ASIAN DEVELOPMENT BANK PCR: PRC 28218

PROJECT COMPLETION REPORT

ON THE

JIANGXI EXPRESSWAY PROJECT (Loan 1484-PRC)

IN THE

PEOPLE’S REPUBLIC OF CHINA

October 2004

CURRENCY EQUIVALENTS

Currency Unit – yuan (CNY)

At Appraisal At Project Completion 14 October 1996 31 March 2004 CNY1.00 = $0.1205 $0.1206 $1.00 = CNY8.3017 CNY8.29

ABBREVIATIONS

AADT – average annual daily traffic EIRR – economic internal rate of return FIRR – financial internal rate of return GDP – gross domestic product ICB – international competitive bidding JHCHAB – Jiangxi High-Class Highway Administration Bureau JPCD – Jiangxi Provincial Communications Department LCB – local competitive bidding MOC – Ministry of Communications NTHS – National Trunk Highway System PCU – passenger car unit PRC – People’s Republic of China TA – technical assistance VOC – vehicle operating cost WACC – weighted average cost of capital

WEIGHTS AND MEASURES ha – hectare km – kilometer km/h – kilometer per hour m – meter

NOTE

In this report, "$" refers to US dollars.

CONTENTS

Page

BASIC DATA MAP I. PROJECT DESCRIPTION 1 II. EVALUATION OF DESIGN AND IMPLEMENTATION 2 A. Relevance of Design and Formulation 2 B. Project Outputs 3 C. Project Costs 4 D. Disbursements 5 E. Project Schedule 5 F. Implementation Arrangements 5 G. Conditions and Covenants 6 H. Related Technical Assistance 6 I. Consultant Recruitment and Procurement 6 J. Performance of Consultants, Contractors, and Suppliers 7 K. Performance of the Borrower and the Executing Agency 7 L. Performance of the Asian Development Bank 7 III. EVALUATION OF PERFORMANCE 8 A. Relevance 8 B. Efficacy in Achievement of Purpose 8 C. Efficiency in Achievement of Outputs and Purpose 10 D. Preliminary Assessment of Sustainability 11 E. Environmental, Sociocultural, and Other Impacts 11 IV. OVERALL ASSESSMENT AND RECOMMENDATIONS 13 A. Overall Assessment 13 B. Lessons Learned 13 C. Recommendations 14 APPENDIXES 1. Major Events in the Projects History 15 2. Training Provided under the Project 16 3. Project Costs and Financing Sources 17 4. Projected and Actual Disbursement Schedules 18 5. Appraisal and Actual Implementation Schedule 19 6. Organizational Chart of the Project Executing Agency 21 7. Compliance with Loan Covenants 24 8. Details of Contract Packages 27 9. Socioeconomic Indicators of Project Influenced Areas 29 10. Traffic Forecasts and Actual Traffic Volume 30 11. Financial Performance 33 12. Financial Reevaluation 37 13. Economic Reevaluation 39 14. Evaluation of Land Acquisition and Resettlement Activities 43 15. Project Framework-Actual Achievements 50

BASIC DATA

A. Loan Identification

1. Country People’s Republic of China 2. Loan Number 1484-PRC 3. Project Title Jiangxi Expressway Project 4. Borrower People’s Republic of China 5. Executing Agency Jiangxi Provincial Communications Department 6. Amount of Loan $150.0 million 7. Project Completion Report (PCR) PCR: PRC 861 Number

B. Loan Data 1. Appraisal – Date Started 22 July 1996 – Date Completed 2 August 1996

2. Loan Negotiations – Date Started 7 October 1996 – Date Completed 9 October 1996

3. Date of Board Approval 19 November 1996

4. Date of Loan Agreement 27 December 1996

5. Date of Loan Effectiveness – In Loan Agreement 27 March 1997 – Actual 12 March 1997 – Number of Extensions nil

6. Closing Date – In Loan Agreement 30 June 2002 – Actual 8 April 2003 – Number of Extensions two (2)

7. Terms of Loan – Interest Rate Asian Development Bank’s (ADB) pool-based variable rate for US dollar lending – Maturity (number of years) 25 years – Grace Period (number of years) 5 years

8. Terms of Relending (if any) – Interest Rate same as ADB’s lending rate – Maturity (number of years) 25 years – Grace Period (number of years) 5 years – Second-Step Borrower Jiangxi Province

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9. Disbursements a. Dates Initial Disbursement Final Disbursement Time Interval

7 August 1997 8 April 2003 64 months

Effective Date Original Closing Date Time Interval

12 March 1997 30 June 2002 63 months

b. Amount ($) Category Last Net or Original Revised Amount Amount Amount Undisbursed Subloan Allocation Allocation Canceled Available Disbursed Balance ($) ($) ($) ($) ($) ($) 1 110,700,000 97,731,227 12,960,773 97,731,227 97,731,227 0 2 5,900,000 7,973,737 0 7,973,737 7,973,737 0 3 1,600,000 913,156 686,844 913,156 913,156 0 4 1,000,000 926,866 73,134 926,866 926,866 0 5 16,000,000 16,000,000 0 16,000,000 16,000,000 0 6 14,800,000 0 12,726,263 0 0 0

Total 150,000,000 123,544,986 26,455,014 123,544,986 123,544,986 0

10. Local Costs (Financed) - Amount ($) 0 - Percentage of Local Costs 0 - Percentage of Total Cost 0

C. Project Data

1. Project Cost ($ million)

Cost Appraisal Estimate Actual Foreign Exchange Cost 180.7 123.5 Local Currency Cost 185.6 196.7 Total 366.3 320.2 2. Financing Plan ($ million)

Cost Appraisal Estimate Actual Implementation Costs Borrower-Financed 96.0 84.2 ADB-Financed 134.0 107.5 Other External Financing 120.3 113.5 Total 350.3 304.2 IDC Costs Borrower-Financed 0.0 0.0 ADB-Financed 16.0 16.0 Other External Financing 0.0 0.0 Subtotal 16.0 16.0 Total 366.3 320.2 ADB = Asian Development Bank, IDC = interest during construction. iv

3. Cost Breakdown by Project Component ($ million) Component Appraisal Estimate Actual 1. Civil works 279.2 233.2 2. Equipment 6.6 15.2 3. Land Acquisition and Relocation 8.1 9.6 4. Consulting Services for Construction Supervision and 10.9 12.7 Training 5. Capacity Building, Training, and Human Resources 1.0 0.9 Development 6. Access Roads 5.8 32.5 7. Physical Contingency 15.6 0.0 8. Price Contingency 23.0 0.0 9. Interest During Construction 16.0 16.0

Total 366.3 320.2

4. Project Schedule Item Appraisal Estimate Actual Date of Contract with Consultants Construction Supervision June 1997 May 1997 Training June 1998 November 1999 Completion of Engineering Designs June 1997 December 1997 Civil Works Contract Date of Award June 1997 December 1997 Completion of Work September 2001 October 2000 Equipment and Supplies Dates First Procurement September 1997 March 1997 Last Procurement December 1999 August 2002 Completion of Equipment Installation October 2001 May 2002 Start of Operations December 2001 May 2002 Completion of Tests and Commissioning November 2001 November 2000 Beginning of Startup December 2001 November 2000 Other Milestonesb None

5. Project Performance Report Ratings Ratings

Development Implementation Implementation Period Objectives Progress From 01 Nov 1998 to 31 Dec 1998 S S From 01 Jan 1999 to 31 Dec 1999 S S From 01 Jan 2000 to 31 Dec 2000 S S From 01 Jan 2001 to 31 Dec 2001 S S From 01 Jan 2002 to 31 Dec 2002 S S From 01 Jan 2003 to 31 Dec 2003 S S S=satisfactory v

D. Data on Asian Development Bank Missions No. of No. of Specialization Name of Missiona Date Person Person-Days of Membersb s Fact-Finding Mission 8-21 May 1996 5 14 a, b, c, d, e Appraisal Mission 22 Jul to 2 Aug 96 5 12 a, b, c, d, e Inception Mission 8-10 May 97 1 3 a Review Mission 1 1-3 Dec 97 1 3 a Review Mission 2 24-28 Nov 98 2 5 a, f Midterm Review Mission 15-22 Nov 99 3 10 a, b, g Special Project Administration Mission 1 1-3 Aug 00 1 3 a Special Project Administration Mission 2 24-31 Oct 00 2 16 c, g Consultation Mission 17-18 Nov 00 1 2 d Review Mission 3 10-16 Aug 01 2 14 a, h Review Mission 4 8-12 Dec 03 2 10 h, i Project Completion Reviewc 22 Mar to 02 Apr 2 24 h, i, j 04

Note: a a = engineer; b = economist; c = financial analyst; d = programs officer; e = environment specialist; f = transport specialist; g = associate operations analyst; h = head, project administration unit; I = operations officer; j = consultant. b The project completion report was prepared by Chwoon Sam Chin, head, project administration unit - mission leader; Perfecto Canlas, operations officer; a financial analyst-economist (staff consultant); and a resettlement specialist (staff consultant). vi

I. PROJECT DESCRIPTION

1. The economy of the People’s Republic of China (PRC) has developed rapidly since the country embarked on economic reforms in the late 1970s. Gross domestic product (GDP) has grown an average of more than 9% per year over this period. This unprecedented economic growth has generated strong demand for goods and services, which in turn generated strong demand for vehicles because road transport is flexible and responsive to the needs of a market economy. Although the PRC has actively developed and improved its road network by adding 86,700 kilometers (km) of new roads and increasing its road investments fourfold over the last 7 years, the PRC still has one of the lowest road densities in the world in terms of population and land area. Its motorization rate is lower than that of other Asian and Pacific countries, with only about 1.3 vehicles for every 100 persons. Roads are the main mode of passenger transport—carrying about 55% of the total passenger-km—and the third major freight transport mode, responsible for 14% of total national freight tons-km. The PRC’s vehicle fleet is expected to expand rapidly with steadily increasing incomes and phenomenal expansion in automotive manufacturing capacity. The inadequate road network, coupled with poor quality roads, has created transport bottlenecks and hindered economic and social development. Economic growth has been unevenly distributed among the different regions in the PRC, resulting in growing inequality and deterioration in income distribution. Despite fast economic development in the country as a whole, Jiangxi province remains poor, with GDP per capita ranked 22nd among all provinces in 2003.

2. To address the major road transport infrastructure constraints, the Government has developed the National Trunk Highway System (NTHS), which entails building 35,000 km of expressways and highways along the 12 key transport corridors and a number of strategic contiguous routes from 1991 to 2010. The plan also called for strengthening the linkages from less- developed regions to better-developed ones and from disadvantaged communities to the economic mainstream. The Project meets these criteria and is designed to promote economic growth in relatively poor, landlocked Jiangxi province. The Project will address the capacity and safety constraints for efficient movement of freight and passengers between Jiujiang and Jingdezhen in Jiangxi Province. The Project will support further policy and institutional reform, capacity building, and human resources development in the road subsector. The project expressway will connect to the part of the north-south NTHS that runs from Beijing through Jinan and Hefei to Nanchang and ultimately to Shenzhen. It will also form part of the east-west expressway from Wuhan to Shanghai. The Project will serve as a regional highway link within the middle and lower reaches of the Yangtze River, providing (i) improved access through the river port of Jiujiang to the economic powerhouses of Wuhan and Shanghai, and (ii) providing access to the Beijing-Kowloon railway that passes through Jiujiang. The Project is essential to developing the Nanchang-Jiujiang-Jingdezhen economic growth triangle. The Jiangxi Provincial Communications Department (JPCD) prepared feasibility studies for the Project, and the Jiangxi Environmental Protection Science Research Institute conducted an environmental impact assessment. ADB approved a project preparatory technical assistance (TA)1 to supplement and refine the government studies. The TA was completed in April 1996 and its findings confirmed the financial and economic viability of the Project and the adequacy of the environmental and social measures to be implemented concurrently. The fact- finding and appraisal missions found the Project suitable for ADB financing. ADB’s Board of Directors approved a loan of $150 million from its ordinary capital resources for the Project on 19 November 1996. Advance procurement action was approved on 20 June 1996 for prequalification,

1 ADB.1995.Technical Assistance to the People’s Republic of China for Jiangxi Highway Project. Manila (TA 2486- PRC, for $250,000 approved on 20 December 1995). 2 bidding, and bid evaluation of the civil works packages and recruitment of international consultants for project supervision and training. The loan was signed on 27 December 1996 and became effective on 12 March 1997. The major events in project implementation are listed in Appendix 1.

3. The Project included construction of 134 km of four-lane, controlled-access toll highway to asphalt concrete paved standards, including (i) a 3,710-meter-long cable-stay bridge and 46 other bridges totaling about 3,310 meters (m) in length, (ii) two twin tunnels about 2,000 m long, (iii) interchanges with toll facilities, and (iv) upgrading of about 253 km of access roads to the expressway. The Project also included equipment and facilities for (i) toll collection, surveillance, and communications; (ii) highway maintenance and rehabilitation; (iii) vehicle-axle load testing; and (iv) road safety. In order to carry out these civil works, land acquisition and relocation was required for about 360 households and 30 small commercial establishments. Consulting services for construction supervision and on-the-job training were included under the Project, as were capacity building, training, and human resource development.

4. The Project was completed as envisaged at appraisal and the expressway was opened to traffic on 18 November 2000. While the expressway was completed and opened to traffic a year ahead of the appraisal schedule, the toll collection, surveillance and communications systems, and access roads were only completed in May and December 2002, respectively, a delay of 12 months.

II. EVALUATION OF DESIGN AND IMPLEMENTATION

A. Relevance of Design and Formulation

5. The expressway was designed in accordance with the Ministry of Communications (MOC) highway design standards for class I highway with a speed of 100 kilometers per hour (km/h), basically in line with international highway design standards. The access roads were designed based on class II, III and IV standards. Road quality was good, with the surface corresponded with the international roughness index measurements for comfortable ride.2 The interchanges were well constructed. The road and drains were well maintained and regularly cleaned. The slope protection work—involving a combination of retaining walls, shortcrete, lattice blocks, grass turfing, and storm drainage—was properly carried out with no noticeable slippage. The tunnels were well constructed and lit, with no water seepage. The cable-stay bridge crossing Boyang Lake provides a permanent crossing in place of an unreliable ferry crossing. This bridge reduces crossing time by at least one hour and enhances the beauty of the lake.

6. The Project forms a strategic link to NTHS and is critical to the economic development of the Nanchang-Jiujiang-Jingdezhen economic growth triangle. The expressway serves as the main transport corridor between Jiujiang and Jingdezhen and provides improved, faster, and permanent access for freight and passengers to the river port of Jiujiang, to the economic zones of Wuhan and Shanghai, and to Beijing-Kowloon railway. The expressway was completed ahead of schedule, although some of the access roads and essential toll, surveillance, and communications systems were only completed and in operation a year later. The Project is also in line with ADB’s past and present operation strategy for the PRC’s road subsector, and represents strategic continuation of ADB’s assistance in expressway development in the PRC, with the main objective of promoting growth in less-developed regions and continuing road reforms through policy dialogue. The Project also provided institutional strengthening to increase the commercial orientation and management efficiency of expressway corporations, and promoted road safety and network integration for people

2 Accumulated axle movements recorded using standard bump integrator equipment measured over 1 km of road distance. 3 in rural areas. Stakeholders were consulted through participative meetings with local government officials and affected groups. The expressway has cut travel time between Jingdezhen and Jiujiang by more than 2 hours and has stimulated the economic development in project-influenced areas. People at all levels of society were generally happy with the Project. The training and human resource development provided to staff at the executing agency, JPCD, enabled it to run more efficiently, and allowed Jiangxi High-Class Highway Administration Bureau (JHCHAB) to operate and maintain the expressway in a more commercial and professional manner.

B. Project Outputs

1. Civil Works

7. At appraisal, the civil works consisted of 12 contracts for earthworks, bridges, and tunnels using international competitive bidding (ICB); 2 contracts for earthworks and 10 contracts for fencings, signs, buildings, and ancillary works; and 10 contracts for upgrading of access roads using local competitive bidding (LCB). Procurement was carried out as planned, and all civil works contracts had been awarded by December 1997, with the exception of the 10 contracts for access roads, 8 of which were carried out using force accounts and 2 using local contractors between 1999 and 2002. The civil works started on 22 December 1997 and the expressway was completed and opened to traffic on 18 November 2000. The completed project consisted of a four-lane, controlled- access expressway totaling 133.6 km, originating at Mujialong in Jiujiang and terminating at Luojiatan in Jingdezhen. The expressway included 2 extra-large bridges totaling 4,998.7 m in length, 14 large bridges totaling 2,256.1 m in length, 17 medium bridges for a combined length of 911.9 m, 11 minor bridges totaling 322.6 m in length, 3 twin-tube tunnels measuring 1,888 m long, 9 interchanges, 776 culverts and underpasses totaling 26,230 m, 45 grade crossings, 2 service areas, 1 maintenance center, 1 management center, and 9 toll plazas.

