and overseeing the execution of all the studies and transporteconomics aspects of Part A5 of the project; (ii) an engineer, with experience in procurement, tocoordinate Part B of the project; and (iii) a management information systems specialist responsible forthe reporting and supervision of the project. PMU will be supported by a small secretariat which willinclude an accountant responsible for project disbursement.
4.6 Traffic Police Prooram Unit. Since the Traffic Police is a division of the DGSTT of MTC,the actual implementation of the Traffic Police program (Part A4) will be managed by a special TrafficPolice Program Unit (TPPU) of the Traffic Police section of DGSTT, under the PMU's overallsupervision. MTC and FONTUR will sign an agreement which will define the responsibilities of eachparty in the execution of Part A4 of the project. The same TPPU will be responsible for theimplementation of the local portion of Part A4 always under PMU's supervision. It will be a conditionof disbursement of Loan funds related to the local portion of the Traffic Police program that eachmunicipality and MTC sign an agreement establishing the responsibilities of each party in the executionof the project (see para. 5.4).
4.7 City Proiect Manaaement Unit. The execution of the city subprojects (Part B) will begoverned by the following arrangements: Each city will establish and maintain a city projectmanagement unit (CPMU) responsible for the implementation and supervision of the city subproject.This unit could be part of one of the agencies required in the city eligibility criteria (para. 4.2). The unitwill be headed by a Project Manager (CPM), responsible for the overall management of the citysubproject, the coordination of all the municipal agencies involved and the interface with FONTUR.He will be an experienced project manager, preferably a professional engineer, appointed by the mayorand reporting directly to him. In addition to the project manager, the CPMU will be staffed with anengineer with experience in design, construction supervision and procurement and supported by a localconsultant financed through the municipal strengthening program. It will be a condition ofdisbursement of Loan funds to any municipality subproject that the CPMU has been established, theCPM has been appointed, the international technical assistance (Part A2) is in place and that themunicipality has satisfactorily complied with the institutional arrangements included in the conditionsof eligibility (para. 5.3 (c)). During preparation all the municipalities appraised have designated a CPMUand a CPM. However, since subproject implementation will involve other agencies in the municipalitywhich didnot participate in project preparation (e.g., the construction and procurement directorates),it is important that the present set up be formalized to ensure efficient coordination.
4.8 The preparation of the subprojects (economic feasibility study, environmentalassessment, preliminary design, final engineering design and preparation of specifications and biddocuments) will be financed under the project (Part A6) and carried out by consultants selectedaccording to Bank Guidelines for consultants. The CPMU will actively participate in the drafting ofterms of reference, evaluation of consultants, preparation of the feasibility study and engineeringdesigns. This process was followed in the case of the five cities appraised and it is crucial to stress
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the sense of ownership of the project. The overall preparation process will comply with the proceduresdescribed in the Operational Manual. Once the subproject has received FONTUR's approval forimplementation, CPMU will call for bids, evaluate the proposals according to the procurementprocedures described in the Operational Manual, and submit its evaluation and recommendation toFONTUR's PMU. After receiving PMU's approval to award the project, CPMU will notify the winnerand prepare a contract based on a standard contract approved by FONTUR. FONTUR should receivecopies of the contract for its files. The CPMU will be responsible for the supervision of the subprojectand FONTUR will also carry out periodic supervision, at least for the first lots under implementation toensure compliance with the agreed design or specifications. At mid-term review, the Bank willevaluate ways to simplify this process based on the performance of the municipalities in the first twoyears.
E. ImDlementation Proaram
4.9 The key actions and respective dates of the Implementation Program are:
(a) FONTUR strengthening (Part Al)- The international technical assistance consultantsmust be selected prior to loan effectiveness (paras. 3.6 and 5.2 (c)).
(b) Municipal strengthening (Part A2)- The international technical assistance consultantsmust be in post before any contracts for goods and works are contracted (para. 3.7and 5.3 (b)).
(c) National Training (Part A3)- The selection of the technical assistance for the IntensiveCourse of the National Training Program must be completed prior to loan effectiveness(paras. 3.8 and 5.2 (b)).
(d) Traffic Police Program (Part A4)- Final draft of the study on the Traffic Police Programwas ready prior to Negotiations. (paras. 3.9 and 5.1 (I)).
(e) Policy studies (Part A5)- Studies A5.1 and A5.2 must be ready, respectively, 1 and 3months after loan effectiveness; studies A5.3 and A5.4 must be completed not laterthan 10 months after loan effectiveness and study A5.5 must be completed not laterthan 12 months after loan effectiveness. Studies A5.10 and A5.11 are specific toCaracas and must be completed not later than 36 months after loan effectiveness.(paras. 3.11 and 5.1 (m)).
(f) Preparation studies (Part A6)- The Public Transport Study for any of the participatingmunicipalities and an action plan based on its recommendations, must be completed14 months after signing of the relevant subproject agreement. Progress in theimplementation of the action plan will be reviewed during the second annual review,(mid-term review) and in subsequent annual reviews (paras. 3.12, 5.1 (n) and 5.1 (q)).
(g) Traffic Infrastructure and equipment (Part B1)- Final engineering design, biddingdocuments and equipment specifications for the first year program were completed asprior to negotiations (paras. 3.14 and 5.1 (o)).
(h) Deferred Maintenance (Part B2)- Final engineering design, bidding documents andequipment specifications for the first year program were completed prior tonegotiations (paras. 3.15 and 5.1 (o)).
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li) Annual Program for Part B- At each annual review, FONTUR will present the programfor the following year and seek approval from the Bank to proceed with its preparationand implementation (paras. 4.19 and 5.1 (p)).
(j) Mid-Term Review- This review will take place 24 months after loan effectiveness, andwill assess the overall performance of the implementation agency and the progressmade by the municipalities towards the recommendations made in the Public TransportStudy. Based on this evaluation it will propose a revised action plan and any correctivemeasures necessary to ensure that the project meets its main objectives (paras. 4.20and 5.1 (q)).
F. Procurement
4.10 Bank procurement guidelines will be followed for the proposed project. The Venezuelanprocurement law (Ley de Licitaciones, August 1990) contains provisions exempting all contracts (civilworks, goods, and services) relating to projects partially or entirely funded by international financingagencies, from complying with its provisions, ruling that in such cases the application of the respectiveagreements will prevail. Civil works under the project would account for about 67 percent of totalproject costs, equipment and materials about 7 percent; and consulting services about 26 percent. Theestimated project cost breakdown by procurement method is presented in Table 4.1 below.
4.11 Civil Works. Contracts exceeding the equivalent of US$ 2 million would be procuredon the basis of International Competitive Bidding (ICB). It is expected that three contracts with anaggregate value of about US$ 39 million may fall into this category. Most other works ($91.6 million)are of a dispersed nature with contract amounts between US$ 0.75 to 2.0 million and thus would notbe suitable for ICB; therefore, they would be awarded according to local competitive bidding (LCB)procedures acceptable to the Bank, and nationally advertised to ensure adequate competition. Foreignbidders would be allowed to participate in the bids, and this would be explicitly stated in the GeneralProcurement Notice which will be published internationally after credit negotiations. The bulk of civilworks contracts would be improvements to existing traffic infrastructure, including roads, traffic signsand signals. The provision and installation of traffic signals, estimated to cost an aggregate of $8million, would be integrated into the respective civil works contracts to ensure properly coordinatedimplementation of the traffic schemes, but in the larger cities ICB is proposed. Small works, withcontract values under $100,000 up to an aggregate total of $ 2 million, would be procured by localshopping based on price quotations from at least three bidders. To avoid fragmentation of civil worksprocurement, contracts below $25,000 would not be eligible for financing.
4.12 Land Acauisition. In a few instances, especially the construction of missing links in theroad system, the acquisition of land may be required. Payments for this item, estimated to cost a totalof US$ 1.21 million equivalent, would be based on national procedures for land expropriation and befinanced entirely out of project counterpart funds; therefore, no Bank proceeds would be used for thispurpose.
4.13 Eauipment and Materials. Contracts estimated to cost more than $200,000 equivalentwould be procured on the basis of ICB. It is expected that goods costing a total of US$ 10 million(55% percent of all goods procured under the project) would fall into the ICB category. Contractsbelow $200,000 with an aggregate value of US$ 7.6 million, would be procured in accordance withLCB procedures nationally advertised and subject to Bank's approval. Contracts for equipment andmaterials costing less than $25,000 could be procured through local or international shopping, up toan aggregate total of $270,000.
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Table 4.1: PROCUREMENT ARRANGEMENTS(in US$ million equivalent)
Procurement Method
ICB LCB Other N.B.F. TOTAL
1. CIVIL WORKS
Part A-Intrastructure for Inst. 1.79 1.79Development (.89) (.89)
Part B-Deferred Maintenance 17.85 1.00 b/ 18.85(8.92) (.50) (9.42)
Part B- Land Acquisition 1.21 1.21
2. EQUIPMENT AND MATERIALS
Part A - Inst. Development (inc. 7.23 2.38 9.61vehicles) (3.61) (1.19) (4.80)
Part B - Traffic Infrastructure 2.91 5.18 .27 b/ 8.3e(1.45) (2.59) (.14) (4.18)
3. CONSULTING SERVICES */
Part A - Training 8.11 8.11(9.11) (8.11)
Part A-Technical Assiatance 11.03 11.03(5.52) (5.52)
Part A - Studies 8.57 8.57(4.29) (4.29)
Part B-Engineering/ Supervision 20.53 20.53(6.84) (6.84)
TOTAL 49.12 99.17 50.51 1.21 200.00(24.55) (49.58) (25.90) (100.0)
NOTE: Figures in parentheses are the respective amounts financed by the Bank loan. N.B.F.: Not Bank-Financed.*/ Services to be procured in accordance with World Bank Guidelines: Use of Consultants by World Bank Borfowers and by the WorldBank as Executing Agency (Washington, DC, August 1981).
b/ Localfinternational shopping
4.14 Consultina Services. Consulting services would be procured in accordance with WorldBank guidelines for consultants. These services, which include studies, technical assistance, training,engineering designs and construction supervision, are estimated to cost an aggregate of US$ 48 millionof which US$ 21 million are for engineering design and supervision services. Foreign consultantswould not be subject to prior registration as a condition for being eligible in the selection process.However, registration would be a pre-condition of being contracted for consulting services, althoughnot of selection. Foreign firms would have to comply with registration procedures after being notifiedof contract award. The registration procedures entail submission of standard forms, provided by
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FONTUR, in which details about the background, specific experience of the firm and financialstatements for the last three years are requested. The registration procedure is free of charge andtakes less than three days.
4.15 Procurement Review. All bidding packages above US$500,000 for civil works, and allbidding packages above US$200,000 for equipment and materials, would be subject to the Bank'sprior review of advertising, bidding documents, bid evaluation and contract awards. The above processwould cover about 50% of the estimated total costs for civil works, equipment and materials.However, in order to ensure that adequate procurement procedures are followed, the first LCB contractfor each municipality would be subject to the Bank's prior review, irrespective of the amount. Allother procurement documentation would be subject to selective ex-post review, at a ratio of not lessthan one for every five. FONTUR would retain documentation for these contracts for periodicexamination by Bank staff.
4.16 Coordination of Procurement. As executing agency, FONTUR would assume overallresponsibility for procurement, although the individual municipalities and the Borrower (MTC-TrafficPolice) would be responsible for procuring the items of their respective project components. TheOperating Manual spells out the detailed procurement procedures and contains standard biddingdocuments and evaluation guidelines to be used in the procurement of civil works, goods and services.It also specifies the documents which should be submitted to FONTUR for prior and ex-post review.FONTUR would also ensure that the aggregate totals for local and international shopping not beexceeded. To avoid unnecessary delays in the implementation of the project, especially during its initialphase, the project includes 24 months of advisory services to FONTUR, the municipalities and theTraffic Police, to assist in the procurement process.
G. Disbursements
4.17 Table 4.2 presents the percentage to be disbursed by loan category.
Table 4.2: LOAN DISBURSEMENT BY CATEGORY(US$)
Amount DIsbusement Rate
Civil Works for Parts A.4 (local) and B 5b870.000 87% of amounts disbursed by FONTUR
Civil Works for Part A.4 Inationall 1.000.000 50% of total expenditures
Equipment and Goods for Parts A.2, A. (local) 4.180.000 87% of amounts disburmed by FONTURand B
Equipment and Goods for Parts A. 1 A.3 and A.4 3.800.000 100% of foreign expenditures and(national) 60% of local expenditures
Consultant services and Training for Parts A.1 (i). 12.120.000 100% of foreign expenditures andA.3 A.4 (national) and A.S 50% of local expenditures
Consultant Services for Part A. 1 0ii (engineering 6,840,000 33% of total expendituresdesign/supervision)
Consultant Services for Part A.2 and A.6 58800.000 1 00% of amounts disbursed by FONTUR forforeign expenditure and 50% of amountsdisbursed by FONTUR for local expenditure
Unallocated 10.3900000
Total 100,000.000
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All disbursements under contracts up to USS500,000 equivalent for works and US$200,000equivalent for goods would be made on the basis of certified statements of expenditures (SOEs)prepared by FONTUR. Supporting documentation for the SOEs would be retained by FONTUR andmade available for examination by Bank staff during supervision missions. To expedite projectexecution, a Special Account would be opened in the Central Bank of Venezuela with a deposit of upto US$5.0 million equivalent. This account will be replenished for the amount of withdrawals onaccount of eligible expenditures. Authorization is sought for retroactive financing of up to US$10million equivalent (10% of loan funds) in accordance with Bank standard guidelines. Claims forretroactive financing would have to be made no later than 12 months before the date of the signatureof the loan (expected date October 30, 1993). The disbursement arrangements were discussed andagreed during negotiations (para. 5.1 (e)).
H. Auditina
4.18 Auditina. FONTUR would prepare financial statements, audited Special Account andaudited SOE's using external auditors acceptable to the Bank. The Bank would review the externalauditors' terms of reference. FONTUR in turn, would require each implementing agency to engageexternal auditors satisfactory to FONTUR to audit their subproject accounts, which should beseparately maintained. FONTUR would review the audits of the subprojects and report to the Bank onthe status and the remedial actions taken, if required. The reports of the subprojects would befurnished by municipalities to FONTUR within five months of the close of the fiscal year. FONTUR'saudit report and its report of the subproject audits would be presented to the Bank annually no laterthat June 30. The project auditing arrangements were discussed and agreed (para 5.1 (d)).
1. Monitorina and Reoortina
4.19 Annual Review and Proiect Plan of Action. In November of each year that the projectis being executed, the Bank and the GOV would conduct a formal joint review of the progress madein reaching the objectives and in the implementation of the proposed project. The annual review wouldprovide an opportunity to discuss project issues, in particular: compliance with sub-loan covenants;institutional development advancements and performance of FONTUR and city agencies and thetechnical assistance at national and local levels; execution and analysis of further needs of the trainingprogram; the quality of subproject implementation, including environmental analyses; implementationof studies, sector policies and actions; implementation of a monitoring program (proposed monitoringindicators are presented in Annex 13). The discussion and analysis of the issues faced during the yearunder review, would lead to the formulation of adjustments and, if necessary, remedial actionssatisfactory to the Bank. The timing and scope of the annual review was confirmed duringnegotiations (para.5.1 (p)).
4.20 The project places great emphasis on institutional development in the sector and assuch, implementation must be closely monitored and success evaluated. It is proposed that a mid termreview of the project be held 24 months after loan effectiveness. At the review, the performance ofthe project will be assessed and the second period implementation program will be amended asnecessary based on the results of that evaluation (para.5.1 (q)).
4.21 Reportino. It was agreed during Appraisal, and was confirmed at Negotiations, thatFONTUR with the assistance of participating municipalities, would prepare bi-annual progress reportsfor the semesters ending on June 30 and December 31. The reports would be furnished to the Bankwithin 60 days of the end of the semester. The progress reports would cover past institutionaldevelopment and project execution achievements and compare them with appraisal projections andgoals set forth in the Action Plan (Annex 13), and present a critical assessment of problems and issuesarising during project execution. The reports would also discuss compliance with subproject
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conditionality by each municipality and actions taken to enforce compliance. In cases of unsatisfactoryprogress, the reports would also detail proposals for adjustments and remedial actions. The case formore periodic (quarterly) reporting would be reviewed at the mid term review. To facilitate adequatemonitoring of the project FONTUR agreed to install not later than ninety days after loan signing amanagement information system to track the physical, financial and environmental status of eachcomponent of the project (para. 5.1 (f)).
4.22 Proiect Supervision. The responsibilities for supervising project implementation and asupervision plan are shown in Annex 13. It is expected that at least three supervision missions peryear staffed by an urban transport engineer/planner and a transport economist will be required tosupervise the proposed project during the first three years of execution (1 993-1996). In addition,specialists in traffic engineering, training and procurement may accompany the supervision missionsas required. Supervision requirements are expected to be intensive, particularly in the initial years, asBank missions would plan to visit every participating city at least once a year. For the first two orthree years, the supervision requirements are estimated at about 1 5 staff-weeks reducing to 13 staff-weeks in the fourth year, 12 staff-weeks in the fifth and 8 staff-weeks in the last year.
V. AGREEMENTS REACHED AND RECOMMENDATION
5.1 Following are the agreements reached at negotiations:
A. Proiect Mana ement:
(a) that the Project Management Unit (PMU) be structured and adequately staffed andotherwise supported in the implementation of its responsibility under the project;FONTUR appointed the head of the Project Management Unit prior to negotiations(para. 4.5);
(b) that Procurement be carried out in accordance with Bank guidelines, including (i) theuse of standard bidding documents for the procurement of goods and works, underLCB and ICB procedures; (ii) use of Bank's guidelines for the selection of consultants;and (iii) the procurement limits (paras. 4.10 to 4.16);
(c) that a Special Account in the Central Bank of Venezuela be opened and maintained(para. 4.17);
(d) that the Special Account and Statements of Expenditures (SOEs) (i) be auditedaccording to procedures, and by independent auditors, acceptable to the Bank, and (ii)that audits be submitted annually no later than June 30 (para. 4.18);
(e) detailed procedures for the transfer of loan funds to participating municipalities wereagreed with the Bank at negotiations (para.3.30);
(f) that (i) a Project Monitoring Management Information System satisfactory to the Bankbe installed ninety days after loan signing; (ii) that agreed institutional, physical,operational and financial performance targets be included in semi-annual and annualreports to the Bank (para. 4.21);
(g) that the project be executed, and the system subsequently operated in accordancewith environmental practices satisfactory to the Bank; should implementation of any
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proposed subproject investment require displacement of population, FONTUR wouldnotify the Bank thereof, and upon the Bank's request would present a resettlementplan, satisfactory to the Bank, prior to implementation (para. 3.40);
(h) the final version of the project Operational Manual was completed and submitted to theBank (para. 3.22).
B. Institutional Development and Policy
(i) the letter of invitation, terms of reference, evaluation criteria and draft contract toinvite proposals for the international technical assistance for FONTUR strengthening(Part Al), as described in Annex 6, were completed prior to negotiations (para. 3.6);
(j) the letter of invitation, terms of reference, evaluation criteria and draft contract toinvite proposals for the international and local technical assistance for municipalstrengthening (Part A2), as described in Annex 6, were completed prior to negotiations(peara. 3.7);
(k) the letter of invitation, terms of reference, evaluation criteria and draft contract toinvite proposals for the international technical assistance to carry out the IntensiveCourse of the National Training Program were completed prior to negotiations(para.3.8);
(I) the draft final study on the Traffic Police Program was completed prior to negotiations(para.3.9);
(m) that studies A5.1 and A5.2 be completed respectively 1 and 3 months after loaneffectiveness; studies A5.3 and A5.4 be completed not later than 10 months after loaneffectiveness; study A5.5 be completed not later than 12 months after loaneffectiveness and studies A5.10 and A5.1 1 be completed not later than 36 monthsafter loan effectiveness (para. 3.1 1);
(n) that the Public Transport Study for the participating cities including cost-recoverymechanisms and provisions for targeted subsidies be completed not later than 14months after signing of the relevant subproject agreement; that an action plan toimplement the recommendations of such study be submitted not later than 60 daysafter the Bank provides its comments; and that the progress in the implementation ofsuch action plan be reviewed during the second annual review and subsequent annualreviews (para.3.12).
C. Traffic Infrastructure and Eauipment
(o) the final engineering design, bidding documents and equipment specifications for thefirst year of the Traffic Infrastructure and Equipment program (Part B) were completedbefore negotiations (para.3.14).
D. Annual and Mid Term Review
(p) that at each annual review, FONTUR will present the program for the following yearand seek approval from the Bank to proceed with its preparation and implementation(para. 4.19);
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(q) that a Mid-Term Review take place 24 months after loan effectiveness, and will reviewagreed institutional, operational and financial performance indicators, compliance withcovenants and the recommendations made in the Public Transport Study for eachparticipating city. Based on this evaluation prepare a revised action plan and anycorrective measures necessary to ensure that the project meets its main objectives(para. 4.20).
E. Eliaibility Criteria and Contractual Arranaements
(rl the city and project eligibility criteria as described in Annex 4 have been adopted byFONTUR (para.3.21);
(s) that the draft contracts to be used for the participation, subproject, MTC/FONTUR,MTC/municipality agreements are submitted to the Bank (para.4.2);
(t) that not later than 60 days after loan effectiveness, MTC and FONTUR should sign anagreement to carry out the national portion of the Traffic Police program (para. 4.2).
5.2 Following are the Conditions of Effectiveness:
(a) the execution of acceptable participation and subproject agreements between FONTURand at least one municipality (para. 4.2);
(b) the selection of the consultants to carry out the Intensive Urban Transport Course aspart of the National Training Program (part A4) (para.3.8);
(c) the selection of consultants to provide the technical assistance for the FONTURstrengthening program (Part Al),(para.3.6);
(d) evidence that GOV's counterpart funds have been made available to FONTUR(para.3.27).
5.3 Prior to disbursements of Loan funds to any municipality, FONTUR would submit to the Bank:
(a) signed participation and subproject agreements with that municipality (para. 4.2);
(b) evidence that a City Project Management Unit has been established and staffed, andthe City Project Manager has been appointed and the international technical assistanceis in place (paras. 4.2 and 4.7);
(c) evidence that the municipality has satisfactorily complied with the institutionalarrangements included in the conditions of eligibility (para. 4.2).
5.4 As a condition of disbursement of funds related to the national portion of the TrafficPolice Program, FONTUR would submit to the Bank an agreement between MTC and FONTUR similarly,as a condition of disbursement of funds related to the local portion of the Traffic Police Program,FONTUR would submit to the Bank a signed agreement between MTC and the municipality (para. 4.6).
5.5 Retroactive financing of up to US$ 10 million for expenditures made after October 30,1992 is recommended (para. 4.17).
5.6 Recommendation. With the above agreements, the project would be suitable for a Bank loanof US$ 100 million equivalent for a period of 15 years including 5 years of grace at the Bank'sstandard variable interest rate.
40 ANNEX 1
VENEZUELAURBAN TRANSPORT PROJECT
Lessons Learned from Other Urban TransDort Proiects
Backaround
1. In 1985, the Bank reported' that it had participated in 17 urban transport projects and 32urban development projects with an urban transport content. Since 1985, other urban transportprojects have been commenced or completed, including Mexico First Urban Transport Project (UTP),Urban Streets and Transport Project (Chile), Bogota UTP (Colombia), Kingston UTP (Jamaica), LimaMetropolitan Development Project (Peru), Taegu UTP (Korea), Shanghai (PRC) and Fourth UTP (Brazil),and other projects are in the course of preparation. Project Completion Reports and/or ProjectPerformance Audit Reports (PCR/PPAR) are available for a total of 1 5 urban transport projects andurban development projects where transport components represented more than 30% of total costs.The relevant projects are summarized in Table 1.1.
2. This review is based on analyses included in the 15 available PCR/PPAR's for urban transportprojects (Table 1.1), on current trends in urban transport projects and on experience from the FirstUrban Transport Project in Mexico.
Relevance of PCR/PPAR's
3. Table 1 shows that no project for which a PCR/PPAR is available, began after 1981 -10 yearsago- and some projects extend back to 1972 - 19 years. Over these time periods, there have beensignificant changes both in the emphasis of urban transport policy and in traffic transport relatedtechnology.
4. 'Policy' changes include, for example, increasing recognition that road traffic is a majorcontributor to air pollution, that maintenance is of crucial importance and that there is an increasingtrend towards deregulation and privatization of public transport (bus operation). The PCR/PPARprojects rarely included such policies.
5. With respect to technology there have also been changes. Typically, 20 years ago, traffic signalcontrol systems were mainly based on large computer systems which not only posed procurementproblems but were not always appropriate for the problems faced by, or consistent with capabilitiesof, developing cities. Use of personal computers for traffic and transport planning and for operationalapplications (e.g., traffic and accident data bases) is now commonplace and has changed the methodsof working. Again, in the area of traffic management design, much has been achieved with busways(and busways are actively considered now in most projects) but only four of the PCR/PPAR projectsincluded such techniques (Brazil I and 11, and Ivory Coast I and 11).
6. It is also noted that at least 5 of the cities in Table 1.1 are very large (population exceeding 5million), hence not all "lessons learned" may be applicable to the present project.
7. Thus, the PCR/PPAR's are not ideal as a source of data for the design of current projects.Clearly, some useful lessons are highlighted and indeed, some have already been incorporated intomore recent projects; for example, over-optimistic project schedules (see below) are not now used andmaintenance is the norm. Additionally, PCR/PPAR's were generally completed.
1/ "Urban Transport" - A World Bank Policy Study, 1986.
41 ANNEX 1
Table 1.1: Lessons Learned from Other Urban Transport Projects
LOANI DATE LOANCREDIT POPULATION, LOAN AMOUNT
REF COUNTRY T - --- Iion) SIGNED US$- -- l~~~~~~~~~~~~~~~~~~~~million)-
851 Malaysia Kuala Lumpur 1.0 Jun. 1972 16.00937 Tunisia Tunis 1.2 Oct. 1973 18.00952 Iran Tehran Dec. 1973 42.00
1214 Malaysia Kuala Lumpur 1.0 Feb. 1976 26.001282 Phillippines Manila 5.9 May. 1976 32.001347 Cote d'lvoire Abidjan 1.7 Dec. 1976 44.001355 India Bombay 8.5 Dec. 1976 25.00687 India Madras 5.2 Apr. 1977 24.00
1491 Costa Rica San Jose 0.6 Nov. 1977 16.501563 Brazil 5 Metropolitan Areas (1) 1.5-9.0 May. 1978 88.001638 Thailand Bangkok 5.2 Dec. 1978 16.001033 India Calcutta 9.5 Jun. 1980 56.001839 Brazil Porto Alegre 1.5 May. 1980 159.001965 Brazil 14 Conurbations (2) Mar. 1981 90.002048 Cote d'lvoire Abidjan, Daloa & 1.7 Aug. 1981 51.00
Korhogo
Notes:1. Curitiba, Porto Alegre, Belo Horizonte, Recife and Salvador2. Baixada Santista, Distrito Federal, SO Luis, Cuiaba, Florianopolis, Goiania, Macei6, Natal,
Jo5o Pessoa, Vale do Ago, Aracaju, Teresina, Manaus and Victoria
about 10 years after the commencement of projects so the time lag diminishes the usefulness of thelessons learned.
