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Implementation Completion Report (ICR) Review - Belo Horizonte Metropolitan Transport


  
1. Project Data:   
ES Date Posted:
02/24/2005   
PROJ ID:
P006564
Appraisal
Actual
Project Name:
Belo Horizonte Metropolitan Transport
Project Costs(US $M)
 197.3  207.1
Country:
Brazil
Loan/Credit (US $M)
 99.0  92.1
Sector, Major Sect.:
Central government administration, Roads & highways, Railways,
Law and justice and public administration; Transportation; Transportation
Cofinancing (US $M)
 0  0
L/C Number:
L3916      
   
Board Approval (FY)
  95
Partners involved
 
Closing Date
12/31/2001 06/30/2004
         
Prepared by: Reviewed by: Group Manager: Group:  
Kavita Mathur
Peter Nigel Freeman Alain A. Barbu OEDSG

2. Project Objectives and Components:

a. Objectives
The objectives of the project were:

(a) the development of an integrated urban transport system for the Belo Horizonte Metropolitan Region (BHMR) under a Regional Transportation Coordination Commission (RTCC) established to coordinate and recommend common policies on pricing, regulation, financing, project evaluation and selection;
(b) the completion and decentralization of the Belo Horizonte Subdivision of the Brazilian Urban Rail Company (STU-BH) from the federal to the state level;
(c) the reduction of the negative environmental (mainly air quality and noise) impacts on the BHMR due to motor vehicles and the promotion of non-motorized transport modes; and
(d) the development of special strategies and actions to improve the accessibility of the low-income population to employment centers, health and education facilities.

b. Components
The project consisted of three components:
(a) Infrastructure and Equipment component (planned US$ 182.7 million; actual US$ 191.6 million) to help build (i) the rail extension of STU-BH and the additional stations required to enhance modal integration; (ii) the transfer terminals and physical accesses required for the actual integration between buses, rail, pedestrians, automobiles and bicycles; and (iii) a centralized road traffic signal control system to improve traffic management and control at about 250 road intersections in Belo Horizonte;
(b) Environmental and Traffic Safety component (planned US$ 0.36 million; actual US$ 0.50 million) to support (i) the design of an inspection and maintenance (I/M) program for vehicle emissions and noise; and (ii) a traffic management and safety program; and
(c) Institutional and Policy Development component (planned US$ 14.3 million; actual US$ 15.0 million) to help in (i) strengthening the RTCC for the BHMR; (ii) preparing an integrated Transport Policy, Land Use and Air Quality Management strategy for the BHMR to meet both transport and air quality targets and to introduce sound cost-recovery, tariff, regulatory and subsidy policies; (iii) implementing a cost-based financial management system in the STU-BH; (iv) developing and enabling environment and financial instruments for more substantial participation of the private sector in the investment and operation of the operating agencies; and (v) strengthening air-quality planning and monitoring of vehicle-based emissions.

c. Comments on Project Cost, Financing and Dates
The actual costs were higher than the appraisal estimate because of additional costs for resettlement, increased market value of land, and additional works not envisaged at appraisal. The Federal Government funded the cost overruns completely. The project suffered considerable disbursement delays mainly due to late effectiveness (effectiveness was delayed by 10 months due to problems relating to registering of the loan with the Central Bank), delays in procurement and counterpart funding. Five project extensions were granted and the project closed on June 30, 2004, two and a half years behind schedule.


3. Achievement of Relevant Objectives:

(a) Development of an integrated urban transport system for the Belo Horizonte Metropolitan Region (BHMR): achieved. The Sao Gabriel and Eldorado stations were integrated with some of the intermunicipal buses, which accounted for 23% of rail ridership in 2003. The integration at Vilarinho was started, but at a smaller scale due to the low frequencies of the train system. The State has been less effective in its integration policies mainly because the Transport Directorate of the State Roads Agency was not very cooperative and was dominated by a strong bus owner lobby that feared a loss of ridership to the metro and therefore is opposed to route rationalization. The municipal integration was very effective and will continue as soon as the signalling system in the new link is fully operational.
To support modal integration the following studies were carried out: (i) the Origin/Destination (O/D) survey for the BHMR; (ii) the METROPLAN, that is the study to design an Integrated Urban Transport , Land Use and Air Quality Management Strategy for the BHMR; (iii) the rail passenger master plan (plano diretor de transporte de passageiros sobre trilhos) of RMBH; (iv) a study regarding the fare structure of the public transport system in the BHMR; and (v) a study of the basic projects for Lines 2 (Calfate-Hospital) and Line 3 (Lagoinha-Savassi) to prepare the system for future expansions.

(b) Decentralization of the Belo Horizonte Subdivision of CBTU (STU-BH) from Federal to State and Municipal levels: achieved. Progress was made towards decentralization of the STU-BH. The project assisted in: (a) developing a blueprint for the institutional and organizational transfer arrangements; (b) the evaluation of SU-BH's assets and completion of an inventory required for the transfer; (c) creation of a new company TMNH or METROMINAS to operate transferred assets; (d) the action plan regarding the human resource need; and (e) the preparation of the legal documents for the eventual transfer of the system. In June 2004, a join management team composed of representatives of the State, the Federal Government (CBTU) and the Municipality of Belo Horizonte was nominated to finalize the gradual decentralization process of STU-BH. A study to evaluate options to concession out the urban rail system to the private sector was also completed. The decentralization process has advanced after loan closure and most of the operational tasks transferred to the local authorities.