2. Equipment

8. The original equipment consisted of two contracts under ICB and eight under international shopping. In fact, 5 ICB contracts and 22 international shopping contracts for equipment were awarded. The highway maintenance and rehabilitation equipment consisted of 20 rollers; 2 cranes, including 1 truck crane; 3 asphalt sprayers; 3 asphalt pavement maintenance vehicles; 4 hydraulic excavators; 1 bulldozer; 3 loaders; 1 grader; 1 diesel generator; 3 asphalt concrete pavers; 1 asphalt concrete mixing plant; 1 piece of bridge inspection equipment; and 1 concrete slipform paver. Weigh-in-motion equipment was included in the project scope, but JPCD decided not to procure it until the Government adopts a unified and consistent approach to eliminating overloading on the expressway. As a result, overloading by trucks was frequently observed along the expressway. A computer-based toll collection systems, procured under ICB, were installed in each of the nine toll stations at the entry and exit points. The main system is located at the Ludao Toll Plaza. The system is based on one magnetic card for the entire expressway from Nanchang to Jingdezhen, including the project expressway. Motorists are given a card upon entry then pay at their chosen exit based on the distance they traveled, the type of vehicle they drive, and applicable toll. The traffic control and monitoring system consists of a closed-circuit television monitoring and recording system, a traffic control and surveillance system, and an emergency telephone system. The system is controlled from the center in Ludao Toll Plaza and is connected to the subcenter at Jingdezhen Administration Center. The system includes a weather forecasting device, a device to measure average vehicle speed, changeable traffic signs, and electronic display boards. Emergency telephones were positioned on both side of the expressway at 2-km intervals. The electronic display boards were located at each end of the expressway.

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3. Land Acquisition and Relocation

9. JPCD prepared a resettlement and compensation plan in accordance with the Land Administration Law of PRC and Jiangxi resettlement regulations, and consultations with project- affected people. About 895.8 hectares (ha) of land were permanently acquired, in addition to temporary land acquisition of 94.0 ha. The land acquired consisted of 398.98 ha of paddy field, 178.45 ha of dry land, 34.8 ha of vegetable land, 24.9 ha of fish ponds, 186.1 ha of forest land and 30.0 ha of wasteland. Some 125,373 square meters (m²) of houses, including 90,217 m² of dwellings and 6,416 m² of structures owned by factories or public institutions, were demolished. About 546 households were resettled. The actual cost of land compensation and resettlement amounted to $9.6 million, $1.5 million higher than the appraisal estimate. The increase was a result of higher approved compensation rates and larger-than-anticipated land acquisition.

4. Capacity Building, Human Resource Development, and Training

10. Consulting services included project supervision, design review, on-the-job training, and international training. A total of 136 staff in 17 groups from JPCD underwent training in Australia and the European Union for a total of 85.1 person-months (Appendix 2). The training included courses in highway planning, design, construction supervision, financial management, environmental protection, road maintenance, and expressway operation and maintenance. All trained staff members were then assigned to JPCD. JPCD found the training highly relevant as it exposed them to modern traffic management and advanced highway design and planning. It also enabled JPCD to manage expressway construction more effectively and efficiently, and allowed JHCHAB to operate and manage the expressway in a professional and commercial manner.

C. Project Costs

11. At appraisal, the Project was estimated at $366.3 million, including a foreign exchange cost of $180.7 million and local currency costs of $185.6 million equivalent. The actual cost amounted to $320.2 million—$46.1 million less than the estimate at the time of appraisal— because of a lower contracted price for civil works brought about by strong competition. However, the actual cost of civil works for the access roads rose by $26.7 million equivalent because of more extensive upgrading, higher road standard works, increased road length, and longer implementation period. The cost of equipment increased by $8.6 million because more equipment was procured. The actual cost comprised foreign exchange cost of $123.5 million and a local currency cost of $196.7 million equivalent. Appendix 3 shows a breakdown of the appraisal estimate and the actual project costs.

12. The financing plan envisaged at appraisal included a $150.0 million loan from ADB to finance about 83% of the foreign currency cost or about 41% of the total project cost. The remaining foreign currency cost of $30.7 million and the entire local currency cost of $185.6 million equivalent were to be financed through a $100.0-million-equivalent grant from MOC, an equity contribution of $96.0 million equivalent from JPCD, and a grant of $20.3 million equivalent from local governments. The actual funding came from the ADB loan of $123.5 million, representing about 39% of the project cost; $89.4 million equivalent from the MOC grant; the equity contribution of $84.2 million equivalent from JPCD; and a $23.1-million- equivalent grant from local governments (Appendix 3).

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D. Disbursements

13. Of the $150 million loan amount, $123.5 million were disbursed and the balance of $26.5 million was cancelled. The disbursements began in August 1997, peaked between 1999 and 2002, and ended in April 2003 (Appendix 4). About 87% of the loan amount was disbursed from 1999 to 2002. A reimbursement procedure was used for civil works, a commitment procedure for equipment purchases, and direct payment for consultant billings. JPCD said it was satisfied with the payment procedures, but added that ADB’s disbursements were generally slow. JPCD said it would have preferred using an imprest account for faster disbursements, but none was requested at appraisal. The actual interest and commitment charge amounted to $16.0 million. JPCD prepaid the entire loan amount on 15 May 2003, including a prepayment premium of $4.3 million.

E. Project Schedule

14. On 20 June 1996, ADB approved advance action for the prequalification, bidding, and evaluation of the first civil works contracts between Jiujiang and the Hukou Bridge and recruitment of international consultants for construction supervision and training. The advance actions enabled JPCD to start construction 8 months after loan effectiveness and complete the expressway 1 year ahead of schedule. The civil works for the expressway, including buildings and ancillary facilities, began in December 1997 and was completed by October 2000. The expressway was opened to traffic a year ahead of schedule—on 18 November 2000—despite 2 consecutive years of floods that damaged earthworks, halted work for about 6 months, and resulted in substantial contract variations for civil works. However, procurement of road maintenance equipment, the toll collection, traffic surveillance, and control and communication systems were only completed in May 2002 and the access roads only completed in December 2002. The delay came as a result of late finalization of the equipment list and system design, as well as slow progress on access road construction using force accounts. The appraised and actual implementation schedule is in Appendix 5.

F. Implementation Arrangements

15. As envisaged at appraisal, JPCD was the executing agency and was responsible for planning and project implementation. A project management office (PMO) was established within JPCD to oversee and coordinate all project activities, including liaison among the various agencies involved in the Project and monitoring of progress. Two district PMOs were established in Hukou and Jiujiang, with the former responsible for bridge and tunnel construction and the latter responsible for road construction. The chief engineer, assisted by the international and domestic consultants, had overall responsibility for construction. Resettlement offices were established within the PMO, as well as in each of the cities and counties along the expressway route, to attend to local concerns including land acquisition, compensation, and resettlement. A separate road maintenance office was established in Cailing Maintenance Center to carry out road maintenance and expressway repairs. The maintenance office was well stocked with road construction materials and maintenance equipment, including an asphalt mixing plant and specialized road repair equipment. After the completion of the expressway, its operation and maintenance (O&M) was handed over to JHCHAB, a fully owned subsidiary of JPCD that was also responsible for O&M of the World-Bank-financed Nanchang-Jiujiang Expressway. The organizational structures of JPCD, JHCHAB, and the resettlement offices are in Appendix 6. JHCHAB was staffed with 396 people, many of them had received international training on expressway O&M. These training programs enhanced JHCHAB’s O&M capacity and 6 will eventually provide the needed capacity to meet the demands of a corporatized expressway operator.

G. Conditions and Covenants

16. All loan covenants have been complied with, except for the submission of the corporatization plan for JHCHAB, which will be deferred until the expressway becomes profitable and attractive to private investors (Appendix 7). All required reports, including the project completion report and the final report on resettlement, were submitted on time and were found to be reasonably well prepared and comprehensive.

H. Related Technical Assistance

17. ADB provided a project preparatory technical assistance (PPTA) (footnote 1) grant to supplement the government studies and to ascertain the technical, financial, and economic viability of the Project. The PPTA confirmed that the project scope was appropriate, cost- effective, and suitable for ADB financing. The PPTA consultants were not able to provide accurate cost estimates because the detailed engineering design was not available at that time. The ensuing project was well formulated—except for overly optimistic traffic forecasts—and the implementation arrangements were appropriate. No significant implementation problems were encountered and the expressway was completed ahead of schedule. The PPTA was rated successful.

I. Consultant Recruitment and Procurement

18. International consultants financed under the loan were recruited by JPCD following ADB’s Guidelines on the Use of Consultants. Recruitment started promptly after ADB approval of advance action. While the contract for project supervision was signed in May 1997, the consultants were only requested to start work in December of 1997 when onsite work commenced. JPCD hired a domestic consulting supervision firm and a domestic procurement agency, following ADB’s approved LCB method, to assist in project supervision, quality control, and procurement of ADB-financed goods and services. The recruitment was carried out efficiently and all consultants were mobilized in time for the commencement of civil works in December 1997. JPCD financed the cost of domestic consultants.

19. Procurement of civil works was carried out according to ADB’s Guidelines for Procurement. Twelve civil works contracts were awarded based on ICB procedures and two based on LCB. Prequalification and bid evaluation was conducted without any difficulties. Eight of the 10 access road upgrade contracts were carried out using force account, while the remaining two were awarded based on a local competitive selection method acceptable to ADB. Traffic engineering works comprising 11 contracts, and building and ancillary facilities in 13 packages, were awarded based on LCB. Equipment procurement was carried out in accordance with the ADB’s Guidelines for Procurement. In total, 5 ICB contracts and 22 international shopping contracts financed by ADB were awarded for equipment totaling $15.2 million. The details of the procurement packages financed by ADB and the mode of procurement are in Appendix 8.

J. Performance of Consultants, Contractors, and Suppliers

20. The consultants engaged under the Project performed satisfactorily and enjoyed a good working relationship with JPCD. In fact, the leader of project supervision consulting team was 7 awarded the title of “Excellent Foreign Expert” by the Jiangxi provincial government. The international consultants completed their supervision assignment in October 2002 with a total input of 80 person-months, compared with the appraisal estimate of 60 person-months. The extra person- months were a result of delayed procurement of road maintenance equipment and the late completion of the toll collection, traffic surveillance, and communication systems. JPCD was satisfied with the overseas training that the international consulting firm arranged, and considered the training effective in strengthening their skills in highway and bridge design, construction supervision, financial management, and expressway O&M. The domestic consultants also performed satisfactorily. Civil works contractors worked in a systematic manner and completed their contracts within the stipulated period despite disruption and damages as a result of floods. The road quality was good (para. 5), and the interchanges well constructed. The road and drains were well maintained and regularly cleaned.

21. The slope protection work was properly carried out with no noticeable land slippage. All slopes were protected by a combination of reinforced concrete retaining walls, open lattice blocks, concrete spray, and grass turfing. Tunnels were well constructed (para. 5). Toll collection, traffic surveillance, and communications systems were operating normally.

K. Performance of the Borrower and the Executing Agency

22. The Borrower completed all requirements for loan effectiveness in a timely manner. The loan became effective within 4 months after loan approval. As JPCD had many years of experience implementing the World Bank-financed Nanchang-Jujiang Expressway, the Project was implemented following the arrangements envisaged at appraisal and without major problems. JPCD staffs were familiar with ADB’s Guidelines for Procurement and had no difficulties in conducting procurements except for delays in equipment procurement. The delay in procurement of equipment was a result of late finalization of the equipment list, design, and the need to standardize toll collection to include the future adoption of a one-card access system for all expressways in the province. Withdrawal applications were submitted regularly and payments to contractors were made on time. Land acquisition and resettlement actions were carried out in a timely manner, and interviews with two relocated households and a primary school principal of the school affected by the Project indicated that they were satisfied with compensation and resettlement arrangements.

L. Performance of the Asian Development Bank

23. JPCD was satisfied with ADB’s performance during project implementation but would have preferred that the same project officer be assigned throughout the Project to ensure better coordination and followup. JPCD also felt that processing of variation orders for civil works was slow. Slow processing was traced to the large and numerous variations, for which ADB required detailed justifications and supporting documents to ensure fair and reasonable claims. ADB supervision of the Project was considered adequate. There was one review mission per year, except for 2002 when the designated project officer completed his term of employment with ADB. JCPD said it appreciated the assistance provided by every mission.

III. EVALUATION OF PERFORMANCE

A. Relevance

24. The Project is consistent with the Government’s strategy of developing NTHS to link major cities and areas of economic growth, to foster regional trade and integration, and to strengthen 8 access from less developed areas to the economic mainstream. The Project is also in line with ADB’s past and present operational strategy for the PRC’s road sector, which aims to promote (i) the construction of highways that connect major growth centers and promote linkages with hinterland economies; (ii) further institutional strengthening to increase the commercial orientation and management efficiency of expressway corporations; (iii) the improvement of highway planning, design, construction, and safety standards; (iv) promotion of private-sector participation; and (v) road safety and network integration that can provide proper access for provincial and county people, particularly the poor. The Project is linked to the north-south expressway from Beijing to Shenzhen. It will also form part of the planned east-west expressway from Wuhan to Shanghai—linking Jiujiang and Jingdezhen to the major tourist site of Huangshan in Anhui Province—scheduled for completion by the end of 2006. The Project contributed to expanding the total length of provincial highways from 60,292 km in 2000 to 61,233 km in 2003 and total length of provincial expressways from 421 km to 1,040 km over the same period. Similarly, passenger and freight traffic on highways expanded from 17,132.8 million passenger-km and 14,719.3 million ton-km in 2000, respectively, to 18,133.5 million passenger-km and 16,207.8 million ton-km in 2003. The expressway has accelerated the transport services in the project-influenced area as travel time has been reduced significantly. There are now 16 bus services between Nanchang and Jiujiang and 14 services between Jiujiang and Jingdezhen as compared to 2 and 4, respectively, before the opening of the expressway. The Project is rated highly relevant.

B. Efficacy in Achievement of Purpose

1. Regional Economic Development

25. The Project serves as the main transport corridor between Jiujiang and Jingdezhen and provides faster, better access for freight and passengers in the Nanchang-Jiujiang-Jingdezhen economic growth triangle. The Project also supported further policy and institutional reform and capacity building, as well as human resources development, in the road subsector. The expressway passes through four counties in Jiangxi Province and contributed considerably to the economic development in the project-influenced areas. The Project also promotes tourism in Lushan, a cultural heritage site, and Jingdezhen, a major ceramic production center that celebrated the 1,000th anniversary of its founding in 2004, as the expressway provides a more comfortable ride and smoother movement of fragile goods. The vehicle operating cost (VOC) savings per vehicle-km were estimated at about CNY0.25-0.92 for the expressway and CNY0.08-0.24 for the local road. To maximize regional economic development, the upgrading of 10 access roads was included in the Project, although no ADB funds were used for this purpose. The access roads serve about 4.1 million people who had an average annual income of CNY5,973 in 2002 compared with the provincial average of CNY9,262. The Project reduced traveling time between Jiujiang and Jingdezhen by at least 2 hours. It also provided residents better and quicker access to schools, hospitals, and other social services and allowed farmers to seek employment in towns and cities during the off-farm seasons. It is now possible for traders from Jingdezhen to conduct business in Jiujiang and Nanchang and be back within the same day. Beside ceramics, other backbone industries such as automobile manufacturer and aviation development expanded operations after the expressway opened. In 2003, industrial and agricultural output in Jingdezhen increased by 10.4% and 7.7%, respectively. In fact, about 50% of the rural population has off-farm employment in nearby cities and towns as compared to about 30% before the Project and an estimated 70% of farmers’ income comes from nonfarm sources. The cable-stay bridge constructed under the Project provides a permanent crossing at Boyang Lake in place of the unreliable, time-consuming ferry. The Project stimulated economic development in the area as most of the sand and gravel came from local factories. About 7,000 local residents were employed during construction, and the revenue that local governments collected from the contractors amounted to CNY20 million per year. Many local 9 residents took the opportunity to set up small restaurants and shops to augment their incomes. A survey of road users and affected persons in 2000 indicated that 91% were happy with the Project and 80% considered the environmental protection measures and restoration works to be good. A further survey conducted in 2002 indicated 97% were satisfied with the Project and road safety measures. However, 80% were concerned with noise and pollution from the increasing number of vehicles.

