Page 1 PROJECT INFORMATION DOCUMENT (PID) CONCEPT STAGE Report No.: 58829 Project Name EG-Urban Transport Infrastructure Development Region MIDDLE EAST AND NORTH AFRICA Sector General transportation sector (100%) Project ID P115837 Borrower(s) GOVERNMENT OF EGYPT Implementing Agency Ministry of Transport Cairo Egypt, Arab Republic of Tel: (20-2) 260-1800 Fax: (20-2) 261-0510 obakary@mot.gov.eg Environment Category [X] A [ ] B [ ] C [ ] FI [ ] TBD (to be determined) Date PID Prepared October 13, 2009 Estimated Date of Appraisal Authorization March 17, 2011 Estimated Date of Board Approval June 15, 2011 I. Key development issues and rationale for Bank involvement 1. The total population of Egypt over the ten-year period between 1996 and 2006 increased from 59 million to 73 million, with an average annual growth rate at 2.04%. The Greater Cairo Region (GCR) comprises five governorates and is home to a rapidly growing population – 16 million in 2008, increasing to more than 21 million by 2022. 1 2. The Urban Transport Strategy for Greater Cairo Region 2 has identified the following urban transport, traffic management and environment issues as the most critical challenges associated with sustaining urban transport sector growth in the GCR: · Institutional Fragmentation & Insufficient financial resources: Overlaying all of the above problems are serious institutional fragmentation, duplication and inadequate financial arrangements leading to under investment in transport facilities. · Poor public transport system : GCR relies on under developed, overcrowded and unreliable passenger transport services. · Aggravated traffic congestion : GCR is experiencing very high traffic congestion. This has serious economic consequences on reducing labor productivity, leading to loses in GDP, and contributes to deteriorating air pollution conditions. · High accident rate : The road transport death rate in GCR is very high. At least 1,000 residents die each year in motor vehicle accidents, more than half of them pedestrians, and over 4,000 are injured. · Air and noise pollution : Mobile source air pollution in GCR is serious both with regard to particulate matter as well as noxious chemicals. Noise levels are high and aggravated by very large and old proportion of the microbuses, minibuses and taxi fleet. 1 JIKA, GCR Urban Transport Master Plan (CREATS), 2002. 2 World Bank, Greater Cairo Urban Transport Strategy, 2006. Page 2 3. It is estimated that by the end of 2009, the Egyptian transportation sector will have been responsible for more than 40 million metric tons of global greenhouse gas emissions, most of which will have been emitted by road-based vehicles. 3 About 40 percent of national transport emissions, or 14 million tons CO 2 e, may be attributed to the GCR alone, where nearly half of all motorized vehicles in Egypt operate. 4. The overall investment program in the GCR urban transport is defined in the Greater Cairo Urban Transport Master Plan (JIKA 2003). The Master Plan studies have provided a new framework for consideration of an integrated urban transport system that emphasized putting “people’s mobility before that of vehicles.” The Master Plan took account of three “missions” for the urban transport: · A safe and environment-friendly transport system that would significantly reduce the carbon signal, focusing on modal shift toward low carbon public transport systems; · An economically effective urban transport system; and · An equitable people’s mobility. 5. The Master Plan includes investments for the period 2003 to 2022 in the amount of US$17 billion (Table 1). 4 Table 1: Investments Proposed in the Transportation Master Plan until 2022 Million US$ Share of investment Mass Rapid Transit (Metro) 2,725 15.7% LRTs 1,475 8.5% Suburban Railway 2,550 14.6% Clean Technology Buses 1,100 6.2% Priority Bus Facilities (BRTs) 500 2.9% Nile Ferry 10 0.1% Regional Roads 325 1.9% Primary Roads 325 1.8% Intersections 525 3.0% Expressways 7,875 45.3% Total 17,410 100.0% 6. However, the high cost of clean technology and lack of a clear investment prioritization mechanism have been a major hindrance to scalability. As the GCR continues to expand, the demand will continue to increase faster than the availability of funding. While it is possible to develop lists of projects that, if implemented, would address the lack of transport capacity and other deficiencies in the present supply of transport services, it is more difficult to determine how they would best be funded. To address these issues, the World Bank has provided assistance to the Government, under the Greater Cairo Urban Transport Strategy, 5 to prioritize investment needs. A sound analytical and scoring method has been applied to assess priority needs and provide reliable evidence and advice to support the making of political decisions on which investments to approve and implement. These efforts have included cost- effectiveness, economic and social returns, environmental impact and potential to attract the private sector participation. Identified investments as high priorities are those proposed for financing under this project. 