The World Bank Upgrading and Greening the Rio de Janeiro Urban Rail System (P111996) REPORT NO.: RES39095 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF UPGRADING AND GREENING THE RIO DE JANEIRO URBAN RAIL SYSTEM APPROVED ON JULY 9, 2009 TO STATE OF RIO DE JANEIRO - SECRETARIA DE ESTADO DE TRANSPORTES DO RIO DE JANEIRO SETRANS TRANSPORT LATIN AMERICA AND CARIBBEAN Regional Vice President (Acting): Franz R. Drees-Gross Country Director: Paloma Anos Casero Regional Director: Franz R. Drees-Gross Practice Manager/Manager: Juan Gaviria Task Team Leader(s): Bianca Bianchi Alves The World Bank Upgrading and Greening the Rio de Janeiro Urban Rail System (P111996) ABBREVIATIONS AND ACRONYMS AF Additional Financing ATP Automated Train Protection CENTRAL Companhia Estadual de Engenharia de Transportes e Logística (State Company of Transport Engineering and Logistics) CIMU Centro Integrado de Mobilidade Urbana (Integrated Control Center System) ERR Economic Rate of Return IA Implementing Agency NPV Net Present Value PDO Project Development Objective RJMR Rio de Janeiro Metropolitan Region SETRANS Secretaria de Estado de Transportes (State Department of Transportation) The World Bank Upgrading and Greening the Rio de Janeiro Urban Rail System (P111996) BASIC DATA Product Information Project ID Financing Instrument P111996 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 09-Jul-2009 31-Dec-2019 Organizations Borrower Responsible Agency State of Rio de Janeiro - Secretaria de Estado de CENTRAL - Companhia Estadual de Engenharia de Transportes do Rio de Janeiro SETRANS Transportes e Logistica Project Development Objective (PDO) Original PDO a) Improve the level-of-service provided to the suburban rail transport users in the RJMR in a safe and cost-efficient manner and b) improve the transport management and policy framework in the RJMR. Current PDO (a) to improve the level of service provided to suburban rail transport users in the RJMR in a safe and cost-efficient manner; (b) to place the suburban rail transport system on a lower carbon growth path; and (c) to improve the transport management and policy framework in the Borrower’s territory and in the RJMR. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IBRD-81170 26-Jan-2012 05-Sep-2012 05-Oct-2012 31-Dec-2019 519.34 425.77 93.58 IBRD-77190 09-Jul-2009 24-Sep-2009 03-Dec-2009 30-Jun-2019 211.70 211.69 .01 The World Bank Upgrading and Greening the Rio de Janeiro Urban Rail System (P111996) Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. Project Status 1. The project consists of the original US$ 211.7 million Loan 7719-BR, signed on September 24, 2009 and declared effective on December 3, 2009, and a US$ 600 million Additional Financing Loan 8177-BR, signed on September 5, 2012 and declared effective on October 5, 2012. The Additional Financing introduced an expansion in project scope, an extension of the closing date, a revision of the Project Development Objective (PDO), and a change in the name of the project. The revised and current PDO is (a) to improve the level of service provided to suburban rail transport users in the RJMR in a safe and cost-efficient manner; (b) to place the suburban rail transport system on a lower carbon growth path; and (c) to improve the transport management and policy framework in the Borrower’s territory and in the Rio de Janeiro Metropolitan Region (RJMR). 2. The original Loan 7719-BR closed on June 30, 2019. The loan will be close to 100 percent disbursed by December 31, 2019. It financed the acquisition of 30 trains and accessories and an institutional component, including studies to support the implementation of the: i) Metropolitan Urban Transport Agency (Agência Metropolitana de Transportes Urbanos); ii) the Transport Master Plan (Plano Diretor de Transportes Urbanos); and iii) Integrated Modal Tariffs. All 30 financed trains are under operation and studies have been completed. 3. The Additional Financing (AF) Loan 8177-BR has a current closing date of December 31, 2019. The loan finances an Infrastructure and Equipment component including i) acquisition of 76 trains; ii) a pilot bicycle program; and iii) civil works for rail safety, and an iv) Institutional and Policy Development component. The latter includes a) a bicycle-rail integration study; b) a climate change study; c) a transit-oriented development (TOD) study; d) a logistics master plan; e) a socioeconomic impact study; f) an integrated control center system study (Centro Integrado de Mobilidade Urbana – CIMU); and g) project management and supervision. In 2017, the project was restructured to allow a US$ 80.5 million cancellation due to savings achieved in the procurement of trains. Of the current total US$ 519 million, 81.3 percent has been disbursed. 