The World Bank Private-driven Metro Sao Paulo Line 4 Phase Iii Extension (P506329) Environmental and Social Review Summary Concept Stage For Official Use Only World Bank Performance Standards (OP 4.03) Date Prepared/Updated: 08/20/2024 Date Prepared/Updated: | Report No: ESRSXXXXXX 08/20/2024 Page 1 of 11 The World Bank Private-driven Metro Sao Paulo Line 4 Phase Iii Extension (P506329) BASIC INFORMATION A. Basic Project Data Project ID Financing Instrument Environmental Team Leaders Investment Project Assessment Category Georges Bianco Darido, Edpo P506329 Financing (IPF) Cat A Covalciuk Silva Approval Date Bank / IFC Collaboration Estimated Closing Date Estimated Guarantee Expiry No 03-Jan-2030 Date 28-April-2025 NA Practice Global Practice Director Country Director Regional Vice President Manager/Manager Nicolas Peltier Johannes C. M. Zutt Felipe Jaramillo Bianca B Alves For Official Use Only Proposed Development Objective(s): The Project Development Objective (PDO) of SOP2 is to (i) improve low-carbon mobility and (ii) increase job accessibility in the catchment area of Metro Line 4 and (iii) strengthen public sector capacity to structure and regulate private-sector participation in urban transport. Financing (in USD Million) Amount Borrowing Country's Fin. Intermediary/ies Montreal Protocol Investment Fund Total Project Cost 618.68M B. Is the project being prepared in a Situation of Urgent Need of Assistance or Capacity Constraints, as per Bank IPF Policy, para. 12? No C. Summary Description of Proposed Project [including Project structure, components, activities, technical design, flow of funds, etc.] The Line 4 extension to Taboão da Serra is a groundbreaking project for Metro São Paulo as it marks the first expansion beyond São Paulo city boundaries. The project includes 3.5 kilometers of new underground tracks and two new stations to 08/20/2024 Page 2 of 11 The World Bank Private-driven Metro Sao Paulo Line 4 Phase Iii Extension (P506329) be implemented and operated by a private concessionaire through an ongoing Public-Private Partnership. Activities from Component 2 includes: Signaling, Power Electric Supply, Telecommunications and Auxiliary (safety and operational equipment such as escalators, elevators, ventilation, emergency lighting, and platform doors, along with comprehensive passenger control and monitoring systems). The Projectaims to improve commutes by providing a quicker, more efficient public transport option, thereby easing traffic on congested roads, encouraging a shift from private cars and diesel buses, and reducing greenhouse gas emissions. D. Scope of application of Performance Standards (PSs) [and Environmental and Social Standards (ESSs), if relevant] Please indicate if both Performance Standards (PSs) and Environmental and Social Standards (ESSs) apply to the project. If so, indicate which components/activities/aspects of the project and the timing of private sector and public sector engagement. São Paulo Metro Line 4 is currently managed under a public-private partnership (PPP) agreement. The implementation strategy involves delegating the project's execution to the private concessionaire, with oversight from Government of State of São Paulo, except for resettlement activities which, if needed, will be carried out by the Borrower. Therefore, and in line with the criteria set out in OP/BP 4.03, the World Bank both Performance Standards (PSs) and the ESF apply to the Project.PS1, 2, 3, 4, 6 and 8 are expected to be applied for this project as well as ESS5 E. Environmental and Social Overview E.1. Project location(s) and salient characteristics relevant to the ES assessment [geographic, environmental, social] The Metro Line 4 extension is located in the west zone of São Paulo (SP) Municipality. The project is within the domain of Atlantic forest Biome, however also in a densely urbanized zone distant from the original assemblies of natural habitats. For Official Use Only The project is located within the Pinheiros river basin, and Pirajussara River subbasin predominantly crossing areas of alluvial plains. The area of Influence of the project is located within the sediments from the Cenozoic period of the sedimentary basin from SP, including three main groups of bedrock formations: (i) Crystalline basement Rocks (Precambrian period); (ii) Sedimentary rocks; and (iii) Alluvial deposits from Cenozoic. The project is set to accommodate 80,000 additional travelers, primarily from the Vila Sônia District in SP and the neighboring city of Taboão da Serra. Vila Sônia's population stands at 123,748, which is roughly 1% of SP’s total 11.5 million residents. Meanwhile, Taboão da Serra has a population of 273,542, growing annually at a rate of 0.94%—a pace that exceeds the national average of 0.52%. Taboão is even more densely populated than SP, with 13,416.81 people per square kilometer compared to SP's 7,528.26. Despite a rising GDP per capita of 6,400 USD in Taboão, it is