The World Bank
RESILIENT AND SUSTAINABLE INFRASTRUCTURE FOR RECOVERY DPF 2 (P175126)
Program Information Document
(PID)
Appraisal Stage | Date Prepared/Updated: 06-Apr-2021 | Report No: PIDA31610
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The World Bank
RESILIENT AND SUSTAINABLE INFRASTRUCTURE FOR RECOVERY DPF 2 (P175126)
BASIC INFORMATION
A. Basic Project Data OPS TABLE
Country Project ID Project Name Parent Project ID (if any)
RESILIENT AND
SUSTAINABLE
Colombia P175126 P173424
INFRASTRUCTURE FOR
RECOVERY DPF 2 (P175126)
Region Estimated Board Date Practice Area (Lead) Financing Instrument
LATIN AMERICA AND Development Policy
17-May-2021 Energy & Extractives
CARIBBEAN Financing
Borrower(s) Implementing Agency
Ministry of Finance Ministry of Mines and Energy, Ministry of Transport
Proposed Development Objective(s)
The development objective of this programmatic series is to support the Government of Colombia's multiyear efforts
to sustain access to critical infrastructure services for firms and households following the COVID-19 crisis, while
establishing the policy foundations for recovery through sustainable and resilient infrastructure.
Financing (in US$, Millions)
FIN_SUMM_PUB_TBL
SUMMARY
Total Financing 750.00
DETAILS -NewFin3
Total World Bank Group Financing 750.00
World Bank Lending 750.00
Decision
The review did authorize the team to appraise and negotiate
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RESILIENT AND SUSTAINABLE INFRASTRUCTURE FOR RECOVERY DPF 2 (P175126)
B. Introduction and Context
Country Context
After two decades of consistent economic growth and reduction in poverty, the COVID-19 crisis hit the economy
hard, with effects that might take time to absorb. On March 12, 2020, the Government of Colombia (GoC) imposed a
strict lockdown and mobility restrictions and rolled out a broad program focused on savings lives, protecting livelihoods
and the economy. Since May 2020, a controlled re-opening and operation of various sectors and businesses started,
along with systems for validation and control, which resulted in a gradual economic recovery throughout the second
half of 2020. Despite these measures, the COVID-19 pandemic and related mitigation measures have triggered the first
recession in Colombia in two decades and the worst in more than a century. Real GDP contracted 6.8 percent in 2020
against a pre-crisis projection of a 3.6 percent growth. As a result of weak revenue collection, and higher spending to
support the economy and lives, the overall deficit of the general government increased to 7.8 percent of GDP in 2020,
from a projected 2.6 percent of GDP before the pandemics broke out. Colombia’s solid economic growth since the early
2000s had led to significant social improvements. Extreme poverty fell from 17.7 percent in 2002 to 7.2 percent in 2018.
Moderate poverty also decreased, dropping from 49.7 percent to 27.0 percent over the same time frame.
Unemployment grew from 12.2 percent in February 2020 to an all-time high of 21.4 percent in May 2020. As a result,
the crisis would also reverse the recent progress in social improvements. The latest estimates suggest that poverty is
estimated to have increased by around 6.7 percentage points between 2019 and 2020, even accounting for the
mitigating impact of the emergency social transfers put in place in response to the crisis.
To support the country’s economic recovery, GoC is implementing a comprehensive economic and reactivation
strategy which includes an ambitious agenda of sustainable and low-carbon infrastructure development. In February
2021, the GoC approved, the CONPES 4023, “Policy for the Economic Reactivation and Sustainable and Inclusive
Growth�?, with comprehensive set of policies and investment programs aimed at bringing the economy to its pre-COVID-
19 growth path, in the short-term, while transitioning to more sustainable, resilient growth in the long-term. Central to
the recovery and reactivation plan is an ambitious agenda of infrastructure development in the energy, transport, and
telecommunications sectors. The measures identified in the CONPES are structured around the following areas
(“Compromisos�?): job creation, clean and sustainable growth, support to the poor and vulnerable, peace, and improved
health. According to the GoC, the implementation of the measures and programs laid out in the reactivation program
will require an estimated COP135 billion in public and private investments (equivalent to 12,5 percent of GDP) over
2021-2026, and they are expected to create 2 million jobs, support vulnerable households and enterprises, and
guarantee the vaccination of 35 million of people.
