The World Bank Support to the Bogota Metro Line 1 Section 1 Project - (Series 1) ( P165300) REPORT NO.: RES43689 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF SUPPORT TO THE BOGOTA METRO LINE 1 SECTION 1 PROJECT - (SERIES 1) APPROVED ON AUGUST 2, 2018 TO EMPRESA METRO DE BOGOTA, SA TRANSPORT LATIN AMERICA AND CARIBBEAN Regional Vice President: Carlos Felipe Jaramillo Country Director: Mark Roland Thomas Regional Director: Maria Marcela Silva Practice Manager/Manager: Bianca Bianchi Alves Task Team Leader(s): Leonardo Canon Rubiano, Linda Ellin Maria Ivarsson Molina The World Bank Support to the Bogota Metro Line 1 Section 1 Project - (Series 1) ( P165300) ABBREVIATIONS AND ACRONYMS Urban Development Institute (Instituto de Desarrollo APA Alternative Procurement Arrangements IDU Urbano) BRT Bus Rapid Transit IFC International Finance Corporation CAPEX Capital Expenditures IFRS International Financial Reporting Standards National Council for Economic and Social Policy (Consejo CONPES IPF Investment Project Financing Nacional de Política Económica y Social) COP Colombian Pesos KPI Key Performance Indicator CPF Country Partnership Framework MDB Multilateral Development Bank COVID-19 Novel Coronavirus Infectious Disease MFD Maximizing Finance for Development National Statistics Department (Departamento Ministry of Finance and Public Credit (Ministerio de DANE MHCP Administrativo Nacional de Estadística) Hacienda y Crédito Público) DFBOMT Design-Finance-Build-Operate-Maintain-Transfer MoT Ministry of Transport (Ministerio de Transporte) National Planning Department (Departamento Nacional DNP NGOs Nongovernmental Organizations de Planeación) EA Economic Analysis OM Operational Manual EHS Environmental, Health and Safety O&M Operation and Maintenance costs EIB European Investment Bank PDO Project Development Objective Bogota Metro Line 1 Section 1 (Primera Línea del Metro EIRR Economic Internal Rate of Return PLMB de Bogota, Tramo 1) EMB Bogota Metro Company (Empresa Metro de Bogota) PMO Project Management Office EMPs Environmental Management Plans PPP Public-Private Partnership ESIA Environmental and Social Impact Assessment PPSD Project Procurement Strategy for Development ESMP Environmental and Social Management Plan RAP Resettlement Action Plans National Development Financier (Financiera de Desarrollo FDN RPF Resettlement Policy Framework Nacional) FMA Financial Management Assessment SCD Systematic Country Diagnostic GDP Gross Domestic Product SDM Mobility Secretariat (Secretaria Distrital de Movilidad) Integrated Public Transit System (Sistema Integrado de GHG Greenhouse Gases SITP Transporte Publico) GoC Government of Colombia SOE State Owned Enterprise GRM Grievance Redress Mechanisms SOP Series of Projects IADB Inter-American Development Bank S-PDO Series Project Development Objective IBRD International Bank for Reconstruction and Development TOD Transit-oriented Development Colombia Institute for Anthropology and History (Instituto ICANH TRR Transportation Research Record Colombiano de Antropología e Historia) Unit for Sustainable Urban Mobility (Unidad de Movilidad UMUS Urbana Sostenible) WB World Bank WDI World Development Indicators WSC Works Supervision Consultant The World Bank Support to the Bogota Metro Line 1 Section 1 Project - (Series 1) ( P165300) BASIC DATA Product Information Project ID Financing Instrument P165300 Investment Project Financing Original EA Category Current EA Category Full Assessment (A) Full Assessment (A) Approval Date Current Closing Date 02-Aug-2018 31-Dec-2023 Organizations Borrower Responsible Agency Empresa Metro de Bogota, SA Project Development Objective (PDO) Original PDO The PDO of the proposed first Project under the series is to improve readiness and start the implementation of the Bogota Metro Line 1, Section 1 (PLMB). OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing (US$, Millions) Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IBRD-89010 02-Aug-2018 06-Aug-2018 27-Jan-2021 31-Dec-2023 70.00 .06 69.94 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank Support to the Bogota Metro Line 1 Section 1 Project - (Series 1) (P165300) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. Introduction 1. This Restructuring Paper seeks the approval of a Level Two Restructuring of the Colombia Bogota Metro Line 1 Section 1 Project (P165300), the first project in a series of projects (SOP)1. This is the first restructuring and extension of the Project, requested by the Borrower on November 28, 2023. The proposed restructuring proposes to: (i) extend the loan closing date from December 31, 2023, to December 12, 20252 (23 months) and update accordingly the end- dates of relevant result indicators targets; (ii) reallocate funds between components and disbursement categories; (iii) include financial external audits under Component 2 of the Project. 