Jilin Urban Development Project

Home , Baicheng, Baishan, Chongqing, District (China), Dunhua, Eastern Liao

Technical Assistance Consultant’s Report

Project Number: 46048-001 March 2014

People’s Republic of China: Jilin Urban Development Project

FINAL REPORT (Volume III of V)

Prepared by HJI Group Corporation

Costa Mesa, CA, USA.

For Jilin Provincial Government

This consultant’s report does not necessarily reflect the views of ADB or the Government concerned, and ADB and the Government cannot be held liable for its contents. (For project preparatory technical assistance: All the views expressed herein may not be incorporated into the proposed project’s design.

CURRENCY EQUIVALENTS (As of 15 January 20141)

Currency Unit – yuan (CNY) CNY 1.00 = $ 0.1667 $1.00 = CNY 6.000

ABBREVIATIONS

1 Due to the uncertainty of future change of the exchange rate, a fixed currency exchange rate is assumed and used for the analysis of the project.

WEIGHTS AND MEASURES

NOTE

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

Jilin Urban Improvement Project Supplementary Appendix 4 (TA 8172-PRC) Final Report

Supplementary Appendix 4 Baishan Water Supply Analysis

Jilin Urban Improvement Project Supplementary Appendix 4 (TA 8172-PRC) Final Report

Table of Contents 1. Introduction ...... 4 1.1 Overall Description ...... 4 1.2 Baishan City ...... 4 1.3 Baicheng City ...... 4 2. Background ...... 4 2.1 Geography and Topography ...... 4 2.1.1 Baicheng City ...... 4 2.2 Rivers and Water Systems ...... 5 2.2.1 Rivers and Water Systems in Baishan Municipality ...... 5 2.2.2 Rivers and Water System in Bacheng Municipality ...... 5 2.3 Water Conservancy Engineering ...... 6 2.3.1 Water Supply Engineering In Baishan City ...... 6 2.4 Climate Condition ...... 6 2.4.1 Mean Annual Temperature ...... 6 2.4.2 Precipitation in Jilin Province ...... 7 2.4.3 The Variation Trend of Annual Precipitation and Annual Temperature ...... 8 3. Water Resource Assessment in the Project Area ...... 9 3.1 Water Resource Amount Assessment in Baishan City ...... 9 3.1.1 Total Water Resource Assessment ...... 9 3.1.2 The Available Water Resource Amount Assessment ...... 9 3.1.3 Status of Construction of Xibeicha Reservoir ...... 11 3.1.4 Water Quality Assessment ...... 11 3.2 The Existing Water Consumption Assessment of Baishan City ...... 11 3.2.1 Overall Current Water Consumptions in Sector's Assessment ...... 11 3.2.2 Current Water Use Efficiency ...... 12 3.2.3 The Changing Trend of water Consumption ...... 13 3.3 Review the Current Water Supply Alternative Options in Baishan City ...... 15 3.3.1 Review of the Current Situation of the Water Supply ...... 15 3.3.2 Review of the Water Treatment Plant ...... 15 3.3.3 Identify Potential Weakness In Existing Infrastructure and Management ...... 15 3.3.4 Identify Potential Weakness in Operation and Maintenance, Service and Management 16 3.3.5 Assessment on the Current Tariff Level ...... 16 3.4 Water Resource Assessment in Baicheng ...... 17 3.4.1 Total Water Resource Assessment ...... 17 3.4.2 The Available Water Resource Amount Assessment ...... 17 3.5 The Existing Water Consumption Assessment Of Baicheng City ...... 17 3.5.1 Overall Current Water Consumption in Sector’s Assessment ...... 17 3.5.2 Current Water Use Efficiency Assessment in Main Sectors ...... 18 3.5.3 The Changing Trend of Water Consumption in Recent Years ...... 18 4. Water Demand Prediction and Water Balance Assessment Of Baishan City ...... 19 4.1 The Determination of the Base Line Year and the Planning Level Year ...... 19 4.2 Main Design Specifications, Norms, and Standards ...... 19 4.3 Targets of Water Supply Plants ...... 20 4.4 The Determination of Sector’s Water Usage Quota ...... 20 4.5 Prediction of Social-Economic Development and Water Consumption Assessment of Baishan City ...... 20 4.5.1 The Existing Social-Economic Assessment ...... 20 4.5.2 Comprehensive Urban Domestic Water Use Quota ...... 21 4.5.3 Prediction of Society-Economy ...... 21 4.6 Water Demand Prediction of Baishan City ...... 21 4.6.1 Water Demand Prediction Of Baishan City Center ...... 21 4.6.2 Water Demand Prediction Of Hunjinag District ...... 22 4.7 Water Balance Assessment ...... 24 5. Technical Assessment of Baishan Water Supply ...... 24 5.1 Introduction ...... 24 5.2 Water Transmission Pipelines ...... 25 5.2.1 Alternatives Study ...... 25 5.2.2 Engineering Design ...... 27 5.2.3 Main Construction Quantity ...... 28

Jilin Urban Improvement Project Supplementary Appendix 4 (TA 8172-PRC) Final Report

5.3 Water Treatment Plant ...... 29 5.3.1 Introduction ...... 29 5.3.2 Alternatives Study ...... 30 a) The Alternative of Water Purification Process ...... 32 b) Primary Oxidant Chemical Alternatives ...... 33 c) Flocculator Alternatives ...... 33 d) Sedimentation Tank Alternatives ...... 34 e) Filter Alternatives ...... 34 5.3.3 Main Construction Quantity ...... 35 5.4 Water Distribution Pipeline ...... 36 5.4.1 Engineering design ...... 36 5.4.2 Main Construction Quantity ...... 38 6. Technical Assessment of Baicheng City ...... 39 6.1 Introduction ...... 39 6.2 Engineering Design ...... 39 7. Operation and Maintenance...... 40 7.1 Successful Experience in China and Abroad...... 40 7.1.1 Importance of Operation & Maintenance to Water Supply Systems ...... 40 7.1.2 Measures adopted on Energy Saving ...... 40 8. Conclusions and Recommendations ...... 42

Jilin Urban Improvement Project Supplementary Appendix 4 (TA 8172-PRC) Final Report

1. Introduction

1.1 Overall Description

1. The Jilin Provincial Government (JPG) and Baishan and Baicheng city governments, in consultation with Asian Development Bank, have proposed the water supply project component for Baishan for Jilin Urban Development Project (ADB-TA8172).

1.2 Baishan City

2. For Bashan City, the proposed construction project includes 2 components: (i) the water supply system; (ii) the integrated municipal solid management. For the water supply system, the proposed project component include: (i) the water transmission line to Hunjiang District; (ii) the water transmission line to Jiangyuan District; (iii) the water treatment plant for Hunjiang, and (vi) the water distribution pipe network in Hunjiang.

1.3 Baicheng City

3. In Baicheng City, the proposed project is at the south and west of the existing urban area, namely Baicheng Economic Development Zone and New Urban Area, which are defined as the new residential and commercial development areas. The proposed project components include: (i) roads and bridges; (ii) water supply system; (iii) sewage networks and stormwater networks; (iv) power and communication system; (v) primary heating pipe network, and (vi) associated urban facilities. .

2. Background

2.1 Geography and Topography

4. Jilin Province lies in the North-East part of China, it locates in the middle part of the North-East Plain . There is a obvious difference in topography in the province, the topography is inclined from the south-east to the north-west with obvious features of there is high elevation in the south-east part and low elevation in the north-west part of the province. 5. Baicheng City and Baishan City are two of cities in Jilin Province. Baicheng City locates in the North-West part of the province and in the Eastern Part of Horqin Grasslands and the Central Part of Songnen Plain. Baishan City 6. Baishan Municipality locates in the hinder land of Changbai Mountain, most of the territory areas is covered by the Changbai lava platform and the Jingyu lava platform. Mountain forests go through ups and downs, gullies and rivers are crisscross. The Longgang Mountain Chain and The Laolong Mountain Chain across the whole region. The elevation of Longgang Mountain Chain is about 800-1200m, the relative elevation is about 500-700m; The body of Laolong Mountain Chain is broad with the elevation of 1000-1300m, and the relative elevation is about 500-800m. The topography along the Yalu River has large range of rising and falling, with deep valley cutting, steep terrains. 7. Baishan City is located in the alluvial valley of the Hunjiang River with a narrow valley landform, there are landform floodplains, terraces class-1 and terrace of class-2. The South Mountainous City, north to the ground and floodplain. There is a great topographic changes in urban area with the elevation altitude of 460 ~ 580m. 8. The Geological strata Cenozoic quaternary is well developed, it is generally covered with loose sediments. Underground water is abundant, the underground water level is generally about 0.7m under the ground.

2.1.1 Baicheng City

9. Baicheng city is located in the north-west of Jilin Province, the western part of the Songnen Plain and the eastern part of Horqin grassland. It borders with the Inner Mongolia Autonomous Region to the Southwest and to the northwest; Baicheng City is separated by the Nen Riveropposite to Heilongjiang province. So Baicheng City is a combination of the Inner Mongolia Autonmous Region, Provinces of Jilin, Heilongjiang, the latitude is from 44 ° 13 '- 46 ° 18', the longitude is from 121 ° 38 '- 124 ° 23'.

Jilin Urban Improvement Project Supplementary Appendix 4 (TA 8172-PRC) Final Report

10. The elevation of Baicheng City is lower in the central part of the city while it is relative higher around the city. To the west, it is the Fold Belt of the east hillside of DaHinggan Mountains with low mountains, hills terraces and valley beachs. In the central part of the city, it is a broad alluvial plain which it belongs to part of the Songnen Plain, the broad valleys, terrace of level-1 and mass of lakes spreads here and there with the elevation of 130-140m. In the east-south part of the city, it is a typical topography of alluvial fans, proluvial fans with the elevation 220-285m. 11. There is a loess terrace in the middle part of the city, it is the watershed of Songhua River and The Eastern Liao River. In the west-south part of the city, it is part of the Songliao Plain, and the alluvial plain what is covered by sand dunes with the elevation of 180-210m, sand dunes, sand ridges spread here and there. There are some pondings in low area and alkalization phenomenon.

2.2 Rivers and Water Systems

2.2.1 Rivers and Water Systems in Baishan Municipality

12. In Baishan City, there are many rivers and water systems and intensive of gully's and river's network. The Yalu River, the second Songhua River are two of major river systems, then it forms 4 of watersheds of the Yalu River, the Hunjiang River, the First Songhua River And its tributaries. 13. There are 2 of water systems in Baishan Municipality, they are The Yalu River water system and the Second Songhua River water system. The Hun River is the biggest rivers among 55 of main rivers, the normal runoff flow rate is about 6～7m3/s . 14. The catchment area of Hun River is 1688.2km2. Main tributaries with greater than or equal to 50km2 are the southwest Chahe River, the main Chahe River, the Dayang River, the Lichagou River etc. The main tributary of the First Songhua River water system is the Tanghe River with 471.5km2 of catchment area . One of main tributaries of the Yalu River is the Sandao River with 196km2 of catchment area.

2.2.2 Rivers and Water System in Bacheng Municipality

15. There are 8 main rivers across into the Baicheng Municipality, they are the Nen River, the Taoer River, The Huolin River, the Erlongtao River, the Jiaolong River, the Huer-da River, the Wenniugechi River and the Ermute River. The mean annual runoff of the NenRiver, the Taoer River the Jiaolong River and the Huolin River is 22,000 million m3, 1347 million m3, 233.4million m3 and 75.2 million m3 respectively. 16. The Nen River is original in the Hule Mountain area on the south hillside of the Da hinggan Mountains, the total length of the river is 1370km with 29.7 km2 of the catchment, the mean annual runoff amount is 1786 million m3. 17. The Yao'er River is one of bigger tributary on the down-stream of the right bank of the Nen River what generates in the south hillside of the Da Hinggan Mountains. It enters into Bacheng city at Lingxi Town of the city, and it crosses Yaonan city, Da'an City and Zhen cities and counties, then flow into Yueliang -pao Reservoir, at last it enters into the Nen Rvier from Ha-er-jin Gate. The total length of the river is 235km with 12557km2 of catchment. The mean annual runoff flow rate is 1701 million m3 at the south Yao'er hydrological station. According to the Water Basin Plain, the assigned water amount to Jilin Province is 450 million m3. 18. The Hulin River is one of another tributary in the province where in the down-stream, on the right bank of the Nen River which generate in the north hillside of Dahinggan Mountains. The total length of the river is 815km with 37655km2 of catchment area. The mean annual runoff volume is about 172 million m3, and it often occurs in the form of flood. There is no water flow into Jilin Province except in flood season, the Huolin River has dried up in the year around.

Jilin Urban Improvement Project Supplementary Appendix 4 (TA 8172-PRC) Final Report

2.3 Water Conservancy Engineering

2.3.1 Water Supply Engineering In Baishan City

19. In Baishan City there is currently only 1 medium-sized reservoir, it is Qujiaying reservoir; 4 small (A)-sized reservoirs, 5 small (B)-sized reservoirs. The total reservoir's storage capacity is 3.479 billion m3, the total utilizable capacity is 2.453 billion m3. Among which, the total storage capacity of the Qujiaying Reservoir is 2.690 billion m3, it was accounting for a total storage capacity of 77.3%; the utilizable capacity of the reservoir is 2.030 billion m3, it accounts for 82.8% of the total utilizable capacity in Baishan City . 20. The Qujiaying reservoir is the major water source of the water supply system for Baishan City. The summary of the river systems in Baishan City is shown in Table 2-1: Table 2-1: The Situation of Water Conservancy Engineerings of Baishan City

Utilizable Storage Administrative Locations of Catchment capacity Completion Reservoirs capacity Size Functions Districts Rivers area(km2) (million date (million m3) m3)

Urban water supply Medium- Qujiaying Hongtuya River 263.4 26.9 20.3 2003.12 sized Hydropower generation, fishing, flood control Langdonggou Langdong River 2.5 0.185 0.16 1978 SmallB Fishing, irrigation Guotiepiangou Hunjian Shengli 3.8 0.112 0.077 1979 SmallB Fishing, irrigation District River Urban water supply, Hekou Hongtuya River 600 1.475 0.6 1983.5 SmallA hydro-power generation Qinggouzi Qinggou River 10 1.68 1.26 1972.1 SmallA Tourismfishing

Taipinghu HeigouRiver 84.3 1.145 0.686 SmallA Fishing, irrigation Urban water Xichuan Tang River 9.5 2 0.66 1977.1 SmallA supply, irrigation

Jiangyuan Yue -jin Xibeicha River 1 0.115 0.042 1972.11 SmallB Irrigation District Heisong Heisong River 6.3 0.661 0.375 1977.1 SmallB Water supply

Wanlin Tang River 12.27 0.516 0.368 2001 SmallB Water supply

Total 34.789 24.528

2.4 Climate Condition

2.4.1 Mean Annual Temperature

21. Baishan City The mean annual temperature is 4.6℃, the highest temperature is 36.5℃ in summers and the lowest temperature is -42.2℃ in winter based on the historical climate recording. The mean annual precipitation is 883.4 mm. The sunshine time is 2259 hours, and the frost free time is 140 days. 22. Baicheng City The mean annual temperature is 4.6℃, the coldest temperature is -40.2oC in winter and the average frost free time is about 134 days. The mean annual precipitation is 429.8mm with uneven distribution. There are few precipitations in spring and winter, but more in the summer months from June to September. Baishan is located in the temperate continental monsoon climate zone with climate features of arid and windy in spring, warm and rainy in summer, cool in winter. There is abundant solar resource and the mean annual sunshine hours are about 2890 hours.

