Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized PROJECT INFORMATION DOCUMENT (PID) CONCEPT STAGE Project Name Cusco Transport Improvement Project (P132505) Region LATIN AMERICA AND CARIBBEAN Country Peru Sector(s) General transportation sector (70%), Urban Transport (30%) Lending Instrument Specific Investment Loan Project ID P132505 Borrower(s) Ministry of Finance, Ministry of Finance Implementing Agency COPESCO Environmental B-Partial Assessment Category Date PID Prepared/ 29-Jan-2013 Updated Date PID Approved/ 29-Jan-2013 Disclosed Estimated Date of Appraisal Completion 23-Jul-2013 Estimated Date of 26-Sep-2013 Board Approval Concept Review Decision Report No.: PIDC626 I. Introduction and Context Country Context In the past decade Peru displayed strong economic performance despite the global financial crisis, and was one of the best performing Latin American economies. Peruvian economic growth accelerated from 6.8 percent in 2005 to 9.8 percent in 2008, declining to just 0.9 percent in 2009 during the Financial Crisis and growing again in 2010 by around 9.0 percent. However, Peru has not been able to achieve a more inclusive economic growth. While fast economic growth in recent years has been accompanied by poverty reduction and job creation, inequality remains high especially between urban areas and the less favored rural ones. In 2011, the Government of Peru launched an ambitious agenda to overcome social inequalities and boost productivity while maintaining high economic growth rates under a solid macroeconomic framework. Under this agenda, the main objectives of the Government are to improve access to services, increase employment and raise coverage of the social safety net, significantly reduce extreme poverty, better monitor environmental impacts, and enhance connections with the rural areas of Peru. In addition, the country has been engaged in a decentralization process that will allow Page 1 of 6
regional and local governments to assume regulation, public expenditure management and service delivery responsibilities. In this process the main challenge the country is facing is the low existing capacities of some of the regional or local governments to carry out the recently acquired responsibilities. Sectoral and Institutional Context Transport Sector in Cusco The city of Cusco, World Heritage Site, has a number or pre-inca and Inca archeological sites, as well as more recent colonial constructions. It receives approximately 80 percent of tourists traveling the country, serves as the main entrance of tourists visiting Machu Picchu, and it is an important production and commercial center in the region. Cusco received 1.4 million visitors in 2009, 1.6 million in 2010, and 2.3 million in 2011, of which 1.2 million were foreign visitors. The number of tourists has more than doubled in the last ten years. At present, the utilization and characteristics of the road system do not allow for efficient mobility of the population and visitors. As population and the number of visitors increases, a further deterioration of mobility is expected as increased traffic flows will add pressure to existing infrastructure. The road system in Cusco is characterized by three longitudinal arteries (the Cultura Boulevard, the Cusco Expressway and the Cusco Bypass Road) and limited transversal circulation. However, at the present time only the Cultura Boulevard is fully operational and is currently absorbing most of the city s and through traffic. The current automotive park consists of around 50,000 private vehicles, and 3,000 vehicles are added to its road network each year, which together with public transport vehicles are generating significant congestion of the existing road network and deterioration of the city s environmental quality and road safety. Traffic congestion is particularly high in the city s Historical Center, where narrow streets are not suitable for the traffic they are currently enduring. As a result, the Historical Center of Cusco will continue to deteriorate unless pedestrian mobility is favored, a parking policy is defined, and a better integration of pedestrian and vehicles traffic is achieved. Additionally, as traditional residents from the Historical Center have been displaced by hotels, commercial businesses, restaurants and handicraft sales, and other services, there is a need to improve access to the city center. The city of Cusco transport system, in spite of having around 63 percent of daily trips made in public transportation, does not have the necessary quality and accessibility conditions to ensure proper service delivery. The main problems that need to be addressed are: low quality of services, lack of public transport terminals, inefficient use of vehicles, and aging vehicle fleet. Overall the system needs to better cope with the increasing demand for mobility while at the same time practicing affordable fares. Equally important is the maintenance and management of the urban road system by local governments that, if not correctly addressed, will lead to an increase in road accidents and congestion. Cusco City requires major infrastructure investments and strengthening of technical, managerial and supervision capacity of the responsible line units within the Regional and Provincial governments for managing its various development plans, including their preservation efforts of such an important tourist city, and to implement coherent investments. The Bank s involvement would support the government s capacity to remove mobility bottlenecks caused by ever increasing vehicle and pedestrian traffic within the city. It would also support the government s plan to expand the Page 2 of 6
