Completion Report

Project Number: 42496-013 Loan Number: 2508 August 2015

People’s Republic of : Emergency Assistance for Wenchuan Earthquake Reconstruction Project

This document is being disclosed to the public in accordance with ADB's Public Communications Policy 2011.

CURRENCY EQUIVALENTS

Currency Unit – yuan (CNY)

At Appraisal At Project Completion (6 February 2009) (30 June 2013) CNY1.00 = $0.1463 $0.1618 $1.00 = CNY6.8375 CNY 6.1805

ABBREVIATIONS

ADB – Asian Development Bank ha – hectare km – kilometer km2 – square kilometer m2 – square meter PMO – project management office PRC – People’s Republic of China SAPG – provincial government SHAB – Highway Administration Bureau SPTD – Sichuan Provincial Transport Department TA – technical assistance

NOTE

In this report, "$" refers to US dollars, unless otherwise stated.

Vice-President S. Groff, Operations 2 Director General A. Konishi, East Asia Department (EARD) Country Director H. Sharif, People’s Republic of China Resident Mission(PRCM), EARD Team leader G. Xiao, Senior Project Officer (Transport), PRCM,EARD Team members H. Hao, Project Analyst, PRCM,EARD W. Zhu, Senior Project Officer (Resettlement), PRCM,EARD N. Li, Environment Officer, PRCM,EARD

In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

CONTENTS

Page BASIC DATA i 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 4 E. Project Schedule 4 F. Implementation Arrangements 5 G. Conditions and Covenants 5 H. Related Technical Assistance 5 I. Performance of Consultants, Contractors, and Suppliers 6 J. Performance of the Borrower and the Executing Agency 6 K. Performance of the Asian Development Bank 6 III. EVALUATION OF PERFORMANCE 7 A. Relevance 7 B. Effectiveness in Achieving Outcome 7 C Efficiency in Achieving Outcome and Outputs 7 D. Preliminary Assessment of Sustainability 8 E. Impact 8 IV. OVERALL ASSESSMENT AND RECOMMENDATIONS 9 A. Overall Assessment 9 B. Lessons 9 C. Recommendations 10 APPENDIXES 1. Design and Monitoring Framework 12 2. Chronology of Major Events in the Project’s History 14 3. Project Costs and Financing Plan 15 4. Projected and Actual Contract Awards and Disbursements 17 5. Appraisal and Actual Implementation Schedules 18 6. Organization Charts 19 7. Status of Compliance with Loan Covenants 21 8. Land Acquisition and Resettlement 31 9. Social Impact and Poverty Reduction 35 10. Environmental Impact Analysis 40

BASIC DATA

A. Loan Identification 1. Country People’s Republic of China 2. Loan Number 2508 3. Project Title Emergency Assistance for Wenchuan Earthquake Reconstruction Project 4. Borrower People’s Republic of China 5. Executing Agency Sichuan Provincial Transport Department Shaanxi City Government Shaanxi Hanzhong City Government 6. Amount of Loan $400.00 million 7. Project Completion Report PRC 1528 Number

B. Loan Data 1. Loan Negotiations - Date Started 5 February 2009 - Date Completed 6 February 2009

2. Date of Board Approval 19 February 2009

3. Date of Loan Agreement 23 March 2009

4. Date of Loan Effectiveness - In Loan Agreement 21 June 2009 - Actual 24 June 2009 - Number of Extensions 0

5. Closing Date - In Loan Agreement 30 June 2012 - Actual 30 June 2013 - Number of Extensions 1

6. Terms of Loan - Interest Rate ADB's London interbank offered rate (LIBOR) - Maturity 32 years - Grace Period 8 years

7. Terms of Relending - Interest Rate ADB's London interbank offered rate (LIBOR) - Maturity 32 years - Grace Period 8 years - Second-Step Borrower Sichuan Provincial Transport Department Shaanxi Baoji Municipal Government Shaanxi Hanzhong Municipal Government 8. Disbursements a. Dates Initial Disbursement Final Disbursement Time Interval

13 April 2010 6 August 2013 40 months

Effective Date Original Closing Date Time Interval

24 June 2009 30 June 2012 36 months b. Amount ($ million)

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Last Original Revised Amount Net Amount Amount Undisbursed Category or Subloan Allocation Allocation Canceled Available Disbursed Balance Shaanxi Education 19.7 22.3 0.0 22.3 0.0 Shaanxi Transport 62.5 77.7 0.0 77.7 0.0 Sichuan Transport 277.0 299.9 0.0 299.9 0.0 Interest and Commitment Charges 32.6 0.1 0.0 0.1 0.0 Unallocated 8.2 0.0 0.0 0.0 0.0 Total 400.0 400.0 0.0 400.0 0.0 Sources: Asian Development Bank.

C. Project Data

1. Project Cost ($ million) Cost Appraisal Estimate Actual Foreign Exchange Cost 400.0 400.0 Local Currency Cost 41.0 168.1 Total 441.6 568.1 Sources: Asian Development Bank, Sichuan Provincial Transport Department, Shaanxi Baoji Municipal Government, and Shaanxi Hanzhong Municipal Government.

2. Financing Plan ($ million)

Shaanxi Province Sichuan Province Total Cost At At At Cost Appraisal Actual Appraisal Actual Appraisal Actual A. Transport Component 71.5 91.0 317.9 452.3 389.4 543.3 1. ADB-financed civil works 68.9 73.2 277.0 299.9 345.9 373.1 2. ADB-financed other costs 1.9 4.5 0.0 0.0 1.9 4.5 3. Government 0.7 13.3 40.9 152.4 41.6 165.7 B. Education Component 19.7 24.7 0.0 0.0 19.7 24.7 1. ADB-financed civil works 15.7 20.8 0.0 0.0 15.7 20.8 2. ADB-financed other costs 4.0 1.5 0.0 0.0 4.0 1.5 3. Government 0.0 2.4 0.0 0.0 0.0 2.4 C. Financing Charges during Implementationa 9.5 0.0 23.0 0.1 32.5 0.1 Total 100.7 115.7 340.9 452.4 441.6 568.1 Sources: Asian Development Bank, Sichuan Provincial Transport Department, Shaanxi Baoji Municipal Government, and Shaanxi Hanzhong Municipal Government.

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3. Cost Breakdown by Project Component ($ million)

Detailed Cost Estimates of Transport Subprojects in Shaanxi Appraisal Estimate Actual Component Cost ADB Government Cost ADB Government A. Base Cost 1. Civil Works 61.2 60.6 0.6 86.2 73.2 13.0 2. Design Procurement and Construction Supervision 1.9 1.9 0.0 4.8 4.5 0.3 3. Project Management 0.1 0.0 0.1 0.0 0.0 0.0 Total Base Cost (A) 63.2 62.5 0.7 91.0 77.7 13.3 B. Contingencies 1. Physical Contingency 2.4 2.4 0.0 0.0 0.0 0.0 2. Price Contingency 3.2 3.2 0.0 0.0 0.0 0.0 Subtotal (B) 5.6 5.6 0.0 0.0 0.0 0.0 C. Financing Charges During Implementation 7.5 7.5 0.0 0.0 0.0 0.0 Total 76.3 75.6 0.7 91.0 77.7 13.3

Detailed Cost Estimates of Education Subprojects in Shaanxi At Appraisal Actual Component Cost ADB Government Cost ADB Government A. Base Cost 1. Civil Works 17.5 17.5 0.0 22.6 20.8 1.8 2. Design Procurement and Construction Supervision 1.0 1.0 0.0 2.1 1.5 0.6 3. Project Management 1.2 1.2 0.0 0.0 0.0 0.0 Total Base Cost (A) 19.7 19.7 0.0 24.7 22.3 2.4 B. Contingencies 1. Physical Contingency 1.5 1.5 0.0 0.0 0.0 0.0 2. Price Contingency 1.2 1.2 0.0 0.0 0.0 0.0 Subtotal (B) 2.7 2.7 0.0 0.0 0.0 0.0 C. Financing Charges During Implementation 2.0 2.0 0.0 0.0 0.0 0.0 Total 24.4 24.4 0.0 24.7 22.3 2.4

Detailed Cost Estimates of Transport Subprojects in Sichuan At Appraisal Actual Component Cost ADB Government Cost ADB Government A. Base Cost 1. Civil Works 282.7 277.0 5.7 384.4 299.9 84.5 2. Design Procurement and Construction Supervision 0.2 0.0 0.2 20.9 0.0 20.9 3. Project Management 12.6 0.0 12.6 47.0 0.0 47.0 Total Base Cost (A) 295.5 277.0 18.5 452.3 299.9 152.4 B. Contingencies 1. Physical Contingency 13.9 0.0 13.9 0.0 0.0 0.0 2. Price Contingency 8.6 0.0 8.6 0.0 0.0 0.0 Subtotal (B) 22.4 0.0 22.4 0.0 0.0 0.0 C. Financing Charges During Implementation 23.0 23.0 0.0 0.1 0.1 0.0 Total 340.9 300.0 40.9 452.4 300.0 152.4

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4. Project Performance Report Ratings Ratings

Implementation Implementation Period Development Objectives Progress

From 17 February 2009 to 31 December 2009 Satisfactory Satisfactory From 1 January 2010 to 31 December 2010 Satisfactory Satisfactory

Source: Asian Development Bank.

D. Data on Asian Development Bank Missions No. of No. of Specialization Name of Mission Date Persons Person-Days of Members

Fact-finding 20–27 November 2008 8 64 a, b, e, f, g Inception and handovera 2–5 March 2010 6 24 a, g Review 1 13–17 May 2010 2 6 a, g Review 2 11–19 October 2010 2 18 a, g Midterm review 10–18 May 2011 5 34 a, c, d, g, Review 4 10–22 June 2012 3 23 a, g, i Review 5 6–13 May 2013 2 16 a, c Project completion review 11–24 June 2014 4 49 a, c, g, h

Note: a = project officer, b = education specialist, c = resettlement officer, d = environment officer, e = counsel, f = resettlement specialist, g = project analyst, h = staff consultant, i = disbursement analyst. a The Emergency Assistance for Wenchuan Earthquake Reconstruction Project was transferred to the Asian Development Bank’s resident mission in the People’s Republic of China for administration on 10 March 2010. Source: Asian Development Bank.

I. PROJECT DESCRIPTION

1. A massive earthquake—measuring magnitude 8.0—struck the southwest of the People’s Republic of China (PRC) on 12 May 2008. The epicenter was 92 kilometers (km) northwest of , the provincial capital of Sichuan, in . The Wenchuan earthquake caused extensive damage and losses, mainly in Sichuan, Shaanxi, and provinces; and caused some damage in seven other provinces. More than 47 million people were affected; over 69,000 people died, 374,000 were injured, and 18,000 were missing. About 8 million homes were destroyed and 24.5 million were damaged; 17,951 educational institutions were destroyed or damaged in the affected region. Transport, infrastructure, power supply, water and sanitation facilities, and critical infrastructure such as hospitals and communications were destroyed or badly damaged. Many rural and urban houses collapsed, infrastructure facilities were damaged on a large scale, and agriculture and industry experienced heavy losses. Environmental destruction was severe. The earthquake caused high altitude landslides, rock falls, and debris flows; and formed barrier lakes. The total direct economic loss caused by the earthquake was estimated at CNY852,309 million; losses in Sichuan, Shaanxi, and Gansu provinces were estimated at CNY845,136 million (99.16% of the total). 2. The PRC State Council set up an earthquake disaster relief center as soon as the Wenchuan earthquake was reported. The premier, as commander-in-chief, personally directed the disaster response and relief through nine working teams. Under the guidance of the State Council, various government agencies worked with the provincial governments to provide relief in disaster-affected areas. The central government allocated CNY27.5 billion for disaster relief, which was supplemented by assistance provided by provincial and local governments. 3. The government requested support from the local and international community, and raised a total of CNY59.5 billion. The international community also provided emergency assistance and support to the PRC’s rescue efforts by providing relief supplies, medical teams, and technical support. 4. To ensure efficient and effective reconstruction, geological and environmental assessments were conducted immediately after the earthquake. Just 4 months after the earthquake, the PRC State Council issued the State Overall Planning for Post-Wenchuan Earthquake Restoration and Reconstruction to complete major recovery within 3 years. Innovative mechanisms to secure funds necessary to conduct these works, such as private– public partnerships, tax incentives, and the mobilization of public support were sought. The central government also set up a “twin assistance” mechanism by which affected counties were paired with a donor province responsible for offering financial and technical assistance (TA). Each donor province provided 1% of their revenue over the 2007 financial year to support reconstruction and rehabilitation in the paired county. 5. Asian Development Bank (ADB) responded to the request for emergency assistance from the PRC government by approving an ordinary capital resources loan of $400 million on 19 February 2009 for Emergency Assistance for Wenchuan Earthquake Reconstruction Project. The principal objective of the project was the accelerated restoration of education and transport infrastructure in the earthquake-affected areas of Sichuan and Shaanxi provinces. The project was to support efforts to (i) restore the livelihoods and economic activities in affected counties; (ii) accelerate poverty reduction in the earthquake-affected counties, many of which have a high incidence of poverty; and (iii) rehabilitate and reconstruct public and community-based infrastructure that is vulnerable to natural disasters. As the first emergency assistance provided by ADB to the PRC, the project was designed to restore and improve access to transport and education infrastructure in 19 counties of Sichuan Province and four counties of Shaanxi Province. The project framework is in Appendix 1. The project was prepared through close