Jilin Urban Improvement Project Supplementary Appendix 4 (TA 8172-PRC) Final Report

2.4.2 Precipitation in Jilin Province

23. The mean annual precipitation in the province is 621.7 mm which it is higher than the average national annual precipitation (648 mm)1. The distribution of precipitation in PRC is shown in Figure 2 -1.

Figure 2-1: The distribution of mean annual precipitation in China (unit: mm)

24. The Distribution Situation of Precipitation in Space-Time The distribution situation of precipitation in space-time is uneven in the province. The proportion of seasonal precipitation is 16%, 64%, 17%, and 3% of annual precipitation respectively during the period of 1970-20002. The highest monthly precipitation usually occurs in July while the lowest monthly precipitation usually occurs in January. Considering the distribution situation of annual precipitation in space, the region where is close to ChangBai Mountain has the distinct rainy zone with the mean annual precipitation above 700mm. While in Baicheng City in the west part of the province, the mean annual precipitation is less than 400mm. The distribution situation of precipitation in Space-Time during the period of 1970-2000 in Jilin Province shows in Figure 2-2 and Figure 2-3, respectively: Figure2- 2: The Distribution Situation of Precipitation in Space-Time during the period of 1970-2000

80.0

60.0 40.0 20.0 0.0 Spring Summer Autumn Winter

Proporation (%) Season season Season Season Seasons _

1. The Outline of The Urban Master Plan of Baicheng Municipality. 2. Planning and Design Institute of Jilin Urban and Rural by The Illustration of The Bacheng City Master Plan. 2008.

Jilin Urban Improvement Project Supplementary Appendix 4 (TA 8172-PRC) Final Report

Figure 2-3: The Distribution Situation of Precipitation in Space during 1970-2000

2.4.3 The Variation Trend of Annual Precipitation and Annual Temperature

25. The global warming has obvious impact on the climate in the province. The annual temperature is increasing with time during the period of 1961-2010. During 1961-1980 period, there were 3 years the annual temperature is higher than the mean annual temperature of 1971-2010, while during the period 1981-2010, there are 3 years when the annual temperature is lower than the mean annual temperature (Figure 2-4). 26. For the annual precipitation, the amplitude between drought years and wet years is becoming larger in recent years, and the frequency of extreme drought and extreme wet has been increasing gradually as shown in Figure 2-5.

Figure 2- 4: Annual mean temperature in Jilin Province during 1961-2010

Jilin Urban Improvement Project Supplementary Appendix 4 (TA 8172-PRC) Final Report

Figure 2-5: Annual mean precipitation in Jilin Province during 1961-2010.

3. Water Resource Assessment in the Project Area

A. Baishan City

3.1 Water Resource Amount Assessment in Baishan City

3.1.1 Total Water Resource Assessment

27. The mean annual water resource amount in Baishan Municipality is 8025 million m3, and the mean annual groundwater resource amount is 1474 million m3 which accounted for 18.36% of total water resource. The water resource amount per capita is 6034 m3 which is higher than the average water resource amount per capita in the province as it is 2.4 times and 4.1 times of the national and provincial average levels. 28. For Baishan urban area, according to The Water Resource Planning of Baishan City, the mean annual water resource amount of Baishan City is 1,155 million m3, and the mean annual available water resource amount is 405 million m3. For Hunjiang District, the mean annual water resource amount and the mean annual available water resource amount are 582 million m3 and 175 million m3, respectively. The details of water resources are shown in Table 3-1. Table 3-1: The Situation of Water Resource In Baishan City Unit: million m3

Total Surface Available Available Groundwater Total available Administrative Catchment water surface groundwater 2 resource water water regions area (km ) resource water resource amount resource resource amount amount amount amount

Hunjiang District 1373 582 175 131.16 21.23 582 175 Jiangyuan District 1348 573 230 121.71 15.06 573 230

Total 2721 1155 405 252.87 36.29 1155 405

3.1.2 The Available Water Resource Amount Assessment

29. At present, there are 4 of water sources as the urban water supply sources: Qujiaying reservoir,

Jilin Urban Improvement Project Supplementary Appendix 4 (TA 8172-PRC) Final Report

Zhenzhumen underground springs, Kucanggou underground water source, and Jinying underground water source. The water supply amounts from Zhenzhumen, Kucanggou, Jinying are 9000m3/d, 5000 m3/d, 10,000m3/d, respectively. 30. The Zhenzhumen water source is not used at the present because it is has been polluted by the discharge from gold mining. The Jinying is not used because the actual water yield is far lower than the designed water supply capacity; especially there is a sharp drop during the winter season. Kucangou water source has a steady flow year round, but the water treatment facility is outdated and he water production amount is too small. It is not rational to use it as the urban water supply source. 31. The available water resource for water supply plant in Baishan City is from Qiujiaying reservoir. The mean annual available water supply quantity is 100,000m3/d, of which 80,000m3/d is allocated for the water supply. However, since the water source for Qujiaying reservoir is from the surface water, it varies from year to year and not really stable for water supply use. 32. The water source for the proposed water supply system in Baishan City is Xibeicha Reservoir which is under construction. The Xibeicha Water Conservancy Hub Project is located in Jiangyuan District of Baishan City. The project is to build the Xibeicha Reservoir. The main functions of the reservoir are water supply, hydrological power generation and flood control. The total storage capacity is 12.37 million m3. The power generation capacity is 3250 KW and the daily water supply capacity is 80,000 m3/d. 33. Xibeicha Reservoir is the proposed water source for the project. The Xibeicha River, a tributary of Hun River, has the catchment area of 128km2. The length of the river is 19.25km and the average slope is about 1.5%. The river system of Hun River is shown in Figure 3-1.

Figure 3-1: Hun River Water System

Jilin Urban Improvement Project Supplementary Appendix 4 (TA 8172-PRC) Final Report

3.1.3 Status of Construction of Xibeicha Reservoir

34. The cost for the reservoir is from State and Provincial Governments. For the construction of small hydropower projects, 3 billion CNY from the State fund was in place in November 2011 and another 3 billion CNY was in place in September 2012. From the provincial government, a 2 billion CNY of the provincial funds was in place for the construction in October 2012. The cost of the construction of the reservoir will be covered by the state and provincial government funding. 35. At the present, the totaled completed investment had reached CNY 107.28 million, which is about 7% of total investment (by June 2013). According to the statement from the Water Affairs Bureau of Baishan City, the dam construction will be completed in 2014, and the power plant will be also be completed by the end of 2014. It is planning to start storing water by end of 20153.

3.1.4 Water Quality Assessment

36. The catchment of the Xibeicha River is in the mountains area The area is covered with a good vegetation and the forest coverage rate has reached more than 95%. Across the catchment of the upper-stream of the Xibeicha Reservoir, there is no village, no mining, and no cultivated land. There is pollution for the water source. A survey for water quality of Xibeicha River was completed by The Monitoring Station of EPB, Baishan Municipality during 2008-2013. Some of the main test results include: PH=7.23, BOD=1.30 mg/L, CODMN 1.67 mg/L, which are all meeting drinking water standards.

3.2 The Existing Water Consumption Assessment of Baishan City

3.2.1 Overall Current Water Consumptions in Sector's Assessment

37. In 2011, the total water usage amount was 183.29 million m3of them the water usage amount in urban water usage was 174.59 million m3. It accounted for 95% of total water usage amount according to The Bulletin of Water Resource Management of Baishan Municipality. 38. The water usage amount of Hunjiang District was accounted for about 86% of total water usage in the Baishan City by 2011. Details of water usages by sectors and by administrative regions of Baishan City are shown in Table 3-2 below:

Table 3-2: The Situation of Water Consumption of Baishan City by 2011.

3 3 Rural water usage 10 000 m Urabn water usage 10 000 m Among which: Administrative Total Forestry and Groundwater Region Agricultural Urban Industrial Public (10,000 m3) animal Sub-total Enviornment Sub-total (10,000 m3) irrigation domestic production facility husbandary

Hunjiang District 481 68 549 2,055 12,502 507 120 15,184 15,733 796

Jiangyuan District 108 213 321 574 1,422 173 106 2,275 2,596 569

Total 589 281 870 2,629 13,924 680 226 17,459 18,329 1,365

Proportions in total 3.2% 1.5% 14.3% 76.0% 3.7% 1.2% 7% water usage (%)

39. Among main water use sectors, the water usage in agricultural irrigation, forestry and animal husbandry, urban domestic, industrial, public facility and environment was 3.2%, 1.5%, 14.3%, 76.0%, 3.7% and 1.2% respectively by 2011. 40. In 2011, the proportion of water usage in urban domestic, industrial production and public facility was 58%, 27% and 15%. Details are shown in Figure 3- 2.

3. The data source was provided by Baishan Water Affairs Bureau in November,2013. 11

Jilin Urban Improvement Project Supplementary Appendix 4 (TA 8172-PRC) Final Report

Figure 3-2: Proportions of Sector's Water Usage by 2011 in Baishan City

15%

58%

27%

Urban domestic Industry Public facility

3.2.2 Current Water Use Efficiency

41. Urban Domestic Water Consumption: In Hunjiang District, the urban domestic water consumption has increased from 7.06 million m3 by 2001 to 8.90 million m3 by 2011. The gross urban domestic water consumption quota had increased from 123 l/pd by 2001 to 167 l/pd by 2011. Considering the NRW loss, the net urban domestic water consumption quota had increased from 89 l/pd by 2002 to 110 l/pd by 2011. 42. Urban Domestic Water Consumption Quota of Baishan City: According to The Bulletin of Water Resource in Baishan Municipality of 2011, the total water usage amount in domestic was 2.629 billion m3, the gross resident's domestic water usage quota, the net resident's domestic water usage quota was 121 l/pd and 79 l/pd. 43. Industrial-added value water usage quota: The main industries in Baishan City are Hydro-power generation, medicine production and tourism. By 2011, the industrial added-value was 37,89 million m3, and the water consumption of per 10,000 CNY of industrial added-value was about 90 m3/10,000 CNY. 44. A survey on the situation of water supply by enterprises’ spare water source that was conducted by Baishan Water Supply Group in 2013. It shows that within Hunjiang District, most of water users of agencies use their own water sources, there were a total of 188 water users of agencies, among which 157 users are using groundwater and 31 of the users are using surface water in 2012. Water users what have own water sources include the hydropower plant, stone plant and mineral water production. The total annual water consumption is estimated as 66,46 million m3 by spare water source. 45. By 2011, the total water usage amount in industrial-added value was 139.24 million m3, while the industrial-added value was 14,414 million CNY. The quota of industrial-added value was 90 m3 per 10,000 CNY in Baishan City. But there was a great unbalance between Hunjiang District and Jiangyuan District. The water usage quota of industrial added-value in Hungjiang was about twice of it in Baishan City. The details are shown in Table 3-3. Table 3-3 : The Situation Of Sector's Water Usage Of Baishan City By 2011

Industrial water usage amount Domestic Net domestic Industrial-added Domestic water Among which: Industrial-added Administrative (10,000 m3) Population water usage water value Water usage amount Groundwater value Region 10000 quota usage quota usage quoa (10,000 m3) (10,000 m3) (10,000CNY) Of which: l/p.d) lp.d) 3 Total (m /10,000 CNY) groundwater

Hunjiang District 2,055 796 12,502 27 697,742 34.9 161 105 179

Jiangyuan District 574 569 1,422 296 743,627 24.44 64 42 19 Total 2,629 1,365 13,924 323 1,441,369 59.34 121 79 97

Jilin Urban Improvement Project Supplementary Appendix 4 (TA 8172-PRC) Final Report

3.2.3 The Changing Trend of water Consumption

64. The total of water supply amount in Baishan City has been increased from 1.394 billion m3 by 2001 to 1.539 billion m3 by 2011, with a 2.36% of annual increasing rate of water supply amount. The rate of Non-revenue water (NRW) has increased from 45% in 2001 to 66% by 2011 due to lack of essential maintenance and upgrading. 65. The Nanshan Water supply is the largest water supply plant in the city. The details of water consuption are shown in Table3-4 and Figure 3-3, and the water usage of water supply in Hunjiang District shows in Table 3-5.

Table 3-4: The Situation of Water Consumption by Sectors in Baishan City By 2011

Water supply /consumption amount Years water supply plants 10,000m3) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Water Supply Amount 182.5 182 170.4 127.75 180.1 130.11 129.11 177.41 141.32 18.12 18.05 18.25 Cangnangou Saled Water Amount 100.92 78.98 64.4 62.03 77.81 53.33 49.22 61.39 47.93 8.95 7.3 6.27 Water Supply Amount 348.8 547.78 715.32 580 531.93 555.44 581.17 708.7 907.99 960.46 1271.92 1433.84 Nanshan Saled Water Amount 192.88 249.33 270.4 281.61 229.79 227.65 221.56 245.23 307.94 473.96 515.14 492.21 Water Supply Amount 313.29 304.2 287.54 182.3 214.83 201.15 204.55 212.4 181.25 Jinying Saled Water Amount 173.24 131.98 108.7 88.52 92.8 82.45 77.98 73.5 61.48 Water Supply Amount 365 360 289.5 229.95 237.44 210.3 240.17 222.03 211.2 81.56 78.26 87.32 Zhenzhumen Saled Water Amount 201.82 156.19 109.43 111.64 102.57 86.18 91.55 76.82 71.62 40.24 31.7 29.97 Water Supply Amount 1209.59 1393.98 1462.76 1120 1164.3 1097 1155 1320.54 1441.76 1060.14 1368.23 1539.41 Total Consumped Water Amount 668.86 616.48 552.93 543.8 502.97 449.61 440.31 456.94 488.97 523.15 554.14 528.45 NRW (%) 45% 56% 62% 51% 57% 59% 62% 65% 66% 51% 59% 66% Proportion of water supply (%) 29% 39% 49% 52% 46% 51% 50% 54% 63% 91% 93% 93% Nanshan WSP Proportion of water consumption %) 29% 40% 49% 52% 46% 51% 50% 54% 63% 91% 93% 93%

Figure 3-3 : Annual Water Supply by WSPs in Baishan City During 2001-2011

Total water Suppy Cang-nan-gou Nanshan Jinying Zhenzhumen

1600

1400

1200

1000

800

600 Water amount (10,000 m3) 400

200

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Years

Jilin Urban Improvement Project Supplementary Appendix 4 (TA 8172-PRC) Final Report Table 3-5: Situations of Water Usage in Hunjiang District During 2001-2011 Annual water supply amount (10,000 3 Annual water proportions in total Water Comprhensiv Comprhensive Annual water usage amount (10,000m ) 3 Comprehensiv Urban Annual m ) fee usae amount (%) e water urban domestic NRW rate Years e water charge Populatio Increasing (10,000 usage per water usage per (%) Urban Public Total water NRW by Total water (CNY/m3) Urban Public n (10,000) rate Industry Sub-Total CNY) Industry capita (l/p.d) capita (l/p.d) domestic Facility usage WSP supply domestic facility

