The World Bank Lima Metropolitano BRT North Extension (P170595) REPORT NO.: RES54712 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF LIMA METROPOLITANO BRT NORTH EXTENSION APPROVED ON JANUARY 30, 2020 TO REPUBLIC OF PERU TRANSPORT LATIN AMERICA AND CARIBBEAN Regional Vice President: Carlos Felipe Jaramillo Country Director: Marianne Fay Regional Director: Maria Marcela Silva Practice Manager/Manager: Eric R. Lancelot Task Team Leader(s): Felipe Targa Rodriguez, Irene Portabales Gonzalez, Yang Chen The World Bank Lima Metropolitano BRT North Extension (P170595) ABBREVIATIONS AND ACRONYMS ATU Lima-Callao Urban Transport Authority BRT Bus Rapid Transit EMAPE Lima Toll Road Municipal Management Agency ESF Environmental and Social Framework ESRS Environmental and Social Review Summary ESCP Environmental and Social Commitment Plan FM Financial Management GAP Gender Action Plan GoP Government of Peru GRM Grievance and Redress Mechanism IBRD International Bank for Reconstruction and Development LA Loan Agreement LAC Latin America and the Caribbean Region LMP Lima Metropolitan Area LMP Labor Management Procedure MEF Ministry of Economy and Finance MML Metropolitan Municipality of Lima PDO Project Development Objective PIU Project Implementation Unit POM Project Operational Manual PWD Persons with disabilities RAP Resettlement Action Plan SEP Stakeholder Engagement Plan SERPAR Lima Parks Service The World Bank Lima Metropolitano BRT North Extension (P170595) BASIC DATA Product Information Project ID Financing Instrument P170595 Investment Project Financing Environmental and Social Risk Classification (ESRC) Substantial Approval Date Current Closing Date 30-Jan-2020 31-Jan-2023 Organizations Borrower Responsible Agency Republic of Peru Project Development Objective (PDO) Original PDO The Project Development Objective (PDO) is to improve urban mobility and accessibility to jobs in the area of influence of the Metropolitano BRT North Extension. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing (US$, Millions) Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IBRD-90400 30-Jan-2020 01-Jun-2020 19-Jun-2020 31-Jan-2023 93.00 86.88 6.12 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank Lima Metropolitano BRT North Extension (P170595) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING Project Status 1. The Metropolitano BRT North Extension Project (“the Project”) was approved on January 30, 2020 and is financed by the Government of Peru (GoP) (US$30 million) and an IBRD loan (US$93 million, effective as of June 19, 2020 with a closing date of January 31, 2023). The Project Development Objective (PDO) is to improve urban mobility and accessibility to jobs in the area of influence of the Metropolitano BRT North Extension. The Project is expected to reduce in-vehicle travel time for public transport users between Terminal Chimpu Ocllo and Terminal Naranjal Lima from 33 minutes to 17 minutes and improve quality of service. It is expected to benefit 1,460,000 residents of four districts in North Lima (Los Olivos, Independencia, Comas, and the urban areas of Carabayllo) – the area of influence of the Metropolitano BRT North Extension, especially low-income people and women, and also result in 60,000 new trips per day on the BRT extension. 2. The Project has two components: component 1 “BRT infrastructure and equipment” (US$92 million of Bank financing and US$25 million counterpart funding); and component 2 “Project Management and Environmental and Social (E&S) management” (US$2 million of Bank financing and US$1 million of counterpart funding). Component 1 has two subcomponents: (1a) BRT civil works, traffic lights, technological component, supervision; road safety and universal access; and pre-operational activities and route management; and (1b) the optimization of the Metropolitano BRT operations and services. Component 2 includes activities to support the project management and E&S management, such as, inter alia: institutional strengthening, implementation of the Environmental and Social Commitment Plan (ESCP) and the management tools and instruments referred to therein (including the provision of financing of resettlement expenditures), and the development and implementation of a Gender Action Plan (GAP). Project implementation is the responsibility of the Metropolitan Municipality of Lima (MML) through its Project Implementation Unit, EMAPE (Empresa Municipal Administradora de Peaje de Lima). Once the BRT civil works are completed, the project will be transferred to Lima-Callao Urban Transport Authority (ATU) for operation and maintenance. 3. The Project’s implementation progress (IP) is currently rated Moderately Satisfactory (MS), but the overall Environmental and Social (E&S) Standards Performance rating is Moderately Unsatisfactory (MU). The IP MS rating is mainly due to the delays in the completion of BRT civil works under subcomponent (1a) and in the implementation of the bus service pre-operational plan activities under subcomponent (1b). As of December 2022, the loan disbursements amounted to US$86.88 million or 93 percent of the US$93 million loan. The MU rating of overall E&S performance is driven by the MU rating of the following E&S Standards: ESS10: Stakeholder Engagement and Information Disclosure, ESS4: Community Health and Safety, ESS5: Land Acquisition, Restrictions on Land Use and Involuntary Resettlement, and ESS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources, for the reasons detailed in paragraph 5 below. 