2. Road Design 26. The expressway and access roads meet international design standards. The expressway was designed to be an access-controlled, four-lane expressway with design speed of 100 km/h and width of 24.5 m. The maximum gradient is 3.6 degrees and the minimum curve radius is 860 m. The pavement is asphalt concrete except for cement pavement in tunnels and toll plazas that are designed to last 10 years before new overlays are needed. The pavement design is considered adequate to carry the forecasted traffic loads up to 2020. The pavement at the time of the visit had few cracks and even though overloading by trucks was frequently noted along the expressway. The standard of construction of the cable-stay bridge and tunnels were high and little water seepage was noted in the tunnels. VOC saved from using the expressway, avoided congestion on the existing road, and reduced travel distances amounted to about CNY 0.49-1.72 per vehicle-km. The average speed along the county road increases from about 35 km per hour to 50 km per hour after project completion. The Ministry of Communications named the expressway as one of the ten best in the PRC in 2001.

3. Poverty Alleviation 27. The Project included upgrading of access roads to enhance the impact on poverty alleviation (para. 25). A total of 10 access roads with a combined length of 276.9 km were upgraded. The upgrading of these roads has improved access for relatively poor communities, reduced transport costs, and allowed poor farmers to gain meaningful employment during off-farm seasons. In fact, many youths have sought employment in towns and cities, leaving the older generation at home to continue farming. Nonfarm income now constitutes about 70% of farmers’ income after the Project, as compared to less than 40% before the Project. During the expressway construction and upgrading of access roads, many materials were procured from local sources and many local residents benefited from temporary employment arising from construction work (para. 25). Each farmer was able to earn an estimated CNY2,400 in total wages working in road construction. Better roads have also made education, health care, and other social services more accessible. One affected household that the mission visited has a son doing a postgraduate study in Hebei province. The GDP per capita in the project-influenced areas increased from CNY2,710.4 in 2000 to CNY 3,142.5 in 2002 and the rural net income per person increased from CNY1,738.5 to CNY1,876.8 over the same period. Appendix 9 presents socioeconomic data for the district and counties served by the expressway and the access roads.

4. Road Maintenance

28. All road maintenance for the expressway was being carried out by the Cailing Maintenance Center, which is equipped and staffed to carry out major road repairs, including overlays. In addition to annual routine repairs, the center also carried out 10 km of major repairs per month. The annual budget for routine road maintenance is about CNY750,000 per km. Overlays are scheduled every 10 years. Road maintenance equipment procured under the loan

3 Accumulated axle movements recorded using standard bump integrator equipment measured over 1 km of road distance. 10

(para 8) was all based in Cailing Maintenance Center. The equipment was well maintained and properly stored and 34 permanent staff members were based there. Overloading by trucks was not strictly enforced along the expressway because there was no weigh-in-motion measuring equipment, but the expressway was not at risk as traffic levels were still low. Since enforcement of overloading has been in effect since 1 July 2004, JHCHAB planned to procure equipment to curb the problem.

5. Road Safety

29. JHCHAB is responsible for maintaining and protecting expressway assets, as well as for coordinating with the Jiangxi Highway Security Bureau (JHSB) regarding road accidents and traffic enforcement along the expressway. Safety measures implemented under the Project include (i) continuous guardrails in the median strip and along the roadside; (ii) emergency roadside telephones located every 2 km; (iii) reflective road signage (although some did not conform with international standards); (iv) traffic surveillance cameras at major intersections and critical sections; and (v) continuous fencing along both sides of the expressway. While weigh-in- motion equipment was included in the original scope, such equipment was not procured resulting in non-enforcement of overlading by trucks. Fortunately, few road accidents were attributed to overloading and premature wear and tear of pavement has not occurred due to low traffic volume. JHSB has two units with about 10 officers and 3 patrol cars each to handle traffic accidents along the expressway. Recorded road accidents since the opening of the expressway have decreased from 189 accidents with 10 fatalities and 40 injuries in 2002 to 182 accidents with 9 fatalities and 14 injuries in 2003. The larger number of accidents in 2002 was mainly a result of the fact that drivers were not familiar with road conditions or traffic signs, and some local farmers gained unauthorized access to the expressway. A survey of road users found that 93% noticed the speed limit signs along the expressway. The number of reported road accidents along the existing road reduced by half to less than 100 in 2003. Overall, the Project is efficacious.

C. Efficiency in Achievement of Outputs and Purpose

1. Traffic Forecast

30. At appraisal, the traffic projections were based on a combination of historical trends and records of origin-destination surveys conducted between Jiujiang and Jingdezhen. The projections also incorporated assessment of economic growth potential and changing demographic and spatial patterns of development. The appraisal traffic forecast was revised downward based on actual traffic for 2001, 2002, and 2003, mainly because of overly optimistic forecasts and the outbreak of severe acute respiratory syndrome (SARS) in 2003. Annual average daily traffic (AADT) for tolled vehicles was 2,360, 3,635, and 4,237 standard passenger car units (PCUs) for 2001, 2002, and 2003, respectively. These levels were 31%, 37%, and 39% lower than forecasts, respectively. The assumptions underlying the traffic forecasts made at appraisal have been revised based on prevailing economic development, the increasing traffic in the project area, and experiences of similar expressways in the PRC. The revised forecast expected an increase in traffic of 12% from 2004 to 2006. Once the expressway from Huangshan to Jingdezhen is completed in late 2006, the traffic volume is expected to grow at 27% in 2007 and at 9% per annum from 2008 to 2010 and subsequently at 7.2% from 2011 to 2015 and thereafter at 5.8%. Since the opening of the expressway, the vehicle ferry service across Boyang Lake has closed. All traffic has been diverted from the existing road to the expressway, except for localized traffic on both sides of Boyang Lake. Appendix 10 presents the assumptions and methodology used for the revised forecasts together with the forecast table. 11

2. Financial Performance 31. At appraisal, it was envisaged that JPCD would establish a corporation for management, and O&M of the expressway. This has not materialized: the expressway is owned by JPCD but managed, operated, and maintained by JHCHAB. Based on current toll rates, actual traffic flow, and updated traffic projections, the financial internal rate of return (FIRR) for the Project is recalculated at 5.9%—compared with 7.8% estimated at appraisal—still higher than the weighted average cost of capital (WACC) of about 4.5%. The lower FIRR is a result of lower- than-expected traffic flow and higher O&M costs. Appendix 11 presents performance of JHCHAB and Appendix 12 provides FIRR calculations and assumptions.

3. Economic Performance

32. Based on the same methodology as at appraisal but using actual and updated data, the economic internal rate of return (EIRR) was computed using the same assumptions for benefits from induced and generated traffic but no benefits computed for avoided accidents costs. The main sources of economic benefits are (i) savings in VOC for vehicles that would have had to travel on the local road if the Project didn’t exist; (ii) time savings from using the expressway, including the permanent bridge at Boyang Lake; and (iii) benefits from reduced congestion accruing to traffic that remains on the existing roads after the operation of the expressway. The recomputed EIRR is 15.6%, compared with 17.9% at appraisal. The lower EIRR was a result of lower-than-projected traffic flow. However, the recalculated EIRR is still higher than the social discounted rate of 12%. Appendix 13 presents EIRR calculations and assumptions. Considering the satisfactory FIRR and EIRR, the Project is rated efficient.

D. Preliminary Assessment of Sustainability

33. The expressway forms an extension of the NTHS main north-south corridor and forms part of the main west to east corridor (para. 24). Steady and robust traffic is to be expected and should generate adequate cash flow for JHCHAB to maintain loan repayments. Toll revenues have increased steadily since the expressway opened and have contributed to the gradual improvement in JHCHAB’s financial performance. JHCHAB staff have received appropriate training in O&M to enhance their proficiency. Once the expressway becomes profitable, corporatization of JHCHAB is expected. The sustainability of the Project is likely.

E. Environmental, Sociocultural, and Other Impacts

1. Environmental Impact

34. An environmental impact assessment (EIA) was prepared with the assistance of a domestic environmental consulting firm. The expressway traverses mostly vacant land and fields. Environmental mitigating measures as recommended in the EIA were strictly enforced. These measures included slope and soil erosion protection; landscaping of exposed areas; solid waste and wastewater treatment facilities; and minimization of dust, vehicle emissions, and noise. Exposed areas and slopes were planted with grass wherever possible. About 1.1 million trees and 1.3 million m² of grass were planted along the median and roadside and about 1.4 million m² of creeping plants were placed on slope and spoil areas. About $19.7 million was spent on landscaping. Slopes on which grass cannot grow have been sprayed with shortcrete or reinforced with lattice blocks and retention walls to prevent landslides. The median was planted with slow-growing trees to reduce night glare and to enhance the expressway’s appearance. Proper drainage and traps were installed to channel rainwater and trap spillage along the road surface. Noise barriers with a combined length of 6.2 km have been installed along sections where schools and residential buildings are near the 12 expressway. About $0.5 million was spent on construction of noise barriers. However, noise at some critical sections still exceeded the allowable level of 50 decibels at night and 60 decibels during the day. Greater noise was mainly a result of drivers ignoring speed limit signs for residential zones. The air quality along the expressway was measured and met class II air quality standards, with the exception of total suspended particulates (TSP), particularly during the dry season. This was mainly a result of extensive land development near the expressway. Link fencing has been erected along both sides of the expressway to prevent local residents from trying to cross. Adequate under- and overpasses were constructed near farmers’ residences to allow safe passage across the expressway. However, some underpasses were flooded during the rainy season. An assessment by external experts concluded that environmental mitigating measures had been properly implemented.

2. Social Impact and Resettlement

35. The Project involved a significant amount of land acquisition and resettlement along the expressway. In July 1996, a resettlement action plan was prepared by JPCD in accordance with the PRC Land Administration Law, as well as Jiangxi province’s implementation rules and regulations on resettlement and compensation. At appraisal, about 730 ha of land would need to be acquired permanently while another 270 ha would be needed for storing materials and as sites for spoil and borrow pits during construction. By project completion, 895.8 ha of land were permanently acquired, in addition to temporary acquisition of 93.96 ha. (para. 9) About 29,756 households, with a total population of 108,551, were affected by land acquisition of which about 546 households (1,943 persons) needed to be resettled. The increase in land acquisition was mainly a result of the failure to include in the estimate land needed for grade separation, underpasses, and landscaping, as well as acquisition of marginal land not suitable for farming. Actual temporary land occupation was about 71% lower than the appraisal estimate. The districts and counties affected by the expressway include Lushan District, Hukou County, Duchang County, Boyang County and Fuliang County. The mission visited two resettlement sites (one each in Fuliang County and Hukou County) and spoke to one affected household from each village. The mission observed that the new houses were larger than their previous dwellings, made of double-story concrete brick, and provided with electricity and water supply. Both affected households said their lives were more comfortable than before, and were satisfied with the land and housing compensation. However, both indicated that they had to borrow from close relatives and friends in building better and bigger houses as the cash compensation was insufficient to meet the full cost of construction. The mission also visited a primary school affected by land acquisition in Hukou County and found the new reinforced-concrete, two-story building to be much better than the previous one. The actual cost of land compensation and resettlement amounted to $9.6 million, higher than the appraisal estimate by $1.5 million. The appraisal estimate had been based on a uniform land compensation rate of CNY45,000 per ha. Actual land payment transfer to the county resettlement offices was based on the type of affected land. Rates ranged from CNY7,500 to CNY47,040 per ha. The increase was due to higher approved compensation rates and larger-than-anticipated land acquisition. The evaluation of land acquisition and resettlement is in Appendix 14. Resettlement was implemented in a satisfactory manner except that 24% of the relocated persons were of the view that cash compensation for housing should be sufficient for the construction of better and bigger housing. Many of the relocated families had used up their lifetime savings and some had incurred debt in constructing their houses.

36. JPCD established a resettlement office for land acquisition and compensation to coordinate with the resettlement offices in the 19 towns and 4 counties affected by the Project. The resettlement offices were responsible for land acquisition, construction of replacement structures, surveys, determination of compensation based on type of land and structures, relocation, and other resettlement activities. They were also responsible for holding regular meetings on resettlement, 13 discussing the resettlement plan with affected persons, and providing feedback to JPCD. The land acquisition and resettlement were carried out from 1996 to 1998.

37. An external evaluation group from Jiangxi Provincial Land Survey and Planning Institute (JPLSPI) prepared a final report on resettlement in November 2001. The report noted that the Project had stimulated economic development in poor counties by purchasing a large quantity of local materials and employing local laborers. Incomes of the people living within the project area increased by about CNY 150-200 per year per household. The evaluation team also visited two families who belonged to vulnerable groups and who were affected by the Project. The team noted that they were living in better housing and with higher incomes than before the Project. There was no ethnic minority groups affected by the Project. The report said that all relocated households lived in spacious new houses supplied with water, power, and access roads. The JPLSPI survey indicated that 79% of the project-affected persons were satisfied with the land acquisition and resettlement arrangements, but 24% were not satisfied with the resettlement rates. Duchang County took advantage of better access roads to implement 10 new development schemes for growing tea, chestnuts, fruit, vegetables, and bamboo, as well as breeding pearls, processing granite and herbal medicines, and making furniture. The new economic schemes are expected to increase annually per capita income in the county by CNY200-500 within 5 to 10 years.

IV. OVERALL ASSESSMENT AND RECOMMENDATIONS

A. Overall Assessment

38. The Project achieved its main objective of improving transport efficiency in the Nanchang-Jiujiang-Jingdezhen economic growth triangle, promoting economic growth in the poor inland province of Jiangxi, and fostering regional trade and integration (para. 25). The Project’s actual achievements in terms of its goals and purposes are in the Project Framework in Appendix 15. The expressway opened to traffic 1 year ahead of schedule and was completed at a lower cost than anticipated at the time of appraisal. The expressway has not encountered any major structural or maintenance problems. Resettlement and land acquisition were carried out in a timely and satisfactory manner. An independent survey gave the project a highly satisfactory rating. The Project’s overall socioeconomic impact has been positive and no adverse environmental impact has been noted. The access roads have directly contributed to poverty alleviation by providing people in disadvantaged areas with better access to markets, job opportunities, and social services.

39. The actual traffic volume along the expressway has been lower than appraisal estimate. However, the traffic flow is expected to increase substantially once the ongoing expressway from Huangshan to Jingdezhen is completed in 2007. Overall, the Project is rated successful.

B. Lessons Learned

40. More conservative traffic projections, particularly for the initial years of operation, should be used to ensure more robust financial performance of the expressway operator.

41. A road safety campaign should be promoted among affected persons and drivers before expressway completion to avoid unnecessary traffic accidents along the expressway. Many of the recorded traffic accidents involved drivers who were not familiar with road conditions and traffic signs and unauthorized road crossing by local residents, who preferred to cross directly rather than us the underpasses nearby. Many sections of the fencing have been removed to gain access to the 14 expressway. Underpasses should be designed so that they are centrally located and have good natural drainage to encourage their frequent use.

42. While the land prices and resettlement compensation rates paid to affected persons were in line with Land Administration Law of PRC, the government has revised rates upwards on a number of occasions since the resettlement plan was completed. Many of the relocated households had either used up their lifetime savings or borrowed from relatives and friends in order to construct better and bigger housing. This created dissatisfaction among 24% of the relocated persons, who said that cash compensation for housing should be sufficient to build bigger and better housing. More frequent dialogue with affected persons and clearer explanations on compensation entitlement would have minimized their dissatisfaction.

C. Recommendations

1. Project Related

43. The expressway from Jingdezhen to Huangshan can only be completed by late 2006 and traffic flow is expected to improve substantially after this expressway is opened to traffic, so the project performance audit report should be carried out in 2008 when more accurate traffic flow can be used for recalculation of FIRR and EIRR.

44. Road signs along the expressway should be replaced with internationally standardized road signage, and wrong English spelling corrected, to avoid confusion among drivers from other regions. Drivers should be educated to understand and observe road signs.

45. Overloaded trucks were often observed along the expressway. Unless enforcement on overloading by trucks is carried out constantly, the road will suffer premature wear and tear and new overlay will be required earlier than planned. A weigh-in-motion system that provides truck weight and axle details should be installed at all toll plazas to control the number of overloaded trucks and to allow JHCHAB to charge correct tolls according to weight. While weigh-in-motion equipment was included in the project scope, JPCD decided not to procure it (para 8). In hindsight, ADB should have insisted that the weigh-in-motion equipment be procured for the Project as envisaged during appraisal, particularly after the Government implemented stringent measures to curb overloading on expressways and highways effective 1 July 2004. JHCHAB has said it will procure the weigh-in- motion system with its own funds.

46. Vacant lots within the interchanges have been landscaped and planted with ornamental plants, but vacant land along the expressway should also be planted with ornamental plants to enhance its appearance.