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1 consultation with other development partners, such as the World Bank and Agence Française de Développement.2 6. At appraisal, the project involved two ADB loans: a $300 million loan for the reconstruction and rehabilitation of about 3,500 km of high-priority earthquake-damaged roads in the 19 worst-affected counties in Sichuan Province, and a $100 million loan for 317 km of roads and bridges and 12 high-priority, earthquake-damaged education facilities in Shaanxi Province. 7. The loans became effective on 24 June 2009 with a loan closing date of 30 June 2012. On 19 February 2009, ADB also approved a $700,000 attached TA to (i) build capacity for ADB project implementation, (ii) build capacity for rural road construction in Sichuan and Shaanxi provinces, and (iii) establish model schools and train teachers in Shaanxi Province. TA implementation started in February 2011 and was completed on 30 June 2012. Appendix 2 provides a chronology of major events. II. EVALUATION OF DESIGN AND IMPLEMENTATION

A. Relevance of Design and Formulation

8. The project was highly relevant to the government and ADB sector strategies at the time of appraisal and completion. It was consistent with the PRC's Eleventh Five-Year Plan (2006– 2010) and the PRC's current strategy, as outlined in its Twelfth Five-Year Plan (2011–2015). Rural road development was a priority area for the PRC to achieve its goal of a harmonious society. The overall objective of the Rural Roads Development Plan, approved by the State Council in February 2005, was that by 2020 all townships and villages in the PRC would be accessible by paved roads, providing a good rural road network and making travel more rapid, safe, and comfortable for farmers. By 2010, paved roads would connect all townships and villages in eastern, central, and western regions; rural roads would total 3.1 million km. Meanwhile, the project was aligned with ADB's Disaster and Emergency Assistance Policy to support national and provincial governments and other stakeholders in overcoming exogenous shocks caused by calamities.3 For the first time, the central government provided the ADB loan as a grant to the provincial governments of Sichuan and Shaanxi. This enabled the provincial governments to utilize ADB assistance for non-revenue-generating projects, such as rural roads and schools. 9. The project design prepared under the project preparatory TA was sound due to adequate due diligence. Key lessons were drawn from ADB’s previous experience with emergency assistance and ADB policies. The project design adhered to principles of simplicity and flexibility for implementation with a focus on the immediate rehabilitation of physical and social infrastructure in the affected areas to restore the livelihoods of those affected. The project was prepared using a people-centric approach, based on detailed discussions with affected people and other stakeholders, and visits to the affected project sites. The local affected communities actively participated in the selection, design, implementation, operation, and maintenance of all works carried out under the project.

1 The World Bank provided $710 million for reconstruction of the urban, health, and education sectors in Sichuan and Gansu provinces. 2 Agence Française de Développement provided $200 million for reconstruction of urban and biogas infrastructure in Sichuan Province. 3 ADB. 2004. Disaster and Emergency Assistance Policy. Manila.

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B. Project Outputs

10. At appraisal, the project comprised two components: (i) reconstruction and rehabilitation of damaged roads and bridges in Sichuan and Shaanxi provinces, and (ii) reconstruction and rehabilitation of damaged schools in Shaanxi Province. The components were designed to achieve the objectives of mitigating earthquake losses of affected communities, and providing urgent rehabilitation and reconstruction of priority education and transport infrastructure assets in strict compliance with the most recent seismic codes.4 All outputs were delivered and the principle of “build-back better” was achieved by adopting the higher design standards in the most recent seismic codes. To ensure higher capacity to withstand potential disasters, the design was improved during implementation, such as using more and stronger retaining walls. The experience and practices were summarized and shared with others through an attached TA. 11. The project outputs in Sichuan province included 349 road subprojects with a total length of 3,467.2 km in 19 counties affected by the earthquake but not paired with a donor province.5 All roads were paved to provide rural residents with all-weather access to markets, schools, clinics, and other facilities. Geotechnical protection civil works were added to prevent potential disasters. Table 1: Project Outputs (Reconstructed/rehabilitated) in Sichuan Province

No. County or Subprojects (number) Length (km) 1 14 271.0 2 9 113.6 3 City 18 128.8 4 29 121.5 5 Luojiang County 33 134.4 6 31 269.0 7 24 272.8 8 18 261.0 9 13 250.9 10 Yuanba District 22 274.0 11 Beicheng District 14 100.7 12 26 225.0 13 26 268.0 14 9 106.3 15 11 108.2 16 City 35 270.1 17 4 51.9 18 Lushan County 9 130.0 19 4 110.0 Total 349 3,467.2

12. In four of the worst affected counties—Ningqiang, Lueyang, Mian, and Chencang— Shaanxi Province, 10 transport subprojects with a total of 317 km of roads, and 12 schools were rehabilitated and reconstructed. The schools were rebuilt with better facilities and more classrooms to accommodate more students; three were equipped with multimedia facilities and science laboratories.

4 GB50011 Code for Seismic Design of Buildings was updated in 2010 with higher standards. 5 At appraisal, 368 earthquake-damaged roads with total length of about 3,500 km were included, but the scope was changed during implementation due to cost overruns.

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C. Project Costs

13. The total project cost was estimated at $441.6 million; ADB provided $400.0 million to cover the civil works cost for rehabilitation and reconstruction of the transport and education infrastructure, design, construction supervision, procurement, taxes and duties, and interest during implementation. The provincial and local governments provided the counterpart financing for project management and for the remaining costs of construction for packages not 100% financed by ADB. 14. The cost of project components in Sichuan Province increased by 32.7%, from $340.9 million to $452.4 million. The increase resulted from (i) price escalation of materials and labor in Sichuan because of the massive reconstruction investment during 2009–2012; (ii) improved design to ensure greater capacity to withstand potential disasters; (iii) cost adjustment for more protection works to prevent potential landslides during the rainy season; and (iv) appreciation of the local currency during project implementation. 15. The cost of the project components in Shaanxi Province increased by 15.1%, from $100.7 million to $115.8 million. The increase in costs resulted from (i) price escalation of materials; (ii) restoration of roads damaged by devastating floods in 2010; and (iii) currency appreciation during project implementation. 16. The project’s financing plan was adjusted during implementation. Only $0.1 million was paid from the ADB loan in 2009 for the interest and commitment charges during construction. The Ministry of Finance paid the remaining costs through a special arrangement for the emergency loan. The remaining loan proceeds of $35.1 million for interest and commitment charges during construction were reallocated for civil works. Counterpart funds increased from $41.6 million to $168.2 million, and the counterpart contribution to the total funding requirement increased from 9.4% to 29.6%, of which the central government provided $110 million and local governments $58.2 million. Appendix 3 provides details of the project costs and financing plan. D. Disbursements

17. Almost all of the $400.0 million loan proceeds were disbursed during 2009–2013. The loan savings of $0.016 was canceled when the loan account was closed on 18 December 2013. Disbursement control procedures were satisfactory. Of the ADB loan proceeds disbursed, $377.6 million went to civil works for rural roads, $22.3 million to schools, and $0.1 million was capitalized for interest during construction and the commitment charges. Due to the start-up delay, disbursements were relatively slow in the early stages of implementation, but accelerated significantly by the third quarter of 2010 following the award of major contracts during 2010– 2011. The imprest account became effective in April 2010, which ensured the timely release of payments to contractors and suppliers for small transactions. Projected and actual contract awards and disbursements are set out in Appendix 4.

E. Project Schedule

18. The project was to be implemented over 3 years from April 2009 to December 2011. Despite slow implementation progress in the first year, the Sichuan Provincial Transport Department (SPTD) and the Sichuan Highway Administration Bureau (SHAB) caught up with implementation to ensure completion of all Sichuan subprojects before the original loan closing date of 30 June 2012. However, implementation delays in Shaanxi Province, which resulted from (i) slow approval of the design and the first bidding document; (ii) geologic hazards

6 The saving was $0.01 due to accounting issue.

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including landslides and collapse caused by torrential rain and floods in the project area in 2010 and 2011; and (iii) the change of design to coordinate with the construction of the Shiyan– Tianshui expressway, required that the loan closing date be extended from 30 June 2012 to 30 June 2013. The appraisal and actual project implementation schedules are in Appendix 5.

F. Implementation Arrangements

19. The entire project is located in Sichuan and Shaanxi provinces, with province-specific implementation arrangements. SPTD, which accumulated sufficient technical and administrative capabilities during previous ADB loan projects in Sichuan, was designated as the executing agency, responsible for overall administration of project implementation in Sichuan. SHAB was the implementing agency for project implementation in Sichuan. SHAB established a project management office (PMO), which was equipped with technical, financial, project management and safeguard experts. Under the guidance of SHAB and SPTD, local transport bureaus were responsible for maintenance of the project roads.

20. Shaanxi Province established a leading group headed by the vice-governor to guide and monitor project implementation. Hanzhong and Baoji city governments were the project executing agencies. Each established a project management office (PMO), headed by a project director and supported by a project management team. Four local transport bureaus were designated as implementing agencies for road subprojects in three counties: Lueyang, Mian, and Ningqiang; and . Three local education bureaus were implementing agencies for school subprojects in Lueyang and Mian counties and Chencang District. Local transport bureaus were responsible for maintenance of project roads, and local education bureaus administrated the project schools. The project organization charts are in Appendix 6.

G. Conditions and Covenants

21. All covenants were relevant. No covenants were modified or waived during implementation. All current loan covenants due were complied with or were being complied with as of December 2014. The Sichuan and Shaanxi provincial audit offices audited the project accounts and financial statements of the two provinces, and audited reports were submitted on time. The reports were useful in identifying and addressing issues and weaknesses in project implementation. Compliance with the loan covenants is set out in Appendix 7.

H. Related Technical Assistance

22. On 19 February 2009, ADB approved a $700,000 piggy-back TA to (i) build capacity for project implementation, (ii) build capacity for rural road construction in Sichuan and Shaanxi provinces, and (iii) establish model schools and train teachers in Shaanxi Province. Recruitment of consultants was delayed in the first 2 years as the executing and implementing agencies had to give priority to the emergency rehabilitation works, including preparation of the feasibility study reports, preliminary and detailed designs, and procurement of civil works. TA implementation started in February 2011 and was completed on 30 June 2012. The TA provided training to PMO staff and to students in the reconstructed schools to improve risk management awareness and knowledge. Risk mitigation and safety measures were incorporated into the basic training of engineers, contractors, and builders during the reconstruction.

23. The TA helped build the capacity of teachers in Shaanxi Province, including tailor-made training for student-centered teaching, information and communication technology applications in education, and interactive library management. About 300 teachers participated in the training

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and three study tours to advanced schools in , , and Xi'an. A final workshop was held to disseminate the training materials and the teacher's reference book developed under the TA to 120 participants, including teachers from nonproject areas. The local education bureaus recognized the three pilot model schools established as the standard to be followed by other schools in the counties. About 450 project staff participated in the training for the sustainable development of rural roads. Two study tours to Yunnan and Fujian provinces were organized to learn about their experience in developing rural roads, and three technical handbooks were developed on rural road construction and maintenance.

I. Performance of Consultants, Contractors, and Suppliers

24. The overall performance of the consultants was generally satisfactory. The external resettlement monitoring consultant monitored and evaluated the resettlement impacts, and prepared the resettlement monitoring reports in accordance with the approved resettlement plans. Domestic design institutes assisted with the full range of design services, including engineering drawings and costing. The required engineering standards and the most recent seismic codes were applied in the design. However, due to the large workload for domestic design institutes after the earthquake and the short time for project preparation, some design omissions occurred that required improvement during implementation. The tendering agencies supported the procurement of all works, goods, and services effectively. The local environment monitoring stations monitored the ambient environmental quality and construction-related environmental impacts, and prepared regular environmental monitoring reports in accordance with the approved environmental monitoring programs. The overall performance of the contractors and suppliers was satisfactory. The contractors completed the construction works generally on time and with acceptable quality. The equipment was supplied and installed according to prescribed specifications.

J. Performance of the Borrower and the Executing Agency

25. The performance of the borrower, executing agencies, and PMOs in both Sichuan and Shaanxi provinces was rated satisfactory. The PMOs were established on time with adequate staff resources. The Shaanxi provincial leading group held periodic meetings to monitor the project’s overall reconstruction plan and provided policy guidance to the PMOs. The borrower, executing agencies, and PMOs fulfilled their obligations during project implementation. A systematic project management system was put in place to ensure the effective use of funds. Domestic funds were mobilized on time. The submission of withdrawal applications was timely, and contractors were promptly paid.