2001 705.88 504.88 210.22 1420.98 616.48 804.50 1420.98 1202.14 0.85 50% 36% 15% 20.47 190 123 2002 811.42 388.38 262.96 1462.76 552.93 909.83 1462.76 1401.84 0.96 55% 27% 18% 20.50 195 144 2.94 62% 2003 576.38 318.15 225.56 1120.09 543.80 576.29 1120.09 1395.59 1.25 51% 28% 20% 20.37 151 108 -23.43 51% 2004 680.71 325.19 260.52 1266.42 564.81 701.61 1266.42 1415.29 1.12 54% 26% 21% 20.21 172 128 13.06 55% 2005 621.93 338.44 136.63 1097.00 449.61 647.39 1097.00 1180.89 1.08 57% 31% 12% 19.64 153 106 -13.38 59% 2006 558.44 428.68 167.88 1155.00 440.31 714.69 1155.00 1310.77 1.13 48% 37% 15% 19.46 163 102 5.29 62% 2007 895.89 341.02 83.63 1320.54 456.94 863.60 1320.54 1362.54 1.03 68% 26% 6% 19.33 187 139 14.33 65% 2008 651.27 612.96 176.76 1440.99 488.98 952.01 1440.99 1449.63 1.01 45% 43% 12% 19.12 206 119 9.12 66% 2009 444.54 433.22 182.38 1060.14 523.15 536.99 1060.14 1493.59 1.41 42% 41% 17% 18.92 154 91 -26.43 51% 2010 787.03 358.98 222.22 1368.23 554.14 814.09 1368.23 1544.60 1.13 58% 26% 16% 18.82 199 147 29.06 59% 2011 889.62 412.17 237.62 1539.41 528.45 1010.96 1539.41 1561.06 1.01 58% 27% 15% 18.50 228 167 12.51 66%

Jilin Urban Improvement Project Supplementary Appendix 4 (TA 8172-PRC) Final Report

3.3 Review the Current Water Supply Alternative Options in Baishan City

3.3.1 Review of the Current Situation of the Water Supply

66. By 2011, there were total 5 water supply plants/sources in Baishan City including 4 WSPs in Hunjiang District and 1 WSP in Jiangyuan District. 67. WSPs in Hunjiang District. In Hunjiang District, there are 4 WSPs including Qujiaying, Zhenzhumen, Kucanggou and Jinying. Zhenzhumen and Jianying WSPs have stopped supplying water due to pollution from water sources. Kucanggou WSP has a steady water yield but the water treatment plant is too simple and the treated water quality cannot meet the Standard Of Drinking Water (GB2006). 68. WSPs in Jiangyuan District. There is one water supply plant in Jiangyuan District, namely Jiangyuan Water Supply Plant. The plant is located in the Dayangcha River. The water supply distribution network has been upgraded in recently years. 69. The summary of water supply plants in Baishan City is shown in Table 3-6 Table 3-6 The Situation WSPs Of Baishan City BY 2011 Existing Type water Water supply Administrative Water sources water supply service Current situation Region sources capacity objectives ( m3/d) Surface Resident's Qujiaying 80,000 Run in normal water domestic Stopped supplying Ground Resident's Zhenzhumen 9,000 water due to water water domestic pollution Water yield is steady Spring Resident's but with a simple Hunjiang Kucanggou 5,000 water domestic water treatment District plant Stopped supplying Spring Resident's water due to the Jingying 10,000 water domestic water yield has dropped Sub- total 104,000 Water pollution, with Yiangyuan Taiyangcha Surface Resident's 30,000 a low guarantee District River water domestic rate of water supply

3.3.2 Review of the Water Treatment Plant

70. General Situations. The Nanshan Water Treatment Plant is the only water treatment plant in Hunjiang District. The water supply capacity of Nanshan Water treatment Plant is 80,000 m3/d. The Qujiaying reservoir is the water source of the water treatment plant. The raw water was transmitted 7.2 km in tunnels and then through 1.0 km of water transmission pipelines to the water treatment plant. The plant was built and put into production in 1992, and the operation processing capacity of water was 50000 m3/d. 71. Water Treatment Technique. The actual water supply capacity is far below 50,000 m3/d due to the aged facilities and lack of maintenance. The conventional water treatment technology was used, which includes mechanical mixing, grid flocculation, inclined tube sedimentation and siphon filter. Later an additional 30,000 m3/d water treatment capacity was added to the plant. A similar water treatment technology including mechanical mixing, folded-plate reaction, inclined-plate sedimentation and fast filtration was adopted. The current plant site is fully occupied without any spare space for further expansion.

3.3.3 Identify Potential Weakness In Existing Infrastructure and Management

72. By 2011, there was a total length of 150 kilometers of water supply pipe (DN75 mm) network in Hunjiang. The water distribution pipe size is too small and the guarantee rate for water supply is very low. In the north side of Hujiang River and the the south side of the railroad line, the water supply network has

Jilin Urban Improvement Project Supplementary Appendix 4 (TA 8172-PRC) Final Report not fully developed yet. 73. The Qujiaying water source has been in use since 1992 and there has been no new water source since then. The diameter of the water distribution network is too small than the required diameter. Major problems of water supply in Baishan City are as follow: (i) In recent years, the groundwater resource has been polluted and it cannot be drunk directly if it is not treated by special water purification process. The water source of Qujiaying Reservoir is the sole surface source. The treated water quality often cannot meet the standard of drinking water. (ii) There is a gap between water demand and water supply. With the fast development of society and economy in the city, not only the existing water supply capacity of Qujiaying reservoir cannot meet the requirement of water demand, but also there is serious leakage problem in the water transmission tunnel. (iii) The water supply from Nanshan Water Treatment Plant (WTP) cannot meet the current demand. The plant design treatment capacity is 80,000 m3/d. However, the actual output is far less than the design capacity and the water source is not reliable due to the water is taken from the surface water from river. (iv) There is a serious situation of pipe corrosion in the Distribution Network and the size of the distribution network is much smaller than the required. (v) The total water supply capacity will be in deficiency in future. According to the available water demand predication outcome, the expected water demand will be 130,000m3/d in 2020, the deficiency of required treated water will be about 50,000 m3/d. The existing water supply capacity cannot meet the requirement of urban development. (vi) There is high none revenue water (NRW) loss in Baishan, which is about 65% based on 2013 data.

3.3.4 Identify Potential Weakness in Operation and Maintenance, Service and Management

74. From the field survey and discussion, the potential weakness in operation, maintenance, service and management in Baishan WSP are: (i) Lack of necessary facilities for leakage detection and emergency rescue; (ii) The staffs have poor skills on the management of WSP system. (iii) High NRW in the water supply system. (iv) The water quality monitoring still relies on traditional monitoring method by collecting water samples manually without automatic monitoring and checking system.

3.3.5 Assessment on the Current Tariff Level

75. The current water tariff was issued by 2004 and it has not been modified or revised yet. The water tariffs of urban domestic, industrial production, public utilities are 2.3 m3/CNY, 4.0 m3/CNY, 4.0 m3/CNY respectively. For special sectors, e.g. car washing, bath industry, the water tariff was 7.0 m3/ CNY. Details are shown in Table 3- 7: Table 3-7: The Situation Of Sector's Water Tariff of Baishan in 2004

Urban Industrial Special Public utilities domestic production sectors

2.30 4.00 4.00 7.00

Jilin Urban Improvement Project Supplementary Appendix 4 (TA 8172-PRC) Final Report

B. Baicheng City

3.4 Water Resource Assessment in Baicheng

3.4.1 Total Water Resource Assessment

76. The water resource in Bacheng Prefecture is relative abundant, there are vast bodies of water. Rivers and lakes spread all over the place. The total water area has reached 270,000 hm2 which is accounted for 42.2% of water area in the province. The total water surface area is 170,667hm2 which is accounted for 57% of water surface area in the province. 77. The mean annual total water resource amount in the prefecture is 2,272 million m3/a, among which, the ground water resource is 2083 million m3/a, accounted for 91.68% of total water resource amount. The surface water is 189 million m3/a, accounted for 8.32% of total water resource amount. The exploitable groundwater resource amount is 1539 million m3/a, it accounts for 73.88% of total ground water resource amount. The mean annual crossing water amount is 22,000 million m3/a.4

3.4.2 The Available Water Resource Amount Assessment

78. In Baicheng City, the groundwater resource is the sole water source of the urban water supply system. There are 3 water treatment plants. The No.1 water treatment plant stopped supplying water to residents. There are 3 deep wells in the No.2 water treatment plant with the area of 113km2, the average daily water supply capacity is 15,000 m3/d. There are 7 deep wells in the No.3 water treatment plant with the area of 31,162m2, the average daily water supply capacity is 80,000 m3/d. The total water supply amount is 22.46 million m3/a. The No.2 water treatment plant is used as the spare source at peak times, while the No. 3 water treatment is the water supply source for the city all day round. 79. Regarding to the increasing in population and the increasing of water demand with the development of society and economy in future, the surface water delivered by The Engineering of Transmission Water From the Nen River to Baicheng Municipality will be used for the water source for the urban water supply from 2015. The water supply capacity of the spare water source by enterprises was 25,000m3/a. 80. The design capacity of The Program of Transmission of Nen River Into Baicheng Municipality is 394 million m3 /a, of which the water allocation to Baicheng City is 89.93 million m3/ by Jilin Water Resource Department. Details are shown in Table 3-8. Table 3-8： The Situation Of Water Resource In Baicheng City

Available resource (million m3) The supplied water amount (million m3) Remain available The allocation of The The exploitable The supplied water water amount Local ground Delivery Water From The supplied ground water Total by Spare water Sub-total (million m3) water amount the Nen River to water by WSP amount source Baicheng (million m3)

473200.00 402200.00 89.33 402289.33 21.18 11.38 32.56 402256.77

3.5 The Existing Water Consumption Assessment Of Baicheng City

3.5.1 Overall Current Water Consumption in Sector’s Assessment

81. The total water supply amount in Baicheng City has been increased from 3,03 billion m3 by 2001 to 3.49 billion m3 by 2011 with 13 % of annual increasing rate. The proportion of annual water supply by WSPs in total water supply has increased from 34% by 2001 to 49% by 2006 and 61% by 2011. 82. While the total water consumption has been increased from 3.03 billion m3 by 2001 to 4.32 billion m3

4. The Water Resource Management Statistic Yearbook of Baicheng City, 2012. 17

Jilin Urban Improvement Project Supplementary Appendix 4 (TA 8172-PRC) Final Report by 2006 with about 7% of average annual average increase rate. 83. The proportion of industrial water consumption has decreased from 53% by 2001 to 39% by 2006, and the proportion of industrial water consumption has increased from 39% by 2006 to 41% by 2011 although the industrial added-value of 2011 was 5.4 times of it by 2001. While the proportion of water consumption in public facility keeps steady during the same period. Details shows in Figure 3-4.

Figure 3-4 The Situation of Sector’s Water Usage in Baicheng During 2001-2011 Period.

Urban domestic water Industry Public facility 线性 (Urban domestic water) 线性 (Industry) 70%

60%

50%

40%

30%

20%

10%

Proportion in total water sUsage (%) sUsage water total in Proportion 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Years

84. By 2011, the total water supply amount was 21,18 million m3 through WSP of Baicheng City; there was an addition 11.38 million m3 of water supplied by the spare water sources of enterprises and privates. The total water supply 32.56 million m3. The supply rate of WSP was 65%.

3.5.2 Current Water Use Efficiency Assessment in Main Sectors

85. Generally speaking, the comprehensive urban domestic water usage keeps stable during the period of 2006-2011 in Baicheng City. It has decreased from 267 l/p.d by 2001 to 233 l/l by 2011, the comprehensive urban domestic water usage had decreased from 107 l/pd by 2001 to 94 l/pd by 2011 in Baicheng city with the implementation of the WSPS upgrading. It was far below to the average provincial level, and national level. 86. For water consumption in industrial, the water consumption quota has decreased from 445 m3 by 2001 to 38 m3 per 10,000 industrial added-value.

3.5.3 The Changing Trend of Water Consumption in Recent Years

87. From 2001—2011, the total water consumption amount has increased from 2.01 billion m3 in 2007 to 2.36 billion m3 in 2011 with about 3% of average annual rate. The details are shown Table 3-9. 88. By 2011, the total water consumption amount in Baicheng City was 32.56 million m3, among which, 21.58 million m3 of water was supplied through WSPs, and the remains water was supplied by spare water sources. The proportion of water supply through WSPs was accounted for about 65% of total water supply. 89. Among sector's water usage, the proportion of urban domestic water, industrial water, public facilities was 41%, 38% and 19% respectively. Details are shown in Figure 3-5. 90. From the Table 3-9 below: The proporation of water supply through WSP had increase from 34% by 2001 to 61% by 2011. As a result, the public water supply engineering has made an important contribution to the society and economy development.

Table 3-9: The Changing Trend of Water Usage in Baicheng City During 2001-2011

Jilin Urban Improvement Project Supplementary Appendix 4 (TA 8172-PRC) Final Report

proportions in total Water usage Annual water usage amount (10,000m3) Annual water supply amount (10,000m3) Water supply by WSP amount (%)

Total NRW Water Years Urban Public Proportio Urban Public water supply Industry domestic Facility Others Total Free Total n of WSP Industry domesti Facility Others usag amount water water chargable Leakage sub-total ( %) c water water amount (10,000m3) water 2001 1,599 1,129 302 3,030 3,030 3,030 1,026 34% 53% 37% 10% 2002 1,826 1,559 308 3,693 3,693 3,693 1,863 50% 49% 42% 8% 2003 2,012 1,271 635 315 4,233 4,233 147 147 4,380 2,324 53% 48% 30% 15% 7% 2004 1,981 1,349 636 324 4,290 4,290 153 153 4,443 2,246 51% 46% 31% 15% 8% 2005 1,679 1,350 638 623 4,290 4,290 252 252 4,542 2,274 50% 39% 31% 15% 15% 2006 1,679 1,368 648 623 4,318 4,318 342 342 4,660 2,274 49% 39% 32% 15% 14% 2007 543 1,218 292 48 2,101 2,101 327 1,467 1,794 3,895 2,397 62% 26% 58% 14% 2% 2008 753 1,495 485 76 2,809 2,809 557 652 1,209 4,018 1,199 30% 27% 53% 17% 3% 2009 701 1,541 509 69 2,820 2,820 557 623 1,180 4,000 2,363 59% 25% 55% 18% 2% 2010 573 1,274 439 65 2,351 2,351 528 622 1,150 3,501 2,349 67% 24% 54% 19% 3% 2011 957 897 441 65 2,360 2,360 519 608 1,127 3,487 2,118 61% 41% 38% 19% 3%

Figure 3-5 : The Situation of Water Usage in Baicheng by 2011

4. Water Demand Prediction and Water Balance Assessment Of Baishan City

4.1 The Determination of the Base Line Year and the Planning Level Year

91. Considering the available data for society-economy, water supply and water usage in proposed project area, it is decided that the year of 2011 was the base line year. Based on Urban Water Supply Engineering (GB50282-98), and the available planning achievements for Urban Master Planning, Five Years Planning in social-economic development and the Long-term planning of water resource, and the planning urban water supply, it is suggested that the year of 2020 is the design year, and the year of 2025, 2030 is the final planning years.

4.2 Main Design Specifications, Norms, and Standards

• "The Standard for Design of Outdoor Water" (GB50013-2006) • "The Standard of City Water Supply Engineering Planning" (GB50282-98) • "The Standard for Drinking Water” (GB5749-2006)

Jilin Urban Improvement Project Supplementary Appendix 4 (TA 8172-PRC) Final Report

4.3 Targets of Water Supply Plants

92. The design guarantee rates of the proposed project was determined by relative national design specifications for domestic water use sector, industry consumption sector and agricultural irrigation water use sector. The coverage rate of urban domestic is no less than 95% and 98% by 2020 and 2030 respectively. The leakage rate of WSP will be decreased to 30%, 20% respectively. The objective of water supply service is urban domestic, industrial production and environmental use for landscaping and road cleaning.