still significantly lower than São Paulo's 12,300 USD per capita. The Human Development Index (HDI) reflects this disparity as well, with São Paulo scoring 0.805 (ranking 15th in the state of São Paulo) and Taboão scoring 0.769 (ranking 115th in the state). In 2021, only 23.3% of Taboão's residents were employed, earning on average 2.6 times the minimum wage, while in SP almost half of the population are employed, earning 4.3 times the minimum wage. E. 2. Client’s Organizational Capacity/Borrower’s Institutional Capacity The Borrower, the Secretaria de Parcerias em Investimentos (SPI), is a newly created Secretariat, which is focused on attracting investments and opportunities to generate employment and income for the State of São Paulo. As it has only been running since January 2023, the Secretariat does not have any previous experience with Safeguard Policies or the ESF. However, it has one staff dedicated to environmental and social management covering several projects and the PPPs managed by SPI are carried out in accordance to São Paulo’s environmental licensing agency, CESTESB, which is a reference in the country for environmental management and enforcement. Also, regarding its rail PPPs, SPI follows the robust SP Metro’s guidelines and policies for implementing expansion works and E&S management. Additionally, 08/20/2024 Page 3 of 11 The World Bank Private-driven Metro Sao Paulo Line 4 Phase Iii Extension (P506329) ViaQuatro, the private partner (concessionaire) running existing section of Line 4,will be in charge of Line 4 extension construction and operations. They are also responsible for the completion and submission of all E&S studies, requesting and obtaining the environmental licenses, carrying out consultations and preparing WB instruments. ViaQuatro is a Special Purpose Vehicle (SPV), and it is owned by CCR, one of the biggest infrastructure and mobility companies in Latin America, signatory of the United Nation’s Global Compact, having a robust ESG strategy and previous experience with the IFC’s Performance Standards. During project preparation the Borrower and specially the concessionaire’s capacity will be further assessed and, if needed capacity strenghtening measures will be set out. II. SCREENING OF POTENTIAL ENVIRONMENTAL AND SOCIAL (ES) RISKS AND IMPACTS Environmental and Social Categorization - CATEGORY A, B, C; FI-1, FI-2 and FI-3 The Category A risk rating accounts for the inherent risks related to metro construction projects, including tunneling and civil works for the construction of the 2 new metro stations, 3 ventilation shafts, 1 Electrical substation and 3.5km of tunnel. Despite the robust institutional framework, CETESB’s requirements and oversight capacity, lessons learned from previous investments shows that PPP concessions brings some inherent higher E&S risks due to the performance pressures from concession contract. Moreover, high risk accounts also for traditional tunneling construction methods “drill and blast� since the use of Tunnel Boring Machine (TBM) was not found to be economically viable for a 3.5km metro extension project. For Official Use Only Key risks and impacts include geotechnical risks and ground stability supporting nearby buildings, water table lowering, impacts to nearby structures from vibrations from tunneling and civil works, risks of flooding of underground structures (stations, metro tunnel, Ventilation Shafts etc..), generation and disposal of excavated material, excavation and disposal of soil from contaminated sites, noise and dust emissions, heavy traffic of dump trucks and concrete mixers within densely populated urban areas and transport of heavy equipment. It also includes workplace hazards for the construction workers such as confined spaces, working at heights, hazardous atmospheres, lifting of heavy equipment, noise, vibrations, use of torch and welders, excavations, electrical hazards etc. The Social risk category is A, for the inherent risks related to metro construction projects, located in a densely populated urban area. During the construction stage, the main social adverse social impacts and risks envisaged are: a) workers’ exposure to workplace hazards from confined spaces, blasting, work at heights, b) community health and safety risks as the associated construction works require the use of heavy machinery, occur in close vicinity with densely populated areas, and may cause temporary disturbances in the surroundings and permanent damages to nearby structures and properties, c) excavation and movements of earth that could interfere with cultural heritage, d) involuntary resettlement, economic displacement, potential temporary loss of access to formal businesses located in the vicinity of the project area and e) inadequate stakeholder engagement during project preparation and during construction works, as this kind of intervention usually generate a large number of complaints and f) the perception of safety of