4. The physical progress of component 1a (BRT infrastructure and equipment), as of January 7, 2023, is at 97.4 percent while component 1b (optimization of the BRT operations and services) is behind schedule and is expected to be finalized by March 2024. While the infrastructure is almost completed, the operationalization of the BRT extension, making the BRT available for users and reducing travel time (PDO indicators) depends on the implementation of the bus service pre-operational plan activity which is delayed. Progress by subcomponents is as follows: i. The BRT civil works started on April 20, 2021 by the Metropolitano North Consortium (the contractor). The PIU and the Supervision firm have approved five work extensions for a total of 371 days mainly due to: (a) utility interferences not detected during project preparation; (b) the delayed approval process by the utility service provider companies to remove utilities interferences; and (c) other variations, such as the technological component (the fiber optic installation) required more coordinated work, especially with ATU. As of January 7, The World Bank Lima Metropolitano BRT North Extension (P170595) 2023, the BRT infrastructure (BRT lanes, pedestrian bridges, U-turns) is almost completely constructed. Only some small works remain to complete the installation of traffic lights, intersection and drainage, bus depot, and passenger stations. Their completion is estimated for February 28, 2023. The defect liability period of civil works is until February 2024. The Supervision contract will cover the defect liability period. ii. Bus service operational studies and user satisfaction surveys in subcomponent 1b are important to achieve the PDO because they ensure the operation of the BRT extension and its integration in the Metropolitano system. However, the PIU has been focusing its limited capacity on the civil works and catching up on the operational studies only recently when the infrastructure is near completion. Specifically, the bus service pre-operational study (including (i) optimization of service plan, (ii) scheduling of feeder routes, and (v) operational performance indicators in under subcomponent 1b) is undergoing bidding and the contract is expected to be signed by February 17, 2023, and last for 210 days (expected to be completed by August 28, 2023). In the meantime, the PIU is working with ATU on a temporary pre-operational plan to be implemented upon completion of the works (February 28, 2023). The consultancy to develop the user satisfaction survey (vi in paragraph 2) has been selected, and the contract is expected to be signed in February and completed by May 2023. The personalization module of the smart card and the bus scheduling software will be implemented by ATU, financed with its own resources for technical and legal reasons, as they are within the scope of the fare collection contract managed by ATU outside the Project. 5. The critical E&S issues are: (i) delays in repairing damages to houses due to vibrations from the Project’s construction works (ESS4 and ESS10); (ii) delays in completion of tree compensation activities (planting of trees) in the Project’s area of influence (ESS6); and (iii) delays in the resettlement action plan (RAP) commitments (ESS5). In addition, there is a separate issue related to (iv) a lawsuit filed by citizens of Comas against the MML, concerning impacts to green areas of the construction of existing bus depot and its expansion (ESS6). i. Regarding delays in repairing of damages to houses due to vibrations from the works (+13 months), the first complaints regarding damages to houses due to construction vibrations were received in November 2021. To date, there have been 51 reported cases of affected houses. Based on the available information, none of these damages represents an imminent danger to its occupants. According to the timeline proposed by the contractor, repairs to 46 houses were to be completed by the end of December 2022, but to date, only 3 houses have been intervened and repaired by the contractor. The PIU is closely following up with the contractor to make sure an updated schedule of pending repairs is prepared and shared with the affected population, and that the repairs are finalized in a timely manner (i.e., ideally prior to the end of the construction by February 2023, and in any case no later than when the PIU accepts the civil works delivered by the contractor, which will happen after the construction works are completed and the supervision offers a favorable technical opinion). In case the contractor does not fix the damages in accordance with that timeline, the PIU intends to undertake that task on its own, in a manner consistent with contractual provisions, and is advancing on the corresponding planning process to undertake the repairs on its own if this ends up being needed. Such process could take approximately between six and nine months, throughout most of 2023, due to the Borrower’s procurement timeframes. ii. Regarding the delays in the compensation of a total of 14,855 trees to be planted in the Project’s area of influence