Page 7 of 16

CONCEPT NOTE ON A PROPOSED GEF PUBLIC TRANSPORT IMPROVEMENT PROGRAM IN LIMA

COUNTRY ELIGIBILITY

1. The Republic of Peru ratified the UNFCCC and is eligible to borrow from the International Bank for Reconstruction and Development.

Consistency with priorities of the Republic of Peru and the cities of Lima and Callao

  1. Peru has ratified the most important multilateral environmental agreements (Vienna Convention 1985- Montreal Protocol 1987 United Nations Climate Change Convention - 1993). It also established a financing institution to promote investments limiting greenhouse gas emissions.
  1. The Government of Peru has recently authorized the submission of its national communication on climate change by the Comision Ambiental Transectorial, comprised by the deputy ministers of the Government. This communication will be submitted to the UNFCCC Secretariat next April. Under the item of technological needs and financial constraints of its national communication, Peru mentions “transportation” as one of the most important mitigation options to tackle climate change within its territory. In addition to measures targeted at private cars, the most important mitigation options included are: replacement of old public transport units, building and promotion of bike lanes, use of compressed natural gas (CNG) buses and conversion of gasoline taxis to liquefied petroleum gas (LPG).
  1. The Central Government has taken several measures to tackle the transportation issue. In 1999 Congress passed the Ground Transportation Act which requires the reinstallation of the technical revision system including vehicle gas emissions controls, as well as emission limits. During next April the Government will pass the first national ambient air quality standards. After a long consultative process spanning 24 months, the air quality standards have been agreed with 20 institutions comprised by the private sector (mining, industry, fisheries and automobiles) and public sector (including local governments) including a strategy of action over the next 30 months.

5.  The local government recently promulgated a Lima Metropolitan Decree of November 14, 2000, which gives the highest priority to urban transport improvements, focusing on improving efficiency of transport services. On February 19th, 2001, an agreement was signed between the Ministry of Transportation and the Mayor of Lima to work together on urban transport issues and to reconvene the Transport Council. This Transport Council, which was established in 1997 as the coordinating body for transport activities in the metropolitan area, was expanded in 1999 to also include coordination of activities under the Clean Air Initiative. The next Government, to take office in July 2001, is expected to continue a policy of addressing the worsening transport conditions in Lima in collaboration with local authorities.

  1. In addition to that, the Peruvian Government has invested US$3 million (Japanese Grant) in urban transport project preparation studies, including a medium term investment strategy and Operational Design and Basic Engineering Design Studies for the pilot bus corridor, called “corridor vitrina.”
  1. In its search for more sustainable transport options, Lima has launched in the early nineties (Decree 159) a plan to increase bicycle use from a current level of 2% of all trips to 10% of all trips by building 86 kilometers of bikeways, making low interest loans available to help low income families buy bicycles, and by promoting bicycle use. The Peru Transport Rehabilitation Project (1994-2000) included a pilot component to build 50 kilometers of bikeways and promote bicycle use in a low income zone in Lima-Callao. The bikeways were completed in 1996 and although bicycle use has increased substantially in the pilot area, further support is needed to improve access to bicycles for the poor and to achieve the required cultural change among potential and existing bicyclists and other road users

8.  The private sector is also engaged. It has initiated a campaign to convert taxis using gasoline to LPG and there are already 16 gas stations where LPG is distributed. There were by February 2001 at least 2000 vehicles using LPG. To end with, the Centro de Investigacion y Desarrollo para el Transporte Terrestre[1] (CIDATT) initiated a pilot operation in May 2000 with one bus owner association which operates a route concession on the Via Expresa to test the rationalization of bus routes and modernization of bus fleets. In part, the initiative was inspired by the proposed WB Lima Urban Transport Project, and its preliminary results will provide important information for the final definition of the World Bank transport project.

Endorsement from national operational focal point

9.  A staff member of CONAM, the GEF focal point, participated in the preparation of this proposal. CONAM will soon be requested to provide a letter of support for this project.

