World Bank: Restructure BRT financing due to delays

World Bank: Restructure BRT financing due to delays
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FOLLOWING delays in the implementation of the Cebu Bus Rapid Transit (BRT), the World Bank has proposed a restructuring of its financing package for the project, including an extension of the project’s closing date to Sept. 30, 2026 from the current Jan. 30, 2024.

The World Bank also proposed revisions to the project’s components, extension of the deadlines for compliance with agreements on institutional and implementation arrangements, and scope of operating costs, it said on its 36-page document it uploaded on its website on Jan. 24.

The financing for the BRT project, approved by the World Bank on Sept. 26, 2014, included an International Bank for Reconstruction and Development loan of $116 million, a Clean Technology Fund Grant of $25 million, and a parallel financing package of EUR50.89 million (equivalent to $57.5 million) from the French Development Agency (AFD).

The Philippine Government’s counterpart funding for the project amounted to $30 million.

According to the World Bank, its proposed restructuring is critical to complete delayed civil works and operationalize bus services.

The bank attributes the delays to the Philippine Government’s inability to maintain sufficient capacity in the project’s early years, the absence of regular allocations from the annual budget, and challenges in procurement and payments to key consultants, exacerbated by non-responsive bids during the first round of procurement for Package 1 civil works and the impact of Covid-19 and quarantine protocols.

Package 1 refers to the 2.38-kilometer phase that runs from the Cebu South Bus Terminal (CSBT) along N. Bacalso Ave. to the front of the Capitol building along Osmeña Blvd. The original target completion period of Package 1 was last quarter of 2023, but it was later moved to the first quarter of 2024.

Proposed revisions

The World Bank said the proposed restructuring involves the change of selected project activities in keeping with the scope and design of the BRT and infrastructure system agreed to during and since the mid-term review (MTR) conducted in September 2020.

The project’s closing date was proposed to be extended by 32 months, from Jan. 30, 2024 to Sept. 30, 2026, to allow for completion of all the activities and satisfactory achievement of the project’s objective.

Fourth extension

The World Bank said this is already the fourth extension of the project since the loan agreement became effective on Dec. 30, 2014.

On June 3, 2021, the World Bank extended the BRT project’s closing date by two years, from June 30, 2021 to June 30, 2023.

The World Bank and AFD informed the Philippine Government that a request for a second extension could be considered for completion of the activities as per the adjusted scope and design as agreed during and since the MTR, thus the project closing date was extended for the second and third time on June 30, 2023 and Sept. 30, 2023, respectively. It was then further extended to Jan. 30, 2024.

If the fourth extension is approved, the cumulative extension for the BRT project would be 63 months, with a project implementation period of 12 years.

“Notable progress”

The World Bank though observed that for the last 18 months, the project “achieved notable progress and has been receiving the highest attention and commitment from all levels of the government.”

Another revision to be made in the project is the scope and description of the BRT road infrastructure which will be modified to comprise segments including Cebu South Bus Terminal (CSBT) to Capitol segregated segment with urban enhancement and road improvement from Osmeña Blvd. to P. del Rosario intersection up to Plaza Independencia; South Road Properties (SRP) to CSBT via Barangay Mambaling and N. Bacalso Ave., and Capitol-IT Park via Escario segregated segments; and IT Park-Talamban, Talisay-SRP, and Talisay-Mambaling mixed traffic segments.

The financing plan was also revised.

Another revision to be undertaken by the World Bank involves extending the deadlines for compliance with the agreements on institutional and implementation arrangements. The overall legal, financial and institutional framework acceptable to the bank for the operation and maintenance of the BRT system in Cebu City shall be established no later than Dec. 31, 2024. The Cebu City BRT system manager is expected to be contracted by Dec. 31, 2025, and one or more bus operators for the BRT should be contracted by June 30, 2026.

On the revision of the scope of operating costs, the bank said expenditures to be covered under the operating costs will be expanded to include office space rental.

Other revisions to be made are the results framework and loan disbursement projections.

In October last year, the National Economic and Development Authority announced that the completion of the entire BRT project has been pushed to 2027 from the original target of 2025 due to the changes in design.

The BRT project’s first phase was divided into three packages including Package 1 construction which spans 2.38 kilometers from the CSBT along N. Bacalso Ave. to the front of the Capitol building along Osmeña Blvd; Package 2 is composed of the routes from the Capitol to IT Park in Barangay Lahug and another route from the CSBT to the SRP; and Package 3 will include routes from the IT Park to Barangay Talamban and from the SRP to Talisay City.

The CBRT project is expected to cater to 60,000 passengers daily in its first year of operation, and up to 160,000 passengers once fully operational, according to the Department of Transportation.

The BRT aims to improve the overall performance of the urban passenger transport system in Cebu City in terms of quality and level of service, safety, and environmental efficiency, according to the World Bank.

SunStar Cebu sought BRT manager Norvin Imbong’s statement on the World Bank’s proposal, but he has yet to respond as of press time.


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