Performance of ComDleted Proiects
8. Table 1.2 gives major items of key data for the PCRIPPAR projects; the general performancetrends are considered to be:
(a) with the exception of two projects 1' loans were near-fully disbursed (100% - 80%);
(b) final project overall costs generally were in the range 80% to 120% of appraisalestimates, although changes in scope occurred in a number of projects;
Ic) the project implementation schedules estimated at appraisal were always too optimistic -loan extensions took place for every project; final implementation times were betweenabout one-and-a half-times to three-times the original appraisal schedule estimate; and
2/ (1) Teheran which was a 'problem project" and the loan canceled, and (2) Bangkok, which waschanged greatly in scope.
42 ANNEX 1
(d) final IRR's given to PCR/PPAR's show somewhat lower values than appraisal estimates3/. However, the data should be treated with great caution and the differences are nottoo significant. Urban transport projects involve a wide range of actions within oneproject - infrastructure, traffic management and control, public transport facilities(including buses), paving, maintenance and rehabilitation; single, project-wide IRR's aredifficult to define either at appraisal or in a PCR.
9. Thus, quantitative indicators present a moderately successful group of projects, except forimplementation periods which were clearly too optimistic.
'Lessons Learned" as Presented in PCR/PPAR's
10. Projects contain a wide range of components - both physical and institutional. This, and thedifferent manner in which the PCR/PPAR's present the 'lessons learned' make generalizations difficult.Table 3 summarizes the main findings from each PCR/PPAR project O' and, insofar as there are generalthemes, they are considered to be the following:
(a) with the exception of the Bangkok UTP which was significantly changed in scope, mostprojects implemented most of the proposed physical works. While some changes did takeplace (e.g., the inclusion of a major, non-appraised bus terminal in Salvador under BrazilI) and while some components were poorly planned (e.g., the Western Busway in Coted'lvoire 11), the physical components proposed at appraisal appear to have been: (i)feasible, (ii) acceptable to decision makers, and (iii) overall estimated project costs weremostly of the right order, although wide variation in individual components occurred.Thus, Bank appraisal procedures for physical works, in the case of the PCR/PPARprojects, appeared to work reasonably well;
(b) institutional arrangements and components were considerably less successful thanphysical measures. Many projects established "traffic and transport units' to plan, designand supervise schemes. The PCR/PPAR's make reference to the "political' problems ofmaintaining the units, of giving the units sufficient authority to act, of staffing the units,of obtaining adequately trained staff and of sustaining those units after theimplementation of a project. The institutional problem of sustaining traffic managementmomentum and capabilities has not yet been solved. Perhaps Brazil came the closest.In the period mid-1 970's to mid-1 980's, the Brazilian Urban Transport Company EBTU,Brazil channelled federal and Bank (Brazil UTP I, IlIl and IV Projects) resources to urbantransport investment and was thereby able to promote innovative urban transportschemes and assisted greatly in establishing sound directions for urban transport inBrazilian cities (although later there was a tendency for EBTU to expandbureaucratically!'). However, following central government policy to decentralizetransport investment decisions, EBTU was disbanded;
2/ The major exception was Brazil UT II (Porto Alegre suburban train), where the internal rate ofreturn was negative but, to date, the project is atypical of urban transport projects in general andunlike the proposed project in particular.
4/1(1) Teheran is omitted since the problems were unique and are not repeated in any other projectand (2) Brazil Second Urban Transport Project (Porto Alegre suburban train) is omitted as it is notrelevant to Venezuela's Urban Transport Project.
./ The Fourth Brazil Urban Transport Project (later canceled) included proposals for reform of EBTU.
43 ANNEX 1
Table 1.2: Summary of Key Data From PCR's and PPAR's
APPRAISAL FINALLOAN CITY LOAN AMOUNT AMOUNT PROJECT PROJECT PERCENT
CREDIT AMOUNT DISBURSED DISBURSED COST US$ COST US$ TOTALREF. (for country - see Table 1i USe Millions US$ Millions 1% (million) (Mill.) COST
861 Kuala Lumpur 18.00 16.00 100% 31.61 41.18 130%937 Tunis 18.00 17.86 99% 28.62 63.43 187%962 Tehran 42.00 24.20 58% 65.90 N/A N/A
1214 Kuala Lumpur 28.00 22.00 85% 72.00 67.82 94%1282 Manila 32.00 39.50 123% 66.00 91.80 141%1347 Abidian 44.00 39.70 90% 122.30 103.90 86%1365 Bombay 25.00 25.00 100% 50.51 45.04 89%887 Madras UD 24.00 24.00 100% 62.00 62.30 120%
LOAN MONTHS FOR MONTHS FOR INCREASECREDIT CITY COMPLETION COMPLETION IN IRR IRRREF. Ifor country-ses Table 1I APPRAISAL ACTUAL TIME APPRAISAL FINAL
851 Kuala Lumpur 51 66 39% 37% 6%-30%937 Tunis 24 96 300% 18%-17% 10%952 Tehran 36 N/A N/A 28% N/A
1214 Kuala Lumpur 64 72 33% 31% 31%1282 Manila 48 84 76% 22% 8%-29%1347 Abidjan 48 84 75% 43% 38%1366 Bombay 32 80 160% 26%-40% 10%-40%887 Madras UD 54 69 28% 21% 21%
1491 san Jose 45 76 67% 37% 25%1683 Met Aresa 42 89 84% 23%-60+ % 10%-60+%1638 Bangkok 42 93 121 % 142% 128%1033 Calcutta 61 69 18% 23% ve1839 Porto Alegre 50 74 48% 19% 11%1966 14 Conurbations 42 90 114% N/A 11 N/A2048 Abidjan, Dalon and 42 6e 63%-86% 16%-41 %
Korhogo
(c) transport policy measures feature in some, but not all, PCR/PPAR projects and theirsuccess varies. For example, some failures were recorded in:
Kuala Lumpur II and Bangkok with respect to road pricing;
* Calcutta and Cote d'lvoire 11 with respect to bus fares; and
* Brazil UT and IlIl studies regarding bus deregulation and maintenance; but somepolicy measures were, at least partly, successfully achieved; for example:
Kuala Lumpur II increases in bus fares;
Bombay and Madras increases in bus fares, although not enough to meetcovenanted agreements regarding revenue/cost ratios (see below).
44 ANNEX I
(d) enforcement of traffic regulations is an integral part of any traffic management system.Few of the PCR/PPAR projects mention involvement of, or project components for, thetraffic police - only San Jose, Bombay, Brazil I and Bangkok (in which police equipmentwas included, but not procured, and some overseas 'study visits' took place). Many ofthe PCR/PPAR cite lack of enforcement as reason for individual scheme failure;
(el despite the implementation of physical schemes, there are indications that there was alack of long term commitment by some cities to accept traffic management measures orthat subsequently changed administrations rejected the traffic management approach,e.g.:
* Bangkok never implemented the full program and those measures which wereimplemented, were not enforced and were allowed to decay;
* Kuala Lumpur 11 high-occupancy vehicles (HOV) and bus priority lanes were notenforced and disappeared; the existing traffic warden force was disbanded;
Manila public transport lanes were not enforced and disappeared;
* Cote d'lvoire bus lanes were not always enforced and disappeared;
Tunis bus lanes were not enforced and disappeared;
Costa Rica did not finalize corridor schemes until public and Bank pressure forcedthe issue; and
* even in Porto Alegre (Brazil 1), innovative busways are declining in standards andeffectiveness due to apparent neglect.!'
(f) a number of projects (Bombay, Madras, Cote d'lvoire and Calcutta) invested in public busmonopoly operations (often buying buses). Except in Calcutta, all the companies arerelatively efficient with, for example, out-turns of 90 + % of the fleet and reasonablestaffing ratios and all companies made operational improvements during projectimplementation. Nevertheless, there was "government' reluctance to allow bus fares torise adequately to meet agreed revenue cost ratios (covenanted under the loan) and forfinancial targets to be met. The "political" difficulties of intervening in publically ownedbus companies are evident; and
(g) as noted in para 8.(c),project schedules were always too optimistic at appraisal. Thisappears to result from some, or all, of the following factors: (i) the difficulties ofimplementing traffic schemes - often involving coordinated action between the "publicworks department", the traffic police, the public transport regulatory authority, publictransport operators, the new traffic unit and other agencies - appear to have been under-estimated, (ii) the lack of final designs in a timely manner, (iii) lack of familiarity with Bankprocurement procedures, and (iv) the lack of counterpart funds.
Trends Since Comoletion of the PCR/PPAR Proiects
11. Since the PCR/PPAR projects were completed, trends in urban transport project preparation andscope have been:
_/ Not included in the PCR/PPAR but observed from subsequent visits.
45 ANNEX 1
(a) street maintenance components are now the norm (particularly for the LAC regionprojects) and components have been, or were, included in Bogota, Kingston, Lima, BrazilIV (now canceled) and in the First Mexico Urban Transport Project;
(b) project implementation schedules are geared to the Bank's average regional profile;
(c) as far as possible, the final designs for at least the first year of implementation arerequired for appraisal; and
(d) the role of the private sector in the provision of public transport services (mainly buses)and infrastructure management and maintenance (maintenance by contract) is given majoremphasis.
12. Within the LAC region, only three PCR/PPAR projects are available (San Jose, and Brazil I andl1l) but many other urban transport projects are under preparation, in progress, or are completed,including Bogota UTP, Lima MDP (suspended), Brazil IV UTP (canceled), First Mexico UTP, Street andMaintenance Project for Santiago, Kingston UTP, the Mexico Medium Sized Cities UTP and the MexicoCity Transport Related Air Quality Management Program (AQMP Mexico City). In addition to the pointsnoted in para 11, a number of common characteristics or directions ("lessons") are noted:
(a) based on successful programs in Brazil I and IlIl, most of the projects include a low incomearea paving program to improve bus accessibility to reduce bus operating costs and tohave a poverty impact; and
(b) transport related air quality problems are being increasingly considered and form animportant objective of the Santiago project and will be the primary objective of the AQMPMexico.
'Lessons Learned" and the ProDosed Venezuela Urban TransDort Proiect
13. The proposed urban transport project is the first to be considered in Venezuela and thus, thereis no "in-country" experience to draw upon. The design of the proposed project has attempted torecognize the findings and experience from similar projects outlined in this Annex. The main featuresof the proposed project which respond to the "lessons learned" are described in the followingparagraphs. Particular attention has been paid to the Brazil IlIl UTP which involved 14 medium sizedcities and conurbations and, to the Mexico Medium Sized Cities UTP (more than 10 medium sizedcities) which was approved by the end of 1 992. Both projects have direct parallels to the VenezuelaUrban Transport project.
14. Institutions A successful institutional arrangement will be the key to project success and toproject sustainability. In the past in Venezuela, there has been little incentive for cities/municipalitiesto undertake cost-effective transport planning and investment and cities have been starved ofresources for transport investment. The creation of FONTUR is a major advance. In addition toproviding much needed resources, FONTUR's key role will to guide transport investment in cities. Thisguidance will be exercised through the eligibility criteria for city participation (Annex 4) will governinvestment of FONTUR funds (including Bank project funds as an integral part of FONTUR's program)and through FONTUR's appraisal and supervision of city projects. The creation of FONTUR will domuch to create a new attitude to transport planning at the national and local level. Present FONTURtrends are encouraging. It has been noted in para 1 0.(b) that was a tendency for EBTU (Brazil) toexpand bureaucratically; FONTUR is envisaged as a compact agency which will (as now) use pribvatesector expertise under contract for day-to-day project monitoring, special tasks and supervision.Specific technical assistance and training programs for FONTUR have been included in the project.
46 ANNEX 1
15. At the local level, the design and operation of traffic and transport projects require expertisewhich is currently largely absent from most medium sized Venezuelan cities. To assist in overcomingthis deficiency, it will be a requirement of project participation (and of the FONTUR program generally)that a Traffic Engineering/Transport Planning Unit exists, or will be formed, in each city. Experienceshows that it takes time to build up expertise and to establish effective units; thus, each sub projectwill incorporate technical assistance to aid cities in establishing the units.
16. To further assist the long term development of traffic and transport planning, the project willinclude a national training program for traffic and transport professionals. Staff from participating citiesand national agencies will benefit from the training.
17. Maintenance. Maintenance is now a standard component for urban transport projects and theVenezuela UT project will be no exception. During project preparation, an initial review of maintenancerequirements and activities was carried out in the cities which have been appraised. The reviewenabled maintenance components to be defined with accuracy and permitted the preparation of modelterms of reference for development of maintenance components for other cities. Within the appraisedcities, the scope of maintenance components will be follows:
(a) it will be a condition of participation that each municipality/city has, or will create underthe Project, a competent road and "traffic control device' maintenance planning andimplementation capability. To realize this aim, the sub projects will include (i) technicalassistance to support the creation of the maintenance unit, and liii) equipment necessaryto establish maintenance management (such as testing equipment and personalcomputers for inventories since it is anticipated that most maintenance will be carried outby contract procedures);
(b) maintenance fails since it is often the first activity to be cut in times of financial restraintand it will be a condition for participation that each municipality/city will undertake toinclude within their annual budgets, adequate funds for the maintenance of worksexecuted under the sub projects; and
(c) to enable the new maintenance units to initiate their activities against a soundbackground, each city/municipality sub-project is likely to include financing of civil worksto correct problems of deferred maintenance,
18. Counterpart Fundina. In Venezuela, devolution of responsibilities to cities/municipalities is arelatively recent policy. At the moment, financial resource mobilization of cities is weak and the abilityof cities to find counterpart funds is severely limited. It would be unrealistic for an urban transportproject, with relatively low investments in any city, to correct the resource mobilization weakness.Thus, to limit the demand for counterpart funds and to ensure that the necessary counterpart fundsare available for successful implementation, the project proposes (i) to use a system of matching grantsrather than loans for each city (municipalities will match FONTUR's contribution), (ii) to place anemphasis on low cost schemes to reduce overall investment requirements, and (iii) to require that citiesinclude a commitment in their annual budgets necessary to meet counterpart funding needs.
19. Implementation Schedule. Long implementation, and thus slow disbursements, have beenproblems in previous projects. This may be traced to:
(a) lack of familiarity of local staff with Bank procedures. This will be particularly acute inthe medium sized cities. A training program is proposed but training programs take timefor benefits to be realized and, even then, there is no substitute for practical application.Much will depend on the capabilities of FONTUR as supervising agency. The project willrequire that FONTUR increases its staffing, employ technical assistance and provide a"consultancy" service to medium sized cities in the preparation of data necessary for
47 ANNEX 1
processing a Bank project. A Procedural Manual is also proposed to assist familiarizecities with the procedures and responsibilities involved in sub project implementation;
(b) lack of political commitment. If implementation times become protracted, politicalchanges may occur in a city and implementation could be jeopardized. However, planningand design of traffic projects is always complex, involves many agencies and takes time.These factors must be balanced. While it is a major objective of the sub projects topromote an "integrated approach" to transport planning, cities will be urged to keep subprojects as simple as possible, consistent with resolving transport problems. Shortimplementation periods will be preferred. To further ensure commitment, it will benecessary for cities to demonstrate, at appraisal, a consensus of view on the sub projectsamong the involved agencies (public works, police, planning group, public transportoperators and "political decision makers");
(c) lack of final engineering designs for physical works. It is proposed that any participatingcity should have the first year (or 25% of the sub project whichever is the minimum) offinal engineering designs (including bidding documents) available (i) by the time ofpresentation of the Project to the Bank's Board (for the first six cities which have beenappraised) and, (ii) by the time of FONTUR's appraisal and Bank review for subsequentsub projects.
20. Enforcement. A number of the previous PCR/PPAR projects listed enforcement problems as:(i) the reasons for the failure of scheme operations, and (ii) a contributory reason for the decay andeventual disappearance of traffic schemes. In the proposed project, schemes will be designed as faras practicable, to be "self enforcing", and physical rather than regulatory means will be encouraged.Moreover, under the proposed Project it will be necessary for any participating city to demonstrate thatcomponents involving traffic regulation enforcement are acceptable to the local traffic police and thatthe police are prepared to undertake enforcement.
21. However, the Project recognizes the unique problems of traffic law enforcement in Venezuelaand includes a significant national component to assist in improving the currently poor situation. Thecomponent will comprise (i) national training and technical assistance and (ii) equipment, such ascommunications and vehicles). The latter would be geared to the participating cities.
22. Environment. It will be a condition of participation that cities/municipalities undertake to adopt,and to comply with, the Article 38 of the Venezuela Municipal Government Act. This requiresmunicipalities to protect the environment and it will be necessary for municipalities to take all actionsto implement the law in respect of traffic related environmental impacts. Within each sub projectevaluation, an assessment of traffic related environmental impacts was conducted. If serious adverseimpacts are identified, remedial actions were required prior to acceptance of the relevant component.
48 ANNEX 2
VENEZUELAURBAN TRANSPORT PROJECT
The Executina Agency: FONTUR
1. FONTUR (Fondo Nacional de Transporte Urbano - National Urban Transport Fund) wasestablished on September 5, 1991, by Decree No. 1827 of the National Executive. FONTUR wascreated as a non-profit Public Foundation with the objective of promoting, developing and supportingthe implementation of urban transport programs and projects aimed at contributing to the improvementof the quality of life of the urban population especially of the low-income groups.
2. The primary objectives of FONTUR, as outlined in the abovementioned decree, are to:
* Identify and mobilize financial resources from several sources with the objective ofchanelling them into urban transport;
* Promote the financing of programs and transport projects targeted primarily at the lowincome population groups;
= Provide specialized technical assistance and promote institutional strengthening andtraining for institutions participating in its projects and programs.
* Promote the development and implementation of techniques, methodologies, systemsand procedures which support the rationalization of investment processes andexpenditures in urban transport.
3. FONTUR's first operation in 1992 was a public transport vehicle fleet renewal and upgradingprogram. This program provides financing to private bus/por puesto/jeep companies and/orowner/operators registered with the municipalities as public transport operators. The financing consistsof a one time grant of approximatelly 50% of the cost of the vehicle, a commercial bank loan at marketrates for the other 47% and a down payment by the operator for the balance. The operator is requiredto maintain the vehicle in public service for the duration of the loan to prevent him from buying thevehicle through this mechanism and, afterwards, shift it to uses other than urban transport. Themunicipality is required to enter in an operating contract with the operator. This contract will includethe requirements for provision of efficient level of service, a periodic tariff review plan, subsidymechanisms and schemes which will allow the operator to operate in conditions which account fordepreciation and cost of capital. The 50% grant to the operator is seen as a one time only grant fromGOV to compensate operators for tariffs which have been traditionally lower than the long run variablecosts and which did not allow for renewal or expansion of the fleet creating, thereby, serious peakhour capacity problems and rundown vehicles.
4. FONTUR is already providing financing for a number of short term or emergency improvementsin the major municipalities of the country. This short term improvement program is going on whileFONTUR works with the IBRD and IDB in the preparation of the medium and long term program toimprove the quality of urban transport in municipalities with more than 100,000 inhabitants. Inaddition, FONTUR is working with the mayors to implement the transfer of responsibility for theadministration of student susbsidies from MTC to the municipalities. Furthermore, in the city ofMaturin, FONTUR is testing a new system to increase the accountability of operators in the collectionof student subsidies.
5. FONTUR has hired local consultants to design its organization (see chart pg. 52). FONTUR'smanagement is well aware of the experiences in Brazil with EBTU and is making a conscious effort to
49 ANNEX 2
keep its size and staffing low and to create an image of a non political body with transparent programs,to add credibility to any financial allocation responsibilities. The Project itself will aim at strengtheningthe existing structure of FONTUR, by providing appropriate training and technical assistance at alllevels.
6. Although this is its first Bank-financed project, FONTUR is not a newcomer to internationalrelations. FONTUR has maintained close links with ABC (Brazilian Agency for Cooperation) with whichit has mounted a number of joint events. The program with ABC, which precedes the officialestablishment of FONTUR, has offered a series of short courses and seminars to FONTUR's staff andrepresentatives of the municipalities in areas such as traffic engineering, transport planning, reservedbus lanes, subsidies and financing mechanisms. FONTUR has also invited representatives of the USFederal Highway Administration to get their advice in several areas related to urban transport. Exposureof FONTUR to the municipalities has been increasing steadily through the short term emergencyprogram and there is a constant interface between FONTUR's technical personnel and the technicalunits in the main municipalities.
7. Currently FONTUR has a staff of 35 of which 33% are technical; all are based at theheadquarters in Caracas. In order to build up operational teams directly responsible for implementingthe Project, FONTUR will receive technical assistance and training. Furthermore, FONTUR will set upa Project Implementation Unit (PIU) conversant with Bank procurement, supervision and disbursementprocedures. Prior to negotiations, FONTUR will produce a Project Operational Manual which willdescribe the procedures to be followed by the municipalities participating in the proposed Credit.
8. FONTUR had a total 1992 budget of 2.7 billion bolivars (US$ 43.5 Million) of which 70% wereused to finance the upgrading and acquisition of buses/por puestos/jeeps, a major priority for thegovernment; 4% for technical assistance and institutional development of municipalities; 25% for shortterm improvements to urban transport in municipalities and 1 % for FONTUR's staff salaries, officeequipment and provisions. FONTUR's revenues are not earmarked although they come from fuel taxes.FONTUR must every year present a program and request a budget from the Executive Branch with aclear justification of the areas of application of these funds. A study to review existing resourcemobilization mechanisms and innovative allocation formulas is included in the proposed project.
9. Figure 1 shows FONTUR's organization and in the next paragraphs a description of of thefunctions of the divisions which are more likely to affect the proposed project.
Proarams Division (Gerencia de Proaramas)
10. The objective of this division is to undertake the identification, preparation, appraisal andselection of programs, submitted by the municipalities, in infrastructure, public transport andinstitutional strengthening in order to ensure their compliance with the goals set by FONTUR'smanagement. More specifically its functions are:
* to undertake the technical, economic, environmental and financial evaluation of theprojects submitted to FONTUR to assess their feasibility.
* to develop methodologies for the formulation, evaluation and management of urbantransport projects, infrastructure, public transport and institutional strengthening.
* to prepare technical assistance, consulting services and training programs in urbantransport projects.
* to offer guidelines for the preparation and presentation of programs to FONTUR.
50 ANNEX 2
* to present and propose to the technical committee the projects which comply withthe prerequisites approved by FONTUR and financial institutions.
11. The Programs Division has 3 units: Infrastructure, Public Transport and InstitutionalStrengthening.
Ooerations Division (Gerencia de Operaciones)
12. The objectives of this division are to promote FONTUR's programs with the municipalitiesand municipal bodies as well as to ensure that the projects to be financed comply with allprerequisites for their approval. Once the project is approved, to carry out the implementation,follow up and technical control of the project from the central government standpoint and its ex-post evaluation. More specifically, the main functions of this division are:
* to promote FONTUR's programs and projects at the municipal level.
* to assist the municipalities, municipal agencies, and operators.
* to participate in the supervision of works and projects under implementation.
* to undertake the technical follow-up of the contracts for studies and/or servicessigned with FONTUR and dealing with pre-investment, technical assistance, training,and to clear the payment of invoices by the treasury.
* to carry out the follow-up and monitoring of the physical execution and operationsmanagement of the projects based on the scheduling agreed.
* to coordinate with the management of the Programs division management thesupervision, technical evaluation and preparation of progress reports to verify thecompliance with targets, budgets and terms of the signed agreements.
* to undertake the ex-post evaluation of projects financed by FONTUR and prepare aproject completion report describing the lessons learned.
* to identify the technical assistance needed to promote the strengthening of theorganizations in charge of executing the programs and/or projects in urbantransport.
* to keep records on the status of each project under implementation, especiallyphysical execution and disbursements.
The Operations Division has three geographical units: Western, Central and Eastern.
Administration Division (Gerencia de Administracion de Covenio)
13. The objective of this division is to establish the interface with the financial institutionswhich provide resources for the FONTUR programs and projects, by providing them with reports onthe operating and financial progress of the projects. It will also ensure the timely flow of fundsbetween FONTUR and the executing agencies.
* It will administer the "convenios" with the financial institutions.
* It will enforce the covenants agreed with those financial institutions.
51 ANNEX 2
* It will produce and mail the follow-up reports to the financial institutions.
* It will coordinate and monitor from the financial and treasury standpoints the"fideicomisos" in which FONTUR participates.
* It will undertake all the necessary steps with the financial institutions to ensure thetimely flow of funds to the programs and projects handled by FONTUR.
* It will keep the records on the status of the 'convenios" both on its physicalimplementation as well as on its financial progress.
* It will develop the administrative proceedures which will govern the operations anddealings of FONTUR with the financial institution in each 'convenio".
This Division has 2 units: Bilateral Agreements and Fiduciary Trusts.
52 ANNEX 2
FONDO NACIONAL DE TRANSPORTE URBANO(FONTUR)
ORGANIGRAMA GENERAL
JUNTA DIRECTIVA
DIRECCION EJECUTIA]
CONSULTORIA _TJURIDICA _ CONTRALORIA
INTERNA
RELACIONES -::0: 0 00- :0:;j: GERENCUA DE k ;77 INSTITUCIONALES _ ... t; ti tt; 0 -ti- i DE
FINANCIAMIENM
PROWECT MANAaEME T
GERENCIA DEADMINI8TRACION
I I __ I T
GERENCIA DE GERENCUA DE GERENCIA DEOPERACIONES _PROGRAMAS DE CONVENIOS
REGION PROGRAMAOCCIDENTAL DE DIVISION
_ _ ~~~~INFRAESTRtUCTURA FIDEICOMISOS
REGION § | PROGRAMADE
TRANSPORTEPUBUCO
|REGION
PROGRAMADE
FORTALECIMIENTOINSTrTUCfONAL
53 ANNEX 3
VENEZUELAURBAN TRANSPORT PROJECT
Municipal Finances in Venezuela
1. This annex presents a view of municipal finances in Venezuela; Section A describes thestructure of municipal finances; Section B outlines the debt-capacity limitations to be used under theproject and provides calculations for potential borrowing as of 1991; and Section C presents thefinancial situation of the five municipalities which will be included in the project's first year program.