stakeholders, especially the surounding communities, due to the major accident occurred in the previous phase of the Line 4 construction. There are no Indigenous Peoples present in the project area. On the positive impacts, the Metro extension will generate the revitalization of the areas around the metro stations through public space improvements and sustainable transit-oriented urban development interventions, such as bike parking; create employment throughout the various stages of the Project and provide access to employment to Taboão’s population in SP’s central area. 08/20/2024 Page 4 of 11 The World Bank Private-driven Metro Sao Paulo Line 4 Phase Iii Extension (P506329) III. APPLICABLE STANDARDS A. Performance Standards PS1 Assessment and Management of Environmental and Social Risks and Impacts Overview of application of PS1: This project is an extension from exiting SP Metro line 4, connecting Avenida Paulista station to Vila Sônia. The Environmental (and Social) Licensing of existing Metro Line 4 was supported by an ESIA (Paulista – Vila Sônia) , submitted in 1998 and, and an adendum (complemetary suty) that was submitted in 2009. A dedicated study (RAP – Relatório Ambiental Preliminar) covering the extension of Line 4 from Vila Sônia to Taboão da Serra (the Project) was submitted to CETESB in 2024. During preparation the WB team will review ViaQatro Environemental and Social ESMS, all the environmental and social studies, including an assessment of the use of public and private areas, E&S contract specifications for construction companies and E&S management programs. The team will also assess the need for aditional gap filling measures, as appropriate. Given this project is a PPP implemented by a private consessionaire, we will apply OP 4.03 – Performance Standards For Private Sector Activities. Stakeholder Engagement: The magnitude of works for Metro projects require a robust engagement strategy that includes the pillars of information, dissemination, assistance and participation. For the expansion works for Line 4, CMCP will follow the Metro’s guidelines on engagement with the surounding communities, requiring contractors to operate community relations offices at the construction sites and these activities are closely monitored. During preparation, the team will For Official Use Only assess if the Social Communication Plan included in the Relatório Ambiental Preliminar as of CETESB’s licensing requirements includes the elements of a SEP required under ESS10/PS1, including consultations with vulnerable groups. The team will also assess the consultation process required by CETESB and include additional strategies, if necessary, as these consultations are to take place during project preparation. A brief description of the potential environmental and social risks and impacts relevant to the Project. PS 2 Labor and Working Conditions Overview of the relevance of PS2 for the project: Metro Line 4 extension construction may include a variety of workplace hazards for workers (underground work - confined spaces, working at heights, electrical hazards, excavations, hot work hazards, blasting and use of explosives, exposure to hazardous agents, lifting of oversized equipment, etc.). During project preparation, the Bank team will review the project’s requirements and labor management practices, concessionaire capacity and management systems, including a GRM for the workers, the E&S specifications for contractors, including those related to SEA/SH, and assess if there is a need for additional gap filling measures to meet Bank’s policies. With a robust workforce available in the Metropolitan Region of São Paulo, labor influx is not expected. PS 3 Resource Efficiency and Pollution Prevention and Management Overview of the relevance of PS3 for the project: Metro linha 4 extension construction may include the generation and disposal of construction wastes, pit borrow areas, excavation material disposal, treatment and disposal of soil from contaminated sites, noise and vibration emissions, use of chemicals, temporary lowering of the water table during underground works, pumping contaminated ground water, 08/20/2024 Page 5 of 11 The World Bank Private-driven Metro Sao Paulo Line 4 Phase Iii Extension (P506329) use of water and wastewater emissions. During project preparation the Bank team will review the ESIA/RAP and related Environmental Studies, CETESB requirements, project instruments and concessionaire capacity and management systems to manage risks and impacts from the project, and assess if there is the need of additional gap filling measures to meet Bank’s policies. Metro projects are designed to bring more efficiency to urban transportation, including energy efficiency when compared to any other type of transportation. Also, the project is expected displace substantial amounts of air emissions from the current fleet of vehicles. PS 4 Community Health and Safety Overview of the relevance of