Report No. PIC556 Project Name Brazil-Sao Paulo Integrated Urban Transport (@+) Project (The Barra Funda-Roosevelt Link) Region Latin America and the Caribbean Sector Transportation Project ID BRPE6559 Implementing Agency Metropolitan Transport Secretariat Av. Paulista 402, 15 andar Paraiso CEP 01310-903, Sao Paulo, SP, Brazil Contact: Arnaldo S. Pereira Tel: (011) 285-0993 Fax: (011) 284-9054 Projected BoardDate December 1997 1. Introduction. The Bank is considering a US$45 million equivalent loan to the Government of the State of Sao Paulo to help finance the first part of an integrated urban transport project in the Sao Paulo Metropolitan Region (SPMR). The project would be implemented by a project unit within the Sao Paulo State Urban Transport Secretariat and by the Sao Paulo State Urban Train Company (CPTM). Counterpart funds of US$45 million equivalent would be provided by the Government of the State of Sao Paulo. The contents of this PID are subject to change, and the components described may not necessarily be included in the final project. 2. Background. The Sao Paulo Metropolitan Region (SPMR), with 8000 sq. km, has 16 million inhabitants spread irregularly over 39 individual municipalities which are dominated by the Sao Paulo Municipality (SPM) with 8.5 million inhabitants. The SPMR generates roughly 20t of the GNP and is considered the most important economic region of the country. Each day, 30 million person trips take place in the SPMR of which 10 million are walking trips. Forty one percent of the motorized trips are by private automobile while the remaining are 39t by bus (mostly private operators), 14t by metro and 6t by train. Of the 12 million trips by public modes, about one third use more than one vehicle, requiring some sort of modal transfer: 78t of all metro trips, 61t of all train trips and 16t of all bus trips require one or more transfers to be completed. This level of urban transport activity, dominated by the road-based motorized modes has significant impacts on the SPMR's environment. Despite an existing 250 km rail network, the lack of integration between the metro and the suburban trains discourages more rail trips, in favor of buses and the automobile creating heavy congestion during peak hours thereby significantly increasing home- to-work trip time. The urban poor are the main users of public transport and bear the brunt of these problems: (i) shortage of capacity at peak hours resulting in overcrowded (>10 pass/m2) often inhuman conditions, (ii) long work journeys (2.5 hours/day) from the metropolitan periphery to the urban centers, with often more than two modal transfers; and (c) paying over a fifth of their income towards fares. Lack of coordination between the 3 levels of government responsible for urban transport, particularly between the SSP and the SPM, has led to poor tariff and modal integration, lack of prioritization in urban transport investments and no common policy on pricing and subsidies. SPM's municipal bus company (CMTC) and private operators under contract to CMTC, received until early 1993 huge subsidies (US$1.5 million/day) due to a chaotic tariff policy which, in the past, was the result of inadequate management and political interference. SPM has now negotiated with the private operators, a much lower subsidy based on the number of passengers transported rather than vehicle-kilometers, and has called for bids for the sale to the private sector of the buses and maintenance facilities which were still directly operated by CMTC. Finally, SPMR needs to modernize its traffic engineering and control technology to be able to cope with the present and growing number of road-based vehicles. 3. The air quality of the city is degraded by the presence of excessive levels of carbon monoxide, ozone and particulate. During 1990, health warnings due to air pollution from CO were issued for a total of 0 days, ozone --108 days, and particulate --54 days. Vehicles account for 73 to 94 percent of most air pollutants in the SPMR, except for particulate matter which are distributed as follows: 51 percent come from industries, 31 percent from motor- vehicles, and 18 percent from open fires. In 1990, the number of vehicles registered in the SPMR, were 4.3 million. Vehicular air pollution has been somewhat mitigated by the use of alcohol. Vehicular accidents, on the other hand, have become a major source of environmental risks. In 1990, they accounted for 64,029 injuries and deaths (2,715 or 7.9/10,000 vehicles) in the SPM alone with a cost conservatively estimated at US$1.5 million/day. Congestion and overcrowding of the public transport system are a source of environmental stress prompting trampling and fights. Although the maximum capacity of most buses is of 36 persons seated and 40 standing,during rush hour, more than 90 passengers --and in some cases, up to 120--are admitted. According to the SPM's Traffic Engineering Department, congestion has been increasing at a rate of 20 percent per year; the economic cost of time and fuel lost due to traffic congestion has been estimated at US$6.2 million per day. 4. Project Objectives. The proposed project is the first part of a two-part program designed with the following development objectives: (a) to finance infrastructure and equipment which are critical to the physical integration between the two existing rail suburban systems (ex-CBTU and ex-FEPASA) and