The World Bank Metro Manila BRT Line 1 Project (P132401) REPORT NO.: RES46902 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF METRO MANILA BRT LINE 1 PROJECT APPROVED ON MARCH 16, 2017 TO REPUBLIC OF THE PHILIPPINES TRANSPORT EAST ASIA AND PACIFIC Regional Vice President: Manuela V. Ferro Country Director: Ndiame Diop Regional Director: Ranjit J. Lamech Practice Manager/Manager: Benedictus Eijbergen Task Team Leader(s): Fang Xu The World Bank Metro Manila BRT Line 1 Project (P132401) ABBREVIATIONS AND ACRONYMS ADB Asian Development Bank AFC Automatic Fare Collection ATC Area Traffic Control AUV Asian Utility Vehicle BAC Bids and Awards Committee BAU Business as Usual BP Bank Procedures BRT Bus Rapid Transit BRTSM BRT System Manager CCTV Closed Circuit TV COA Commission on Audit CTF Clean Technology Fund DA Designated Account DBM Department of Budget and Management DBP Development Bank of the Philippines DED Detailed Engineering Design DENR Department of Environment and Natural Resources DOTr Department of Transportation DPWH Department of Public Works and Highways DTS Detailed Technical Study EDSA Epifanio de los Santos Avenue EE Energy Efficiency EIRR Economic Internal Rate of Return EMA External Monitoring Agent ESIA Environment and Social Impact Assessment ESMP Environment and Social Management Plan EST Environmentally Sustainable Transport GDP Gross Domestic Product GHG Greenhouse Gas GoP Government of the Philippines IA Implementing Agencies IBRD International Bank for Reconstruction and Development IFRs Interim Financial Reports The World Bank Metro Manila BRT Line 1 Project (P132401) BASIC DATA Product Information Project ID Financing Instrument P132401 Investment Project Financing Original EA Category Current EA Category Full Assessment (A) Full Assessment (A) Approval Date Current Closing Date 16-Mar-2017 30-Nov-2022 Organizations Borrower Responsible Agency Republic of the Philippines Project Development Objective (PDO) Original PDO The Project Development Objective (PDO) is to improve the efficiency, effectiveness and safety of the public transport system along the Project Corridor in Metro Manila in an environmentally sustainable manner. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing (US$, Millions) Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IBRD-87280 16-Mar-2017 14-Feb-2019 15-Mar-2019 30-Nov-2022 40.70 .10 40.60 TF-A2129 16-Mar-2017 14-Feb-2019 15-Mar-2019 30-Nov-2022 23.90 0 23.90 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank Metro Manila BRT Line 1 Project (P132401) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING 1. The Metro Manila Bus Rapid Transit Line 1 Project (the Project) has a Development Objective (PDO) of improving the efficiency, effectiveness, and safety of the public transport system along the Project corridor in Metro Manila in an environmentally sustainable manner. The PDO is supported by six components: (a) Bus Rapid Transit (BRT) infrastructure development along Quezon Avenue in Metro Manila, (b) BRT system management to support traffic engineering and management measures, and the development of an intelligent bus operational support and management system, (c) BRT concept development and dissemination to support capacity building and feasibility studies in other corridors in Metro Manila and secondary cities in the Philippines, (d) accessibility and urban realm enhancements to support the identification, design and improvement of the key areas in terms of walkability and access routes around the BRT corridor, (e) Project outcome monitoring; and (f) Project management. The Department of Transportation (DOTr) is the government agency in charge of implementing this Project. 2. The Executive Directors of the Bank approved the IBRD loan of US$40.70 million and the CTF loan of US$23.90 million for the Project on March 16, 2017. The IBRD Loan Agreement (Loan No. 8728-PH) and the CTF Loan Agreement (CTF Loan TF 0A2129-PH (collectively, the Loan Agreements) were signed by the Republic of the Philippines (the Borrower) and the Bank, acting in its own capacity and as an implementing entity of the CTF on February 14, 2019 and declared effective on March 15, 2019. The closing date under the Loan Agreements is November 30, 2022. 3. The Project experienced delays even before the signing of the Loan Agreements. Following the national election in 2016, the new government put several donor-supported urban transport projects agreed/approved by the previous administration on hold to reassess their priority. As a result, the proposed bus rapid transit project for Asian Development Bank financing was shelved; the implementation of the Bank-financed Cebu BRT Project (CBRT) was stalled; and the signing of the Loan Agreements for the Project was delayed. However, following continued engagement by the Bank team and buy-in from concerned government counterparts, the Loan Agreements were signed after nearly twenty-four months since the Board approval. 