4. The project’s progress toward achievement of the development objectives is currently rated as “Moderately Satisfactory” and it is expected that the objectives will be fully achieved if the proposed extension of the closing date is granted. The rail system, which is the backbone of urban mobility in Rio and serves a large number of urban poor, reached a peak of 692,000 passengers per day in April 2016, a 40 percent increase from 2009. While the demand has now been affected by the economic crisis, the system still carries 593,000 passengers per day (421,000 are from the bottom 40 percent of the target population), connecting some of the poorest areas of the Rio de Janeiro Metropolitan Region to the downtown area, where most jobs are concentrated. The World Bank Upgrading and Greening the Rio de Janeiro Urban Rail System (P111996) 5. All 76 trains were delivered and are under operation. 70 trains were delivered ahead of schedule to support transport during the Olympic Games in August 2016. The service quality during the games was praised by many media sources, as the passenger pool grew during the events. The remaining 6 trains started operations between 2018 and 2019. All trains have received the provisional acceptance certificate, issued by the Borrower after initial testing phase, and 95 percent of the purchase value has been paid. The remaining 5 percent is kept as a retainer until the final acceptance certificate is issued, after a three-year warranty period, which will end by December 2022. 6. Civil works for rail safety. This includes walls, pedestrian bridges and automatic gates at railway crossings. The designs for Phase I of these investments (in the amount of US$9.9 million) were concluded in early December 2019 and procurement of works for the Phase I will be concluded by May 2020. The designs for the remaining bridges and walls (Phase II) are under development and expected to be delivered by June 2020. It is expected that all construction will be finalized by March 2022. 7. Several studies in the Institutional and Policy Development Component were delivered. This includes the logistics master plan, the bicycle-rail Integration Study, and the TOD pilot in Queimados, a low-income municipality in the suburbs of Rio de Janeiro. For the three remaining studies (socioeconomic impact evaluation study, climate change, and CIMU), an action plan has been prepared, and procurement is underway. All studies are expected to be concluded by March 2021. 8. Social and Environmental Safeguards. The project is compliant with the Environmental Management Plans and other policies and regulations. Resettlement activities related to train operations have been completed and a post-review of resettlement was concluded in 2014. The project’s overall safeguards rating is currently “Moderately Satisfactory”. 9. Fiduciary. There are no outstanding audit reports and all audit reports has been deemed “Satisfactory” by the Bank. Since July 2016, the Financial Management Rating is “Satisfactory”. B. Rationale for Restructuring 10. The project needs to be restructured to fully achieve and enhance sustainability of the PDO. This restructuring will include a three-year extension of the loan closing date from December 31, 2019 to December 31, 2022. The extension will allow the Borrower to complete payments of the trains’ guarantees to supplier, and to finalize rail safety components, the bicycle pilot and three remaining studies (Climate Change, Baseline for Estimating project Benefits, Control Center). The railway safety interventions are also critical to reduce the risk of accidents and to enhance the quality of service. 11. To address the ongoing implementation delays, the implementing agency (IA) agreed to an action plan, which has been completed. The action plan included a commitment of substantial conclusion of the procurement processes of the institutional component studies by December 1, 2019. Proactive action from the IA has been taken and all procurement processes underway will have been published by end-2019. The action plan also included a commitment to conclude rail safety project designs and bidding documents by December 1, 2019. A new private rail operator (Mitsui) took charge of the operations in August 2019 and has fully supported the government, contributing to the completion of this commitment. These designs were delivered by IA on December 4th and were deemed acceptable by the Bank’s technical team. 12. The extension will allow for completion of activities that will enhance the impact and the long-term sustainability of the project. No new safeguard policies are triggered, and all safety works will happen within the right- of-way of the railway line, not requiring any new resettlement. The implementation arrangements will remain the same The World Bank Upgrading and Greening the Rio de Janeiro Urban Rail System (P111996) and the risk of further delays are low given that the action plan was delivered, and most remaining activities are advanced and are of low complexity (small civil works and studies). II. DESCRIPTION OF PROPOSED CHANGES 13. The proposed changes to the project (Loan 8177-BR) include a closing date extension from December 31, 2019 to December 31, 2022. 