 Sao Paolo Metro Line 4 tunnel under construction - Funding the fourth mass transit loan to São Paulo for $550 million
- World Bank is supporting suburban rail systems around Buenos Aires, Argentina, and the Bank has received requests for support with a new subway in Bogota, Colombia, and for urban rail decentralization in Mexico
November 17, 2008 – When it comes to hallmark urban transport programs in the LAC region, busways and bus rapid transit (BRT) such as Curitiba in Brazil from the 1970s and the Transmilenio in Colombia from the last decade hold exalted status. But unsung among the legends is the Brazilian urban rail program, the biggest urban train project supported by the World Bank—now a model program for other regions. “LAC is known for its busways and BRTs, but not as much for what we have done with metrorail—metros plus commuter rail,” said Jorge Rebelo, the Bank’s senior lead transport specialist who pioneered the LAC urban rail program. “We are the only region that has a program like that,” he added. A New Way to Travel The LAC urban rail program began in the early 1990s in response to a request from the Brazilian government to help decentralize the urban train system operating in São Paulo, Rio de Janeiro, Belo Horizonte, Recife, Salvador and Fortaleza as the federal government transferred their operations to the states and municipalities. The government and the Bank team, led by Rebelo, saw an opportunity to radically revamp urban rail transport in Brazil. They knew that better metropolitan transportation coordination, land use, and air quality could be achieved by integrating commuter railways with the dominant bus system. And long-term sustainability could be increased with better financing and private sector participation in operations and investment. “Managers understood that the existing railways, as they were, without rehabilitation and modernization and integration with buses would not function well,” Rebelo said. “But above all, they were convinced that most of the users and potential users would be low-income population and their quality of life would be improved,” he added. Six loans to the Brazilian government totaling $567 million were signed, five of which have already closed and one of which is still underway. The loans rehabilitated, extended, and modernized the railway systems, prepared them for decentralization, integrated them with other modes of transport, promoted regional coordination, and financed integrated land use, urban transport, and air quality strategies that are the blueprint for future expansion. The projects shifted to rail transport thousands of passengers per day who otherwise would have required more buses. The results were reduced traffic congestion and road-based transport emissions. The way was also paved for urban renewal around some of the stations—many quite dilapidated due to the degradation of the rail system.
Ridership Explosion The Bank next partnered with the state governments now operating the decentralized systems.
From 2000–2007, four loans for São Paulo State totaling $899 million were approved, and another $130 million is being prepared for Phase 2 of metro line 4. Although relatively small, the Bank’s financing attracted multilateral co-financiers such as the Japan Bank for International Cooperation for the same amount. The two loans to Rio State for the same period totaled $232 million with another $220 million loan under preparation. The Bank currently is funding its fourth mass transit loan to São Paulo for $550 million to buy more trains and improve signaling and telecom systems for subway and commuter rail networks. Expansion is needed as ridership has exploded in São Paulo with the introduction of the Bilhete-Único, an integrated modal fare providing combined access to bus, rail, and metro at a rate lower than the individual fares combined. This single innovation has boosted ridership for low-income groups, another Bank metrorail program development objective.
Other accomplishments include: Private Participation in the Rio subway and commuter rail in 1998. With $300 million in annual operating subsidies before privatization, both systems are strong, highly profitable and well received by users. São Paulo Metro Line 4, the first fully underground “subway” financed by the Bank through a turnkey for civil works, with a public-private partnership (PPP) for its operation with the private sector, providing trains, systems and operations for 30 years. The modernization of São Paulo’s Luz station, a landmark restored to its original form, and linked with a subway line and the city’s main art museum. In addition to revitalizing the station, the small $45 million loan helped revitalize a decaying area into one of the city’s most popular tourist attractions.
A Model for Latin America and Beyond Other Latin American countries now are emulating Brazil’s model. The Bank is supporting suburban rail systems around Buenos Aires, Argentina, and the Bank has received requests for support with a new subway in Bogota, Colombia, and for urban rail decentralization in Mexico. Also, China is now starting at least ten subway systems and specifically requested assistance from the LAC region to learn from its experience. In July, Rebelo visited China to participate in the Bank’s first urban rail mission to that country. “Asian cities are growing dramatically, with rural people moving to urban areas,” said Aurelio Menendez, lead transport specialist in the East Asia and Pacific region. “This shift took place in Latin American countries a long time ago, and major Latin American cities have significant experience on how to build up and maintain large public transport networks,” he added. Menendez said Rebelo is joining his team on all missions to China as part of the Wuhan second urban transport project. Risks—and Rewards Rebelo said that constructing the urban rail and particularly metro projects entails substantial risks—such as highly specialized tunnel construction—and safety is key to minimize accidents that occur in major civil works.
Property expropriation and population resettlement is occasionally required, and the bidding process is often fiercely competitive, given the high value of the contracts. “But they also have high rewards, particularly because Latin America is becoming more urbanized and the majority of people who use these systems are very low-income people,” Rebelo said. “They promote affordability, accessibility, availability and acceptability of urban transport services improving the quality of life of its users,” he added.
Useful links:
The Rail Decentralization and Modernization Program in Brazil: Lessons Learned (PDF - 2003)
Urban Operations And The São Paulo Metro Line 4 (PDF - 2006) Reforming the Urban Transport Sector in the Rio de Janeiro Metropolitan Region: A Case Study in Concessions (PDF - 1999) | 
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