PS4 for the project: Metro Line 4 construction may result in geotechnical hazards for nearby buildings, traffic hazards from dump trucks, concrete mixers, transport and lifting of oversize equipment. Noise and dust emissions may also result in nuisance for nearby communities. During project preparation the Bank team will review CETESB requirements and project instruments to manage risks and impacts, and assess if they are consistent with WB policies, or if there is the need for gap filling measures. PS 5 Land Acquisition, Restrictions on Land Use and Involuntary Resettlement Overview of the relevance of PS5 for the project: According to the limitations set forth in Operational Policy 4.03, paragraph 7(b), which states, "The World Bank Performance Standards do not apply to activities where the responsibilities for identifying, assessing, and managing For Official Use Only environmental and social risks and impacts are shared between the Private Entity and the member country and cannot be clearly separated. In such cases, the World Bank Safeguard Policies apply in their entirety to such activities," the Environmental and Social Standard 5 (ESS5) – Land Acquisition, Restrictions on Land Use and Involuntary Resettlement will be applicable. The processes of expropriation and land acquisition have been assigned to the private entity (the concessionaire). However, should there be a need for involuntary resettlement of vulnerable populations, which remains uncertain, such resettlements will be conducted by the public entity (SPI), with the support of the State Housing Secretariat. Therefore, ESS5 may be utilized. PS 6 Biodiversity Conservation and Sustainable Management of Living Natural Resources Overview of the relevance of PS6 for the project: The project is located in a densely populated urban areas and no loss of habitats or impacts to natural or critical habitats are expected. There is one protected area whith the area of influence of the project, which is an Urban Municipal partk, a former cottage from São Paulo Jockey Club. The park is a modified habitat and it has more urbanisitc relevance as a leasure area for the population rather than for conservation. Nevertheless, the project must follow PS6 requirements for Protected Areas. Potential impacts, mitigation and/or compensation measures were adressed in the ESIA/ Relatório Ambiental Preliminar, which will be further assessd during project preparation. PS 7 Indigenous Peoples/Sub-Saharan African Historically Underserved Traditional Local Communities Overview of the relevance of PS7 for the project: There are no Indigenous Peoples present in the area of the Project. Although there are three Indigenous Lands within the municipality of São Paulo (Jaraguá, Tenondé Porã and Rio Branco), they are located at its Northwesternmost and 08/20/2024 Page 6 of 11 The World Bank Private-driven Metro Sao Paulo Line 4 Phase Iii Extension (P506329) Southernmost borders, far from the neighborhoods cut across by the extension of Line 4. PS 8 Cultural Heritage Overview of the relevance of PS8 for the project: Metro line 4 extension may have impacts on cultural heritage. A survey of assets protected by listing legislation in the directly affected are, as well as in the direct and indirect influence areas is requested by CETESB’s licensing standards. Consultations with the deliberative bodies at the federal (Iphan), state (CONDEPHAAT) and municipal levels (when existing, in the case of São Paulo, CONPRESP) and/or culture departments of the cities involved are part of the cultural heritage studies carried out for the Preliminary Environmental Study (RAP - Relatório Ambiental Preliminar). The cultural heritage study, as well as the Cultural and Archaelogical Heritage Management program (also part of the Relatório Ambiental Preliminar) will be reviewed during preparation and, if needed, aditional gap filling measures will be agreed with the Borrower. B. Environment and Social Standards (ESSs) that Apply to the Activities Being Considered ESS1 Assessment and Management of Environmental and Social Risks and Impacts Overview of application of ESS1: Does not apply For Official Use Only Areas where reliance on the Borrower’s E&S Framework may be considered: ESS10 Stakeholder Engagement and Information Disclosure Overview of application of ESS10: Does not apply B.2. Specific Risks and Impacts A brief description of the potential environmental and social risks and impacts relevant to the project. ESS2 Labor and Working Conditions Overview of the relevance of ESS2 for the project: Does not Apply ESS3 Resource Efficiency and Pollution Prevention and Management Overview of the relevance of ESS3 for the project: Does not Apply. ESS4 Community Health and Safety 08/20/2024 Page 7 of 11 The World Bank Private-driven Metro Sao Paulo Line 4 Phase Iii Extension (P506329) Overview of the relevance of ESS4 for the project: Does not Apply. ESS5 Land Acquisition, Restrictions on Land