14. The Results Framework has been revised in order to: (i) reflect the proposed project end date; and (ii) correct some inconsistencies in the previous results framework. These changes involved: a. To drop the intermediate indicator “Component 1f - Cumulative completion of SETRANS building rehabilitation”, since this activity is no longer financed by the project; b. To rectify the number of trains from 82 to 76 in the intermediate sub–indicator “Component 1d. Cumulative % of completion of rehabilitation/modernization of metric gauge rolling stock, additional trains (82 trains) (Percentage)”, since the indicator previously considered 12 four–car trains (for a total of 82), which are now counted as 6 eight–car trains (for a total of 76), with the number of train cars remaining the same; c. To change the target end dates to reflect the proposed closing date of Loan 8177-BR; d. To revise the methodology for indicator “Component 2.b. Studies (Additional Finance) (% of Completion) (Percentage)” considering now four components (CIMU, climate change, socioeconomic, TOD) 15. The disbursement arrangements remain the same, but disbursement estimates were revised to reflect the new proposed project timeline. 16. An update of the economic analysis was carried out to reflect the updated timeline of the project and the timing in which project investments became operational. This was necessary because the original calculations had not been updated since 2009, before the AF. The benefits included in the economic analysis are travel time savings, operating cost savings, maintenance cost savings, bus managing cost savings, air pollution reduction, and road crash reduction (from reduced use of buses). The costs included in the economic analysis are the total investments in the original loan and the AF loan. The calculations assume a general value of time of US$2.67 per hour, based on the Rio de Janeiro’s state minimum wage. The updated economic rate of return is 13.7 percent, with a net present value of US$118 million (with a 5 percent discount rate). This is consistent with the estimated values in the original analysis (in 2009) of 14.4 percent (ERR) and US$191 million (NPV). Therefore, the project remains economically feasible. III. SUMMARY OF CHANGES Changed Not Changed Results Framework ✔ Loan Closing Date(s) ✔ Disbursement Estimates ✔ The World Bank Upgrading and Greening the Rio de Janeiro Urban Rail System (P111996) Implementation Schedule ✔ Economic and Financial Analysis ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ Components and Cost ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Disbursements Arrangements ✔ Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Other Change(s) ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_LOANCLOSING_TABLE LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications 30-Jun-2017, 30-Jun- IBRD-77190 Closed 30-Jun-2014 2019 IBRD-81170 Effective 30-Jun-2017 31-Dec-2019 30-Dec-2022 30-Apr-2023 The World Bank Upgrading and Greening the Rio de Janeiro Urban Rail System (P111996) OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 0000 0.00 0.00 2010 26,717,120.07 26,717,120.07 2011 21,076,249.26 21,076,249.26 2012 157,985,689.40 157,985,689.40 2013 17,263,766.37 17,263,766.37 2014 104,754,533.08 104,754,533.08 2015 217,364,096.60 217,364,096.60 2016 16,530,052.96 16,530,052.96 2017 34,669,507.58 34,669,507.58 2018 44,747,928.27 44,747,928.27 2019 27,452,262.80 10,700,224.00 2020 62,483,759.61 15,508,700.00 2021 0.00 19,118,130.00 2022 0.00 38,236,260.00 2023 0.00 12,745,418.25 . The World Bank Upgrading and Greening the Rio de Janeiro Urban Rail System (P111996) . Results framework COUNTRY: Brazil Upgrading and Greening the Rio de Janeiro Urban Rail System Project Development Objectives(s) (a) to improve the level of service provided to suburban rail transport users in the RJMR in a safe and cost-efficient manner; (b) to place the suburban rail transport system on a lower carbon growth path; and (c) to improve the transport management and policy