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.


Original loan: $ 329 millionApproved: 1995Effective: 1996Crisis: 1999Restructured: 2000Cancellations: $80 millionDisbursed: $249 million


Acronyms, etc.:

– UPT urban public transport– PT public transport– UT urban transport– MoT Ministry of Transport– Oblast regional government


Beneficiaries: PT companies in 14 citiesBorrower: Russian FederationSub-loan to cities, guaranteed by oblastsCities took foreign exchange riskAfter 1998-99 financial crisis, 6 cities

stepped out of the loan, unwilling or unable to service sub-loans


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)


Main physical outputs:– 1400 new buses– 38 new trolley-buses– 1400 vehicles rehabilitated– Misc equipment– Studies, workshops


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


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


Unstated objectives:

5a. Assist MoT in preparing a national strategy for UPT sector

5b. Reform the vehicle procurement process


Results:1a. UPT capacity: achieved (data lacking)1b. Cost recovery: achieved; results (49-105%)

exceed all expectations2a. Status of UPT operators (data lacking)2b. Efficiency of operators (data lacking)2c. Private sector involvement (data lacking)3. Canceled4. Bus manufacture: achieved


Results (cont’d):– 5a. MoT-based UPT reform: achieved;

progress exceeding expectations– 5b. Vehicle procurement: achieved


Overview of results:

- best results achieved re 1a and 1b, then 5a and 5b


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)


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


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


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 …”


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)


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


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


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

Documents

LESSONS: RUSSIA URBAN TRANSPORT PROJECT