K. Performance of the Asian Development Bank

26. ADB’s performance during project implementation is rated satisfactory. ADB conducted regular loan review missions and provided effective advice to the PMOs on project implementation, monitoring, and procurement matters. Despite the huge number of contracts, ADB reviewed and processed procurement documents efficiently.7 ADB processed the requests of the borrower and the PMOs promptly. Withdrawal applications were processed and disbursed on time. The PMOs expressed satisfaction with the transfer of project administration to ADB’s PRC resident mission, which facilitated closer and more efficient communication and coordination.

7 A total of 427 contracts were awarded for the project, under NCB procurement post review.

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III. EVALUATION OF PERFORMANCE

A. Relevance

27. The project is rated highly relevant, both at appraisal and completion, to the government’s development strategy and ADB’s operating priorities. It was aligned with ADB's Disaster and Emergency Assistance Policy to support national and provincial governments and other stakeholders to overcome exogenous shocks caused by calamities, and it responded to the PRC’s regulation on post-Wenchuan earthquake disaster recovery and reconstruction issued by the PRC government on 8 June 2008. The project was consistent with the PRC's 11th and 12th 5-year plans. Rural road development was a priority for the PRC to achieve the goal of a harmonious society. The overall objective of the Rural Road Development Plan approved by the State Council in February 2005 was that by 2020 all townships and villages in the PRC would be accessible by paved roads, forming a high service rural road network providing rapid, safe, and comfortable travel for farmers.

B. Effectiveness in Achieving Outcome

28. The project is rated effective in achieving its outcome. Once the rehabilitated or reconstructed rural roads were open to the public, traffic flow and travel time on the roads and bridges were restored to or exceeded pre-earthquake rates. Rural areas now have access to paved and all-season roads, making it easier for children to go to school. More clinics, post offices, and mobile phone services are provided along roads. Twelve schools were rehabilitated or reconstructed, of which three were set up as demonstration schools equipped with multimedia facilities and science laboratories. The number of children attending school returned to pre-earthquake rates. The project provided better facilities and services with higher school standards, including dormitories, dining rooms, reading rooms, and toilet facilities. It demonstrated advanced teaching methods by using multimedia land science laboratories, which are copied by other schools in the project area.

C. Efficiency in Achieving Outcome and Outputs

29. The project is rated efficient in achieving the outcome and outputs. In Sichuan Province, it rehabilitated and reconstructed 3,467 km of rural roads; and in Shaanxi Province, it rehabilitated and reconstructed 317 km of roads, and 12 schools with improved design standards. The project allowed for roads and schools to be rehabilitated and reconstructed in a short period of time, reversing the devastating impact of the earthquake, reviving economic activity, and improving livelihoods. The project benefitted the project area with (i) savings in vehicle operating costs due to shorter travel time and improved traffic conditions, (ii) time savings, (iii) benefits to generated traffic, (iv) savings resulting from fewer accidents, (v) value- added of business along the rural roads attributable to the project, and (vi) better education for future opportunities for employment and participation in economic activities.

30. Community participation contributed to efficient project implementation. The local affected communities actively participated in the selection, design, implementation, operation, and maintenance of all works carried out under the project. Local villagers voluntarily monitored implementation of the road reconstruction. They checked the materials used and measured the thickness and width of the road, based on the design documents, to ensure the quality of the rehabilitation and reconstruction.

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D. Preliminary Assessment of Sustainability

31. The project is rated likely to be sustainable. The project was designed and constructed in accordance with the required engineering standards and the latest seismic codes, and is considered to be of sufficient quality to meet the design service life to ensure the realization of the project’s benefits in the long term. The training provided by the TA strengthened the capacity of the executing and implementing agencies to ensure sustainable operation and maintenance. The executing and implementing agencies accumulated sound technical and administrative capacity for the management of construction and maintenance of rural roads and schools in a smooth manner. The experience gained from the project for project management, particularly for procurement management, has been shared with other projects financed by domestic funds.

32. SPTD, the Shaanxi Provincial Transport Department, and the local governments are committed to maintaining the local roads and rural road networks. In October 2005, the PRC State Council issued a new rural road administration policy aimed at improving institutional arrangements, budgeting, and local government capacity for road management through outsourcing and market-oriented operation and maintenance. SPTD and the Shaanxi Provincial Transport Department, through the local highway bureaus, responded to the government’s call with proactive sustainability measures for local roads and rural road networks in the province. This commitment and the priority assigned to local and rural road development, with steady budget support and multilevel input will ensure the sustainable development of local and rural roads, and provide remote and poor areas with easier access and greater connectivity.

E. Impact

33. Construction and operation of the thousands of rural roads in the project have rehabilitated and improved the road network, resulting in better transport conditions and increased traffic capacity in the project area. This has enabled better access to markets for local agricultural products. With project completion, agricultural enterprises that include planting, breeding, and processing factories, were increasingly being set up in rural areas. These enterprises introduced new technologies and management skills, and upgraded their industrial structures in the project areas. Local employment was improved by local government and enterprises during project implementation. Improved traffic conditions allowed people, especially those from remote areas, to take the public bus or motorcycles to work, ensuring that more people can transit to off-farm activities. 34. The project has assisted in rebuilding six primary schools and six high schools, including classrooms, laboratories, dormitories, libraries, play grounds, dining halls, and heating systems. A total of 80,000 square meters (m2) of new buildings were constructed under the project, benefiting 30,000 students in the project areas. Since new buildings were constructed in line with higher service standards, the antidisaster capability of those schools has been improved. The training program supported by the TA has improved the teaching expertise of more than 200 rural teachers. 35. The project contributed to rehabilitation and rural development in earthquake-stricken areas, including (i) upgraded agricultural development and industrial structure through the improved roads network, (ii) enhanced project benefits to the poor and increased rural income in the project areas, (iii) job creation during project construction and operation, (iv) improved labor mobility and increased engagement in off-farm jobs; and (v) improved gender development through better transport conditions and education development in the project areas.

9

36. The severe earthquake seriously impacted rural residents, particularly poor and vulnerable groups in the project area. With implementation of the earthquake disaster rehabilitation program, the income of affected people has been significantly increased. According to the project completion report prepared by SPTD, during 2008–2013, the growth of average rural income per capita in 19 project counties and cities in Sichuan was in the range of 45%–150%. The poverty ratio has declined in the project area. 37. The monitoring reports prepared by Southwest Jiaotong University indicate that the reconstruction of rural roads in Sichuan Province involved upgrading existing roads within the available rights-of-way without land acquisition or demolition of structures. The project permanently acquired 345.69 mu of land in Shaanxi, 29.7% more than the estimated area in the resettlement plans. A total of 10,435.19 square meters of houses and buildings were demolished, 36.6% less than estimated. Accordingly, a total of 575 households were affected by land acquisition, 11.7% more than estimated; 162 households were affected by house demolition, 3.6% less than in the resettlement plans. The increased land acquisition was due to additional lands acquired to deal with landslides caused by floods during project implementation and low cost estimates. Affected persons were adequately compensated and rehabiliated. 38. Local environmental protection bureaus and monitoring stations were contracted to conduct compliance monitoring covering air quality, noise, and water quality according to government laws and regulations. The environmental management plan of each subproject was implemented generally well during construction. Project construction did not result in any major environmental damage. Measures were taken to minimize the negative impacts to the local and regional environment during construction and operation of the subprojects. For civil works bids, environmental monitoring and mitigation of impacts were key evaluation criteria, and were carefully reviewed and evaluated. All procurement bidding documents and contracts included environmental protection provisions. IV. OVERALL ASSESSMENT AND RECOMMENDATIONS

A. Overall Assessment

39. The project is rated successful. It was (i) highly relevant to the government’s development strategies and ADB’s strategy under ADB's Disaster and Emergency Assistance Policy, (ii) effective in achieving outcomes of restoring access to transport and education infrastructure to pre-earthquake levels in Sichuan and Shaanxi provinces, (iii) efficient in achieving the outcomes and outputs, and (iv) likely to be sustainable. The project was successfully implemented and achieved its main objectives of accelerating restoration of transport and education infrastructure in the earthquake-affected areas of Sichuan and Shaanxi provinces, which reversed the devastating impact of the earthquake, revived economic activity, improved livelihoods, and helped affected people return to their normal lives. The piggy-back TA helped to build capacity in operating and maintaining transport and education facilities, and raised disaster risk awareness among students and local residents.

B. Lessons

40. This is the first emergency assistance loan to be processed for the PRC under ADB’s Disaster and Emergency Assistance Policy. The project comprised more than 363 subprojects in 23 counties in two provinces, including reconstructing and upgrading rural roads ranging in length from 3 km to 32 km and rebuilding 12 schools. The PMOs and implementing agencies had no experience in implementing ADB projects. Their relatively weak capacity in managing many subprojects resulted in implementation lagging during the first 2 years. The TA-supported

10

training strengthened the project management capacity and knowledge of ADB policies of the staff of the PMOs and implementing agencies. A special review mission was conducted in both Sichuan and Shaanxi provinces in 2010 to fully coordinate the major reconstruction works and identify the bottlenecks that impede construction progress and resettlement implementation. Further, procurement and disbursement arrangements were also facilitated to ensure timely approval, award of contracts and disbursements. 41. The project engagement of external monitors in both Sichuan and Shaanxi enabled timely response to any involuntary resettlement impact during project construction and ensured full compensation and income restoration of affected villages. The emergency loan adopted a framework approach for resettlement safeguard management, i.e., a resettlement framework was prepared during loan processing, and during implementation detailed resettlement plans were prepared for all subprojects with adverse impacts. In general, this approach worked well for the emergency project with minor to moderate resettlement impacts to achieve streamlined loan processing. The environmental management practices during construction were implemented well by contractors and public participation was solicited effectively with public awareness campaigns on environmental protection and public health and well integrated with operations and maintenance of completed roads and education facilities. This approach facilitated project implementation and in the future can be adopted taking into account the emergency nature of components.

C. Recommendations

42. The experience of efficient and effective rescue and reconstruction for such a devastating earthquake resulted in lessons and some recommendations. The response of the PRC government, related agencies and institutes was unprecedented. Less than two hours after the event, Premier Wen Jiabao went to the affected area and stayed in the region for the first five days to lead the search and rescue efforts, and at very beginning established the Recovery and Reconstruction of the Earthquake Relief Headquarters under the State Council. Strong central government leadership played a key role, which ensured the work of search and rescue, quarantine, deployment of supplies, rehousing of victims, and distribution of the wounded well organized. The PRC government welcomed relief assistance from all countries throughout the world with an open attitude, invited and arranged foreign support to disaster relief, and provided direct access for materials and equipment contributions to reach the disaster areas quickly. 43. An innovative reconstruction assistance system was adopted by requiring the developed provinces and municipalities in the eastern and middle region to give assistance to the heavily affected counties in the disaster area, matching one province with an affected county. The ADB project covered the counties which were not supported by any designated provinces. To avoid serious potential risks from future geological hazards, the sites of all reconstructed buildings including the schools were determined carefully. All the new buildings were designed and constructed with adequate earthquake resistance capacity in compliance with the updated national standards. The reconstruction work guided by the State Overall Planning for Post- Wenchuan Earthquake Restoration and Reconstruction, including the assistance by the ADB’s emergency loan project, reversed the devastating impact of the earthquake, revived economic activity, improved livelihoods, and helped people return to normal life as quickly as possible given the huge reconstruction task. 44. Project design of emergency projects needs to provide for more detailed implementation arrangements on county level for project coordination, resettlement, and subproject prioritization to ensure more active participation and involvement of affected communities for numerous village roads. Due diligence for prioritized road components should ensure that the

11

reconstruction follow the existing right-of-way during project screening to ensure no demolition of structures and land acquisition issues. To facilitate project start-up, the PMO should ensure closer coordination with donor funding organizations on project scope, timely approval of domestic and donor requirements and ensure synergy and synchronization of construction works, environmental clearances and resettlement.