4.4 The Determination of Sector’s Water Usage Quota

a) Comprehensive Urban Domestic Water Usage Quota 93. National Comprehensive Urban Domestic Water Quota - In order to predict the water demand for urban domestic use, The Specification of City Water Supply Project Planning GB50282-98 is refereed. 94. The comprehensive method to predict urban domestic water usage is used. The water quota includes resident’s daily water usage and public building’s water usage. It does not include the water usage for road, landscaping, municipal facility and leakage of pipe networks. The detail of urban domestic water quota shows in Table 4-1. Table 4-1: The National Quota of Urban Comprehensive Domestic Quota Unit: l/pd

City Size Megalopolis Large Cities Medium –small sized Cites

Daily Daily Daily Daily Daily Daily Zone’s Code maximum average maximum average maximum average

1 260～410 210～340 240～390 190～310 220～370 170～280

2 190～280 150～240 170～260 130～210 150 ～240 110 ～180

3 170～270 140～230 150～250 120～200 130～230 100～170

Notes: 1) Mega city refers to: the non-agricultural population of the city urban and suburb≥ 1,000,000 of City and close and above; Large city refers to: 500,000＜ the non-agricultural population of the city＜ 1,000,000; small city refers to: the non agricultural population of the city's urban and suburban areas < 500,000. 2) Zone 1 includes Hubei, Hunan, Jiangxi, Zhejiang, Fujian, Guangdong, Guangxi, Hainan, Shanghai, Jiangsu, Anhui, Chongqing; Zone 2 includes Sichuan, Guizhou, Yunnan, Heilongjiang, Jilin, Liaoning, Beijing, Tianjin, Hebei, Shanxi, Henan, Shandong, Ningxia, Shaanxi, Inner Mongolia Gansu East and east of the Yellow River; Zone 3 includes Xinjiang, Qinghai, Tibet, Inner Mongolia and Gansu in the west of the west of the Yellow River. 95. Baicheng City and Baishan City belong to medium-small sized city in Zone 2. The designed daily average water consumption quota of urban domestic water is 110-180 l/pd

4.5 Prediction of Social-Economic Development and Water Consumption Assessment of Baishan City

4.5.1 The Existing Social-Economic Assessment

a) Population 96. Population of Bashan City During the period of 2001 to 2011, the total population has been decreasing slightly from 593,400 by 2010 to 599,300 by 2011. The average annual growth rate of population is -0.99‰, and the urbanization rate keeps stable around 79%. 97. Population of Hunjiang District The population has decreased from 270,030 in 2001 to 244,370 by 2011, and the average decreasing rate is around 10.01‰. The urbanization rate of Hunjiang District was also stable during the period of 2001-2011, keeping around 76% in the district. b) Economy

Jilin Urban Improvement Project Supplementary Appendix 4 (TA 8172-PRC) Final Report

98. Hunjiang District The GDP value of Hunjiang District has increased from 150.640 billion CNY in 2001 to 1224,611 billion CNY in 2011, and the industrial added-value has increased from 32.479 billion CNY in 2001 to 743.627 billion CNY in 2011. The increasing rate of GDP and the industrial added-value have increased 8.1 and 22.9 times respectively. Details are shown in Table 4-2. 99. From the Table 4-2, it can be found that the proportion of GDP of Hunjiang District in Baishan has increased from 32.8% to 47.5% from 2001 to 2011. The population proportion of Hunjiang in Baishan has decreased from 45.1% to 41.2% from 2001 to 2011. Table 4-2: The Situation of Society-Economy in Hunjiang District

Production value Population (10,000) Added valuepresent price Population 10,000 CNY Proportions of Population Urbanization City GDP proportion of Years GDP in the City growth rate rate (%) Industrial The First The Secondary The Tertiay (10,000 CNY) Project Area in Urban Rural Total GDP Total (%) (‰) added-value Industry Industry Industry the City (%)

2001 26.000 6.900 32.900 79% 150,640 32,479 18,496 87,502 44,642 150,640 459,483 32.8% 54.9%

2002 26.100 6.900 33.000 79% 170,072 31,973 20,493 98,527 51,052 170,072 519,581 32.7% 55.0% 3.04

2003 26.300 6.800 33.100 79% 230,657 33,617 34,306 107,142 89,209 230,657 617,875 37.3% 55.2% 3.03

2004 26.600 6.900 33.500 79% 280,318 57,990 41,696 134,253 104,309 280,258 724,206 38.7% 56.2% 12.08

2005 26.900 6.800 33.700 80% 280,581 104,631 36,470 136,539 107,572 280,581 820,381 34.2% 56.7% 5.97

2006 26.900 6.800 33.700 80% 358,684 162,561 40,088 178,993 139,603 358,684 1,013,418 35.4% 56.9% 0.00

2007 26.900 7.000 33.900 79% 454,442 223,936 44,684 258,390 151,368 454,442 1,258,807 36.1% 57.2% 5.93

2008 28.100 6.100 34.200 82% 580,240 299,251 59,288 310,245 210,707 580,240 1,521,390 38.1% 57.6% 8.85

2009 27.800 6.600 34.400 81% 795,248 436,241 59,297 455,897 280,054 795,248 1,890,411 42.1% 57.9% 5.85

2010 28.100 6.500 34.600 81% 1,001,684 595,718 49,664 615,405 336,615 1,001,684 2,179,728 46.0% 58.2% 5.81

2011 28.300 6.600 34.900 81% 1,224,611 743,627 56,102 783,657 384,852 1,224,611 2,576,521 47.5% 58.8% 8.67

4.5.2 Comprehensive Urban Domestic Water Use Quota

100. Referencing the urban domestic water usage quota in The Integrated Water Resource Planning of Baishan City, the average urban domestic water quota will be controlled under 100 l/pd and 120 l/pd by 2020, 2030 respectively.

4.5.3 Prediction of Society-Economy

101. The total population was 281,000 by 2011 in the Baishan City. In accordance with the Master Planning of Baishan City, the overall comprehensive growth trend rate of population is 14.4 ‰. The population of Hunjiang will reach 321,000 and 345,000 by 2015 and 2020 respectively.

4.6 Water Demand Prediction of Baishan City

4.6.1 Water Demand Prediction Of Baishan City Center

102. The daily average water demand and daily maximum water demand will be 135,011 m3/d and 162,014 m3/d respectively by 2020. The daily average water demand and daily maximum water demand will be 197,536 m3/d and 237,043 m3/d respectively by 2025. The predicted water demand is shown in Table 4-3.

Jilin Urban Improvement Project Supplementary Appendix 4 (TA 8172-PRC) Final Report

Table 4-3 Predicted Daily Water Demand of Baishan City Center Through WSPs Years 2011 2015 2020 2025 A. Water Demand Forecast 1 Total Population (people ) 593,373 605,330 620,615 642,643 2 Urban Population (people ) 467,958 484,978 507,125 535,581 3 Water Supply Serving Population (people ) 327,571 362,027 410,238 469,513 b Water Supply Serving Population (urban) (people) 327,571 241,507 261,700 286,414 c % water supply for urban population (%) 70% 83% 87% 91% 4 Industrial added value (10,000 CNY) 378,914 762,691 1,617,074 2,165,459 a water use Per CNY10000 industrial added value (m3/CNY10000) 80 71 61 52 6 Domestic water use/demand through WSP (m3/d) 18,016 22,087 28,491 37,120 Per capita domestic water use (L/day/capita) 55 61 69 79 7 Industrial water use/demand (m3/d) 8,305 19,828 52,042 86,268 Industrial water demand supplied by WSP (%) 10% 13% 19% 28% 8 Road watering and land sacping 1,053 1,677 3,221 4,936 9 Public facilities 5,264 8,383 16,107 24,678 10 Non-revenue water from the pipeline network (m3/d) 19,583 22,492 29,958 36,938 a % leakages from pipelines 50% 33% 20% 14% b Uncounted water 10% 10% 10% 10%

B. Net water Demand (2010)/Demand Forecast (2011 - 2025) 52,222 74,467 129,819 189,939

C Water required by WSP (4% of net water demand) 2,089 2,979 5,193 7,598 D. Water Demand (2011)/Demand Forecast Through WSP (2012 - 2030) 1 Demand /Forecasted Demand (Daily average ) (m3/d) 54,310 77,445 135,011 197,536 2 Demand /Forecasted Demand (Daily max ) (m3/d) 65,172 92,934 162,014 237,043

3 3 Annual Demand /Forecasted Demand (million m /year) 19.82 28.27 49.28 72.10

4.6.2 Water Demand Prediction Of Hunjinag District

103. The daily average water demand and daily maximum water demand of Hunjiang District will be 97,719 m3/d and 117,262 m3/d respectively by 2020. The daily average water demand and daily maximum water demand will be 153,018 m3/d and 183,621 m3/d by 2025. Details of Water Demand of Hunjiang District shows in Table 4-4. The water allocations to domestic water, industrial and other water uses are shown in Table 4-5.

Jilin Urban Improvement Project Supplementary Appendix 4 (TA 8172-PRC) Final Report

Table 4-4: Predicted Water Demand Through WSPs in Hunjiang District

Years 2011 2015 2020 2025 A. Water Demand Forecast 1 Total Population (people ) 346,141 353,116 362,033 374,882 2 Urban Population (people ) 283,100 291,157 301,551 315,436 3 Water Supply Serving Population (people ) 226,480 241,507 261,700 286,414 b Water Supply Serving Population (urban) (people) 226,480 241,507 261,700 286,414 c % water supply for urban population (%) 80% 83% 87% 91% 4 Industrial added value (CNY million) 227,348 457,615 970,244 1,299,275 a water use Per CNY10000 industrial added value (m3/CNY1000 90 80 68 58 6 Domestic water use/demand (m3/d) 12,683 15,422 16,195 17,007 Per capita domestic water use (L/day/capita) 70 77 87 98 7 Industrial water use/demand (m3/d) 5,606 11,230 31,964 61,293 8 Road watering and land sacping 507 1,066 2,066 3,468 9 Public facilities 3,658 5,883 11,702 18,682 10 Non-revenue water from the pipeline network (m3/d) 14,595 16,394 21,683 31,572 a % leakages from pipelines 55% 35% 20% 17% b Uncounted water 10% 10% 10% 10%

B. Net water Demand (2010)/Demand Forecast (2011 - 2025) 37,049 52,756 93,960 147,132

C Water required by WSP (6% of net water demand) 1,482 2,110 3,758 5,885 D. Water Demand (2011)/Demand Forecast Through WSP (2012 - 2030) 1 Demand /Forecasted Demand (Daily average ) (m3/d) 38,531 54,867 97,719 153,018 2 Demand /Forecasted Demand (Daily max ) (m3/d) 46,237 65,840 117,262 183,621 3 Annual Demand /Forecasted Demand (million m3/year) 14.06 20.03 35.67 55.85

Table 4-5 Predicted Water Allocation in Hunjiang District

Items years 2011 2015 2020 2025

A. Domestic Water Use and Industrial Use (million m3/year) 14.06 20.03 35.67 55.85

1 Domestic water 4.63 5.63 7.19 9.27

2 Industrial Use 2.05 5.11 14.17 24.82

3 Road watering and land sacping 0.19 0.39 0.75 1.27

4 Public facilities water 1.34 2.15 4.27 6.82

5 Non-Revenue water from the pipeline network 5.33 5.98 7.91 11.52

6 Water required by WSP (4% of net water demand) 0.54 0.77 1.37 2.15

B. Water Demand Allocation Through WSPs (%)

1 Domestic Water 33% 28% 20% 17%

2 Industrial Water 15% 26% 40% 44%

3 Road watering and landsacping 1% 2% 2% 2%

4 Public facilities water 9% 11% 12% 12%

5 Non-Revenue water from the pipeline network 38% 30% 22% 21%

6 Water required by WSP (6% of net water demand) 4% 4% 4% 4%

C. Water Resource Availability of Reservoirs (million m3/year) 29.20 55.95 55.95 55.95

Water Availability (Qujiaying Reservoir ) (million m3/year) 29.20 29.20 29.20 29.20

Water Availability (Xibeicha Resrvoir) (million m3/year) 26.75 26.75 26.75

D.Water Resource Gap Analysis and Its Potential Allocation (Average Year) 15.14 35.93 20.29 0.10

E. Water Resource Allocation fulfillment Rate Through WSPs (%) (Average Year)

1 Drinking Water 100% 100% 100% 100%

2 Industrial Water 100% 100% 100% 100%

3 Road watering and land sacping 100% 100% 100% 100% 4 Public facilities water 100% 100% 100% 100%

Jilin Urban Improvement Project Supplementary Appendix 4 (TA 8172-PRC) Final Report

4.7 Water Balance Assessment

104. The water balance in Baishan City and Hunjiang District is assessed based on the available water resource at the design guarantee rate and the predicted maximum daily water demand. Details Shows in Table 4-9. It can be found that there is a positive water balance assessment between the available water resource of WSP and the required water demand and the designed capacity of water treatment can be determined.

Table 6-9 Water Balance Assessment For WSP of Hunjiang District by 2025 Unit: 10,000m3 Available Water Treated Balance Balance of water water sources demand Water of water daily treated supply amount Capacity supply water amount amount

Qujiaying Reservoir 12 10 8 -2 4

Qujiaying Reservoir 10 8 12 2 1 Xibeicha Reservoir 4 5

5. Technical Assessment of Baishan Water Supply

5.1 Introduction

105. The proposed components include: • There are about 27.49 km of raw water’s transmission pipeline; • The new WSP with the daily water treatment capacity of 50,000 m3/d; • The total length of water distribution pipelines is about 55.378 km. Of which, the length of upgrading water distribution pipeline is about 11.138km, the new built water distribution pipeline is about 44.24km. 106. Two water transmission pipe will be built to transfer the raw water from Xibeicha Reservoir to the WSPs. One DN900 water transmission pipe delvers 50000 ton/day water to the Hunjiang District new WSP. The other DN800 water transmission pipe delivers 30000 ton/day water to Jiangyuan District WSP. Figure 6-1 shows the layout of subprojects in Baishan City.

Figure 6-1: The Layout of Subprojects of Urban Water supply in Baishan City

Jilin Urban Improvement Project Supplementary Appendix 4 (TA 8172-PRC) Final Report

5.2 Water Transmission Pipelines

5.2.1 Alternatives Study

A. Analysis on Alternative Water Transmission Pipeline Routes

107. Hunjiang District and Jiangyuan District locate in two sides of the Hunjiang River. Jiangyuang District locates in the Eastern part of the upper-stream of the Hunjinag River, while Jangyuan District locates in the Western part of the down-stream of the Hunjinag River. Baishan City has a jurisdiction over the region and the river source area.

108. The length of pipeline and the amount of affected utilities needs to be minimized. The amount of the affected buildings, structures and farming land should be minimized. The water lines should avoid crossing river, railway and road to save investment cost. Energy saving is also a key factor of route selection. The water distribution is preferred to be delivered by gravity.

B. Alternative Water Transmission Pipeline Routes Of Jiangyuan District

109. The Xibeicha water conservancy Hub power plant is located in the north of Baishan City, and the Jiangyuan water plant is located in the south of the city. After several route reconnaissances by the construction units and Design Institute, there are 2 pipe line alternatives.

110. Alternatives 1: The pipeline is buried in the river bed from Xibeicha Reservoir to the WSP in Jiangyuan District. The total length is 6.8 km.

Jilin Urban Improvement Project Supplementary Appendix 4 (TA 8172-PRC) Final Report

111. Alternative 2: The pipeline is buried on land. starting at Xibeicha Reservoir, crossing Xibeicha River, Sanchazi Forest Bureau, continuing along the river to reach Hunjiang River Bridge, than crossing the river again to reach the railroad line, and to Jiangyuan District Hospital and Jiangyuan water treatment plant. The total length is 6.865 km. Photo 6-1 shows Hunjiang River.

