The World Bank Lima Metropolitano North Extension (P170595) Project Information Document (PID) Concept Stage | Date Prepared/Updated: 01-May-2019 | Report No: PIDC26725 Apr 09, 2019 Page 1 of 11 The World Bank Lima Metropolitano North Extension (P170595) BASIC INFORMATION A. Basic Project Data OPS TABLE Country Project ID Parent Project ID (if any) Project Name Peru P170595 Lima Metropolitano North Extension (P170595) Region Estimated Appraisal Date Estimated Board Date Practice Area (Lead) LATIN AMERICA AND Jul 15, 2019 Sep 12, 2019 Transport CARIBBEAN Financing Instrument Borrower(s) Implementing Agency Investment Project Financing Ministerio de Economia y EMAPE Finanzas Proposed Development Objective(s) The Project Development Objective (PDO) is to improve urban transport services, mobility and accessibility to jobs in the North of the City of Lima. PROJECT FINANCING DATA (US$, Millions) SUMMARY-NewFin1 Total Project Cost 123.00 Total Financing 123.00 of which IBRD/IDA 87.00 Financing Gap 0.00 DETAILS -NewFinEnh1 World Bank Group Financing International Bank for Reconstruction and Development (IBRD) 87.00 Non-World Bank Group Financing Counterpart Funding 36.00 Borrower/Recipient 36.00 Apr 09, 2019 Page 2 of 11 The World Bank Lima Metropolitano North Extension (P170595) Environmental and Social Risk Classification Concept Review Decision Substantial Track II-The review did authorize the preparation to continue Other Decision (as needed) B. Introduction and Context Country Context 1. Peru has experienced sustained growth and significant poverty reduction in the last 10 years. However, inequality remains a major challenge. Gross domestic product (GDP) growth has been the primary driver of poverty reduction in the country. Between 2007 and 2017, the average GDP rate was 4.8 percent, while the poverty rate decreased substantially from 42.4 to 21.7 percent. In addition, Peru has been ranked as an investment-grade country since 2008. This grading is indicative of the capacity of different administrations to set up and manage a stable economy. However, even with these robust results, inequality (based on the Gini coefficient) only decreased from 0.50 to 0.43 in the same period. 2. Lima (the capital) is the most populous metropolitan area of Peru, the third-largest city in Latin America. Callao and Lima cities are part of the same conurbation and form the Lima Metropolitan Area (LMA). The population for LMA is around 9.3 million (2018) comprised of 43 districts. LMA stretches north to south for 80 km along the Pacific Ocean, and from west to east for 40 km from the Pacific Ocean to the Andean Mountain Ranges. Since the ocean and mountains bind the city, further expansion is difficult. The city of Lima covers a considerable area, with about 2,672 square kilometers leading to a population density of around 3,000 people per square kilometer. 3. Urbanization and migration rates in Peru have been high for several decades, and the highest population is concentrated in Lima. Peru is a highly urbanized country, with about 78 percent of the population of about 32 million living in urban areas (2017 World Bank data). Since the first wave of migration that occurred during the 1950s, when urbanization in the country was around 47 percent, the city of Lima has attracted a large number of internal rural- to-urban migrants. The second wave of migration took place in the 1980s and was mainly driven due to forced displacement from areas affected by internal violence. This migration was concentrated in the North of Lima (Cono Norte). The third wave of migration took place recently with the arrival of a significant number of Venezuelan immigrants to Peru, primarily in Lima. Even without accounting for this recent wave of international immigration, Lima’s population has increased by an average of 1.1 percent per year between 2007 and 2017, and it is home for 29 percent of the country’s population. 4. Lima, as a center of trade and industry, is a driver of competitiveness, economic growth and quality of life in Peru. LMA accounts for 49 percent of the national GDP and includes the country’s leading facilities for international trade and domestic logistics, 90 percent of containers in Peru are moved to and from the port of Callao. However, even Lima concentrates the main facilities and public services of Peru, the urban poverty in the Cono Norte districts in the north of Lima is above the national average (between 16 and 28 percent). Apr 09, 2019 Page 3 of 11 The World Bank Lima Metropolitano North Extension (P170595) Sectoral and Institutional Context 5. One of the main factors affecting competitiveness, economic growth and quality of life in Lima is associated with the limited coverage and quality of urban transport services. Almost 70 percent of LMA’s population uses public transport modes (JICA, 2012), including formal and informal providers, but only 20 percent is provided by mass transit systems (Metro and Bus Rapid Transport, BRT). Coverage and quality of the urban transport infrastructure is limited and cannot meet the current demand. Accessibility to jobs is low, in particular in the north of Lima, one of the main emerging economic centers of the capital, affecting productivity and economic growth. 