(c) Reduction of the negative environmental impacts on the BHMR due to motor vehicles and the promotion of non-motorized transport modes: achieved. The introduction of the new centralized traffic light system (which is operational and will become fully functional in the beginning of 2005) has improved traffic management. Once fully operational, further improvement in traffic circulation and speeding up of bus operations is expected to decrease energy consumption thereby reducing emissions by 23%. To promote non-motorized transport, ICR notes that bicycle facilities are planned at Vilarinho and Jose Candido stations.

(d) Improve the accessibility of the poor to employment centers, health centers and education facilities: achieved. 50% of the metro users in 2000 belonged to households low-income households. The extension of the system to Vilarinho, in Venda Nova, and the integration of the system at Sao Gabriel substantially improved the accessibility for the poor. Low income populations are also better off because of the improvement of the accesses to the Vilarinho and Eldorado Stations. Seven minibus lines with reduced fare (R$ 0.35 instead of the basic fare of R$ 1.45) were started to serve slums.


4. Significant Outcomes/Impacts:

The Belo Horizonte Municipal Transport and Transit Company (BHTRANS) concessioned out the municipal routes through competitive bidding instead of operating "with permission". Belo Horizonte municipality was the first municipality in Brazil to do this.
  • The municipality of Belo Horizonte successfully eliminated illegal vans, which started to proliferate in the city after the appraisal of the project and were causing increased congestion and environmental problems.
  • Pedestrian safety and security was improved through the expansion of crossings with pedestrian lights, longer pedestrian cycles and an increase in lights that can be activated by pedestrians. Other measures to improve walking such as improvement of access to stations through construction of sidewalks and overpasses were undertaken. BHTRANS also carried out a detailed safety audit.
  • The private sector has shown willingness to make investments in the system, for example, the Oiapoque terminal was implemented with a private investment of US$ 135,000. The private investments in the Barreiro integration station totaled US$ 13,500,000 and another private partnership took place for the installation of shelters for public transport users.

5. Significant Shortcomings (include non-compliance with safeguard features):

There was a lack of leadership in the decentralization process. The Ministry of Transport (as the original representative of the Federal Government) was never a champion in assuring the States compliance with the decentralization model. With the coming of new Federal Government in January 2003, the original decentralization process which was almost complete was brought to a halt and the responsibility of the project was transferred to the newly created Ministry of Cities. The Ministry of Cities, which succeeded the Ministry of Transport together with the newly appointed CBTU presidency, also contributed to the delay in implementation of the new decentralized model. At loan closing, the decentralization process was not fully completed.
  • The project suffered considerable disbursement delays mainly due to late effectiveness and delays in procurement. Furthermore, the project implementation and outcome was negatively affected by inadequate provision of counterpart funds.
  • The designing of an inspection and maintenance (I/M) program for vehicle emissions and noise was not done. The ICR notes that it will be undertaken (it does not indicate when) by the State/Municipality based on the guidelines provided by the Federal Ministry of Environment. The acquisition and installation of two air pollution monitoring stations was not done due to lack of resources. The bidding process was launched only in June 2004.
  • The new link between Sao Gabriel and Vilarinho is operating only with manual signalling and the system is not yet totally integrated.
  • 6. Ratings:ICROED ReviewReason for Disagreement/Comments
    Outcome:
    SatisfactorySatisfactory
    Institutional Dev.:
    SubstantialSubstantial
    Sustainability:
    LikelyLikely
    Bank Performance:
    SatisfactorySatisfactorySatisfactory on balance, but the project suffered considerable disbursement delays due to late effectiveness and delays in procurement. Also, the Bank underestimated the complexity of the decentralization process in Belo Horizonte.
    Borrower Perf.:
    SatisfactorySatisfactoryBut only marginally so for the following reasons: (a) there was a lack of leadership in the decentralization process; (b) the State has been less effective in its integration policies mainly because the Transport Directorate of the State Roads Agency was not very cooperative and was dominated by strong bus owner lobby that feared a loss of ridership to the metro and therefore is opposed to route rationalization; (c) the late signing of loan agreement and the effectiveness delay of 10 months caused considerable project implementation and disbursement delays; and (d) the project implementation and outcome were negatively affected by inadequate provision of counterpart funds.
    Quality of ICR:
    Satisfactory

    7. Lessons of Broad Applicablity:

    Decentralization of urban rail system from Federal to State or lower level of government can be extremely lengthy, complicated and a highly politicized process. For the process to be completed within the lifetime of the project, decentralization should be a condition of effectiveness for a rehabilitation and modernization loan, with the respective rights and obligation of the transferring and receiving parties laid out in a binding way in advance.
    1. Public transport integration needs strong political champions who can fight against bus lobbies to impose the changes necessary to rationalize the bus and the rail system.
    2. At the local level, concrete measures need to be taken to eliminate informal transport operators.
    3. It is critical to follow-up on families that accepted cash contributions (during the resettlement process) to determine whether they were able to restore their previous income level and quality of life.

    8. Audit Recommended?  Yes

              Why?  Brazil's experience in addressing the decentralization issues in the urban transport sector are very relevant to other developing countries which are planning urban transport reforms. Field assessment of this project along with the recently completed Brazil Recife Metropolitan Transport Decentralization Project can provide valuable lessons.

    9. Comments on Quality of ICR:

    The quality of the ICR is satisfactory. The ICR provided a detailed and comprehensive analysis of implementation issues, and highlights important lessons which have broad applicability. Perhaps, the ICR could have assessed political complexity more carefully. It is somewhat lenient in its rating of the Borrower Performance. Also, the ICR could have discussed in some ways to prevent invasion by squatters.

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