Photo 6-1: Hunjiang River in Jinangyuan District

Table 6-1 Alternative 1 and alternative 2 comparison list Alternative 1 Alternative 2 Water transmission pipe DN800 L=7500m PN0.6MPa DN800 L=6868m PN0.6MPa Total investment 58.9 million RMB 20.1 million RMB

112. Table6-1 compares alternatives 1 and 2. The Alternative 2 is selected due to following factors: 1) It is difficult to build water line in the river; 2) it is difficult for maintenance and operation for Alternative 1; and 3) Alternative 2 can save 38.8 million RMB for investment.

C. Alternative of The Water transmission Pipeline for Hunjiang District

113. The water transmission line for Hunjiang District is from the east to the west, running through Sanchazi Town, Jiangyuan Town, Babao Town, Zazi Town to reach Shandianzi Bridge. There are 2 alternatives for the water transmission line.

Alternative 1: From the new hydropower station at Xibeicha Reservoir, the transmission line starts to crossing the Xibeicha River and continuing along the river to a bridge, crossing the river and a railway to the hillside of Jiangyuan WSP, continuing along the railway to Highway 201, then reaching the proposed WSP. The total length of transmission pipeline is 21.14 km. Photo 6-2 shows the Alternative of pipeline along the railway.

Photo 6-2: The Railway In Hunjiang District

Jilin Urban Improvement Project Supplementary Appendix 4 (TA 8172-PRC) Final Report

Alternative 2: All transmission line is placed in the river bed from Xibeicha Reservoir to the proposed WSP. The total length is 21.4 km.

Table 6-2 ：Alternative 1 and Alternative 2 Comparison Alternative 1 Alternative 2 Water transmission pipe DN900 L=19000m PN0.6MPa DN900 L=16750m PN0.6MPa DN900 L=1500m PN1.0MPa DN900 L=900m PN1.0MPa DN900 L=3831m PN1.6MPa DN900 L=2975m PN1.6MPa Total investment 97.83 million RMB 212.89 million RMB

114. Table 8-2 compares alternatives 1 and 2. Alternative1 is selected due to following factors: 1) Alternative 2 is difficult to build; 2) it is difficult for maintenance and operation for Alternative 2; and 3) Alternative 1 can save 115.06 million RMB.

5.2.2 Engineering Design

a) Hydraulic Calculation Of Pipelines

115. The calculation of the pipe head loss should include the frictional head loss and the local loss of water head. Because there are a lot of turns in midway of the large pipeline, the local head loss of water transmission pipe lines is estimated to 20% of the frictional head loss. The pipe diameter of water transmission pipeline to the Jiangyuan District is DN800mm, and the pipe diameter of water transmission pipe to Hunjiang District is 900mm.

b) Calculation Of The Water Transmission Pipeline Pressure

116. Jiangyuan Water Transmission Line: The elevation of the outlet for the transmission line at Xibeicha Reservoir is 619 m, and the distance to the Jiangyuan WSP is about 6.8 km. The elevation of the inlet at Jiangyuan WTP is 608.65m. There is an elevation difference of 10.35m, which has the adequate water pressure for the water to flow by gravity.

117. It is estimated that the maximum water hammer pressure will rise to 50%. So the maximum pressure value of the water transmission pipeline would be 20.70 m. The selected pipe pressure is 0.3MPa.

118. Hunjiang Water Transmission Line: The elevation of the transmission line outlet at Xibeicha Reservoir is 582 m, and the distance to the proposed WSP is 21.41km. The elevation of the inlet of the proposed WTP is 520 m. There is an elevation difference of 62 m between the outlet and inlet pipes. Based on the design calculation, the water can be transmitted by gravity using DN900 pipe.

Jilin Urban Improvement Project Supplementary Appendix 4 (TA 8172-PRC) Final Report

119. It is estimated that the maximum water hammer pressure will rise to 100%. The maximum water pressure is 124m and the selected pipe pressure is 1.6 MPa. c) Analysis on Alternative of Pipe Materials

120. The pipe alternatives include steel pipe (SP), fiberglass reinforced plastics pipe (FRPP), ductile iron pipe (DIP) and high-density polyethylene pipe (HDPEP). An alternative study was conducted in consideration of material strength, reliability, working pressure, construction convenience, cost, and antisepsis. The comparison of different pipes is shown in Table 6-3, and the proposed pipe selection is shown in Table 6-4.

Table 6-3: Comparison of Pipe Materials and Characteristics No. Item DIP SP FRPP HDPEP

1 Tensile strength (MPa) 3,000 200

2 Strength (MPa) 21,000 60,000 3 3 Density (kg/m ) 7.86 7.86 0.935 4 Brittle temperature ( ) -80 Working pressure (MPa) 5 ℃ 0.45 -1.0 Wide range 1.4~1.6 1.4~1.6

Required the depth of 6 None None >800mm >800mm covering earth

Positive after Positive after Negative Negative 7 Affection on water quality easy scaling easy scaling

Pipe resistance 8 0.013* 0.013* 0.0084 0.009 coefficient Socket, Welding or Dual rubber Socket ring melting, flange 9 Connection flange ring or screw

Antisepsis and life-time 10 - 25 years >50 years >50 years

Pipe cost (Million 83.41 119.08 126.34 111.00 11 CNY/km)**

Table 6-4: List of Pipe Material No. Pipe Diameter (mm) Pipe Material

1 >300 DIP 2 <300 HDPE 3 Pipe through river and railway SP

5.2.3 Main Construction Quantity

121. Table 6-5 shows the main pipes for raw water transmission.

Table 6-5: List of Raw Water Transmission Pipes

No. Description Unit Amount

1 DN900 ductile iron pipe (PN0.6MPa) m 15573

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2 DN900 ductile iron pipe (PN1.0MPa) m 754

3 DN900 steel pipe m 423

4 DN900 ductile iron pipe (PN1.0MPa) m 900

5 DN900 ductile iron pipe (PN1.6MPa) m 2975

6 DN800 ductile iron pipe (PN0.6MPa) m 6845

7 DN800 steel pipe m 20

Total m 27490

122. Table 6-6 shows the major civil works quantities.

Table 6-6: Civil Works of Water Transmission Pipeline No. Description Unit Amount

1 Pipe DN900 Km 21.14 2 Pipe DN800 km 8.86 1 Earthwork evacuation m3 198,210 2 Stonework evacuation m3 95,281 3 Refill m3 94,679 4 Cast -in-place concrete m3 28,070 5 Precast concrete m3 15,266

123. Table 6-7 lists the additional construction items such as manholes and instruments needed for the water transmission lines.

Table 6-7: Well and Instrument of Water Transmission and Distribution Pipeline No. Description Unit Quantity 1 Pipe air emission well Set 26 2 Valve well Set 26 3 Pipe drainage well Set 26 4 Wet well Set 26 5 Pressure release well Set 2 6 Pressure release device Set 2 7 Pressure transmission meter Set 2 8 Flow meter well Set 4 9 Flow meter Set 5

5.3 Water Treatment Plant

5.3.1 Introduction

124. The capacity of the proposed new WSP is 50,000 m3/d. According to the monitoring data of the water quality in Xibeicha River provided by Baishan City Environment Protection Bureau in November 2000, the water quality of Xibeicha Reservoir meets the National Standard of Class II of “The Surface

Jilin Urban Improvement Project Supplementary Appendix 4 (TA 8172-PRC) Final Report

Water Environment Quality Standard” (GB3838-2002). The treated water quality of the WSPs should meet the requirements specified in the “Drinking Water Hygiene Standards” (GB5749-2006). The treatment process includes flocculation, sedimentation, filtration and disinfection.

5.3.2 Alternatives Study

A. Site Alternatives Of The Proposed New WSP

125. There are 2 sites selected as alternatives of proposed new WSP. Alternative 1 is located in the area at the south of Xibeicha Reservoir power station. The advantages include:

• The power plant can provide electricity to the proposed new WSP to save long distance power transmission equipment and cable power loss; • The land is close to the water resource site to save the cost of raw water transmission pipe; • The elevation of the site is about 580-585m which is higher than the service area of 465-481m. The water can be delivered by gravity.

126. However, the site also has the following disadvantages:

• The length of water transmission pipe is 21.04 km. There is a high investment of pipes. • The elevation difference is about 100 m. The pressure requirement of the pipe is high. The investment of pipe is also high. • 30 of households are required for resettlement.

127. Alternative 2 is located at Shandianzi Village. The advantages include: • The site is close to the service area; • The total investment is lower than the other alternative. The elevation of Shangdianzi Village is about 505-536m and the elevation of water service area is about 465-481m. The water can be delivered by gravity. 128. The disadvantages of the alternative include: • Earth work is needed to level the site 129. Table 6-8 shows comparison of these two sites. Figure 6-2 shows Shandianzi Village for Alternative 2 and Figure 6-3 shows the location at Xibeicha Reservoir for Alternative 1. Figure 6-4 shows the current site view of the proposed WSP at Shandianzi Village. Most of the area is the farming land. The electricity cable tower will be reset. Figure 6-5 shows the current site view in south of the power station of Xibeicha Water Conervancy Hub Project.

Figure 6-2: Site for the Proposed WSP of At Shandianzi Village

Jilin Urban Improvement Project Supplementary Appendix 4 (TA 8172-PRC) Final Report

Figure 6-4: Current Site Status of Proposed WSP at Shangdianzi Village

Figure 6-3: Site of Proposed WSP at Xibeicha Reservoir

Figure 6-5: Current Site Status in southern of the Power Station of Xibeicha Water Control Project

Jilin Urban Improvement Project Supplementary Appendix 4 (TA 8172-PRC) Final Report

Table 6-8: Comparison between Alternative 1 and Alternative 2 Land in southern of the power Land Land at Shandianzi Village station of Xibeicha Water Hub Project Diameter, length and pressure of DN900 L=16750m PN0.6MPa water transmission pipeline DN900 L=900m PN1.0MPa DN900 L=200m PN0.6MPa DN900 L=2975m PN1.6MPa Diameter, length and pressure of DN1000 L=17000m PN0.6MPa water distribution pipeline from DN1000 L=5602m PN1.0MPa DN1000 L=900m PN1.0MPa WSP to Baishan Urban Area DN1000 L=7300m PN1.6MPa

Resettlement None 50 households

Site leveling quantity 32,000m3 49,914m3

Power cable mode and length YJV29-10-3×50 L=3000m YJV29-10-3×50 L=500m

Land area 4.25ha 4.25ha

Total investment 125.87 million CNY 153.02 million CNY

130. According to Table 6-8, Alternative 2, the site at Shandianzi Village, will save about 27.15 million CNY for the construction cost. Therefore, Alternation 2 is selected as the proposed land for new WSP..

B. Alternatives Of Water Purification Process a) The Alternative of Water Purification Process

131. The conventional treatment process is applied in the proposed WTP. The treated water quality shall meet the standard as specified in “Drinking Water Hygiene Standards” (GB5749-2006). The water treatment process is shown in Figure 6-6. The sludge treatment process is shown in Figure 6-7.

Figure 6-6: The Water Treatment Process Of WSP In Baishan City

Chlorine Chlorine Flocculent dioxide dioxide

Raw water Intake Mix ing Wave Sloping V filter Clean Distributi Water pumping tank p late pipe water on supply house floccula sedime tank pumping pipeline tor ntation station tank

Figure 6-7: The Sludge Treatment Process

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Supernant used as raw Drainage Backwashed water water tank from V filter Leachate

Sludge Sludge Sludge Sludge Slude cake for Sludge from disposal sedimentation tank tank thickener equalization dewatering tank machine

Supernant drainage

b) Primary Oxidant Chemical Alternatives

132. The primary oxidant chemical is added for water treatment, and the comparison is showed in Table 6-9. Chlorine dioxide is used for better safety. The effective chlorine concentration in chlorine dioxide is 2.63 times than chlorine liquid and the disinfection efficiency is 2.5 times than chlorine liquid. Using Chlorine dioxide requires less equipment investment and labor works. The chlorine dioxide has being used widely as primary oxidant chemical in many WSPs. The operation cost is 0.0047 CNY/m3, which is cheaper than the cost of potassium permanganate. Based on the comparison, the chlorine dioxide is selected as the primary oxidant chemical for proposed new WSP.

Table 6-9: Primary Oxidant Chemical Alternatives Oxidant chemical Chlorine dioxide Potassium Permanganate • Applied widely in many WSPs • Hydraulic retention time is 30 • None hazard to human minutes. This requires smaller • Only required simple dosing Advantages reaction tank volume equipments • Safe, high efficiency, high disinfection • Treated water has no smelly or rate bitter taste. • Price is cheaper • Hydraulic retention time is 60 minutes. This requires a bigger reaction tank volume • Additional chemical preparation Disadvantages • A little lower efficiency equipment and labor works are required. • Potassium permanganate is more expensive than Chlorine. • Price is higher Dosage (mg/L) 1 2 Operation Cost (CNY/m3) 0.0023 0.007 c) Flocculator Alternatives

133. A porous-plate flocculator and a wave-plate flocculator are compared. The wave plate flocculator is selected. The comparison is shown in Table 6-10. .

Table 6-10: Flocculator Alternatives Flocculator porous Plate Flocculator Wave plate Flocculator • Smaller land area requirement and less • Less equipment and material Advantages civil works; cost • Simple equipment structure • Higher civil works cost Disadvantages • Higher Equipment and material cost

Jilin Urban Improvement Project Supplementary Appendix 4 (TA 8172-PRC) Final Report

Cost (Million CNY) 3.56 3.78 d) Sedimentation Tank Alternatives

134. The sloping-plate sedimentation tank and the sloping-pipe sedimentation tank are compared. The sloping-pipe sedimentation tank is widely used in WSPs. The comparison is shown in Table 6-11.

Table 6-11: Sedimentation Tank Alternatives Sloping Plate Sedimentation Sloping Pipe Sedimentation Sedimentation Tank Tank Tank

• Applied widely in WSPs • Simple water outlet; Advantages • Better hydraulic conditions • Less sludge • Easier installation

• Complicated outlet • Shorter sloping pipe • More cost of sloping plates Disadvantages replacement compared to • Difficult for installation sloping plate

Cost (Million CNY) 4.31 4.85

e) Filter Alternatives

135. The v-filter and the fast-filter are compared and the results are shown in Table 6-12. The v-filter has a better backwash system to ensure it has a longer operation interval before next backwash. The v-filter has a faster filtration rate and with less investment, and it is selected as the filter for the new WSP.

Table 6-12: Filter Alternatives Filter types Fast -filter V-filter

• Longer operation interval before next • Tank height is lower than the backwash V-filter • Faster filtration rate Advantages • Adjustable filtration rate for • Equal influent distribution better treated water • Has a better air- water backwash and a surface swipe wash system

• More tanks and valves than • Additional auxiliary equipment Disadvantages V filter • More complicated civil works structure • Additional backwash system Tank height is more than the fast-filter

Cost (Million CNY) 6.41 5.99

C. Engineering Design

136. The daily water supply capacity of the new WSP is 50,000m3/d and the design year is 2020. The plant site is near Shandianzi Village. The water treatment process includes mixing, sedimentation, filtration and disinfection. The sludge treatment process includes a sludge tank, a sludge thickening tank, a sludge conditioning tank and a sludge dewatering equipment. Figure 6-8 shows the layout of new WSP.

Figure 6-8: Layout of Proposed New WSP

Jilin Urban Improvement Project Supplementary Appendix 4 (TA 8172-PRC) Final Report

5.3.3 Main Construction Quantity

137. The main structures of the new WSP include chemical dosage room, water treatment workshop, blower room, etc. The main civil works include earthwork and stonework, refill and cast-in-place concrete, etc. The summary is shown in Table 6-13.