6. Urban transport of Lima faces big challenges that require significant interventions. The high urbanization and motorization rates of LMA have accelerated the demand for road space and worsened congestion. Users face long travel times, poor road safety, increasing congestion, high pollution rates (among the most congested in the region), and public transport inefficiencies. The current BRT fleet is working at 93-98 percent of its capacity and need to be renewed in about three to four years, when most buses will reach the limit of their operational life time according to the operation contracts (1,000,000 km). 7. The National Government and the Municipality of Lima have undertaken significant efforts to improve urban transport. From 2004 to 2010 the City of Lima implemented, through the Instituto Metropolitano Protransporte (Protransporte), the first BRT system in Lima designed as a High-Capacity Segregated Corridor (Corredor Segregado de Alta Capacitad, COSAC) with World Bank support (Peru Lima Transport Project, P035740). This BRT line began commercial operations in 2011 with a 33-kilometer (km) North–South corridor crossing the historic center of the city. Moreover, the Lima Metro Line 1 (a 34-kilometers of elevated railway, currently linking the district of Villa El Salvador in the south of Lima with San Juan de Lurigancho in the northeast)) began operations in 2010, with the oversight of the Ministry of Transport and OSITRAN (the regulatory and supervisory agency for transport infrastructure), and currently serves nearly eight percent of total daily motorized trips. A second, this time underground, Metro line (Peru Lima Metro Line 2 Project, P145610) is under construction, with support from Multilateral Development Banks. The implementation is facing significant delays, with five kilometers expected to enter into operation in 2021, 15 kilometers in 2023 and additional 15 kilometers in 2025. Metro Lines 3 and 4 are currently under preparation (technical, financial and project structuring are being developed) and are expected to be tendered in the next two years. 8. Challenges to integration of the public transport system are intensified by a very challenging institutional context. To date, the BRT and Metro lines are controlled by different agencies and there is no fare integration system. Buses and informal transport operating in mixed traffic serve about 37 percent of total daily motorized trips and constitute the mode of choice for lower-income residents. Formal bus services face fierce competition from informal services, as well as poor enforcement and misaligned incentives which favor competition by informal operators (commonly referred to as “guerra del centavo�) and undermine the efficiency, safety and comfort of Lima’s public transport network. On the other hand, motorization rates are rising, driven by a steady increase in average incomes. It is estimated that nearly one million cars will enter Lima’s streets during the next decade, placing additional pressure on the existing challenges and negative effects of a dysfunctional urban transport system in Lima and Callao. In addition, the lack of planning and the contradictory urban transport policies and practices between Lima and Callao have created further conditions for a chaotic urban transport situation. 9. Two key institutional reforms that provide the framework for urban transport development and sustainability have recently been approved: the creation of the Lima–Callao Urban Transport Authority (Autoridad de Transporte Urbano, ATU) in December 2018 and the National Urban Transport Policy in April 2019. These are major steps forward and are currently at an early stage of implementation. The ATU was created in response to the institutional challenges that undermine urban transport coordination, planning and regulation between the cities of Lima and Callao. The ATU’s legal and institutional framework was approved to address urban transport planning, transport integration, infrastructure provision, service concession and permitting, and fare policy, including fare setting and adjustments. Apr 09, 2019 Page 4 of 11 The World Bank Lima Metropolitano North Extension (P170595) The National Urban Transport Policy and initial regulations have been approved, and additional regulations are under preparation. To this effect, the ATU will integrate and absorb the currently fragmented BRT and Metro authorities, as well as Lima and Callao’s individual transportation departments. Transitioning from the current institutional arrangements and building capacity in the ATU are expected to occur during a ramping-up period over the coming years.1 10. Despite the ATU’s creation, it is expected that its capacity will remain weak in the early years, and this is a challenge, considering the increasing needs for improved and expanded urban transport services. The World Bank is currently supporting the first phase of the ATU’s implementation by sharing international best practices and assessing the ATU’s charter. More support is needed to accelerate the learning curve and establish a stable institution to go beyond a single presidential or municipal administration period that could, for instance, affect the