12 Appendix 1

DESIGN AND MONITORING FRAMEWORK

Performance Targets/Indicators Data Sources/ Design Reporting Summary At Appraisal At Completion Mechanisms Impact Accelerated restoration of In Sichuan Province, 29,000 km 31,000 km of rural roads were Government transport and education of rural roads reconstructed and reconstructed and rehabilitated by statistics infrastructure in the rehabilitated by 2012 2012 earthquake-affected areas of Sichuan and Shaanxi In Shaanxi Province, 381 schools More than 400 schools and 3,700 provinces reconstructed by 2011; and 3,200 km of roads were reconstructed by km of roads reconstructed by 2012 2012 Outcome People’s access to transport Travel time restored to pre- Travel time was restored to pre- Government and education infrastructure earthquake levels by December earthquake levels in Sichuan statistics is restored to pre- 2011 Province by December 2011 and in earthquake level in Shaanxi Province by March 2013 Project progress 19 counties of Sichuan reports and project Province and in 4 counties in Number of children attending Number of children attending school completion report Shaanxi Province school restored to pre- restored to pre-earthquake rate in earthquake rate by December Shaanxi Province by May 2012 2011 Output 1. Earthquake-damaged In Sichuan Province, about In Sichuan Province, about 3,467 Government roads and bridges in 3,500 km of roads rehabilitated km of roads were rehabilitated or statistics 19 counties of Sichuan or reconstructed by December reconstructed by December 2011 Province and in 4 counties in 2011 with improved design with improved design standards Project progress Shaanxi Province standards and completion rehabilitated reports In Shaanxi Province, 317 km of In Shaanxi Province, 317 km of roads roads rehabilitated or were rehabilitated or reconstructed by ADB review reconstructed by 2011 with 2013 with improved design standards missions improved design standards

2. Earthquake-damaged In Shaanxi Province, 12 schools 12 schools were rehabilitated or educational institutions in rehabilitated or reconstructed by reconstructed by December 2013; of three counties of Shaanxi December 2011; of these, two these, 3 model schools were set up Province rehabilitated model schools are set up with with multimedia facilities and science multimedia facilities and science laboratories laboratories

3. Capacity development By September 2010, capacity By April 2013, capacity building supported building support, through a support, through a technical technical assistance, provided assistance, is provided (i) to (i) to implementing agencies for implementing agencies for speedy speedy and smooth project and smooth project implementation; implementation; (ii) to schools (ii) to schools and teachers including and teachers; and training for teachers, domestic study (iii) for sustainable road operation tour, establishment of three pilot and maintenance systems schools (science, information communication and technology, and library), and prepared teaching manuals to be shared in more areas; and (iii) for sustainable road operation and maintenance systems being achieved by domestic study tour, staff training, and preparation of transportation management manual

Appendix 1 13

Activities with Milestones at Appraisal Actual Inputs 1. Road and bridge reconstruction 1. Road and bridge reconstruction  ADB: 1.1. Technical design completed by 1.1. Technical design was completed by October $100 million December 2010 2010. $77.65 million, 1.2. All procurement completed by March 1.2. All procurement was completed by June 2011. transport 2011 1.3. Civil works were started in July 2010 and $22.32 million, 1.3. Civil works started in April 2009 and completed by March 2013. education completed by November 2011 1.4. Physical works were completed by June 2013.  Government: 1.4. Physical works completed by December $9.4 million 2011 Technical 2. School reconstruction 2. School reconstruction Assistance: 2.1. Technical design completed by April 2.1. Technical design was completed by October  ADB: 2009 2010. $0.44 million 2.2. All procurement completed by July 2009 2.2. All procurement was completed by February  Government: 2.3. Civil works completed by December 2012. $150,000 2010 2.3. Civil works were completed by 30 June 2014. 2.4 Physical works completed by December 2.4 Physical works were completed by 30 June 2014. 2010

3. Capacity Building 3. Capacity Building 3.1. Technical assistance completed by 3.1. Technical assistance was completed by June October 2011 2012. 3.2. Training of implementing agencies 3.2. Training of implementing agencies started by started by March 2009 and training of March 2009 and training of teachers was teachers completed by September 2010 completed by March 2012. ADB = Asian Development Bank, km = kilometer. Sources: Asian Development Bank. 2009. Report and Recommendation of the President to the Board of Directors: Proposed Loan to the People's Republic of China for Emergency Assistance for Wenchuan Earthquake Reconstruction Project. Manila; and Sichuan Provincial Transport Department, Shaanxi Baoji Municipal Government, and Shaanxi Hanzhong Municipal Government.

14 Appendix 2

CHRONOLOGY OF MAJOR EVENTS IN THE PROJECT'S HISTORY

26 May 2008 Approval of project preparatory technical assistance 20–27 November 2008 Fact-finding mission fielded 12 January 2009 Management review meeting held 5–6 February 2009 Loan negotiations held 12 February 2009 Board circulation 17 February 2009 Loan approval 23 March 2009 Loan agreement signing 24 June 2009 Loan effectiveness 1 October 2009 First loan reallocation approved 14 December 2009 First contract of Sichuan Province approved 2–5 March 2010 Inception mission and hand-over mission 10 March 2010 Transfer of the project administration to the Asian Development Bank’s Resident Mission in the People’s Republic of China 5 April 2010 First contract of Shaanxi Province approved 13 April 2010 First disbursement 13–17 May 2010 First loan review mission 11–19 October 2010 Second loan review mission 10–18 May 2011 Midterm review mission 3 February 2012 Second loan reallocation approved 6 June 2012 First extension of loan closing date 10–22 June 2012 Fourth loan review mission 30 June 2012 Original loan closing date 12 November 2012 Third loan reallocation approved 6–13 May 2013 Fifth loan review mission 6 August 2013 Final disbursement 11 October 2013 Third loan reallocation approved 18 December 2013 Actual loan closing date 11–24 June 2014 Project completion review mission 15 August 2017 First repayment of loan principal

Appendix 3 15

PROJECT COSTS AND FINANCING PLAN

Table A3.1: Appraisal and Actual Project Costs of Transport Subprojects in Shaanxi ($ million)

At Appraisal Actual Component Cost ADB Government Cost ADB Government A. Base Cost 1. Civil works 61.2 60.6 0.6 86.2 73.2 13.0 2. Design procurement and 1.9 1.9 0.0 4.8 4.5 0.3 construction supervision 3. Project management 0.1 0.0 0.1 0.0 0.0 0.0 Subtotal (A) 63.2 62.5 0.7 91.0 77.7 13.3 B. Contingencies 1. Physical contingency 2.4 2.4 0.0 0.0 0.0 0.0 2. Price contingency 3.2 3.2 0.0 0.0 0.0 0.0 Subtotal (B) 5.6 5.6 0.0 0.0 0.0 0.0 C. Financing Charges during 7.5 7.5 0.0 0.0 0.0 0.0 Implementation Total Project Cost 76.3 75.6 0.7 91.0 77.7 13.3 % Total Project Cost 99.0 1.0 85.4 14.6 ADB = Asian Development Bank. Sources: Asian Development Bank. 2009. Report and Recommendation of the President to the Board of Directors: Proposed Loan to the People's Republic of China for Emergency Assistance for Wenchuan Earthquake Reconstruction Project. Manila; and Sichuan Provincial Transport Department, Shaanxi Baoji Municipal Government, and Shaanxi Hanzhong Municipal Government.

Table A3.2: Appraisal and Actual Project Costs of Education Subprojects in Shaanxi ($ million)

At Appraisal Actual Component Cost ADB Government Cost ADB Government A. Base Cost 1. Civil works 17.5 17.5 0.0 22.6 20.8 1.8 2. Design procurement and construction 1.0 1.0 0.0 2.1 1.5 0.6 supervision 3. Project management 1.2 1.2 0.0 0.0 0.0 0.0 Subtotal (A) 19.7 19.7 0.0 24.7 22.3 2.4 B. Contingencies 1. Physical contingency 1.5 1.5 0.0 0.0 0.0 0.0 2. Price contingency 1.2 1.2 0.0 0.0 0.0 0.0 Subtotal (B) 2.7 2.7 0.0 0.0 0.0 0.0 C. Financing Charges during 2.0 2.0 0.0 0.0 0.0 0.0 Implementation Total Project Cost 24.4 24.4 0.0 24.7 22.3 2.4 % Total Project Cost 100.0 90.3 9.7 ADB = Asian Development Bank. Sources: Asian Development Bank. 2009. Report and Recommendation of the President to the Board of Directors: Proposed Loan to the People's Republic of China for Emergency Assistance for Wenchuan Earthquake Reconstruction Project. Manila; and Sichuan Provincial Transport Department, Shaanxi Baoji Municipal Government, and Shaanxi Hanzhong Municipal Government.

16 Appendix 3

Table A3.3: Appraisal and Actual Project Costs of Transport Subprojects in Sichuan ($ million)

At Appraisal Actual Component Cost ADB Government Cost ADB Government A. Base Cost 1. Civil works 282.7 277.0 5.7 384.4 299.9 84.5 2. Design procurement and construction 0.2 0.0 0.2 20.9 0.0 20.9 supervision 3. Project management 12.6 0.0 12.6 47.0 0.0 47.0 Subtotal (A) 295.5 277.0 18.5 452.3 299.9 152.4 B. Contingencies 1. Physical contingency 13.9 0.0 13.9 0.0 0.0 0.0 2. Price contingency 8.6 0.0 8.6 0.0 0.0 0.0 Subtotal (B) 22.4 0.0 22.4 0.0 0.0 0.0 Financing Charges during 23.0 23.0 0.0 0.1 0.1 0.0 Implementation Total Project Cost 340.9 300.0 40.9 452.4 300.0 152.4 % Total Project Cost 88.0 12.0 66.3 33.7 Sources: Asian Development Bank. 2009. Report and Recommendation of the President to the Board of Directors: Proposed Loan to the People's Republic of China for Emergency Assistance for Wenchuan Earthquake Reconstruction Project. Manila; and Sichuan Provincial Transport Department, Shaanxi Baoji Municipal Government, and Shaanxi Hanzhong Municipal Government.

Table A3.4: Financing Plan ($ million)

Shaanxi Province Sichuan Province Total Cost At At At Cost Appraisal Actual Appraisal Actual Appraisal Actual A. Transport Subprojects 71.5 91.0 317.9 452.3 389.4 543.3 1. ADB-financed civil works 68.9 73.2 277.0 299.9 345.9 373.1 2. ADB-financed other costs 1.9 4.5 0.0 0.0 1.9 4.5 3. Government 0.7 13.3 40.9 152.4 41.6 165.7 B. Education Subprojects 19.7 24.7 0.0 0.0 19.7 24.7 1. ADB-financed civil works 15.7 20.8 0.0 0.0 15.7 20.8 2. ADB-financed other costs 4.0 1.5 0.0 0.0 4.0 1.5 3. Government 0.0 2.4 0.0 0.0 0.0 2.4 C. Financing Charges during 9.5 0.0 23.0 0.1 32.5 0.1 Implementation Total 100.7 115.7 340.9 452.4 441.6 568.1 Sources: Asian Development Bank. 2009. Report and Recommendation of the President to the Board of Directors: Proposed Loan to the People's Republic of China for Emergency Assistance for Wenchuan Earthquake Reconstruction Project. Manila; and Sichuan Provincial Transport Department, Shaanxi Baoji Municipal Government, and Shaanxi Hanzhong Municipal Government.

Appendix 4 17

PROJECTED AND ACTUAL CONTRACT AWARDS AND DISBURSEMENTS

Table A4: Projected and Actual Contract Awards and Disbursements ($ million)

Contract Awards Disbursement Actual/Projected Actual/Projected Year Projected Actual (%) Projected Actual (%) 2009 0.0 0.0 100.0 0.0 0.2 0.0 2010 122.0 113.9 93.4 67.1 67.0 99.9 2011 130.0 250.1 192.4 50.0 173.3 346.6 2012 147.9 35.9 24.2 282.9 159.2 56.3 2013 0.0 0.0 100.0 0.0 0.3 0.0 Total 399.9 399.9 400.0 400.0 Sources: Asian Development Bank loan financial information system.

Sources: Asian Development Bank loan financial information system.

18

APPRAISAL AND ACTUAL IMPLEMENTATION SCHEDULES Appendix

Content 2009 2010 2011 2012 2013

5 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

A. Loan Preparation 1. Loan Negotiation X 2. Board Approval X 3. Loan Effectiveness X B. Design Sichuan Rural Roads

Shaanxi Rural Roads

Shaanxi Schools

C. Procurement

Sichuan Rural Roads

Shaanxi Rural Roads

Shaanxi Schools

D. Civil Works Implementation Sichuan Rural Roads

Shaanxi Rural Roads

Shanxi Schools

E. Physical Completion Works Sichuan Rural Roads

Shaanxi Rural Roads

Shaanxi Schools

Sources: Sichuan Provincial Transport Department, Shaanxi Baoji Municipal Government, and Shaanxi Hanzhong Municipal Government.

Appendix 6 19

ORGANIZATION CHARTS

Figure A6.1: ADB Funds Flow in Sichuan Province

ADB MOF

PFD Provincial PMO

CIFD City PMO

CFD County PMO

Fund flow Request of withdrawal application ADB = Asian Development Bank, CFD = county finance department CIFD = city finance department, MOF = Ministry of Finance, PFD = provincial finance department, PMO = project management office. Source: Ministry of Finance, People's Republic of China.

Figure A6.2: ADB Funds Flow in Shaanxi Province

ADB MOF

PFD

ADB loan office at city level (EA) CIFD

CFD County Education Bureau (IA) County Transport Bureau (IA)

Fund Flow Request of Withdrawal application

ADB = Asian Development Bank, CIFD = city finance department, CFD = county finance department, MOF = Ministry of Finance, PFD = provincial finance department, PMO = project management office. Source: Ministry of Finance, People's Republic of China.