Table 6-13: Civil Works of New WSP

No. Description Unit Quantity

1 Earthwork and stone evacuation m3 253,000

2 Earthwork and stone refill m3 215,000

3 Lack of refill m3 32,000

138. The structures and buildings are designed based on the requirement of water treatment process, power, office, heating, repair, storage and safety. Attachment 6-1 shows main structures and buildings of the new WSP. The equipment is designed based on the requirement of water treatment process. Table 6-14 lists main equipment and instrument in the new WSP, and the details are shown in Attachment 6-2.

Table 6-14: Main equipment and Instrument of New WSP

Description No.

A Process Equipment i Outdoor plant area ii Chemical dosing room iii Water treatment workshop Mixing tank, wave-plate flocculator and sloping-pipe sedimentation tank V filter Backwash pumping room iv Blower room v Chlorine room

Jilin Urban Improvement Project Supplementary Appendix 4 (TA 8172-PRC) Final Report

Description No.

vi Drain tank and sludge tank vii Sludge thickening room viii Sludge dewatering room B Electrical equipment, auto control equipment and instrument i Electrical equipment ii Auto control equipment C Instrument D Repair equipment E Lab F Vehicle

5.4 Water Distribution Pipeline

5.4.1 Engineering design

A. Hourly Variation Ratio And The Additional Allocated Water Amount

139. According to the overall Urban Plan Of Baishan City and giving a comprehensive consideration of the scale of the City and economic development in the city, as well as the hourly variation of water usage, the water variation coefficient is 1.4 in Baishan City is selected.

B. Water Distribution System

140. After the project is completed, the urban water supply will be provided by both the existing Nanshan WTP and the new proposed WTP. According to the overall city’s planning, the project area covers the water distribution network in the north of Hunjiang River and the south area of the railroad . C. Principles Of Network Layout

141. Considering the poor condition of the existing water distribution pipes and smaller diameters, it is planned to rehabilitate the pipe network with problems. The project is also to include the new water distribution network . D. Pipe Networks Calculation

142. The model of hydraulic calculation for Hazen -William Formula is used:

7.10 ×Q 852.1 i = 87.4852.1 DC where i---section of water head loss along tubes, m/m; Q- pipe flow, m3/s; D –pipe’s diameters, m; C –pipe’s friction coefficient.

143. The C value of pipe’s friction coefficient is based on the pipe materials. For the Project, the C values are determined as 110 for new pipes, and 120 for the renovation and expansion pipes. The design considerations are as followings and the water distribution network is shown in Figure 6-9.

• The maximum daily capacity of the water distribution pipeline is 130,000 m3/d and the hourly variation ratio is 1.4. The water pressure is 0.28 MPa at the end point of pipeline network. The

Jilin Urban Improvement Project Supplementary Appendix 4 (TA 8172-PRC) Final Report

pressure design meets the requirement of Code of Design on Building Fire Protection and Prevention (GB50016-2006). • The pipe material is DIP with diameter larger than DN 300mm while the pipe material is HDPEP with diameter equal or smaller than DN 300mm.

Figure 6-7: Layout of Water Distribution Pipeline Of Hunjiang District

E. Design of Rivers-Crossing and The Railway-Crossing For Distribution Pipelines

144. There are 4 booster pumping stations required to keep the pressure of the distribution pipeline. The summary of the pump stations is shown in Table 6-15.

Table 6-15: Mid-way Pumping House Equipment List Description Type/mode Unit Amount Vertical centrifuge pump Q=160m3/hH=30mN=22.0kW Set 9 Vertical centrifuge pump Q=320m3/h H=30mN=30.0kW Set 3 Submersible pump Q=/hH=15mN=1.1kW Set 4

Crane T=2tLk= Set 4

Jilin Urban Improvement Project Supplementary Appendix 4 (TA 8172-PRC) Final Report

F. SCADA System

145. The SCADA system is included bases on a GPRS wireless network to monitor the pressure and flow of the pipeline network to improve the energy conservation. This SCADA system includes a set of data collections, GPRS data transfer and command center. The system will monitor the pressure and flow through RTU system, and the GPRS wiles system will transfer the data through the CGSN to the data center server. The coordination center server will collect and deal data with HMI software. The operator will operate the water distribution system based on the analysis result. Table 6-16 shows the equipment and fittings for the SCADA system.

Table 6-16: List of SCADA System Equipment

Description Type/mode Unit Amount RTU Set 20 GPRS data terminals Set 20 Power and metering box Set 20 Measurement box Built-in RTU, pressure and flow transmitters Set 20 Power and control cable Set １

5.4.2 Main Construction Quantity

146. The civil works of water transmission and distribution pipeline are summarized in Table 6-17. The total length of water distribution pipeline is about 52km, including 18km of upgrade pipeline and 34km of new built pipeline as shown in Table 6-18. Table 6-19 lists the manholes and instruments needed for the water transmission and distribution pipeline system.

Table 6-17: Civil Works of Water Transmission and Distribution Pipeline

No. Description Unit Amount 1 Earthwork evacuation m3 141,470 2 Stonework evacuation m3 60,630 3 Refill m3 162,690 4 Cast -in-place concrete m3 4,013

Table 6-18: Pipe Amount of Water Distribution Pipeline

No. Diametermm Material Length (m)

1. New built pipe 1.1 DN200 PE 2393 1.2 DN300 PE 11,597 1.3 DN300 Steel pipe 60 1.4 DN400 Ductile iron pipe 6,917

1.5 DN500 Ductile iron pipe 13,222

1.6 DN500 Steel pipe 600

1.7 DN600 Ductile iron pipe 1,152

1.8 DN600 Steel pipe 260

1.9 DN700 Ductile iron pipe 2,184

Jilin Urban Improvement Project Supplementary Appendix 4 (TA 8172-PRC) Final Report

1.1 DN700 Steel pipe 200

1.11 DN1000 Ductile iron pipe 5,592

1.12 DN1000 Steel pipe 63 Sub 44,240 2. Upgrade pipes 2.1 DN300 PE 572

2.2 DN500 Ductile iron pipe 4,233

2.3 DN600 Ductile iron pipe 3,544

2.4 DN700 Ductile iron pipe 2,789

Sub 11,138 Total 55,378

Table 6-19: Manholes and Instrument of Water Transmission and Distribution Pipeline

No. Description Unit Quantity

1 Valve well Set 113 2 Pipe air emission well Set 54 3 Pipe drainage well Set 54 4 Wet well Set 54 5 Fire plug Set 28 6 Pressure indication well Set 8 7 Flow meter well Set 12 8 Pressure transmission meter Set 8 9 Flow meter Set 12

6. Technical Assessment of Baicheng City

6.1 Introduction

147. In Baicheng City, the existing water supply system was upgraded in 2006. The existing water source, the capacity of water treatment can meet the requirement of water demand for the city. But in the northwestern part of the city, there is a need to provide new municipal services for the new urban development.

6.2 Engineering Design

148. The projected maximum daily capacity of the water distribution pipeline is about 297,000 m3/d by 2030. The current water supply capacity from 3 existing water treatment plants is 935,000 m3/day and the current water treatment plants have adequate capacity to supply the water for the new urban expansion. Based on the alternative study, diameter of the water supply pipe is DN > 400mm, the ductile iron pipe with flexible rubber interface will be selected. For the pipe diameter of the water supply pipe DN ≤ 400mm, PE pipe will be used. The major construction quantities are shown in Table 7-1.

Jilin Urban Improvement Project Supplementary Appendix 4 (TA 8172-PRC) Final Report

Table 7-2: Main Construction Quantities for Bacheng Water Supply Engineering

Pipe length Diameter of Pipe Name of streets Properties ᧤m᧥ lines ᧤mm᧥

New construction 2650 DN500 New construction 1050 DN600 No.3 Road New construction 6700 DN700 New construction 3462 DN400 New construction 870 DN600 Xiangyang Street New construction 3825 DN500 New construction 1724 DN400 Xinhua west Road New construction 1000 DE160 Shengli Road New construction 2313 D500 New construction 2400 DN400 Chunyang Road New construction 1100 DE225 New construction 700 DE315 The North of Xingfu Sterrt New construction 1330 DE315 No.1 the South Street (The New construction 947 DE315 Nanyi Street) oTa -er River Road New construction 3804 DE315 The Xinggong Road New construction 1498 DE315 New construction 1900 DN400

Total 37,273

7. Operation and Maintenance

7.1 Successful Experience in China and Abroad

7.1.1 Importance of Operation & Maintenance to Water Supply Systems

149. The water supply system is one of the most important infrastructures in urban, which is also a large energy consumer with huge energy-saving potential. Reducing the energy consumption of the water supply system is the requirement of social healthy development to water supply enterprises, but also the main approach of water supply enterprises to improve the economic benefits. As the water supply systems is large in investment, complex in system and involve wide ranges, currently in the planning, design, and operation management of our water supply system, there is an irrational phenomenon to vary degrees, because the use of energy is inefficient and a waste of energy, and result in the increase business costs. Therefore, aiming at urban water supply system, from the several major points of water supply system, energy saving and optimization of water pumping station, energy saving and optimization of water distribution networks, scientific control of pipeline leakage and optimal selection of water supply pipelines are necessary for the proposed project.

7.1.2 Measures adopted on Energy Saving

(i) Energy saving and optimization of water pumping station.

150. In urban water supply systems, the upgrade of pump stations and optimal operation are the main ways to reduce energy consumption. For energy saving upgrading methods of pump station in theoretical,

Jilin Urban Improvement Project Supplementary Appendix 4 (TA 8172-PRC) Final Report it is needed to find ways to optimize the selection of pump stations, and to build a mathematical model to optimize selection of water pumps. Reasonable planning and design of water supply network is the critical step to achieve energy saving. One of principles of the energy saving is to the zone water supply of the water pipe network, the reasonable method of pipe network layout, the pipe layout and the choice of pipe layouts of the long-distance water pipe. Together with the zone network investment and operating cost, it is required to establish a cost model of pipeline network about reasonable partition.

(ii) Optimal election of water supply pipe

151. Optimal selection of water supply pipe is an important aspect of energy saving and investment reducing in pipe network. Under comprehensive consideration of water quality, safety and reliability, water conditions and other factors, value analysis method is applied to optimize the selection of water supply pipe. Transmission pipes, large-medium and medium-small diameter water pipeline are recommended in selection and usage.

(iii) Measures To Improve Efficiency of Pumps

1. The urban water supply system is one of the largest power consumption users, and about more than 90% of electricity consumption of water supply enterprises is consumed in the lifting of water supply by pump motors. Therefore, the energy consumption of pumping stations is directly affecting the energy saving condition of the whole water supply system. The rationality of pump stations on energy consumption mainly depends on the following three aspects: 1) whether there is the pump lifting head is reasonable. 2) whether there is a high pump efficiency. 3) whether there is a reasonable pump's combination. Therefore, the energy consumption can be reduced by reducing the pumping water volume and the water head properly, and improving the operation efficiency of pumping station (through the optimization of high pump's combination, to set a water tank with a reasonable elevation and volume). Of which, the optimization approach of pump operation and optimal time control of different lift of pump operation (according to the actual flow of the pump station) will have a significant impact. In order to achieve the purpose of reducing energy consumption, the combined optimum method of variable-speed pumps and constant-speed pumps makes the carrying capacity of pumps the same with the actual water consumption tally under the same time constant pressure water pump and obviously, the variable-speed pumping has not only kept constant pressure water supply, but also saved energy and reduced pipe leakage rate5.

(iv) Energy Saving Through Reducing the Total Water Head

152. Energy consumption can be effectively reduced by reasonable reducing the total water head of the water supply system. In order to reasonably reduce the total head system, water supply enterprises can be adopted according to their different circumstances of local conditions to take the regional water supply, midway pressurized water supply means, and set pools in the conditional place at high position or takes the gravity flow and the pressure flow mixing water supply mode.

(v) SCADA System

153. The design proposed a SCADA system for monitoring and control for energy saving. The SCADA system will guide the operators to adjust the pumps in the water distribution pumping station according to the flow and pressure of the monitoring points set in the water distribution pipeline network. The pumps will work according to the real requirement of the water supply in the project area.

10. Jurnal of Chongqing Architecture University. Wang pu, Jiang Zhixian, Shi Chang’en. Vol . 24 No. 4 Aug. 2002

Jilin Urban Improvement Project Supplementary Appendix 4 (TA 8172-PRC) Final Report

8. Conclusions and Recommendations

154. The project will support the PRC’s sustainable urban and rural development policy, and approved Baishan City’s Socioeconomic Development Master Plan. The technical solution is feasible. The Baishan City Government shall ensure that emergency preparedness and response mechanisms for drinking water source protection and water supply safety are developed for the project in compliance with relevant PRC regulations and the Asian Development Bank’s EHS Guidelines.

155. Jiangyuan District and Hunjiang District share a common drinking water source. it is recommended to coordinate the water supply for the two districts for an integrated urban water supply management in Baishan City.

64. There is an integrated capacity building planning by focus on improving the water supply management skill. It is critically important to provide loan implementation and management assistance by consultants on project management, construction supervision and O&M during the loan implementation for meeting the objectives envisaged during the PPTA stage and for a successful construction of the Project.

Jilin Urban Improvement Project Supplementary Appendix 4 (TA 8172-PRC) Final Report

Attachment 6-1: Details of Structures and Buildings of New WSP

No. Structure/Building Dimension Unit Quantity

1 Chemical dosing room 38.1m×12 Se 1

2 Water Treatment Workshop 90.0m×42 Se 1

Mixing tank, Wave plate flocculator tank (1) 44.25m×1. Set 2 and sedimentation tank

(2) V filter 22.80m×1. Set 2

(3) Backwash pumping room 6.0m×16.. Set 1

(4) Blower room 6.0m×10.. Set 1

3 Clean water tank 42m×30m×m Set 2

4 Chlorine room 13.5m×13 Se 1

5 Drain tank 15.0m×6.9m Set 2

6 Sludge tank 15.9 Set 2

7 Sludge thickening room 36.0m×18. Set 1

8 Sludge dewater room Φ9.0mH=6 Set 2

(1) Sludge conditioning tank 4.5m×3.62 Set 2

(2) Sludge dewater room 12.0m×10. Set 1

9 Sludge piling site 12.0m×7.5m×5.7m S 1

10 Office building 1000m2 S 1

11 Repair and storage room 740m2 Se 1

12 Boiler room 300m2 Se 1

13 Sludge storage area 12.0m×7.7 Set 1

14 Gate house 32m2 Set 1

Jilin Urban Improvement Project Supplementary Appendix 4 (TA 8172-PRC) Final Report

Attachment 6-2: Details of Equipment & Instrument of New WSP

No. Description Type/Mode Unit Quantity I Process Equipment i Outdoor plant area 1 Pipe mixer DN150 PN1.0MPa Set 1 2 Sampling pump Q=2.5m3/h H=20m N=0.75kW Set 2 3 Mobil submersible pump Q=100m3/h H=10m N=7.5kW Set 1 ii Chemical dosing room 1 Electrical crane T=1t, L=9.0m Set 1 Aluminum sulfate metering Set 2 Q=500L/h H=40m N=0.37kW 6 pump Aluminum sulfate metering Set 3 Q=250L/h H=40m N=0.25kW 4 pump