Relationship to CPF
The second Resilient and Sustainable Infrastructure for Recovery DPF is aligned with the Country Partnership
Framework (CPF) for FY16- FY21 and the World Bank’s Group’s COVID-19 crisis response. The CPF, as updated by the
Performance and Learning Review (PLR), focuses on three objectives: fostering balanced territorial development (Pillar
1), enhancing social inclusion and mobility through improved service delivery (Pillar 2); and supporting fiscal sustainability
and productivity (Pillar 3). The DPF 2 supports Pillar 3 of the CPF, medium-term productivity growth, through policy and
institutional reforms that will contribute to close the energy, transport, and digital infrastructure development gaps. The
second DPF is also aligned with the WBG’s COVID-19 crisis response outlined in the WBG Approach Paper (AP). Measures
supported under the DPF2 are aligned with Pillar 4 of the WBG AP, “Strengthening Policies, Institutions and Investments
for Rebuilding Better�?, by supporting the policy foundations for an accelerated recovery from COVID-19 through
investment in green and sustainable energy, transport, and ICT infrastructure. These investments are not only expected
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RESILIENT AND SUSTAINABLE INFRASTRUCTURE FOR RECOVERY DPF 2 (P175126)
to have a direct positive impact on job creation, competitiveness, and low-carbon growth, but also will make growth
more inclusive by increasing access to essential electricity and digital services to disadvantaged population.
C. Proposed Development Objective(s)
The development objective of this programmatic series is to support the Government of Colombia's multiyear efforts
to sustain access to critical infrastructure services for firms and households following the COVID-19 crisis, while
establishing the policy foundations for recovery through sustainable and resilient infrastructure. The series supports
critical policy and institutional reforms within four pillars with the following development objectives: (1) sustain access
to critical infrastructure to secure the economy from COVID-19; (2) support resilient and sustainable energy and
transport infrastructure for recovery from COVID-19; (3) increase access to digital infrastructure for Recovery from
COVID-19; and (4) sound management and long-term infrastructure finance for Recovery from COVID-19.
Key Results
Measures supported under the DPF 2 will support the country’s transition to a low-carbon and more resilient economic
recovery path. Prior Actions under will help mainstream national emissions reduction targets into domestic policies and
sectors, allowing Colombia to comply with its long-term climate change mitigation and adaption commitments under the
Paris Agreement. In the energy sector, policy measures promote the development of non-conventional renewable energy
(NCRE) to help close the electricity access gap and contribute to reduce gender gaps at the Ministry of Mines and Energy.
In the transport sector, policy reforms are expected to increase the viability of PPPs and concessions in the airport and
fluvial projects, and promote the integration of a cleaner bus fleet and a more sustainable financial framework to support
the expansion and the operation of mass transit systems. In the digital development sector, measures are expected to
help close the urban/rural divide by incentivizing invests to increase access, coverage, and usage of internet services in
rural areas. Consistent with the World Bank Group (WBG) approach of maximizing financing for development (MFD), policy
reforms supported under the DPF will increase the mobilization of private and long-term infrastructure financing.