20 Appendix 6

Figure A6.3: Project Implementation Arrangement in Sichuan Province

ADB MOF

SPFB

SPTD (EA)

SHAB (IA)

PMO at county level (19 counties)

ADB = Asian Development Bank, EA = executing agency, IA = implementing agency, MOF = Ministry of Finance, PMO = project management office, SHAB = Sichuan Highway Administration Bureau, SPFB = Sichuan Provincial Finance Bureau, SPTD = Sichuan Provincial Transportation Department. Source: Ministry of Finance, People's Republic of China.

Figure A6.4: Project Implementation Arrangement in Shaanxi Province

ADB MOF

PPMO

ADB loan office PMO at city level (EA) (2 cities)

County Education County Transport Bureau (3 counties) Bureau (4 counties) (IA) (IA)

ADB = Asian Development Bank, EA = executing agency, IA = implementing agency, MOF = Ministry of Finance, PMO = project management office, PMOED = Project Management Office for Education, PMOTR = Project Management Office for Transportation, PPMO = provincial project management office. Source: Ministry of Finance, People's Republic of China.

Appendix 7 21

STATUS OF COMPLIANCE WITH LOAN COVENANTS (as of June 2014)

Covenant Reference Status of Compliance Implementation Arrangements 1. Established, Staffed, and Operating PMU or PIU Complied with.

2. Project Executing Agencies: SPTD in Sichuan Province LA, Schedule 5, Complied with. and the Hanzhong and Baoji City Governments in paras. 2-3 Shaanxi Province are the Project Executing Agencies (EA).

3. Role of PMO: Each EA will establish a PMO, headed by Project Complied with. PMOs a project director and supported by a team specialized Agreements were established as in project management, technical aspects, and (PAs), required in Sichuan and environmental and social issues as required. The PMOs Schedule, Shaanxi provinces. will be responsible for (i) providing day-to-day paras. 1-2 assistance and guidance to the project IAs; (ii) reviewing subprojects to satisfy ADB’s due diligence requirements and approving subproject proposals submitted by line departments and IAs; (iii)consolidating project accounts; (iv) consolidating and submitting progress reports to ADB; (v) conducting review of financial reports provided by the IAs; and (v) reviewing compliance with specifications and plans and quality control by agencies undertaking reconstruction works. 4. Implementing Agencies: Sichuan Highway LA, Schedule 5, Complied with. Administration Bureau (SHAB) will act as Implementing para. 4 All IAs set up PMOs as Agency (IA) for the roads in Sichuan Province. County required. Highway Administration Bureaus will act as IAs for the PAs, Schedule, roads and bridges and County Education Bureaus as para. 3 IAs for schools in the respective counties of Shaanxi Province. The IAs will have PMOs for implementing and monitoring the subprojects.

5. Role of IAs: The IAs will be responsible for (i) LA, Schedule 5, Complied with. implementing reconstruction works and activities; para. 5 All IAs played their (ii) conducting detailed assessments, surveys, and roles as required. planning of reconstruction, including public consultation PAs, Schedule, and input from recipient local entities and beneficiaries para. 3 as required; (iii) preparation and implementation of short resettlement plans, as required; (iv) prioritizing works, and preparing detailed designs, specifications, quantity schedules, bidding documents, contracts, and related documentation; (v) preparing regular progress reports for ADB through the respective EAs; and (vi) supervising construction, conducting quality control, approving progress payments to contractors, and maintaining records and accounts on an up-to-date basis and making these available to ADB, its missions, or auditors for inspection.

Construction Quality 6. The Sichuan Provincial Government (SPG) and Shaanxi PAs, Schedule, Complied with. Provincial Government (SAPG) will ensure that all para. 10 Quality control was

22 Appendix 7

Covenant Reference Status of Compliance construction of roads, bridges, and schools is carried conducted during the out in strict compliance with the appropriate engineering construction period and specifications and building code approved by the necessary quality Government for seismic-resistant buildings. inspections were carried out upon completion of all subprojects. Counterpart Financing 7. The Government will cause SPG and SAPG to ensure LA, Schedule 5, Complied with. that (a) all counterpart financing necessary for the para. 6 Domestic funds were Project is provided in a timely manner, and (b) provided timely and additional counterpart funding is provided in the event of PAs, Schedule, ensured smooth any shortfall of funds or cost overruns to complete any para. 4 implementation of the subprojects that have already commenced construction. project.

Subprojects 8. SPG and SAPG will ensure that all subprojects meet, to PAs, Schedule, Complied with. the satisfaction of ADB, the agreed selection criteria and para. 5 Selection criteria of implementation arrangements, and that all subprojects subprojects were are properly monitored to the satisfaction of ADB. followed and monitored. 9. Except as ADB may otherwise agree, all transport PAs, Schedule, Complied with. subprojects shall meet the following criteria: para. 6 The criteria were (i) subproject shall be located in one of the nineteen followed. earthquake affected counties of Sichuan and Shaanxi provinces; (ii) subproject shall be part of the State Overall Plan for Post-Wenchuan Earthquake Restoration and Reconstruction. (iii) section selection shall be based on timeliness criteria and consider the magnitude of socioeconomic impacts; (iv) a section that solves communities' isolation shall be given higher priority; (v) subproject shall avoid any area that requires resettlement. In the event any section involves land acquisition or resettlement, ADB's Involuntary Resettlement Policy (1995) and the RF shall be followed; (vi) subproject shall avoid any serious environmental adverse impacts. Selected sections' design and implementation shall comply with the Borrower's applicable environment protection laws and regulations and ADB's Environment Policy (2002) and agreed EARF; and (vii) subproject shall be technically feasible, cost efficient and financially sustainable.

10. Except as ADB may otherwise agree, all education Complied with. subprojects shall meet the following criteria: The criteria were (i) Subproject shall be located in one of the four followed. earthquake affected counties of Shaanxi province; (ii) subproject shall be part of the program for

Appendix 7 23

Covenant Reference Status of Compliance rehabilitation of educational facilities under the State Overall Plan for Post-Wenchuan Earthquake Restoration and Reconstruction; (iii) selection of the educational institute shall be based on timeliness criteria and consider the magnitude of socioeconomic impacts; (iv) schools located in the remote isolated area shall be given preference; (v) subproject shall avoid any area that requires resettlement. In the event that any school involves land acquisition or resettlement, ADB’s Involuntary Resettlement Policy and the RF shall be followed; (vi) subproject shall be technically feasible, cost efficient and financially sustainable. Community Participation 11. The SPG and SAPG will ensure that the EAs and IAs PAs, Schedule, Complied with. actively seek community participation in the selection, para. 7 Local laborers were design, and implementation of all works carried out hired when applicable. under the Project, including maintenance of the project facilities. To that extent, a provision will be included in all tender documents that contractors will give preference to local labor, where applicable.

Operation and Maintenance 12. SPG and SAPG will ensure that the facilities provided PAs, Schedule, Being complied with under the Project are operated and maintained paras. 8-9 All subprojects are appropriately, and that adequate budgetary and other managed and resources are provided for operation and maintenance maintained by proper in a timely manner. SPG and SAPG shall ensure that government units to positions required to meet the staffing requirements are ensure their operation. in place before the start of any subproject. 13. SPG and SAPG shall ensure that positions required to Complied with. meet the staffing requirements are in place before the Proper staffing was set start of any subproject. up. Environment 14. SPG and SAPG will ensure that adequate PAs, Schedule, Complied with. environmental mitigation measures in accordance with para. 11 For more details, refer (a) the Government’s environmental regulations and (b) to Appendix 10. ADB’s Environment Policy (2002) are incorporated into all subproject design and implementation. The Government will ensure that the environmental management plan (EMP) to mitigate any adverse environmental impacts is implemented, and in the event that unexpected impacts occur, remedial measures are prepared in consultation with ADB. The SPG and SAPG will ensure that the agreed environmental assessment review framework is applied in selecting subprojects, that a subproject for which an environmental assessment study is required has such a study completed, and that a subproject for which government environmental clearance is required obtains such clearance prior to the award of any contracts for that subproject.

24 Appendix 7

Covenant Reference Status of Compliance Land Acquisition and Resettlement 15. SPG and SAPG will cause the EAs and IAs to ensure PAs, Schedule, Complied with. (a) all the subprojects are screened for resettlement para. 12 More details in impacts and those subprojects with impacts have short Appendix 8. resettlement plans prepared and approved in accordance with the resettlement framework; (b) all resettlement plans are implemented in accordance with their terms; (c) all land and rights-of-way required by the Project are made available in a timely manner; (d) the provisions of the resettlement plan, including compensation and entitlements for affected persons (APs), will be implemented in accordance with all applicable government laws and regulations and ADB’s Involuntary Resettlement Policy (1995); (e) compensation and resettlement assistance are given to the APs prior to dispossession and displacement; (f) timely provision of counterpart funds for land acquisition and resettlement activities; (g) any obligations in excess of the resettlement plan budget estimate are met; and (h) the APs will be at least as well off as they would have been in the absence of the Project.

16. SPG and SAPG will cause the EAs and IAs to PAs, Schedule, Complied with. (a) ensure that civil works contractor specifications para. 13 More details in include requirements to comply with the resettlement Appendix 8. framework and relevant resettlement plans, including temporary land occupation requirements; (b) supervise the contractors to ensure compliance with the requirements of the resettlement plan, applicable laws and regulations, and ADB’s Involuntary Resettlement Policy; and (c) encourage contractors, as a priority, to provide employment to at least 50% of the APs of employable age.

17. SPG and SAPG will cause the EAs and IAs to ensure PAs, Schedule, Being complied with. that (a) adequate staff and resources are committed to para. 14 An adequate number of supervising and monitoring the implementation of the staff responsible for resettlement plans and maintaining related resettlement issues documentation; and (b) an independent resettlement were equipped in each expert(s) acceptable to ADB is engaged by the EAs, if PMO and independent necessary, to conduct due diligence and report to ADB, monitors were provide guidance to IAs on resettlement plan engaged. Monitoring preparation, carry out independent monitoring and reports were submitted evaluation of resettlement, and prepare and submit to ADB. annual monitoring reports to ADB.

Poverty Reduction 18. SPG and SAPG will cause the EAs and IAs to PAs, Schedule, Complied with. encourage the contractors to maximize the employment para. 15 Local people were of poor local people who meet the job and efficiency employed during requirements for construction of the project roads, construction. bridges and schools.

Appendix 7 25

Covenant Reference Status of Compliance Labor Standards 19. SPG and SAPG will cause the EAs and IAs to ensure PAs, Schedule, Complied with. that civil works contractors comply with all applicable para. 16 Relevant provisions labor legislation. Bidding documents and civil works were included in the contracts shall include clauses prohibiting child labor for bidding documents and construction and maintenance activities, ensuring equal contracts. pay for men and women for work of equal value, and requiring a timely payment for workers on a monthly basis. The compliance will be monitored by the IAs.

Gender and Development 20. SPG and SAPG shall cause the EAs and IAs to (a) take PAs, Schedule, Complied with. all reasonable and necessary steps to encourage para. 17 More details in women living in the project area to participate in the Appendix 9. planning and implementation of the Project, including causing the contractors to maximize their employment of women in connection with the Project; (b) ensure that for works that can be done by both male and female workers, female workers will be given equal opportunities for employment; and (c) ensure that the Project is implemented in accordance with ADB’s Policy on Gender and Development (1998).

Governance and Anticorruption 21. ADB’s Anticorruption Policy (1998, as amended to date) PAs, Schedule, Complied with. was explained to and discussed with the Government. para. 18 No corruption was Consistent with its commitment to good governance, identified during project accountability, and transparency, ADB reserves the implementation. right to investigate, directly or through its agents, any alleged corrupt, fraudulent, collusive, or coercive practices relating to the Project. To support these efforts, relevant provisions of ADB’s Anticorruption Policy are included in the loan regulations and the bidding documents for the Project. In particular, all contracts financed by ADB in connection with the Project shall include provisions specifying the right of ADB to audit and examine the records and accounts of the EAs and IAs, and all contractors, suppliers, consultants, and other service providers as they relate to the Project. The EAs will: (a) involve the agencies responsible for oversight of each IA in bidding and construction in order to monitor construction quality control and supervise effective work; (b) introduce a dual-signing system in which the civil works contract winner also signs an anticorruption agreement with the concerned IA; (c) periodically inspect the contractors’ activities related to fund withdrawals and settlements; (d) support the PMOs and the IAs to ensure good governance, accountability, and transparency in project operations; and (e) initiate liaison meetings with the relevant agency, as needed, to discuss any warnings about, or information on, alleged corrupt, fraudulent, collusive, or coercive practices relating to the Project. The provincial governments will ensure that proper

26 Appendix 7

Covenant Reference Status of Compliance accounting and audit procedures are in place to ensure efficient and economic use of the ADB financing proceeds. Accounts and financial statements in relation to the Project and the subprojects will be maintained and certified by independent auditors acceptable to ADB.

Project Performance Monitoring and Evaluation 22. SPG and SAPG shall ensure that the PMOs carry out PAs, Schedule, Complied with. the necessary arrangements for systematic PPMS. The para. 19 Data and reports were PPMS shall include the indicators agreed with ADB. prepared properly.