A. The Structure of Municipal Finances in Venezuela
2. In 1989, municipal revenues in Venezuela were roughly equally divided between centralgovernment transfers, representing 49.7% of total revenues, and own revenues, representing 50.3%of total revenues.
Transfers
3. Given the high degree of dependence on the petroleum sector, intergovernmental transfers fromthe national to subnational governments play a large role. Municipal transfers are comprised largelyof the situado municipal, part of the situado constitutional, which is a grant program funded out ofgeneral government revenues and distributed to the states according to a formula that specifies that70% of funds are allocated on a per capita basis, with the rest allocated equally across the states.As stated in the Decentralization Act, the amount of the situado constitutional is increasing since 1989by one percent per year to 20% of central government revenues by 1 994; moreover, 50% of the fundsare supposed to be used for investment projects.
4. Situado Municipal. Part of the situado constitutional is passed on to municipalities. Up to1989, municipalities had access to 5% of the situado constitutional (i.e., 10% of the 50% of thesituado the states could use to finance recurrent expenditures; the remaining 50% was to financeinvestment programs). This amount was distributed among the municipalities in the same way as thesituado constitutional: 70% on a per capita basis; and 30% allocated equally across the municipalities.The amendment of the LORM (the municipal law) increased the municipal situado which is nowcomputed as a percentage of the total constitutional situado. That percentage in increasing from 10%in 1989 to 20% in 1999 (1 % a year).
5. The 'situado' is a transparent way of distributing central government revenues to the statesbut is still far from being an efficient distributive process. It is true that the 30% equal allocationacross the states serves to increase slightly the redistributive impact of this grant program, as thepopulation of the low population states is disproportionately poor. However, a better way to pursuethis effect could be achieved including explicit measures of need --e.g., per capita income-- and of taxeffort in the allocation formula. It seems that as the terms of the situado constitutional are set in theconstitution, and that its basic structure could be difficult to change. To pursue more focusseddistribution programs, the government is considering a temporary redistribution fund. However, it maybe worth to consider a change/improvement in the formula of the situado constitutional and to avoidthe proliferation of parallel distribution funds. The main problem at present is however the lack of basiceconomic data at state level that could be used in the improved formula for the situado.
54 ANNEX 3
Own Revenues
6. The Business Tax on Industry and Commerce (PIC): The primary source of revenues at themunicipio level is a tax on local businesses -- the Patente Industria y Comercio (PIC). In the largestmunicipalities, the PIC accounts for about 60% of the local revenues. The basic structure consists ofa low rate tax on gross sales, coupled with a minimum tax and a license fee; rates in the communitiesvisited were in the neighborhood of 0.2-1.0% of sales. Despite some proposals (e.g. FUDECO) toexclude from the base the purchase of goods on which the tax was already paid, the PIC remains atransactions tax, that is, a tax on gross sales by all enterprises.
7. The Property Tax: The second major source of revenue at the local level is the property tax.The structure and problems of the property tax in Venezuela appear to be typical of many developingcountries. The tax is generally assessed on both residential and non-residential property, and the lattertype of property often faces differentially high rates. Rates are low, properties are systematicallyunderassessed and evasion is widespread. Local governments have understood this situation and arecommitted to improving the tax base. In several municipalities visited by the project team, (e.g. PuntoFijo), efforts were being devoted to creating or improving computer-based cadastral surveys in orderto make assessments correspond more closely to market values. Two problems were noticed. Thefirst one is that local jurisdictions have little if any power enforce the property tax (in contrast to thePIC, in which case non-paying businesses can be shut down). It would be urgent in thesecircumstances to provide local governments with such power, including the right to foreclose onproperties that are sufficiently delinquent in their tax payments.
8. The second problem is the political incentive to raise taxes. To address this aspect, thegovernment is considering ways to include in the situado a measure of tax effort (or the relationbetween tax collection and tax capacity) so as to 'reward' the local governments who are doing betterin terms of tax collection. This is a very interesting point which the final report will address in detailwith examples from other countries with reset to the design of the incentive scheme.There is significant potential for increasing local revenues through improved collection and increasedrates. Using a residential property tax to finance local services is widely viewed as desirable. Taxeson non-residential property can also be justified to some extent as benefit taxes; indeed, for thereasons noted above, replacing the PIC with the property tax would be desirable as long as taxes wereat least loosely related to benefits received.
9. Land Taxes. Local governments rely to a small extent on separate land taxes (sometimesconditioned on the land being vacant). In addition, some times, land values are determined separatelyfrom the values of capital improvements. This suggests some potential for increased revenues fromincreased land taxes (including reassessments). Land taxes are desirable on efficiency grounds to theextent they are used to finance 'pure' rather than congested local public services and if they offsetincreases in property values attributable to public services; in addition, they are desirable on equitygrounds to the extent that land ownership is concentrated among the rich. Increased use of land taxesis an option at the local level, although the base is relatively small to make land taxes a major sourceof revenue.
10. The Motor Vehicle Tax (MVT). The MVT, (levied on vehicle ownership) is very common in mostparts of the world. It is easy to collect and to enforce. It can be a local tax provided tax rates do notvary too much across jurisdictions --large differences tend to favor displacement of enterprises withlarge vehicle fleets-- and that the revenues are associated with the benefits, e.g., resources used tofinance urban/local road infrastructure.'
lin developing and transition countries, the Vehicle Tax has another advantage. In countries where incometax evasion is widespread and car ownership is low, a high rate Vehicle Tax on private cars has a strongredistributive affect.
55 ANNEX 3
11. In Venezuela, the MVT or Patente de Vehfculos" is a municipal tax. In large municipalities, itis the third source of tax revenue though at a great distance from the business tax and the propertytax. The tax base is a function of the size and use of the vehicle. Table 3.1 shows the tax rates forthe various types of vehicles. Public administration vehicles, as well as the vehicles of welfare andcultural associations are exempted. The tax is collected quarterly.
TABLE 3.1: VEHCLE TAX RATES ACCORDING TO TYPES OF VEIICLEQuarterly tax rates
Base Rate Additional Rate
Cars under 1000kg 25 Bs + 5 Bs per additional 500kgTrucks under 2000kg load capacity 40 Bs + 10 Bs per additional 2000kgPickup trucks under 2000kg load capacity 35 Bs +40 Bs above 2000kgTrailers under 5000kg load capacity 65 Bs + 10 Bs per additional 1000kgPublic Iransport buses under 30 seats 60 Bs + 8 Bs per additional seatPrivate transport buses under 30 seats 30 Bs +40 Bs above 30 seatsMotorcycles 15 Bs
Note: In January 1992 the exchange rate was US$ 1 = 62 Bs. In September 1993, USS 1 = 97.1 Bs.Source: Ordenanza Sobre Patente de Vehfculos, Gaceta Municipal, Santiago Mariiio, 19 Deciembre 1987, Art. 9.
12. Venezuela's MVT suffers from two major problems at present: it has not been updated in thelast 30 years and is difficult to enforce. The MTC is a flat rate defined in terms of vehicle size. In thesixties, when the average cost price was about 15,000 Bs, the owner would have paid 100 Bs amonth or the equivalent of a sales tax of 0.67%. In 1992, the same car may cost 1,500,000 Bs. Theannual tax remains at the same 100 Bs (US$ 1.61), which is equivalent to a tax rate of 0.0067%. Atsuch low rates, the tax yields and so low that do not pay collection. Incentives of local governmentsto enforce tax collection is minimal and tax evasion is rampant. The mission estimated that the MTV'syields would increase 2.5% because the account of better enforcement and 100 times if rates wereupdated to the real level of 30 year ago. In these conditions, the MVT would be the most importantmunicipal revenue source after the situado.
13. To 'rehabilitate' the MVT as a local revenue source, four steps would be necessary: (a)enforce compliance; (b) update tax rates; (c) update information/register on the base (vehicle fleet);and Id) improve tax effectiveness. The details are explained below.
(a) Enforcement compliance -- evasion of the MVT (motor vehicle tax) is widespread. Estimatesfor the municipality of Valencia (table 3.2) suggest that actual tax revenue is less than one-third of its potential if evasion were eliminated. The first condition for this to become realitywould be for local governments to gain easy access to an updated register. Before 1 987, anyrenewal of license plates (by the Direccion Nacional del Trdnsito), was conditional upon proofof payment of the Municipal Vehicle Tax in the last five years. In 1987, the law changed.Since then plate renewal is no longer conditional on the payment of tax. In addition, the newlaw has established a national registration fee (without the Municipal Vehicle Tax), since thenew national registration tax was considered to be a substitute to the local Vehicle Tax. Asa result, the periodic renewal of license plates no longer exists. Even when the car is sold,vehicle owners no longer have to pay their overdue Vehicle Tax. The requirement that themunicipal Vehicle Tax should have been paid prior to any registration renewal should bebrought back into the law.
56 ANNEX 3
(b) Update Tax Rates -- the current tax rate is low (25 Bs, or US$0.40 for a car). If tax rates wereupdated to their real level 30 years ago revenues would increase 40 times the current level.(And still be lower than in many other countries). (See Table 5.9) This increase in tax ratestogether with full compliance could make the Vehicle Tax the first source of tax revenues forthe municipalities. Any increase in rates should be determined at the central level to avoidwide variations across localities. One suggestion would be to establish a minimum standardand a margin of variation for local governments to fix their rates within a 10-20% margin.
(c) Update Information on Tax Base -- At present, Venezuela's municipalities have no way toidentify the vehicle owners who failed to register their vehicle with the local Treasurydepartment, for they have no access to the National Permanent Register for Vehicles (RegistroAutomotor Permanente), under the responsibility of the Direcci6n Nacional del Trdnsito (in theMTC). A recent study (Acedo & Barrientos, 1991) proposed that the information of thenational register should be made available to the municipalities to allow them more efficiencyin collecting the Vehicle Tax.
(d) Design a more effective system -- Since municipalities have no way to find the tax evadersthrough the National Permanent Register for Vehicles and annual registration no longer presentan opportunity to recover overdue Vehicle Tax. The only policy tool available to themunicipalities is on-the-street controls. In most countries where vehicle taxes exist, the controlis carried out by the traffic police, which has also supervision responsibilities for drivers' licenseand car insurance. In Venezuela, VT monitoring is not a responsibility of the national police.Municipal fiscal agents could monitor but they are not authorized to stop cars in the streets.To deal with this problem, the municipality of Santiago Mariiio issued warnings throughpropaganda on the local radio broadcast network. The revenues from the Vehicle Tax doubled.
14. However, the national register has several problems. Prior to 1987, the owner of a new vehiclehad to apply for a new registration card to get his/her license plates. The fee for registering a car wasabout 80 Bs. Both the registration and the license plates had to be renewed every 5 years, whichpermitted updating information on the fleet. In 1987, the system changed. The registration systembecame national and private cars were levied with a national tax of 250 Bs (US$ ) in addition to theregistration fee. Unfortunately, the new system was found unconstitutional and never worked. Thefinal result was that both the annual and the 5-year renewal scheme disappeared. The informationavailable on the vehicle fleet at present comes from the registration of transactions on new and usedcars, but it is impossible to know whether vehicles are registered and if they are still on the road.
57 ANNEX 3
Table 3.2: Potential and Actual Revenues of the Vehicle Tax(Valenia Municipality in 1989)
Sources: Carabobo vehicle flet- OCEI, Anuario estadfstco 1990, p.4 3 2."Population = Census 1990 Particular, AIquiler, Carga, Colectivo, Motocicleta.vValencia vehicle fleet has been calculad on the asumption that motorization rates ae twice as high in the
municipality than they ae in die rest of the StateTax rates - Municipio de Santiago Marijio.
15. Rehabilitating the Vehicle Tax requires that state police control and enforce payment. The finefor default could enter the state budget to help finance enforcement. To help the process two systemscould be used: one is a tag on the license plate, as in Brazil, or a sticker on the windshield like inMorocco and in France. Similar stickers, called 'calcomanles' were used in Venezuela until some yearsago. However, as inflation eroded the nominal value of the MTV, the cost of producing the stickersbecame greater than the net revenue of the Vehicle Tax. The practice of the sticker would beappropriate but the tax rates must be updated first.
16. Vehicle Tax -A Municipal tax? There are strong arguments for the MTV to be a municipal ora state tax. In line with the benefit principle, The allocation will depend on which level of governmentwill have the responsibilities for road construction and maintenance. Our opinion is that the MVT inVenezuela should be organized so as to reflect the share of local responsibility and financing ofdifferent levels of government. Unfortunately there are no good data that would allow us to make thisestimate in this report but those values exist in the country and could be used to justify an efficientsharing mechanism to help states and municipalities to finance road-related expenditures. Rates shouldnot vary too much across states in order to minimize allocative inefficiencies. Enforcement costswould remain low if it were possible to have the state police with the responsibility for its enforcement.
17. Table 3.3 compares the potential revenues accruing from the state Vehicle Tax to the presentSituado. With 'reasonable rates* and normal enforcement the MTV could increase states' revenuesby more than 70 times. This assumes the MVT on private cars, taxicabs and public transportminibuses would increase increase 100 times (to compensate for inflation in the last 30 years); rateson trucks motorcycles and buses, 50 times. Since the user charges on trucks are grossly
58 ANNEX 3
underestimated in Venezuela, as compared to their cost in terms of road deterioration, it would bereasonable to increase the VT rates as function of axle load capacity.
Table 3.3: Potential Revenues from a Stae Vehide Tax
Sources: Vehicle Fleet = OCEI, Anuanio Estadfsico 1990, p.432. Tax Rate- Municipio de Santiago MarinoMission estimates.
18. The following table compares the potential revenues from a state Vehicle Tax with a higher rateon trucks (48,00OBs on the average) to the present Situado by state. In this case the revenue fromthe tax will almost double the disposable budget of the states with the largest populations and, on theaverage, increase state budgets by 60%.
59 ANNEX 3
Table 3.4: Potential Vehicle Tax Revenues by State, 1990(In Mbs)
Sources: Fleet = OCEI, Anuario Estadistico 1990, p.4 3 2. Tax Rates Municipio de Santiago Marifio.
19. The above estimates are only indicative of the potential revenue that could be obtainedfrom a more effective Motor Vehicle Tax. More detailed analysis would be required to: identify thepotential legal and political impediments of assigning a Vehicle Tax to the states; to analyze otherdeveloping countries experience and their adaptability to the Venezuelan experience and to assess thepotential revenue expected from various systems.
Funding of Road Maintenance
20. Road Cost Recovery and Demend Management. Road user charges in Venezuela consistessentially of a tax on petroleum products, tolls on some expressway sections and major bridges, anda vehicle ownership tax, which is levied by municipalities. Tolls, which until recently were exclusivelycollected by the central government, have not been updated since these roads were opened; tollrevenues therefore are insignificant. Similarly, vehicle ownership tax rates are outdated; themunicipalities' revenues from these taxes contribute only a share of their expenditures on urban streetnetworks. Revenues from the tax on petroleum products have, as an average over the recent years,exceeded all Central government expenditures on roads. However, prices of petroleum products arevery low in Venezuela (Annex 14, Table 14.2b). If one consider this factor, there is virtually norecovery of road costs and an implicit subsidy to road users. Agreement was first reached with theGovernment under the Structural Adjustment Loan on a plan to progressively raise the prices of
60 ANNEX 3
petroleum products to international levels. This program of phased price increases was to continueunder the Public Enterprise Reform Project (Loan No. 3223-VE). Progress was made under this planuntil January 1992, when prices reached over 50% of the international levels. However, the impactof these price increases on the net disposable income of a large proportion of the population has ledthe Government to postpone and slow down further increases.
21. Fuel Taxes. Fuel taxes could be important revenue sources for municipalities (and states).From an economic point of view they should be benefit-related --that is, their proceeds should be usedto finance road-related programs such as construction and maintenance or to finance pollution controlprojects (to internalize the costs of environment degradation). The tax could have three components,central, state, and local, which would make it politically more attractive (as local governments wouldbe able to used it) and economically more efficient.
22. The allocative impact of petroleum subsidies is essentially on the use of private cars versuspublic transport. The impact on the inter-modal allocation of freight is insignificant since there are noalternative to trucking in general. The impact is therefore on traffic congestion and capacityinvestments, particularly in urban areas, rather than on pavement maintenance. Within this context,the main elements of an adequate road cost recovery and demand management policy would be to:(a) aim to at least recover the short term marginal cost of road use by the different categories ofvehicles, by maintaining appropriate road user charge levels through a combination of taxes onpetroleum products and on vehicle use and/or ownership; (b) charge appropriate tolls on expressways,preferably through concessions to private operators, responsible for operation and maintenance,capacity investments and related financing; (c) use market prices, in particular for petroleum products,in evaluating and selecting the investments to be included in the annual highway programs; and (d)disseminate adeqwuate policies and measures, including parking restraint and traffic management, toimprove the management of demand for road use in urban areas. The Highways Management projectwould help the Government to develop and implement elements (a) to (c). The presently proposedUrban Transport project would help to implement element (d).
23. Highway Maintenance Funding. Largely insufficient resources have, in the past, been allocatedto road maintenance, which led to the deterioration of the network. The 1992 budget, however,includes much increased allocations for road maintenance. In order to secure appropriate, permanentfunding for road maintenance, the Government has presented to Congress a proposal to create a RoadFund (Fundo Vial) which would receive part of the proceeds of gasoline taxation and be used partlyfor the maintenance of the primary road network. Congress, however, has not yet acted on theproposal. If the proposal would not be approved by Congress, alternative permanent fundingmechanisms would be developed under the project, considering in particular alternative sources ofrevenues such as tolls, vehicle use tax, etc., and their redistribution to the states in accordance withtheir expenditure responsibilities, and established in accordance with an agreed timetable.
B. Debt CaDacity of ParticiDptina Municipalities
24. The Low Income Barrios Project ( Ln 3495-VE) examined the debt capacity limitations of 76municipalities to assume, manage and repay loans for infrastructure investments. Assuming nearmarket rates, and medium- to long-term periods (10 years), sensitivity analysis was done to show thateven under conservative assumptions about exogenous and other factors municipalities would be ableto repay these loans. The analysis demonstrated that an annual debt service limit of 15% of totalrevenues would enable municipalities to repay loans and remain financially healthy.
61 ANNEX 3
C. Financial Situation of First Year MuniciDalities
25. The financial situation of the five municipalities which will participate in the first year program--Maturin, Merida, Ciudad Guayana, Maracaibo, Barquisimeto and 40 other municipalities werereviewed in the context of 'The Low Income Barrios Improvement Project", Loan #3495 and aredescribed in the Annex 2 of the IBRD report # 10401 -E. All the municipalities have the capacity toprovide the counterpart funds required for their subprojects.
62 ANNEX 4
VENEZUELAURBAN TRANSPORT PROJECT
SubDrolect Eliibility Criteria
Introduction
1. Urban transportation involves an integrated system of roads, traffic policies and measures(parking, traffic management, tariffs, etc.), private modes, public transport, goods transport,pedestrians and in some cases, railways and metros. A change in one component of an urbantransport system affects other components; to improve sector efficiency and quality, it is necessaryto adopt a systematic approach to planning and investment. It is FONTUR's aim to promoteimprovements in the Venezuelan urban transport sector through well planned, well directed andjustified investment programs. To this end, FONTUR has established criteria for the selection of citiesto participate in its investment programs and has also established scheme investment eligibility criteria.The criteria are described in the following sections.
City Elioibility Criteria
2. The threshold criteria of eligibility for a city to participate in the Urban Transport Program tobe financed either with FONTUR's own resources or with resources from World Bank or IBD loans havebeen defined and the conditions, with which a city is obliged to comply, are:
(a) a municipality should have a population in excess of 100,000 inhabitants; exceptionscan be considered for cities with lower populations if they are of vital economic, socialor territorial importance to Venezuela. In cases where a city includes more than onemunicipality or is a metropolitan area, the population of the most important municipalityshall be more than 100,000;
(b) the municipalities shall develop an mintegrated urban transport strategy" covering shortand medium term actions for both private and public transport. The strategy shall bein accordance with sectoral objectives and priorities established by MTC and for which,FONTUR has the responsibility for implementation. In cases where more than onemunicipality or a metropolitan area is involved, a common strategy betweenmunicipalities shall be adopted. The strategy will be developed through an integraltransport study which will be carried out in accordance with TOR agreed by FONTUR.The strategy will include proposals for:
li) a transport infrastructure and traffic strategy (parking, traffic management andother policies);
lii) a public transport strategy aimed at improving the efficiency of the publictransport system and increasing financial viability of the sub-sector; and
(iii) an institutional development strategy for traffic and transport planning andoperations; and
(iv) a maintenance development strategy.
In the cases of Barquisimeto, Maracaibo, Maturin, Merida and Ciudad Guayana onlyparts (ii),(iii) and (iv) are required;
63 ANNEX 4
(c) the creation and/or strengthening of permanent local agencies, units or groups' withresponsibilities for traffic management, road maintenance, maintenance of trafficcontrol equipment and control and planning of public transport. In cities with morethan one municipality, effective mechanisms will be required to coordinate separatemunicipality actions and the creation of a 'metropolitan" agency is the preferredoption;
(d) an agreement ("convenio") between FONTUR and the municipality shall be establishedin which:
(i) the municipality agrees to allocate sufficient resources for the program. Annualbudget allocations will include adequate budget for the maintenance roads,public transport facilities and traffic management systems and, adequatebudget for the counterpart funds necessary for the implementation ofFONTUR/Bank projects. In cities with more than one municipality, allmunicipalities will allocate sufficient resources in the appropriate categories.To assist in mobilizing the resources, the municipalities will review and revisevehicle and other transport taxes within their competence and establishmechanisms for collection and for transfer to the sector;
(ii) the municipality(ies) will take all actions necessary to protect the environmentfrom the adverse impacts of transport and to control vehicle emissions inaccordance with Venezuelan Law (Art 38, Ley Organica de Regimen Municipaland, in the case of vehicle emissions, by application of the Ley Organica delAmbiente y sus Reglamientos); and
(iii) the municipality(ies) will have completed final engineering designs anddocumentation for those components which are to be implemented in the firstyear of the FONTUR/World Bank/inter American Development Bank sub-project;
(iv) the municipality will adhere and comply with FONTUR's Operations Manual.
(v) the municipality(ies) will sign an agreement ("convenio") with the Traffic Police(Direccion de Vigilancia de Transito Terrestre de la Direccion General Sectorialde Transporte Terrestre del MTC), following model terms prepared by FONTUR,in which a clear commitment is made to carry out the necessary traffic lawenforcement functions and to provide the necessary human and materialresources to enable those functions to be performed;
(vi) the municipality(ies) will devise and carry out a monitoring and ex-postevaluation program; and
(vii) the municipality(ies) will seek approval of FONTUR before initiating anyinvestment in the transport sector with a cost of more than US$ 3 million.
(e) in the case of the Metropolitan Area of Caracas, for criteria (d), only items (i), (ii), (iii),(iv) and (v) will apply.
the organizational structure will follow one of the models developed by FONTUR as appropriatefor municipalities of varying sizes.
64 ANNEX 4
Proiect Investment Criteria
3. Any urban transport investment shall be considered eligible for financing under the UrbanTransport Program, either with FONTUR's own resources or with BID/Bank resources, provided thefollowing criteria are met. The proposed investment shall:
(a) be in accordance with the policies and sectoral objectives established by MTC, and forwhich FONTUR is the executing agent and, should form part of a city integratedtransport strategy acceptable to FONTUR;
(b) be subject to an economic and operational evaluation which shows that the proposedcomponent is an efficient and effective solution to the identified problem.
(c} have an economic rate of return of at least 12%;
(d) have been subject to an environmental assessment. In the case of negative impacts,appropriate mitigating measures should be devised and included. In the case that re-settlement of people is involved, a re-settlement plan acceptable to FONTUR, the WorldBank and the IDB shall be included;
(e) includes any necessary complementary institutional and policy action plans forsuccessful implementation and operation;
(f) no single component shall have an implementation period greater than 18 months,unless otherwise agreed by the FONTUR;
(g) include maintenance program associated with the investment to be executed under theprogram.
65 ANNEX 5
VENEZUELAURBAN TRANSPORT PROJECT
SamDle of a Suborooect ADoraisal1
City Traffic and Transport Preparation Studies
1. The proposed Bank Project will be an integral part of the FONTUR's National Urban TransportProgram. Eligibility criteria for city participation and for investment in traffic and transportcomponents have been defined in Annex 4. The Project has broader objectives than improvementof traffic conditions in the participating cities. The primary objective of the Project is to improvethe capabilities and effectiveness of both local and national institutions involved in traffic andtransport planning and operations. This will be achieved through primarily through technicalassistance to FONTUR, municipalities and traffic police and through national and local trainingprograms for professionals and technicians in the sector. Thus, while important traffic operationaland efficiency gains will be made from the city transport investments, the city sub projects are alsomechanisms to assist the general development of the urban transport sector. Given the currentstage of development of city capabilities in the sector and the current level of traffic problems inthe cities, each city sub project concentrates on relatively simple measures which can beimplemented rapidly. Thus city sub projects are not comprehensive transport programs and do notaddress all issues in the urban transport sector in each city.
2. Five cities have prepared, or in the process of preparing, sub projects. The current results ofthe preparation studies and the recommended investment proposals were presented to the Bank atAppraisal. The status of the preparation studies is as follows:
(a) the sub project preparation studies for traffic and transport measures have been inprogress since about May 1992 in the cities of Barquisimeto, Maracaibo, Merida,Maturin and Ciudad Guayana;
(b) while various technical comments remain, the sub project preparation study inBarquisimeto has been completed;
(c) the sub project preparation study is nearing completion in Maracaibo;
(d) while the studies have defined investments in Ciudad Guayana, Maturin and Merida,some additional work is required to establish the feasibility and costs of proposedinvestments with greater confidence.
3. The actions required to complete the subprojects such that they can be include in the Projectare outlined in the Action Plan (Annex 13);
City Maintenance ComDonent Preparation
4. In parallel with the traffic and transport preparation studies, an assessment has been made ineach city of road maintenance requirements (see Annex 10). The assessment has enabled a draftdeferred maintenance plan to be established for each city.
1/ A subproject description is available for each of the cities appraised but given their length only a sampleis included in the appraisal report. All the others will be in the project file.
66 ANNEX 5
City Institutional DeveloDment
5. As part of the traffic and transport sub project preparation studies, the consultants formed aview on the institutional needs in each city to implement a successful traffic and maintenanceprogram. In parallel, FONTUR have carried out a broadly based institutional study (the Role ofGovernment Study) which established model traffic and transport organizations for municipalities ofvarying size. Based on these two areas of work, a technical assistance program for themunicipalities has been defined by FONTUR (see Annex 6).