2. The Project was approved on August 2, 2018 with an original Closing Date of December 31, 2023, and became effective on January 27, 2021. The Project Development Objective (PDO) is to improve readiness and start the implementation of the Bogota Metro Line 1, Section 1 (PLMB). The Project, delivered by a single, 27-year design- finance-build-operate-maintain-transfer (DFBOMT) concession contract, is supported by the following components: (1) Detailed Designs, Initial Construction and Works Supervision Contract (WSC), with an estimated total cost of US$190 million, of which Bank financing US$67 million, and (2) Institutional & Policy Strengthening, with an estimated total cost of US$6 million, of which World Bank financing US$3 million. The Empresa Metro de Bogota (EMB) is both the Borrower and the implementing agency. Project status 3. Progress towards achievement of the PDO was downgraded to Moderately Satisfactory (MS) in June 2023, on account of the delays accumulated with respect to the current closing date. Overall Implementation Progress of the Project has been MS for the last couple of years, with a physical implementation progress reaching 26.66 percent in November 2023. The Borrower remains fully committed to the Project, as evidenced by the overall progress of implementation, including the outcomes and component indicators. a) Related to Component 1 EMB awarded and signed both the DFBOMT concession contract (November 27, 2019), and the WSC contract (July 24, 2020). Once the WSC certified that designs were complete, EMB initiated the construction phase of the Project on July 25, 2023. b) Related to Component 2, the Loan proceeds have financed the financial audit consulting contract. The rest of the initial scope of the component - the Project Management Office (PMO), carrying out technical studies for the implementation of the PLMB, and institutional strengthening of the EMB and Bogota’s Mobility sector, hiring of consultants to support safeguard and fiduciary matters, and training – has been funded with counterpart funding from EMB, and, in some cases (traffic management plans) as part of the contractual responsibilities of the DFBOMT and WSC contracts. 1 The Project is the first project in a series of two projects and will contribute to the Series of Project Development Objective (S-PDO) which is to improve access to jobs and quality transit for public transport users in the area of influence of the Bogota Metro Line 1 Section 1 (PLMB). 2 The Borrower’s original request for exstension was for 27 months, or until May 2026. The World Bank suggested the extension to be shorter as disbursements from the Loan will occur primarily during 2025. Undisbursed amounts could be reflected in the total loan amount of the SOP2, which should go to the Board by November 2025. The World Bank Support to the Bogota Metro Line 1 Section 1 Project - (Series 1) (P165300) 4. Despite the adequate physical implementation progress of the Program, disbursements from Multilateral Development Bank (MDB) loans have been posponed as a result of EMB’s accumulated funding surplus. During construction stage, EMB’s main funding source is national and local government cash transfers, as agreed in the Project’s cofinancing agreement signed between the Government of Colombia (GoC) and Bogota municipality in 2018. This funding scheme generated a financial surplus for EMB, which has no financial incentive to draw from more expensive loan resources. a) EMB is performing well and has become a robust Project Implementation Unit (PIU) carrying out the execution of the Bogota Metro Line 1 and preparing the new Bogota Metro Line 2. EMB’s managerial and technical leadership teams are stable and strong, and the PIU has been strengthened in all aspects of technical, procurement, financial management, and safeguards, with satisfactory performance to date. There are no overdue audit reports nor reports deemed unsatisfactory to the Bank. On safeguards, EMB’s social and environmental teams are robust and capable, and are responsible for the elaboration and implementation of Environmental and Social Management Plans, (ESMPs). To date, WB and MDBs have provided their no objections to ESMPs for the implementation of all pre-construction activities, and ESMPs have been adequately disclosed. The performance of specific areas is as follows: 5. Compliance with legal covenants. The project is fully compliant with all legal covenants except for one case where it is partially compliant (annual disbursement ratios). The annual disbrusements ratios are currently being updated with the new disbursement plan of EMB that has been adjusted to the concessionaire execution plan (approved by the supervision firm and EMB). The new annual disbusrment ratios will be updated in the operating manual, and the new disbursement estimates have been updated and reflected in this paper. 