Improve the long-run financial viability of support for sustained transport.
- For the subsectors and transport modes that rely on operations and maintenance funds from public sources or earmarked funds such as intercity highways and rural roads: (i) engage with the client where high-level policy decisions related to maintenance funding can be taken (ii) within the Bank, put a more prominent emphasis on the adequacy and reliability of transport maintenance funding in public expenditure reviews.
- Diversify the sources of financing for roads and urban transport for more reliable financing, such as axle control fees, fuel surcharges, vehicle registration fees, and congestion charges.
- In the railways subsector, critically assess the viability of investments, with particular attention to: (i) realistic demand forecasts based on analysis of potential competition from other transport modes and (ii) realistic estimation of rehabilitation and maintenance costs.
- Support to urban transport should include comprehensive financial analysis of the overall urban transport system, including fare integration, tariffs and subsidies, and the net impact on the poor.
Financial viability Financial viability is one of two intermediate outcomes associated with sustained transport.
Countries that had public expenditure reviews (PERs), especially with explicit mention of transport maintenance, were more likely to realize sustained transport outcomes. However, more than half of the PERs reviewed failed to highlight the transport maintenance funding issue.
Transport financing that relies on diverse funding sources has improved financial viability in urban transport and intercity highways. Railways have faced difficulty sustaining their infrastructure and services for both World Bank and IFC projects because they generally did not pay enough attention at appraisal to market demand conditions, such as road competition, and accurately estimating the capital investment needs to revamp infrastructure.
While low-income passengers are less able to pay, the benefits of improved access to jobs and economic opportunities may be great. The net impact of user fees to finance transport operation and maintenance on the poor is ambiguous, however, and depends on the context.
Original Response: Agreed: The Transport Sector Board will assess the transport sector's contribution to PERs and identify opportunities to integrate transport into PERs.
During design, project task teams will explore more systematically a variety of sources of funding for maintenance and operations, including plans for self-finance.
Efforts to realistically evaluate cost and revenue forecasts that cover competition between different modes of transport will be enhanced, with particular attention to urban transport and railways.
Ex ante analysis of urban transport projects will include an analysis of subsidy requirements and integration of pricing of different sub-modes of transport.
WB Action 2.A: The Transport Sector Board/Global Practice will finalize and disseminate the Sourcebook on Resources Allocation and Utilization in the Transport Sector.
Indicator: Sourcebook finalized and fully disseminated across the Bank.
Baseline: Final draft of Sourcebook on Resources Allocation and Utilization in the Transport Sector.
Timeline: End of FY 14
WB Action 2.B: Public Expenditures Reviews (PER) better informed by all transport operations with substantial maintenance needs and/or expenditure risks.
Indicator: Maintenance needs and/or expenditure risks in transport operations regularly reported to Public Sector Management
Baseline: No systematic reporting of project maintenance needs and expenditure risks in public expenditures reviews.
Target: All transport operations that meet applicability threshold are reported to PSM for inclusion in PER as appropriate.
Timeline: Applicability threshold determined by the Transport/ICT Global Practice and implemented by TTLs in FY15.
WB Action 2.C: The Transport Sector Board will monitor the implementation of the guidelines spelled out in the Railway Reform Toolkit, the Operational Guidelines to bank Staff on Urban Transport Operations and the Urban Transport Policy Toolkit, which include specific guidance on financial viability of those modes.
Target: 100 percent of Railways and Urban Transport project informed on financial sustainability requirements by FY15.
Timeline: Annual portfolio review by the Transport Sector Board /Global Practice starting in FY15.
On 2A, IEG takes note that guidance notes on Resources Allocation and Utilization in the Transport Sector.
On 2B, IEG also notices that the PER review of transport sector was carried out in Ghana in FY17 and T&I staff took the lead on the PER related to transport. However, IEG notes that whether applicability threshold of transport projects for PER was not defined by the T&ICT GP, and whether a PER of transport sector would be conducted is not decided by the T&ICT GP, therefore, the maintenance needs and/or expenditure risks in transport operations was not regularly reported to Public Sector Management.
On 2C, IEG acknowledges that 100 percentage of UT projects approved in FY17 had done financial viability analysis at the project design stage and one UT project included an analysis of subsidy requirement.
2A- This action was completed last year, the source book was published on the transport website http://globalpractices.worldbank.org/gsg/RAMRA/Knowledge%20Base/SOURCEB…
2B- This year we carried out one Public Expenditure and Institutional Review of the Transport Sector for Ghana (see http://wbdocs.worldbank.org/wbdocs/viewer/docViewer/indexEx.jsp?objectI… ) This PEIR evaluates all instructions in the sector, including a) Transport Services Delivery Agencies and b) Road Infrastructure Development and Maintenance Organizations. General PEIRs are carried out by the Country Economist team and T&I is not involved, therefore, transport projects are not taken into account. When the country is carrying out a PEIR focus on the transport sector, such as Ghana in FY17, T&I staff takes the lead on the guidance for the PEIR and all aspects of transport are included.
2C-There were no Rail operations approved in FY17. Of the UT projects approved in FY17 (Argentina AF P161393, Philippines P132401, Senegal P156186, and Tanzania P150937), all have been reviewed by the Urban Mobility GSG to ensure that the guidelines in the toolkit are being followed. All have carried out a financial sustainability analysis' and were informed by accessibility analysis, that is, calculating the access to employment opportunities within a 60 min commute using public transport. 1 project (25% - Tanzania) included subsidies requirements.