Project Reviews 23. SPG and SAPG, together with ADB, shall carry out PAs, Schedule, Complied with. regular Project reviews, including a midterm review para. 20 An ADB review mission approximately in 2010 to assess the need for changes was carried out each required in the implementation arrangements to achieve year and the midterm overall objectives of the Project. review was carried out in 2011.

Others 24. SPG and SAPG shall cause BCG, HCG and IAs to PA, Art. II, para. Complied with. enable ADB's representatives to inspect the Project, the 2 ADB’s review missions Goods and Works financed out of the proceeds of the and consultants were Loan, all other buildings, sites, properties and supported in Sichuan equipment of BCG, HCG and IAs, as they relate to the and Shaanxi. Project, and any relevant records and documents. 25. Finance of Goods, Works and Consulting Services. PA, Art. II, Complied with. Except as ADB may otherwise agree, all Goods, Works para.2 ADB’s procurement and consulting services to be financed out of the policy, guidelines, and proceeds of the Loan shall be procured in accordance procedures were with the provisions of Schedule 4 to the Loan followed and Agreement. ADB may refuse to finance a contract monitored. where Goods, Works or consulting services have not been procured under procedures substantially in accordance with those agreed between the Borrower and the ADB or where the terms and conditions of the contract are not satisfactory to ADB.

26. Insurance. (a) SPG, SAPG, BCG, HCG and IAs shall PA, Art. II, Complied with. take out and maintain with responsible insurers, or para.2 Insurance was make other arrangements satisfactory to ADB for, arranged properly insurance of the Project facilities to such extent and during implementation. against such risks and in such amounts as shall be consistent with sound practice. (b) Without limiting the generality of the foregoing, SPG, SAPG, BCG, HCG and IAs undertake to insure, or cause to be insured, the Goods to be imported for the Project and to be financed out of the proceeds of the Loan against hazards, incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable to replace or repair such Goods.

Appendix 7 27

Covenant Reference Status of Compliance 27. Reports. Without limiting the generality of the foregoing, PA, Art. II, Complied with. SPG and SAPG shall furnish to ADB quarterly reports para.2 Quarterly reports were on the execution of the Project, and on the operation submitted basically on and management of the Project facilities, as necessary. time. Such reports shall be submitted in such form and in such detail and within such a period as ADB shall reasonably request, and shall indicate, among other things, progress made and problems encountered during the quarter under review, steps taken or proposed to be taken to remedy these problems, and proposed program of activities and expected progress during the following quarter. 28. Promptly after physical completion of the Project, but in PA, Art. II, Complied with. any event not later than three (3) months thereafter or para.2 Both provinces such later date as ADB may agree for this purpose, submitted their draft SAPG shall prepare and furnish to ADB a report, in completion report to such form and in such detail as ADB shall reasonably ADB in May 2014. request, on the execution and initial operation of the Project, the performance by SAPG, BCG, HCG and the IAs of their obligations under this Project Agreement and the accomplishment of the purposes of the Loan. Sector 29. The Borrower shall cause SPG and SAPG to make LA, Art. IV Complied with. available to SPCD, BCG and HCG, respectively, Sufficient resources promptly as needed and on terms and conditions were applied. acceptable to ADB, the funds, facilities, services, land and other resources which are required, in addition to the proceeds of the Loan, for the carrying out of the Project. 30. Except as ADB may otherwise agree, SPG and SAPG PA. Art. II Complied with. shall duly perform all its obligations under the SPG and SAPG abided Implementation Agreement, and shall not take, or by the implementation concur in, any action which would have the effect of agreement. assigning, amending, abrogating or waiving any rights or obligations of the parties under the Implementation Agreement. 31. SPG and SAPG shall, through BCG and HCG cause IAs PA. Art. II Complied with. to, at all times operate and maintain their buildings, Operation and equipment and other property, and from time to time, maintenance were promptly as needed, make all necessary repairs and arranged. renewals thereof, all in accordance with sound administrative, financial, engineering, environmental, and maintenance and operational practices. 32. In the carrying out of the Project and operation of the PA. Art. II Complied with. Project facilities, SPG and SAPG shall, and shall cause The EAs and IAs BCG, HCG and IAs to, perform all obligations set forth performed their in the Loan Agreement to the extent that they are obligations according to applicable to SPG, SAPG, BCG, HCG, IAs and all the project agreement. obligations set forth in the Schedule to this Project Agreement. 33. The Borrower shall take all action, which shall be LA. Art. IV Complied with. necessary on its part to enable each of SPG, SAPG, The obligations SPCD, BCG and HCG to perform its obligations under indicated in the project

28 Appendix 7

Covenant Reference Status of Compliance the respective Project Agreement, and shall not take or agreement were permit any action which would interfere with the performed. performance of such obligations. 34. The Borrower shall ensure that the activities of its LA. Art. IV Complied with. departments and agencies with respect to the carrying Administrative policies out of the Project and operation of the Project facilities and procedures were are conducted and coordinated in accordance with followed. sound administrative policies and procedures. 35. SPG and SAPG shall and shall cause BCG, HCG and PA. Art. IV Complied with. IAs to promptly as required, take all action within their Necessary actions powers to carry on their operations, and to acquire, were taken. maintain and renew all rights, properties, powers, privileges and franchises which are necessary in the carrying out of the Project or in the conduct of their business during Project implementation period. 36. SPG and SAPG shall, and shall cause BCG, HCG, and PA. Art. II Complied with. IAs to, maintain, or cause to be maintained, records and Adequate accounts accounts adequate to identify the Goods, Works and were maintained. consulting services and other items of expenditure financed out of the proceeds of the Loan, to disclose the use thereof in the Project, to record the progress of the Project (including the cost thereof) and to reflect, in accordance with consistently maintained sound accounting principles, its operations and financial condition. 37. The Borrower shall cause SPG and SAPG to make LA Art. IV Complied with. available to SPCD, BCG and HCG, respectively, Resources were promptly as needed and on terms and conditions provided adequately. acceptable to ADB, the funds, facilities, services, land and other resources which are required, in addition to the proceeds of the Loan, for the carrying out of the Project. 38. SPG, SAPG, BCG, HCG and IAs shall cooperate fully to PA. Art. II Complied with. ensure that the purposes of the Loan will be The EAs and IAs accomplished; (b) SPG and SAPG shall, and shall performed their cause BCG, HCG and IAs to, promptly inform ADB of obligations according to any condition which interferes with, or threatens to the project agreement. interfere with, the progress of the Project, the performance of its obligations under this Project Agreement, or the accomplishment of the purposes of the Loan; and (c) ADB, SPG, and SAPG shall from time to time, at the request of earlier party, exchange views through their representatives with regard to any matters relating to the Project, BCG, HCG, the IAs and the Loan. 39. SPG and SAPG shall, and shall cause BCG, HCG, and PA. Art. II Complied with. IAs to, make available, promptly as needed, the funds, The required funds, facilities, services, equipment, land and other resources facilities, services, which are required, in addition to the proceeds of the equipment, land, and Loan, for the carrying out of the Project. other resources were available. 40. SPG and SAPG shall, and shall cause BCG, HCG and PA. Art. II Complied with. IAs to, carry out the Project in accordance with plans, The project was

Appendix 7 29

Covenant Reference Status of Compliance design standards, specifications, work schedules and implemented with construction methods acceptable to ADB. SPG and higher design SAPG shall furnish, or cause to be furnished, to ADB, standards. promptly after their preparation, such plans, design standards, specifications and work schedules, and any material modifications subsequently made therein, in such details as ADB shall reasonably request. Financial 41. Except as ADB may otherwise agree, SPG and SAPG PA. Art. II Complied with. shall, and shall cause BCG, HCG, and IAs to, apply the The expenditures proceeds of the Loan to the financing of expenditures followed the loan on the Project in accordance with the provisions of the project agreements. Loan Agreement and this Project Agreement, and shall ensure that all Goods, Works and consulting services financed out of such proceeds are used exclusively in the carrying out of the Project. 42. SPG, SAPG shall, and shall cause BCG, HCG, and IAs PA. Art. II Complied with. to, furnish to ADB all such reports and information as The required ADB shall reasonably request concerning (i) the Loan information was and the expenditure of the proceeds thereof; (ii) the provided. Goods, Works and consulting services and other items of expenditure financed out of such proceeds; (iii) the Project, and (iv) any other matters relating to the purposes of the Loan. 43. Except as ADB may otherwise agree, SPG and SAPG, PA. Art. II Complied with. through BCG, HCG, shall cause IAs not to sell, lease or otherwise dispose of any of their assets which shall be required for the efficient carrying on of their operations or the disposal of which may prejudice its ability to perform satisfactorily any of their obligations under this Project Agreement. 44. Audited Project Accounts and Financial Statements. PA. Art. II Complied with. (a) SPG and SAPG shall, and shall cause BCG, HCG, and Audited financial IAs, to the extent relevant to the Project, to (i) maintain statements were separate accounts for the Project; (ii) have such submitted to ADB accounts and related financial statements, if any, timely each year. audited annually, in accordance with appropriate auditing standards consistently applied, by independent auditors whose qualifications, experience and terms of reference are acceptable to ADB; and (iii) furnish to ADB, promptly after their preparation but in any event not later than 6 months after the close of the fiscal year to which they relate, certified copies of such audited accounts and financial statements, if any, and the report of the auditors relating thereto (including the auditors' opinion on the use of the Loan proceeds and compliance with the covenants of the Loan Agreement as well as on the use of the procedures for imprest account/statement of expenditures), all in the English language. SPG and SAPG shall, and shall cause BCG, HCG and IAs to, furnish to ADB such further information concerning such accounts and financial statements, if any, and the audit thereof as ADB shall form time to time reasonably request.

30 Appendix 7

Covenant Reference Status of Compliance (b) SPG and SAPG shall, and shall cause BCG, HCG, and IAs to, enable ADB, upon ADB's request, to discuss SPG's, SAPG's, BCG's, HCG's, and IA's financial statements, if any, and its financial affairs from time to time with the auditors appointed by them, concerned IA pursuant to Section 2.09(a) hereabove, and shall authorize and require any representative of such auditors to participate in any such discussions requested by ADB, provided that any such discussion shall be conducted only in the presence of an authorized officer of SPG, SAPG, BCG, HCG, concerned IA unless SPG, SAPG, BCG, HCG or concerned IA shall otherwise agree.

Appendix 8 31

LAND ACQUISITION AND RESETTLEMENT

A. Background

1. During the preparation of the emergency loan, a resettlement framework was formulated to address potential land acquisition and resettlement impacts caused by the project activities. The total number of affected persons was not known during loan processing, but some potential land acquisition and house relocation activities were expected in Shaanxi Province. During loan implementation, resettlement plans were prepared for the Chencang transport subproject, the Lueyang transport subproject, the Ningqiang transport subproject, and the Chencang education subproject, and submitted to the Asian Development Bank (ADB) before commencement of project construction. ADB subsequently reviewed and approved the resettlement plans in 2010 and 2011. According to the resettlement plans, project implementation in Shaanxi would result in loss of land, houses, and other assets. A total 345.69 mu 1 of land would be acquired permanently, affecting 515 households. A total of 16,465.5 square meters (m2) of the houses or buildings would be demolished, requiring the relocation of 168 households. 2. Reconstruction of rural roads in Sichuan Province involved upgrading the existing roads within the available rights-of-way without land acquisition or demolition of structures. Although the feasibility report indicated that no involuntary resettlement impact would be induced by road reconstruction in Sichuan, Southwest Jiaotong University was recruited as the external monitor to supervise project implementation in case of unanticipated involuntary resettlement impacts during project construction. Two monitoring reports were submitted to ADB in 2011 and 2012. According to the monitoring reports, all reconstruction activities were conducted within the scope of existing roads, no land acquisition or house relocation was found during project implementation in Sichuan. B. Scope of Land Acquisition and Resettlement

3. Project implementation permanently acquired 345.69 mu of land in Shaanxi, 29.7% more than the estimates in the resettlement plans. A total of 10,435.19 m2 of houses and buildings were demolished, 36.6% less than estimated. Accordingly, a total of 575 households were affected by land acquisition, 11.7% more than estimated; 162 households were affected by house demolition, 3.6% less than that in the resettlement plans. The increased land acquisition was mainly due to additional lands acquired to deal with landslides caused by floods during construction. The amount of actual house demolition decreased mainly due to avoidance during project implementation. Table A8.1 presents the actual project impacts versus those estimated in the resettlement plans. Table A8.1: Project Land Acquisition and Resettlement Impacts Impacts Variation Item Unit Resettlement Plan Actual Quantity Percentage 1. Land Acquisition Permanent mu 345.69 448.20 102.51 29.7 Temporary mu 0.00 0.00 0.00 2 2. Building Demolition m 16,465.50 10,435.19 (6,030.31) (36.6) 3. Households Affected

By land acquisition HH 515 575 60 11.7 By building demolition HH 168 162 (6) (3.6) ( ) = negative value, m2 = square meter, mu = 666.67 m2, HH = household. Source: Resettlement plans and resettlement monitoring completion reports.