6. The Borrower and the World bank carried out a joint mid-term review in June 2023. The MTR concluded that: (i) an extension of the project was required to fully disburse and (ii) reallocation between components, as the activities under Component 2 will remain with the same ambition but they will be financed using the cash surplus from EMB and MDBs non-reimbursable resources. B. Rationale for restructuring 7. Based on the request of the Borrower for restructuring of the Project dated on June 1 and November 28, 2023 , the rationale for the proposed restructuring is the following: (a) More time needed to achieve some outcome targets. The PDO remains achievable, and two of the three PDO outcomes have been achieved to date: DFBOMT contract awarded, and cumulative percentage of physical works in the railyards. The remaining PDO target, the construction of the Calle 72 underpass, is at 31.15% execution while it was expected to be at 69.79% by the current closing date. The delay of this construction has been caused by : (i) archeological findings, (ii) delays on the transfers of utility networks (now completed), (iii) additional properties to be acquired by EMB and (iv) suboptimal performance by some sub-contractors. Issues (i) through (iii) have now been resolved, and EMB and the DFBOMT have agreed to redouble efforts to ensure sub-contractors improve performance. With the above, the construction of the Calle 72 is expected to achieve the indicator target by the new closing date. (b) Changes Component 2. As explained in para 3, activities under Component 2, originally designed to be financed with loan resources, are being financed by counterpart funding, following the financial surplus rationale. The World Bank Support to the Bogota Metro Line 1 Section 1 Project - (Series 1) (P165300) 8. The Project continues to represent a strategic engagement for the Bank. The Project remains highly relevant in the context of the upcoming CPF for Colombia (FY24-27), supporting the decarbonization of the transport sector and the increase in connectivity and access to jobs and opportunities to beneficiaries. Lessons from the Project are being incorporated in the design of the proposed Bogota Metro Line 2 Project (P179822). These include: (a) enhancing financial planning coordination between government and MDBto prioritize MDB disbursements, optimize GoC’s fiscal space management, and ensure timely disbursements, (b) adopting a value-for-money approach in the procurement of DFBOMT contracts by introducing rated criteria in the bidding documents, thus promoting greater competition, and (c) ensure enhanced oversight over subcontractors through a strengthened role of the PMO and intermediate completion milestones for the design stage. II. DESCRIPTION OF PROPOSED CHANGES 9. Loan Closing Date. The loan closing date will b eextended from December 31, 2023, to December 12, 2025 (23 months). This is the first extension of the original loan closing date. The extension meets the relevant requirements of the World Bank Investment Project Financing Directive. 10. Results Framework. The Project Result Framework has been modified to extend the end dates of relevant targets in line with the revised closing date. 11. Components. The restructuring will modify numeral 2 of Part B (Component 2) of Schedule 1 of the Financing Agreement, to include external financial audits. 12. Component Costs. The undisbursed amount of US$2.84 million under Part B (Component 2) is reallocated to Part A (Component 1) (see Table 2). TABLE 1 – IBRD LOAN: ORIGINAL AND PROPOSED ALLOCATION BY DISBURSEMENT CATEGORY Original Allocation Proposed Difference (US$ (US $M) Allocation (US$ M) M) Category (1) Goods, works, non-consulting services, and consulting 67 69.84 +2.84 services for Part A of the Project (2) Consulting services and Training for Part B of the Project 3 0.16 -2.84 Total 70 70 0 13. Disbursement. By the time of the initial closing date, the Project will have a significant undisbursed balance due to the EMB’s disbursement planning, as explained in para 5. The Project disbursement profile will be modified accordingly. 