$320M for improving public transportation and waste treatment in Colombia

WASHINGTON, DC, Aug. 4, 2009 -- Today, the World Bank's Board of Executive Directors approved two loans totaling US$320 million for Colombia. These loans will finance programs within its development plan that will primarily benefit vulnerable populations by seeking to improve their quality of life through access to efficient services.

The loans are for an additional US$300 million for the Integrated Mass Transit System Project and US$20 million for the Solid Waste Management Program. Both projects are part of the Country Partnership Strategy, which includes flexible planning, advisory services, and technical assistance, as well as long-term financing with highly competitive interest rates and payback terms.

"We acknowledge the government's efforts to implement countercyclical policies in order to alleviate the impacts of the crisis and reduce external vulnerabilities. Both operations, each of which plays a key role in its sector, are proof of the World Bank's confidence in Colombia, as well as our clear commitment to working with the country," stated Axel van Trotsenburg, World Bank Director for Colombia and Mexico.

Funding for the Integrated Mass Transit Systems Project will finance the expansion of the project's scope. Like many Latin American countries, in recent decades Colombia has shown significant urban population growth with severe socioeconomic impacts.

"Public transportation has been a great concern for Colombia's planners and decision-makers both at national and local levels. Urban transport is considered to be a driver of improved productivity and increased urban competitiveness, as well as playing a key role in city efficiency," commented Gabriel García, Deputy Minister of Transportation. "Citizens without access to a reliable public transport system are excluded from employment opportunities and health care, and are isolated from the rest of the community. In contrast, offering this service is a tool to promote growth, reduce poverty, improve social networks and environmental conditions," adds García.

The project aims to:

i) Develop Fast Bus Systems (SBTR) in participating cities in order to improve mobility throughout strategic mass traffic corridors;
ii) Improve poor populations' access to public transportation;
iii) Build greater institutional capacity among public transportation institutions in order to make integrated urban transportation policies and improve urban transportation planning and traffic management.

This is the third instance in which the World Bank has supported the program, which was launched in 2004 with US$250 million in financing. It received US$207 of additional financing in December 2007. In both cases, this funding was allocated to civil works and technical assistance in Barranquilla, Bogotá, Bucaramanga, Medellín-Valle de Aburra, and Pereira. The third loan will also cover the cost of land purchases needed to build the new RTBS infrastructure, public areas, and relocation compensation costs.

Total funding required to complete this stage is US$429 million, US$300 million of which will be provided by the World Bank and US$129 by the Colombian Government. The Ministry of Transportation will be responsible for implementing the World Bank Loan. This fixed-rate loan has a payback period of 3.5 years and a grace period of 11.5 years. A front-end fee (FEF) of 0.25% of the total amount has been agreed upon, to be paid with government resources. The project's end date is March 31, 2012.

Financing to address health and environmental problems
The US$20 million for implementing the Solid Waste Management Program in Colombia will seek to improve the quality and coverage of the country's integrated waste treatment services, benefiting close to 400,000 people thanks to the appropriate management of solid waste in landfills built by the project.

"This program aims to leverage additional resources from different sources in the waste management sector. It will be implemented within the framework set by the Water and Waste Department Plans, in alignment with the institutional management, financial, social, and environmental instruments. We seek to modernize waste services and the institutions responsible for their management in order to improve Colombians' quality of life," declared Dr. Leyla Rojas Molano, Deputy Minister of Drinking Water and Waste.

The project involves three components:

• Development of and investment in final solid waste disposal systems. The resources will finance infrastructure, equipment, and services to facilitate solid waste management, particularly by eliminating open-air dumps. Technical assistance will also be financed.
• Institutional strengthening. This component aims to strengthen regional solid waste management planning systems through technical assistance: improve institutional capacities for applying regulatory schemes and sector tariffs; and develop a strategic framework for recycling.
• Project management. Includes associated costs for implementation.

The project's total cost is US$26.5 million, of which the World Bank will provide US$20 million and the Colombian government US$6.5 million. It aims to achieve the following outcomes:

a) Construction and operation of landfills:
b) Sustainable closure of open-air dumps:
c) Cost recovery in World Bank-financed landfills:
d) Establishment of companies specializing in solid waste management;
e) Social inclusion of garbage scavengers affected by project implementation.

The Colombian Ministry of Environment, Housing, and Territorial Development is responsible for project implementation. This fixed-rate loan in United States dollars has a 15.5-year payback period and a 10-year grace period. A front-end fee (FEF) of 0.25% of the total amount has been agreed upon, to be paid with government resources. The project period spans from October 1, 2009, to December 31, 2013.

For more information on the World Bank and Colombia, please visit: http://www.worldbank.org/co

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