2. General

47. Future ADB-financed expressway projects should include financing of clearly identified rural and county roads assessed to have significant impact on maximizing poverty reduction benefits and enhancing regional economic development. This would enable ADB to provide more effective and closer monitoring on the progress of such rural and county roads to ensure their timely completion and quality. Appendix 1 15

MAJOR EVENTS IN THE PROJECT'S HISTORY

Year Date Activity 1995 21 Sep Fact-finding mission of PPTA 2486 began 1995 10 Oct Advance recruitment action approved 1995 20 Dec TA approved by the President 1996 01 Feb TA Agreement signed 1996 05 Feb Contract negotiations began 1996 08 Feb Consultant's contract signed 1996 15 Feb Notice to Proceed issued 1996 04 Mar Consultants' fieldwork began 1996 12 Mar Inception mission for TA 2486 1996 26 Mar TA inception report received 1996 26 Apr Project brief meeting for Loan 1484 1996 08 May Fact-finding mission for Loan 1484 began 1996 30 May Final report received 1996 20 Jun Management review meeting 1996 22 Jul Start of appraisal mission 1996 06 Sep Staff review committee meeting 1996 07 Oct Loan negotiations began 1996 November Land acquisition and resettlement activities began 1996 19 Nov Loan approved 1996 27 Dec Loan Agreement signed 1997 12 ICB civil works packages awarded 1997 21 Feb Civil works for cable-stay bridge and tunnels packages approved 1997 05 Mar Award of two LCB civil works packages approved 1997 12 Mar Loan became effective 1997 05 May Contract for international consulting services for construction supervision for civil works signed 1997 08 May Inception mission began 1997 07 Aug First disbursement made 1997 01 Dec First review mission began 1997 December Resettlement of affected persons completed 1998 24 Nov Start of second review mission 1999 August Training began 1999 15 Nov Midterm review mission began 2000 01 Aug First special project administration mission began 2000 24 Oct Second special project administration mission began 2000 17 Nov Consultation mission began 2000 18 Nov Expressway opened 2001 10 Aug Third review mission began 2002 15 May Loan repayment began 2002 20 May Toll collection, surveillance, and communications systems operating 2002 30 Jun Original loan closing date 2002 30 Dec All access roads completed 2002 31 Dec First extension of loan closing date 2003 08 Apr Actual loan closing date 2003 15 May Full loan repayment 2003 08 Dec Fourth review mission began 2004 22 Mar Project completion review mission began ICB = international competitive bidding, LCB = local competitive bidding, PPTA = project preparatory technical assistance, TA = technical assistance Source: Asian Development Bank records 16 Appendix 2

TRAINING PROVIDED UNDER THE PROJECT Appraisal vs. Actual

Appraisal Actual Number Total Number Total Duration Duration Subject Type of (person- of (person- Venue (months) (months) Trainees months) Trainees months)

Expressway Operation and Maintenance LT 4 4 16 - - - Australia ST 6 1 6 27 1 27

Network Planning P 2 9 18 - - - (Traffic forecasting, diversion LT 4 4 16 6 1.1 6.6 EU models, investment evaluation) ST 6 1 6 33 0.5 16.5 Australia

Survey and Design, Roads and Bridges LT 5 6 30 - - - ST 3 1 3 28 0.5 14 Australia

Bridge Retrofitting LT 6 3 18 - - - -

RMMS/BMMS LT 6 3 18 - - - - ST 6 1 6 25 0.5 12.5 Australia

Project Management P 1 9 9 - - - - LT 4 4 16 4 0.5 2 Australia

Environmental Protection LT 6 3 18 4 0.5 2 Australia

Financial Management 9 0.5 4.5 Australia

Total 59 180 136 85.5 BMMS = bridge maintenance management system, EU = European Union, LT = long term training P=placement, ST=short term training; RMMS=road maintenance management system

Source: Jiangxi High-Class Highways Administration Bureau Appendix 3 17

PROJECT COSTS AND FINANCING SOURCES ($ million)

Table A3.1: Appraisal and Actual Project Costs

Component Appraised Actual FX LC Total FX LC Total

A. Civil Works 135.3 144.0 279.3 97.7 135.6 233.3 B. Equipment 5.9 0.8 6.7 8.0 7.2 15.2 C. Land Acquisition and Resettlement 0.0 8.1 8.1 0.0 9.6 9.6 D. Consulting Services 1.6 9.2 10.8 0.9 11.8 12.7 E. Capacity Building, Training, and Human 1.0 0.0 1.0 0.9 0.0 0.9 Resources Development F. Access Roads 2.7 3.1 5.8 0.0 32.5 32.5 Base Cost (A+B+C+D+E+F) 146.5 165.2 311.7 107.5 196.7 304.2

G. Contingencies Physical Contingencies 7.3 8.3 15.6 0.0 0.0 0.0 Price Escalation 10.8 12.2 23.0 0.0 0.0 0.0 Subtotal 18.1 20.5 38.6 0.0 0.0 0.0 H. Interest During Construction 16.0 0.0 16.0 16.0 0.0 16.0 Total 180.6 185.7 366.3 123.5 196.7 320.2 FX = foreign exchange, LC = local cost. Source: Staff estimates based on data from Jiangxi Provincial Communications Department.

Table A3.2: Financing Sources

Source Appraisal Actual FX LC Total FX LC Total

Asian Development Bank 150.0 0.0 150.0 123.5 0.0 123.5 Ministry of Communications 0.0 100.0 100.0 0.0 89.4 89.4 Jiangxi Provincial Communications 30.7 65.3 96.0 0.0 84.2 84.2 Department Local Government 0.0 20.3 20.3 0.0 23.1 23.1 Total 180.7 185.6 366.3 123.5 196.7 320.2 FX = foreign exchange, LC = local cost. Source: Jiangxi Provincial Communications Department 18 Appendix 4

PROJECTED AND ACTUAL DISBURSEMENT SCHEDULES ($ million)

Table A4-1: Disbursement Schedule For the Year Cumulative Year Projected Actual Projected Actual % of Loan 1997 14.00 0.04 14.00 0.04 0 1998 12.00 15.63 26.00 15.67 13 1999 15.00 26.72 41.00 42.39 34 2000 24.00 25.60 65.00 67.99 55 2001 25.00 29.13 90.00 97.12 79 2002 30.00 25.68 120.00 122.80 100 2003 1.60 0.45 121.60 123.25 100

Total 121.60 123.25 Source: The Asian Development Bank's Loan Financial Information System.

Figure A4-1: Cumulative Disbursement

130 120 110 100 90 80 70 60

($ million) 50 40 30

Cumulative Disbursements 20 10 - 1997 1998 1999 2000 2001 2002 2003 Year Projected Actual APPRAISAL AND ACTUAL IMPLEMENTATION SCHEDULE 1996 1997 1998 1999 Task Name JASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASOND

I. Preconstruction Activities A. Prequalification/Evaluation

B. Tendering

C. Bid Evaluation

D. Contract Award

II. Land Acquisition and Relocation

III. Civil Works A. Earthworks and Bridges

B. Access Roads

C. Pavement

D. Buildings and Facilities

E. Guardrails and Fences

F. Signs and Markings

IV. Equipment A. Maintenance

B. Communications Appendix 519 C. Traffic Engineering

D. Toll Collection

V. Consulting Servicews A. Construction Supervision

B. Training

Legend: Planned Actual

Continued on next page APPRAISAL AND ACTUAL IMPLEMENTATION SCHEDULE 20 Appendix5 2000 2001 2002 Task Name JFMAMJJASONDJFMAMJJASONDJFMAMJJASOND

I. Preconstruction Activities A. Prequalification/Evaluation

B. Tendering

C. Bid Evaluation

D. Contract Award

II. Land Acquisition and Relocation

III. Civil Works A. Earthworks and Bridges

B. Access Roads

C. Pavement

D. Buildings and Facilities

E. Guardrails and Fences

F. Signs and Markings

IV. Equipment A. Maintenance

B. Communications

C. Traffic Engineering

D. Toll Collection

V. Consulting Servicews A. Construction Supervision

B. Training

Legend: Planned Actual Appendix 6 21

ORGANIZATIONAL CHART OF THE PROJECT EXECUTING AGENCY

Jiangxi Provincial Government

Jiangxi Provincial Communications Department

Administration Office Jiangxi Provincial High-Class Highway Jinjiang-Jingdezhen Highway Administration Bureau Project Office Financial Statistics Division Jiangxi Provincial Highway Transport Administration Bureau Project Management Office Planning Division Jiangxi Provincial Communications Construction Administration Bureau

Auditing Division Director Jiangxi Provincial Communications Design Institute

General Affairs Division Jiangxi Communications Supervision Company

Personnel Division Jiangxi Communications Scientific Research Institute

Science & Education Division Jiangxi Communications Development

Others

Chief Supervising Engineer Deputy Chief Supervising Engineer Consultants

Administration & Planning & Finance Engineering & Training Technology Resident Engineer

Contractors 22

ORGANIZATION CHART OF JIANGXI HIGH-CLASS HIGHWAY ADMINISTRATION BUREAU Appendix 6

Jiangxi Provincial Communications Department

Jiangxi High-Class Highway Administration Bureau

Project Expressway Other Expressways

Bridge and Cailing Xingang Hukou Duchang Boyang Jingdezhen Tunnel Admin. Maintenance Branch Branch Branch Branch Admin. Center Center Center (56) (66) (63) (75) (60) (42) (34)

Admin. = administration Note: Figure in bracket denotes number of staff Appendix 6 23

ORGANIZATIONAL CHART FOR RESETTLEMENT OFFICES

Jiangxi Provincial Communications Department

Jinjiang-Jingdezhen Highway Project Office

Jiujiang Resettlement Office Shengrao Resettlement Jingdezhen Resettlement Office Office

Lushan County Hukou County Duchang County Boyang County Fuliang County Resettlement Resettlement Resettlement Office Resettlement Office Resettlement Office Office Office

Hongyuan Town Wuli Xingang Chunzhe Beigui Cailing Minsan Zhongquan Town Town Town Town Town Town Town

Beiqiao Maying Wenqiao Wusan Farmland Town Town Town

Jinpanling Xiangshuitan Youduniie Huping Zhegang Bisan Town Tianbaniie Town Town Town Town town Town

Source: Jiangxi Provincial Communications Department 24 Appendix 7

COMPLIANCE WITH LOAN COVENANTS

Particular Covenants Reference To Loan Status of Compliance Documents I. Implementation Arrangements 1. Employ competent and qualified consultants Project Agreement (PA), Section, Complied with and contractors, acceptable to ADB, to an extent 2.03 (a) and upon terms and conditions satisfactory to ADB.

2. Carry out the Project in accordance with plans, PA, Section 2.04 Complied with design standards, specifications, work schedules, and construction methods acceptable to ADB. Furnish to ADB promptly after their preparation such plans, design standards, specifications, work schedules, and any material modifications.

3. Maintain records and accounts adequate to PA, Section 2.06 Complied with identify the goods and services and other items of expenditure financed out of the proceeds of the loan.

4. Maintain separate accounts for the Project and PA, Section 2.09 (a) Complied with have such accounts and related financial statements (balance sheets, statements of income and expenses, and related statements) audited annually in accordance with sound auditing standards by independent auditors acceptable to ADB.

5. Establish within JPCD the Jiujiang-Jingdezhen PA, Schedule, para. 2 Complied with Highway project management office (PMO) to (i) oversee and coordinate all project activities, including ensuring appropriate liaison among the agencies involved in project implementation; (ii) review the status of project implementation; and (iii) monitor the progress achieved and resolve any difficulties encountered. The PMO shall also assume responsibility for monitoring the implementation of the resettlement plan and ensuring compliance with the requirements of the environmental impact assessment.

II. Counterpart Contribution 7. Ensure that the upgrading of access roads PA, Schedule, para. 4 Complied with shall be undertaken by the host counties. The PMO shall be also responsible for the supervision and coordination of the upgrading of access roads.

8. Make available then funds, facilities, services, LA, Section 4.02 Complied with land, and other resources required, in addition to the proceeds of the loan for carrying out the Project.

III. Human Resources Development 9. Prepare for the concurrence of ADB (i) a PA, Schedule, para. 9 Complied with. The training training program and a list of nominated evaluation report submitted to candidates for training, (ii) a workshop/seminar ADB in July 2003. program to be delivered at JPCD by those trained overseas, and (iii) a list of training equipment and training aids required to

Appendix 7 25

Particular Covenants Reference To Loan Status of Compliance Documents strengthen and implement such training programs. Upon the completion of the workshops, JPCD shall provide ADB with its evaluation of the workshops and identify courses that are proposed for formal incorporation into JPCD’s regular staff training curriculum.

IV. Environmental and Social Measures 10. Ensure that environmental problems related PA, Schedule, para. 5 Complied with. Summary of to the construction and operation of the Project environmental monitoring shall be minimized by implementing the program submitted to ADB in mitigation measures, environmental monitoring July 2003. program, and recommendations presented in the environmental impact assessment and the summary environmental impact assessment. JPCD should report annually to ADB on the results of its environmental monitoring system.

11. Carry out the agreed resettlement plan, PA, Schedule, para. 6 Complied with. Evaluation report compensation arrangements, surveys of affected on resettlement plan submitted to people, and monitoring programs. JPCD shall ADB in July 2003. keep ADB informed of the progress of implementation of the resettlement plan and, in particular, shall ensure that affected persons improve or at least maintain the standard of living they enjoyed before the commencement of the Project.

V. Operations and Maintenance

12. Carry out all road safety measures including LA Schedule 6, para. 2 (i) adoption of road signs that conform to accepted international standards; (ii) provision of safety barriers on embankments and central reservation, including delineation measures; and (iii) provision of relevant training in road safety, and traffic engineers.

13. Operate and maintain its plants, equipment, PA, Section 2.11 (c) and Loan Complied with and other property and make all necessary Agreement (LA) Schedule 6, para. 3 repairs and renewals.

14. Establish and periodically review and adjust PA, Schedule, para. 7 Being complied with. No the expressway toll charges to at least cover its adjustment of toll charges since operating and maintenance expenses, operation. depreciation, interest expenses, and debt repayment.

15. Keep ADB informed of the status of progress PA, Schedule, para. 8 Not complied with. The report of with commercialization and corporatization for commercialization plan has not the management, operation and maintenance of been submitted to ADB. the Project expressway and, in consultation with Corporatization deferred to later ADB, make a decision, not later than the year when toll revenues are midterm review of the Project, on the timing of sufficient to attract private establishing a corporation for the above operators. mentioned purpose.

26 Appendix 7

Particular Covenants Reference To Loan Status of Compliance Documents VI. Reporting 16. Furnish to ADB all reports and information PA, Section 2.08 (a) Complied with concerning (i) the Loan and the expenditure of the proceeds; (ii) the goods and services and other items of expenditure financed out of such proceeds; (iii) the Project; (iv) the administration, operations and financial condition of JPCD, and (v) any other matters relating to the purposes of the Loan.

17. Furnish to ADB quarterly reports on the PA, Section 2.08 (b) Complied with execution of the Project and on the operation and management of the Project facilities, including as a minimum progress made and problems encountered, steps taken to remedy problems, and proposed program of activities and expected progress during the following quarter.

18. Prepare and furnish to ADB, promptly after PA, Section 2.08 (c) Complied with. Report received physical completion of the Project and not later in July 2003. than three (3) months in any event, a report in such form and in such detail as ADB shall reasonably request on the execution and initial operation of the Project, including its cost, the performance by JPCD of its obligations under the Project Agreement, and the accomplishment of the purpose of the Loan.

19. Furnish to ADB, promptly after their PA, Section 2.09 Complied with preparation and not later than nine (9) months after the close of the fiscal year to which they relate, certified copies of such audited accounts and financial statements and the report of the auditors all in the English language.

20. The Jiangxi provincial government shall PA, Schedule, para. 10 Being complied with. Final BME cause JPCD to undertake benefit monitoring and report will be submitted in 2006. evaluation activities as agreed with ADB to ensure that the facilities to be provided under the Project are managed efficiently and that the resulting benefits are maximized. Jiangxi shall ensure that the data required shall be collected and analyzed after the completion of the Project, and again five (5) years thereafter.