GEF COMPONENT OBJECTIVE

  1. The proposed GEF component is consistent with the objectives of the GEF Operational Program 11 on Transport, which states that “GEF will facilitate commitments to adopt sustainable low-GHG transport measures and disengagement from present unsustainable measures” and “facilitate modal shifts from personal transport to mass transit” and non motorized modes.
  1. It is also consistent with the GEF Operational Program 7: reducing the long-term costs of low greenhouse gas emitting energy technologies which aims at reducing greenhouse gas emissions from anthropogenic sources by increasing the market share of low greenhouse gas-emitting technologies that have not yet become widespread.

THE URBAN TRANSPORT PROBLEM

  1. Air pollution and emission of greenhouse gases caused by the transport and traffic situation in Lima is a difficult challenge. Between 1990 and 1997, the number of public transport units have tripled, and the number of automobiles have increased at a yearly rate of over 6.4 percent. The city has approximately 7 million inhabitants, 650,000 motor vehicles, with 9 million daily trips on motor vehicles. From 1990 to 1998, the operating public transport fleet allowed to operate increased by 350 %, from 10,500 to 46,238 units. Currently, 100,000taxis and 15,000 motorized tricycles are circulating in Lima’s streets. Buses are obsolete with an average fleet age of 18 years for buses, 15 years for minibuses and 11years for Combis (low capacity buses). The number of transport companies increased from 150 to 410 in the meantime. Almost all bus owners have only one or two vehicles, and these transport companies, which in some cases could be assimilated to mere bus owner associations, are just brokers subcontracting services to the individual bus owners – which explains the aggressive behavior (guerra del centavo) and oversupply especially during off-peak hours.
  1. Due to public transport system inefficiencies, there is an annual over-combustion[2] of 13.2 million liters of gasoline and over-emission of 4,400 metric tons of air pollutants. Only the aforementioned rationalization of one bus-route by CIDATT resulted in a total reduction of 880,000 km by buses per year on this route, achieved through the shortening of bus routes and the removal of redundant buses. At the same time, car use is increasing steadily and most of the private vehicles are also old and poorly maintained. There have not been any motor verification or vehicle inspection programs in the last ten years. All of this contributes not only to a high level of local air pollution but as well to global warming through the emission of greenhouse effect gases. Lima is now among the most polluted cities in Latin America. The burden falls disproportionately on the poor as air pollution gets trapped and accumulates in poor neighborhoods along the Andes foothills.
  1. The urban transport situation in Lima is somewhat peculiar. Although use of public transportation is widespread and the motorization rate is relatively low, pollution and emission of greenhouse gases are important environmental problems. Urban transport deregulation (of the 1990s) has had mixed results. Although it made public transportation more flexible and convenient. It also created an oversupply of public transport vehicles not subjected to minimum emission quality standards. In order to enhance the creation of formal bus companies, the concession scheme needs to be revised. Instead of subcontracting services to small bus owners, the alternative scheme would be to concession whole catchment areas of trunk roads so that would small operators would be induced to merge into formal companies. These would provide a more efficient transport service reducing the oversupply, the cut-throat competition and thus the air pollution, shifting the competition from the streets to the bidding process.
  1. Today, growing traffic congestion in the Lima metropolitan area is impeding the functioning of the bus transport system. To re-establish a clean, efficient and reliable transport alternative, it is thus necessary both to separate public transport from general traffic congestion in order to increase the speed and to use vehicles with higher capacity which are far less polluting per passenger-km. The most cost-effective solution is to create segregated bus ways dedicated to high capacity buses. These separated bus ways will serve as trunk roads for public transport, are easily accessible on foot, and provide parking facilities for bikes. To ensure efficiency, their operations should be concessioned to private operators.
  1. Course of Action. To address the aforementioned issues, a major study was finalized early in 1999, which is the basis for a proposed World Bank loan (which is described into further details in the following pages). Its main recommendations are the following :

(i) Develop a high-capacity public transport system based on dedicated busways to increase the efficiency of the public transport system. These busways would be concessioned to the private sector on a competitive basis.

(ii) Establish a comprehensive program to improve transport conditions through traffic management and engineering work.

(iii) Restructure of urban transport agencies and strengthen professional capacity .