IEG takes note that progress has been made in FY16 in developing guidance notes on related topics. We acknowledge that the PER review of two countries have included the transport sector, and the railway COP reviewed 100% of the railway projects approved in the last two years. All of this are likely to contribute to the improved project design, better risk identification and mitigation. In making the assessment of the implementation status, IEG would need more specific information on (i) the percentage of UT projects that had done financial viability analysis at the project design stage (ii) the percentage of UT projects that included an analysis of subsidy requirement and (iii) whether applicability threshold of transport projects for PER was defined by the T&ICT GP.
According to the additional information provided by the management, IEG took note that 100% of UT projects approved in FY16 informed on financial sustainability of the projects.
In FY '16 Transport and ICT and its Global Solutions Groups (GSGs) and Community of Practices (CoPs) carried out three specific tasks related to this IEG recommendation and Management commitment for action:
2a. T&I developed a series of guidance notes on related topics including Measuring Rural Access to Transport, Mobility to All, and Climate Resilient Transport. The GP also developed a RoadLab Pro, a smartphone app (Android and iPhone) that allows road engineers to evaluate road roughness, collect GPS coordination of roads, and automatically link data to Dropbox or Google Drive for easy and efficient management. The RoadLab App has been used in Belarus, Kenya, Tanzania, Ethiopia, Uganda, Zambia, Mozambique, Nepal and Bangladesh.
Links to Guidance Notes and RoadLab Pro: http://www.worldbank.org/en/topic/transport/brief/connections-note-23
http://www.worldbank.org/en/topic/transport/brief/connections-note-25
https://openknowledge.worldbank.org/handle/10986/23685
https://play.google.com/store/apps/details?id=com.softteco.roadlabpro&h…
https://itunes.apple.com/mz/app/roadlabpro/id1125333158?mt=8
2b. T&I carried out transport specific Public Expenditure Reviews (PERs) [See Infrastructure PER for United Arabs Emirates - P150257 and Road Sector PER for Nepal - P156908]. T&I has done extensive training and information dissemination on financing and maintaining transportation infrastructure with the support of the private sector (see Transforming Transportation 2016 and the Transportation Infrastructure Investment for Developing Countries Seminar on April 2016).
Link to Agenda for Transforming Transportation: http://www.worldbank.org/en/events/2015/12/14/transforming-transportati…
2c. T&I's Railways Community of Practice (CoP) created and monitors the usage of the Railways Reform Toolkit for improving rail sector performance, now online. The Railways CoP has reviewed every new railway investment in the past 2 years and requests robust and realistic traffic data on each.
Link to Railways Toolkit: http://www.ppiaf.org/sites/ppiaf.org/files/documents/toolkits/railways_…
2c: "Railways: The Railways CoP reviews every new railway investment approved to ensure guidance provided in the Toolkit is followed and requested robust and realistic traffic data on each. However, in FY16 there were no railways projects approved. UT: Of the eight UT projects approved in FY16, six have carried out a financial sustainability analysis and six have included subsidies requirements"
IEG notes that because of the transition to the new GP structure, the publication and dissemination of the Sourcebook on Resource Allocation and Utilization were delayed. Annual portfolio review was not carried out and no transport PERs were conducted in FY15. IEG acknowledged that the creation of GSGs is a step in the right direction, but IEG would like to get more information on the specific plan and timeline on how those delayed actions are to be carried out.
WB Action 2.A The Sourcebook on Resource Allocation and Utilization has been drafted. The publication and dissemination to the Practice has been delayed as FY15 was a transition year with the creation of the GP model. The Sourcebook will now need to go through a review and endorsement process by the GP including the relevant GSG/CoP.
WB Action 2.B: No transport PERs have been conducted in FY15.
WB Action 2.C: FY 15 was a transition year as the GP structure was established, which included the creation of Global Solutions Group and Communities of Practice (including a Road Asset Management and Rural Accessibility GSG, an Urban Mobility GSG and a railways CoP) that will lead technical discussions in these areas. The creation of these GSG/CoP are a step in the right direction as they are expected to provide technical support to teams designing new projects to ensure alignment with best practices on the subject. The annual portfolio review has been delayed due to the transition arrangements for FY 15 as the relevant GSG and CoP will play a key role in establishing a monitoring framework for this purpose (with support from the PMSO).
IEG commends the progress made by the Bankâs transport practice in preparing a guidebook on resources allocation in transport in its draft form, and look forward to receiving the final report and related dissemination plan.
IEG also acknowledges that the newly established transport and ICT Global Practice is setting up thematic groups that will be mandated to increase the focus on improving long run financial viability for transport infrastructure and services. While this initiative is welcome, IEG seeks to understand how the performance of the thematic groups would be assessed in carrying out their tasks to improve the long run financial viability for the transport project portfolio. This would require a collection of baseline information which could be extracted from the recent IEG evaluation, or the practice could collect a new baseline as of its establishment. Progress against the pre-defined targets in terms of "level of reporting of project maintenance needs and expenditure risks in public expenditures reviewsâ, and âpercent of Railways and Urban Transport projects informed on financial sustainability requirementsâ would need to be reported in future MARs.
Within the Global Practice Transport and ICT, two Thematic Groups will be tasked with monitoring these particular aspects, the Road Assets Management and Rural Roads TG and the Urban Transport and Smart Cities TG. Additionnally, a Guidebook on Resource Allocation in Transport, now in draft final form, will be published and disseminated in FY15 to help Transport teams better factor the Transport sector in PERs.