ATU’s Board, its priorities and commitments. The ATU has an ambitious delivery schedule in the short term, including: (a) the operational, physical and fare integration of BRT, Metro (Lines 1 and 2, with the latter under construction and expected to be partially completed by 2023), and the proposed cable-car system; (b) renewal of the BRT fleet and scrapping of old, traditional units; and (c) leading the design and implementation of a financial sustainability strategy for the integrated transport network. The ATU will require additional human resources as Lima residents’ expectations for better urban transport supply increase. The proposed project would support the City of Lima in improving its capacity for increasing ridership (27,000 new daily trips) and quality (90,000 current trips per day) by and the sustainability of its BRT system in line with the National Urban Transport Policy. Relationship to CPF 11. The proposed project will support Pillar I. Productivity for Growth: Improve connectivity in critical corridors of the territory of the Country Partnership Framework (CPF). The Project Development Objective (PDO) of the proposed project is in line with Pillar I of the CPF, approved by the Board on April 4, 2017, and is consistent with the systematic country diagnostic (SCD). The project will also help address gender disparities, highlighted in the CPF, by improving access for women to urban transport. Female users will benefit from the change in designs, operational safety, and greater participation in the work force, as captured by one of the CPF’s indicators. 12. The proposed project is fully aligned with the Bank’s twin goals. It supports the reduction of urban poverty in the districts of the northern area (Cono Norte) of Lima (currently above the average) where 30 percent of the city’s population is located. A more efficient BRT will improve access to jobs and potential income, thus supporting the Bank’s goal of shared prosperity. 13. The proposed project will address climate change and the entire loan is expected to result in climate co-benefits. The expansion of the BRT (Metropolitano) will replace part of the fragmented, informal supply of urban transport provision in three municipalities in the north of Lima (Independencia, Comas and Carabayllo). GHG emission reduction are a key benefit of this proposed project, and the total loan amount is expected to result in climate co- benefits. 14. Urban transport operations in Lima have been implemented under PPP schemes, and the proposed project will mobilize commercial financing for the additional BRT fleet. Protransporte, on behalf of the City of Lima, signed six 1 The proposed project will be implemented during this transition and will take into account the potential effects of the transition, including capacity, decision-making authority, accountability, financial and human resources, and support for project preparation and implementation. Considering that ATU has not initiated operations, the competences on BRTs are under the Metropolitan Municipality of Lima (MML) and the provision of BRTs servicer under the Instituto del Transporte (Protransporte). In this context, the implementation of the proposed project will require an agreement between the ATU and the MML. Apr 09, 2019 Page 5 of 11 The World Bank Lima Metropolitano North Extension (P170595) PPP contracts (four with transport operators, one for natural gas provision, and one for revenue collection). The transport operation PPP contracts include the provision, operation and maintenance (O&M) of buses, and transport service for users regulated under contractual levels of services, frequencies and capacity of buses. In the case of the natural gas provider, the private party bears the risk of the assets, the operation and provision of the gas stations, and the maintenance of facilities under service levels stipulated in the contract. A sixth PPP contract was signed for the installation and operation of a collection center, magnetic cards, and the management of the revenue trust fund and its distribution in accordance with the contracts. The proposed project will also provide an opportunity in the short term for PPP financing of additional fleet to support the BRT extension, fare collection, and renewal to replace the current fleet in three to four years. This is a good opportunity to introduce innovations in urban transport provision. The proposed project will contribute to Peru’s green-growth plans and strategy through the improvement of urban transport and private-sector financing to support the increase in the bus fleet and operations with Maximizing Finance for Development (MFD) products. C. Proposed Development Objective(s) The Project Development Objective (PDO) is to improve urban transport services, mobility and accessibility to jobs in the North of the City of Lima. Key Results (From PCN) 15. The proposed PDO indicators are listed below. The PDO will be measured through increased number of beneficiaries of public transport, improved quality, reduction for GHG emissions, access to jobs and travel times. Project preparation will deploy the most recent version of the urban transport accessibility tool which that the World Bank has successfully implemented in similar projects. This will be refined at a later stage of project preparation. Outcome Outcome indicator Improve urban transport  Change in user satisfaction (coverage, safety and reliability), services differentiated by income and gender (citizen engagement).  