ADB = Asian Development Bank, BME = benefits monitoring and evaluation, LA = loan agreement, PA = project agreement. Source(s): Staff assessment

DETAILS OF MAJOR CONTRACT PACKAGES

PCSS Mode of Contract Amount Actual Amt. No. Item Name of Supplier/Country Proc. Currency $ Equiv Financed ($) 0001 Consulting Services for Construction Haas Consult/Germany ICB US$ 913,155.81 913,156 913,156 Supervision and Training 0016 Consulting Services for Staff Training Insearch Ltd./Australia DP US$ 926,866.00 926,866 926,866 CAT. 01 - CIVIL WORKS 0002 Expressway, Bridge, and Tunnel Construction Beijing Mun. Yantong Hiway Engg/PRC ICB CNY 13,396,352.65 1,615,893 1,615,893 0003 Expressway, Bridge, and Tunnel Construction 1st Eng'g. Div. of 15th Eng'g. Bureau/PRC ICB CNY 26,545,901.41 3,204,348 3,204,348 Construction and Maintenance of Approach Bridge 0004 of Hukuo Bridge Heilongjiang Provincial Gen. Corp/PRC ICB CNY 33,955,795.36 4,089,090 4,089,090 Construction and Maintenance of the Side Span 0005 of Hukuo Bridge Major Bridge Eng'g. Bureau/PRC ICB CNY 47,489,010.19 5,718,813 5,718,813 Construction, Completion, and Maintenance of 0006 Main Span of Main Bridge of Hukuo 2nd Highway Eng'g. Bureau/PRC ICB CNY 79,338,534.42 9,554,412 9,554,412 0007 Pavement Works (Mujialong to Yunquiao) Guizhou Highway Eng'g. Corp./PRC ICB CNY 65,412,334.08 7,877,211 7,877,211 0008 Pavement Works (Yunqiao to Hubin Township) Shaanxi Provincial Road & Bridge/PRC ICB CNY 70,102,018.69 8,441,959 8,441,959 0009 Pavement Works (Hubin Township to Luojiatan) Zhejiang Prov. Road & Bridge Eng'g./PRC ICB CNY 75,001,792.4 9,032,008 9,032,008 Yanlieshan Tunnel and Subgrade, Bridge and 0010 Culvert Works Tunnel Engineering Bureau/PRC ICB CNY 70,420,071.82 8,480,259 8,480,259 Subgrade, Bridge, and Culvert Works (Sanlijie 0011 to Wushan Town) 2nd Navigational Eng'g. Bureau/PRC ICB CNY 62,958,577.12 7,581,715 7,581,715 Subgrade, Bridge, and Culvert Works (Wushan 0012 Town to Jiepai) China Construction 5th Eng'g. Gen. Corp/PRC ICB CNY 27,765,371.3 3,343,620 3,343,620 0013 Subgrade, Bridge, Culvert, and Tunnel Works No. 3 Engineering Bureau/PRC ICB CNY 46,330,463.52 5,579,311 5,579,311 Subgrade, Bridge, Culvert, and Tunnel Works 0014 (Xiangshuitan to Tianbanjie) Xinjiang Kunlun Road & Dock/PRC ICB CNY 73,279,545.92 8,824,609 8,824,609 Subgrade, Bridge, and Culvert Works 0015 (Tianbanjie to Luojiatan) Guangxi Highway & Bridge Eng'g./PRC ICB CNY 76,151,837.71 9,170,500 9,170,500 Continued on next page Appendix 8

27

28

Appendix8 PCSS Mode of Contract Amount Actual Amt. No. Item Name of Supplier/Country Proc. Currency $ Equiv Financed ($) TRAFFIC ENGINEERING 0031 Package SM1 Jiangxi Traffic Engineering/PRC LCB CNY 3,697,553.45 445,274 445,274 0032 Package G1 Shanghai Jiayi Cold Bending Shape Steel/PRC LCB CNY 10,168,939.27 1,224,584 1,224,584 0033 Package F2 Fuzhou Jinwang Metal Products Co. Ltd./PRC LCB CNY 2,167,736.35 261,047 261,047 0034 Package F3 Fuzhou Jinwang Metal Products Co. Ltd./PRC LCB CNY 2,036,048.46 245,189 245,189 ANCILLARY FACILITIES 0035 Package BF1 Fencheng Building Construction Co./PRC LCB CNY 1,576,721.22 190,441 190,441 0036 Package BF3 The Building Construction Co./PRC LCB CNY 1,011,792.97 122,207 122,207 0037 Package BF5 Nanchang No. 6 Building Construction Co./PRC LCB CNY 1,404,512.75 169,641 169,641 0038 Package BF7 Jiangxi Linchuan Bldg. & Installation/PRC LCB CNY 1,987,649.74 240,074 240,074 0039 Package BF9 Jiangxi Bldg. & Decoration Engineering Co./PRC LCB CNY 1,067,903.92 128,984 128,984 0040 Package BF12 Fuzhou Prefecture Bldg. Construction Co./PRC LCB CNY 1,870,052.92 225,871 225,871 0041 Package F1 Henan Xiandai Traffic Facilities/PRC LCB CNY 3,387,037.14 407,880 407,880 0042 Package G3 Xuzhou Guanghuan Traffic Facilities/PRC LCB CNY 6,776,994.80 816,111 816,111 0043 Package G4 Shandong Fubo Co. (Group)/PRC LCB CNY 6,146,407.61 740,175 740,175 CAT. 02 - EQUIPMENT 0017 Concrete Slipform Paver, 1 unit Wirtgen Hongkong Ltd./HKG-PRC ICB DM 1,172,400.00 539,108 539,108 0018 12M Mixed Bituminous Materials Paver, 2 units Modern (Int'l) Plants & Machinery/HKG-PRC ICB EUR 598,211.50 530,946 500,275 0019 9M Mixed Bituminous Materials Paver, 1 unit Modern (Int'l) Plants & Machinery/HKG-PRC ICB EUR 258,202.40 228,612 228,612 0020 Fire Truck Crane, 1 unit China National Machinery & Eqpt./PRC ICB DM 1,319,839.00 624,808 624,808 0021 Asphalt Concrete Mixing Plant, 1 unit Balama Prima Engineering Co. Ltd./HKG-PRC IS EUR 904,800.00 837,931 837,931 0022 Motor Grader, Komatsu (Pkg. 1) Chinney Alliance Engineering/HKG-PRC IS Y14019900 110,921 110,921 0023 Excavator, Hydraulic-Tracked (Pkg. 4) The China Engineers Ltd./HKG-PRC IS US$ 371,425.20 371,425 371,425 0024 Obstacle Clearing Truck (Pkg. 5) Gentech Vehicle Engineering Ltd./HKG-PRC IS US$ 131,198.00 131,198 131,198 0025 Seal Grouting Machine w/Emulsified Asphalt Akzo Nobel Asphalt Application/USA IS US$ 217,800.00 217,800 217,800 0026 Bulldozer (Pkg. 7) The China Engineers Ltd./HKG-PRC IS US$ 217,800.00 259,800 259,800 0027 Single Smooth Drum Vibratory Tandem Drum/Tire Roller, etc. (Pkgs. 8, 9, 10, 11, and 12) Bomag GmbH Co./GER IS US$ 874,410.00 874,410 874,410 0028 Excavator-Loader (Pkg. 13) and Multifunction Excavator-Loader (Pkg. 14) Boma Equipment & Machineries Supplies Ltd./HKG-PR IS US$ 330,486.00 330,486 330,486 0029 Diesel Generator Set (Pkg. 15) The China Engineers Ltd./HKG-PRC IS US$ 108,000.00 108,000 108,000 0030 Bridge Inspection Equipment (Pkg. 17) New Motion Ltd./HKG-PRC IS US$ 334,720.00 334,720 334,720 0044 Mobile Crane, Liebherr 55T Liebherr-Werk Ehingen GmbH/GER IS EUR 415,790.00 404,397 404,397 0045 Rincheval Autosprayer Vehicle Balama Prima Engineering Co./HKG-PRC IS US$ 273,000.00 273,000 273,000 0046 Asphalt Pavement Maintenance Vehicle Freetech Technology Ltd./HKG-PRC IS US$ 488,486.00 488,486 488,486 0047 Asphalt Pavement Maintenance Vehicle Freetech Technology Ltd./HKG-PRC IS US$ 441,188.00 441,188 441,188 0048 Vibratory Rollers/Rubber-tired Rollers, Single Drum Bomag GmbH & Co/GER IS US$ 406,500.00 406,500 406,500 0049 Rincheval Autosprayer Vehicle Balama Prima Engineering Co./HKG-PRC IS US$ 460,000.00 460,000 460,000

EUR=Euro; Ger=Germany; HKG=Hong Kong, China; DM=deische mark; DP=direct purchase; ICB=international competitive bidding; IS=international shopping; Y=yen; LCB=local competitive bidding; PRC=People's Republic of China; USA=United States; US$=US dollars Source: Asian Development Bank records SOCIOECONOMIC INDICATORS OF PROJECT INFLUENCED AREAS

Jiangxi Unit ('000s) Jiujiang Jingdezhen Leping Lushan Duchang Hukou Fuliang Boyang Province

2000 Population ('000s) 4,488.34 1,480.43 760.00 239.26 701.00 268.00 272.00 1,300.00 41,500.00 GDP CNY million 21,312.37 9,526.53 3,467.25 1,290.08 836.26 684.47 1,242.77 2,074.50 2,003.00 GDP per capita CNY 4,771.00 6,464.00 4,562.17 5,392.05 1,212.00 2,559.00 4,569.01 1,548.13 4,851.00 Industrial Output CNY million 14,901.95 8,636.08 1,257.07 370.00 115.05 221.68 184.71 202.65 - Agriculture Output CNY million 6,199.02 1,535.77 875.48 204.73 556.22 550.12 466.89 2,109.64 - Average Income CNY per person 6,236.00 5,989.00 5,430.00 6,673.00 5,505.00 5,447.00 5,253.00 4,648.00 7,014.00 Rural Net Income CNY per person 1,851.00 2,379.00 7,465.00 2,410.00 1,272.00 1,914.00 2,253.00 1,298.00 2,135.00

2001 Population ('000s) 4,497.50 1,493.42 767.00 756.30 708.90 269.10 278.00 1,355.00 41,900.00 GDP CNY million 23,262.45 10,425.66 3,674.67 1,432.12 900.09 747.30 1,313.11 2,330.98 217,600.00 GDP per capita CNY 5,160.00 7,012.00 4,790.96 5,587.67 1,277.00 2,782.00 4,723.42 1,720.28 5,221.00 Industrial Output CNY million 13,554.28 9,002.64 1,154.76 87.27 129.39 246.20 350.90 20.63 - Agriculture Output CNY million 6,489.97 1,549.32 899.55 213.94 589.08 573.11 463.04 2,038.66 - Average Income CNY per person 6,865.00 7,053.00 6,253.00 7,818.00 6,193.00 6,838.00 5,737.00 5,116.00 8,026.00 Rural Net Income CNY per person 1,962.00 2,428.00 2,510.00 2,455.00 1,375.00 2,001.00 2,268.00 1,306.00 2,232.00

2002 Population ('000s) 4,551.00 1,506.00 776.00 263.40 716.30 270.40 280.00 1,370.00 42,200.00 GDP CNY million 26,334.00 11,625.00 4,162.23 1,604.00 1,039.03 848.90 1,419.00 2,478.91 245,000.00 GDP per capita CNY 5,791.00 7,750.00 5,363.70 6,089.60 1,450.55 3,139.42 5,067.86 1,809.42 5,829.00

Industrial Output CNY million 27,368.00 15,711.00 1,502.55 128.56 185.49 281.66 383.13 260.16 - A

Agriculture Output CNY million 6,931.00 1,636.00 962.48 236.59 700.25 592.57 471.53 2,452.17 - pp

Average Income CNY per person 8,292.00 8,149.00 7,294.00 4,133.00 6,893.00 7,239.00 5,968.00 5,492.00 9,262.00 9 endix Rural Net Income CNY per person 2,114.00 7,513.00 2,607.00 2,637.00 1,538.00 2,168.00 2,331.00 1,344.00 2,334.00 CNY=yuan; GDP=gross domestic product Source: Statistical Year Books of Jiangxi Province 2 9 30 Appendix 10

TRAFFIC FORECAST AND ACTUAL TRAFFIC VOLUME

1. The project expressway from Jiujiang to Jingdezhen was formally opened on 18 November 2000. At appraisal, average annual daily traffic (AADT) was estimated at 6,318 for 2001—the first year operation—and was projected to grow to 8,898 in 2005, 13,653 in 2010, and 21, 994 in 2020. Traffic was expected to grow 10.2% per year during 2001-2005, 10.7% per year during 2006-2010, and 6.1% per year during 2010-2020. Actual traffic volume was lower than expected during the first 3 years of expressway operation. AADT was about 1,760 tolled vehicles or 2,360 passenger car units (PCUs) in 2001, 2,291 tolled vehicles or 3,365 PCUs in 2002, and 2,692 tolled vehicles or 4,237 PCUs in 2003. In the first 4 months of 2004, the traffic in AADT reached 3,207 vehicles (or 4,957 PCUs). The annual traffic growth rates for PCUs were about 54.0%, 16.6%, and 17.0%, respectively in 2002, 2003, and 2004.

2. The traffic forecasts have been revised to take into account actual traffic on the expressway, socioeconomic development, transport network completion, traffic growth trends, and experiences of similar expressways in the People’s Republic of China (PRC). The assumptions underlying the traffic forecasts made at the time of appraisal have been reviewed and updated based on prevailing socioeconomic conditions at the time of the Project Completion Review (PCR) mission. The expected opening of the Jingdezhen-Wuyuan- Huangshan expressway, the expressway would form part of the shortest road transport corridor from Jiujiang to Hangzhou and Shanghai. This would generate increasing amounts of through traffic. Jingdezhen is a major porcelain, ceramic, industrial, and tourism center in northeast Jiangxi province. The opening of the expressway was expected to significantly stimulate socioeconomic development in Jingdezhen and other project-impacted areas. The replacement of an unreliable ferry crossing over Boyang Lake with a permanent cable-stayed bridge has transformed transport development and enhanced the strategic location of Jingdezhen. In the revised traffic forecasts, the vehicle-type distributions were adjusted over the projection period to take into account the sharply increased volume of passenger cars over the past 2 years and strong domestic tourism. The revised traffic forecasts are in Tables 1 and 2 below. This data was used in the economic and financial reevaluations of the expressway. Appendix 10 31

Table A10.1: Expressway Traffic Forecast at Project Completion Review (Average Annual Daily Traffic in No. of Vehicles) Year Car M. Bus L. Bus S. Truck M. Truck L. Truck SL. Total PCU Rate Truck (%) 2001 866 224 49 371 419 6 0 1,936 2,460 2002 1,144 297 68 467 537 8 0 2,520 3,791 54 2003 1,409 278 95 548 573 57 1 2,961 4,428 17 2004 2,222 298 158 822 771 75 5 4,352 5,244 18 2005 2,591 349 190 910 872 87 6 5,004 6,034 15 2006 3,036 334 200 1,012 842 116 25 5,566 6,657 10 2007 4,065 407 271 1,284 1,053 152 33 7,264 8,666 20 2008 5,024 454 338 1,501 1,213 183 40 8,752 10,413 10 2009 5,689 459 387 1,605 1,281 202 44 9,667 11,471 15 2010 6,467 517 415 1,719 1,328 224 69 10,720 12,636 10 2011 7,260 512 438 1,815 1,313 299 107 11,744 13,920 10 2012 8,090 567 456 1,900 1,375 326 116 12,788 15,056 8 2013 8,920 543 465 1,958 1,268 475 125 13,754 16,284 8 2014 9,751 596 517 1,997 1,345 513 135 14,855 17,600 8 2015 10,675 552 566 2,024 1,354 546 144 15,810 18,684 6 2016 11,396 594 579 2,011 1,310 716 152 16,759 21,041 6 2017 12,412 535 616 2,021 1,330 762 182 17,838 22,110 6 2018 13,189 553 647 1,970 1,405 800 170 18,730 23,051 5 2019 14,218 467 682 1,939 1,418 844 180 14,747 24,432 5 2020 15,854 490 716 1,866 1,489 886 188 20,755 25,654 5 2021 15,854 515 752 1,959 4,564 930 196 21,771 25,654 5

PCU = passenger car unit, M.Bus=medium bus; M.Truck=medium truck; L.Bus=large bus; L.Truck=large truck; S.Truck=small truck; SL.Truck=trailer truck

Note: Traffic levels above include non-tolled vehicles (10%). Source(s): Jiangxi Provincial Communications Department

3. Actual expressway traffic during the first 3 years of opening was about 60-70% lower than was estimated at the time of appraisal. The pending completion of the Wuhan-Shanghai expressway and actual traffic development experiences of other similar expressways in China were considered in the PCR forecast. Traffic was expected to increase sharply during 2007- 2010. PCR mission estimated that traffic level would reach about 90% of the levels estimated at the time of appraisal by 2014. In 2021, traffic will reach a similar level to that given at the time of appraisal. A comparison is set out in the following table.

Table A10.2: Actual Expressway Traffic and Revised Forecast (Average Annual Daily Traffic in Number of Vehicles) Year Appraisal Actual PCR Forecast Actual/Appraisal PCR/Appraisal (%) (%) 2001 6,318 1,936 31% 2002 6,883 2,520 37% 2003 7,498 2,961 39% 2004 8,168 4,352 53% 2005 8,898 5,004 56 2006 9,694 5,566 57 2007 10,560 7,264 69 2008 11,504 8,752 76 2009 12,533 9,667 77 2010 13,653 10,720 79 32 Appendix 10

2011 14,320 11,744 82 2012 15,019 12,788 85 2013 15,753 13,754 87 2014 16,522 14,855 90 2015 17,329 15,810 91 2016 18,175 16,759 92 2017 19,063 17,838 94 2018 19,994 18,730 94 2019 20,970 19,747 94 2020 21,994 20,735 94 2021 21,995 21,771 99 PCR=project completion review Source(s): Staff estimates

4. Traffic on the existing road reduced substantially after the expressway opened and vehicle ferry across Boyang Lake stopped operating. Projected traffic for the local road was estimated based on socioeconomic trends and the design capacity of the existing road. A revised forecast for the road, specifically the Jingdezhen to Hukou section, is in Table 3 below.