based on an agreement between the Lima Parks Service (SERPAR) and EMAPE, even though more than 6,250 trees have been planted to date under this scheme, almost 60% of the required compensation is still pending, mainly due to coordination and logistic issues with SERPAR. The PIU is waiting for changes in government administration to become effective in January 2023 to re-start coordination and negotiation activities with SERPAR for the signing of the 5th addendum to the EMAPE-SERPAR agreement, and thus be able to complete pending compensation activities (expected to be finalized within 6 months from the date the addendum is signed). The World Bank Lima Metropolitano BRT North Extension (P170595) iii. Regarding the delayed implementation of the RAP (+six months), while key activities of the RAP have been already completed, like the land acquisition and the relocation of the informal vendor’s market, there are still outstanding activities that have experienced delays, which include: (a) compensation payments to a fourth group of 22 informal street vendors; (b) payment associated with a complaint for additional economic impact initially not considered in one of the cases (Lot 1); (c) compensation payment to the inheritors of 50% of Lot 6, once the intestate succession process concludes, and the closure of a complaint associated with the other 50%; and (d) the construction of a replacement chapel, after updating and consulting the new design with the affected people. While some of these actions could be concluded within the first quarter of 2023, the construction of the chapel and the completion of its updated features could be delayed until the last quarter of 2023, particularly due to the Borrower’s contracting timeframes. iv. Regarding the lawsuit filed by local citizens to the Superior Court of Justice of Lima against EMAPE, the MML and SERPAR for the suspension of Project activities in the BRT bus depot and the restoration of all affected green areas, in September 2021, neighbors of the Comas District formally sued the MML and requested Project works to stop, arguing mainly that the current BRT bus depot (and its expansion) are located within an area designated for a park that was deforested in 2009 by the MML. On December 1, 2022, the court ruled in favor of the neighbors, ordering the implementation of one or two parks of 10 ha within the Comas District within a 4-year period, or demolishing of the bus depot in case of failure to deliver within this timeframe. To address this issue: (i) an independent legal opinion on the court ruling will be prepared, to be financed by the Bank, no later than Q4 of FY23; (ii) Bank will prepare a note providing information on the Project background and related concerns regarding trees, green areas, and the use of the park, as well as talking points in preparation for any needed engagement between the Bank and the media, no later than Q3 of FY23; and (iii) the Bank will engage with the MML to understand its response to the ruling, both on the legal dimensions and also on the possibility/practicality of complying with the ruling if needed, throughout the remaining of 2023. 6. The Procurement is rated Satisfactory and Financial Management is rated Moderately Satisfactory. The PIU has made good progress in the procurement of the consultancy services for the pre-operational plan and the satisfaction surveys (under subcomponent 1b) that are expected to be completed by August 2023 and by May 2023, respectively. The Borrower is in compliance with the financial management requirements and the Project does not have overdue financial audit reports. The reports received were considered acceptable to the Bank. The senior financial specialist position in the MML, a key position for the Project specified in the Project Operations Manual (POM), has not been filled for more than six months, due to difficulties in finding a candidate. Meanwhile, the financial specialist hired at EMPAE has been assisting in the preparation of financial reports and justifications of expenditures (the justification of disbursements has been delayed, but payments to contractors and consultants have been made on time). 7. Project Management, Counterpart Funding and Monitoring and Evaluation are rated Satisfactory. The performance of the Borrower is considered as satisfactory. Rationale for Restructuring 8. The Ministry of Economy and Finance (MEF) requested the extension of the Project closing date from January 31, 2023 to April 30, 2024 on December 29, 2022 to account for the delays in the BRT civil works (component 1a), in the integration of the BRT extension with the existing BRT, implementation of the operational studies and satisfaction surveys (component 1b), and in the fulfillment of environmental and social commitments (component 2), as detailed in paragraphs 4 and 5. With 3 years implementation, the original project implementation time was very short. Based on the latest implementation plan, the MML proposed, and approved by the MEF, a 15-month extension to April 2024 to allow the project to complete all civil works including the 12-month defect liability period that the Supervision contract will cover, all the activities under component 1b (operational studies and satisfaction surveys) and their implementation, and all environmental and social