Greenhouse gas (GHG) emissions. Improve mobility  Number of users in the extended Metropolitano BRT corridor.  Number of passengers’ trips in the extended Metropolitano BRT corridor. Improve accessibility to jobs  Number of jobs reachable by public transportation within a 60-minute one-way commute in the area of influence of the Metropolitano BRT, differentiated by income and gender.  Travel time for public transport users in the area of influence of the extension of the Metropolitano BRT, including transfer and access time. D. Concept Description 16. The project focuses on: (a) delivering the extension of the BRT Infrastructure in the north area of Lima (segregated corridor, stations, pedestrian bridges, U-turns and bus depot) and a wastewater treatment plant; and (b) the necessary equipment and technology. The proposed project will also provide an opportunity in the short term for PPP financing of additional fleet to support the BRT extension and fare collection system. To achieve these objectives, in accordance with the Government of Peru (GoP) the proposed project will finance the two below components. Apr 09, 2019 Page 6 of 11 The World Bank Lima Metropolitano North Extension (P170595) 17. Project beneficiaries and focus. The proposed Bank-financed project is expected to: (a) benefit 1,075,000 residents in three municipalities in the north of Lima (Independencia, Comas and Carabayllo); and (b) improve 90,000 current trips per day and support 27,000 new trips in the northern area of Lima. Target beneficiaries comprise a majority of residents from poor urban families at socioeconomic levels C and D (low income), reflecting the project beneficiaries’ high level of vulnerability. 18. Project costs and duration. The project’s preliminary cost is estimated at US$123 million, including an IBRD loan of US$87 million. Considering its complexity, the project is expected to be implemented over a period of five years to allow sufficient time for successful completion of the PDO. 19. Project components: 20. Component 1: BRT Infrastructure and equipment (total estimated costs US$117 million (TBC) out of which US$85 million to be financed by IBRD and US$30 million to be finance by the MML). The proposed project will finance BRT infrastructure expansion and equipment. This component will provide works, goods, environmental and social management, and related compliance to improve accessibility to jobs and transport services, including: (a) construction of 10.2 kms of dedicated and segregated BRT lanes, 17 passenger stations, two pedestrian bridges, one bus terminal, the expansion of the bus depot, the partial replacement of water and sanitation distribution, water and sanitation mains, and upgrading the water-treatment plant; (b) installation of equipment and technology to support BRT operations and control; and (c) supervision of works and equipment to be financed by the project. The stations, bridges and bus terminal will be designed to take into account the need for improved safety and accessibility for all users (including disability and gender needs). Readiness for implementation is well advanced: the infrastructure designs and environmental assessment have been approved by the authorities but will need to meet WB standards. 21. Component 2: Project implementation support (US$6 million funded by MML out of which US$2 million to be financed by the IBRD). This component will finance project management (including M&E activities), citizen engagement activities (GRM, stakeholder engagement plan, etc.), training on Bank environmental and social standards, fiduciary policies, assessments on BRT performance, road safety and accessibility analysis, as well as land acquisition. The assessments will include the following activities: o Accessibility assessment for the BRT: To establish the baseline and estimated target for the PDO indicator, the team will conduct an accessibility assessment along the entire BRT corridor for with- and without-project scenarios. The assessment will analyze accessibility to jobs by public transport based on the latest demographic data, the distribution of jobs, and public transport network information in the Lima Metropolitan Area. The assessment will estimate the net gains from the project in terms of accessibility to jobs, measured by the average number of accessible jobs within a 60-minute one-way morning rush-hour commute by public transport in the Metropolitano BRT’s area of influence. The results will also be differentiated in terms of persons with disabilities (PWD), income group and gender, to further examine the project’s impact on improving mobility for women and the poor. o Road safety in urban transport projects: (i) Road Infrastructure Safety Assessment: The project will undertake appropriate road safety assessment of the existing condition to improve the design of the BRT extension, as well as surrounding areas with potential safety implications (e.g. access to the