Aluminum sulfate 3 Set 4 Q=3.3m /h H=15m N=1.5kW 4 submersible transfer pump

Aluminum sulfate transfer 3 Set 5 Q=3.0m /h H=15m N=1.5kW 2 pump 6 Mixer Φ900 N=1.5kW Set 6 iii Water treatment workshop Mixing tank, wave plate flocculator and sloping pipe sedimentation tank Paddle mixer (1st phase Set 1 D1000 N=5.5kW 2 mixing) Paddle mixer (2nd phase Set 2 D1000 N=2.2kW 2 mixing) 3 Sludge scraper W=5.60m L=27m N=2.2kW Set 2 Cast iron gate lined with Set 5 copper with electric and 1000x1000 N=1.5kW 2 manual hoist Cast iron gate lined with Set 6 copper with electric and 900x1000 N=1.5kW 2 manual hoist A stainless steel wave plate 7 1480x980x2000 Set 34 box B stainless steel wave plate 8 1480x1180x1450 Set 36 box 2 9 Sloping pipe media Φ35, L=1000, θ=60º m 610 10 Stainless steel sump 350×550×5300 b=5 Pc 60 V filter Light square gate with 11 600 x 600 N=1.5 kW Set 6 electrical and manual hoist Light square gate with 12 500 x 500 N=1.5 kW Set 6 electrical and manual hoist 13 Electrical hoist T=1t Set 2 14 Submersible pump Q=10m3/h H=15m N=1.1kW Set 2 15 Quartz sand media 0.9~1.2mm K80<1.3 m3 432 16 Corse sand support layer 2~4mm m3 36 Backwash pumping room

Jilin Urban Improvement Project Supplementary Appendix 4 (TA 8172-PRC) Final Report

No. Description Type/Mode Unit Quantity 17 Horizontal centrifuge pump Q=650m3/h H=10m N=22.0kW Set 3 18 Horizontal centrifuge pump Q=7.5m3/h H=55m N=7.5kW Set 3 19 Submersible pump Q=10m3/h H=15m N=1.1kW Set 1 20 Electrical beam crane T=2t, L=3.0m Set 1 iv Blower room 1 Roots blower Q=29m3/min H=5.0m N=30kW Set 3 2 Electrical single beam crane T=2t L=3.0m Set 1 v Chlorine room 1 Electrical single beam crane T=2t Lk=6.0m Set 1 Cabinet vacuum auto 2 Flow=0=10kg/h Set 3 chlorine dosing machine 3 Chlorine gas filter Set 2 4 Chlorine detector with alarm 0~10ppm Set 1 Chlorine adsorption 5 Adsorption capacity=1000kg/h Set 1 equipment 6 Electric balancer 0-2T Set 2 7 Gas mask Set 2 vi Drain tank and sludge tank Q=100m 3/h H=15m Set 1 Submersible pump 4 N=11kW Submersible pump with Set 2 Q=30m 3/h H=15m N=3kW 4 mixer

Submersible pump with 3 Set 3 Q=10m /h H=6m N=0.75kW 2 mixer 4 Submersible mixer N=2.2kW Set 4 vii Sludge thickening room

1 Sludge thickener Φ9000 N=0.55kW Set 2 2 Sludge screw pump Q=2.5-5m3/h H=6m N=1.5kW Set 4 3 Sludge shredder DN150 N=1.5kW Set 4 4 Mixer N=2.2kW Set 2 viii Sludge dewatering room 1 Sludge centrifuge Q=5-10m3/h N=15kW Set 2 Flocculation chemical Set 2 Q=500-1000L/h N=1.5kW 2 equipment 3 Flocculant metering pump Q=250-500L/h H=20m N=1.1kW Set 4

Horizontal anaxial screw 3 Set 4 Q=1.5m /h L=4.0m N=3.0kW 1 conveyor 5 25° anaxial screw conveyor Q=1.5m3/h L=8.6m N=1.5kW Set 1 6 Electrical single beam crane T=2t Lk=7.5m Set 1 B Heating and airing equipment i Equipment in boiler room ii Airing equipment B Electrical equipment, auto control equipment and instrument

Jilin Urban Improvement Project Supplementary Appendix 4 (TA 8172-PRC) Final Report

No. Description Type/Mode Unit Quantity i Electrical equipment 1 High voltage switch cabinet Set 9 2 DC screen DC 220V 65Ah Set 1 3 Voltage transformer SCB10-800/10 Set 2 Low voltage distribution Set 4 27 cabinet 5 Power distribution box XL31 Set 6 6 Filter on-site control platform None standardized Set 6 ii Auto control equipment 1 Operation station Industrial control class computer Set 2 2S UP Sn=3kVA Un=~220V Set 4 3 Printer Color, spray, A3 Set 2 4 Ejector DLP front ejector Set 1 5 Ejector screen Manual bead type Set 1 6 PLC Set 3 iii Instrument 1 Solenoid flow meter Separate and Integrated Set 11 3 Hot matter flow meter Separate Set 1 4 Ultra sonic level meter Separate Set 16 5 Pressure transmitter Set 12 6 Turbidity analyzer High range and low range Set 9 8 pH analyzer On-site and sample Set 2 10 Residue chlorine analyzer Sample Set 1 Hazard gas detector with Set 11 Dual detector 1 alarm II Repair equipment 1 Engine lathe C616 Set 1 2 Drilling machine Z3035B Set 1 0.5m3/min Set 4 Air compressor 1 Max. Pressure=0.7MPa 5 Electrical hoist T=5t Set 1 6 Vise Set 3 7 AC welder 330A Set 1 8 DC welder 375A Set 1 9 Ethyne generator Capacity=1m3/h Set 1 10 Oxygen vessel 40kg Pc 3 III Lab Device Pipe electric resistance Set 1 SK-6-10 1 furnace Electrothermal thermostatic Set 2 202-II 1 drier 3 Electrothermal thermostatic HH -B11-600 Set 1

Jilin Urban Improvement Project Supplementary Appendix 4 (TA 8172-PRC) Final Report

No. Description Type/Mode Unit Quantity incubator

Electrothermal pavilion Set 4 1 distiller Electrothermal thermostatic Set 5 HH.S11.4 1kW 1 water bath 6 Spectrophotometer WY×-402 Set 1 7 Photo colorimeter Set 1 8 Turbidity analyzer GDS Set 2 Fast residue chlorine color Set 9 2 comparator 10 Conductivity analyzer Set 1 11 pH meter Set 1 12 Ion chromatograph Set 1 13 Air phase chromatograph Set 1 Inductively Coupled Plasma - Set 14 1 Mass Spectrometer 15 Liquid phase chromatograph Set 1 16 Background lowαβ detector Set 1 17 BOD detector Set 1 18 Ultra-pure water macine Set 1 19 Microorganism suck and filter Set 1 20 Stage control filter Set 1 Two kinds of bacteria Set 21 1 detector 22 Extractor Set 1 Auto 1/10000 precise Set 23 1 balancer 24 Refreeze Set 2 25 High times microscope Set 2 26 Biological microscope Set 2 27 Electric 6 units mixers Set 1 High pressure steam Set 28 1 disinfector VI Vehicles 1 Vane set 1 2 Bus set 1 3 Jeep Set 1 4 Pickup truck Load: 2.0t Set 1 5 Truck Load: 4.0t Set 1 6 Sludge truck Load: 10.0t Set 1

Jilin Urban Improvement Project Supplementary Appendix 5 (TA 8172-PRC) Final Report

Supplementary Appendix 5 Non -Revenue Water (NRW) Assessment

Jilin Urban Improvement Project Supplementary Appendix 5 (TA 8172-PRC) Final Report

1. INTRODUCTION

1. Most developed countries have a solid infrastructure and established operational practices for managing and controlling non-revenue water (NRW). This is not always the case in developing countries; many are struggling to ensure that customers receive a reasonable supply of safe drinking water, often via a pipe network that is inadequate, with poor record systems and a low level of technical skills and technology. Tariff system and revenue collection policies often do not reflect the true value of water supplied, which limits the utility's cost recovery and encourage customers to undervalue the service.

2. NRW is a globe problem requiring a management strategy that can be globally applied. Developing such a strategy requires a diagnostic approach to identify the problem, and then to use the available tools to reduce or remove it. Following a step-wise process--asking some basic questions about the utility policies and practices, and then undertaking the appropriate tasks to answer them-- is the basis of successful strategy development. The philosophies, concepts, and recommendations, especially those recommended by the IWA and the World Bank Institute, reflect international best practice.

3. Developing country like China faces similar challenges in reducing NRW, including aging infrastructure, financial constraints, poor project design and installation. Many utilities in China, however, can draw on motivated and industrious staff to implement solutions once the challenges of reducing NRW have been identified.

4. ADB has worked with the PRC on NRW reduction in several projects, but there are still limited practical examples and experiences in addressing the issues in cold region, like northeast China in Jilin province. The project provides a better chance to addressing and assessment this issue based on previous knowledge and skills. This could serve as demonstration which will also help other similar places in the PRC improve non-revenue water management performance.

5. Based on the 2012 water supply statistics data of Baishan city in Jilin, current situation and status for Baishan as follows:

• There are three water plants in Baishan city, including two ground water plants and one surface water plant. The average output water volume is 43 MLD in 2012. The popularity rate is 70%. The daily per capita water consumption is 75 liter/day/capita. • Total lengths of pipe which diameter above 75 mm are 225 KM. The NRW rate is 65%. Total water consumers are up to 102,085, including 93,744 domestic consumers. • The average pressure 0.22 MPa and the water supply covering 30 km2 areas. • Water power consumption per unit is 115 kWh / 1000 m3. • Annual sales income for Baishan water utility is CNY15, 440,000 and annual net profit is – CNY7, 020,000. The number of total staffs is 597. • With 2004 water policy, water tariff system is shown as follows: domestic water consumer 2.3 CNY/m3, administrative water consumer 4.0 CNY/m3, industrial water consumer 4.0 CNY/m3, business water consumer 4.8 CNY/m3 and special high-water- consumption sector 8.0 CNY/m3 respectively.

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2.T HE PROPOSED PROJECT TARGETS

(1) Implement a diagnostic of the NRW situation, possible targets, and timeframes for NRW reduction; (2) Identify investments needed, expected results and other changes including organizational, legislation, and contractual that would be needed to enable NRW reduction to occur; (3) Formulate a capacity development to enable the achievement and sustain targeted NRW levels;

3. ESTABLISHMENT AND CHECK OF WATER BALANCE

3.1 Water balance analysis theory 6. Water balance is a method of quantifying and analyzing the System Input Volume and System Output Volume. The fundament of water balance analysis theory is that for a water supply system, the overall water volume calculation should be balanced through measurement or definition of the volume of produced, input, output, and lost water. Theoretically, each of the water balance components can be quantified in a fixed period, and water balance analysis of the water supply system can be complemented by investigating the input and output and collecting relative data. Therefore, introduction of water balance can help quantify the components and the lost water more precisely.

7. To most water utilities, the level of NRW is a key performance indicator of efficiency. However, most utilities tend to underestimate NRW because of institutional and political pressures, as well as a lack of knowledge to properly determine the NRW level. Reports of low levels of NRW are eagerly accepted by senior managers. However, reported low levels of NRW, whether due to deliberate misinformation or, more likely, a lack of accurate information, will not help the water utility to reduce its costs or increase revenue. Instead, it will mask the real problems affecting the water utility’s operating efficiency. Only by quantifying NRW and its components, calculating appropriate performance indicators, and turning volumes of lost water into monetary values, can the NRW situation be properly understood and the required actions taken.

8. Water balance helps utility managers to understand the magnitude, sources, and cost of NRW. The International Water Association (IWA) has developed a standard international water balance structure and terminology (Table 3.1).

Table3.1: Water balance showing NRW components

Billed Metered Consumption Billed Authorized Revenue Consumption Billed Unmetered Water Consumption Authorized Consumption Unbilled Metered System Unbilled Consumption Authorized Input Unbilled Unmetered Volume Consumption Consumption Non -Revenue Water Unauthorized Consumption Commercial Water Losses Losses Customer Meter Inaccuracies and Data Handling

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Errors

Leakage on Transmission and Distribution Mains Leakage and Overflows from Physical Losses the Utilities Storage Tanks Leakage on Service Connections up to the Customer Meter

9. Non-revenue water (NRW) is equal to the total amount of water flowing into the water supply network from a water treatment plant (the ‘System Input Volume’) minus the total amount of water that industrial and domestic consumers are authorized to use (the ‘Authorized Consumption’).

NRW = System Input Volume - Billed Authorized Consumption

This equation assumes that:

a. System input volume has been corrected for any known errors b. The billed metered consumption period for customer billing records are consistent with the System Input Volume period.

10. Utility managers should use the water balance to calculate each component and determine where water losses are occurring, as described in the next sections. They will then prioritize and implement the required policy changes and operational practices.

3.2 Steps for establishing water balance 11. Water balance is conducted by calculating or estimating the input, output, consumption and losses of the water supply system. The significance lies in being capable of clearly describing and quantifying every system component and hence making the water losses more easily understood. Initially the volume of each water balance component need be calculated; the key part of which is to decompose NRW into Unbilled authorized consumption, apparent losses and Physical losses. Generally, steps to calculate water balance components are as follows:

Step 1. Determine system input volume Step 2. Determine billed metered consumption and billed unmetered consumption which sum up to revenue water Step 3. Determine NRW by subtracting revenue water from system input volume. Step 4. Determine unbilled metered consumption and unbilled unmetered consumption which sum up to unbilled authorized consumption. Step 5. Determine authorized consumption by adding revenue water to unbilled authorized consumption. Step 6. Determine water losses by subtracting authorized consumption from system input volume. Step 7. Estimate unauthorized consumption and customer metering inaccuracies properly which sum up to apparent losses.

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Step 8. Determine physical losses by subtracting apparent losses from water losses. Step 9. Estimate real loss components in feasible methods which include night flow analysis, burst frequency / leakage flow rate / leakage duration, modeling and etc. Add components of physical losses and cross-check with the physical losses as derived from Step 8.

3.3 Water balance analysis of Baishan’s water supply system a. Setting a research period 12. Given water balance’s essential relation to time, water utility should choose a period for analyzing and evaluating the total system consumption. According to Baishan water utility’s statistics, utility can define the whole year of 2012 as the water balance research period and use relative volume data from Jan 1, 2012 to Nov 31, 2012, so as to reduce the influence of the time lag between water consumption and meter reading. Besides, this period also involves the seasonal element.