City Traffic and Transport Sub Proiects
6. The basic population, travel characteristics for each city, and a description of the transportconditions and subprojects for each city are included in Attachments (see project file) similar toAttachment A below for Barquisimeto.
67 ANNEX 5f
ATTACHMENT A - BARQUISIMETO SUBPROJECT
Part A - Urban Development
1. Location and Features The Metropolitan Area includes the cities of Barquisimeto (Municipalityof Iribarren) and Cabudare (Municipality of Palavecino). The area is located 255 km west-south-west of Caracas. The Metropolitan Area is referred to as Barquisimeto in the present description.
2. Spatial Develooment and City Form Urbanized development in Barquisimeto extends overabout 21,705 ha. The city of Barquisimeto is broadly linear in form and is located between the RioTurbio (in the south) and high ground (to the north). The older, central area of the city comprises aclosely spaced, regular grid of narrow streets with a central plaza; land use is mixed commercial,retail and lower income residential. An industrial area is located in the north west of the city andan expanding residential areas to the west. Cabudare, 5 km to the south east, is a dormitory areafor Barquisimeto. The center of the Barquisimeto is by-passed in the north by the major east-westCaracas-Valencia-Barquisimeto highway Ruta No. 1 (Ave. Libertador), and continues westward viaCarora to Maracaibo, although the road has become increasingly urban in character north ofBarquisimeto. A further east-west road, Ave. Riberehia, by-passes the city to the south; the roadhas poor connections to the city, largely as result of topography. Within the Barquisimeto areathere are few north-south road connections and some major east-west roads are discontinuous.Barquisimeto and Cabudare are linked by Ave. Intercomunal Barquisimeto-Cabudare and Ave.Ribereffa.
3. Population The population of the Metropolitan Area in 1990 was 745,000: Barquisimeto isabout 602,000 (80%) and Cabudare about 143,000. Between 1980 and 1990 a growth rate ofabout 2.6 % per year was experienced and this rate is expected to continue with a populationprediction of 935,000 by 2000. Population growth trends are towards the northeast andnorthwest sectors of the metropolitan area.
4. Main Economic Activity Barquisimeto is an important regional service and commercialcenter, and its citizens consider it the "fourth city in Venezuela", behind Caracas, Maracaibo, andValencia; industrially the city is expanding and includes major industrial zones to the northwest andwest, with railway transportation facilities.
Part B - Urban Transport Sector
5. Motorization and Mobility Motorized trips number about 850,000 million per day. Publictransport (bus and por puesto) carry about 52% and private car about 48% of trips. Of the publictransport sector, buses carry 60,000 passengers per day (21 %), and por puestos carry 226,130passengers per day (79%). The public transport fleet includes 1778 24-passenger por puestovehicles, and 77 70-passenger buses.
6. Traffic and Transoort Conditions Traffic congestion in Barquisimeto is not yet all pervasiveor severe; it is most often located at particular main junctions causing journey times to vary wiely;traffic and junction problems exist on Av Libertador (52,000 vpd, speeds from 8 to 40 kph), AvVargas (26,000 vpd, speeds from 4 to 34 kph), Av Venezuela (central area 44,500 vpd, speedsfrom 10 to 58 kph) and similar conditions apply to other roads; various main junctions alsoexperience congestion - Los Leones, Cabudare and Pate'Palo. Congestion also occurs in thevicinity of the inter-urban/urban bus terminal. Traffic accident deaths are reported at 68 in 1987and 27 in 1988.
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7. Traffic management is of a relatively good standard but the staff team in the municipality issmall and lacks resources; the traffic control system (signals) is outdated and unresponsive totraffic. Road markings are soon destroyed as conventional road paint is used.
8. Road Maintenance The road network comprises about 200 kms and is maintained by theMTC delegation. Road maintenance standards are reasonable; a sample of roads was reviewed forSub Project preparation showed that 67 km were in unacceptable condition and required someform of rehabilitation. Particular problems occur on Avenida Libertador in the left turn lanes due tohigh traffic volumes and tracking. There is no systematic maintenance planning, programming orbudgeting. In the expanding areas of the city, some bus routes in residential areas are unpaved.
9. Public Trainsort In 1992, the public transport system in Barquisimeto comprised about 77conventional buses (typical seating capacity of 45) and 1680 minibuses/por puestos (23 seats).Recently, the state government introduced 40 buses at a subsidized fare of 60% of the existingservice. However, the public transport system is private sector owned and operated and comprises21 owner-organizations. The bus fleet is not of high quality and offers little passenger attraction orcomfort. A flat fare system operates at 8B (US$ 0.1 1). There has been a trend for many years(1979 to 1990) for the number of buses to decline (179 to 77) and por puestos to increase (1007to 1680); the number of 'seats' offered has probably increased by about 35% in this period.
10. The bus system is currently regulated by the transport and traffic unit office. Franchiseconditions cover fares and routes. Although the system allows for periodic franchise renewals andfor sanctions against operators who do not comply with the conditions, actions of this nature arerarely, if ever, taken. The public transport system has developed in an uncoordinated andinefficient manner and there is agreement that reform is probably best dealt with at the Municipallevel. This will be carried out through a public transport study under the Project.
11. Traffic and Transport Institutions Road, traffic and transport matters in Barquisimeto are theresponsibility of the municipal Office of Metropolitan Traffic and Transport; the office has threedivisions (i) engineering, (ii) planning and studies and, (iii) control. The total staff of OMTTcomprises 4 professionals. OMPU and MTC also have some roles in the sector (planning majorroads, road maintenance etc).
Part C - Urban Transoort Issues and Obiectives
12. Traffic and transport problems in Barquisimeto can be summarized as:
(a) institutional - a lack of professionally qualified staff engaged in traffic and transportmatters and in road maintenance; the situation will worsen as decentralizationbecomes a reality;
(b) public transPort - poor levels of service arising from a combination of factors includingoutdated and inappropriate regulatory framework, unrealistic tariffs which contributeto a low quality service and a complex and outdated route structure; lack of paving ofbus routes in some outer areas increases operating cost;
(c) road maintenance - a lack of systematic planning which will worsen as MTC hand overresponsibilities to the municipality;
(d) traffi - although congestion and safety are not yet severe, some problems exists andsignificant benefits can be achieved with well directed, cost-effective andmanagement methods.
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13. The objectives of the Barquisimeto Sub Project are those of the Project in general, namely toimprove the operational efficiency of the traffic system, to improve the institutional capabilities ofBarquisimeto in the sector and to improve maintenance of urban transport infrastructure andfacilities.
Part D - Sub Proiect Institutional Comoonent
14. Annex 6 describes the institutional strengthening (TA and equipment) program in whichBarquisimeto will participate. Additionally, it is proposed to include a public transport study (TORsee Annex 8);
Part E - Traffic and Transgort Infrastructure and Euuioments Comoonent
1 5. The component will assist in improving the operational efficiency of the system by alleviatingtraffic congestion and by assisting public transport operations on a series of corridors and in thecentral area. Works involved include traffic management (improved junction layouts, traffic signals,revised circulation etc) applied at particular junctions or comprehensively along corridors, bus andpedestrian priority (in the central area), new road connections to correct deficiencies in thenetwork, paving of bus routes and a program of marking and signing. The proposals aresummarized as follows:
(a) Corridors The objectives of the schemes are to improve the level of service, efficiencyof traffic flows and increase safety of traffic operations on major corridors. The typeof works on each corridor are similar and include a program of signing, repaving,thermoplastic road marking, channelization and modification of junctions, bus stoprelocation, new traffic signals (mostly linked) and controllers at junctions and revisedtimings. The corridors proposed and their costs are (costs include design, supervision,works, equipment and physical contingencies - the schemes have been design to avoidany expropriation);
v Ave. Libertador -- east-west corridor between Calle 33 to the east and Ave. LosLeones to the west. (Estimated cost: US$ 2.2M.)
* Ave. Venezuela -- east-west corridor through the CBD between Calle 42/Ave.Romulo Gallegos with its connection with the Autopista Centro Occidental onthe east side. (Estimated cost: US$ 1.2M.)
* Ave. Vargas -- corridor serving north-south traffic on extreme east side of thecity, from Carrera 16 north to Ave. Libertador. (Estimated cost: US$ 0.6M.)Intercomunal Barquisimeto-Cabudare -- principal connector betweenBarquisimeto and Cabudare from Cabudare to conection with the AutopistaCentro Occidental at the roundabout; includes Ave. Lara segment from Calle 2to Intercomunal. (Estimated cost: US$ 1.3M)
(b) Conflict Points (Intersections) The objectives of the schemes are to reduce congestionand increase safety of traffic operations at major intersections on the main corridors.The works involved at each intersection include widening approach lanes, new trafficsignals, controllers and timings, modification to traffic circulation. The intersectionsproposed and are as follows (costs are included in the relevant corridor):
X Ave. Libertador/Calle 22 (Pata e Palo) (Costs included with costs for CorridorAve. Libertador, above.)
X Ave. Venezuela/Av Las Leones/Capanapro/Autopista Centro Occidental. (Costsincluded with costs for Corridor Ave. Venezuela, above.)
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Intercomunal Barquisimeto Cabudare/Ave. La Mata (Costs included with costsfor Intercomunal Barquisimeto-Cabudare, above.)
(c) Bus Terminal Area The bus terminal area is congested and buses experience difficultyin gaining access at Calle 42. In the short terms, it is to introduce a series of trafficmanagement measures including an exclusive bus access lane and revised trafficcirculation pattern for buses and traffic to ease the congestion problem. The worksinvolve changes in traffic flow directions, new road markings and signing, new trafficsignals and controllers, and new bus routes. (Estimated cost: US$ 0.3M.)
(d) Central Area Traffic Scheme The objectives of the scheme are to improve the level ofservice of traffic operations and to improve bus operations and pedestrian conditions.This will be achieved through a series of measures including revised traffic circulation,new traffic signals system (including coordination), introduction of exclusivebus/pedestrian streets, relocation of bus stops, reconfiguration of road cross sectionsand other minor traffic management works. (Estimated cost: US$ 2.1 1 M.)
(e) Access to Av Riberena The main highway to the south of the city is not usedeffectively due to poor access. It is proposed to utilize the full potential of the road byimproving the access/connections to the existing road network and by improving thejunctions. Works will involve limited road construction through difficult terrain.Geometrics will not be ideal since Av Riberena is at a low level and access to theexisting network will involve a relatively steep gradient; preliminary investigationsshow the design to be acceptable in urban conditions but will be verified at finaldesign stage. (Estimated cost: USS 2.52M.)
(f) Public Transoort Imorovement Two categories of measure are proposed. First, withthe objective of reducing the costs of operation of buses/por puestos, it is proposed topave some 28 kms of bus routes - presently unpaved. Second, it is proposed toimprove the quality of bus services by introducing bus stop shelters. (Total cost ofthe component is estimated at: US$ 4.9M.)
Part F- Maintenance Comoonent
16. See Annex 10
Part G - Proiect Costs and Financing
17. Cs The Barquisimeto Sub Project total cost is estimated as US$ 1 5.6M. The Sub Projectcost estimates (Oct 1992) have been based on feasibility plans (1:1000 scale) for physical worksand estimates for equipment; physical contingencies have been allocated at 15%; pricecontingencies have been based on projected international inflation rates of 3.7%/year. Noexpropriation is involved in the project.
18. Financina Plan The financing plan would be the same as for the Project in general (seeTable 3.3, Chapter 3).
Part H - SubProiect Evaluation
19. Economic Benefits for the majority of components (90% of total Sub Project costs) havebeen quantified in accordance with the methodology and principles described in Annex 11. It is
71 ANNEX 5
estimated that, based on vehicle operating costs savings, component IRR's range from 10% to56% with an overall figure of 27%. If time savings are included, the IRR's rise to 37% to 120%with an overall value of 73%. It is estimated that about 19% of the benefits accrue to the urbanpoor.
20. Environmental. Environmental conditions are not believed to be affected greatly inBarquisimeto by transport factors. In general it is assessed that the Sub Project will have a neutralimpact on (i) noise, (ii) segregation of communities and (iii) urban heritage. In the case of accidentsand vehicle emitted pollution, the impacts should be positive as in the former case, improvedjunction an road layout should lead to safer traffic operations and in the latter case, improve trafficoperations should lead to less congestion and thus less vehicle emitted pollutants under idlingconditions.
Part I - SubProiect Execution
21. Proiect Organization and Manaaement As defined in the SAR, FONTUR would be responsiblefor overall Project supervision. The Municipality of Barquisimeto would be responsible for day-to-day SubProject implementation matters through the strengthened Traffic and Transport PlanningUnit. The head of the Unit would also be designated as SubProject Manager.
22. ImDlementation Schedule The physical works of the Sub Project will be implemented over4.5 years.
Part J - Proiect Risks
23. The major Sub Project risk is institutional. Traffic and transport planning are relatively newfields of activity in Barquisimeto and staff involved are inexperienced. It is proposed to minimizethe risk by: (i) the creation of a Traffic and Transport Unit to provide the focus for traffic andtransport actions, (ii) ensuring adequate staff numbers, (iii) providing of full time technicalassistance to support and train the staff Isee Annex 6) , and (iv) by the provision of a NationalTraining Program (Part A of the Project) in which Barquisimeto staff must participate in order toqualify for the Municipal Strengthing Component.
72 ANNEX 6
VENEZUELAURBAN TRANSPORT PROJECT
Institutional Strenathenina ProaraM for FONTUR and Municipalities
Backaround
1. Until recently, the transfer of central government funds to local entities for urban transportimprovements was primarily a subject for negotiation between the central government and the localagencies involved. Only limited evaluation of projects was carried out. With the creation of FONTUR,the procedures of allocating federal funds to municipalities (for transport infrastructure and trafficsystems) and to the private sector (for the enhancement of the public transport fleet, mainly buses),are undergoing change. To qualify for federal funds, projects will have to be subject to evaluation andonly those which meet acceptable technical, economic, financial, environmental and social evaluationstandards. Projects must also form part of an acceptable urban transport strategy developed from anintegrated urban transport study of the municipality concerned.
2. The responsibilities and role of FONTUR in this process has been described in Annex 2.However, the role includes the promotion of national urban transport policy, the technical evaluationof projects for eligibility under the National Urban Transport Program (and thus the Bank project sinceit is an integral part) and to assist in the decentralization of urban transport functions by strengtheningmunicipalities. The structure of FONTUR and the responsibilities have been fully described in Annex2. Broadly, FONTUR has been organized into three basic divisions:
(i) Operations - responsible for promotion of municipal programs, coordination of programs,supervision of progress of programs, progress reporting to FONTUR management andidentification of technical assistance needs at local level;
(ii) Programs - responsible for technical, economic and financial evaluation of projects to befinanced from FONTUR resources, development of methods suitable for the analyses ofprojects in the Venezuelan urban context, supervision of preinvestment work )studies,preparation of projects and so on);
(iii) "Convenios" (Agreement) - responsible for administration of the "convenios" withagencies receiving funds, supervision of agency compliance with convenio agreementsand financial supervision. agencies;
3. FONTUR is a new agency and staff at this stage lack experience in the sector. Additionally,systematic planning of urban transport, apart from Caracas Metro, does not have a strong tradition inVenezuela. Thus, it will be necessary to support and strengthen FONTUR during the next few yearsto enable it to fulfill its functions effectively. It is not intended that FONTUR become a large unwieldybureaucracy and much of the routine work (such as project supervision) will be contracted to privatesector consultants. Thus, a strengthening program has been defined comprising: (a) technicalassistance - international, (b) technical assistance - national, (c) equipment (computers, software etc),(d) consultant supervision program and, (e) studies. Details are as follows.
Technical Assistance. Consultant Services and Eauipment for FONTUR
4. Technical assistance will be provided under the Project to assist FONTUR in the key technicalareas of traffic engineering, transport planning, public transport operations, infrastructure maintenance
73 ANNEX 6
management and transport economics. The technical assistance will assist FONTUR to developmethodologies, processes, work programs and appropriate methodologies to be used throughout theProgram, the Bank project and municipality studies. A prime function will be to assist in the evaluationof municipality transport investments proposed for financing under FONTUR's program and the Project.
5. International Technical Assistance. 162 staff months of technical assistance has been allocatedto the three FONTUR operating divisions at an estimated cost of US$1.92 million. This level oftechnical assistance is proposed over the first 2 to 3 years of the Project. Since this is a largeprogram, it is necessary to monitor closely its effectiveness and success. In the first instance, it isproposed that the technical assistance core team be contracted over 12 months (that is for 60 staffmonths) and that at the first Annual Review Meeting of the Project or 9 months after the appointmentof the technical assistance (whichever is the earliest), FONTUR with the participation of the Bankwould evaluate progress. It would then be decided (i) if the team as constituted is effective and if itshould continue unchanged or if it should be subject to change of skills or personnel and (ii) if theadditional staff resources (102 staff months) should be committed and to which skill area and for whatperiod. Thus, the program is:
Additional Allocation subjectTechnical Assistance Initial Contract to review
6. Terms of reference for the initial 12-month period, including general profiles for specialists ineach technical assistance area are included in the project file and will be confirmed at negotiations.
7. Proposals for the technical assistance will be solicited internationally (Venezuelan consultantswill be eligible) in accordance with Bank guidelines for consulting services.
8. It will be essential, if the technical assistance team is to be effective, that FONTUR is fullystaffed in the relevant divisions; thus, at effectiveness assurances should be received that FONTURhave appropriate staff levels.
9. Consultant SuDervision Proaram. FONTUR proposes to supervise projects through the use oflocal consultants. US$1.72 million has been allocated for the first two years of the Project, which isequivalent to 172 staff months. After this time, it is anticipated that FONTUR will carry out the work,using local consultants, with their own resources. Specimen terms of reference are included in the
74 ANNEX 6
project file; these will be modified by the FONTUR international technical assistance team as eachspecific city project or study arises and requires supervision.
10. Eauipment. An allocation of US$200,000 has also been made to provide FONTUR with officeequipment such as personal computers, traffic and transport planning software and video equipment.
Technical Assistance for Municipalities,,
11. FONTUR is aware that: li) municipalities have little capability in the urban traffic and transportsector, (ii) national consultants have little experience in the sector, and (iii) technology transfer tomunicipalities can only take place if there is a permanent technical assistance presence within themunicipalities by a combined program of national and international technical assistance. The programis described below.
12. International Technical Assistance would comprise a group of seven international consultantscontracted for two years (168 staff months) as follows:
(a) a team of two in each of the larger cities of Maracaibo and Barquisimeto; and
(b) one in each of the medium-sized cities of Merida, Cuidad Guayana and Maturin.
13. The two-man international technical assistance team in the cities of Maracaibo and Barquisimetowill comprise:
(a) a public transport specialist (24 staff months); and
(b) a traffic/transport planner (24 staff months).
14. The technical adviser in Merida, Cuidad Guayana and Maturin will comprise a transportplanner/engineer who, typically, will be experienced in working in a number of traffic/transportdepartments of a large city. Thus, 24 staff-months over two years will be required for each of the treemedium-sized cities (a total of 72 staff-months).
15. The technical assistance advisers in each city will (i) deal with day-to-day project problems suchas scheme design and planning, (ii) establish working practices in the cities, set up data bases, (iii)conduct seminars for local staff and consultants, and (iv) provide on-the-job training to the nationalconsultants (see below) allocated to each city.
16. To ensure consistency of approach in each of the cities and to provide skills which may belacking in the relatively small local teams, it will be a duty of the FONTUR international technicalassistance to provide back-up services to the municipalities.
17. Proposals for the technical assistance will be sought internationally (Venezuelan consultants willbe eligible) in accordance with Bank guidelines. Given the dispersed nature of the team throughoutthe 5 cities, an allocation of 6 staff months has been included to enable the selected firm to coordinatethe activities of the staff in each city. As with the FONTUR team, the municipal international technicalassistance will be subject to review after the first year; thus, the contract will be for an initial 12
,, Terms of Reference for the TA are available in the project file
75 ANNEX 6
month period (a total of 84 staff months) and will be subject to review and change for the second 84staff months.
18. National Technical Assistance The national technical assistance team will comprise 3 staff foreach city over a period of 4 years. The teams will be in the nature of supplementary staff for each cityfor the 4 years. After that time, municipalities will take over the financing of their own staff. Thus,the Project will include financing for 144 staff months for each city giving a total of 720 staff months.Staff will be mid-range or newly qualified transport specialists (e.g., with a masters degree but withoutextensive operational experience) who will gain practical experience and guidance from theinternational municipal technical assistance. The following specialist areas are proposed:
(a) a public transport planner;
(b) a traffic engineer/planner; and
(c) a maintenance engineer
19. Proposals for the technical assistance will be solicited nationally since it is aim to transfertechnology to local personnel. As with the FONTUR and municipality international team, the technicalassistance would be subject to review after the first year and the technical assistance contract wouldbe for the initial 1 2-month period and subject to review and change for the subsequent period. Termsof reference for this technical assistance have been prepared and discussed with the Bank.
20. Eauipment An allocation of US$ 1.2 million (240,000 for each city) has been made forequipment, computers and traffic, transport and maintenance planning software. Final needs will bedetermined by the international technical assistance team as a matter of priority.
21. Study Tours. Much has been done within Latin America in the context of urban transport,including public transport operations and planning, infrastructure maintenance and traffic managementparticularly, for example, in Brazil, Argentina and Chile. It is proposed to arrange study tours to eachof these countries to review appropriate measures. The program would be devised by the internationalconsultants. Tours could also be made to relevant cities in Europe and the USA to complement LatinAmerican experience in traffic management, public transport planning and operation and maintenancemanagement. Costs are estimated at US$ 390,000 for study tours for staff from all 5 municipalitiesto other countries.
Structure of Municipalities
22. During sub project preparation in each city, the consultants carried out an initial review of thetype of organization necessary for the successful implementation of a sub project. In parallel, FONTURhas carried out a broadly based institutional study (the Role of the Government) which, inter alia,defines model organizations in the traffic and transport sector for municipalities of varying size. It isa condition of city eligibility under the project that each municipality must have or strengthenappropriate traffic, public transport and maintenance or strengthen appropriate traffic, public transportand maintenance units. Municipalities face problems in that there is a shortage of specialized staff.In the short term, it is proposed that (i) the recommended FONTUR structure be legally established;(ii) that the head of the relevant units (traffic, maintenance and public transport as appropriate) bedesignated; and (iii) the national consultants (see para 15) provide the counterpart staff capability. Inthe medium term and before, or by the time of the mid term Project review, the municipality mustappoint local counterpart staff at a level approved by the Bank.
76 ANNEX 6
Costs of the Proaram
23. Costs of the program are estimated as follows in Table 6.1:
Municipality National TA 720 0 36 0.36 0.36 0 36 0 36 0.36 2.16
Municipality Equipment N/A 0 60 0.60 1.20
Municipality Study Tours N/A 0 195 0.195 0.39
| Municipality Sub Total 888 2.21 | 2.21 | 0.36 0.36 1 0.36 | 036 5.S5
77 ANNEX 7
VENEZUELAURBAN TRANSPORT PROJECT
The National Trainina Proaram
Backaround
1. It is FONTUR's aim to promote improvements in the Venezuelan urban transport sector throughwell planned, well directed and justified improvement programs. This will be achieved through theMTC Urban Transport Program for which FONTUR is the executing agency. The Program will providefederal (FONTUR) grants to cities on the condition that cities, inter alia, prepare an transportinvestment program and undertake an institutional strengthening program aimed at improving theprofessional level of engineers and managers involved in the provision and maintenance of urbantransport services.
2. Urban transportation planning and management in Venezuelan cities is not carried outsystematically. The cities lack not only appropriate organization, but most importantly, lack personnelwith the ability to plan systems, to analyze alternative solutions and investment programs, to manageand to maintain transport systems. In order to improve the level of urban transport planning andmanagement in Venezuelan urban areas generally and in the 20 cities which FONTUR has identifiedas first priority, a training program has been defined and will be implemented under the Program andwithin the Bank project.
National Trainino Proaram Obiectives
3. The objectives of the National Training Program (NTP) are as follows:
(a) to train, in a short time, a nucleus of professionals such that they haveunderstanding of urban transport issues, urban transport planning, methodologiesfor analyses (operational, economic, etc) of alternative transport and traffic actionsand such that they are able to prioritize transport investments;
(b) to develop the staff capabilities required to improve urban traffic planning,engineering and management practice, and;
(c} to promote and strengthen the technical staff capabilities in the urban traffic andtransport sector through permanent training programs.
4. To accomplish the objectives, an integrated National Training Program (NTP) is program isenvisaged. The NTP will cover training for professionals, training for administrators and managers,training for technicians and for public transport operators. The program is described as follows.
Intensive and Foundation Courses
5. The Intensive Course - intensive courses of about 4 months duration are proposed aimed atengineers, economists and urban planners with the objective of providing basic training in planning forurban transport, including public transport. The courses will be devised and run by experiencedprofessionals with practical knowledge in the field and participants will be drawn from FONTUR andthe municipalities.
78 ANNEX 7
6. The Intensive Course will comprise five modules: i) Transport Planning, (ii) Traffic Engineering,(ONi Traffic Management, (iv) Transport Economics, (v) Public transportation. Each module would bedivided into a series of lectures on specific subjects. Details of the modules are:
(a) Transoort Plannins - the module would cover the following aspects: objectives of urbantransport; aims of regional and urban planning and their interaction; urban transportplanning methodologies; modeling urban transport demand characteristics and flow;consideration for model selection; data needs and geographic considerations; surveys andsampling; preparation of alternative scenarios and characteristics of urban transportsystems; available software evaluation; comprehensive planning output; evaluation andthe preparation of investment programs; workshops would be expected in all areas;
(b) Traffic Enaineerino - the module would cover the basics in: the design of urban roads andexpressways; traffic surveys and methods of application; traffic flow characteristics; roadand signalized intersection capacity and intersection design (priority, grade separated,signalized); the use of state of the art software for calculation of levels of service;demonstration and exercises in use of software packages; workshops would be expectedin all areas;
(c) Traffic Manaaement - the course would cover the traffic administration aspects including:road traffic safety data and planning; signing and marking; design and policy planning forparking; priorities and reserved systems for road based public transport; pedestrianschemes; bicycle schemes; planning for goods vehicles; software and its application forshort term planning; workshops would be expected in all areas;
(d) Public Transoort - the module would cover the basics in: characteristics of publictransport systems, (taxis, por-puestos, buses, light rail, metro systems); definition of levelof service; public transport route planning; public transport line planning; public transportoperations; regulation and privatization issues within the Venezuelan regulationframework; public transport company operation considerations (operations, tariffstructures and profitability); workshops would be expected in all areas; and
(e) Transoortation Economics - the module would cover the basics in: methods for evaluatingprojects; vehicle operating costs and time related benefits; externalities; with and withoutevaluation process and considerations; sensitivity analysis; growth consideration; theevaluation of single projects; first year benefits, net present value, internal rate of return;priorities and the preparation of investment programs; workshops would be expected inall areas
7. Each module would contain lectures, workshops, exercises and laboratory sessions and, ifappropriate, field exercises.
8. The duration of the Intensive Course would be 4 months with a regime of 40 hours of lectures,exercises, workshops and laboratories each week. Thus, each module is estimated to be of about 100hours duration for an Intensive Course total of 500 hours. The final preparation and delivery of thecourse will be contracted and final details will be determined by the contracted course presenters.