1 A mu is a Chinese unit of measurement (1 mu = 666.67 square meters).

32 Appendix 8

C. Resettlement Policy and Compensation Rates

4. Land acquisition and resettlement were implemented based on the Land Administration Law (2004) of the People’s Republic of China (PRC), ADB’s Involuntary Resettlement Policy (1995), the Implementation Measures for the Land Administration Law of the PRC in Shaanxi Province (2005), the land acquisition policy reform (No. 28 Decree by the State Council of PRC) in October 2004, and the subsequent policy update by the Shaanxi provincial government in 2005, as well as a detailed resettlement and compensation policy issued by local governments in the project areas. The implemented compensation rates for land acquisition and house relocation for the expressway construction were generally higher than those in the resettlement plan in Chencang district and (Table A8.2). The significant increase in compensation rates for housing lands in Chencang and Ningqiang is mainly due to the location of affected houses as well as intensive negotiation. However, an ADB review mission identified a lower compensation rate for land acquisition for the Luiyang transport project. The interviewed affected villagers advised that they received land compensation funding at the rate of CNY3,500 per mu, which is only 50% of the land compensation rate stipulated in the agreed resettlement plan for the Luiyang transport subproject. With frequent follow-ups and strong support from the Shaanxi provincial project management office (PMO), the government eventually completed full payment of land compensation before 31 October 2014. Subsequently, the Shaanxi provincical PMO verified the payment and confirmed this with ADB on 3 April 2015. Table A8.2: Compensation Rates of Land Acquisition and House Demolition: Resettlement Plan versus Actual

Chencang Chencang Lueyang Ningqiang Transport Education Transport Transport Item Unit RP Actual RP Actual RP Actual RP Actual A. Land Acquisition

Paddy field CNY/mu 20,000 38,486 80,000 84,500 8,000 8,000 15,000 15,000 Orchard CNY/mu 6,000 9,000

Dry farmland CNY/mu 16,000 16,549 7,000 7,000 7,500 7,500

Housing land CNY/mu 6,000 39,280 4,000 4,000 2,500 66,666

Slope land CNY/mu 13,000

B. House Compensation

Brick and concrete CNY/ m2 500 974a 658 659 650 673a

Brick and wood CNY/ m2 450 496 497 450

Earth and wood CNY/ m2 300 140 200

Simple CNY/ m2 120 90 100 m2 = square meter, RP = resettlement plan. a Average rate (asset evaluation). Sources: Resettlement plans and external resettlement monitoring reports.

D. Rehabilitation and Income Restoration

5. According to the external resettlement monitoring report, farmers’ income from planting was not a major portion of their total income before project implementation, ranging from 15% to 31%. Most laborers in the affected villages were engaged in nonagriculture activities, such as migrant labor and transport. Given the small amounts of land acquisition for the project and income structures of affected households, the land acquisition impact on people’s livelihood was deemed insignificant. Based on consultations with village heads and representatives of affected households, most affected households prefer cash compensation rather than land adjustment.

Appendix 8 33

Consequently, the compensation agreement with each family was signed and each family received a bank saving card (Table 8.3). The compensation for land acquisition was disbursed directly to affected households from the PMOs of local governments. For lands acquired that belong to reserved land resources of a village collective, the compensation fund was used for community purposes according to the decision made by the villagers’ meeting. In addition, local government took measures to promote economic development in the affected villages, such as skill training, migrant labor services, land reclamation, animal husbandry, and logistics services. The external monitor conducted an income survey of 500 sample households and concluded that the income of affected households had increased, although the payment of 50% of the land compensation fund was delayed for the Lueyang transport project. Table A8.3: Income Restoration of Affected Households (per capita income, CNY/year)

Sample Project Affected Area Households 2009 2011 2012 Growth Rate Chengcang 330 5,116 7,850 9,114 78% Lueyang 90 2,010 2,254 3,758 87% Ningqiang 80 4,225 6,061 7,630 81%

Source: External resettlement monitoring reports. 6. The number of relocated households was not significant due to the linear project; no concentrated resettlement site was constructed along an alignment. Affected households selected a new housing plot within their villages based on their preference with the help provided by local governments, and built new houses by themselves with the received compensation fund as well as assistance from the village. After relocation, the housing conditions of affected households and associate facilities were significantly improved as compared with the preproject situtation. Vulnerable groups were provided with special assistance in the selection of house plots and construction of new houses. E. Resettlement Cost

7. Implementation of land acquisition and resettlement cost CNY22.69 million, which was an increase of 23% from the CNY18.51 million estimated in the resettlement plans. The significant increase in resettlement cost was mainly due to the increased land acquisition and higher compensation rates (Table 8.4). Table A8.4: Land Acquisition and Resettlement Costs (CNY) Chencang Lueyang Ningqiang Chencang Item Transport Transport Transport Education Total 1. Permanent land acquisition 3,634,338 1,016,981 990,637 6,337,500 11,979,455 2. House compensation and allowance 6,827,818 56,147 2,031,375 8,915,340

3. Trees and other land attachment 445,774 141,450 106,255 693,479 compensation fee 4. Infrastructure compensation fee 761,000 97,950 245,700 1,104,650

Total 11,668,930 1,312,528 3,373,966 6,337,500 22,692,924 Source: External resettlement monitoring reports. F. Information Disclosure, Consultation, and Participation

8. The project county or district governments established a project coordination group in each affected village. The group normally had 3–5 members elected by the villagers, and

34 Appendix 8

comprised the village chief, representatives of women and vulnerable groups, and others. They were involved in project preparation and implementation. The external monitoring report indicates that groups had important roles during project implementation, including (i) consulting with affected households throughout land acquisition, and resettlement preparation and implementation; (ii) supervising community support for project implementation; (iii) mobilizing villagers to participate in project construction; and (iv) participating in baseline surveys. The records of consultation and participation activities for each subproject provided in the external monitor report demonstrate that many consultation activities were conducted during resettlement preparation and implementation in terms of the optimization of project design, minimizing adverse impacts, and disclosure and negotiation of compensation rates and resettlement approaches.

G. Monitoring and Evaluation

9. The Shaanxi Academy of Social Science was engaged as the external monitor for land acquisition and resettlement implementation for the Shaanxi component. From 2011 to 2013, ADB received three external resettlement monitoring reports, which evaluated resettlement implementation and identified key issues on a timely basis. The last external monitoring and evaluation report concluded that incomes of affected households had been restored. Southwest Jiaotong University was recruited as the external monitor to supervise project implementation in case of unanticipated involuntary resettlement impacts during project construction. From 2011 to 2012, ADB received two monitoring reports indicating that no land acquisition or house relocation was required for the Sichuan component.

H. Lessons

10. The emergency loan adopted a framework approach for resettlement safeguard management, i.e., a resettlement framework was prepared during loan processing, and all detailed resettlement plans were prepared for the subprojects experiencing adverse impacts during implemenetation. In general, this approach worked well for the emergency project with minor to moderate resettlement impacts to achieve both streamlined loan processing and substantial compliance with safeguard policy during implementation. Strong capacity of provincial PMOs, timely recruitment of external monitors, and ADB’s close review were also esstential for adopting the framework approach.

Appendix 9 35

SOCIAL IMPACT AND POVERTY REDUCTION

1. The Wenchuan earthquake brought immense suffering to many rural and poor households that were not prepared for the disaster and reconstruction efforts. The emergency assistance was to support the reconstruction or upgrading of about 3,500 kilometers of rural roads in Sichuan Province and about 317 kilometers (km) of rural roads and 12 schools in Shaanxi Province. The summary poverty reduction and social strategy estimated that the loan would alleviate transport problems caused by the earthquake and improve the quality of the schools, which will indirectly facilitate poverty reduction: (i) Improved availability of reliable transport to markets would stimulate cash crop farming in remote or isolated areas, and broaden access to off-farm employment opportunities (ii) Reconstruction and improvement of schools in affected towns and villages would bring immediate benefits to students (about 50% female) and long-term benefits to future students among the local residents of the area serviced by the schools, about 40% of whom are from rural areas of these remote counties. Two of the three project areas are poverty counties in Shanxi. (iii) Temporary employment opportunities would be created for local unskilled workers during project construction.

A. Agriculture Development and Availability of Reliable Transport to Markets

2. Construction and operation of the project have rehabilitated and improved the road network, resulting in better transport conditions and increased traffic capacity in the project area. This has greatly enabled farmers to send agricultural products to markets. The number of agricultural industrial zones and livestock breeding zones increased by 15.3% from 1,686 at appraisal to 1,944 after project completion for the Sichuan component. For example, in Sichuan, the soil in and around Qianfo town, located in the high mountains, is suitable for ginger planting. Due to poor road conditions, local villagers used to take 1 day to walk to the market to sell the ginger. Since completion of a cement road to link the town to the market, six large production bases have been established for planting ginger and Chinese herbs. Instead of walking to market, the retailers’ trucks are always available in the villages. The average annual income in Qianfo has increased by CNY2,000 per household as compared with that before the project. Likewise in Xingfu village, a 600 mu fruit production base was developed after road construction; the annual value of products has reached more than CNY6 million. According to the executing agency’s project completion reports, a total of 6,144 villages in 19 counties in Sichuan and 101 villages in 3 counties in Shaanxi have benefited from the project. The total number of beneficiaries has reached 9.63 million, about 80% of the population in the project area.

B. Industrial Structures

3. With project completion, an increasing number of agriculture enterprises, including planting, breeding, and processing factories, were set up in rural areas. The enterprises have introduced new technologies and management skills, and upgraded industrial structures in the project areas. From 2008 to 2013, the number of small-size factories and enterprises increased by 224% from 429 to 1,391 in the project areas of the Sichuan component. For example, in Zhongjiang county, prefecture, after construction of rural roads, local farmers shifted their traditional crop planting to higher-value-added industrial crops, such as cotton, fruit, mushrooms, and herbs. As a result, the average annual income of local famers increased by 20.42% during 2009–2012. In Yongquan village, , Quanxin Seeds Company constructed a production base for vegetable planting, seed breeding, vegetable

36 Appendix 9

storage and processing, and aquaculture by renting a total of 130 mu in the village. Establishment of the production base has provided job opportunities for local laborers and demonstrated a new productive manner to replace traditional ways in rural development. Consequently, local farmers are increasingly being engaged in the vegetable industry. By the end of 2013, 7,500 mu1 were being used for vegetable planting in Yongquan village; the total annual product value has reached CNY34 million. In addition, the upgraded industrial structures have attracted an increasing number migrant laborers to return to their hometown for jobs. The number of migrant laborers decreased by 17.51% during 2009–2011 in Luojiang county.

C. Labor Mobility and Access to Off-Farm Employment Opportunities

4. Full employment is important for restructuring and increasing income. The benefit monitoring report, prepared by the external monitor, indicates that about 50% of rural income comes from informal labor wages. The project improved traffic conditions for local residents, especially those living far from urban areas, allowing local residents to take a public bus or travel by motorcycle to work places. In turn, more people are engaged in service sector jobs. Moreover, villagers make greater use of machinery for agricultural activities, saving time used for agricultural activities and spending more time on off-farm activities. In many cases, a couple may go to urban areas for off-farm activities, leaving home in the morning and returning in the evening. Xinhua village, Chencang district, in Shaanxi Province is 18 km from Baoji city. The number of off-farming laborers increased from 860 before the highway (class III) was constructed to more than 1,200 after. Income from the service sector is now more than 65% of the total (40% in the past), and farmer’s net income per capita increased to about CNY7,000 from CNY3,500. Fulemiao village, Langzhong city, in Sichuan Province is another example. It is about 12 km away from Langzhong city; the Tianbai Highway (Tiangong town–Baiya township) improved local travelling conditions. Now more than 800 people (140 before the project) are engaged in the service sector in Langzhong and other places; farmer’s net income per capita increased to CNY8,200 in 2013 from CNY2,700 before the highway was improved; income from the service sector was about 50% of the total in 2013 compared with 20% before the project.

D. Roads to Promote Tourism Development

5. The project areas are rich in tourism resources, particularly for the cultural aspects of the . The rehabilitation and improvement of rural roads provides the basic conditions for tourism development. Consequently, the number of tourists increased to 1,237,853 by the end of 2012 in the project area of Sichuan, as compared with 584,440 in 2008; the earthquake had a severe impact on the area. During 2008–2013, the number of scenic areas increased from 72 to 83; income directly from tourism increased from CNY34.8 million to CNY44.1 million. In addition, with the improved rural roads, farmers are increasingly developing agritainment and agritourism by taking advantage of their unique nostalgic, rural, family, and outdoor appeal. In Luojiang county, local government has promoted the “1+4” modality (1 household + unique agriculture + ecosystem + culture + tourism) for rural development. The revenue generated by the 1+4 modality has directly contributed to growth of rural household income.