4. Despite the renewed commitment from government counterparts, project implementation remained slow during the last three years. The Project has zero procurement activity completed and the Borrower has not submitted any withdrawal application. Various reasons contributed to the poor performance of the Project: a. Weak capacity of the implementing agency. The National BRT Program Management Office (NPMO) in charge of BRT projects implementation has very limited experience with BRT projects. At the same time, the NPMO has been understaffed and experienced high staff turn-over throughout the Project implementation process. Within the last three years, DOTr appointed five managers for NPMO and three Undersecretaries in charge of the BRT portfolio. b. Inefficiency of procurement management. There was no dedicated procurement specialist and financial management specialist supporting the BRT projects during the last three years. The special Bids and Awards Committee within DOTr is not dedicated to the BRT projects and often took a very long time to move the Project procurement activities. Though the Bank has provided its no- objection to the TORs of key consultant services, e.g., the Preliminary Engineering Design (PED) The World Bank Metro Manila BRT Line 1 Project (P132401) consultant, the technical support consultant (TSC2) for the Project, and the social management consultant more than one year ago, DOTr is yet to advertise any of these positions. c. Lack of general government budget allocation. Given that no progress has been made, DOTr was not able to secure government budget allocation for the Project for three years (CY2020-2022). The lack of budget allocation hampered Project implementation as no contracts could be awarded without budget. d. COVID-19 pandemic. The outbreak of the COVID-19 two years ago and the quarantine measures further affected the mobilization of international and local consultants and the coordination within DOTr and between government agencies. 5. To date, the cumulative disbursement remains zero for both IBRD and CTF loans, with only about US$0.10 million paid out of the IBRD loan for front-end fee. II. DESCRIPTION OF PROPOSED CHANGES 6. In light of the lack of any implementation progress made on this Project and with less than six months left to the Project’s closing date, an extension cannot be justified. A cancellation of the full undisbursed balance for the IBRD and the CTF loans for this Project has been agreed between the Bank and the Government. A formal cancellation request dated June 21 2022 was sent by the Department of Finance to the Bank for a full cancellation of the undisbursed amount of USD40,598,250 IBRD loan and USD23,900,000 CTF loan. On that basis, a total of USD 64,498,250 will be cancelled with this restructuring. III. SUMMARY OF CHANGES Changed Not Changed Components and Cost ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ Results Framework ✔ Loan Closing Date(s) ✔ Disbursements Arrangements ✔ Disbursement Estimates ✔ The World Bank Metro Manila BRT Line 1 Project (P132401) Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Implementation Schedule ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_COMPONENTS_TABLE COMPONENTS Current Current Proposed Proposed Cost Action Component Name Component Name Cost (US$M) (US$M) BRT Infrastructure 48.86 Revised BRT Infrastructure 0.00 System Management 12.68 Revised System Management 0.00 Capacity Building and Concept Capacity Building and Concept 11.05 Revised Development and 0.00 Development and Dissemination Dissemination Accessibility and Urban Realm Accessibility and Urban Realm 18.01 Revised 0.00 Enhancements Enhancements Project Outcome Monitoring 1.77 Revised Project Outcome Monitoring 0.00 Project Management 7.88 Revised Project Management 0.00 TOTAL 100.25 0.00 The World Bank Metro Manila BRT Line 1 Project (P132401) OPS_DETAILEDCHANGES_CANCELLATIONS_TABLE CANCELLATIONS Value Reason Current Cancellation New Ln/Cr/Tf Status Currency Date of for Amount Amount Amount Cancellation Cancellation BORROWER' S REQUEST IBRD- Disburs USD 40,700,000.00 40,598,250.00 15-Jun-2022 101,750.00 FOR 87280-001 ing COUNTRY REASONS BORROWER' S REQUEST TF-A2129- Effectiv USD 23,900,000.00 23,900,000.00 15-Jun-2022 0.00 FOR 001 e COUNTRY REASONS OPS_DETAILEDCHANGES_REALLOCATION _TABLE REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Financing % Current Allocation Actuals + Committed Proposed Allocation (Type Total) Current Proposed IBRD-87280-001 | Currency: USD iLap Category Sequence No: 1 Current Expenditure Category: GD,WKS,NCS,CS, TR OC 1A 1B 2D 4 6 40,598,250.00 0.00 0.00 100.00 100.00 iLap Category Sequence No: FEF Current Expenditure Category: FRONT END FEE 101,750.00 101,750.00 101,750.00 Total 40,700,000.00 101,750.00 101,750.00 TF-A2129-001 | Currency: USD iLap Category Sequence No: 1 Current Expenditure Category: GD,WKS,NCS,CS, TR OC 1A 1B 2D 4 5 23,900,000.00 0.00 0.00 100.00 100.00 The World Bank Metro Manila BRT Line 1 Project (P132401) Total 23,900,000.00 0.00 0.00 .