14. Fiduciary Assignment Contract and Trust Account. The changes requested by the Borrower referring to the Project Trust Account will be processed in a subsequent amendment, once the Bank and the Borrower clarify additional considerations on this request, in particular, to the Fiduciary Assignement Contract (Encargo Fiduciario) and its Trust Account. The team adopted this approach to avoid delays in the extension of the closing date. Contract The World Bank Support to the Bogota Metro Line 1 Section 1 Project - (Series 1) (P165300) III. SUMMARY OF CHANGES Changed Not Changed Results Framework ✔ Components and Cost ✔ Loan Closing Date(s) ✔ Reallocation between Disbursement Categories ✔ Disbursement Estimates ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ PBCs ✔ Cancellations Proposed ✔ Disbursements Arrangements ✔ Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Implementation Schedule ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) The World Bank Support to the Bogota Metro Line 1 Section 1 Project - (Series 1) (P165300) OPS_DETAILEDCHANGES_COMPONENTS_TABLE COMPONENTS Current Current Proposed Proposed Cost Action Component Name Component Name Cost (US$M) (US$M) Component 1: Detailed Designs, Component 1: Detailed Initial Construction, and Work 67.00 Revised Designs, Initial Construction, 69.84 Supervision Contract and Work Supervision Contract Component 2: Institutional & Component 2: Institutional & 3.00 Revised 0.16 Policy Strengthening Policy Strengthening TOTAL 70.00 70.00 OPS_DETAILEDCHANGES_LOANCLOSING_TABLE LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications IBRD-89010 Effective 31-Dec-2023 12-Dec-2025 12-Apr-2026 OPS_DETAILEDCHANGES_REALLOCATION _TABLE REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Financing % Current Allocation Actuals + Committed Proposed Allocation (Type Total) Current Proposed IBRD-89010-001 | Currency: USD iLap Category Sequence No: 1 Current Expenditure Category: GO,CW,NCS,CS PART A 67,000,000.00 0.00 69,835,943.00 100.00 100.00 iLap Category Sequence No: 2 Current Expenditure Category: CS,TRN PART B 3,000,000.00 64,056.76 164,057.00 100.00 100 Total 70,000,000.00 64,056.76 70,000,000.00 The World Bank Support to the Bogota Metro Line 1 Section 1 Project - (Series 1) (P165300) OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 2019 1,000,000.00 0.00 2020 1,000,000.00 0.00 2021 33,000,000.00 0.00 2022 34,000,000.00 0.00 2023 1,000,000.00 70,000.00 2024 0.00 90,000.00 2025 0.00 50,000,000.00 2026 0.00 19,840,000.00 . The World Bank Support to the Bogota Metro Line 1 Section 1 Project - (Series 1) (P165300) . Results framework COUNTRY: Colombia Support to the Bogota Metro Line 1 Section 1 Project - (Series 1) Project Development Objectives(s) The PDO of the proposed first Project under the series is to improve readiness and start the implementation of the Bogota Metro Line 1, Section 1 (PLMB). Project Development Objective Indicators by Objectives/ Outcomes RESULT_FRAME_TBL_PDO Indicator Name PBC Baseline Intermediate Targets End Target 1 To improve readiness and start the implementation of the Bogota Metro Line 1, Section 1 (PLMB) DFBOMT Contract awarded (Yes/No) No Yes Cumulative percentage of physical works for 0.00 30.00 railyard and Cl72 interchange (Percentage) Action: This indicator has been Revised Cumulative percentage of physical works for 0.00 34.00 50.00 Cl72 interchange (Percentage) Action: This indicator has been Revised cumulative percentage of physical works for 0.00 11.00 50.00 Railyards (Percentage) PDO Table SPACE The World Bank Support to the Bogota Metro Line 1 Section 1 Project - (Series 1) (P165300) Intermediate Results Indicators by Components RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 Component 1: Detailed Designs, Initial Construction and Work Supervision Contract Cumulative percentage of transfer of 0.00 69.00 100.00 utility networks completed. (Percentage) Grievances responded and/or resolved within the stipulated service standards 0.00 80.00 for response times (%) (Percentage) Action: This indicator has been Revised Traffic management plans for preliminary works (Railyards, Av 68 & Cl 72) approved 0.00 0.00 2.00 3.00 by the Secretariat of Mobility (Number) Cumulative percentage of land purchase 0.00 100.00 completed (Percentage) Component 2: Institutional & Policy Strengthening Project Management Office hired No Yes (Yes/No) DFBOMT contract includes target of women employed in O&M phase of the No Yes PLMB (Yes/No) IO Table SPACE . The World Bank Support to the Bogota Metro Line 1 Section 1 Project - (Series 1) (P165300)