9. Foundation Course A foundation course will be provided for participants of the Intensive Course.The course will of about 160 hours duration and thus last about 4 weeks. The course will include anintroduction to personal computers, the use of basic software packages, basic statistics and basiceconomics. The Foundation Course will be developed and presented by the same providers as theIntensive Course.
79 ANNEX 7
10. Intensive Course and Foundation Course Procurement Final development and provision of thetwo courses will be sought from qualified organizations on a competitive basis. The procedures to befollowed are set out in Attachment A, 'Prequalification of Organizations for the Development ofFoundation and Intensive Courses for the national Training Program'. Proposals will be sought fromnational and international organizations. So that technology transfer is achieved, internationalorganizations will be required to seek active participation of a Venezuelan university (or similar instituteor organization). The procedures would be in accordance with the Bank procedures for theprocurement of consultant services.
Manaaers/Administrators Courses
11. The courses would be aimed at supervisors and managers in municipalities and in FONTUR. Theaim is to provide a greater understanding of urban transport issues and procedures. The courses wouldcover management and administration of transport projects, preparation of budgets, project execution,structure and legislative organization of the sector. Courses would be limited to 25 participants andwould have a duration of about 40 hours.
Technician Courses
12. The courses would be at city level and would be aimed at technicians in the sector with the aimof developing familiarization with basic techniques used in the analysis of the sector. The courseswould cover geometric design and channelization, analysis of road and signals capacity, road marking,signing, accident analysis, parking control, bus operations, public transport tariffs, financing urbantransport priority for public transport, management of public transport. The course would be about80 hours duration.
Loaistics Course
13. The course would be at city level and would be aimed at technicians. The course would coveruse of microcomputers, traffic surveys and control and operation of public transport. The coursewould be about 40 hours duration.
Public Transport Operator Trainins
14. The course would be aimed at administrators, operators and those responsible for themaintenance of the public transport fleet. The course would cover bus company administration,personnel management, routine company operations, defensive driving, basic mechanicalunderstanding, public relations, transport legislation, and municipal legislation affecting publictransport. The course would be of about 40 hours duration.
Proaram Evaluation
15. The Bank project would finance an Evaluation of the National Training Program to determine theimpact of the various courses. The aim would assess the success of courses and allow for theiradjustment and improvement during and after the program.
80 ANNEX 7
Traininn Abroad
16. The objective of training abroad is to increase the specialist skills in urban transport planning andtraffic engineering in Venezuela and to assist the development of the profession in the sector. Theareas of specialization and the location of overseas training would be determined by FONTUR, with theassistance of their technical assistants, during the Project implementation period. At this stage,training of about 3 months duration is proposed for each of about 16 professionals. The professionalswill be selected for the program by a committee established by FONTUR for this purpose. It isproposed that a participant should enter an obligation to work for two years in the organization fromwhich they come once the training has been completed.
17. Selected successful participants from the intensive course or professionals with comparablebackground from FONTUR would be eligible for overseas study specialize in specific sector areas suchas transport economics, urban roads, public transport operations, transportation modeling, etc.
Execution of the Courses
18. The courses would be initiated in 1994 and repeated in 1995 and 1996. Details of the proposedchronogram and participants are as follows:
(a) Intensive and Foundation Courses - to be held three times, once in 1994, in 1995 and1996. Thirty professional would participate in each year; they would stay in the city(location to be decided) where the courses was delivered for the full duration of 5 monthsand attend all lectures, practical, workshops and laboratories;
(b) Manauers/Administrators Courses - the courses would be held regionally in Venezuela (inthe centre, east and west), once per year for three consecutive years starting in 1 994.Participants would stay throughout the course in the selected city; places would beoffered to all municipalities in the region at the beginning of the year and FONTUR wouldprepare a basic program including selected city, detailed contents, duration etc;
(c) Technician Courses - the courses would be held regionally in Venezuela (in the centre,east and west), once per year for four consecutive years starting in 1994. A city wouldbe selected for the courses and participants would stay throughout the course in theselected city; the number of places would be determined on the basis of municipalitydemand; FONTUR would prepare the program at the beginning of each year;
(d) Logistic Courses - the courses would be held in 20 cities in Venezuela during 6 years,with 5 cities per year. In 1994, the courses would be held in the 5 cities within whichBank projects are to be executed.
(e) Public Transport Ooerator Training - the courses would be held in 20 times 4 times peryear throughout 6 years from 1 994 to 1 998. It is programmed to give the course toabout 25 persons on each occasion.
81 ANNEX 7
ResDonsibilities for Mananement. Preparation and Delivery of Courses
19. Responsibilities are as follows:
(a) Mananement - FONTUR will be responsible for (i) preparation of all terms of reference,short listing procedures, evaluation of proposals, contract negotiations etc for consultantsto prepare and deliver the courses, (ii) all course administration such as publicizing withmunicipalities, selection of participants, selection of regional centres for the courses.arranging participant accommodation, program planning and scheduling and (iii) theprocurement of all hardware required by the course (such as visual display equipment,computers etc) unless otherwise specific din the consultants terms of reference. FONTURwill be assisted in these tasks by the their technical assistance team;
(b) PreDaration of Curriculae and Course Contents - consultants (organizations or firms oruniversities) would prepare all courses in response to FONTUR's terms of reference; and
(c) Deliverv - consultants (organizations or firms or universities) would prepare all courses inresponse to FONTUR's terms of reference. The delivery would include the provision ofall course material specific to the course such as lecture notes, workshop materials etc.
Costs of Courses and Proiect Particioation
20. It is proposed to fund all courses under the Bank project. The exception will be that the Projectwill not fund salaries of participants; these will be met by the parent organization. Based on thisprinciple the costs of the program are estimated as follows;
Table 7.1: Summmary of National Training Program Costs(US$ Millions)
Expenses for Expenses for Number TotalTRAINING COLURE Preparation Delivery Delivery Participants Courses Cost
Intensive and Foundatlon 0.066 0.132 0.036 0.590 3 2.34
Logistic Development 0.004 0.008 0.001 0.027 30 1.08
Public Transport Operator 0.004 0.008 0.001 0.027 60 2.16
TOTAL OF PROGRAM 7.22
82 ANNEX 8
VENEZUELAURBAN TRANSPORT PROJECT
Institutional Development and Policy Component Studies
1. The Institutional and Policy component of the proposed project will be undertaken both at thecentral government level {Parts Al and A5) as well as at the municipality level (Part A3,B4). Thesestudies will recommend plans of action which are necessary to ensure the policy reforms sought withthe project. Next, an outline of the studies planned is given.
A. Studies at the Central Level
2. The studies required at this level are intended to strengthen FONTUR as a central agency forfinancing urban transport, to provide recommendations on how to mobilize and allocate resources forfunding of future projects, to review the federal subsidy policies and recommend changes, to reviewand recommend changes in DGSTT'S responsibilities for urban transport,to recommend changes in thetransit law.
Review gf FONTUR's Orcanizational Structure
3. Although FONTUR's organizational structure described in Annex 2 responds to the immediateneeds of an organization of this type, it is recommended that foreign consultants who worked in similarorganizations in their countries, prepare a review and detailed analysis of the functions and jobdescriptions for the key divisions and posts of the organization. This review and fine tuning will takeinto account that FONTUR should be a small organization, with very transparent procedures to allocatefunds to municipalities and capable of evaluating with authority from the technical, economic andfinancial standpoints the proposals submitted by the municipalities. The study will also propose howFONTUR should function to carry out its evaluation and supervision tasks, whether it should do it inhouse or through consultants. FONTUR has hired a local firm to prepare its original organization butit is felt that the team lacked specialists in central organizations of this type. This review should notrequire more than 8 person weeks and must be ready prior to negotiations for approval by the Bank.
Review of DGSTT's Organizational Structure
4. DGSTT is the MTC directorate in charge of land transport and its three divisions (ing. detransito, transporte and vigilancia) have responsibilities in urban transport which are not very clearsince the decentralization of responsibilities to municipalities took place. In addittion, the DGSTT'splanning office is responsible for the formulation of policies. This study will review the existingstructure and propose changes in the attributions of DGSTT, ensure a formal coordination withFONTUR and will recommend after discussions with DGSTT and FONTUR the basic text for ammendingthe reglamento organico of the MTC. This study should not require more than 3 person months with1 person month of an expatriate consultant with experience in this area. The study should be readyprior to effectiveness.
Resource Mobilization and Allocation Procedures
5. FONTUR's capability in mobilizing funds and its transparency in allocating and chanelling themto the municipalities will be two of the main aspects by which its credibility will be judged. FONTUR's
83 ANNEX 8
funds are not earmarked and therefore every year FONTUR must prepare and justify a budget to bediscussed with Congress. This might be an unreliable source of funds. How can a minimum amountbe guaranteed for urban transport? Once the funds are obtained the problem is how to allocate them.The criteria and allocation formulas must be carefully studied to ensure equity between the severalparts of the country, to promote public transport rather than the automobile, to favor private versuspublic ownership, to foster environmentally friendly solutions and to reward municipalities which takesteps towards reducing regulatory barriers. This study will require not more than 12 person monthsof which 6 person months of expatriate inputs by specialists with experience in this area. The studyshould take place after effectiveness but be ready not later than 12 months after signing.
Review of National Subsidies
6. During the preparation of the proposed project, a quick study of subsidies was undertaken andsome of its recommendations, especially those concerning the student subsidy, are being tried on apilot city. However, the fact remains that there are a number of national government subsidies suchas the student subsidy, the special fares for military and old age citizens, the bono de transporte, thegrants to finance acquisition of new vehicles, the payment of depreciation and cost of capital of themetro system, and the fuel subsidy. Although some of these subsidies might be justified in the shortrun, their gradual elimination in the long run will be desireable. A review of the subsidy policy fromthe macroeconomic standpoint and its weight on the national budget is necessary. To protect the lowincome classes for which home-to-work-trips may cost a sizeable percentage of their household incomethe targeting of some subsidies might be justified. But what cannot continue is a system in which faresare set below costs and both users and operators are subsidized. This study will investigate in detailthe validity for and costs of the existing subsidies, will propose ways to increase their targeting or theirelimination and will recommend an action plan and timetable for the proposed measures. The studywill analyse the relation between variables such as fares, vehicle operating costs, household income,minimum salary, typical home-to-work trips, fuel costs, etc. This study would be carried out by arecognized world specialist in this area and should take 12 person months of which 6 person monthsof a local specialist. This study should be ready not later than 12 months after the signing of the loan.
Review of the 'Lev de Transito"
7. The present Ley de Transito is outdated and needs to be revised to allow effective enforcementof traffic regulations. Previous attempts to ammend the law were not successful, may be because notadequate time and expertise was dedicated to update that law on th basis of experiences in othercountries. This study will produce a draft of the new law for discussion and all the supportingdocumentation required for the hearings. This study will require a maximum of 12 person months andshould be ready not later than 18 months after signing.
National Manaaement Information System for Urban TransDort
8. This study will consist in the design and pilot implementation at the national level, of amanagement information system on urban transport. The system will include a data base of statistical,operating and financial information provided by the municipalities on the basis of standardquestionnaires which will be updated on a period basis. This data base will allow FONTUR to measurethe progress achieved by the municipalities towards agreed goals and will serve as an input for theannual allocation of funds. The study is expected to require 12 person months and be prepared overa 3 month period.
84 ANNEX 8
B. Studies at the Municipal Level
Integral Plans
9. The centerpiece of the studies at this level is the Integrated Urban Transport strategy whichincludes: il a traffic management study with the identification, selection and technical and economicevaluation of the low cost measures required for improvement of the traffic conditions in themunicipality; ii) a public transport study which will address all the regulatory aspects of public transportin the municipality such as market entry, route and fare regulation, subsidy policy, service to sparselypopulated areas, type of vehicles, private versus public organization, to mention only some; iii) aninstitutional study which will address the type of organizational units which must be set up at themunicipality level to handle traffic management, public transport and road maintenance/ construction;and, iv) a detailed study of the deferred road maintenance needs of the municipality and of the roadpaving and new construction required in the municipality.
10. For the cities already appraised only part {i) above was done. As a condition of elegibility theother parts must be completed and discussed and approved by the municipalities 6 months prior to midterm review. At mid term review, FONTUR and the Bank will examine the progress and willingness ofthe municipality to implement the recommendations of the study. For the new municipalities applyingto the program, the preparation of the integrated urban transport strategy is a requirement to qualifyfor any funding. The integral urban transport strategy should not require more than 12 person monthsfor cities other than Caracas broken down as follows: part i) 4 person months; part ii) 3 personmonths; part iii) 2 person months; part iv) 3 person months. Of the total 12 person months at least50% of parts i),ii) and iii) must be done with expatriate consultants with experience in Bank projects.The cost of each integral urban transport strategy should not exceed US$ 150,000.
institutional Study for The Caracas MetroDolitan Renion
11. The existence of 5 municipalities in the Caracas metropolitan region, without a common bodyin charge of joint traffic and transport coordination, is one of the reasons why tariff and modalintegration are difficult if not impossible. The only exception to this are the federally ownedMetro/Metrobus systems which are not under the jurisdiction of a single municipality. This study willconsist of a thourough review of the institutional framework in the Caracas Metropolitan Region andthe recommendation of an agency with proportional representation which would coordinate theplanning, financing and operation of urban transport in the Caracas Metropolitan Region. This studywill be undertaken over a 12 month period and will require 18 person months.
Motor Vehicle Emissions Control Study
12. This study will evaluate the present situation and trends in air quality and transport related airpollution in Caracas; develop an integrated transport air quality management strategy and prepareselected elements of the strategy for possible financing by the World Bank, the Global EnvironmentalFund and/other multilateral and bilateral sources. This study is expected to require 15 person monthsover a period of one year.
Leaal Framework for Public Transport
13. This study will design the legal framework for public transport at the local level. In fact,although the municipalities are responsible for urban transport, there is no basic legal framework at the
85 ANNEX 8
municipality level to define the responsibilities of the municipalities and of the operators. This studywill produce legal texts which could be used as models by the municipalities to create the legalframework required for the provision of urban transport services. This study is expected to require 1 2person months.
Accident ReDortina System
14. This study will define the accident reporting systems to be used in each municipality by thethe traffic police and the type of annual reports to be prepared to identify areas for improvement. Thisstudy is expected to require 6 person months.
Table 8.1: Summary of Institutional and Policy Component Studies
NumberName of person Estimated Cost To be completed by
months in $ 1000's
CENTRAL LEVEL
FONTUR organization 2 24 Negotiations
DGSTT organization 31 Effectiveness
Resource Mobilization and allocation 12 120 8 months after effectiveness
Review of National Subsidies 12 120 8 months after effectiveness
Review of Ley de Transito 12 9S 12 months after effectiveness
UT Management Information System 12 9e 8 months after effectiveness
MunicipalIty Level l
Integral plans:
Cities already appraised 6-9 640 13 months after signing of subprojectagreement
Cities not yet appraised 8 12 864 13 months after signing of subprojectagreement
Institutional study for the Caracas 18 270 36 months after loan effectivenessMet. Region l
Caracas Motor Vehicle Emissions 10 250 36 months after loan effectivenessControl
Public Transport Local Legal 12 144 to be discussedFramework
Accident Reporting System 8 72 to be discussed
TOTAL 221 2827
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VENEZUELAURBAN TRANSPORT PROJECT
ATTACHMENT 1- Public Transoort Study - Outline Terms of Reference
Backaround.
1. In late 1 989, the Venezuelan Government began to transfer various responsibilities to the stateand municipal Governments, in accordance with its policy of power decentralization and the newmunicipal law. In September 1991, it created the National Fund for Urban Transport (FONTUR), whichis now responsible for the development of national urban transport strategies and for the allocation ofGovernment funds budgeted for urban transport.
2. Public transport in Venezuela's cities is provided by a large number private operators, who aregrouped into trade associations for bus and por-puesto (minibus and passenger car) owners. Fares arenow controlled by local Government; in order to keep them low, the national Government gives grantsfor vehicle purchases and monthly operating subsidies and, in about 5 cities, local Government ownsand operates subsidized public transport services. This is at odds with an overall policy to graduallyremove subsidies and other measures which cause price distortions and inefficiencies in Venezuela'seconomy.
3. One of FONTUR's concerns is to reconcile the transport needs of the urban poor and the long-existing custom of subsidized fares with the requirements of a modern market economy and the needto provide adequate and sustainable urban transport. In collaboration with the World Bank and theInter-American Development Bank, it has developed a $300 million program of urban transportimprovements. The study specified in these terms of reference is a part of that program; theconclusions to be drawn from the study will be a key element of the Mid-Term Review of the WorldBank supported project. Currently scheduled for September 1995, the mid-term review will examinethe achievements of the project's first two years and confirm (or modify) the overall project scopethereafter.
Study Obiectives.
4. The study will focus on municipal government policies regarding the creation of an enablingenvironment (regulatory and cost-recovery framework, etc.), which is required for the developmentand sustained operation of a predominantly privately owned public passenger transport system in(name of city) Its principal goal will be to assist the municipal authorities in developing a short-termaction program which will be discussed with FONTUR and the World Bank at the Mid-Term ProjectReview in about September 1995. Its specific objectives are:
a. to review the existing public transport characteristics in (name of city) and define short-term strategies to:
i. ensure adequate and competitive public transport services on a financially andoperationally sustainable basis;
ii. reduce government subsidies over a 3-year period by a combination of (a)reduced operating costs, (b) fare restructuring and/or deregulation, (c) cross-subsidies from within the urban transport sector, and (d) if needed, targetedGovernment subsidies to needy users of the public transport services.
87 ANNEX 8
iii. maximize safety; and
iv. minimize air pollution and other negative effects on environment.
b. to define and evaluate 2-3 policy options for reforming public transport in Iname ofcity) and desrcibe them in such a manner that the municipal Government can make arational selection and decision; and
c. to develop an implementation program and monitoring system for transitioning to thereformed public transport framework selected by the municipal Government.
Basic Study Anoroach and Timetable.
5. The study will consist of three phases which are divided by short periods during which themunicipal Government, FONTUR, the unions, users associations and the World Bank will review andcomment on the consultant's interim reports. They are:
Phase A: Data collection and detailed study design. Inception Report, to be submitted 2months after study begins. About 20% of total study effort should go into thisphase (Months 1-2).
Comments: Within 1 month, the Municipality, FONTUR, unions, user associations and theWorld Bank will provide comments on Inception Report (Month 3).
Phase B: Evaluation of public transport characteristics, regulations and financial aspects.Definition of 2-3 policy options for review and selection by Government.Evaluation Report, to be submitted 3 months after Phase B begins. About 60%of total study effort should go into this phase (Months 4-6).
Comments: Within 1 month, the Municipality, FONTUR, unions, user associations and theWorld Bank will provide comments on Evaluation Report. Within a furthermonth, Government will decide which policy option it wishes to pursue.FONTUR will authorize consultants to begin with next phase (Months 7-8).
Phase C: Develop implementation program and monitoring system. Submit Final Report1 month after Phase C begins. About 20% of total study effort should go intothis phase (Month 9).
ScoQe of Study.
6. The study's scope of work will comprise at least the following items:
Phase A:
a. From existing statistics and other available data, prepare an inventory of the currentpublic transport situation, including:
- route structure and travel demand- users' profile (income etc.)- modal split by public transport type
trip purpose- overall origin-destination pattern
88 ANNEX 8
vehicle fleetvehicle ownershipoperational dataaccidents/safety managementfaresoperating costs for different vehicle typesfinances (including subsidies)programmed improvements.
b. Describe the existing regulatory framework.
c. Describe and assess the role of Government, at national, state and municipal levels.
d. Describe and assess the role of unions, route associations and other tradeorganizations.
e. Estimate revenues (taxes etc.) and expenses (subsidies, investments etc.) of thenational, state and municipal Governments for public transport in (name of city) for1989, 1990, 1991, 1992, 1993 (actuals), 1994 (estimated) and 1995 (budget).
f. Analyze the conclusions of the Review of National Subsidies, scheduled to becompleted in September 1994.
g. Produce Inception Report (in Spanish), describing results of data collection and outliningwork program for Phase B (taking into account the National review mentioned above).
Phase 8:
h. Evaluate structure of public transport industry.
i. Evaluate capacity and economic effioiency of public transport system.
j. Evaluate safety aspects of public transport.
k. Evaluate environmental aspects of public transport; consider possible fiscal policies toachieve environmental objectives.
I. Conduct affordability analysis for low-income users.
m. Define fare and subsidy policy options such as: reduce government subsidies over 3years, consider system of variable fares and variable service standards, assess methodsfor targetting subsidies, etc.
n. Define options for regulatory structure: define functions of regulations (safety -emissions - service standards - tariffs - cross-subsidy mechanisms etc.). Define rolesof various government agencies and trade associations. Define enforcement andtaxation mechanisms. Address such issues as market entry and possible cartelformation. Suggest how cartels can be avoided.
0. Evaluate the above options, according to such criteria as sustainability (operational andfinancial), environment, safety, public acceptability, adaptability to long-range plans(such as busways), traffic congestion, economic efficiency, etc.
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p. Formulate 2-3 policy options (and decribe their expected implications) for decision ofthe local government.
q. Describe findings of Phase B in Evaluation Report (in Spanish).
Phase C:
r. Identify and define steps to implement policy reforms selected by local Government.
s. Agree with local Government on a timetable (not exceeding 3 years) to implementreforms and phase out subsidies.
t. Estimate budget requirements of the local and national Governments for that 3-yearperiod.
u. Define monitoring mechanism.
V. Prepare Final Report (in Spanish, with English summary).
Study Arranaements:
7. The study will be conducted by a team of two transport consultants, (one from Venezuela andone from abroad), assisted by staff from FONTUR and the relevant municipality. The two consultantswill be contracted individually by FONTUR, who will use its best judgment to select two competentand compatible professionals. They will be jointly responsible for the quality and timeliness of theirreports.
8. The Venezuelan expert should have an academic degree in a related subject and have at least5 years experience in transport planning or operations. He should be familiar with conditions in thecity of (insert name).
9. The foreign expert should have an academic degree in a related subject and have at least 10years experience in the policy aspects of urban public transport operations. He should be personallyfamiliar with the World Bank's urban transport criteria and/or recent deregulation measures in foreigncountries. He should be able to conduct technical conversations in Spanish.
10. Three freestanding studies of this type are envisaged: (a) for Maracaibo, (b) for Barquesimetoand Merida, and (c) for Ciudad Guyana and Maturin. The consultants will establish their respectivestudy offices in one of these cities to ensure frequent contact with the city's decision-makers andtransport operators. Each of the three study budgets would allow for 3-5 months for the foreignexpert (three trips to Venezuela), 3-5 months for the Venezuelan expert, and a modest amount for datacollection and report production. In addition, similar studies will be made in the context of larger-scaleurban transport studies envisaged for further cities, yet to be selected.
90 ANNEX 8
VENEZUELAURBAN TRANSPORT PROJECT
ATTACHMENT 2 - Outline TOR for the Motor Vehicle Emissions Control Studyfor Caracas
Obiectives
1. The main objectives can be described as follows:
li) to evaluate the present situation and trends in air quality and transport-related airpollution in Caracas
(ii) to develop an integrated transport air quality management strategy
(iii) to prepare selected elements of the strategy for financing under a future Transport AirQuality Management Project, the Global Environmental Fund, and/or other multilateraland bilateral sources.
Scope of Work
2. Collect, review, and compile available data on the following as they apply to MetropolitanCaracas:
- air pollutant concentrations and air quality- air pollutant emission inventories- emission inventories of global warming gases* vehicle populations and growth rates by vehicle type- vehicle-kilometers travelled by vehicle type- vehicle emission factors by type* vehicle fuel consumption- fuel composition and characteristics- refining industry structure and characteristics, as these relate to ability to produce and
costs of producing reformulated fuels- usage and economics of alternative fuels, specifically natural gas, LPG, methanol,
ethanol, and ethers
Identify gaps or shortcomings in the data, and recommend additional studies or researchnecessary to fill these gaps.
3. Evaluate the feasibility, costs, effectiveness for reducing emissions of air pollutants and globalwarming gases, and cost-effectiveness of potential motor vehicle emission control measures, including(but not limited to):
- emissions standards for new vehicles and engines;- gasoline vapor recovery;- changes in gasoline formulation (lead, oxygenates, sulfur, volatility);- changes in diesel fuel formulation (sulfur, aromatics);- retrofit of existing high-use vehicles;- replacement of existing high-use vehicles;- use of alternative fuels with appropriate emission controls;
91 ANNEX 8
- vehicle inspection and maintenance (I/M);- traffic management;- improvements in public transport; and- fuel taxes, vehicle emissions taxes, and other economic instruments.
Identify areas of uncertainty in the evaluation, and specify research needed to resolve thisuncertainty.
4. Based on the results of the evaluations in Task 2, the consultant shall recommend and justifyan integrated transport air quality management strategy, comprising a set of cost-effective andmutually-reinforcing emissions control measures, together with any necessary improvements in airquality monitoring and modeling, emissions inventories, and other improvements needed to support theair quality management program. The consultant shall document these recommendations in an interimreport. This report shall be discussed with the Government and the World Bank, and agreementreached on a strategy and program before proceeding with the remainder of the tasks.
5. In consultation with the Government and the World Bank, the consultant shall identify fromamong the components of the program developed in Task 3: (a) a subset of measures - primarilyinvestments - to be financed by the World Bank under the proposed Caracas Transport Air QualityManagement Project; (b) a subset of measures to be proposed for financing by the GlobalEnvironmental Fund; (c) a subset of measures to be proposed for funding under other availablemultilateral and bilateral assistance programs.
6. For each of the measures identified in Task 4, the consultant shall carry out the necessarypreparatory steps for funding. For investment measures, the consultant shall prepare detailedequipment specifications and procurement plans; for technical assistance and studies, the consultantshall develop detailed Terms of Reference.