limited road network in the East-West direction by completing Cusco s Expressway, a second artery that would capture traffic that otherwise is needlessly passing through the city center. When combined with the significant financial resources committed by the governments, the Bank s contribution is expected to result in major improvements to the flow of traffic and general mobility in Cusco. Institutional Context The Regional Government of Cusco is seeking to obtain more sustainable development and has centered its efforts on improving its financial position. Under this scope, the Regional Government submitted itself to a credit assessment to broaden its financing options and facilitate its access to financial markets. As a result, the Regional Government was rated BBB- for long-term debt, which reflects its capacity of meeting financial commitments, both capital and interest, under certain conditions and deadlines. In addition, the Regional Government is currently working with the Ministry of Economy and Finance (Ministerio de Economia y Finanzas / MEF) with the Bank s assistance to achieve a more competitive position. The Cusco Regional Development Project (PRODER Cusco) builds upon the earlier Vilcanota project and is intended to be the first regional development project piloting how the Bank could lend to regions. The authorities at the central and regional governments together with the Bank agreed to divide and repackage the activities of PRODER. Based on this understanding, there are two distinct projects in preparation, a multi-sectoral tourism program ( PRODER Cusco ) consisting of tourism investments, solid waste and disaster risk; and a transport project ( the Cusco Transport Improvement Project ), to support institutional strengthening of Provincial agencies in transport planning administration and the construction of four lanes of the Via Expresa. In addition, the Bank will tap into previous experiences in other countries such as Colombia and Argentina to help guide project preparation. Although the project s borrower is the Ministry of Economy and Finance, the Regional Government will implement the project through PER Plan COPESCO, its unit responsible for tourism-related infrastructure in Cusco. The Provincial Government owns and manages Cusco s road network and will receive technical assistance from the project. In addition, the Provincial Government will jointly develop technical assistance components with COPESCO. Relationship to CAS The Cusco Transport Improvement Project will support the achievement of the following strategic objectives outlined in the CPS of March 13, 2012: Strategic Objective 2.2, Better transport and infrastructure to reduce inequality; Strategic Objective 3.4, improving disaster risk management and urban planning; and promote decentralization fulfilling Strategic Objective 4.2, strengthening subnational management and capacity building. II. Proposed Development Objective(s) Proposed Development Objective(s) (From PCN) The overall Project Development Objective is to improve mobility in the city of Cusco. This objective will be achieved by: (i) strengthening the capacity of the provincial government to manage public transportation, traffic regulations, mobility in the Historical Center, and management Page 3 of 6
of the urban road network asset; and (ii) support the construction of four lanes of the East- West Expressway (Via Expresa). Key Results (From PCN) Progress towards meeting the development objective will be measured by a number of indicators, which will be further identified during project preparation. Expected impact indicators are: (i) reduction of travel time in the East-West directions of the city during rush hour (in minutes); (ii) reduction of traffic congestion in La Cultura Boulevard during rush hour (annual sum of all the pertrip delays for those persons who travel in the peak periods); (iii) reduction of the number of heavy trucks traveling through the Historical Center (number of 18 ton trucks and higher), (iv) increased pedestrian areas in the Historical Center (in meters), (v) integral remodeling of 5.7 km of the Expressway with the construction of four-lane road and construction of two overpasses. III. Preliminary Description Concept Description The Cusco Transport Improvement Project would achieve the above mentioned objective though the implementation of two components: Component 1: Road and Transport Improvement of the City of Cusco. This component includes technical assistance to the relevant units in the regional and provincial governments for strengthening their capacity in: (i) the preparation and management of public transport and traffic regulation plans, including delimitation of parking zones and road safety interventions, (ii) management of mobility in the historical center through the establishment of pedestrian zones, (iii) the creation of environmentally friendly pedestrian and biking paths circuits in peri-urban areas,(iv) the preparation of the road network maintenance management plan based on results, and (v) providing technical advice on matters related to transport infrastructure works in the greater metropolitan area of the city. Component 2: Improvement of Cusco s Expressway. This component will finance the completion of the Cusco Expressway, which comprises about 5.7 km of a divided roadway, bridges, drainage, storm water channels, urban pedestrian infrastructure, landscaping treatment, and two main overpasses --the Libertadores oval and the intersection node which connects with Cusco s Bypass Road. The Expressway cross-section has four local access lanes and four rapid access lanes for a total width of 50 meters. At the present time, the four local access lanes of the Expressway are completed. IV. Safeguard Policies that might apply Safeguard Policies Triggered by the Project Yes No TBD Environmental Assessment OP/BP 4.01 Natural Habitats OP/BP 4.04 Forests OP/BP 4.36 Pest Management OP 4.09 Physical Cultural Resources OP/BP 4.11 Indigenous Peoples OP/BP 4.10 Involuntary Resettlement OP/BP 4.12 Page 4 of 6
Safety of Dams OP/BP 4.37 Projects on International Waterways OP/BP 7.50 Projects in Disputed Areas OP/BP 7.60 V. Tentative financing Financing Source Amount Borrower 80.00 International Bank for Reconstruction and Develo 30.00 Total 110.00 VI. Contact point World Bank Contact: Maria Margarita Nunez Title: Sr Highway Engineer Tel: 473-6860 Email: mnunez1@worldbank.org Borrower/Client/Recipient Name: Ministry of Finance Contact: Carlos Linares Title: General Director of the Public Treasury and Debt Dept. Tel: 51-1-3115930 Email: clinares@mef.gob.pe Name: Ministry of Finance Contact: Carlos Linares Title: General Director of the Public Treasury and Debt Dept. Tel: 51-1-3115930 Email: clinares@mef.gob.pe Implementing Agencies Name: COPESCO Contact: Title: Tel: (51-84) 581-540 Email: pcastro@copesco.gob.pe VII. For more information contact: The InfoShop The World Bank 1818 H Street, NW Page 5 of 6
Washington, D.C. 20433 Telephone: (202) 458-4500 Fax: (202) 522-1500 Web: http://www.worldbank.org/infoshop Page 6 of 6