E. Job Creation

6. Local employment was promoted during project implementation. According to the project completion report prepared by the Sichuan Provincial Transportation Department, road construction in Sichuan provided 266,266 person-months of work for laborers, of which 241,374

1 A mu is a Chinese unit of measurement (1 mu = 666.67 square meters).

Appendix 9 37

person-months (90.65%) were from the local labor market (Table 9.1). Of the total employment, 24,678 person-months went to women (9.3%). With daily wages at CNY80–CNY120 for unskilled jobs and CNY150–CNY200 for skilled jobs, a total of CNY603 million of wages was disbursed to local households during project construction. Construction of the Shaanxi component provided around 25,200 person-months of employment and a total of CNY63 million in wages went to local households.

Table 9.1: Job Creation during Project Implementation in Sichuan (person-months) Female Labor Local Labor County, District Total Labor Amount Rate Amount Rate Nanjiang County 12,067 916 7.60% 11,151 92.41% Dayi County 9,005 412 4.60% 8,593 95.42% Guanghan City ,794 798 7.40% 9,996 92.61% Jingang District 5,977 239 4.00% 5,737 95.98% Luojiang County 18,816 1,235 6.60% 17,581 93.44% Zhongjiang County 43,856 3,738 8.50% 40,118 91.48% Peicheng District 7,245 945 13.00% 6,300 86.96% Youxian District 8,984 798 8.90% 8,186 91.12% Zitong County 9,265 487 5.30% 8,778 94.74% Yanting County 12,692 1,991 15.70% 10,601 83.53% Santai County 31,109 2,591 8.30% 28,505 91.63% Cangxi County 14,263 2,810 19.70% 11,416 80.04% Chaotian District 28,979 2,594 9.00% 26,384 91.05% Yuanba District 2,885 84 2.90% 2,801 97.09% Wangcang County 4,255 122 2.90% 4,133 97.13% Langzhong City 35,020 3,578 10.20% 31,441 89.78% Lushan County 3,629 563 15.50% 3,066 84.49% Baoxing County 4,498 601 13.40% 3,898 86.66% Shimian County 2,927 176 6.00% 2,688 91.83% Total 266,266 24,678 9.3% 241,373 90.65% Source: Project completion report prepared by the Sichuan Provincial Transportation Department.

F. Time and Energy Saving, and Affordable Mobility

7. The project restored and improved local mobility and consequently changed the lifestyle and social behavior of local residents. The road access and road smoothness rates in project counties increased significantly. According to a survey conducted by the Sichuan Provincial Transportation Department (SPTD), the coverage area for both passenger transport and freight transport expanded remarkably. The average passenger traffic volume increased by 66.45% from 42.3 times/day to 79.41 times/day and the average freight traffic volume increased by 58.3% from 42.3 times/day to 79.41 times/day. With the improved road conditions, fuel consumption/100 km reduced by 33.33% from 24 liters to 16 liters. Consequently, the average transport cost declined by 40.69% from CNY2.31/ton/km to CNY1.37/ton/km. This reduction in transport costs made local produce more competitive or profitable in the larger markets, which clearly benefitted farmers, traders, and retailers.

8. With the rehabilitated and improved rural roads, the commuting pattern of local residents has changed. The SPTD survey shows that, instead of walking, 62.26% of local villagers now drive motorcycles. The average travel time from village to market and hospital has decreased by

38 Appendix 9

35 minutes, and from village to school by 37 minutes; the average transport time by truck between village and market decreased by 23 minutes. Consequently, the travel frequency of local villagers increased by 1 or 2 times a week.

G. Rural Incomes and Poverty Reduction

9. The severe earthquake seriously impacted rural residents, particularly poor and vulnerable groups in the project area. With implementation of the government’s vast earthquake disaster rehabilitation program, including livelihood support, rural income has significantly increased in recent years. According to the project completion report prepared by SPTD, from 2008 to 2013, the growth of average rural income per capita in 19 project counties and cities was in the range of 45%–150%. The poverty ratio declined in 19 project counties and cities (Table A9.2). The ADB-financed project contributed to poverty reduction by improving mobility, reducing transport costs, and generating jobs during reconstruction. The project implementing agencies were encouraged to recruit local laborers during project implementation and operation.

Table A9.2: Increased Rural Per Capita Income and Poverty Reduction in the Project Area

2008 (poverty line: CNY1,196) 2013 (poverty line: CNY2,300) Average Rural Net Poverty Poverty Average Rural Poverty Poverty Income per Capita Population Ratio Net Income per Population Ratio County, District (CNY) (number) (%) Capita (CNY) (number) (%) Cangxi County 3,149 198,000 30.00 6,352 99,000 15.00 Chaotian District 2,968 60,218 30.80 6,045 29,917 15.60 Dayi County 6,095 8,745 2.70 10,656 5,998 2.00 Peicheng District 4,725 24,315 6.80 11,806 14,265 3.60 Guanghan City 5,570 9,000 2.04 10,871 2,340 6.30 Jingyang District 5,912 12,863 5.60 11,427 6,165 2.68 Luojiang County 9,854 12,990 6.57 14,316 7,334 3.71 Nanjiang County 2,970 176,000 28.10 6,250 89,600 15.40 Shimian County 3,893 12,890 17.00 6,597 10,058 13.00 Wangcang County 3,165 25,690 0.07 5,964 24,800 0.07 Yanting County 4,399 36,524 6.25 7,784 8,965 1.53 Youxian District 5,549 11,196 3.20 10,259 20,737 5.92 Yuanba District 2,700 59,800 27.69 5,200 37,500 17.36 Zhongjiang County 4,261 92,826 6.51 8,811 47,292 3.30 Zitong County 4,590 75,421 28.42 9,118 39,812 18.04 Santai County 4,064 20,911 5.85 10,153 12,268 3.10 Langzhong City 4,047 33,602 5.75 7,161 8,248 1.41 Lushan County 3,527 221,760 0.34 7,114 110,880 0.17 Baoxing County 5,326 116,033 8.14 11,014 59,115 4.13 Source: Project completion report prepared by the Sichuan Provincial Transportation Department.

H. Gender Development

10. The operation of the improved rural roads promoted gender development in the project area: (i) around 10% of total job creation during the road construction went to local women in the project area, and female employees received wages equivalent to those of male employees for similar job types; (ii) improved road conditions enabled local women to access medical services, particularly women living in remote mountainous areas. In recent years, pregnant women are increasingly delivering their babies in hospitals (the hospital delivery rate in Sichuan Province increased from 80.9% in 2008 to 96.04% in 2013); (iii) improved school facilities and teaching expertise directly benefits school students, of which about 50% are female; and (iv) the improved road networks facilitated external investment and the establishment of enterprises in

Appendix 9 39

rural areas, so instead of migrant work, girls and women are increasingly working in nearby enterprises.

I. Education Development

11. The education subproject in Shaanxi assisted in rebuilding six primary schools and six high schools, including classrooms, laboratories, dormitories, libraries, play grounds, dining halls, and heating systems. About 80,000 square meters of new buildings were constructed with the project, benefiting about 30,000 students in the project areas. Since new buildings were constructed in line with a higher standard, the anti-disaster ability of the schools is improved. In addition to the school construction, the project provided technical assistance to build the capacity of rural teachers. More than 200 teachers received training, and their mindset and teaching expertise have improved. This included disaster awareness.

J. Conclusions

12. The project contributed directly and indirectly to rehabilitation and rural development in the earthquake stricken areas. It (i) contributed to developing agriculture and upgraded industry structures by improving the availability of reliable transport to markets, (ii) enhanced project benefits to the poor and increased rural income in the project areas, (iii) created jobs during project construction and operation, (iv) improved labor mobility and increased engagement in off-farm jobs, and (v) improved gender development and education development in the project areas.

40 Appendix 10

ENVIRONMENTAL IMPACT ANALYSIS 1. The Emergency Assistance for Wenchuan Earthquake Reconstruction Project comprises subprojects with construction activities in Sichuan and Shaanxi provinces: (i) Sichuan. The project included 349 subprojects in 19 counties with a total length of 3,467.2 kilometers (km); it was completed in June 2012. (ii) Shaanxi. The project comprised two components: (a) the transport component rehabilitated and reconstructed 10 subprojects with a total length of 317 km in Ningqiang, Lueyang, and Mian counties; and Chencang District; and (b) the education component rehabilitated and reconstructed 12 schools in Lueyang and Mian counties and Chencang District.

2. Given the potential localized and short-term negative impacts caused by the nature of the project’s physical works (i.e., reconstruction of damaged road sections and school buildings), the project was classified as Asian Development Bank (ADB) environment category B. At appraisal, a summary initial environmental examination report covering 23 representative subprojects was prepared and attached as an appendix of the report and recommendation of the President.10 It was based on domestic initial environmental examinations for the individual subprojects in accordance with ADB’s Environmental Assessment Guidelines (2002) and Disaster and Emergency Assistance Policy.11 By 2010 the initial environmental examinations for the remaining subprojects in Sichuan and Shaanxi provinces were approved by the municipal environmental protection bureaus later in compliance with the environmental assessment and review framework.

3. The summary initial environmental examination concluded that the project’s physical components would have only minor and short-term potential adverse environmental impacts. The impacts were considered to be controllable through proper implementation and supervision arrangements. The major environmental protection related risk was inadequate civil works management. This was to be avoided by including environmental protection measures in contract documents, and by supervising the implementation of civil works through the use of construction supervision consultants.

4. In line with the national laws and regulations of the People’s Republic of China (PRC), all subprojects passed through the required domestic completion review and acceptance for environment protection by local environmental protection bureaus.

A. Institutional Setup and Environmental Management

5. During implementation, the Sichuan Provincial Transportation Department and the transport bureaus of Hanzhong and Baoji cities were responsible for overall environmental protection during rural road reconstruction. The provincial highway bureaus were responsible for supervising the rural road reconstruction-related activities of the county transportation bureaus. The Hanzhong and Baoji city education bureaus were responsible for overall environmental protection of school building reconstruction.

6. Local environmental protection bureaus and monitoring stations were contracted to conduct compliance monitoring covering air quality, noise, and water quality as per government

10 Asian Development Bank. 2009. Report and Recommendation of the President to the Board of Directors: Proposed Loan to the People's Republic of China for Emergency Assistance for Wenchuan Earthquake Reconstruction Project. Manila 11 ADB 2004. Disaster and Emergency Assistance Policy. Manila.

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laws and regulations. Both Shaanxi and Sichuan project management offices submitted three environmental monitoring reports during 2010–2013. ADB reviewed all the environmental monitoring reports and found them to be of acceptable quality; they were disclosed to the ADB website.

B. Environmental Impacts and Mitigation Measures

7. The environmental management plan of each subproject was generally implemented well during construction. No major environmental damage occurred due to the project construction. Measures were taken to minimize the negative impacts to the local and regional environment during the construction and operation of the subprojects. During project component tendering, especially for civil works, environmental monitoring and mitigation of impacts were key evaluation criteria for bids, which were carefully reviewed and evaluated. All procurement bidding documents and awarded contracts included environmental protection provisions.

8. Water. During construction, adverse impacts on surface water were limited, caused mainly by oil leaks and drainage. All proposed mitigation measures were undertaken appropriately. Monitoring found that the water quality of all receiving water bodies was within the quality designation indicated by the environmental impact assessment. During operation, roadway runoff was diverted to the drainage system.

9. Air quality. During construction, air pollution from construction machinery was insignificant. Suspended dust from excavation, debris removal, pavement, and transportation were well controlled by covering and spraying water on the exposed areas. As only minor negative impacts on air quality for the road component were predicted for project operation, no monitoring of vehicle emissions was required, apart from vehicle emission testing, which was conducted.

10. Noise. During construction, contractors used low-noise equipment and adopted mitigation measures to reduce noise at sensitive locations mentioned in the environmental impact assessments. Construction activities in urban areas and near sensitive receptors (i.e., schools and hospitals) were limited to daylight hours. The nature of school building reconstruction work means that general annoyances may be inevitable. The constructor made a detailed construction plan and consulted with schools to minimize impacts during project implementation. The measured noise during the day and night were in compliance with the relevant standards, such as the Standard of Environmental Noise of urban Areas (GB 3096- 1996).

11. Soil and solid waste. All disposal sites and borrow pits were restored and rehabilitated using retaining structures, drainage systems, and revegetation. During operation, solid waste production is minor. Soil protection works are inspected regularly to ensure the road network’s good condition and effective functioning.

C. Environmental Benefits

12. The road reconstruction component helped the region re-establish an efficient, safe, and sustainable transport system. The regional economy and local residents are expected to benefit from improved transport facilities and efficiency. The road also contributed to reductions in motor vehicle emissions through more efficient motor vehicle operation and shorter travel times.

42 Appendix 10

D. Public Participation

13. During project implementation, the public participation programs were extensively designed and implemented effectively. Public awareness activities were undertaken and well received by local residents, which included public health and environmental education.

E. Conclusion

14. During construction and operation, all contractors fulfilled their obligations to protect the environment and implement mitigation measures. The adverse effects of project construction on the surrounding environment were thus minimized. The necessary environmental management approaches were integrated into operations.