7. The consultant shall prepare a comprehensive final report.
Qualifications
8. The consultant staff assigned to the project, especially the Project Director, should havedemonstrated extensive experience related to motor vehicle emissions control, air quality planning, andstrategy development. Specific, demonstrated experience is required in evaluating costs, emissionsimpacts, and cost-effectiveness of vehicle emissions control measures such as emissions standards,I/M, fuel reformulation, and alternative fuels. The consultant should also have demonstratedexperience in evaluating economic and policy instruments relating to vehicle emissions, such asgasoline taxes, and in planning and preparation of emission control programs. Experience in theseareas in one or more developing countries is strongly preferred. Demonstrated familiarity with WorldBank procedures and requirements for project preparation is required.
Budoet and Schedule
9. Approximately 6 months from contract signing to the interim report at the end of Task 3. Sixmore months for completion of Tasks 4-6. Labor requirements are about 24 person-months, for abudget of approximately USS 250,000.
92 ANNEX 9
VENEZUELAURBAN TRANSPORT PROJECT
Traffic Police Component forthe Cuerpo de Vicilancia de Transito Terrestre (CVT)M
Backaround
1. The Bank Project, and the FONTUR transport program in general, places emphasis on trafficmanagement schemes. Schemes include new traffic signal systems, parking controls, on-street busoperational controls, measures to improve the accident records at critical junctions and similar actions.Such measures require a high level of traffic law enforcement. Although progress has been made inthe last few years on improving CVTT's organization, as a result of enlightened management, theCVTT still lacks investment in basic equipment, in infrastructure and in training; operational expertise,methods and training are also in need of modernization. As decentralization of traffic functions tomunicipalities takes place, there is also a greater need for traffic police to decentralize their ownactivities and thus to be in a position to respond more readily to local traffic problems. This has beenrecognized by FONTUR and as part of city eligibility criteria for participation in the Project, and as partof the FONTUR program, it will be necessary for each city to sign an agreement ('convenio') with thenational CVTT to form a municipal-based traffic police force.
2. The Project has recognized the essential need to improve CVTT in Venezuelan cities as keyfactor in achieving achieving success for measures to be implemented under the Project and forFONTUR program. Thus, the Project will support the improvement of CVTT through an investmentprogram in training courses, in training facilities and in equipment.
Obiectives
3. A FONTUR study is in progress: li) to review the present CVTT training procedures andfacilities, lii) to review CVTT facilities and traffic regulation enforcement equipment and, (iii) todetermine CVTT training and equipment needs. The CVTT study has completed its preliminary stagesand has identified the general scope of the CVTT program. In general terms, the study has determinedthat over the next 5 years, an investment program (not recurrent expenditure) of about US$ 70 millionwill be required by CVTT. Since the CVTT study has yet to be completed and since some of theidentified investments are basic requirements which must the responsibility of any modern traffic policeforce, it is not realistic to commit Project funds to the full investment program. However, it is essentialto improve CVTT performance to ensure the success of traffic policies and to support the proposedtraffic management investments proposed under the Project. Thus, Project funds will be committedto supporting CVTT with the objectives:
(a) to improve the general level of CVTT training and expertise; and
(b) to improve the CVTT performance in the specific Project cities (of Barquisimeto, Maturin,Merida, Ciudad Guayana and Maracaibo) such the full potential of the proposedinvestment in traffic management schemes can be realized and permanent.
93 ANNEX 9
The Proaram
4. The program proposed under the Project will comprise investments in the CVTT national trainingprogram and in equipment and technical assistance in each of the five project cities. Details are asfollows.
5. National CVTT Investments The CVTT has a national training school but the facilities areoutdated, require expansion, require modern equipment for the delivery of courses (instruction material,audio visual equipment etc) and accommodation for participants. Additionally, the expertise level ofinstructors must be improved and the content of training courses themselves should be revised toensure that they respond to present traffic needs. Thus the program will comprise:
(a) Training School Facilities - funds will be provided under the Project to modernize, expandthe training school, participant facilities and provide adequate teaching equipment;
(b) Trainina School Courses - funds will be provided under the Project for technical assistanceto prepare new course curriculae for delivery at the CVTT training school; and
(c) Trainina of Instructors - it is proposed to provide funds for training of CVTT instructors.This will involve either the attendance of CVTT officers at overseas training schools orthe provision of expatriate training personnel to provide courses in Venezuela. Theprecise program will be determined by negotiations.
6. Local Level CVTT Investments Local level support will be provided by investment in each of thefive Project cities (Barquisimeto, Maturin, Merida, Ciudad Guayana and Maracaibo). Thus the Projectwill fund:
(a) Traffic Law Enforcement Equipment - the provision of equipment for traffic lawenforcement (such as patrol vehicles, tow trucks, communications equipment etc) in eachcity;
(b) Administrative Eauipment - the provision of equipment for day-to-day administration ofcity CVTT units (such as personal-computers for accident recording and analysis); and
(c) Technical Assistance - the provision of technical assistance to each city to establish thelocal CVTT unit (arising from the completion of the 'convenio' between the municipalitiesand the CVTT) and to guide the local CVTT unit in the effective use of the newequipment.
Status of Preparation
7. The current estimates of needs and investments are based on the preliminary CVTT study; thestudy is not yet complete. Funds will not be disbursed for this component until the study is completed,and the needs and cost estimates of the Project components are confirmed and that the results areacceptable to the Bank.
8. The actions necessary to operationalize the component are set out in the Action Plan in Annex13 key dates in the chronogram are:
(a) preparation of a detailed implementation program for the Project components:
94 ANNEX 9
(b) final report on the Training School expansion and equipment;
(c) prepartion of the TOR for the TA to the Training School to prepare the new coursecurriculae;
(d) commencement of overseas training for the selected personnel.
Costs Estimates
9. The base costs of the component are as follows:
Expansion of the CVTT training school and provision Civil works 1.594of participant accommodation
CVTT instructor training (either in Venezuela or Training 1.179overseas)
Technical assistance for preparation of CVTT Training Technical 0.500School Courses assistance
SUB TOTAL NATIONAL (PART A) 3.273
LOCAL COMPONENT __l_= =_
Equipment for on-street traffic law enforcement in 5 Equipment 6.621cities (patrol cars, motorcycle, tow trucks, etc)
Communications equipment and computers for 5 cities Equipment 0.530
Technical assistance for support to the establishment Technical 0.750of local CVTT units in each of 5 cities assistance
SUB TOTAL LOCAL (PART B) _ 7.901
TOTAL 11.174
95 ANNEX 10
VENEZUELAURBAN TRANSPORT PROJECT
Road Maintenance Comoonent
MAINTENANCE COMPONENT
1. Extent and Classification of the Network The network concerned by the Program compriseessentially the roads which carry public transport vehicles and they are generally those with the highestvolume of traffic. They have been classified into 4 categories, namely: a) Expressways; b) ArterialRoads; c) Collector Roads, and d) Local Streets. Selected on the basis of discussions held with localMTC officials and municipalities, the total extension of this Primary network, for the five cities,represent approximately 1,406 km. Both in terms of total present value and traffic volumes, theyconstitute the top priority network on which investments for carrying out deferred rehabilitation andmaintenance activities should be concentrated.
2. Accurate inventories of the total length of the whole urban road networks in the cities have notyet been made but available information do suggest that the Public transport main road system accountapproximately for 10 to 20% of the total urban road network. The following table shows, for eachcity, and by functional category, the extent of the Primary road network considered under the Program.
Table 10.1: Extent and Classification of Primary PublicTransport Road Network
MARACAIBO BAROUISIMETO CDAD.GUAYANA MATURIN MERIDA TOTAL
3. As can be seen, the selection of the main Public transport road network is distributed as follows:A)ved: i) Expressways, 5.8%; ii) Arterial Roads, 23.8%; iii) Collectors, 28.0%; iv) Local, 41.4%;B) Unoaved, 1.0%
4. Assessment of Network Condition. As part of the initial study carried out to provide preliminaryestimates of the needs for deferred maintenance activities, a visual assessment of the condition of asuitable sample of the Primary network has been undertaken. Within the time scale available, the
96 ANNEX 10
sample size varied from one city to another ranging from 40% to 100% of the total extension of thenetwork. The visual survey classified the pavement condition into four main categories: A) Category1: Good or excellent surface condition, showing negligible or no defects; B) Category 2: Regular or fairsurface condition with local, minor defects only; C) Category 3: Bad condition showing significantsurface defects; and D) Category 4: Very bad surface condition characterized by extensive deformationsuch as deep rutting, alligator cracks or complete wearing course desintegration over a majorproportion of the total pavement area.
5. Expanding the assessed sample (65%) to the entire main road network, the following distributionof surface condition has been obtained: A) Pavements in good condition, category 1, 55.39%;B)Pavements in fair condition, category 2, 28.2%; C) Pavements in bad condition, category 3, 11.0%;D) Pavements in very bad condition, category 4, 5.5%. As far as pavement type is concerned, thegreat majority are of the flexible type with asphaltic concrete wearing course, the proportion of rigidconcrete pavement amounting to only 1 % (mainly in Merida). The following table gives for eachcategory of road and per city, the extent and the proportion of the network falling under each classof surface condition rating.
6. During the detailed engineering studies aiming at providing more accurate information onmaintenance or rehabilitation needs on a yearly basis an extensive pavement condition survey is to becarried out to show not only pavement distresses by type and magnitude but also structural capacitiesthus enabling appropriate repair measures to be defined and properly quantified and costed. Similarly,additional information on cross section characteristics, on drainage, curbs and gutter conditions as wellas on sidewalks and public utilities shall be included in the survey in order to best define overallcondition and priorities. Indeed, apart from sheer surface condition evaluation, this initial study dididentify the overwhelming importance of a number of specific problems or issues such as drainagedeficiencies (in Maracaibo, particularly), inadequate construction on maintenance practices (in Merida),bad asphalt mix design (in Guayana) upon which more detailed investigation must focus.
7. Considerations on Traffic Volumes and Eauivalent Axle Factors. It was not intended, during thisfirst phase study, to carry out traffic counts using appropriate procedures designed to furnish suitabledata for pavement rehabilitation design. However, some information available from other consultantsstudies on the problem of traffic management do yield interesting results regarding traffic volume andcharacteristics over the primary network carrying public transport: a) daily traffic intensities can bequite considerable, reaching up to 10,000 vehicles on the most heavily trafficked lanes; b) even onlocal access roads either to industrial, residential or marginal areas, the average traffic volumes ofbuses may be of the order of 200 to 500; c) except for the heavily traveled thoroughfares whereoverloaded commercial vehicles are most likely to be expected, the majority of the primary networkis traveled by buses having 2 single axles, the maximum load of which would generally be less than10 tons. A typical example of traffic volume distribution over the primary road network of the city ofBarqusimeto is as follows:
Table 2: SURFACE CONDITION RATING OF PRIMARY PUBLIC TRANSPORTROAD NETWORK
____~ LI II'-I Iz -I Ii zi'1' 11:11 1- IIL CLASS OF ROAD MARACAIBO BAR1SIMFI CaUAD WItAYANA MATUPB [N MERDA TOTAL
I 2T3 4 I 2 3 4 I 2 3T4 I 1 2 13 4 12 1 3 4 I 2 1 3 4
Eotm.,ac Km. Exui- Xm. EXIeOD 1-. Exetwin Km. Ext-ami. Kti. Exit. ioa Km.
PAVED
EXPRESWAYS 41 O OjO 0 0 0 0 41 0 0 0 0 0 0 0 0 0 O 82 0 0 0
> 40,000 1 320,000 to 40,000 3810,000 to 20,000 245,000 to 10,000 141,000 to 5,000 12
Representative vehicle distribution on main public transport corridors in Merida is:a) Cars, 67%; b) Buses, 13%; c} Trucks, 20%. For pavement design purposes, the detailed engineeringstudies must necessarily include traffic counts enabling a better assessment of daily volumes, vehiclestypes distribution and axle load factors for each road segment included in the program, as well as theprobable rate of increase over the next 10 years.
8. Maintenance and Rehabilitation Strateaies. It was not envisaged, during the preliminary study,to extensively define the various maintenance and rehabilitation techniques to be implemented in thecourse of the program. As a first approach, the following strategies have been assigned to each ofthe four categories of surface condition rating: A) Pavements in good or excellent condition, fallingunder cateory 1. would only require routine maintenance comprising essentially very localized andminor skin patching, cleaning of drainage system, vegetation control, sweeping of pavements and localrepairs of curbs and gutters; B) Pavements in fair condition, pertaining to cateaor 2. would be subjectto minor corrective maintenance including some skin or deep patching, cracks sealing and any otherlocal repairs or cleaning of drainage, curbs, gutters and sidewalk systems; C) Pavements in relativelybad condition, belonging to cateaory 3 would require maior maintenance comprising substantialpatching, repairs, surface dressing or thin overlay applications over relatively large areas,complemented by all additional works necessary to restore the drainage system and operationalefficiency of sideways structures such as curbs, gutters and sidewalks. D) Pavements in very poorcondition, falling under cateaoy would necessitate rehabilitation works including either thickoverlays, recycling or indeed reconstruction.
9. In the case of earth roads in need of upgrading and paving, rehabilitation would also, andnecessarily, include geometrical improvement as well as the prior installation of an adequate drainagesystem. During detailed engineering studies, the exact types and most cost effective maintenance orrehabilitation activities, taking into account all construction constraints applicable, will be adequatelydefined for each road section pertaining to the program. At present, and based upon the visual survey,the extent of application of each one of the above described strategies, under the program, is asfollows:
10. Maintenance and Rehabilitation Unit Costs. The following table shows a preliminaryassessment of unit costs applied to each maintenance strategy. These figures have been used to
99 ANNEX 10
grossly estimate the total cost of the Program. However, a more precise analysis is deemed necessaryat final engineering stage to take into account the specificities of the network in each city, andparticularly:
i) materials availability (in Maraibo for example, the nearest rock quarry is located at some 100 km. ofthe city center); ii) range of rehabilitation techniques (whether recycling, overlaying, removal andreconstruction work); iii) the gravity of the drainage problem; iv) the presence of public utilities withinor below the pavement, etc.
Table 103: Unit Costs of Defenred Maintenane Activities
MAINTENANCE AVERAGE UNrI COST PER KILOMETER (US$)STRATEGY
CLASS OF ROADS
ARTERIALS COLLECTORS LOCAL UNPAVEDEXPRESSWAY
Emerg. Routine Maint. 2,000 2,000 2,000 1,500
Minor Correct. Maint. Not applicable 8,000 7,000 4,000 Not applicable
Major Maintenance Not applicable 70,000 60,000 30,000 Not applicable
Rehabilitation Not applicable 100,000 90,000 60,000 Not applicable
Upgrading & Paving Not applicable Not applicable Not applicable Not applicable 110,000-145,000
N.B. For normal routine maintenance, an average consant value of $1,500/Km has been asumed.
11. Sub-oroiects Quantities and Cost Estimates. The following table is a summary of the totaldeferred maintenance needs occurring under the program. Costs are expressed in US$ million.
100 ANNEX 10
Table 4: SUB-PROJECT QUANTMES AND COST ESTIMATES FORDEFERRED MAINTENANCE
MARACAIBO B2QIIEO CDAD.WAAN MAUI MERIDA TOTALKm. cost Km. Cost Krn. Cost Km. Cost Km. Cost Km. cost
Oraanization of a Road Maintenance Unit in a Municigality
12. Functions of the Road Maintenance Unit. The functions of a road maintenance unit aremanyfold: a) identifying and evaluating the street maintenance and rehabilitation programs; b)prioritizing and budgeting the needs in annual and pluri-annual plans; c) assigning the routinemaintenance activities, on an annual basis, to the force-account unit - if any- and managing theexecution of such works; d) procuring and contracting as well as supervising all major rehabilitationor new construction works to the private sector.
13. Organization of a Road Maintenance Unit. To fulfill the above functions a road maintenance unitshould normally comprise: a) a section in charge of studies, planning and budgeting; b) a sectionresponsible for the execution of routine maintenance activities by force account; c) a section devotedto deal with the contracts and the monitoring of all major works, let to the private sector. The 'Studiesand Planning" section identifies the needs on the basis of an adequate and updated street and trafficinventory, as well as on the definition of the levels of service required and the elaboration of designsand specifications enabling the service levels to be attained. Its prioritizing and budgeting functionsstem from the knowledge he must have of unit costs and from its expertise or good diagnosis ofproblems. It is normally within this section that the core of a Pavement Management system shouldbe installed.
14. The "Routine Maintenance Activity" section is responsible for carrying out by force accountall the minor recurrent works involved in the daily maintenance of the streets and other relevant urbanfeatures. It must have adequate capabilities for managing personnel, maintaining the equipment andproperly executing the works. The "Rehabilitation or new Construction" section essentially deals withall works that are important enough to warrant contracting to the Private sector. This section shouldbe able to prepare tender documents, analyze offers, procure the works and control quality, quantitiesand costs.
15. Staffing of a Road Maintenance Unit. Obviously, the quantity and quality of staff required tomanage a road maintenance unit will depend on the density of the network, on the relative importanceof the maintenance programs and on the eventual sharing of responsibilities between municipalities,states and local government. Assuming an urban network density of below 3.000km with a populationof the order of 500,000 and besides the Director (and his administrative staff) who is responsible forthe general policy of maintenance within the municipality (i.e. objectives, organization, research anddistribution of credits among the sections, personnel problems and career or promotion), a typicalstaffing for the three above mentioned operational sections would be as follows:
a.Studies and Planninn Section
Activity Personnel
Section Manager: 1 qualified road engineer, 1 technician + team for traffic counts.Network Inventory: 1 junior engineer, 1 technician + team for pavement inventory.Interpretations, Design, 1 experienced engineer, 1 computer technician.Specification:Costing and Budgeting: 1 specialist.
Section Manager 1 qualified engineer.Procurement 1 specialist.Quality Control 1 laboratory engineer + equipment + site team.Cost Control 1 specialist.
d*.Summary
1 Director + administrative staff or secretariat.> 5 years experience 3 qualified engineers in charge of the 3 sections + individual
secretariat.
< 5 years experience 3 junior engineers (network monitoring plus design and specification,plus materials).4 specialists Icosting and budgeting, plus equipment, plus procurementand cost control).5 technicians (traffic plus inventory, plus 2 computers, plus laboratory).3 foreman.
Total 1 9
16. If the municipality decides not to have force account, the basic personnel needed is the onelisted for the studies and planning section plus a procurement specialist plus a small unit dedicated toroad testing and inventory. This is the preferred organization staffing for the municipalities in the firstyear program.
103 ANNEX 11
VENEZUELAURBAN TRANSPORT PROJECT
Economic Evaluation
A. BASIC METHODOLOGY USED IN THE EVALUATION
General
1. A conventional approach was used for the evaluation of traffic schemes within each city sub-project. In general, benefits/disbenefits were assessed in monetary terms as a result of:
a. savings in Vehicle Operating Costs (VOC) as a result of reductions in delay/increasesin speed;
b. changes in VOC as a result of changes in distance travelled, if any, arising from ascheme. Most schemes will not cause traffic to change routes but, some schemesmay cause diversion of traffic to new routes. The changes of routing could have twoeffects: (i) there will be changes in distance travelled by vehicles and, (ii) there will bean impact on speeds/delays on the routes from/to which vehicles are diverted. Botheffects will have an impact on overall costs of operation of the system. Evaluationsassessed the impacts of both the changes in distance travelled and the changes inspeeds/delays on the diversion and existing routes. The evaluation of the schemeinvolved the same volume of total vehicles in the "with scheme' and 'without scheme'scenarios;
c. savings in personal travel time arising from decreased journey times for users of thetransport system; and
d. improvements in street surface condition which affect the VOC will be taken intoaccount for specific appropriate components (e.g. deferred road maintenance).
2. In some schemes, there were disbenefits to some traffic/users as well as some benefits toother traffic/users. The evaluation took into account the total impacts (benefits and disbenefits) ofschemes. The effects of changes of routes have been noted above but other typical examples of'disadvantages":
a. corridor improvements may involve provision of additional traffic capacity (eg. 'greentime") at intersections on a main corridor thus resulting in benefits to the main corridortraffic; however, traffic on minor/crossing roads may be provided with less capacity("green time") and disbenefits could occur for this traffic. Both effects should beassessed; and
b. an exclusive busway/bus lane may result benefits to busses/public transport vehicles,but may result in disbenefits to private traffic on the same route; both effects shouldbe assessed.
Periods of Evaluation
3. The following should periods of evaluation were used:
a. oeak hours/off oeak hours - Benefits are most likely to result from improvements intraffic operations in peak periods - lower benefits will arise in other periods. No
104 ANNEX 11
generalizations are made for the hourly periods to be included in the evaluation. Citvsoecific 24 hour traffic counts should be used to identify the traffic distributionthroughout the day and to derive the number of hours of each type to be used in theevaluation. It is expected that the evaluation will most likely involve:
* a number of morning peak hours per day;
* a number of evening peak hours per day;
* a number of inter-peak hours per day.
Other hours may show insignificant benefits and may not be worth including in theevaluation. Benefits should be calculated, using the appropriate traffic volumes andspeeds/delays, for the number of hours in each category.
There was inadequate time in the preparation studies to derive special 'peak":"interpeak": 'other' hour relationships for every scheme although different hourly profilesmay be applicable for (say) schemes close to, and schemes from, the city center.
b. days oer year - evaluations were carried out for the number of working days in a year(260 days) unless specific local circumstances and surveys show that Saturdaysinvolve similar traffic volumes to working weekdays; and
c. life of schemes - For short-term schemes, a 5 year project life was assumed and thatthe period of evaluation will be the same. For more costly schemes - such as wideningof a corridor of the construction of "missing links" or paving of bus access routes - alonger life of 15 years was assumed and used as the evaluation period (see below -residual value). Periodic rehabilitation costs should be included for components withrelatively short lives (such as traffic signals) which form part of projects evaluated overa longer period.
Residual Value
4. The residual value of schemes vary with type:
a. a 20% residual value was taken after 15 years for the civil works elements ofinfrastructure schemes such as new roads, road widening, missing links, paving of busroutes to low income areas etc, and if land/property is involved, a 100% residual valuewill be taken for the property/land elements; and
b. a 20% residual value was taken after 5 years for management related schemes suchas traffic management measures, traffic signals, etc.
Soeed-flow and/or "Before" and "After" Soeeds
5. The key element in any traffic and road scheme evaluation was the establishment of the"before" and "after' speeds/delays. Speed/delays will be a function of predicted traffic volumes andcapacity. The study consultants have proposed various procedures to establish "after" speeds/delaysand were, of course, free to select their own methodology to relate traffic volumes, traffic capacityand traffic delays in a realistic manner. However, most consultants have proposed to use some formof traffic model for the assessment of scheme impacts including TRANSYT 7, PASSER, NETSIM, HCM(intersections), etc. Models were calibrated/checked against existing city ("before") conditions by fieldsurveys of speeds/delays to enable outputs to be used with confidence in the specific conditions found
105 ANNEX 1 1
in Venezuelan cities. Normally, if a model was used, the delays/speeds associated with the "before'situation were those estimated by the calibrated model (calibrated from field surveys). The followinggeneral comments are also made for typical, but not all, schemes:
a. for intersections - benefits will come mainly from reduced delays although accidentsavings may be possible (see below I and procedures are required which enablesindividual junction delays to be assessed.
b. for corridors (traffic and infrastructure improvement schemes along a route) - benefitscame mainly from reduced end-to-end travel times and procedures were required whichenable route speeds to be assessed. Various options are possible depending on theinteraction between intersections but assessments could be based on: {i) cumulativejunction delays along the route using the same procedure as noted in para. 5.a above,or (ii) by use of a route procedures such as PASSER or TRANSYT 7 (applied along theroute); the latter may be appropriate if some from of linked signals are proposed;
c. for area wide schemes such as central are or local area traffic management andinfrastructure schemes, benefits came mainly from reduction in average journey timesthroughout the network.
It is noted that if measures are proposed which are 'external' to the traffic system (egmeasures which benefit pedestrians or bus passengers but are not specifically aimedat moving traffic/buses), it would be acceptable, in the evaluation, to omit the costsof those measures in the analyses - in the evaluation, the principle will be to includethe costs which produce the operational benefits. Other elements of an integratedscheme, which may produce quality benefits or environmental benefits (such aspedestrianization or bus stop shelters) may be evaluated in a qualitative way;
d. for sionina and marking programs, no quantified evaluation is proposed.
6. Scheme costs for the evaluation included:
a. capital costs for all civil works (including design and supervision), equipment, signing,marking, traffic signals etc and contingencies;
b. land/property costs if necessary for the scheme;
c. specific operating, if any, necessary for a scheme (e.g. enforcement costs on a HOVlane); and
d. routine and periodic maintenance costs (an estimate of say 2% per annum of thecapital cost of the scheme for routine maintenance and say 5% after 5 years forperiodic maintenance costs if appropriate, would be acceptable unless consultants havespecific data).
7. The evaluation used economic costs. Thus for the evaluation, cost estimates should identify,and subtract from market prices all taxes and duties and other government levied surcharges whilstany subsidies should be included.
106 ANNEX 11
Base Year
8. The base year for capital costs an vehicle operating costs should be the same. It would beconvenient if this base year/date was the same as proposed for the BIRF/BID appraisal, say, aboutSeptember 1992. However, consultants may estimate costs etc at the date most appropriate for theirparticular city study but it would be helpful if they could present an estimated percentage increase tobe applied to bring costs/benefits to August 1992.
Vehicle Ooeratina Costs (VOC)
9. VOC's were estimated by FONTUR/MTC Isee Tables 11.1 and 11.2) in the form of costs perkm at various speeds and per hour stopped with motor idling, typical of an urban area. At this stage,it is proposed to prepare data for different VOC'S for:
* private cars;* "standard" medium/large buses;* "small' por puestos (mini buses) - about 20-24 seats;* 'normal" por puestos (mini buses) - about 30-32 seats;* 'standard" trucks; and* special case vehicles such as jeeps in Caracas or 'car/taxi collectivos in Maracaibo.
10. Difficulties occur when V/C ratios are high, speeds drop (and VOC's rise) and effects such astrip suppression occur. The evaluations need not consider trip suppression etc and can assume thatonce a minimum speed (and thus maximum VOC) has been reached, it will apply thereafter. At thisstage is assumed that speeds will cut off at 8 kph even though V/C's may increase (theoretically)considerably beyond 1. If consultants prefer to use a more sophisticated methodology at highcongestion levels, this will be acceptable but should be cleared with FONTUR/MTC.
Evaluation of Time Costs
11. Person time costs - were developed by FONTUR for each specific city base don input valueson wage rates to be provided by FONTUR/MTC. It is noted that the costs of vehicle operatives (suchas bus drivers, truck drivers etc) will have been included in the VOC above and that person time costsrefer only to passengers. The following apply:
a. a single time cost value will be used for all passengers travelling in non-working time,regardless of mode;
b. a broad estimate will be made of the number of people travelling in working time (thiswill be a small number in the peaks and perhaps a somewhat greater number in the offpeaks). the valuation of the time of these workina time travellers will be mode specific(normally higher for higher paid workers who have higher propensity to travel by car)and will be based on the average wage rate for the city;
c. all other (non working time) adult travellers time will be valued at 30% of the averagewage rate for the city; and
d. all children/students will be valued at 30% of the 30% average wage rate.
