Lessons RU UTP

LESSONS: RUSSIA URBAN TRANSPORT PROJECT: 

LESSONS: RUSSIA URBAN TRANSPORT PROJECT December 16, 2002 Brown-bag lunch seminar given by Slobodan Mitric on the occasion of the first-draft Implementation Completion Report for this project.

LESSONS: RUSSIA URBAN TRANSPORT PROJECT: 

LESSONS: RUSSIA URBAN TRANSPORT PROJECT Original loan: $ 329 million Approved: 1995 Effective: 1996 Crisis: 1999 Restructured: 2000 Cancellations: $80 million Disbursed: $249 million

LESSONS: RUSSIA URBAN TRANSPORT PROJECT: 

LESSONS: RUSSIA URBAN TRANSPORT PROJECT Acronyms, etc.: UPT urban public transport PT public transport UT urban transport MoT Ministry of Transport Oblast regional government

LESSONS: RUSSIA URBAN TRANSPORT PROJECT: 

LESSONS: RUSSIA URBAN TRANSPORT PROJECT Beneficiaries: PT companies in 14 cities Borrower: Russian Federation Sub-loan to cities, guaranteed by oblasts Cities took foreign exchange risk After 1998-99 financial crisis, 6 cities stepped out of the loan, unwilling or unable to service sub-loans

LESSONS: RUSSIA URBAN TRANSPORT PROJECT: 

LESSONS: RUSSIA URBAN TRANSPORT PROJECT Original components: Bus/trolley-bus purchases $278.3 m (actual $247.3m) Vehicle rehabilitation: $40.90 million (actual $44.75m) Equipment: $8.9 million (actual $8.25) Nat’l Spare Parts Program: $50 million (canceled) TA: $12.9 million (actual $7.97 m)

LESSONS: RUSSIA URBAN TRANSPORT PROJECT: 

LESSONS: RUSSIA URBAN TRANSPORT PROJECT Main physical outputs: 1400 new buses 38 new trolley-buses 1400 vehicles rehabilitated Misc equipment Studies, workshops

LESSONS: RUSSIA URBAN TRANSPORT PROJECT: 

LESSONS: RUSSIA URBAN TRANSPORT PROJECT Objectives (nominal): 1. Preserve essential UPT capacity in 14 cities by linking financing of urgently needed vehicles and parts to the implementation of reforms 2. Strengthen UT institutions in client cities so as to improve efficiency of PT operations 3. Arrest decline of UPT throughout Russia through provision of spare parts 4. Provide restructuring advice to domestic bus industry

LESSONS: RUSSIA URBAN TRANSPORT PROJECT: 

LESSONS: RUSSIA URBAN TRANSPORT PROJECT Restated objectives: 1a.Preserve essential UPT capacity in 14 cities 1b. Shift the onus of financing UPT to passengers (cost recovery to reach 40% in 1996) 2a. Reform relation between public-owned UPT operators & cities 2b. Improve operations & maintenance of client companies 2c. Involve the private sector 3. No change 4. No change

LESSONS: RUSSIA URBAN TRANSPORT PROJECT: 

LESSONS: RUSSIA URBAN TRANSPORT PROJECT Unstated objectives: 5a. Assist MoT in preparing a national strategy for UPT sector 5b. Reform the vehicle procurement process

LESSONS: RUSSIA URBAN TRANSPORT PROJECT: 

LESSONS: RUSSIA URBAN TRANSPORT PROJECT Results: 1a. UPT capacity: achieved (data lacking) 1b. Cost recovery: achieved; results (49-105%) exceed all expectations 2a. Status of UPT operators (data lacking) 2b. Efficiency of operators (data lacking) 2c. Private sector involvement (data lacking) 3. Canceled 4. Bus manufacture: achieved

LESSONS: RUSSIA URBAN TRANSPORT PROJECT: 

LESSONS: RUSSIA URBAN TRANSPORT PROJECT Results (cont’d): 5a. MoT-based UPT reform: achieved; progress exceeding expectations 5b. Vehicle procurement: achieved

LESSONS: RUSSIA URBAN TRANSPORT PROJECT: 

LESSONS: RUSSIA URBAN TRANSPORT PROJECT Overview of results: - best results achieved re 1a and 1b, then 5a and 5b

LESSONS: RUSSIA URBAN TRANSPORT PROJECT: 

LESSONS: RUSSIA URBAN TRANSPORT PROJECT Lesson 1: ensure that formal objectives of the project include those linked to activities likely to require much time input during the supervision. Example: work on vehicle specifications and tender documents (objective 5a) took nearly all supervision budget in 1996-98 (but there was no nominal objective related to this)

LESSONS: RUSSIA URBAN TRANSPORT PROJECT: 

LESSONS: RUSSIA URBAN TRANSPORT PROJECT Lesson 2: (converse of Lesson 1) ensure that an objective is matched by supervision budget. Example: all reform objectives (especially 2a,b,c) refer to cities, but working close with 14 cities was not feasible

LESSONS: RUSSIA URBAN TRANSPORT PROJECT: 

LESSONS: RUSSIA URBAN TRANSPORT PROJECT Lesson 3: ensure that institutional and policy objectives/covenants are matched with legal power to carry it out. Example: cities in this project committed to carry out reforms for which they did not have the legal power

LESSONS: RUSSIA URBAN TRANSPORT PROJECT: 

LESSONS: RUSSIA URBAN TRANSPORT PROJECT Lesson 4: avoid weak and/or open-ended conditionality. Example: “cities were to “take all the necessary measures to support the provision of transport services by private individuals or companies …”

LESSONS: RUSSIA URBAN TRANSPORT PROJECT: 

LESSONS: RUSSIA URBAN TRANSPORT PROJECT Lesson 5: Check whether any objectives may be conflicting? Example: increasing cost recovery for public sector companies in this project turned out to be in conflict with increasing private PT operations (flight of paying passengers)

LESSONS: RUSSIA URBAN TRANSPORT PROJECT: 

LESSONS: RUSSIA URBAN TRANSPORT PROJECT Lesson 6: anticipate the peak in monitoring & evaluation needs at project’s end Example: post-evaluation of bus investments at ICR stage not doable with available (Bank) budget, while the clients made no commitment to do it at their expense

LESSONS: RUSSIA URBAN TRANSPORT PROJECT: 

LESSONS: RUSSIA URBAN TRANSPORT PROJECT Lesson 7: do not let local sub-borrowers carry foreign-exchange risk in unstable macro conditions, when their revenues are in local currency Example: due to ruble devaluation, bus contracts denominated in $ and DEM almost tripled in cities’ perception

LESSONS: RUSSIA URBAN TRANSPORT PROJECT: 

LESSONS: RUSSIA URBAN TRANSPORT PROJECT Lesson 8: Strive to end the project along an ascending curve to get a momentum in the reform process which will carry it well beyond the end of the loan