between them and the Sao Paulo subway system (METRO); (b) to increase private sector participation in the management and operations of the SPMR's rail- based urban transport systems; and (c) to contribute for the reduction of noise and pollution from transport sources. Specifically, the proposed project would integrate about 250 km of suburban main line tracks by building rail links to allow trains from ex-CBTU's Leste lines access to ex-FEPASA's lines at the Barra Funda intermodal station. East-West bound passengers would then be able to transfer between the suburban rail systems of FEPASA and CBTU, connect with the North-South Metro line at the intermediate station of Luz, and have access to the Sao Paulo central business -2 - district. The proposed project will also finance the hiring of a financial advisor to conduct the process to concession out CPTM's operations and maintenance to the private sector. Finally, the proposed project will include a number of actions designed to contribute for the improvement of air quality in the SPMR The second part of the program, which is under consideration in parallel as a separate loan , will consist of the construction of a 9.63 km subway line (the Metro's 4th line) under a Build-Operate- Transfer (BOT) scheme. This line will further contribute for the physical integration of the rail-based systems in the SPMR, increasing considerably the attractiveness of this mode due to its geographical coverage. This second part which will be jointly financed by the Government of Sao Paulo, the Bank, JEXIM and the private sector (50%-) is being prepared jointly by the Bank and IFC which has been retained as the financial advisor. 5. Project Description. Infrastructure and Equipment Investment Component (Part A) : to build a rail connection between the suburban train systems (FEPASA and CBTU). The estimated cost of this component is US$75million and accounts for 84%- of the total project cost; 6. Air Quality Component (Part B) to support: an inspection and maintenance program for vehicle emissions and noise as well as a vehicle emissions and noise laboratory along with hardware, software, and technical assistance to develop the capacity for air quality modelling and emissions investigation within the Environmental Technology Company (CETESB) and the University of Sao Paulo (B1). The estimated cost of this component is US$4 million and accounts for 4%- of the total project cost; 7. Institutional and Policy Development Component (Part C) to assist in: carrying out the concession of CPTM; establishing a Regional Transport Coordination Commission for the SPMR, as well as preparing an integrated transport, land use, and air quality management strategy for the SPMR (C2);The estimated cost of this component is US$11 million and accounts for 12 percent of the total project cost; 8. Benefits. Substantial quantifiable and non-quantifiable benefits are expected from the provision of an integrated rail and bus network including cost savings, time savings for the users, less accidents and fatalities and employment generation through better spatial integration of markets. In addition, there will be a positive environmental impact through the reduction of fossil fuel consumption, reduction of motor-vehicle related emissions, and road congestion with a consequent improvement of air quality and noise pollution. Finally, by encouraging greater private sector participation in the development of aerial and ground station space, the proposed project will be a first step towards decreasing the investment burden on the state. At preparation, a preliminary economic evaluation of the project shows an IERR of 120 percent for the infrastructure and equipment component which represents 84 percent of the project, without including newly generated demand -3 - and the quantification of air quality and noise reduction benefits. 9. Project Sustainability: It is expected that the introduction of private sector operations in railways and the control of fare evasion will reduce the subsidies paid to the railway and thereby allow better maintenance of the system. 10. Poverty Category: Not applicable 11. Environmental Impact: The works included in the project are expected to have a positive impact on the environment and the bidding documents for works will spell out the environmental good practices to be respected by the contractors performing the works. Consultants have verified that there is no resettlement due to this project and the works will be done in an existing rail right-of- way. This project is a Category "B" project. Contact Point: Public Information Center The World Bank 1818 H Street N.W. Washington, D.C. 20433 Telephone No.: (202) 458-5454 Fax No.: (202) 522-1500 Note: This is information on an evolving project. Certain components may not necessarily be included in the final project. Processed by the Public Information Center week ending August 29, 1997. - 4 - Annex Environmental This project is expected to have very positive impacts on the environment since it decreases the number of buses operating in roads which are parallel to the railway link. The works will be carried out in an existing right-of-way and as long as the environmental good practices prescribed in the bidding documents are respected, no negative impacts are expected. There is no resettlement since all the work is taking place on an existing right-of-way.