Table A10.3: Actual Traffic and Revised Forecasts for Local Jingdezhen-Hukou Road (Average Annual Daily Traffic in Number of Vehicles) Year Car/S. L. Bus S. Truck M. Truck L. Truck Total Rate Bus 1999 519 238 164 466 283 1,671 2000 374 284 126 306 239 1,329 (20) 2001 408 257 111 275 234 1,284 (3) 2002 372 251 106 241 213 1,183 (8) 2003 355 229 239 242 194 1,259 6 2004 404 202 269 269 202 1,347 7 2005 432 216 288 274 231 1,442 7 2006 474 229 290 290 245 1,528 6 2007 502 243 308 292 275 1,620 6 2008 549 258 309 309 292 1,717 6 2009 601 273 309 309 328 1,820 6 2010 656 289 309 328 347 1,929 6 2011 709 304 304 324 385 2,026 5 2012 766 319 298 340 404 2,127 5 2013 826 335 290 335 447 2,233 5 2014 891 352 281 352 469 2,345 5 2015 960 369 271 369 492 2,462 5 2016 1,024 384 256 359 538 2,561 4 2017 1,065 399 266 346 586 2,663 4 2018 1,108 415 277 332 637 2,770 4 2019 1,152 432 288 317 691 2,881 4 2020 1,198 449 300 300 749 2,996 4 2021 1,246 467 312 312 779 3,116 4 L.Bus=large bus; L.Truck=large truck; M.Truck=medium truck; S.Bus=small bus; S.Truckl=small truck Source(s): Staff estimates Appendix 11 33

FINANCIAL PERFORMANCE

1. At the time of appraisal, Jiangxi Province Communication Department (JPCD) was expected to have established, in consultation with the Asian Development Bank (ADB) and not later than the midterm review of the Project, a corporation to manage, operate, and maintain the project expressway. The expressway had not been corporatized by the time of the Project Completion Review (PCR) mission. The expressway is owned by JPCD and operated by its subsidiary, Jiangxi Province High-Class Highway Administration Bureau (JHCHAB). All revenues that the expressway generated would go to JPCD, and JPCD would provide funds to JHCHAB to operate the expressway.

2. The PCR mission, in consultation with the JHCHAB and JPCD, prepared actual (1997- 2003) and projected (2004-2021) financial statements for the expressway assuming that the profits and/or losses are the sole responsibility of a corporatized JHCHAB. The projections take into consideration the actual commercial operation of the expressway for the first 3 years, as well as projected traffic after the Wuhan-Shanghai expressway is completed. Three financial performance sheets were prepared: an income statement, a cash flow statement, and a balance sheet. The financial projections were based on the following assumptions:

(i) The yuan has slightly appreciated against US dollar from CNY 8.3017 per dollar at appraisal to CNY8.289 per dollar in 2004. Domestic price inflation is forecast to be 3% in 2004, and 2.7% for 2005, and 3% from 2006 onwards. (ii) Future operating revenues were estimated based on the forecast traffic and expressway toll rates. The toll rates were adjusted to real terms for future years, which necessitated about 15% increase in tolls every 5 years. Non-toll revenues from other services such as advertisement and leasing of facilities were estimated at 10% of the toll revenues. (iii) Because the expressway has not been corporatized, no corporate tax was applied. Income tax of 33% was applied to calculate net income. (iv) The operation and maintenance (O&M) costs were estimated considering the average O&M costs for similar expressways in the People’s Republic of China (PRC). Major expressway rehabilitation was scheduled for 2011 and 2012. The cost of expressway rehabilitation has been capitalized. (v) Depreciation was calculated assuming 30 years of economic life for civil works and 10 years for equipment and pavement. Depreciation was estimated based on actual annual traffic on the expressway.

3. There were four sources of project financing: the ADB loan (43%), a grant from the Ministry of Communications (31%), a grant from the Jiangxi provincial government (18%), and JPCD funds (8%). For financial projections, the interest rate was assumed to be 5.18% based on the 10-year swap cost from variable interest rates to fixed ones. Repayment of the ADB loan started in 2002, after 5 years’ grace period, in accordance with the Loan Agreement.

4. Based on the financial statements, four financial indicators were recalculated to illustrate the expressway’s financial performance:

(i) Debt-equity ratio. The debt-equity ratio started from 18:82 in 1998, reached a peak at 66:34 in 2003, then declined substantially in line with continuing debt repayment and sound operating results. (ii) Return on equity. Return on equity was quite low in the first 5 years after expressway opening. After 2005, it started to increase and reached 8% in 2011. 34 Appendix 11

Average return on equity was 6.4% over 20 years of expressway operation and 7.8% in the period from 2006-2020. (iii) Debt-service coverage ratio. The debt-service coverage ratio started at 0.9 in 2002 and reach 1.0 in 2004. After 2004, it increased continuously and reached 10.6 in 2021. (iv) Working ratio. The working ratios were 28-39% in early years of expressway operation. From 2006 onward, this ratio was expected to decline gradually to 6% in 2021, in line with the increasing of traffic and toll revenue.

5. All the financial indicators were in satisfactory ranges. Revised financial projections indicated that the forecast revenues, based on existing toll rates, would be sufficient to cover operating costs and repayments on the ADB loan. Appendix 11 35

Table A11.1: Project Financial Statements (CNY Million)

Project Year 123456789101112 Actual Forecast 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 PROJECTED INCOME STATEMENT Operating Revenues Operating Revenues 62 82 96 118 136 172 223 267 Other Income 6 8 10 12 14 17 22 27 Total Operating Revenues 68 90 105 130 150 189 246 294 Less: Business Tax Net Operating Revenue 68 90 105 130 150 189 246 294 Operating Expenses Operations 22 23 25 36 36 37 37 38 Maintenance 2 8 10 23 11 13 16 Depreciation 15 20 23 34 39 43 55 66 Total Operating Expenses 37 45 56 80 98 90 106 120 Net Operating Income 31 45 49 50 52 99 140 175 Interest Expenses-ADB 53 52 50 48 46 44 42 Income before provision for income tax 31 (9) (3) 0 3 53 95 132 Corporate Tax (33%) Net income after income tax 31 (9) (3) 0 3 53 95 132

PROJECTED CASH FLOW STATEMENT Net Cash Inflows from Operating Activities Net income after tax 31 (9) (3) 0 3 53 95 132 Depreciation 15 20 23 34 39 43 55 66 Net changes in working capital (117) (262) 20 279 123 34 (86) (2) (1) (4) (5) (4) Cash inflows from Financing ADB Loan 2 131 222 212 236 217 5 MOC Grant 120 105 145 146 60 Jiangxi Government 1 56 79 30 Province Communication Department 170 292 149 55 0 30 Cash Inflows Total 176 322 615 723 466 293 (61) 32 41 91 146 194

Cash Outflows Construction Cost 101 222 636 792 310 289 35 Others (rehabilitation) Debt Service-ADB loan (principal payment) 30 32 34 35 37 39 41 Cash Outlows Total 101 222 636 792 310 319 67 34 35 37 39 41

Net Cash Flows 75 100 (69) (69) 156 (26) (128) (1) 6 54 107 153 Opening Balance - 75 154 154 85 241 215 87 86 92 146 252 Closing Balance 75 175 85 85 241 215 87 86 92 146 252 405

PROJECTED BALANCE SHEET Asset Cash 75 175 85 85 241 215 87 86 92 146 252 405 Other Current Asset (account receivable) 119 399 399 303 214 92 10 12 14 17 22 27 Fixed Asset 101 323 323 1,751 2,061 2,350 2,385 2,456 2,523 2,598 2,676 2,756 Less Accumulated Depreciation 15 36 59 93 132 174 230 296 Net Fixed Assets 295 897 1,547 2,139 2,500 2,621 2,422 2,461 2,496 2,587 2,721 2,893

Liabilities and Equity Current Liability (account payable) 2 20 76 224 257 170 1 12122 ADB Loan 2 133 354 567 803 990 963 929 894 857 818 777 Paid-in Capital 291 744 1,117 1,349 1,409 1,439 1,439 1,510 1,576 1,652 1,730 1,810 Retained Earnings 31 23 20 20 24 76 172 304 Total Liabilities and Equity 295 897 1,547 2,139 2,500 2,621 2,422 2,461 2,496 2,587 2,721 2,893

Performance Indicators Debt-Equity Ratio (a) 1 18 32 42 56 68 66 61 56 50 43 37 Returns on Equity (b) 2% (-1%) 0% 0% 0% 3% 5% 6% Debt Service Coverage Ratio (c) 0.8 0.9 1.0 1.10 1.7 2.3 2.9 Working Ratio (d) 32% 28% 31% 35% 39% 25% 21% 18% 36 Appendix 11

Table A11.2: Project Financial Statements (CNY Million)

Project Year 13 14 15 16 17 18 19 20 21 22 23 24 25 Actual Forecast 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

PROJECTED INCOME STATEMENT Operating Revenues Operating Revenues 294 322 410 442 478 516 546 670 709 744 780 819 860 Other Income 29 32 41 44 48 52 55 67 71 74 78 82 86 Total Operating Revenues 323 354 451 486 526 568 601 737 779 818 858 901 946 Less: Business Tax Net Operating Revenue 323 354 451 486 526 568 601 737 779 818 858 901 946 Operating Expenses Operations 38 38 39 39 40 40 40 41 41 42 42 42 43 Maintenance 17 18 6 6 8 10 11 16 23 10 11 16 16 Depreciation 73 80 88 95 101 109 116 123 130 136 143 150 158 Total Operating Expenses 128 136 132 139 149 159 167 179 194 188 196 208 216 Net Operating Income 195 218 319 346 377 409 434 558 586 631 662 692 730 Interest Expenses-ADB 40 38 36 33 31 28 25 22 19 15 12 8 4 Income before provision for income tax 155 180 283 313 347 381 409 536 567 616 650 684 725 Corporate Tax (33%) Net income after income tax 155 180 283 313 347 381 409 536 567 616 650 684 725

PROJECTED CASH FLOW STATEMENT Net Cash Inflows from Operating Activities 155 180 283 313 347 381 409 536 567 616 650 684 725 Net income after tax 73 80 88 95 101 109 116 123 130 136 143 150 158 Depreciation (3) (3) (9) (3) (4) (4) (3) (12) (4) (4) (4) (4) (4) Net changes in working capital Cash inflows from Financing ADB Loan MOC Grant Jiangxi Government Province Communication Department Cash Inflows Total 225 257 362 405 444 487 522 646 693 748 790 831 879

Cash Outflows Construction Cost Others (rehabilitation) 168 168 Debt Service-ADB loan (principal payment) 43 45 48 50 53 56 59 62 65 68 72 75 79 Cash Outlows Total 43 45 215 218 53 56 59 62 65 68 72 75 79

Net Cash Flows 182 212 146 187 391 431 463 585 628 680 718 755 800 Opening Balance 405 587 799 945 1,132 1,523 1,954 2,418 3,002 3,630 4,310 5,028 6,783 Closing Balance 587 799 945 1,132 1,523 1,954 2,418 3,002 3,630 4,310 5,028 5,783 6,583

PROJECTED BALANCE SHEET Asset Cash 587 799 945 1,132 1,523 1,954 2,418 3,002 3,630 4,310 5,028 5,783 6,583 Other Current Asset (account receivable) 29 32 41 44 48 52 55 67 71 74 78 82 86 Fixed Asset 2,839 2,924 3,180 3,442 3,546 3,652 3,762 3,874 3,991 4,110 4,234 4,361 4,492 Less Accumulated Depreciation 369 449 536 631 732 841 957 1,080 1,209 1,346 1,489 1,639 1,796 Net Fixed Assets 3,087 3,307 3,629 3,988 4,385 4,817 5,277 5,864 6,482 7,149 7,851 8,587 9,364

Liabilities and Equity Current Liability (account payable) 2211112222222 ADB Loan 734 688 640 590 537 481 423 361 296 228 156 81 1 Paid-in Capital 1,893 1,978 2,066 2,161 2,265 2,371 2,481 2,593 2,710 2,829 2,953 3,080 3,211 Retained Earnings 459 639 922 1,235 1,582 1,963 2,372 2,908 3,475 4,090 4,740 5,425 6,150 Total Liabilities and Equity 3,087 3,307 3,629 3,988 4,385 4,817 5,277 5,864 6,482 7,149 7,851 8,587 9,364

Performance Indicators Debt-Equity Ratio (a) 31 26 21 17 14 11 9753210 Returns on Equity (b) 7% 7% 9% 9% 9% 9% 8% 10% 9% 9% 8% 8% 8% Debt Service Coverage Ratio (c) 3.2 3.6 4.9 5.3 5.7 6.2 6.6 8.1 8.6 9.2 9.6 10.1 10.6 Working Ratio (d) 17% 16% 10% 9% 9% 9% 8% 8% 8% 6% 6% 6% 6% Appendix 12 37

FINANCIAL REEVALUATION

1. The financial internal rate of return (FIRR) for the project expressway was recalculated using actual capital costs, operation and maintenance (O&M) costs, revenues from 2001 onward, and revised financial projections for 2004-2021. The main assumptions used in calculating the FIRR are as follows:

(i) The costs and revenues are in constant 2004 prices. They cover a 25-year period from 1997 to 2021. (ii) The capital cost includes all incremental capital expenditures related to the construction, equipment, and resettlement activities associated with the expressway but exclude the costs for the access roads and interest during construction. Major repair expenditures are treated as capital costs. (iii) O&M costs include all incremental costs incurred during O&M of the expressway, but exclude depreciation provisions. (iv) The residual values for the civil works and equipment are based on the average economic asset life for different items. (v) No corporate tax was paid for operating the expressway because it has not been corporatized. Corporate tax has been included as one scenario in the sensitivity analysis. (vi) The revenues beyond 2003 are based on revised traffic forecasts (see traffic forecast report) and the revised tolls shown in Table 1. The toll rates were adjusted by increasing 15% in every 5 years. Non-toll revenue was assumed to be 10% of toll revenues.

Table A12.1: Expressway Toll Rates (CNY/vehicle-kilometer) Item Type 1 Type 2 Type 3 Type 4 Type 5 Type 6 Present-2005 0.40 0.75 1.00 1.35 1.70 2.10 2006-2010 0.46 0.86 1.15 1.55 1.96 2.42 2011-2015 0.53 0.99 1.32 1.79 2.25 2.78 2016-2020 0.61 1.14 1.52 2.05 2.59 3.19 Type 1=car, truck less than 2 tons, and small bus less than 17 seaters; Type 2=medium trucks between 2.1 to 5 ton, and medium bus with 18 to 30 seaters; Type 3=large truck between 5.1 to 10.0 tons, large bus with 31 to 50 seaters; Type 4=large truck between 10.1 to 15.0 tons, and large bus over 51 seaters; Type 5=large truck between 15.1 to 20.0 tons; Type 6=trailer truck over 20.1 tons Source(s): Jiangxi High-Class Highway Administration Bureau

2. The recalculated FIRR of the expressway was 5.9% (Table 2), compared to 7.8% at appraisal. The main reason was that the traffic was much lighter than that at appraisal. Higher O&M costs were also applied, and these would likely fall once the expressway is corporatized. When capital costs for access roads were included, the FIRR fell to 5.1%. The recalculated FIRR is higher than the real weighted average cost of capital (WACC) for the Project, which is estimated at 4.5%. The recalculated FIRR indicated that the expressway would be financially sound. Sensitivity analysis (Table 3) was also carried out to test effects of several scenarios on key parameters that determine revenues and O&M costs. The FIRR varies between 3.4% and 5.5%. The Project is most sensitive to a decrease in revenue, as well as to corporate tax payments as a part of corporatization. In the worst case scenario—which combines a 20% decrease in revenue and a 20% increase in O&M costs—the FIRR was 3.5%, lower than the WACC of 4.5%. Traffic levels in future years and toll rates would be critical in ensuring the financial viability of the expressway.