Use and Involuntary Resettlement Overview of the relevance of ESS5 for the project: According to the limitations set forth in Operational Policy 4.03, paragraph 7(b), which states, "The World Bank Performance Standards do not apply to activities where the responsibilities for identifying, assessing, and managing environmental and social risks and impacts are shared between the Private Entity and the member country and cannot be clearly separated. In such cases, the World Bank Safeguard Policies apply in their entirety to such activities," the Environmental and Social Standard 5 (ESS5) – Land Acquisition, Restrictions on Land Use and Involuntary Resettlement will be applicable. This is because the Environmental and Social Framework (ESF) has taken over from the Safeguard Policies as of October 1, 2018. The processes of expropriation and land acquisition have been assigned to the private entity (the concessionaire). However, should there be a need for involuntary resettlement of vulnerable populations, which remains uncertain, such resettlements will be conducted by the public entity (SPI), with the support of the State Housing Secretariat. Therefore, due to the shared responsibilities in land acquisition and involuntary resettlement, ESS5 will be utilized. For Official Use Only The Project will require land acquisition for the construction of the 2 stations and 3 ventilation shafts/emergency exits for its 3.5km extension. A study for the location alternatives and analysis is a requirement on CETESB’s licensing standards and the Borrower is carrying out a land domain study to support the issuance of public utility decree that will allow for the expropriation processes. Some areas selected for the stations are located on municipal public land so that expropriation impacts can be reduced. There will also be need for temporary use of municipal land in Taboão during construction works. Arrangements for temporary use and permanent land acquisition of public land with the municipalities of SP (within the Chácara do Jockey Municipal Park) and Taboão da Serra are undergoing and will be better discussed during preparation. To date, it is known that Taboão’s City Hall is willing to provide a temporary land use concession in return for improvements of the area after its use. In SP, the arrangements will depend on the environmental licensing process with CETESB. During preparation, the Expropriation Process Monitoring Program and its subprograms, part of the Relatório Ambiental Preliminar, will be assessed and, if needed, gap filling measures will be set forth. Economic displacement and potential temporary loss of access to formal businesses located in the vicinity of the project area will be assessed and gap filling measures to meet the objectives set forth on ESS5 might need to be established, considering some known discrepancies between the Bank’s policies and national legislation on the theme. The Project will require land acquisition. A study for the location alternatives and analysis is a requirement on CETESB’s licensing standards and the Borrower is carrying out a land domain study to support the issuance of public utility decree that will allow for the expropriation processes and arrangements for the use of public land. During preparation, the Expropriation Process Monitoring Program and its subprograms, part of the Relatório Ambiental Preliminar, will be assessed and, if needed, gap filling measures will be set forth. Economic displacement and potential temporary loss of access to formal businesses located in the vicinity of the project area will be assessed and gap filling measures to meet the objectives set forth on ESS5 might need to be established, considering some known discrepancies between the Bank’s policies and national legislation on the theme. 08/20/2024 Page 8 of 11 The World Bank Private-driven Metro Sao Paulo Line 4 Phase Iii Extension (P506329) ESS6 Biodiversity Conservation and Sustainable Management of Living Natural Resources Overview of the relevance of ESS6 for the project: Does not Apply. ESS7 Indigenous Peoples/Sub-Saharan African Historically Underserved Traditional Local Communities Overview of the relevance of ESS7 for the project: Does not Apply. ESS8 Cultural Heritage Overview of the relevance of ESS8 for the project: Does not Apply. ESS9 Financial Intermediaries For Official Use Only Overview of the relevance of ESS9 for the project: Does not Apply. C. Legal Operational Policies that Apply OP 7.50 Projects on International Waterways No Explanation: The project is not expected to rely or result in impacts to International waterways. OP 7.60 Projects in Disputed Areas No Explanation: The project is not located in Disputed Areas. III. WORLD BANK ENVIRONMENTAL AND SOCIAL DUE DILIGENCE Other Relevant Project Risks Overview of all potential risks of relevance for the project that may impact the environmental and social assessment: The Category A risk rating accounts for the