commitments presented in the ESCP, especially the completion of tree compensation activities, The World Bank Lima Metropolitano BRT North Extension (P170595) the repair of damages to the houses affected by the Project construction works, RAP actions that are overdue such as the payment to the fourth group of informal vendors and the construction of a replacement chapel. While the MML/ATU plans to start operating the BRT extension soon after the civil works completion, currently estimated around April 2023, it takes additional several months for ATU to adopt the results of the bus operational studies and user feedback after their delivery in August 2023 to achieve fully integrated operation of the BRT extension. Considering various (technical, environmental and social) risks of the large civil works contract, and the complexities of the operation (especially its integration with the existing BRT and feeder buses), a close supervision and intensive implementation support from the Bank will be needed and expect the project to fully achieve the PDO by April 2024. 9. The MEF, the MML, and other key Project stakeholders are fully committed to the objective of the restructuring, as demonstrated by the recent implementation progress, and to achieving the PDO by the proposed closing date. The Bank has agreed with the PIU on a revised implementation plan, as shown in paragraph 12 (completion of the remaining BRT infrastructure works, providing a one-year liability period after their completion, preparation of a pre-operational plan to initiate the operation of the infrastructure, as well as addressing housing damage and moving forward with environmental and social commitments). The progress recently made in Project implementation, especially under the component 1a (95.57 percent implemented), demonstrates strong commitment of the PIU and continued high strategic relevance of the Project for Peru. In addition, the implementation of the operational study and satisfaction surveys are advancing with the consulting firms already selected and activities starting in February. The Project continues to be highly relevant for the new CPF for Peru (FY23-27), for Objective 3 “Enhance Delivery of Public Services,” under the HLO 2 “Improved Access to Quality Public Services.” 10. This is the first restructuring of the Project. II. DESCRIPTION OF PROPOSED CHANGES Result Framework 11. The end-of-project target dates are extended in consistency with the proposed closing date for those indicator targets that have not been met yet, as shown in the attached result framework. Loan Closing Date and Implementation Schedule 12. The Project closing date is proposed to be extended by fifteen months from January 31, 2023, to April 30, 2024. The new implementation schedule is shown below. The proposed timeline for activities under component 1 and component 2 is adjusted to ensure that all studies will be completed, and environmental and social commitments are met in time for the operation of the North Extension of the Metropolitano. Table 1: Initial and Revised Estimated Implementation Schedule Activity Initial estimate Revised estimate Component 1a BRT civil works completion April 20, 2021 February 28, 2023 Civil works defect liability period February 21, 2023 February 28, 2024 Supervision contract for the civil works February 21, 2023 February 28, 2024 Component 1b The World Bank Lima Metropolitano BRT North Extension (P170595) Consulting services for the quality survey studies for January 31, 2022 May 2023 the Metropolitano BRT North Extension completed Consulting services for the operational design studies January 23, 2022 August 2023 for the BRT integration in the Metropolitano system completed Component 2 Damages repair to the houses affected by the works of November 1, 2022 Dec 31, 2023 the Project completed Completion of tree compensation as part of PCAS December 1, 2022 December 30, 2023 Completion of the RAP pending activities December 31, 2022 December 31, 2023 III. SUMMARY OF CHANGES Changed Not Changed Results Framework ✔ Loan Closing Date(s) ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ PBCs ✔ Components and Cost ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Disbursements Arrangements ✔ Disbursement Estimates ✔ Overall Risk Rating ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Implementation Schedule ✔ The World Bank Lima Metropolitano BRT North Extension (P170595) Other Change(s) ✔ Economic and Financial Analysis ✔ 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 IBRD-90400 Effective 31-Jan-2023 30-Apr-2024 30-Aug-2024 . The World Bank Lima Metropolitano BRT North Extension (P170595) . Results framework COUNTRY: Peru Lima Metropolitano BRT North Extension Project Development Objectives(s) The Project Development Objective (PDO) is to improve urban mobility and accessibility to jobs in the area of influence of the Metropolitano BRT North Extension. Project Development Objective Indicators by Objectives/ Outcomes RESULT_FRAME_TBL_PDO Indicator Name PBC Baseline End Target Improving urban mobility In-vehicle travel time for public transport users between 31.00 17.00 Terminal Chimpu Ocllo and Terminal Naranjal (Minutes) Action: This indicator has been Revised Passengers’ trips per day in the Metropolitano BRT North Extension, differentiated by socioeconomic