37 38 Appendix 12

Table A12.2: Recalculated Financial Internal Rate of Return

Year Capital Main- Operation Total Toll Other Total Cash Income Net Cash Costs tenance Costs Costs Revenues Revenues Revenues Flow Tax Flow Costs 1997 101.32 101.32 (101.32) (101.32) 1998 221.89 221.89 (221.89) (221.89) 1999 636.01 636.01 (636.01) (636.01) 2000 791.59 791.59 (791.59) (791.59) 2001 310.05 21.74 331.79 62.22 6.22 68.44 (263.35) (263.35) 2002 288.71 2.00 15.97 306.67 81.71 8.17 89.88 (216.79) (216.79) 2003 35.11 8.30 24.53 67.94 95.71 9.57 105.28 37.34 12.32 25.02 2004 9.80 36.12 45.92 118.21 11.82 130.03 84.11 27.76 56.35 2005 22.50 36.48 58.98 135.94 13.59 149.53 90.55 29.88 60.67 2006 10.50 36.85 47.35 172.00 17.20 189.20 141.85 46.81 95.04 2007 13.20 37.22 50.42 223.20 22.32 245.52 195.10 64.38 130.72 2008 15.70 37.59 53.29 278.49 27.85 306.34 253.06 83.51 169.55 2009 17.20 37.96 55.16 319.69 31.97 351.66 296.49 97.84 198.65 2010 18.00 38.34 56.34 350.95 35.10 386.05 329.71 108.80 220.90 2011 173.20 38.73 211.93 438.16 43.82 481.98 270.05 89.12 180.94 2012 173.20 39.11 212.31 472.28 47.23 519.51 307.20 101.38 205.82 2013 7.80 39.51 47.31 511.00 51.10 562.10 514.80 169.88 344.91 2014 9.50 39.90 49.40 551.88 55.19 607.07 557.67 184.03 373.64 2015 10.70 40.30 51.00 583.92 58.39 642.32 591.32 195.13 396.18 2016 15.70 40.70 56.40 716.03 71.60 787.64 731.23 241.31 489.93 2017 23.00 41.11 64.11 757.62 75.76 833.38 769.27 253.86 515.41 2018 9.70 41.52 51.22 795.50 79.55 875.05 823.83 271.86 551.96 2019 10.70 41.94 52.64 833.74 83.37 917.11 864.48 285.28 579.20 2020 15.70 42.35 58.05 875.43 87.54 962.97 904.91 298.62 606.29 2021 15.70 42.78 58.48 919.20 91.92 1,011.12 952.64 314.37 638.27 FIRR 5.9% FIRR=financial internal rate of return Source(s): Staff estimates

Table A12.3: Sensitivity Analysis Item FIRR (%) 1. Base-Case Scenario 5.9 2. Decrease in Revenues by 20% 3.8 3. Increase in O&M Costs by 20% 5.5 4. Corporatization of the Expressway 5.4 5. Combination of 2 and 3 3.4 6. Including Capital Costs for Access Roads 5.0 FIRR=financial internal rate of return, O&M=operation and maintenance Source(s): Staff estimates

Appendix 13 39

ECONOMIC REEVALUATION

A. General

1. The economic reevaluation of the expressway was conducted under with- and without- project scenarios using updated data. In the without-project case, the existing class III provincial road will be used with increasing traffic congestion until its practical capacities are exceeded. In the with-project case, the new expressway would be extensively used for Jiujiang and Jingdezhen and the project-impacted areas because of factors including lower vehicle operating costs (VOC), shorter travel time, discontinuation of ferry service for vehicles, and shorter distances traveled. The economic reevaluation was based on the discussions with the Jiangsu Provincial Communications Department and Jiangxi High-Class Highway Authorization Bureau.

B. Costs

2. The project cost consisted of capital costs and operation and maintenance (O&M) costs. The actual capital cost was about 12.6% lower than that at appraisal, mainly because less construction took place than originally anticipated (16.5%). Costs for the access roads increased significantly, however, from $5.8 to $32.5 million. The construction period was extended from 5 years to 7 years, mainly because of a delay in installing expressway equipment, later-than-expected installation of a traffic surveillance system, and slower upgrading of access roads. The O&M costs were adjusted according to the real expenditure and latest estimate for future years. A large-scale maintenance was rescheduled to be carried out in 10th and 11th years after expressway opening because of lighter-than-expected traffic during the earlier years of expressway operation. Financial costs were converted into economic costs using a standard conversion factor of 0.9. All economic costs were estimated in constant 2004 prices.

C. Traffic

3. The Jiujiang-Jingdezhen expressway was opened on 18 November 2000. During the first 3 years of expressway operation, average annual daily traffic (AADT) was about 1,760 tolled vehicles in 2001 (2,360 passenger car units [PCUs]), 2,291 tolled vehicles in 2002 (3,635 PCUs), and 2,692 tolled vehicles in 2003 (4,237 PCUs). In the first 4 months of 2004, AADT reached 3,207 vehicles (4,957 PCU). Traffic growth in PCUs was about 54.0% in 2002, 16.6% in 2003, and 17.0% in 2004 (first 4 months). The project completion review (PCR) mission forecast future traffic taking into account the socioeconomic development, transport network completion, and traffic growth trends in the project area, as well as the experiences of other similar expressways in the People’s Republic of China (PRC) (Appendix 10). This new forecast was used in both economic and financial reevaluations.

D. Benefits

4. The main sources of economic benefits are (i) VOC savings from using the expressway, (ii) VOC savings from reduced congestion on the existing road; (iii) VOC savings due to reduced travel distances; (iv) passengers’ travel time savings from those using the expressway; (v) travel time savings compared with using the existing road; and (vi) ferry cost savings. The avoided maintenance costs on the alternate road and avoided accident costs were not included in the benefit calculation. Eighty percent of total traffic on the expressway was considered diverted traffic and the remaining 20% was generated traffic. Both diverted and generated traffic were used in the benefit recalculation. 40 Appendix 13

5. The VOC savings were recalculated according to vehicle type, traveling speed, and road class, a method adopted from the Asian Development Bank’s (ADB) latest technical assistance (TA) report for Guangxi.1 These VOCs were calculated using highway design modeling version III (HDM-III) model and adjusted to fit circumstances in Jiangxi. Average vehicle speeds were expected to be 80-110 kilometers (km) per hour on the expressway for the with-project case and 30-40 km per hour on the local parallel road for the without-project case. Average speed on the local road was assumed to increase to 40-60 km per hour for the with-project case. The VOC savings per vehicle-km were estimated to be about CNY 0.25-0.92 for expressway traffic and only CNY 0.24-0.80 for local road traffic.

6. Travel time savings were recalculated by vehicle type and for both the expressway and local road. The passenger time costs were derived from the gross domestic product per capita of Jiangxi province in 2003. Traveling time cost was double for car passengers and 1.5 times for minibus passengers. Incremental growth in passenger traveling costs was estimated to increase 4-10% from 2004 to 2021. Other factors were also taken into account in the recalculation, including average vehicle loads, percentage of working trips, traveling speed for with- and without-project cases, and vehicle type.

7. On the local parallel road, the vehicles need to cross Boyang Lake by ferry. After expressway opened, all traffic crosses the lake by bridge, causing significant savings on ferry costs. The ferry tariff was CNY6.00-60.00 per vehicle according to tonnage. Seventy percent of this tariff was considered the ferry cost for the purposes of the benefit calculation. The expressway is 133.64 km long, about 11.36 km shorter than the local parallel road. Only half of the VOC for expressway traffic was considered in calculating the short distance VOC savings.

8. VOC savings accounted for the biggest share of benefits, from 40% in 2001 to 55% in 2021. Travel time saved was the second biggest share, from 29% in 2001 to 36% in 2021. Meanwhile, the share of benefits from the local road traffic declined in the calculation period, mainly because of slow traffic growth constrained by capacity.

E. Economic Internal Rate of Return Reevaluation

9. The recalculated economic internal rate of return (EIRR) of the project expressway was 15.6%, compared with 17.9% at appraisal, mainly because of lower-than-expected traffic in the first few years of opening. The EIRR reevaluation was conservative; some benefits such as accident cost savings, local road maintenance cost savings, and project damage cost savings were not included. Upgrading of access roads was included, however. The recalculated EIRR is higher than the social discount rate of 12%. The Project can be considered economically viable.

10. The EIRR was subjected to a sensitivity analysis to test the effects of increasing operation and maintenance (O&M) costs, decreasing benefits, and a combination of the two. The Project will be economically viable under all cases. The Project is more sensitive to a reduction in benefits than it is to an increase in O&M costs. The EIRR would be 13.1% in the case of a 20% decrease in benefits, while it would decrease slightly to 15.3% in the case of a 20% increase in O&M costs. In the worst-case scenario—with the combination of a 20% increase in O&M cost and 20% drop in benefits—the EIRR would be 12.8%, still higher than the economic discount rate of 12%.

1 ADB. 2004. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the People’s Republic of China for Guangxi Road Development II Project. Manila. Table A13.2: Economic Internal Rate of Return (CNY million) Present Year Passenger Time Ferry Distance Total Net Value Accumulate Cost VOC Saving Saving Saving Reduction Benefit Net Capital O&M Total Expressway Local Expressway Local Benefits Road Road 1997 91 91 (91) (81) (81) 1998 200 200 (200) (159) (241) 1999 572 572 (572) (407) (648) 2000 712 712 (712) (453) (1,101) 2001 279 20 299 26 13 44 12 5 5 104 (194) (110) (1,211) 2002 260 16 276 34 12 58 12 6 6 128 (148) (75) (1,286) 2003 32 30 61 40 13 65 11 7 8 144 83 37 (1,249) 2004 41 41 60 14 92 10 10 11 198 156 63 (1,186) 2005 53 53 69 15 118 12 12 13 239 186 67 (1,118) 2006 43 43 78 16 129 13 13 14 262 220 71 (1,048) 2007 45 45 102 16 169 14 17 18 337 291 84 (964) 2008 48 48 128 17 213 15 21 23 418 370 95 (869) 2009 50 50 149 18 247 16 24 26 481 431 99 (770) 2010 51 51 165 20 300 19 27 28 558 507 104 (666) 2011 151 40 191 177 21 319 20 29 31 596 406 74 (592) 2012 151 40 191 193 22 351 21 31 33 651 460 75 (517) 2013 43 43 207 23 372 22 34 36 694 651 95 (422) 2014 44 44 224 24 408 24 36 38 754 710 92 (330) 2015 46 46 239 25 461 27 38 40 830 785 91 (239) 2016 51 51 252 26 490 28 41 43 880 830 86 (153) 2017 58 58 269 27 519 29 43 45 933 875 81 (72) 2018 46 46 283 28 548 30 45 48 982 936 77 5 2019 47 47 299 29 574 32 47 50 1,030 983 73 78 2020 52 52 314 30 631 34 49 52 1,111 1,059 70 148 2021 (1,224) 53 (1,171) 323 32 650 36 51 54 1,145 2,316 136 284 O&M = operation and maintenance, VOC = vehicle operating cost

Net present value (NPV): 284 A Benefit/cost ratio: 1.18 ppe

Economic internal rate of return (EIRR): 13.7% ndix 13 Number of years until break even: 21.9 Social discount rate: 12%

41 Source: Staff estimates based on data provided by Jiangxi Provincial Communications Department.

42 Appendix 13

Table A13.1: Sensitivity Analysis Item EIRR (%)

1. Base-Case Scenarios 15.6 2. Decrease in Benefits by 20% 13.1 3. Increase in O&M by 20% 15.3 4. Combination of 2 and 3 12.8 EIRR=economic internal rate of return Source(s): Staff estimates Appendix 14 43

EVALUATION OF LAND ACQUISITION AND RESETTLEMENT ACTIVITIES

A. Background

1. The Jiujiang-Jingdezhen expressway is located in northeast Jiangxi province. The four- lane, controlled-access expressway is 134 kilometers (km) long, with nine interchanges, two service areas, one maintenance area, one management center, and nine toll plazas. The expressway passes through Lushan District in Hukou County, Duchang County, Boyang County of Shangrao City, and Fuliang County in Jingdezhen City. The Project also upgraded about 253 km of access roads.

2. Expressway construction started on 22 December 1997, and the road opened to traffic on 18 November 2000. The Project involved substantial land acquisition and resettlement.

B. Scope of Resettlement

3. In July 1996, the Jiangxi Province Communications Department (JPCD) prepared a resettlement and compensation plan based on the People’s Republic of China’s (PRC) Land Administration Law and the rules and regulations of Jiangxi province. A final resettlement evaluation report was prepared by Jiangxi Provincial Land Survey and Planning Institute in November 2001, 1 year after expressway completion. The resettlement plan provided a basis for resettlement implementation, monitoring, and evaluation.

4. At appraisal, the resettlement plan envisaged that 749.8 hectares (ha) of land would be required permanently, 327.3 ha would be required temporarily, 361 households (1,332 people) would need to be resettled, and 162 workers would be affected by the relocation of factories and public institutions. By project completion, actual land acquisition was 13,437.34 mu (895 ha), 22.74% more than anticipated in the resettlement plan. This was because the plan did not include land for grade separation, underpasses, or afforestation. Nor did the plan include acquisition of marginal and scattered land which could not be cultivated after acquisition. Of the total acquired land, 71.12% was cultivated. Permanent land acquisition for the Project was as follows:

44 Appendix 14

Table A14.1: Comparison of Land Acquisition, 1996 and 2004 Item Unit Total in Lushan Hukou Duchang Boyang Fuliang Total Change Resettlement (%) Plan A B C D E F Paddy field ha 292.9 51.6 70.8 64.0 159.0 53.4 398.9 36.16 Dry land ha 194.5 16.2 50.0 50.4 59.0 3.0 178.4 (8.26) Vegetable ha 5.0 3.0 24.6 4.7 2.5 602.45 land orchard Fish pond ha 4.2 4.0 11.1 5.3 0.3 34.8 Cultivated ha 492.6 75.0 149.5 130.1 225.8 51.7 637.1 29.38 land acquisition subtotal Forest land ha 99.2 21.4 4.0 64.9 74.1 23.8 188.1 89.70 Waste land ha 101.4 2.0 5.4 3.3 18.3 1.0 30.0 (70.45) Housing plot ha 4.2 2.0 2.4 2.7 11.3 Other un- ha 36.9 1.4 2.0 2.0 10.6 13.4 29.3 (20.51) cultivated land Uncultivated ha 237.4 28.9 13.4 72.5 105.7 38.1 258.7 8.97 land acquisition subtotal Land ha 729.8 103.9 162.9 202.6 331.5 94.9 895.8 22.74 acquisition total Households household 3,491 6,300 5,615 10,705 3,646 29,756 affected by land acquisition Persons person 12,950 23,374 20,830 38,966 12,432 108,551 affected by land acquisition ha=hectare Source(s): Jiangxi Provincial Land Survey and Planning Institute

5. To reduce project impact, actual temporary land occupation was reduced to 1409.33 mu (94 ha), 71.39% less than the 4,908.75 mu (327.3 ha) estimate in the resettlement plan.

6. Total demolished dwellings were 90,216.68 square meters (m²), an increase of 95.11% compared with 47,238 m² in the resettlement plan. Some 546 households or 1,943 persons were affected, an increase of 51.25% and 45.91%, respectively, from original estimates because of larger-than-anticipated land acquisition. Actual affected dwellings are as follows:

Table A14.2: Comparison of Scope of Resettlement Impact (Structures Owned by Private Individuals) 1996 and 2004

County Item Affected Structures Affected Households Affected Persons (m²) Lushan Estimated 5,545.00 40 148 Actual 19,492.30 131 469 Hukou Estimated 20,845.00 104 382 Actual 16,505.97 127 455 Duchang Estimated 6,769.00 45 162 Actual 8,035.31 76 272 Boyang Estimated 8,688.00 52 192 Appendix 14 45

Actual 21,485.68 108 393 Fuliang Estimated 4,391.00 120 448 Actual 24,697.42 104 355 Total Estimated 46,238.00 361 1,332 Actual 90,216.68 546 1,943 Change (%) 95.11 51.25 45.91 m2=square meter Source(s): Jiangxi Provincial Land Survey and Planning Institute

7. The total amount of demolished housing owned by factories and public institutions was 6,415.81 m², 22.19% lower than the 8,246 m² estimate in the resettlement plan. Nine factories and public institutions, with a total of 126 workers, were affected. The reduction in demolished houses owned by factories and public institutions was brought about by realigning the expressway to minimize affected housing. Detailed data on affected housing owned by factories and public institutions are as follows:

Table A14.3: Comparison of Scope of Resettlement Impact (Structures Owned by Factories or Public Institutions) 1996 and 2004

County Item Affected Structures Affected factories and Affected workers (m²) public institutions

Lushan Estimated 1,800.00 Actual 125.51 1 15 Hukou Estimated 2,500.00 Actual 775.01 1 12 Duchang Estimated 152.00 Actual 112.27 2 28 Boyang Estimated 1,750.00 Actual 5,142.44 4 49 Fuliang Estimated 2,044.00 Actual 260.58 1 22 Total Estimated 8,246.00 Actual 6,415.81 9 126 Change (22.19)% m2=square meter Source(s): Jiangxi Provincial Land Survey and Planning Institute

C. Resettlement Compensation

8. Land acquisition and resettlement were implemented according to the procedures and compensation standards laid down in the resettlement plan.