12. Thus, two general values will be derived for person time - one for peak and one for off peak -which account for the different traveller composition at the two times (in working hours, in nonworking hours, and children/students). Exhaustive field surveys are not reouired to determine thesedata; the consultants best estimate based on (i) previous surveys; lii) exiting census data; liii)
107 ANNEX 11
consultations with the Municipality; and, liv) "standard' approaches, will be adequate. See Table 11.3 for time costs.
Accidents
13. Some measures (such as intersection improvements) may be aimed at increasing safety atintersections. If data exist on the 'before' situation, the study should attempt to assess the possiblechanges in accident occurrence and attribute a value to the reduction.
Imoact on Low Income Groups
14. For each project, an estimation should be made of the proportion of total benefits directlyaccruing to low income families which are defined as those whose per capita income is less than44.267 Bolivars in values of August 1991. It should be noted that in order to relate this figure to wagerates, it is necessary to multiply by average family size and divide by the average number ofeconomically active persons in each family.
15. Benefits directly accruing to the group are:
a. wages paid to low wage earners employed on construction schemes and other relatedto the project implementation;
b. time savings to low income family members and
C. 50% of VOC savings of public transport vehicles used by travellers from low incomefamilies.
16. These benefits should be assessed in NPV form and expressed as a ratio of the NPV of projectimplementation costs. This calculation should be repeated to test the effect of time savings.
Long wheelbase jeep 11.7940 8.4780 7.5946 7.1880 6.9546 6.8052
Notes: USS = 58,5 BolivaresThe costs exclude: (i) personal time savings and; {ii) savings due to fleet size reduction, madepossible by improvements to traffic speed.
Table' 111.2:esucCstpr KOHV of' HrleVuaH llIp
.Vehicle Tvoe| No. of oersons in Crew Unit Labor Cost | Cost/ehiclelhour
Notes:1. Social security and related costs were assessed at 35% of wage rate.2. Overhead and related administrative costs borne by the employer were assessed at 20%
of the wage rate of bus travellers, 25% for por puesto users and 30% for car occupants.3. Wage rates were those published by the Oficina Central de Estadistica e Informatica,
Presidencia de la Republica.4. Values were adjusted to estimated March 1991 equivalents by the consumer price index
with an extra 2.5% being added to allow for real wage increases.5. Wage rates for users of different modes were assessed in the following way. The
regional income distribution of non-agricultural workers was obtained and the rate for bususers was taken to be the income corresponding to the person 25% of the way up thescale, starting from the lowest wage rate; por puesto travellers were assumed tocorrespond to the median wage; and car occupants to the wage of the person 75% upthe scale.
6. 160 hours worked per month per worker were universally assumed.
B. ECONOMIC EVALUATION RESULTS
17. Economic costs and benefits were quantified for all project components except InstitutionalDevelopment, Technical Assistance and National Training Program. The benefit-cost ratio (B/C ratio),the net present value (NPV), and the economic internal rate of return (EIRR) were calculated for eachcomponent. The results are presented in Table 1 1. 1, considering as benefits only those resulting fromthe reduction of vehicle operating costs (BRCO). The overall EIRR for the project, computed by addingthe cash flows of all components evaluated, is 32% in the base case. If the benefits due to timesavings are included the EIRR jumps to 79% in the base case. Several sensitivity analyses were carriedout, considering both reduction in benefits, increase in costs and a combination of both The results arelisted in table 11.4
18. The economic evaluation was undertaken for each of the components identified in the first fivecities included in the corridor (Maracaibo, Barquisimeto, Merida, Maturin and Ciudad Guayana), fortransport corridors and CBD improvements, public transport improvement, traffic management andsignal improvement. A list of the corridors evaluated and their respective EIRRs are given in table 11.5.Economic analysis was not done for institutional development, training and technical assistanceactivities representing 18% of the total costs. Therefore, the economic evaluation understates theeconomic viability of the project, since there will be benefits that will arise from the institutionaldevelopment, training and technical assistance program investments.
19. The costs in Bolivares were converted into dollar costs at the market exchange rate at thetime (September 1992).
20. Vehicle operating costs (VOCs) were prepared by CEPAL-FONTUR/MTC (Table 11.1) forVenezuelan cities based on resource costs adjusted for urban purposes and to the Venezuelan
1 10 ANNEX 1 1
commercial vehicles. The VOC comprise the cost of fuel, engine oil, tires, maintenance including spareparts, depreciation, related to different speeds. Drivers and helpers were computed separately andadded to the other costs in order to compute the final VOC. A document describing how the VOCswere determined is included in the project file.
21. The bus route paving program was evaluated for a minimal viability, based on an averagetraffic composition, in such a form that the basic data need was the construction cost and the existingmicrobus traffic per hour or per day. The minimal EIRR of 12% is obtained by a daily traffic of 60buses, or three round trips per hour. This procedure is the same as the one used in the PROPAVprogram financed by the World Bank in Brazil in 1981. The deferred maintenance program is alsoevaluated, for the more peripheral areas, for a minimal viability, which is obtained at the traffic levelof 10 microbuses per hour or a total of 100 buses per day per road link.
22. Economic internal rates of return (EIRR) estimated for individual Investments vary widely fromthe acceptance floor of 12% to levels beyond 100% (it is considered that EIRRs greater than 60% losetheir physical meaning as the IRR algorithm assumes that benefits are re-invested at the same rate).These findings are normal in traffic schemes, specially where great traffic volumes are addressed withmeasures that require very little in terms of investments such as the traffic light scheme managementsadjusted to changes in flow directions.
23. For project which are still being developed, the FONTUR Operational Manual, ANNEX 10,covers all steps necessary to clarify methodological procedures acceptable to the Word Bank foreconomic evaluation.
Table 11.4: Summary of Quantified Sub-project Benefits(Economic Rate of Return (%))
Base Benefits Benefits - Benefits-25%+25% 25% + Costs
+25%
Ocs ocs ocs ocs ocs ocs ocs ocsonly + only + only + only +
TS TS I TS I TS
Barquisimeto 35 73 47 92 23 52 15 40
Maracaibo 37 92 49 117 24 67 15 52
Maturin 27 89 38 113 15 64 8 48
Merida 17 41 25 53 9 28 4 20
Ciudad 20 65 26 82 13 49 8 38Guayana
Total Part B 32 79 44 100 21 57 13 44OC&- Operating Cost mTS - Time Savings
This annex includes the detailed project costs, namely: i) the project cost summary; ii) theconsolidated cost estimates by year and semester; iii) the estimated schedule of disbursements; iv) thetraffic and infrastructure investments costs for the five cities appraised and for the program that werefully evaluated; v) the road rehabilitation and deferred maintenance costs for the five cities.
113 ANNEX 12
TABLE 12.1 PROJECTS COST SUMMARYQn US$ MILLION EQUIVALENT)
PROGRAM Component Total % Of Local % of Foreign % otUS$ m Total USS m Total USS m Total
Total (Inc taxes) 219.62 109.8 139.13 69.6 80.51 40.3
NOTESPart B2 is a program and thus physical contingencies are not approprlateTax and duty rates provided by FONTUR
TABLE 12.1 A PROJECT TECHNICAL ASSISTANCE BY TYPEOn USS MILUON EQUIVALENT)
PROGRAM Component Technical Total % of LOCAL % of Forelgn % ofI_________ _____________________ IAssistance USS m Total USS m Total US$ m Totalnstituonal Al - FONTUR Strengthening IDTA 3.84 14.7 1.54 5.9 2.30 8.8
Developmrent A2 - Municipal Strengthening IDTA 4.95 19.0 2.27 8.7 2.68 10.3and Policy A3 - National Training IDTA 7.22 27.7 2.91 11.2 4.31 16.5Program A4 Tratf c Police IDTA 2.43 9.3 0.49 1.9 1.94 7.4
Sub Total IDTA 18.44 70.7 7.21 27.7 11.23 43.1(PART A) A5- PolcyStudies SUB.TA 2.63 10.1 1.31 5.0 1.31 5.0
AS Preparation Stucles SUB.TA 5.00 19.2 2.50 9.6 2.50 9.6Sub Total SUB.TA 7.63 29.3 3.81 14,6 3.81 14.6
1.09 Total (ex price cont) 1.51 0.811 2.311 5.73 8.0911 18.44
AssumptionsNew paving of bus routes etc is included in the traffic and infrastructure worksBase cost as Table 4 of Annex 10 but amended for design, supervision and contingenciesDesign is 5% and supervision 7%oPhysical contingencies is 15%
118 ANNEX 13
VENEZUELAURBAN TRANSPORT PROJECT
Project Implementation Schedule. Monitoring, Evaluationand Supervision Plan
A. Proiect Schedule
1. The project implementation schedule is shown in Figure 1. The schedule provides the basis forproject monitoring and for the disbursement profile (Annex 12).
B. Monitorina and Evaluation
Monitorina - Part A National Comoonent
2. Part A (National Component), comprises six components: (i) Part Al - FONTUR strengthening,liil Part A2 - municipality strengthening, (iii) Part A3 - national training program, (iv) Part A4 -trafficpolice component, (v) Part A5 - studies and, (vi) Part A6 - preparation studies in additional cities.
3. Monitoring of activities will involve two separate but closely related activities (i) monitoring ofthe implementation schedule and key target dates and (ii) and financial monitoring (expenditures inrelation to project costs).
4. Implementation Monitoring FONTUR will monitor compliance with the schedule shown in Figure1. by defining target dates for key actions. The target dates for key actions for the first year of theproject (to about mid 1994) are shown in the Action Plan in this Annex. In May 1994, FONTUR willprepare, with the agreement of the Bank, a similar action plan for the second year of implementation,and in May 1995 an action plan for the third year and so on throughout the life of the project. In theevent of delays, FONTUR will be responsible for identification of the constraint and for devising andexecuting policies to resolve problems.
5. Part A2 involves municipal strengthening programs; the Action Plans for Part A2 will beadjusted and made more detailed as each city sub-project implementation schedule is finalized. Typicalkey dates for Part A2 for each city will be developed and will include issue of invitations to technicalassistance consultants, and commencement and completion of consultants employment.
6. Financial progress will be monitored by FONTUR in the same way as implementation progress.Estimates of costs of Part A have been made but final costs will be dependent on consultants contracts(for technical assistance and studies etc) and on bid prices (for equipment etc). Thus, it will be theresponsibility of FONTUR to update cost schedules as contracts and bids are finalized, and to monitorfinancial progress in relation to the updated schedules.
7. FONTUR will report on both implementation and financial progress in the bi-annual progressreports.
8. Evaluation of Parts Al -A5 of the institutional program will attempt to determine the extent towhich objectives are achieved. As with all institutional programs, evaluations will be largely subjectiveand based on analysis of effectiveness by FONTUR and on reviews carried out by experiencedpersonnel during the mid term project review and during Bank supervision missions. The main aspectsof the reviews will be as follows:
9. Part Al - international technical assistance is proposed over 2 years. An evaluation will becarried out 9 months after the commencement of the technical assistance contract. The review willbe carried out jointly by FONTUR and the Bank with the aims of (i) determining how successful thetechnical assistance team has been in maintaining project progress and transferring technology toFONTUR, (ii) determining if the team or its composition should be changed for the subsequent yearand, (iii) defining the commitment for the subsequent year. At the end of the FONTUR strengtheningprogram, a final evaluation will be undertaken which will assess, inter alia,
* the success of the application of the Operational Manual and the need fordevelopment and change;
- the time needed to implement a subproject and the extent to which FONTUR'sown staff were able to undertake the work;
* the extent to which the international technical assistance team were able toundertake a technology transfer to FONTUR staff;
v the number of FONTUR staff who are able to comply with their professionalobligations once the technical assistance was completed;
* the use made of the equipment purchased with Project funds;* reports from participants will be required indicating the experience they gained
and how it is expected to be useful in their future work with FONTUR andother agencies;
10. Part A2 - municipality strengthening is proposed in each city for 6 years and includes mid-leveltechnical assistance and supplementary staff. Before the end of each year in each municipality,FONTUR, with the help of its international technical assistance team (for the first two years), willreview progress of the technical assistance. FONTUR will assess: (i) how successful the teams havebeen in maintaining city sub-project progress, setting up working practices and in transferringtechnology to city staff, and (ii) if the team or its composition should be changed for the subsequentyear;
11. Part A3 - national training program. The intensive course will be held 3 times (in 1994, 1995and 1996). The 1994 course will be evaluated to inform the decision to proceed with subsequentcourses. The evaluation will be largely based on questionnaires answered by the participants, byreports from the principal lecturers and by a review carried out by Bank supervision missions. Afterthe intensive courses have been completed (after 1995), or at the mid term project review (whicheveris the sooner) all training courses would be reviewed. This includes the intensive course, the managerscourses (held over 3 years), the technician courses (held over 4 years), the logistic courses (held over6 years) and the public transport operator courses (held over 6 years). The evaluation will be basedon comments from the agencies that sponsored participants as well as from the participantsthemselves. FONTUR will be required to prepare questionnaires, in a format agreed by the Bank,circulate, collect and prepare an analysis report for consideration at the review. A primary aim of theof the review will be to determine if the on-going courses should continue or be modified and todetermine if additional courses (such as further presentations of the intensive courses) should bemounted;
121 ANNEX 13
12. Part A4 - traffic police training. The revised police training courses will be assessed in theconventional way by course presenters through questionnaires to participants. At the local level, thetraffic police will receive various equipment (communications, vehicles, for accident reporting etc).At the mid term review, FONTUR will furnish a report on the manner in which the equipment has beendeployed and an assessment of its effectiveness. In general, however, the most important effect oftraffic police training should be improved on-street traffic operations; this effect will be long-term andextremely difficult to measure and quantify and only qualitative reviews are proposed.
13. Part A5 - policy and other studies. Eleven policy and institutional studies are proposed. Targetdates are given in Table 8.1 of Annex 8; at the mid term project review, an assessment will be madeof the success of implementing recommendations of the studies completed by that and agreementswill be reached with GOV, if necessary, on actions to ensure implementation.
C. Monitorino and Evaluation of Suboroiects
14. As a condition of eligibility, each participating city will be required to develop and to carry out,a monitoring and evaluation program.
15. Monitorins would identify the physical, institutional and financial status of each subprojectcomponent, as appropriate, on a periodic basis. The aim will be to identify implementation problemsand the extent of deviation from the targets proposed at appraisal. The results of the monitoringprogram (the comparison of achieved performance with appraisal targets) will be presented in theSemester Reports for each city subproject, prepared and coordinated by FONTUR. The results of eachcity subproject monitoring program will provide the basis and information for cities to prepare measuresand actions to resolve implementation problems, if any, and at the same time, to update project costs,disbursement and implementation schedules if necessary. Monitoring indicators to be employed willvary by type of component but the general guidelines are set out in the following paragraphs.
16. The following general guidelines would be followed:
(a) each participating city will prepare, as part of its subproject preparation report, animplementation schedule which sets out target dates for key actions for physicalworks, equipment supply and institutional components. WVhere components are notfully prepared at appraisal, it would be a condition of their subsequent inclusion thatan implementation schedule is prepared as an integral part of the component;
(b) for physical works (and equipment) progress; the implementation schedule will definetarget dates (to the nearest quarter) for the start and finish of key actions involved inthe implementation of physical works ( and supply of equipment). Thus indicators arelikely to include:
* start/finish dates for final engineering design and documents for works (orequipment);date for issue of bid documents;
* date contract signature and;* start/finish dates for works (or supply of equipment).
(c) for financial performance; since works (or supply of equipment) are likely to extendover some time, the subproject implementation schedule will also be required to givetarget "percentage completed' by quarter. Thus target expenditures can be estimatedand will be used to monitor financial (disbursement) performance on a quarterly basis;and,
122 ANNEX 13
(d) for institutional measures (technical assistance, training and studies), the monitoringtargets will have been included, as a part of Part A2, in the Action Plans (see para 5).
17. Ex-post evaluation would be aimed at determining the effectiveness and efficiency of measuresin meeting the objectives determined at appraisal. In the event that objectives are not met andpreviously anticipated improvements in performance are not achieved, the data would be used (i) toidentify why components had not been fully successful and ii) to modify future components proposedfor subsequent implementation which were based on similar premises. Furthermore, the ex-postevaluation would be used as a major input to the project completion report.
18. As with the monitoring program, definition of the ex-post evaluation program for thecomponents in each city subproject would be part of the appraisal. Ex-post evaluation indicators whichwould be employed will vary with the type of component. Generally, ex-post indicators will be thesame as the key indicators which are used in the component evaluation. The city sub-projectpreparation reports prepared by consultants and reviewed by FONTUR and the Bank, for eachparticipating city will set out both the type of proposed ex-post evaluation indicators and, the proposed'before and after' levels for each component. No generalizations can be made in this latter regardsince the level of improvements (e.g., reduction in delay, reduction in accidents) depends on the scaleof problems which the component sets out to resolve.
19. The following general criteria will be applied to each city evaluation program:
(a) in general, the schemes proposed under the subprojects will not require longimplementation periods and thus "beforew and 'after' assessments can be made.'Before' surveys should be carried out as close as possible to the commencement ofcivil works and wafter" surveys should be carried out a few months after completionof work when traffic conditions have stabilized;
(b) not all schemes will be subject to monitoring (since many minor junction improvementsare involved in most cities); in developing their evaluation proposals, each city willdefine which schemes are to be subject to evaluation and these will be agreed byFONTUR as part of the monitoring eligibility criteria;
(c) in cases where individual schemes require an extended implementation period or wherea scheme cannot be evaluated as traffic flows will be affected by other schemes, itmay not be possible to carry out closely timed "before" and "after" studies; in thesecases, the same indicators, survey procedures etc will be followed but assessment willbe made on a "with" and 'without' scheme basis.
20. The following are key indicators for the type of components which are most commonly includedin the city subprojects.
123 ANNEX 13
Table 13.1 - Indicators for TSM Corridor Components
INDICATOR DATA REQUIRED FOR "BEFORE" and 'AFTER" SURVEYS
1. Bus journey times or Surveys will be required to determine average speeds overspeeds corridors for buses and for private vehicles. Surveys will beand required for a representative period (more than 1 day) in both2. Private vehicle journey directions of travel, in the AM, off- and PM peak periods and ontimes or speeds weekdays. Travel data should be collected so that intermediate
times/delay along the route can be identified.Traffic (by type) volumes and bus passenger volumes will becounted over the same time periods at key route sections.
3. Junction capacity Traffic volumes, traffic turning counts, saturation flows and("Level of Service") junction delay surveys will be carried out at major junctions alongand corridors to enable the junction indicators to be assessed.4. Junction delay
5. Accident records Collection of accident records should be part of the day-to-daywork of the city traffic agency. It is necessary to assess data overa considerable time period before trends can be confirmed(although short term accident data can be valuable in resolvingimmediate problems). Accident data will be collected and analyzedbut final trend be finalized until some 2 or 3 years after schemeopening.
Table 13.2 - Indicators for TSM Junction Improvements
INDICATOR DATA REQUIRED FOR 'BEFORE" and "AFTER" SURVEYS
1. Junction capacity Traffic volumes, traffic turning counts, saturation flows andi(Level of Service") and junction delay surveys will be carried out to enable the junction2. Junction delay indicators to be assessed.
Where schemes involves diversions, similar indicators should beassessed on diversion routes.
3. Accident records Collection of accident records should be part of the day-to-daywork of the city traffic agency. It is necessary to assess data overa considerable time period before trends can be confirmed(although short term accident data can be valuable in resolvingimmediate problems). Accident data will be collected and analyzedbut final trend be finalized until some 2 or 3 years after schemeopening.
124 ANNEX 13
Table 13.3: Indicators for Bus Route Paving
INDICATOR DATA REQUIRED FOR *BEFORE" and "AFTER' SURVEYS
1. Bus Speeds Surveys to determine average bus speeds over a sample of projectroute sections for a represen-tative period Imore than 1 day) inboth directions of travel, in the AM, off- and PM peak periods andon weekdays. Bus volumes would also be counted.
Table 13.4: Road Rehabilitation Components
INDICATOR DATA REQUIRED FOR "BEFORE" and "AFTER' SURVEYS
1. Roughness Using appropriate techniques, measures of "before- and "after"roughness indices will be made for a sample of roads.
2. Vehicle speeds Surveys to determine average vehicle speeds over a sample ofproject route sections for a representative period (more than 1 day)in both directions of travel, in the AM, off- and PM peak periodsand on weekdays. Traffic volumes should also be counted
125 ANNEX 13
D. Supervision Plan
I. Bank Supervision
1. The main emphasis during the initial project phase would be to: (a) review the development andimplementation of the project monitoring system; (b) make certain that FONTUR's staff is adequatelyfamiliar with Bank procurement guidelines, Bank disbursement procedures (i.e. Special Accounttransactions) and Bank independent auditing requirements; (c) establish a system to evaluate themunicipalities for participation in the program; and (d) help FONTUR's development of a strategy toproperly promote the project to eligible municipalities and promote the project to the Venezuelan public.Many of these items would be addressed in the project launch workshop scheduled for September1993. During project implementation, the supervision missions would need to conduct the followingactivities in the field on a regular basis in addition to monitoring project progress: (a) review a samplingof contract bids and awards; (b) inspect disbursement procedures and record keeping; (c) inspectadequacy of supervision and monitoring of the municipalities and respective subprojects; Id) reviewperformance and accuracy of the Project Monitoring System; (e) complete a mid-term review bySeptember of 1995 to examine the progress made epecially in the public transport studies, to assessthe relevance of project objectives and actions, and recommend appropriate revisions (as needed).Supervision missions in the field should attempt to visit one or more municipalities during each trip.A preliminary schedule of supervision missions including key activities is indicated in the table on thefollowing page. The key activities shown are in addition to the regular supervision needs, whichinclude review of: (a) progress reports; (b) procurement issues; (c) disbursements; (e) ProjectImplementation Plan; (f) Project Operations Manual; (g) yearly independent audits; (h) correspondence;and (i) unforseen issues.
2. The Bank project team would consist of the Task Manager (Sr. Transport Planner/Economist),a Traffic Engineer, and an Urban Planner. Consultants are anticipated to be required on a short termbasis to assist in specific areas, such as analysis of monitoring system, review of institutionaldevelopment programs, etc. Supervision requirements for the project are expected to be high due to:(a) the complexity of the institutional arrangements, (b) the anticipated large number of small scalesubprojects; (c) FONTUR's lack of experience with Bank procedures; and (d) institutional weakness ofFONTUR (requiring significant training and technical assistance). Supervision requirements areanticipated to be about 20 staff-weeks during the first year and about 1 5 staff-weeks thereafter. Asummary of key inputs is provided on the following page.
II. Borrower's Contribution to Supervision
3. Fontur is expected to: (a).be responsible for project monitoring and coordination, keeping theProject Monitoring System accurate, and to follow-up and address all issues which are "signaled' bythe system; (b) be responsible for properly managing all procurement and disbursement considerations,keeping procurement and disbursement records up to date; (c) prepare progress reports in June andDecember of each year; and (d) be responsible for coordinating arrangements for the Bank supervisionmissions.
126 ANNEX 13
Table 13.5: Bank Supervision Input Into Key Activities
| 12/93 Supervision Mission-Project Effectiveness Sr. Transport Planner 4.5(review: (i) conditions for project Traffic Engineereffectiveness - PIP, POM, and Monitoring Procurement Specialistsystem; and (ii) special coordinatingarrangements devised among severalsectoral agencies participating in projectimplementation and {ii) existing financialand accounting systems/procedures)
2/94 Supervision Mission Sr. Transport Planner/Economist 5.5(review Project Monitoring System Traffic EngineerTraining/implementation, Institutional Consultantdevelopment including training programs)
6/94 Supervision Mission Sr. Transport Planner 8.0(Review results of 1 st year Independent Traffic Engineeraudit) Highway Engineer l
12/94 Supervision Mission Sr. Transport Planner 7.0(Concentrate on subprojects: i) contracts; Traffic Engineerii) eligibility/limits; iii) costs; iv) status)
6/95 Supervision Mission Sr. Transport Planner 8.0(concentrate on disbursements, financial Traffic Engineerstatus, Institutional development, Public Consultant
!_________ Transport Studies)
12/95 Supervision Mission Sr. Transport Planner 7.0(concentrate on subproject status, Traffic Engineerimplementation of recommendations ofpublic transport study)
1996 Two Supervision Missions Sr. Transport Planner 13.0Traffic EngineerConsultant
1997 Three Supervision Missions Sr. Transport Planner 12.0(begin negotiations of follow-up loan, if Traffic Engineermid-term reviews are favorable) Consultant
1998 Two Supervision Missions, continue Sr. Transport Planner 8.0negotiations for follow-up loan) Traffic Engineer
1999 Two Supervision Missions-Loan Closing Sr. Transport Planner 8.0(Project closing, Final negotiations for Traffic Engineerfollow-up loan)
,, . . .=.
127 ANNEX 13
E. ACTION PLAN
The Action Plan is based on the assumption that Board Presentation (Pre) will takeplace in late October 1993 and the project will be Effective (Eff) on January 1994.The Action Plan represents key actions to be taken in the first year (to about midJune 1994); the second year action plan will be developed in March 1994.