3 IEA. 2007; Analysis: World Bank Carbon Finance Unit, 2009 4 This cost may appear as high, but when expressed as a % of the gross income of the metropolitan area over the same period it is actually as low as only 0.5%. 5 World Bank. 2006. Page 3 7. Meantime, the Government has already completed lines # 1 and 2 of the underground Metro totaling 65km, is currently constructing line # 3 for completion by 2012 and line # 4 for completion by 2017, totaling 70 km. Several Expressways and Nile Ferry transport are under final stage of studies. 8. Do Nothing Scenario: Vehicle ownership rates, congestion, and emissions are expected to significantly increase through the next 20 years, with average travel speeds and accessibility continuing to decline. For example, according to the plan, without immediate investment in urban transport, by 2022, the GCR government expects annual transport GHG emissions to increase to at least 16 million tons (and this is very conservative), a decline in average trip speed (all modes) from 19 kph to 12 kph, and an average roundtrip journey to work time of more than 1.5 hours. Further, according to the plan, the economic cost of a “do nothing” scenario would be at least LE 7.5 billion (US$ 1.6 billion) per annum. Rationale for Bank involvement: 9. The project is fully consistent with the World Bank CAS objective of expanded supply and improved efficiency of infrastructure services (CAS outcome 2.2): “The success of the reform program will depend to a large extent on the depth of restructuring and streamlining of government bodies responsible for infrastructure and the investment supply response of the private sector. Government plans to facilitate this response not only by changing some key policy parameters but also by undertaking institutional reforms and making some strategic infrastructure investments. The Bank Group proposes to support these investments through technical and financial assistance.” 10. The FY09-11 lending program (CAS Progress Report, June 2008) includes the proposed project in the amount of US$150 million IBRD financing. Working with the GoE, the World Bank has also secured an additional US$100 million credit from the Clean Technology Fund (CTF), which is a at IDA- like terms, and its investment plan has been approved by the CTF Trust Fund Committee in January 2009. The Bank is also assisting the Government in leveraging Carbon Funds, whose value would be proportional to the emissions reductions associated with these investments. 11. This is not business as usual. Despite large investments made in metro lines and urban road capacity over the last two decades in the GCR, the level of investment in transport infrastructure and services has failed to keep pace with the increasing demands (see paragraph 8). With the IBRD, CTF and Carbon Finance support, the consolidation and acceleration of programs that promote more efficient transport systems and accelerated GHG emission reduction (ER) would be possible. The World Bank is indeed committed to climate change and global mitigation measure to reduce GHG emissions. Implementation of the combined urban transport program (IBRD, CTF and CF) is expected to result in about 17.7-19.5 million tons CO 2 e emissions reduction over the next ten years period. 12. The Government of Egypt has started taking serious reform measures to address major institutional fragmentation currently exists in the urban transport sector in GCRs. A proposal made in the Urban Transport Strategy to establish a Metropolitan Urban Transport Authority for Great Cairo has been approved by the Prime Minister and it is currently under establishment by a Presidential Decree. The new Authority will be mapped to Ministry of Transport, but reports to an inter-ministerial and inter- jurisdictional Board of Directors, chaired by the Prime Minister. It is expected to address issues of planning and regulation. Meantime, a study has been completed to restructure Cairo Transport Authority (CTA), separating bus fleet operation, from planning and regulation. II. Proposed objective Page 