levels and gender 0.00 60,000.00 (Number) Action: This indicator has been Revised Low-income passengers as % of total validations entering the northern terminals of the Metropolitano BRT system 31.00 42.00 (Percentage) Women passengers per day as % of total validations on the Metropolitano BRT North Extension (feeder and trunk buses) 0.00 49.00 (Percentage) Women passengers shifting from informal transport modes to the Metropolitano BRT North Extension, as % of total 0.00 10.00 surveyed women (Percentage) The World Bank Lima Metropolitano BRT North Extension (P170595) RESULT_FRAME_TBL_PDO Indicator Name PBC Baseline End Target Users satisfied with the service in the northern BRT extension (coverage, reliability, safety, personal security), differentiated by 56.00 65.00 socioeconomic level and gender (Percentage) Action: This indicator has been Revised Change in % of women passengers satisfied with service in 0.00 10.00 terms of safety, security (Percentage) Improving accessibility to jobs Average number of jobs reachable by public transportation within a 60-minute, one-way commute in the area of influence of 156,595.00 165,990.00 the Metropolitano BRT North Extension (number) (Number) Action: This indicator has been Revised PDO Table SPACE Intermediate Results Indicators by Components RESULT_FRAME_TBL_IO Indicator Name PBC Baseline End Target 1. (a) BRT infrastructure and equipment Physical progress in building segregated BRT lanes on the 0.00 100.00 Metropolitano BRT North Extension (Percentage) Action: This indicator has been Revised Roads constructed (CRI, Kilometers) 0.00 10.20 Action: This indicator has been Revised Roads constructed - non-rural (CRI, Kilometers) 0.00 10.20 The World Bank Lima Metropolitano BRT North Extension (P170595) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline End Target Physical progress in constructing passenger stations on the 0.00 100.00 Metropolitano BRT North Extension (Percentage) Action: This indicator has been Revised Passenger stations that provide access for people with 0.00 17.00 disabilities (Number) Physical progress in constructing pedestrian bridges on the 0.00 100.00 Metropolitano BRT North Extension (Percentage) Action: This indicator has been Revised Construction of U-turns on the Metropolitano BRT North 0.00 3.00 Extension (Number) Action: This indicator has been Revised Physical progress of expanding a bus depot on the Metropolitano 0.00 100.00 BRT North Extension (Percentage) Action: This indicator has been Revised Carriageway-km covered by installing infrastructure and/or 0.00 10.20 equipment designed to reduce speeds (Kilometers) Action: This indicator has been Revised Integrated the Metropolitano BRT North Extension to the BRT No Yes system based on the preoperational plan (Yes/No) Action: This indicator has been Revised Citizens reporting satisfaction with key aspects of consultation 0.00 60.00 process, disintegrated by gender (Percentage) Action: This indicator has been Revised The World Bank Lima Metropolitano BRT North Extension (P170595) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline End Target Harmonized Response Protocol to address cases of sexual harassment in the Metropolitano BRT being used by No Yes Protransporte (Yes/No) Action: This indicator has been Revised Women employed in the Metropolitano BRT (Percentage) 13.00 20.00 Action: This indicator has been Revised Construction workers in the Metropolitano BRT North Extension that have signed the code of conduct and attended the code of 0.00 100.00 conduct training (Percentage) Action: This indicator has been Revised Implementation the environmental management measures for the project’s green areas following the specifications of the No Yes approved final Vegetation Management Plan (Yes/No) Action: This indicator has been Revised 1. (b) Optimization of the BRT operations and services. Improved the capacity of Protransporte's bus scheduling task No Yes team (Yes/No) Action: This indicator has been Revised Diagnosis and improvement of service plans, route No Yes scheduling, and bus dispatch services completed (Yes/No) State-of-the-art software and methodology for scheduling No Yes feeder and trunk services implemented (Yes/No) Enhanced M&E framework for monitoring operational No Yes performance indicators on the Metropolitano BRT (Yes/No) Action: This indicator has been Revised The World Bank Lima Metropolitano BRT North Extension (P170595) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline End Target Operational efficiencies implemented (Number) 0.00 2.00 Action: This indicator has been Revised Updated and upgraded feeder-route service plan (Number) 0.00 1.00 Action: This indicator has been Revised Updated trunk service plan (Number) 0.00 1.00 Action: This indicator has been Revised Implementation plan for an expanded, integrated and improved the fare collection system on the entire Metropolitano BRT No Yes system (Yes/No) Action: This indicator has been Revised Integration and expansion of the existing Metropolitano BRT fare collection system with the North Extension (including No Yes feeder routes) completed (Yes/No) Share of personalized smart cards as % of total active smart 0.00 25.00 cards for the Metropolitano BRT system (Percentage) IO Table SPACE The World Bank Lima Metropolitano BRT North Extension (P170595)