stations, feeder roads directly impacted by the project corridors as applicable). During construction, the project will analyze road safety implications of the works and ensure mitigation measures are in place to address the risks identified, including but not limited to managing speeds of construction-related vehicles and other traffic. (ii) Baseline fatality data: the project will collect baseline annual crash fatality data, segregated by four road user types (vehicle occupants, motorcyclists, pedestrians, bicyclists), to be available to the ATU for the BRT extension for data collection, storage and analysis (If this information is not available or suspected to Apr 09, 2019 Page 7 of 11 The World Bank Lima Metropolitano North Extension (P170595) be unreliable, the project will include steps towards strengthening crash data collection, storage and analysis for the ATU). (iii) Road safety indicator: the project will include as part of M&E at least one road safety indicator. 22. The project has conducted a preliminary analysis of gender issues in provision of urban transport services and identified gender gaps that the project can address. According to the National Institute of Informatics and Statistics, 79 percent of men were economically active in 2016, compared to 60.2 percent of women. Moreover, 58 percent of women are employed in the informal sector, compared to 50 percent of men. The gap is more pronounced in terms of employment segregation: fewer women than men are employed in the transport, storage and communications sector (men 12.4 percent, women 1.7 percent). Moreover, based on “Lima Cómo Vamos NGO� data2, 33 percent of women feel unsafe using public transportation in Lima. This indicates that they may have been victims of sexual harassment in public transport. According to a survey conducted by the Interamerican Development Bank (IDB), women prefer using slower modes (52 percent use combis/minibuses and only three percent use BRT), which restrict their access to potentially better employment opportunities. Data also show that women in Lima tend to change their routes and transport modes to enhance their safety. To address these challenges, the project will implement activities to increase women’s security and mobility in the BRT stations and buses. It will also analyze the possibility of encouraging the employment of women in the project, bus transport operations, the Metropolitano and the ATU. 23. Lessons learned from the Metropolitano BRT and similar mass-transit corridor projects in the LAC Region are relevant for the proposed project. Main lessons learned from the implementation of the first phase of the Metropolitano include: a. Accessibility to jobs and services in the target area. Enhancing access to jobs, schools and health services is linked to an ongoing reorganization of regular routes served by traditional formal and informal providers. Improving mobility and accessibility for the poor through BRT systems requires the effective integration of the main corridor with feeder service and other public transport systems that are closer to passenger origins and destinations. While the Metropolitano BRT initially provided improved access and quality of public transport services to large numbers of poorer residents, the ongoing improvement in access and quality within a hierarchically integrated transport system relies on ensuring proper complementarity with a network of lower-capacity bus lines and feeder routes, particularly those connecting the corridor’s north and south terminals where poverty rates are higher. b. Citizen engagement. Given the complex urban settings in which urban transport systems are developed and implemented, it is essential to conduct, starting at an early stage, ongoing engagement and meaningful consultation with stakeholders, in particular communities, groups and individuals affected by the proposed projects, and to provide project-based grievance redress mechanisms (GRMs). The original Metropolitano project provided insufficient information to residents of the Municipality of Barranco. This, combined with the lack of an adequate traffic impact evaluation or a well-designed traffic management and mitigation mechanism, resulted in a complaint and an Inspection Panel investigation, which contributed to delays in project implementation. c. Readiness for implementation. During preparation, it is necessary to ensure that all project preparation, including engineering designs and environmental and social studies, are completed and cleared by relevant authorities. Aspects to be highlighted should include the adequacy of terminal size and design, station designs based on user demand, proper assessment of peak hours with and without integration, proper capacity to oversee environmental and social management of the project, and inter-institutional 2Non-governmental organization (NGO) which monitors and evaluates changes in the quality of life of the inhabitants of Metropolitan Lima and Callao. Apr 09, 2019 Page 8 of 11 The World Bank Lima Metropolitano North Extension (P170595) coordination of key entities including the Empresa Municipal Administradora de Peaje de Lima (EMAPE) and Protransporte. d. PPP structuring and supervision for