9. The resettlement plan did not specify the compensation prices for different categories of affected land, specifying a standard price of CNY45,000/ha. Under the plan, the project office would pay compensation to the resettlement offices at this uniform rate, then the resettlement offices would pay affected collectives according to the categories of land shown below: 46 Appendix 14

Table A14.4: Comparison of Land Compensation, 1996 and 2004

Land item Unit Estimates from Budget Actual Price in Resettlement Plan Paddy field CNY/ha 45,000 45,000-47,040 Dry land CNY/ha 45,000 36,000-45,000 Vegetable plots and orchards CNY/ha 45,000 45,000-47,040 Fish pond CNY/ha 45,000 36,000-45,000 Forest land CNY/ha 45,000 15,000-27,000 Wasteland CNY/ha 45,000 7,500-15,000 Housing plots CNY/ha 45,000 36,000-45,000 Other uncultivated land CNY/ha 45,000 15,000-36,000 CNY=yuan; ha=hectare Source(s): Jiangxi Provincial Land Survey and Planning Institute

10. The compensation prices for demolished structures were as follows:

Table A14.5: Comparison of Resettlement Compensation, 1996 and 2004

Item Unit Estimate from Actual Price Resettlement Plan Budget Brick concrete houses CNY/m² 130-190 Brick timber houses CNY/m² 78 90-130 Timber tile houses CNY/m² 39 39 Simple houses CNY/m² 32.5 32.5 Wall CNY/unit 32.5 32.5 Tomb CNY/unit 19.5 19.5 Cement floor CNY/m² 13 13 m2=square meter Source(s): Jiangxi Provincial Land Survey and Planning Institute

D. Resettlement Organizations

11. The project executing agency is the Jiangxi Provincial Communications Department (JPCD), which established the Jiujiang-Jingdezhen Highway project management office (PMO) to manage expressway construction. The Jiangxi High-Class Highways Administration Bureau (JHCHAB) is responsible for operation and maintenance (O&M) of the expressway. JPCD established a resettlement office to ensure timely and effective implementation of land acquisition and resettlement.

12. Resettlement offices were established in Jiujiang, Shangrao, and Jingdezhen, as well as in all the 4 counties, to take charge of the resettlement within their jurisdiction (see chart). These resettlement offices were well staffed and equipped. Each county resettlement office conducted surveys along its section of the expressway. Resettlement staff in each affected village carried out extensive public consultations and a publicity campaign to explain the purpose of the Project and the compensation policies. The county resettlement offices were disbanded after land acquisition and resettlement ended.

E. Resettlement Cost

13. The total actual cost of compensation for land acquisition, house relocation, and affected electrical and telecommunications facilities was CNY59.97 million ($7.24 million)—49.53% Appendix 14 47 higher than the estimate in the resettlement plan—as a result of larger-than-expected acquisition and resettlement (see table).

14. The JPCD resettlement office allocated compensation to county resettlement offices, which in turn distributed funds to affected collectives and individuals. Funds were given to affected households through township financial divisions, administrative villages, and village groups. Compensation for land, housing, and other ground attachments was paid before and after housing demolition, usually in two or three installments.

Table A14.6: Comparison of Land and Resettlement Compensation, 1996 and 2004

Item Land House Electrical and Total acquisition Demolishing Telecommunications (CNY) (CNY) (CNY) Facilities (CNY) Resettlement plan 32,850,300 3,634,900 3,619,600 40,104,800 estimates Actual in Lushan 4,887,707 1,859,267 6,746,974 Actual in Hukou 7,662,628 1,672,720 9,335,348 Actual in Duchang 9,532,562 854,680 10,387,242 Actual in Boyang 15,594,669 3,034,945 18,629,614 Actual in Fuliang 4,461,932 2,222,122 6,684,054 Actual total 42,139,498 9,643,734 8,185,000 59,968,232 Change (%) 28.28 165.31 126.13 49.53 CNY=yuan Source(s): Jiangxi Provincial Land Survey and Planning Institute

15. Civil works contractors paid compensation for temporary land occupation directly to the affected collectives or households, so details of how temporary land occupation costs were spent (CNY14.73 million) were not available. According to the field investigation, contractors paid about CNY24,000/ha for the entire temporary occupation period.

F. Resettlement Implementation

16. Land for acquisition was measured and ground attachments checked in October 1996. House relocation began in February 1997, and land acquisition began two months later. Compensation contracts were signed between January and May 1997. Most land acquisition and housing relocation was finished in 1997, and most affected infrastructure was rehabilitated or reconstructed that same year.

17. The resettlement plan stated that if a village group’s per capita cultivated land holding fell below 0.02 ha after land acquisition, the local government would help one member of the each family resettle in a town or city or provide him or her with other employment. According to the evaluation report, 5,164 persons needed to be resettled in towns or cities. Of this number, 1,643 persons were provided employment in county, township, and village enterprises; 500 established small businesses with government assistance; 1,282 were provided with replacement land; 629 were employed as laborers, mainly in Shanghai, Guangdong, or Zhejiang province; and 1,110 were given employment in orchard planting or fisheries. 48 Appendix 14

Table A14.7: Breakdown of Employment of Affected Persons

Measure Unit Lushan Hukou Duchang Boyang Total Affected persons needing person 73 1,490 680 2,921 5,164 to be resettled Employment in town and person 43 240 500 860 1,643 village enterprises Self-employment person 30 470 500 Replacement land person 500 782 1,282 Labor service in city person 220 180 229 629 Orchards and fisheries person 60 1,050 1,110

Source(s): Jiangxi Provincial Land Survey and Planning Institute

18. About 70% of affected persons took full compensation for their cultivated land, including their resettlement subsidy, in cash. The others were compensated partly in cash and partly through land redistribution. The balance of cash compensation for land was used for collective village-level purposes such as wasteland development, orchard planting, livestock breeding, and infrastructure improvement. Compensation for cultivated land was paid according to affected persons’ preferences, so they were satisfied with the payment arrangements. Compensation for nonfarm land was given to village groups, who would decide whether to use it for collective development or to distribute the cash among group members.

19. Houses were demolished from March to August 1997, and the county government provided new housing plots to the villages or village groups free of charge at the same time. The new houses were built according to the wishes of relocated households. The new houses were usually completed about 3 months after the old houses were demolished, so there was a period during which they needed temporary housing. No transitional or moving allowances were included in the resettlement plans, so most affected people had to stay with friends or relatives.

20. Most relocated households decided to build larger and better houses, many of them costing more than the compensation amount. Relocated households who did so used savings or borrowed from relatives and friends to make up the difference.

21. Compensation for demolished housing owned by factories or public institutions— including compensation for affected structures and attachments, moving costs, replacement land cost, and other losses—was paid directly through the county resettlement offices. For example, CNY220,000 was paid in October 1998 for 400 m² of demolished houses and other fixtures to the Jinpanling town condominium in Boyang County. The Jinpanling town condominium used the funds to build 500 m² of new condominium space, completed in October 1999. During the transitional period, Jinpanling town government provided them with spare vacant housing free of charge. The Jinpanling condominium is now among the best in the area.

G. Quality Assessment of Resettlement Implementation and Rehabilitation

22. Farmers whose land was less than 0.02 ha after acquisition were given supplementary employment to ensure that they at least maintained their pre-project incomes.

23. An independent evaluation of the resettlement process confirmed that affected households were relocated in their original village groups so that their social and economic relationships were preserved. The size and structure of houses was better after relocation, and infrastructure such as access roads, water, and electricity was provided free of charge. The Appendix 14 49 housing compensation was adequate for rebuilding new houses of the same size and quality, but affected people chose to invest more, through savings or loans, to build better and larger houses. Most relocated households said they were satisfied with the relocation arrangements.

24. Affected factories and public institutions were given additional funds to help them rebuild better houses and facilities.

25. An onsite investigation found that more than 50% of rural laborers sought employment outside their villages and more than 70% of the farmers’ household incomes came from sources other than agriculture. Land acquisition did not harm their overall income. Cash compensation for collective landowners provided affected farmers with replacement land, better farm inputs, and employment opportunities in areas such as orchards and fisheries. Many affected farmers were engaged in expressway construction. Each farmer who worked in road construction earned an average total of CNY2,400. Affected farmers saw annual per capita net income reach at least CNY1,100 per year after the Project, compared with CNY650 in 1996. The adverse impacts of land acquisition were limited, and farmers’ incomes have improved.

H. Conclusions and Lessons Learned

26. Resettlement was implemented according to the plan, except in areas where the provisions of the plan were unclear (compensation standards for land, resettlement monitoring, etc). The objectives of the resettlement plan have been achieved.

27. Resettlement was carried out using a proven system at the provincial, district/county, township, village, and village group levels. This helped ensure that resettlement followed the construction schedule, and also promoted enthusiasm among local government officials and affected persons. The institutions involved in resettlement are considered well coordinated and well operated.

28. Project staff consulted with affected persons before and during resettlement to inform them of project policies and solicit their input.

29. Compensation was delivered to affected collectives and individuals according to the resettlement plan. All the relocated households who wished to build new houses did so, and were provided with the necessary infrastructure free of charge. Affected facilities and infrastructure have been rehabilitated or reconstructed.

30. Efforts by the resettlement offices and local governments ensured that farmers in the seriously affected village groups were provided with special assistance to ensure that their incomes were fully restored. Affected farmers were resettled according to the wishes of a majority of villagers. Since less than one third of their incomes came from agriculture, the land acquisition did not significantly reduce their earnings. Their income has improved and their income-earning capacity has been enhanced. 50 Appendix 15

PROJECT FRAMEWORK - ACTUAL ACHIEVEMENTS

Design Performance Indicators/Targets Actual Achievements Summary Goal • Serious congestion and By the end of 2003, Jiangxi GDP To provide road deteriorating safety reached CNY283 billion with GDP per infrastructure in Jiangxi standards on the existing capita of CNY6,677. Road network as province so as to improve road between Juijiang and of 2003 was 61,233 km, including transport efficiency and Jingdezhen (about 150 km) 1,040 km of expressways. This promote economic relieved through the compares to 2000 GDP of CNY 200.3 development construction of a four-lane, billion, GDP per capita for that year of controlled-access CNY4,851, and a road network of expressway 60,292 km, including 421 km of expressway. Travel time from Jiujiang to Jingdezhen was reduced by more than 2 hours. A permanent bridge replaced an unreliable ferry crossing over Boyang Lake. Accessibility improved from less developed communities and disadvantaged areas, and VOC and accidents reduced. • Jiangxi Provincial Well trained, experienced staff Communications members were assigned for project Department’s capability management, contract administration, improved for project and road maintenance. New management, contract expressways meet international administration, and road highway standards. maintenance

Policy environment for private- Jiangxi currently has seven joint- sector participation improved in the venture-operated expressways. road sector

B. Purpose 1. To improve transport efficiency in the road 1.1 Design capacity increased to Actual traffic on the Jiujiang- subsector in the 25,000 standard PCUs by year Jingdezhen Expressway in AADT was Nanchang-Jiujiang- 2001 2,360 PCUs in 2001, 3,635 in 2002, Jingdezhen growth and 4,280 in 2003. triangle by providing a new expressway from Jiujiang to Jingdezhen for increased capacity and more efficient movement of freight and passengers;1

1 Revised by the Project Completion Review Mission to be in line with the report and recommendation of the President. Appendix 15 51

Design Performance Indicators/Targets Actual Achievements Summary 2. Institutional Capacity 2.1 Systems for data collection, A well-equipped, properly staffed road accounting, expressway maintenance center established to management, and road/bridge maintain the project expressway and to maintenance management carry out major repairs. A computer- established based toll collection system was installed. A traffic control and monitoring system was installed to record traffic conditions. Proper accounting software was installed. 136 staff members from the Jiangxi Provincial Communications Department were trained in Australia and the European Union in highway planning, design, construction supervision, financial management, environmental protection, road maintenance, and expressway operation and maintenance. 2.2 Systems for data collection, accounting, expressway management, and road/bridge maintenance management established 3. Policy and Institutional 3.1 The Highway Law approved by Highway Law approved in 1998 and Reform National People’s Congress by being enforced. 31 December 1997 3.2 Revised Road Design Revised road design standards in line Standards published by 30 with international standards adopted. June 1998 3.3 Rationalized road-user cost Six categories of toll rates depending recovery system implemented on type of vehicle and distance traveled are applied to road users since opening of the Project expressway. The average toll rate is about CNY1.22 per km. 3.4 Established procedures for Seven expressways have been turned mobilizing nongovernment over to joint-venture toll companies to funds by 2000 operate. 3.5 Expressway administration The project expressway is currently entities corporatized (where being operated by a subsidiary of applicable) by the year 2000 or JPCD called the Jiangsu High-Class earlier Highway Administration Bureau (JHCHAB). The corporatization of JHCHAB has been deferred pending the achievement of profits that would be attractive to private sector investors.

52 Appendix15

Design Performance Indicators/Targets Actual Achievements Summary C. Component/Outputs 1. Civil Works 1.1 Construction of 134 km of four- 133.6 km of four-lane, controlled- lane, controlled-access access expressway completed and expressway and 253 km of opened to traffic in November 2000 access roads completed and along with two service areas, one open to traffic by mid-2001 maintenance center, one management center, and nine toll plazas. 276.9 km of access roads completed in December 2002. 1.1 134 km of expressway and 253 km of paved access roads. 2. Equipment 2.1 Equipment and 2.1 Road maintenance standards Road maintenance standards adopted. facilities for road prepared, maintenance Maintenance equipment procured maintenance, equipment delivered, and includes 20 rollers, 2 cranes, 3 asphalt communications, maintenance management sprayers, 3 asphalt pavement traffic engineering, system installed and operating maintenance vehicles, 4 hydraulic and toll collection successfully. Communications, excavators, 1 bulldozer, 3 loaders, 1 systems, as well as traffic engineering, and toll grader, 1 diesel generator, 3 asphalt- related equipment collection equipment installed concrete pavers, 1 asphalt concrete and operating mixing plant, 1 piece of bridge inspection equipment, and 1 concrete slipform paver. A computer-based toll collection system, a traffic monitoring and control system, and an emergency telephone system installed. 3. Consulting Services 3.1 Efficient construction 3.1 On-the-job training of JPCD About 300 staff received on-the-job supervision and on- staff and domestic consultants training. the-job training and adoption of international practices in project management, contract administration, and quality control systems 4. Capacity Building, Training, and Human Resource Development 4.1 Increased capacity in 4.1 Improved institutional structure 136 staff from JPCD underwent expressway and upgraded human resource overseas training in highway planning, operations and capability. Up to 50 JPCD staff design, construction supervision, maintenance undergoing training in PRC and financial management, environmental overseas protection, road maintenance, and expressway operation and maintenance.

Appendix 15 53

Design Performance Indicators/Targets Actual Achievements Summary D. Activities 1.1 Providing adequate 1.1 Funds allocated from MOC, Actual funds included an MOC grant of counterpart funds JPCD, and local government $89.4 million equivalent, JPCD equity contributions of $84.2 million, and a local government grant of $123.1 million equivalent. 1.2 Recruiting supervision 1.2 Consultants recruited in March An international consulting firm was consultants 1997 fielded in December 1997 and completed the services in October 2002 for a total of 80 person-months. 1.3 Carrying out survey 1.3 Survey and detailed design Survey and detailed design completed and design completed by 31 October 1996 by December 1997. 1.4 Awarding of 1.4 Civil works contracts awarded Civil works contracts awarded between contracts/procurement between May 1997 and April December 1997 and October 1998. 1999 1.5 Construction and 1.5 Construction and upgrading Upgrading of access roads completed upgrading of selected completed by mid-2001 by December 2002. road sections 1.6 Supervising 1.6 Construction supervision Construction supervision completed by construction and completed by May 2001 and October 2002. Training completed by installation, as well as JPCD staff trained in November 1999. on-the-job training construction supervision and contract administration 2.1 Resettlement and 2.1 Resettlement Plan and Resettlement plan was prepared by compensation compensation measures JPCD in accordance with the Land completed by October 1997 Administration Law of PRC and Jiangxi resettlement regulations. About 895.82 ha of land were permanently requested in addition to temporary land acquisition of 93.96 ha. 2.2 Land acquisition and 2.2 Minimized relocation About 546 households were relocated. relocation 3.1 Capacity building and 3.1. On-the-job training and Training was completed by November human resource domestic and overseas training 1999. development completed by May 2001

CNY=yuan; JHCHAB=Jiangxi High-Class Highway Administration Bureau; km=kilometer; JPCD=Jiangxi Provincial Communications Department; MOC=Ministry of Communications

54 Appendix15

Table A6: Input/Resources Project Cost ($ million)

Item Appraisal Actual Estimate Amount 1. Civil Works 279.2 233.3 2. Equipment 6.6 15.2 3. Land Acquisition and Resettlement 8.1 9.6 4. Consulting Services 10.9 12.7 5. Capacity Building, Training, and Human Resource 1.0 0.9 Development 6. Physical Contingency 10.9 7. Price Contingency 23.0 8. Interest During Construction 16.0 16.0 Total 366.3 320.2 Source(s): Jiangxi Provincial Communications Department