D. Project Description
Second of a series of two programmatic DPFs, the project focuses on accelerating the transition to more sustainable
and resilient energy and transport systems, closing the digital access and use gaps, and strengthening the enabling
framework to mobilize private and long-term financing for these investments. The overall program, therefore, is
structured under four pillars. Pillar 1 in the first DPF in the series supported the efforts to sustain access to critical
infrastructure services and stabilize the financial standing of critical services providers during the early phases of the
COVID-19 crisis. Given their intrinsically time-bound nature and the gradual recovery of the economy, no follow up
measures beyond monitoring are included in the program supported by this second DPF in the series. The second DPF
supports policy and institutional reforms in the three remaining pillars as described below:
- Under Pillar 2, “Resilient and Sustainable Energy and Transport Infrastructure for Recovery from COVID -
19�?, the DPF2 focuses on establishing the policy foundations for an accelerated recovery from COVID-19
through resilient and sustainable energy and transport infrastructure. Specifically, policy measures will: (i)
update the policy and regulatory framework to foster the development of (NCRE) to close the access gap, (ii)
reduce gender gaps; (iii) introduce measures to green and increase the efficiency, quality and competitiveness
of the logistics; and (v) improve and support the scaling up of cleaner bus fleets. In addition, the DPF2 supports
Colombia’s adoption of an ambitious emission reduction target through the updated of its NDC.
- Under Pillar 3, “Increased Access to Digital Infrastructure for Recovery from COVID-19�?, the second DPF will
foster policy measures to introduce innovative incentive mechanisms to sustainably foster private
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RESILIENT AND SUSTAINABLE INFRASTRUCTURE FOR RECOVERY DPF 2 (P175126)
infrastructure investments and improve connectivity in rural and non-commercially viable areas, helping close
the urban/rural divide. The DPF will support: (i) the implementation of a national program to make available
internet in rural schools and nearby areas; (ii) incentivize operators to increase coverage in rural areas; and
(iii) remove regulatory restrictions and provide incentives for new market entrants to provide internet services
in rural areas.
- Under Pillar 4, “Sound Fiscal Management and Long-Term Infrastructure Finance for Recovery from COVID-
19�?, the proposed DPF focuses on strengthening the framework and efficiency to mobilize public and private
financing into infrastructure sectors, by supporting catalytic government financing, mobilization of new
funding sources, and the elimination of regulatory bottlenecks for institutional investors. It will do so through
two complementary policy actions: (i) creating an infrastructure fund to capture alternative financing for
infrastructure projects; and (ii) enabling pension funds to invest in infrastructure.
E. Implementation
Institutional and Implementation Arrangements
The Ministry of Hacienda and Public Credit (MHCP for its acronym in Spanish) and the National Planning Unit (DNP for its
acronym in Spanish) are responsible for collecting and monitoring information related to program implementation and
progress towards the achievement of results for this DPF. MHCP and DNP are further responsible for coordinating
necessary actions among the agencies involved in the reform program supported by this project. The main government
agencies responsible for the implementation of the different policy and institutional reforms include the Ministry of
Mines and Energy (MME), the Ministry of Transport (MT), and the Ministry of Information Technologies and
Communications (MINTIC).
F. Poverty and Social Impacts, and Environmental, Forests, and Other Natural Resource Aspects
Poverty and Social Impacts
This DPF supports actions that are expected to have largely neutral or positive effects on poverty reduction and income
distribution in the short-term, and positive effects over the medium- and long-term. Advancing the agenda supported in
DPF1 - which included measures to sustain access to critical infrastructure during the COVID-19 crisis - this DPF focuses
on promoting an economic recovery that is both resilient and sustainable, as well as fiscally sound, and that will lead to
new job opportunities, improved quality of services and improved mobility. In addition, recognizing the complexity of
quantifying the poverty and distributional impact of prior actions that involve institutional reforms, improvements to
regulatory frameworks, and actions to leverage investment financing, these reforms are expected to have a positive long-
term impact through increased economic growth and job creation.