transport operations. Proper structuring of bus-service provision concessions (contracts) is essential to ensure levels of service and allow the public authority to adequately supervise and manage concession contracts. The current concession contract needs to address clear risk sharing between the operator and authorities. This will reduce liabilities for the public authority, such as those related to extending the date when the obligations will be in force, and the presence of competing services in the area of influence of the BRT (400 meters). The contract’s penalty scheme for operators needs to be well defined e. Sustainability of outcomes. Most major cities in Latin America have implemented BRT systems. A number of key lessons that may be useful for the proposed project sustainability include: (i) the importance of conducting proper planning and technical studies prior to the project’s development, and specific delegation of responsibilities between national and local governments; (ii) a robust evaluation of traffic management and impacts to mitigate implementation risks; (iii) a technically structured fare policy to prevent political interference in fare setting; (iv) an assessment of fare evasion and effective measures dependent on modernized regulations (including penalties) and improved engineering, enforcement and education campaigns; and (v) governments incorporating incumbents in the planning and operations of new systems and benefiting from including them as partners in the operations under public-private partnership (PPP) schemes. Legal Operational Policies Triggered? Projects on International Waterways OP 7.50 No Projects in Disputed Areas OP 7.60 No Summary of Screening of Environmental and Social Risks and Impacts Despite this project being brown field and deploying technology that is well known, the environmental and social risk classification is substantial under the ESF. The classification responds to risks and impacts across the project's large geographic footprint and associated indirect area of influence along the corridors of intervention and their various intersections. These risks are mainly associated with the complex institutional arrangements of project implementation; PIU’s lack of ability to manage social and environmental risks and impacts in accordance with the Bank’s ESF; risks of inadequately handling occupational and community health and safety issues and traffic management during construction. Potential environmental risk are related to: i) construction-related activities may include overall nuisance to the communities due to noise and vibration, dust, traffic congestion, waste, and visual disturbances, as well as by the removal and relocation of aproximately 3,500 trees; (ii) Inadequate sourcing and transportation of construction material from quarries, as well as transportation and disposal of surplus materials during construction; (iii) Inadequate handling and disposal of waste and hazardous materials during construction and consequent potential contamination of soil and/or water; (iv) Contamination of soil and/or underground water due to expansion and operation of a wastewater treatment plant, and relocation of existing sewage canal, activities that are part of the project; (v) Inadequate management of existing environmental liabilities among others. Potential adverse social impacts and risks attributable to the project include: (i) the need to relocate approximately 800 informal vendors located in the right of way; (ii) the land acquisition of 11 social units (three residential dwellings, three Apr 09, 2019 Page 9 of 11 The World Bank Lima Metropolitano North Extension (P170595) commercial establishments, and five residential and commercial structures; (iii) relocation of a small religious chapel located in the District of Comas that belongs to the community; iv) socioeconomic risk associated to restrictions in access to residential, commercial, and public services, including education (preschools, schools, universities) and health (clinics, hospitals), as a result of construction, traffic deviations, and street closings; and (v) risks of community health and safety. In addition, there is a significant contextual and stakeholder risk associated to the complex urban settings in which the BRT expansion will be implemented, including the risk of reproducing a system of gender harassment and citizen insecurity present in the current Metropolitano. Note To view the Environmental and Social Risks and Impacts, please refer to the Concept Stage ESRS Document. CONTACT POINT World Bank Lincoln Flor, Sofia Guerrero Gamez Senior Transport Economist Borrower/Client/Recipient Ministerio de Economia y Finanzas Betty Armida Sotelo Bazán Sotelo Bazán Viceministra de Hacienda vhacienda@mef.gob.pe Implementing Agencies EMAPE José Buleje Guillén Gerente jbuleje@emape.gob.pe FOR MORE INFORMATION CONTACT The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 473-1000 Web: http://www.worldbank.org/projects Apr 09, 2019 Page 10 of 11 The World Bank Lima Metropolitano North Extension (P170595) APPROVAL Task Team Leader(s): Lincoln Flor, Sofia Guerrero Gamez Approved By APPROVALTBL Practice Manager/Manager: Country Director: Apr 09, 2019 Page 11 of 11