  1. A World Bank project (Peru Transport Rehabilitation Project I,) included a non-motorized transport pilot component for Lima from which valuable lessons have been learned. Under the proposed project, bikeways and non-motorized transport alternatives have been considered as a possible component. In addition to the lack of promotion of bicycle use for transport activities, the absence of safe and secure bicycle parking facilities is a major barrier for the use of bicycles. A project component could include a pilot study of a privately operated, concessioned bicycle parking on public land, with the operator providing a range of services from small repairs to selling newspapers, etc.

NATIONAL CONTEXT AND POLICY FRAMEWORK

  1. Environmental Issues in Peru. Peru faces environmental challenges which may impede its sustainable economic growth, such as air pollution in the larger urban centers attributed primarily to the high number of vehicles, poor public transportation systems, and an aging industry with little or no emission controls.
  1. Government response. The Peruvian Government has made a nominal effort to address these growing and increasingly diverse environmental problems. Among other responses, GOP has: (i) created a national coordinating and consultative body (CONAM) under the President of the Council of Ministers; (ii) created financing institutions for the environment such as FONAM (National Fund for the Environment); (iii) established an institutional framework to harmonize environmental legislation and institutional responsibilities; (iv)developed a body of sector-based environmental legislation; (v) established a series of prevention and control instruments including environmental impact assessments, environmental compliance programs, and territorial environmental assessments for public and private projects; and (vi) established a national protected area system.
  1. Nevertheless there lie serious challenges ahead. One of them is the need to strengthen FONAM so that it can promote the environmental agenda in a financially sustainable way. This is mainly caused by lack of awareness of the impact of air and water pollution on public health. Other important challenges remain in the implementation of the legal framework, the creation of environmental good behavior incentives and lack of data, monitoring and evaluation of the environment in general.
  1. Municipal response. Under the impulse of the Clean Air Initiative, uniting six major Latin American cities in their struggle against air pollution, the Government has facilitated the establishment of the Lima-Callao Clean Air Committee in 1999. This Committee is composed of representatives of the municipalities, the central government and the private sector (mainly transport). The Committee is financially supported by a Swiss trust fund and has carried out important air quality monitoring studies in the Lima/Callao area. It has also promoted a series of robust air pollution control measures, such as technical inspection of vehicles, which are now under implementation by the Lima/Callao municipalities.
  1. FONAM. The National Environmental Fund was created in August 1997 but started only functioning in 1999. It is a private non-profit institution of public and social interest created by the Peruvian Congress under Law No 26793 with the objectives of promoting institutional mechanisms to identify and generate environmental priority projects to mobilize funds and finance plans, programs, projects and activities aimed at issues related to climate change and greenhouse gases, transport and energy. FONAM functions as the focal point for the Prototype Carbon Fund. The Board of directors is composed of six members. Three board members represent the private sector (the National Confederation of Private Enterprises, the University Community and the Non-Governmental Organizations) and three members represent the public sector (Ministry of Economy and Finance, the Ministry of Agriculture and CONAM, which presides the Board).
  1. At the request of the national government, and supported by two Japanese Grants, the Bank has been preparing a Lima Urban Transport Loan that will assist in restructuring the urban public transport system, reducing traffic accidents, monitoring vehicular pollution and improving the mobility of the poor.

24.  The objectives of the loan are: (i) to create an adequate regulatory and institutional framework for urban transport in the metropolitan area; (ii) to carry out an integrated strategic urban transport planning; (iii) to implement a network of exclusive bus-corridors on the main trunk roads; (iv) to execute a comprehensive air/noise pollution monitoring and control program and (v) to implement a program of urban transport and traffic management improvements, including improving access to low income areas through street paving programs, road safety improvements with special attention for pedestrian and bicycle vulnerability, rehabilitation and maintenance of the urban road network, and the reduction of environmental pollution by transport sources.

  1. Lima is one of the five cities in Latin America that the Clean Air Initiative is dealing with.
  2. The private sector is logically interested in this project and there is already a clear commitment on their side to restructure public transport operations. A pilot program is underway involving one bus-owner association which operates four lines on a separated busway. This initiative is financially supported by a Swiss foundation and Scania, producer of buses and managed by CIDATT (Centro de Investigacion y Desarrollo para el Transporte Terrestre).

27.  To end with, the IDB is supporting a program for rehabilitating of Lima historic center, which includes a transport component.