4 13. The proposed development objective is to improve the efficiency and environmental sustainability of the urban transport system in Egypt. This will be achieved through the implementation of cost-effective and clean technology investments that support modal shift, thus reduce traffic congestions, greenhouse gas emission, air pollution and improve service provision to citizens. III. Preliminary Description 14. The project will be financed as a Specific Investment Loan (SIL), whose final amount will depend upon the GOE’s final request and should take into account refined cost estimates. The option of an APL, encompassing a program of investments over several years, has not been considered because of GOE’s preference for SILs. The project is comprised of four components as follows: · Component 1: Provision of 1,100 new fuel efficient buses to replace old fleet; · Component 2: Construction of six Bus Rapid Transit (BRT) corridors; · Component 3: Improvement of Traffic Management System; and · Component 4: Institutional support to the Metropolitan Urban Transport Authority. There is also a proposal to include in the project’s scope the transformation of the existing and obsolete Metro Heliopolis into a modern and fast Light Rail Transit (LRT) and its extension to New Cairo City, but this subproject will be confirmed during preparation. See Annex 1 for technical details about each investment component. 15. The proposed investments presented in this PCN includes cost-effective measures that must be implemented in their entirety to make a significant impact in improving the public transit system, reducing traffic congestion, improving air quality in the GCR, and in significantly reducing greenhouse gas (GHG) emissions by a minimum of 1.6 million tons CO 2 e per year 6 . 16. Ministry of Transport, through the newly established Metropolitan Urban Transport Authority will be responsible for the implementation of this project in coordination with Cairo Transport Authority (CTA) for bus replacement and Heliopolis Tram transformation and with the General Authority for Roads, Bridges and Tunnels (GARBLT) for the BRTs. 17. In parallel, the World Bank is providing carbon finance support to the Government of Egypt for the Egypt Vehicle Scrapping and Recycling Program (P119483) . The national program enables vehicle owners affected by Traffic Law #121 (2008), which states that owners of fee-based transport vehicles, including taxis and microbuses, that are greater than 20 years old are not eligible for a new operating license or license renewal, may voluntarily surrender their vehicle for managed scrapping and recycling, in exchange for financial incentives that may be used towards the purchase of a new vehicle from a registered vehicle dealer, under a closely monitored process. 7 The estimated emissions reduction from scrapping about 49,000 old taxi per se in GCR is about 1.7 – 3.5 million tons CO 2 e over the period 2009-2018. The P rogram is thus expected to generate substantial revenues from carbon finance to cover all transaction costs and the cost of providing subsidies to participating vehicle owners. To date, the Minister of Finance has signed a Letter of Intent with the World Bank Country Director , confirming the Bank’s intent to purchase at least US$5.6 million worth of emissions reduction credits generated by the scheme under a 6 Cairo is also the only city from the MNA Region in the C40 Cities Program of Clinton Climate Initiative: http://www.c40cities.org/cities/ 7 The Government of Egypt. Law #121 for 2008 Concerning the Amendment of Select Traffic Law Articles Issued by Law #66 for 1973. Article 4, Paragraph 2. Page 5 CF Program of Activities (PoA). The program is expected to be scaled up beyond its current phase in the Greater Cairo Region to other major cities. IV. Safeguard policies that might apply Safeguard Policies Triggered Yes No TBD Environmental Assessment (OP/BP 4.01) X Natural Habitats (OP/BP 4.04) X Forests (OP/BP 4.36) X Pest Management (OP 4.09) X Physical Cultural Resources (OP/BP 4.11) X Indigenous Peoples (OP/BP 4.10) X Involuntary Resettlement (OP/BP 4.12) X Safety of Dams (OP/BP 4.37) X Projects on International Waterways (OP/BP 7.50) X Projects in Disputed Areas (OP/BP 7.60) X V. Tentative financing Source: ($m.) Borrower 0 International Bank for Reconstruction and Development 150 Climate Investment Funds 100 Total 250 Additional co-financing will be sought from IFIs and borrower’s contribution. VI. Contact point Contact: Mr. Ahmed A. R. Eiweida Title: Sr. Urban Specialist Tel: (202) 458-9046 Email: aeiweida@worldbank.org