Table 13.6: Project Action Plan
Activity Target Agency StatusDate
1. FONTUR Procedures ___
1.01 Final Version of Operations ManualCompleted by: March 29, 1993 FONTUR Completed
1.02 Project Coordinating Unit Formed by: March 29, 1993 FONTUR1 .03 Project Coordinating Unit Manager
nominated & appointed by: March 29, 1993 FONTUR1.04 Project Coordinating Unit staff nominated
and appointed by: March 29, 1993 FONTUR1.05 Final Designs for First Year Components for
Part B1:(a) appoint consultants Nov 92 FONTUR(b) finalize designs for first year Jun 93 FONTUR(c) sample contract docs March 29, 1993 FONTUR
1.06 FONTUR organizational review completed FONTURby: Jan 93
1.07 City Convenios accepting:(a) eligibility criteria
* Maracaibo Dec 92* Maturin Mar 93* Ciudad Guyana Dec 92 FONTUR* Merida Nov 92* Barquisimeto Apr 93
(b) subproject* First city by Jun 93* Second city by Jun 93* All 5 cities by Sep 93 FONTUR/Bank
1.08 Project Launch Seminar - target by: Dec 93 FONTUR1.09 Detailed Action Plan 1994 - Submit to Bank Dec 93
Table 13.6 (cont'd) 128 ANNEX 13
2. PART Al - FONTUR TECHNICALASSISTANCE (TA)
2.01 Select Short List for International TA March 29, 1993 FONTUR Completed2.02 For International TA, issue invitations and
agreed TOR (Bank no objections, evaluateproposals, select, negotiate, obtain Bankobjections sign contract) - complete by: Oct 93 FONTUR/Bank
2.03 For Supervision TA, complete TOR anddefine procedures and program forappointment - complete by: Nov 93 FONTUR
3. PART A2 - Municipal Technical Assistance
3.01 For International TA, issue invitations andagreed TOR (Bank no objections, evaluate FONTUR/proposals, select, negotiate, obtain Bank Dec 93 Municipalitiesobjections sign contract) - complete by:
3.02 For junior national staff, issue invitationsand agreed TOR (Bank no objections, FONTUR/evaluate proposals, select, negotiate, Dec 93 Municipalitiesobtain Bank objections sign contract) -complete by:
4. PART A3 - National Training Program(intensive Course)
4.01 Appoint consultants to prepare and delivercourse including preparation and issue ofpre-qualification documents, select short Nov 93 FONTURlist, obtain Bank no objections, request andevaluate proposals, select, negotiate,obtain Bank no objections, sign contract -Complete by: Nov 93 FONTUR
4.02 Make all administrative arrangements,select location and participants for first Jan 94 Consultantsintensive course
4.03 Deliver First Intensive Course
Table 13.6 (cont'd) 129 ANNEX 13
5. PART A3 - National Training Program (othercourses)
5.01 Finalize Curricula of all courses and send to Feb 94 FONTURBank (including use of consultants ifnecessary) Feb 94 FONTUR
5.02 Prepare detailed chronogram for all courses5.03 Target dates for the delivery (including all
necessary selection of locations,participants, etc.)* Managers course March 94 Consultants* technician course* logistic course* public transport courses
6. PART A4 - CVVT Program
6.01 Submission draft final report on BankProject Components Mar 7, 1993 Consultants/ Completed
6.02 Comments on draft final report - completed Mar 29, 1993 Bankby; Mar 29, 1993 FONTUR/Bank
6.03 Final report agreed6.04 Preparation of detailed TOR for technical
assistance for: Nov 93 FONTUR/CVVT* national training school (preparation of
and delivery of courses* for municipalities (operations)(including short list, select negotiate andobtain Bank no objections, request andevaluate proposals, sign contracts - Nov 93 FONTUR/CVVTcompleted by:
6.05 Appoint National Training SchoolConsultants (inc. short list, select negotiateand obtain Bank no objections, request and Nov 93 FONTUR/CVVTevaluate proposals, sign contracts -completed by: Jan 94 Consultants
6.06 Appoint Local Level TA - as for 6.05 above6.07 Prepare Training School Improvement
Program detailed proposals Jun 94 FONTUR/CVVT6.08 Detailed design and bidding docs for Sep 94 FONTUR/CVVT
Training School civil work (inc appointmentof consultants, etc) completed by: Jun 94 Consultant
6.09 Bid Training School civil works Sep 94 FONTUR/CVVT6.10 Prepare final specifications and bid
documents for local level equipment Jun 94 FONTUR/CVVT6.11 Bid local level equipment6.12 Make all arrangements (inc. Bank no
objections for overseas training - Targetdate for completion by:
Table 13.6 (cont'd) 130 ANNEX 13
7. PART B1 - Traffic and InfrastructureComponents
7.01 Final Design completion - See item 1.05 Jun 93 FONTUR Completedabove
7.02 Municipalities sign subprojects Agreements* First City by:* Second city by: Nov 93* Target date for completion five cities Dec 93 FONTUR/
7.03 Municipalities assign counterpart funds and Feb 94 Municipalitiesdemonstrate to FONTUR for first year* First city by:* Second city by: Nov 93* Target date for completion five cities Dec 93 Municipalities
7.04 Municipalities develop Maintenance Action Feb 94Plan and demonstrate to FONTUR* First city by:* Second city by: Nov 93* Target date for completion five cities Dec 93
7.05 Municipalities to sign Traffic Police Feb 94Convenio* First city by:* Second city by: Dec 93* Target date for completion five cities Jan 94 Municipalities/
7.06 Municipalities establish Project Apr 94 CVVTimplementation Unit* First city by:* Second city by: Nov 93* Target date for completion five cities Dec 93 Municipalities
7.07 Municipalities sign undertaking to carry out Apr 94Public Transport Study* First city by:* Second city by: Nov 93* Target date for completion five cities Dec 93
Apr 94
8. Part B2 - Maintenance Components
8.01 Maintenance studies completed by:* First city by: May 93 Completed* Second city by: Jun 93 FONTUR* Target date for completion five cities Jul 93
8.02 Maintenance Contracts bid:* First city by: Dec 93* Second city by: Jan 94 FONTUR/* Target date for completion five cities Apr 94 Municipalities
131 ANNEX 14
VENEZUELAURBAN TRANSPORT PROJECT
Urban Transport Characteristics
1. Venezuela has an estimated fleet of 2.0 million vehicles (1990), of which 73% are private cars,6% are vehicles used for public passenger transport, and the rest are motor cycles, trucks, trailers andsemi-trailers. The Capital Region has 42% of the country's cars, and 39% of its public transportvehicles. In addition to those modes, Caracas has a metro (CAMETRO) with two lines totalling 40 km.More than 95% of the public transport fleet is privately owned and consists of buses, por puestos (seepara.3 below for definition) and jeeps. The modal share of urban buses and por puestos ranges from40% in Maracaibo to nearly 60% in Merida; walking accounts for about 13-16% of all trips in mostcities, and private cars for 29-42%. Other than walking, there is little non-motorized transport, partlybecause the hilly topography makes it difficult to operate bicycles. In Caracas, the metro accounts fornearly 15% of the trips, other public transport for 28%, cars for 41 % and walking for roughly 16%;there is also a growing use of motorcycles.
2. In urban areas other than Caracas, a typical home-to-work trip requires transfers between porpuestos and can take as much as 1-2 hours each way. Since the por puesto tariffs are not integrated,many passengers must pay multiple fares; in these cases, poor people are obliged to pay a highproportion of their disposable salary on transport. In Caracas, the lowest income users live in ranchos('areas marginales') on the hillsides which can only be served by four wheel drive vehicles (jeeps), sincegradients are steep and other vehicles cannot maneuver safely. A typical home-to-work trip for arancho dweller consists of climbing down a hillside stairway to a jeep stop, taking the jeep to a porpuesto stop and transferring to a por puesto to reach the metro. Due to the long distances and therelatively high traffic congestion in Caracas, it is not uncommon for trips to take over 2 hours eachway. The service level of road-based transport has deteriorated considerably due to lower speedscaused by traffic congestion. Frequencies tend to be low, reliability is poor, and conditions of comfortand safety are bad. Furthermore, the lack of appropriate traffic management systems coupled withpoor parking policies and unsafe driving results in an high number of accidents, especially atintersections. Traffic safety enforcement is generally absent and some improvements couldsignificantly reduce the number of accidents.
Por Puestos and Jeeos
3. The term 'por puesto' refers to paratransit services provided with small or medium-sizedvehicles. About 100,000 por puestos are registered in the country, 39% of which are in the CapitalRegion. Por puestos are usually driven by their owner who, according to a 1962 law, is only allowedto own one such vehicle. It is, however, permissible to have more than one driver to operate thesame vehicle, and it is reported that this practice is increasing in order to increase revenue.
4. Por puestos originated as shared taxis, and these still predominate in Maracaibo. In most othercities, however, they have been largely replaced by the 32-seat minibus which is the largest vehicleadmitted as a por puesto; above this size the vehicle is classified as a bus. The average por puestosize ranges from 24.1 seats in Barquisimeto to 8.1 in Maracaibo. In the Capital Region, the averagevehicle has 17.4 seats; this reflects the relatively large number of 12-seat jeeps which serve the poorneighborhoods that have grown on the city's steep mountain slopes. However, the most common porpuesto in Caracas are the 32-seat minibuses. With an additional standing capacity of 10-15passengers, they are competing directly with conventional buses and have taken over some of theirmarket share.
5. From the passengers' viewpoint, por puestos have the advantage of excellent frequencies, a highdensity route coverage, convenience (no formal bus stops) and a reasonable level of comfort if the
132 ANNEX 14
vehicle is not too old. The success of the por puesto system is also due to the fact that driversoperate their own vehicle and thus tend to work longer and take greater care of the vehicle than driversemployed by (bus) companies. However, there are also negative features, including (a) greaterdisruption to other traffic and more air pollution than is caused by normal buses; (b) infrequent servicesin late evenings and on public holidays; (c) less reliable services at other times, for example duringheavy rains; (d) por puesto fares tend to be higher than those for buses; and (e) por puestos areextremely difficult to regulate. The municipalities (MTC until 1990) generally require that por puestosoperate on specified routes. The vehicles on each route form an association and these are groupedinto an overall national organization ("Central Unica de Asociaciones de Venezuela") which essentiallyfunctions as the drivers' union. In other ways, por puesto services are naturally fragmented anddifficult for any level of Government to control.
6. Unlike fares on most regular buses, por puesto fares are graduated according to the distancetravelled. The minimum fare is Bs.7; over this amount it is believed that fares typically average aroundBs.0.85 per km. A 1989 analysis revealed that gasoline comprises only 15% of vehicle operatingcosts for a 24-seat minibus; in the case of the diesel powered 32-seat minibuses, fuel represented aslittle a 3%. Nevertheless, the issue of fuel price increases continues to be extremely sensitive. Onereason for this appears to be a general (but mistaken) perception that fuel carries a great weight intotal vehicle operating costs.
Reaular Buse
7. More than 90% of the regular bus services in Venezuelan cities are provided by privatecompanies. The principal exceptions to this basic pattern are Ca) the Caracas metrobus operationwhich carries 110,000 daily passengers in 141 buses (September 1992), (b) the heavily subsidizedservices provided by the Caracas Municipality of Libertadores, and (c) the recently started operationin Barquisimeto (30 buses in September 1992).
8. Until 1975, regular bus companies tended to expand their operations, but in the 1980s weresqueezed by increasing costs and falling patronage and, on the other hand, controlled fares whichcould not be raised in line with inflation. It is generally accepted that their financial position is nowin a critical state. In Caracas alone the number of bus companies and buses in circulation droppedfrom 41 and 1,473 in 1975 to 24 and 523 in 1989.
9. Buses are regulated by the municipal authorities, although in the smaller cities there are basicallyno regular bus services. Recently, some cities and States have been considering to buy, and in somecases operate, regular bus services because they argue that they are at the mercy of por puestoassociations, and that Government is obliged to provide some form of mobility to the poor. InBarquisimeto, the Government of Lara State initiated services in 1992 and intends to expand its fleetof 30 buses to 100.1' Maracaibo planned to acquire 300 buses in 1992 with Government assistance,but these were to be operated by a private company.
10. In 1988, about 800 buses served the inner part of the Capital Region, and 150 buses the outerareas. In the inner part, average route length was 27 km, average distance between stops 450meters, and average commercial speed 14 km/hour. Average service frequency was about 7 busesper hour. Bus occupancy at the maximum load point was 73 passengers during the peak hour, and41 passengers during the off-peak. Before the introduction of metrobus services the fleet of regular
I/ Ja Juw 1992, Ib mivian pmtided by Puladraspolst waried 324,000 puaen, of whm 202,000 wre full-paying adub. A bus trip costWSBSU for , SB2-SD3 for sola, ad was free of chare for persu bdow 10 and above 65 yea of age; about 70% of ditect opqentcost exclding cpitl and depciation were coveed from fae.
133 ANNEX 14
buses in Caracas was comprised of generally old vehicles. They thus required relatively heavymaintenance, and availability tended to be poor.
11. The main problems of bus services are caused by the generally poor condition of the fleet, whichhas resulted from years of neglect. In 1989, only 52% of the Caracas buses were in operation, andof these, one third was judged to be in poor condition. Of the rest, 27% were out of service requiringrepairs and 21 % were considered ready for scrapping. As a result of poor maintenance, buses oftenbreak down, resulting in unreliable services and a poor image for bus transport. While some of theblame for this situation must be placed on the management of the companies themselves, otherproblems have been beyond their control, including: (a) a squeeze on revenues due to fare controls;(b) a major loss of passengers due principally to competition from the por puestos; and (c) difficultieswith vehicle maintenance, due particularly to problems in obtaining of spare parts. Profitability hadbecome so low by the late 1980s that the disappearance of private buses was widely regarded asinevitable. Recent fare increases may have marginally improved that situation.
Caracas Metro
12. The Caracas Metro Company (CAMETRO) was constituted in August 1977 as a state ownedcompany with 99% of the shares held by MTC. It has two lines with a total length of 40 km. Thecompany has a total of nearly 4,000 employees, of whom about 500 work for the metrobus division.The number of passengers transported by the metro has been growing at about 30% annually, from55.5 million in 1983 to 260 million in 1989. Traffic on a normal workday in 1991 was estimated tobe about 900,000 passengers, of whom nearly one quarter come from car-owning households. Aboutone third reach the metro station by motorized transport, primarily por puesto, and the same appliesfor reaching the final destination. About half of all metro trips are to or from work; 83 percent oftravellers use the system regularly, making one or more trips per day. Metro fares are structured sothat (in 1991) a trip of up to four stations cost Bs 8.00. Fares increase by Bs 1.00 for each additionalfour stations, the maximum fare (beyond 20 stations) being Bs 12.00. It would seem that the farestructure should be reassessed. Most low-income metro passengers live at the ends of the networkand so are penalized by the present graduated tariffs. It has been suggested that future fare increasescould be combined with the use of a flat, or at any rate flatter, fare structure which would shield thepoor who make long trips from a significant increase, while increasing CAMETRO's total fare revenue.
13. The Caracas metro system is designed to run at a minimum headway of 90 seconds betweentrains, i.e., 40 trains per hour. However, CAMETRO does not feel happy about running trains at sucha short interval for periods as long as an hour. A more acceptable estimate of maximum peak hourcapacity is 33 trains per hour (i.e. an average interval of about 110 seconds). Each train has a nominalcapacity of 1,200 passengers but in practice it has been found that the crush capacity is around 1,800persons per train. Thus the maximum one-way capacity at the maximum load point is 59,000passengers per hour. CAMETRO's total 1989 operating revenue was Bs 1.06 billion, 97% frompassenger fares. Operating costs totalled Bs 1.18 billion, and administrative and general expensesadded a further Bs 198 million, resulting in a deficit of Bs 315 million prior to depreciation and loanamortization. These totalled Bs 294 million so that the operational result for the year 1989 was a lossof Bs 609 million, equivalent to 57% of operating revenues.
14. Metrobuses are organized as a separate division within CAMETRO (called Gerencia Ejecutiva deTransporte Superficial). The first metrobuses were put into operation in October 1987 at the requestof the nation's President to respond to a growing crisis in urban transport in some areas of Caracas.At that time one of the principal functions of the fleet was to provide a service between the stationsLa Paz (line 2) and Capitolio (line 1) while the final section linking the two metros was being built. Asof September 1992, CAMETRO operates a fleet of 141 buses which serve a collection and distributionfunction for metro passengers. Metrobuses currently operate on 1 6 routes within Caracas plus twolonger routes to Petare/Guarenas. Services are provided from 6AM to 11 PM. The total staff of the
134 ANNEX 14
metrobus division is just over 500, with 328 operators and about 170 others, including thoseresponsible for maintenance. This is about 3.5 persons per bus, which is low in comparison with mostoperations elsewhere. Over 90% of all buses are dispatched for revenue services, which is also good.
15. Metrobus fares are integrated with the metro routes, i.e. they give the right to continue the tripon the rail system without additional payment. In September 1992, metrobus patronage was about111,000 passengers on a normal work day, with an average revenue of B$16 per passenger. Whilethis represents a substantial increase over the fares charged earlier, it is clear that the metrobusrevenues do not cover their operating costs.
Passenger p/KM of line in 11,347,938 2,270.459Yearly Passengers 238,306,695 43,138,724Monthly Passengers 19,858,891 3,594,893Week day Passengers 779,288 136,617
Week day Passengers (Maximum) 1,018,446 180,463Peak hour passengers 75,000 17,500Avg. distance traveled/passenger 6.34 Km 9.50 KmTrains in operation - peak hour 33 13Minimum Headway 2 min 10 sec 4 minTrain Crush Capacity (Passengers) 2,100 2,100
Normal 1,280 1,280Flow of Pasongers (One direction) 20,000 7,700Most traveled station p/day (boarding anddisembarking) 162,106 32,890Avg passenger density in trains in most traveledinter-station 4.3 pass/sqm N.A.Train kilometers per year 4,233,027 2,307,889Load factor 33 % 16%Energy Consumption (KWH)Trains 98,131,600 45,387,300Fixed Installations 76,058,279 46,128,000Ticket Vending: AutomAtic 70% 84%
Notes: (1) Based on average minimum salary of 7500 Bs./month and US$1 -63Bs.(2) EsUmated assuming 2 rideS per day in the 22 working days of a month per person, besides a coefficlent equalto .8 was applied to account for that not all household members travel. Bus rides include connecting por puesto/leep trips.Combined bus-metro rides are those in which users take both modes
Barquisimeto Metropolitan Re iion
Income Average. Urban Transportation Expenses (2)Brackets Average Househotd
In Minimum Household Income {1) Bus Riders Por puesto Ridenr Combined rideWages (MW) Stze (USS) (USS) % of Income (UBS) % of Income - of Income
Up to 2 5.6 317.46 25.03 7.9% 25.03 7.9% 16.8%2 to 3 5.6 476.19 25.03 5.3% 25.03 5.3% 10.5%4to 5 5.6 1,071.43 25.03 2.3% 25.03 2.3% 4.7%
Maracaibo Metro olitan Region
Income Average Urban Transportation Expenseo (2)Brackets Average Household
In Mlnimum Household Income (1) Bus Riders Pot pueto Rideir: Combined rideWages (MW) Size (US$) (US$) % of Income (US$) % of Income % of lncome
Up to 2 5.8 317.46 28.16 8.9% 28.16 8.9% 17.7%2to 3 5.6 476.19 28.16 5.9% 28.16 5.9% 11.8%4 to 5 5.6 1,071.43 28.16 2.6% 28.16 2.8% 5.3%
Ciudad Gusyani Metropolitan Region
Income Average Uroan Transportation Expenses (2)Brackets Average Househotd
In Minimum Household Income (1) Bus Riders Pot puesto Riderrs Combined rid,Wages (MW) Size (Us$) (USS) % of income | (US$) % of Income % ,oflIcomn
Up to 2 4.9 317.46 24.64 7.5% 24.64 7.8% 16.5%2 to 3 4.9 476.19 24.e4 5.2% 24.64 5.2% 10.3%4 to 5 4.9 857.14 24.64 2.9% 24.64 2.9% 5.7%
Notes: (1) Based on average minimum salary of 8000 Bs./month and US$1 -83B.(2) Estimated assuming 2 rides per day In the 22 working days of a month per person, besides a coefficient equalto .8 was applied to account for that not all household members travel. Bus rides do not Include connecting por puesto/ljeep trips.Combined bus-por puesto rides are those In which users take both modes
Table 14.13- SUMMARY OF URBAN TRANSPORT SUBSIDIES
TYPE OF SUBSIDY PAID BY PAID TO ANNUAL Justification Problems ProposalsAMOUNT (millionsof bolivares)
Student subsidy ( GOV Transport Operators by type of 5.000 ($us 80 Reduce the 1) The allocation of the implementationreduced tariff in all (MTC) vehicles based on monthly million) transportation subsidy is not linked to of a direct
the country for all statements. Payment is made through expenses of a the students subsidy to the
the students) the associations and unions. non productive transported but instead student as a
Approximatelly 60,000 operators sector of the to the capacity of the function of thereceive this payment. Bus, Minibus country to allow vehicle number of trips
and jeep subsidies are respectively their training and undertaken8500, 7.400 and 5700 Bs/month. consequently 2) the students are through tickets
decrease their considered by the or tokens whicheducation costs, operator as a second would be later
class user because he exchanged bydoesn't pay full tariff. their full value.For that reason quite cReation of anoften the operator does ooficial studentnot stop to pick up the roster.students.
3) High number offalsified student cardsmakes % of student
__________________ ________________ passengers very high.
Bono de Transporte GOV (all Civil servants and workers which 6,720 Bs. ($US It complements 1) The subsidy is Establishment
( Salary supplement the gov. make less than 15000 Bs/month. It is 107 million) the very low neither related to the of a direct
for workers with offices) paid to approximatelly 700,000 household salary number of trips taken or subsidy scheme
low income) people- the monthly allowance is 800 to ensure that to the actual hh. to low oicomeBa. home to work transport costs people similar to
trips are paid 2) The subsidy is not the vale deupdated automatically transportefor inflation as the vale - which is ade-transporte in Brazil. function of the
actual trips and
costs throughtickets, tokensand not in
money terms.
Private office employees and workers who 21,434 Bs ($USEmployers make less than 15000 bsl month. 340 million)
It is paid to about 1.985 million________ people at 800 Ba/month per parson>
TOTAL ~,626 Bel,on I u
145 ANNEX 15
VENEZUELAURBAN TRANSPORT PROJECT
Selected Documents in the Proiect File
1. Politica Integral de Transporte Publico - Consejo Venezolano de Transporte2. An Estimation of the Resource Costs of Vehicle Operation in Venezuelan Cities -
Thomson/CEPAL-MTC - FONTUR3. Estrutura Organizativa - Fondo Nacional de Transporte (FONTUR)4. Programa de Financiamiento de Vehfculos de Transporte POblico Urbano - FONTUR5. Programa de Financiamiento de Flota de Transporte Publico Urbano - FONTUR6. Manual de Operaciones - FONTUR7. Documento para la Precalificaci6n de Organizaciones para el Desarrollo de los Cursos de
Nivelaci6n e Intensivos de Entrenamiento para el Programa Nacional de Capacitaci6n -Programa Nacional de Transorte Urbano para Ciudades Medianas - FONTUR
8. Programa de Preinversi6n en Transporte - Programa de las Naciones Unidas para el DesarrolloDocumento de Proyecto - Ministerio de Transporte y Communicaciones - FONTUR
9. Avance del Programa Fontur - Presentaci6n al Gabinete Econ6mico - Ministerio de Transportey Comunicaciones - FONTUR
10. Estudio para el Analisis de Esquemas Alternativos de Gesti6n del Sistema Metrobus -Programa de Preinversi6n de Transporte, Transurb Consult - FONTUR
11. Estudio de Administraci6n del Transito del Area Metropolitana de Caracas - Cons6rcio Oficinade Ingenieria Edgar Elias Osuna - FONTUR
12. Estudio de Administraci6n de Transito del Area Metropolitana de Barquisimeto - Cons6rcioPost, Buckley, Schuh y Jernigan, Inc. - FONTUR
13. Estudio de Administraci6n de Transito del Area Metropolitana de Maracaibo - GrupoConsultor Sofretu/BceomfTransplan/Provial - FONTUR
14. Estudio de Administraci6n de Transito del Area Metropolitana de Maturin - D.I.T. Harris,S.A./Frederic R. Harris, Inc. - FONTUR
15. Estudio de Administraci6n de Transito en Ciudad Guayana - Urbanismo y Vialidad, S.A.(URVISA) - FONTUR
16. Fortalecimiento Institucional de las Municipalidades - I.R.R. Consultores Asociados, S.A. -FONTUR
17. Diseho del Manual de Operaciones del FONTUR - ENGENHO Consultoria, Arquitectura ePlanejamento - FONTUR
18. Aplicaci6n de la Legislaci6n Especial en Materia Policial del Transito - E.I.R. Ingenieros, C.A. -FONTUR
19. Programa de Apoyo y Asesoria Tecnica a los Municrpios en Transporte - Ministerio deTransporte y Comunicaciones/MTC - FONTUR
20. Proposed Urban Transport Study - John Cracknell21. La Soluci6n al Tranporte de Merida - Comici6n Presidencial de Transporte para la Ciudad de
Merida - Merida Entidad de Ahorro y Prestamo (MERENAP)22. 'La Definici6n de las Competencias Nacionales y Municipales en Materia de Transporte
Terrestre" - Seminario, 'La Gesti6n Municipal en el Transporte Publicoa - PROHOMBRE -Centro de Promoci6n del Hombre
23. Economics and Analysis - Economic Evaluation of Capital Projects24. Los Castillos de Guayana - ALMACARONI25. Guayana - ALMACARONI26. Macagua - Parque la Llovizna - ALMACARONI27. Estudios de Tarifaci6n y Subsidios - Willian Alberto Aquino Pereira28. Deregulation of Urban Transport in Chile: What Have We Learned? - Richard Darbera29. Plan - Piloto de Subsidio en Transporte Publico Ciudad Maturin - Informe Final - Banco
Interamericano de Desarollo - BID - Willian Alberto Aquino Pereira
146 ANNEX 15
30. Programa Global de Desarrollo del Transporte Urbano Conceptos Bdsicos Preliminares -Misi6n Conjunta - Banco Interamericano de Desarrollo/BID - Banco Mundial/BIRD
31. Proyecto de Administraci6n de Transito para el Area Metropolitana de Barcelona - Puerto LaCruz - Terminos de Referencia para Servicios de Consultores - Programa de TransporteUrbano en Venezuela
32. Proyocto de Control de Transito en el Area Metropolitana de Caracas - Terminos deReferencia
33. lnventario de la Flota de Por Puestos: * Maracaibo, Zulia* Caroni, Bolivar* Barcelona, Bolivar* Baruta, Miranda* Sucre, Miranda* Libertador, Merida* Barquisimeto, Lara* Barcelona, Puerto La Cruz
34. Diagnostico de la Funci6n de Planificaciones - Ingt ' Elizabeth Cavallin - Ministerio deTranporte y Comunicaciones/MTC
35. Competencias en la Planificaci6n, Organizaci6n, Regulaci6n y Control del Transporte,Transito y Circulaci6n - Ministerio de Tranporte y Comunicaciones/MTC
36. Avances en el Sector Transporte Operaciones de Credito BIRF/BID - Ministerio de Tranporte yComunicaciones/MTC
37. Programas de Preinversion - Assistencia Tecnica y Proximas Operaciones del Banco Mundialy del Banco Interamericano de Desarrollo - Ministerio de Transporte y Comunicaciones/MTC
38. Centro de Capacitaci6n de Ingenieria de Transito y Transporte Publico: Antecedentes yEstimacion de Custos
39. Consejo Venesolano de Transporte - Grupo Tecnico de Transporte Urbano, Agenda NO 1 yAgenda N° 2.
