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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. Original loan: $ 329 million Approved: 1995

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LESSONS: RUSSIA URBAN TRANSPORT PROJECT

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  1. 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.

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

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

  4. 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

  5. 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)

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

  7. 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

  8. 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

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

  10. 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

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

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

  13. 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)

  14. 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

  15. 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

  16. 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 …”

  17. 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)

  18. 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

  19. 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

  20. 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

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