inherent risks related to metro construction projects, including tunneling and civil works for the construction of the 2 new metro stations, 3 ventilation shafts, 1 Electrical substation and 3.5km of tunnel. Despite the robust institutional framework, CETESB’s requirements and oversight capacity, lessons learned from previous investments shows that PPP concessions brings some inherent higher E&S risks due to the performance 08/20/2024 Page 9 of 11 The World Bank Private-driven Metro Sao Paulo Line 4 Phase Iii Extension (P506329) pressures from concession contract. Moreover, high risk accounts also for traditional tunneling construction methods “drill and blast� since the use of Tunnel Boring Machine (TBM) was not found to be economically viable for a 3.5km metro extension project. Key risks and impacts include geotechnical risks and ground stability supporting nearby buildings, water table lowering, impacts to nearby structures from vibrations from tunneling and civil works, risks of flooding of underground structures (stations, metro tunnel, Ventilation Shafts etc..), generation and disposal of excavated material, excavation and disposal of soil from contaminated sites, noise and dust emissions, heavy traffic of dump trucks and concrete mixers within densely populated urban areas and transport of heavy equipment. It also includes workplace hazards for the construction workers such as confined spaces, working at heights, hazardous atmospheres, lifting of heavy equipment, noise, vibrations, use of torch and welders, excavations, electrical hazards etc. The Social risk category is A, for the inherent risks related to metro construction projects, located in a densely populated urban area. During the construction stage, the main social adverse social impacts and risks envisaged are: a) workers’ exposure to workplace hazards from confined spaces, blasting, work at heights, b) community health and safety risks as the associated construction works require the use of heavy machinery, occur in close vicinity with densely populated areas, and may cause temporary disturbances in the surroundings and permanent damages to nearby structures and properties, c) excavation and movements of earth that could interfere with cultural heritage, d) involuntary resettlement, economic displacement, potential temporary loss of access to formal businesses located in the vicinity of the project area and e) inadequate stakeholder engagement during project preparation and during construction works, as this kind of intervention usually generate a large number of complaints and f) the perception of safety of stakeholders, especially the surounding communities, due to the major accident occurred in the previous phase of the For Official Use Only Line 4 construction. There are no Indigenous Peoples present in the project area. On the positive impacts, the Metro extension will generate the revitalization of the areas around the metro stations through public space improvements and sustainable transit-oriented urban development interventions, such as bike parking; create employment throughout the various stages of the Project and provide access to employment to Taboão’s population in SP’s central area. A. Is a common approach being considered? No This is a WB Financing and there are no co-lenders. B. Proposed Measures, Actions and Timing (Borrower’s commitments) : The ESIAs from previous phases from Metro Line 4, as well as project’s ESIA (Relatório Ambiental Preliminar), including project’s ESMP (Environmental and Social Management Plan), with Project’s Social Communication Plan as well as Land Acquisition/Resettlement Action Plan will be disclosed no later than 60 days prior to Board presentation. During project preparation the Bank will assess the need for completion of additional instruments to meet Bank’s requirements along with the respective timing for completion. The E&S requirements of the ESCP, including the gap filling measures of CETESB's licensing requirements, will be outlined in the contract amendment that will be signed between SPI and the private concessionaire. 08/20/2024 Page 10 of 11 The World Bank Private-driven Metro Sao Paulo Line 4 Phase Iii Extension (P506329) C. Timing Tentative target date for preparing the Appraisal Stage ESRS 09/25/2024 V. CONTACT POINTS World Bank Contact: Georges Bianco Darido Title: Lead Urban Transport Specialist Telephone No: +1 4079028544 Email: gdarido@worldbank.org Contact: Edpo Covalciuk Silva Title: Transport Specialist Telephone No: 202 381 4749 Email: ecovalciuksilva@worldbank.org Borrower/Client/Recipient: Governo do Estado de São Paulo Implementing Agency(ies) For Official Use Only Secretaria de Parceirias e Investimentos SPI VI. 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 VII. APPROVAL Task Team Leader(s): Regional Standards Advisor (RSA): 09/11/2024 Angela Nyawira Khaminwa Practice Manager: 10/9/2024 Erwin De Nys 10/4/2024 David Seth 08/20/2024 Page 11 of 11