in Lima, Peru

operators through a competitive procurement process. the operators financed and provided the rolling stock and operated the buses on 12-year concessions. bus depots were built with loan funds and counterpart money. bus operators provided maintenance equipment for the buses and desks for office workers. another private partner financed, procured, and operated ticketing and fare collection systems. total private investment in this project was us$90 million, or 34 percent of the total project costs. by 2014, the project had reduced travel times by 34 percent,1 while reducing the number of buses operating from 5,000 to 300 (iDb 2015), at least initially. later on, the number of buses increased slightly as ridership rose. initial ridership fell well short of expectations, achieving only one-third of the amount forecast for 2010. currently, ridership has improved to more than 700,000 daily passengers, above the initial target. Despite this success, the project ended up costing the government of Peru 95 percent more than originally estimated, reaching a total of us$261.9 million. One reason for this difference in costs was the rising cost of construction, which was perhaps exacerbated by a weakening of the Peruvian sol after 2013.2

Feeder routes operated in parallel with regular buses, also overlapping with the brt corridor. as a result, fewer trips were justified during regular hours, and waiting times at stops on feeder routes were as long as 40 minutes. moreover, this disequilibrium led to overcrowded buses during rush hours, affecting, as usual, low-income citizens, who mainly lived outside the metropolitan area. this case shows the importance of enforcing integration and reorganizing the system even after a brt system is built. the original concessions defined an extension, still in the planning phase when contracts were awarded, as an essential component of the concession. concessionaires claimed that, without the extension, the contract had not entered its operational stage. as a result, after eight years of operating, concessionaires claimed that their concession period had not started. based on the

TABLE A.1 Lessons learned from the Metropolitano bus rapid transit project in Lima, Peru

BEST PRACTICES

• A mechanism to modify payments to operators and tariffs if revenues fall short of or exceed expectations is a good way of sharing upside and downside revenue risks. [operations risk] [financing risk] • The government incorporated incumbents in the planning and operation of new systems and benefited from including them as partners in the project in a special-purpose vehicle. [operation risk] [political and social risk] • Putting up the concession as collateral to banks is an effective measure for derisking the operators’ debt and reducing the cost of capital. [financing risk] • An incentive fund is given out every six months to the operator with the best service score. The fund is made up of all the penalties charged to the operators. [operation risk] • Operations must begin with just a small sample of the fleet, in order to allow control centers to scale it up later while learning from its mistakes and correcting small details. [operation risk] • Incumbent operators must be incorporated or removed from the concession area. [operation risk] • The contract would have benefited from the inclusion of mechanisms to compensate for undue competition. In this case, incumbent service providers were included at first but not in subsequent phases of the project. [operation risk] • Feeder routes must be considered in plans for new projects, as these routes often serve the communities with the greatest need for improved transportation. [political and social risk] • The government should have established deadlines to start operations and conduct technical supervision of construction contractors. [construction risk] • Loose definition of the concession contract project (consideration of a nonconfirmed extension to be essential to the contract) and low contract management capacity have led to noncompliance with obligations and potential disputes. [planning risk]

Source: World Bank. AREAS FOR IMPROVEMENT

same argument and taking advantage of the essential nature of their service, poorly structured financing, and the presence of a public sector financier, operators did not comply with their debt repayment schedule.

Serving as a lesson to BRTs in Africa, such as those in Dakar and Dar es Salaam, Metropolitano started operations with 9 BRT buses out of a planned total of 300. It was not the first project to start with a fraction of its planned fleet. TransMilenio in Bogotá started operations with 90 of a planned 470 buses. This approach is more realistic, as a small fleet can start operations and generate a pull effect to bring more buses on board. As a positive side effect, the control center can learn by managing a smaller fleet. Table A.1 reflects on other lessons learned from the project.

TRANSANTIAGO (SANTIAGO, CHILE)

Transantiago increased the quality of service and organization of public transportation in Santiago (ECLAC 2017). The Transantiago BRT system was developed using the “private finance of infrastructure” PPP structure. This case demonstrates the importance of conducting exhaustive project planning, creating robust demand estimates, and executing appropriate feasibility studies.

In 2001 the public transportation system of Santiago was scattered and informal, had low coverage, and competed unfairly for customers. The Ministry of Transport developed the “Gran Santiago’s Urban Transport Plan, 2000 to 2010” to solve the public transportation crisis. Transantiago was the first project developed under the plan. It led to the development of 2,821 kilometers of roads, 378 routes, 11,339 bus stops, 35 bus stations, and 6,646 vehicles. The project had the following goals:

• Develop a modern, safe, efficient, high-quality, and integrated transportation system • establish integrated tariffs and an integrated payment system • Carry more than 513,000 passengers per day.

Up to 2013, the World Bank provided US$2.4 million for the project. By 2017, the total project investment was almost US$5.8 billion. The private sector financed 69 percent of the project’s infrastructure, amounting to almost US$4 billion. Seven bundled operators financed and procured the rolling stock, built depots for bus maintenance and parking, and operated the buses under concessions lasting between one and nine years. Another private partner financed, provided, and operated ticketing and fare collection systems.

Transantiago has achieved positive operational results but has faced financial difficulties. By 2018 Transantiago carried roughly 3 million users daily. From 2007 to 2011, it improved bus speeds, reduced travel times from 59 to 50 minutes, and cut waiting times in half, from 15 minutes to 7 minutes. Issues with project design required the government to pay operators more than US$4 billion in subsidies to cover 40 percent of operating expenditures. Transantiago suffers from a high rate of fare evasion (34 percent) and has had to bear additional costs to pay fees to the metro system to use its intermodal stations. These additional costs were not considered prior to project development. Table A.2 presents the lessons learned from the project.