framework in the Borrower’s territory and in the RJMR. Project Development Objective Indicators by Objectives/ Outcomes RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline End Target Improve the level of service provided to suburban rail transport users in the RJMR 1. Travel time plus waiting time between selected pairs of 0.00 0.00 stations before and after the trains are delivered (Minutes) Action: This indicator has been Revised 1.a. Japeri Branch (Minutes) 59.00 52.00 Action: This indicator has been Revised 1.b. Santa Cruz Branch (Minutes) 62.00 54.00 Action: This indicator has been Revised 1.c. Saracuruna Branch (Minutes) 54.00 46.00 Action: This indicator has been Revised 1.d. Belford Roxo Branch (Minutes) 73.00 62.00 Action: This indicator has been Revised 1.e. Deodoro Branch (Minutes) 46.00 40.00 The World Bank Upgrading and Greening the Rio de Janeiro Urban Rail System (P111996) RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline End Target Action: This indicator has been Revised 2. Average passengers per square meter on Supervia Lines at 8.00 6.00 peak hour (Number) Action: This indicator has been Revised 3. % of passengers per day from households earning less than 4 0.00 80.00 Minimum Salaries (MS) (Percentage) Action: This indicator has been Revised Place the suburban rail transport system on a lower carbon growth path 6. Transport-related greenhouse gas emissions in the SuperVia 0.00 34,000.00 system (Ton CO2) (Number) Action: This indicator has been Revised To improve the transport management and policy framework in the RJMR 4. Number of Supervia stations with bicycle parking facilities 3.00 20.00 (Number) Action: This indicator has been Revised 5. SuperVia stations with bus-rail fare integration (Number) 30.00 75.00 Action: This indicator has been Revised 5.a. Japeri Branch (Number) 12.00 15.00 Action: This indicator has been Revised 5.b. Santa Cruz Branch (Number) 8.00 10.00 Action: This indicator has been Revised 5.c. Saracuruna Branch (Number) 1.00 16.00 The World Bank Upgrading and Greening the Rio de Janeiro Urban Rail System (P111996) RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline End Target Action: This indicator has been Revised 5.d. Belford Roxo Branch (Number) 2.00 15.00 Action: This indicator has been Revised 5.e. Deodoro Branch (Number) 7.00 19.00 Action: This indicator has been Revised PDO Table SPACE Intermediate Results Indicators by Components RESULT_FRAME_TBL_IO Indicator Name DLI Baseline End Target Infrastructure and Equipment Component 1a. Trains in peak-hour (off peak) hour (Text) 8/4 10/6 Action: This indicator has been Revised a. Ramal Japeri – linha CENTRAL / Nova Iguaçu (Text) 8/4 10/6 Action: This indicator has been Revised b. Ramal Santa Cruz – linha CENTRAL / Bangu (Text) 8/6 10/6 Action: This indicator has been Revised c. Ramal Saracuruna – linha CENTRAL / Gramacho (Text) 6/2 10/6 Action: This indicator has been Revised d. Ramal Belford Roxo – linha CENTRAL / B. Roxo (Text) 3/1.5 10/6 The World Bank Upgrading and Greening the Rio de Janeiro Urban Rail System (P111996) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline End Target Action: This indicator has been Revised e. Ramal Deodoro – linha CENTRAL / Deodoro (Text) 8/0 15/10 Action: This indicator has been Revised Component 1b. Additional demand generated from project on 0.00 70,211.00 SuperVia -passengers per day (Number) Action: This indicator has been Revised Component 1c. Working ratio supervia (Number) 0.75 0.70 Action: This indicator has been Revised Component 1d. Cumulative % of train manufacturing completion 0.00 100.00 (Percentage) Action: This indicator has been Revised Additional trains (76 trains) (Percentage) 0.00 100.00 Action: This indicator has been Revised Initial trains (30 trains) (Percentage) 0.00 100.00 Action: This indicator has been Revised Component 1e. Cumulative % of completion of rehabilitation/modernization of metric gauge rolling stock 0.00 100.00 (Percentage) Action: This indicator has been Revised Component 1f. Cumulative completion of SETRANS building 0.00 100.00 rehabilitation (Percentage) Action: This indicator has been Marked for Deletion Institutional and Policy Development The World Bank Upgrading and Greening the Rio de Janeiro Urban Rail System (P111996) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline End Target Component 2a. Update/completion of studies (Original Loan) PDTU 100% PDTU (Text) Action: This indicator has been Revised Component 2.b. Studies (Additional Finance) (% of Completion) 0.00 100.00 (Percentage) Action: This indicator has been Revised IO Table SPACE The World Bank Upgrading and Greening the Rio de Janeiro Urban Rail System (P111996)