Environmental, Forests, and Other Natural Resource Aspects
An environmental analysis was carried out to assess if the measures supported in the DPF2 are likely to cause significant
adverse or positive effects on the environment, forest, and natural resources. The analysis found that the Prior Actions
supported by this DPF series have positive effects on the environment, forests, and other natural resources. The Prior
Actions in the second DPF will lead to a net reduction of GHG emissions and local pollution due to a shift to new and
cleaner technologies and more efficient investment and operation of infrastructure. This DPF supports measures that
imply a positive impact on air quality, reduction of greenhouse gases emissions, resource efficiency, and climate change
adaptation. The government has put in place mitigation measures for the potential negative impact identified for the
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RESILIENT AND SUSTAINABLE INFRASTRUCTURE FOR RECOVERY DPF 2 (P175126)
operation. For example, existing environmental regulation and policies concerning electronic and hazardous wastes is
the main instrument to mitigate the potential increase of electronic waste generated during the installation, operation,
and replacement of solar photovoltaic projects (batteries, solar panel) and telecommunications projects. This potential
impact will also be addressed by ensuring the strict enforcement of environmental regulation regarding waste
management, including recycling alternatives, and programs to return products after consumption. Finally, the
assessment included a review of Colombia’s legal and institutional framework for environmental management. The
Ministry of Environment and Sustainable Development (MADS) was identified as the national regulatory entity in charge
of formulating, implementing, and enforcing environmental policies and regulations to ensure the sustainable
development of the country. Other stakeholders including MME, MT, and MINTIC were identified as stakeholders in this
DPF series, and they have the necessary environmental management systems in place.
G. Risks and Mitigation
The overall risk of this operation is rated as Moderate. The most relevant risks that could affect achievement of the
development objective for this operation include: (i) macroeconomic; and (ii) implementation capacity and sustainability.
In the macroeconomic front, there is still uncertainty as to whether the COVID-19 crisis has permanently affected both
the level and the slope of the potential GDP trend. In addition, vaccinations against COVID-19 in Colombia and in many of
Colombia’s trading partners have just started. The possibility that the speed of vaccinations is uneven could weaken overall
domestic and external activity, and lead to uncoordinated increase in interest rates in major trading partners. Finally,
confidence and credibility of macroeconomic policies over the medium-term depend crucially on the strength and
durability of the measures that the government will be able to implement to normalize fiscal policy. The materialization
of exogenous shocks or the lack of a strong and credible fiscal normalization plan could directly affect Colombia’s short
and medium-term growth prospects and erode Colombia’s fiscal capacity to support firms, households, and the recovery.
If this happened, the Government’s priorities could change in a way that could impact the implementation of this DPF
series. To mitigate the macroeconomic risks, the Government is working closely with international financial institutions to
secure fiscal buffers and formulate a balanced reactivation plan for the economy.
In terms of sector strategies and sustainability, the DPF2 supports a wide range of ambitious policies, institutional reforms,
and innovative programs that will be implemented over the next months. The capacity of government entities will be
challenged to develop secondary legislation, regulations, and design programs that are needed to achieve the expected
results. To mitigate these risks, the program focuses on critical reforms that are closely aligned with the country’s
economic reactivation strategy and benefit from high-level political support and the program builds on strong analytical
foundations,
. international best practice, and reforms have been subject to ample consultations.
CONTACT POINT
World Bank
Claudia Ines Vasquez Suarez, Ana Waksberg Guerrini, Catalina Garcia-Kilroy
Senior Energy Specialist
Borrower/Client/Recipient
Ministry of Finance
Cesar Arias
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The World Bank
RESILIENT AND SUSTAINABLE INFRASTRUCTURE FOR RECOVERY DPF 2 (P175126)
Director General, Public Credit and National Treasury
Cesar.Arias@minhacienda.gov.co
Implementing Agencies
Ministry of Mines and Energy
Diego Mesa
Minister of Mines and Energy
dmesa@minenergia.gov.co
Ministry of Transport
Angela Orozco Gomez
Minister of Transport
aorozco@mintransporte.gov.co
FOR MORE INFORMATION CONTACT
The World Bank
1818 H Street, NW
Washington, D.C. 20433
Telephone: (202) 473-1000
Web: http://www.worldbank.org/projects
APPROVAL
Task Team Leader(s): Claudia Ines Vasquez Suarez, Ana Waksberg Guerrini, Catalina Garcia-Kilroy
Approved By
APPROVALTBL
Country Director: Ulrich Zachau 06-Apr-2021
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