Table 3.2: Water balance of Baishan water supply system in 2012 after check and verification Unit: m3

Billed Billed Metered Consumption Authorized 5,8,53840 Revenue Water Consumption 5,2,71000 Billed Unmetered Consumption Authorized 5,2,71000 173,160 Consumption 5,9,71135 Unbilled Metered Consumption Unbilled 0 Authorized Consumption Unbilled Unmetered 7,5 13 Consumption System Input 7,5 13 Volume Unauthorized Consumption 16 ,083,600 Commercial 453,703 Non -Revenue Losses Customer Meter Inaccuracies Water 2,6,84413 and Data Handling Errors 10 ,371,600 Water 2,2 39 ,710 Losses Reported Bursts 10 ,364,465 2,2 44 ,002 Physical Unreported Bursts Losses 4,2 89 ,713 7,8,51052 Background Leakage 183,337

4. ASSESSMENT OF CURRENT INFRASTRUCTURE LEAKAGE SITUATION AND ANALYSIS OF LEAKAGE REDUCTION STRATEGY

a. Calculation results of 2012 water balance

Table 4.1: Percents of 2012 water balance components in SIV

Authorized Billed System Input Billed Metered Consumption Revenue Water Consumption Authorized Volume 34.438% 35.515% 35.559% Consumption

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35.515% Billed Unmetered Consumption 1.077% Unbilled Metered Consumption Unbilled 0 Authorized Unbilled Unmetered Consumption 0.044% Consumption 0.044% Unauthorized Consumption Commercial 2.821% Non -Revenue Losses Customer Meter Inaccuracies Water 17.697% and Data Handling Errors 64.485% Water 14.876% Losses Reported Bursts 64.441% 15.183% Physical Unreported Bursts Losses 30.421% 46.744% Background Leakage 1.140%

Picture 4.1: Column diagram of Baishan’s water balance components in 2012

b. Non-Revenue Water (NRW) 13. In 2012, NRW of Baishan water supply system is 10,371,600 m³, 64.485% of the System Input Volume and costs 12,539,085 yuan. It is composed of five components as follows: 1) Unbilled Metered Consumption:7,135 m3 2) Unbilled Unmetered Consumption: 453,703m3 3) Unauthorized Consumption: 2,392,710m3 4) Customer Meter Inaccuracies and Data Handling Errors: 242,002m3 5) Reported Bursts: 242,002 m3 6) Unreported Bursts: 4,892,713 m3

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7) Background Leakage: 183,337 m3

Picture 4.2: Column diagram of NRW component proportion

Picture 4.3: Pie diagram of NRW component proportion

c. Infrastructure Leakage Index (ILI) and its categories 14. In Baishan, the ILI is 29. And at the current operating pressure of 22m, the physical loss value per service connection per day is 689 L/c/d. By comparison with the physical loss target matrix in Table 3.5, it’s concluded that Baishan has qualified at Category D in developing countries with high network leakage level. Leakage management is imperative to reduce NRW. This situation indicates that horrendously inefficient use of resources, leakage reduction programs imperative and high priority.

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Picture 4.4: ILI value calculated

Table 4.2: Comparison matrix between ILI and physical losses (l/c/d)

Technical Physical Losses [liters/connection/day] performance ILI (when the system is pressured) at an average pressure of: category 10m 20m 30m 40m 50m Develop A 1-2 <50 <75 <100 <125 ed B 2-4 500 -10 750 -15 100 -200 125 -250 Countri C 4-8 100 -200 150 -300 200 -400 250 -500 es D >8 >200 >300 >400 >500 Develop A 1-4 <50 <100 <150 <200 <250 ing B 4-8 500 -10 100 -200 150 -300 200 -400 250 -500 Countri C 8-16 100 -200 200 -400 300 -600 400 -800 500 -1000 es D >16 >200 >400 >600 >800 >1000 1) Category A: Good. Unless with extremely scarce water resources, further loss reduction may be uneconomic and careful analysis needed to identify cost-effective improvements. 2) Category B—Potential for marked improvements. Consider pressure management, better active leakage control, and better maintenance. 3) Category C—Poor. Tolerable only if water is plentiful and cheap, and even then intensify NRW reduction efforts. 4) Category D—Bad. The utility is using resources inefficiently and NRW reduction programs are imperative.

5. CONCLUSION AND SUGGESTION

5.1 Conclusion 6. It can be concluded from field test data analysis, water balance establishment and leakage condition assessment in Baishan City:

1) Its NRW in 2012 is 10,371,600 m³, 64.485% of system input volume, and worth 12,539,085yuan. After assessment of Baishan’s water supply system leakage condition, it can be discovered that physical losses and poor meter management are the key factors of NRW.

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2) Its apparent losses in 2012 are 2,846,413 m³, 17.697% of system input volume. And ALI is calculated at 0.9966. 3) Its physical losses in 2012 are7,518,052 m³, 46.744% of system input volume. Moreover, it can be known from estimation of physical losses components that reported bursts take up15.183%, unreported losses 30.421% and background losses 1.14%. 4) Baishan’s ILI is 29, the average pressure is 0.22 MPa, and the physical losses are 689 L/c·d. Compared with Target Matrix provided by World Bank Institute, Baishan’s water supply network is Category D among developing countries, which means serious leakage level. Its horrendously inefficient use of resources, leakage reduction programs imperative and high priority. 5) Based on current condition investigation and data analysis, leakage reduction consultant selected 29 performance indicators suitable for Baishan’s current conditions from IWA Performance Indicator Handbook, and developed a series of leakage reduction strategies and measures involving PIs as tools. 7. Although the apparent loss of Baishan is lower than the real loss based on the statistics data, the condition of meter management is not optimal for the reasons that Baishan has not established meter check and meter validation mechanism. May be the apparent loss is higher than the result of water balance calculation from the objective view.

8. It is not necessary that Baishan water utility take more measures to reduce pressure of systems. Firstly, Nanshan WTP as a main surface water plants, is located at higher level, so the pressure of Nanshan is not higher than any other plain position WTP. Secondly, the average pressure in Baishan reaches at 0.22 MPa, supplying with 4 floors building only. So the water network has not more redundancy pressure to be lowered.

9. The water loss strategy team of Baishan water utility will serve as an effective focal point for the implementation of its water loss reduction. It plays a key role of in galvanizing the expertise of the other department who are involved in water network management., such as operation and maintenance, national water control center, SCADA, water planning, network development and GIS, field services, customer services and corporate planning, to reduce water loss and enhance network management efficiency.

5.2 Suggestions

a. Capacity building (inclusive of training and institution enhancement)

(1) Establish leakage reduction strategy team which comprises core staff from Departments of Operation Control, Network Maintenance, Billing, Customer Service, Auditing, Measurement, Finance and so on. First, undertake comprehensive and systematic leakage control training, based on IWA’s water leakage control principles, processes and methods. Second, according to results of water balance and performance assessment, identify key loss components and targets of leakage control, make corresponding enforcement schemes, and draft annual plan and budget for leakage control. Finally, every department devotes great efforts to fulfill performance assessment criteria of leakage control, and enforce corresponding strategies. (With capacity building expense CNY 50,000)

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(2) Enhancement specialized leak detection group skills. Leak detection is an active leakage control measure. At present, Baishan has one leak detection group equipped with a set of relevant detection equipment. However, lack of sufficient staffs and professional leak detection expertise, the detection frequency remains one year when scanning the whole networks in Baishan. It is advisable to expand leak detection group and equip more necessary leak detection devices. In the first place, conduct strict leak detection trainings that focus on field practice. External leak detection force can also be resorted to for training and drill when necessary. Mentoring program helps group members master leak detection technology. And these devices enable local leak detection, leakage reduction and performance boost. (with capacity building expense of CNY 50,000 and equipment purchase expense of 331,000)

(3) Baishan’s poor meter management is reflected in difficulty of estimating apparent losses. From perspectives of management, reducing apparent losses requires no extra input and can obtain obvious effectiveness. Specifically, Baishan water utility should first establish a meter management department staffed with specialized members. Second, carefully check current meters’ category, diameter distribution and whether they match flow or not, change the present condition of using domestic meters continuously without any calibration procedure once they installed, quantify and analyze apparent losses, so as to increase metering accuracy. Most importantly, meter fraud and water thief activities should be punished severely with the combined action from local government and water utility.

b. Project Construction (1) Installation 6 water meters in outlet of WTP for output volume measurement accuracy (Cost of CNY 602,000) • There are 3 water treatment plants (WTP) in Baishan city. One is surface water plant named Nanshan WTP with capacity of 80,000 m3 per day, others are Zhenzhumen and Kuchangou groundwater WTP, with output volume 9,000 and 5,000 m3 per day respectively. • Lack of measurement facilities in all of outlet of WTPs, it is difficult to assess the output volume of the whole systems. Current result of water balance is based on some estimated data with limited confidence. The unbelievable data should be eliminated immediately so as to gain reliable information with support of ADB water supply project in Baishan. • 4 Electromagnetic meters, be selected in Nanshan water treatment plant for its electricity and remote devices installation availability. 2 Bore-hole electromagnetic meters is suitable for Zhenzhumen and Kucanggou groundwater plants for no electricity charge condition in site. (2) Flow meter installation and night flow monitoring in 3 DMAs demonstration(Cost of CNY 110,000) • Select 3 DMAs in Baishan water supply network to conduct leakage monitoring and analysis which can be taken as the basis of leakage monitoring and reduction of the whole network. Install measuring equipments on DMAs’ boundaries to record pressure, flow and other data in different area networks. Thus water utility is able to monitor the whole network for long term, acquire the micrographic distribution of

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leakages and balance the network service pressure to reduce leakage. Establishing DMAs as a strategy of leakage management enables the water utility to evaluate the area leakage condition, to compare leakage of different areas, and to find out areas with high leakage for active leak detection. • Analyses of long-term monitoring data of DMAs help water utility to understand the flow variation against time. For example, when burst happens in a DMA, flow changes sharply and even the area pressure drops considerably. Based on the monitoring data, the utility managers can find out areas with abrupt variation of pressure and flow, and analyze the flow rates to locate leakages in short time. Especially in case of bursts, the monitoring data can facilitate utility managers to identify the location quickly for timely repair which would diminish volume of lost water and other losses. In conclusion, monitoring DMA is vital for network management because through the monitoring system, pressure and flow of the whole network can be explicitly reflected, bursts can be quickly located and it can provide data for network modeling. • It is to be noted that ADB cannot fund all DMA monitoring. However, ADB will provide technological support or demonstration areas in terms of IWA philosophy of water loss reduction, and conduct comprehensive analysis to make sure network operates better and functions properly. In this way, objectives of the demonstration project can be fulfilled. • Choose residential quarters, as required, with commercial and industrial customers as few as possible, aged network, frequent leakages, individual inflow mains, and bulk meters installed at inlets. • 3 DMA named Xingtai garden(including 1017 household), Baihe (including 1248 household )and Yangguang community(including 1098 household) are chose as demonstration areas for monitoring customer demand against pressure. Meanwhile, data from the DMA meters are transmitted to central operation department by remote devices.

5.3 Anticipated accomplishments of the leakage reduction project 1) Make rational use of urban water resources with moderate or none consumption increase, and realize sustained development. 2) In contrast to current ALR period, Leak detection period of the urban water supply network, and time taken to attend bursts or leaks after the first notification be shorted significantly in the future. 3) During implementing ADB project, water utility should perform water balance calculation and leakage reduction PI assessment annually. The NRW at the end of the project will be decreased by 30%, standing at 35% compared with current high level 65%. 4) Be capable of analyzing and comparing night flow data in DMAs to prioritize leak detection strategy. 5) The popularity rate for water supply is 70% in 2012. The figure is expected to reach 90% by the end of ADB project period. 6) Undertake and realize an annual optimistic estimation of investments saved by implementation ADB water loss control project.

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Table 5.1: The next plan proposed for Baishan loss control

Performance Targets Data Sources and and Assumptions and Summary Reporting Indicators with Risks Mechanisms Baselines By 2016: Assumption Impact Non revenue water The Baishan Increased access of local management government will the urban statistical reports Improved near improve its water residents to safe and Baishan Water domestic average level. resources water supply in Supply Company’s Non revenue water management and Baishan. Intermittent annual reports reduced to supervised strongly supply is not happened. 35% with NRW. By 2014: Outcome Non revenue water Reports by the Risk Reduced non revenue management Baishan Water Measure meters in water in Baishan improved Supply Company’s WTP are not water supply Non revenue water records installation completely. system reduced to 55% from current 65% Outputs 1. A survey report and By 2013: water balance chart on final report submitted to Site inspection and nonrevenue water Assumption ADB collection, produced Participation and Non revenue water Government’s 2. Non revenue water strong support of the recommendation various FSR and other Reduction measures PMO and local water incorporated in documents proposed Supply Company the ensuing loan project 3. Awareness on

Non revenue water Management increased

12 Jilin Urban Improvement Project Supplementary Appendix 5 (TA 8172-PRC) Final Report

Table 5.2 Expenses of capacity building, project construction and equipment purchase Equipment Construct. Others Sub -total No Item Equipment Qty expense expense YCN Note (CNY) CNY CNY 3 days Capacity 1 50,000 workshop of building NRW reduction 3asys 2 50,000 workshop of leak detection 100,000 Electronic Equipment 3 leak 1 78,000 purchase detector Pipe 4 1 67,000 locator Soundsens 5 correlator 1 180,000

Listening 3, 000*2=6,0 6 2 pod 00 331,000 Using for Project Nanshan WTP constructio DN800 measurement, 7 n 1 (meter Electromag 1 74,000 38,000 10,000 122,000 including installation netic meter electricity and remote devices Using for Nanshan WTP DN400 measurement, 8 Electromag 1 44,000 38,000 10,000 92,000 including netic meter electricity and remote devices Using for Nanshan WTP DN300 2*10,00 2*36,000=72 2*38,000= measurement, 9 Electromag 2 0=20,00 168,000 ,000 76,000 including netic meter 0 electricity and remote devices Using for Zhenzhumen DN400 WTP bore-hole measurement, 10 1 74,000 38,000 0 112,000 Electromag including netic meter pressure recording and remote devices Using for Kucanggou DN300 WTP bore-hole measurement, 11 1 7,000 38,000 0 108,000 Electromag including netic meter pressure recording and remote devices

13 Jilin Urban Improvement Project Supplementary Appendix 5 (TA 8172-PRC) Final Report Installation at Project Xingtai garden constructio (1017 DN200 n 2 2*40,000=80 households)an 12 remote 2 0 0 80,000 DMA ,000 d Baihe meter manageme community1 nt 248 households Installation at DN150 Yangguang 13 remote 1 30,000 0 0 30,000 community1 meter 098 households Total 1,143,000

Supplementary Appendix 6 Financial Analysis

Project Number: 46048 / TA 8172 - PRC

Jilin Urban Development Project Jilin Urban Development Project (TA 8172-PRC) Final Report

FINANCIAL ANALYSIS

I. FINANCIAL ANALYSIS OF REVENUE GENERATING SUBCOMPONENT

A. Introduction

1. The financial analysis will cover 4 components in Baishan and Baicheng Cities of Jilin Province, the People’s Republic of China (PRC) including integrated solid waste management (ISWM) in Baishan; Improved water supply system in Baishan; improved urban road network and improved municipal services in Baicheng, and institution and capacity strengthening. Financial analysis of the Project and its components is carried out in accordance with Asian Development Bank’s (ADB) Financial Management and Analysis of Projects1 as well as Guidelines for Financial Governance and Management of Investment Projects Financed by the ADB2, and other relevant publications.

2. Financial internal rate of return (FIRR) is estimated for revenue generating subprojects, i.e., the new water supply system in Baishan including a new water treatment plant with daily treatment capacity of 50,000 tons and water transmission and supply networks. Cost streams used for the purpose of the financial internal rate of return (FIRR) determination include capital investment and operations and maintenance. The weighted average cost of capital (WACC) based on each subcomponent funding assumptions are compared with the FIRR to ascertain the financial viability.

3. Finally, the affordability of water tariff directly from end users is assessed by determining the percentage of household income to meet the estimated yearly bill from piped water supply and water services. Financial projections over 20 years excluding construction period are prepared to ensure that cumulative cash flow will meet cash operating costs, debt service, and replacement of short-lived fixed assets at prevailing tariffs. Required financial ratios, such as, debt service coverage ratio” would be no less than 1.2 and recommended as part of loan covenants and assurances.

B. Financial Assumptions

4. The following are the general assumptions:

• All costs are expressed in July 2013 prices. • The Project is analysed over a 20-year period excluding construction period, and the residual value is not considered. • Demand projections are adopted in the FSR. • Foreign exchange rate of CNY6.08 per US$1.00 is used when converting foreign exchange costs to their local currency equivalent, as the average level from 2014 to 2019. • Operation and maintenance costs include personnel salaries and welfare, plant maintenance costs, administration, insurance, taxes, power cost, and other expenses. • Capital cost includes the base cost of the revenue generating subcomponent, including the investment cost for the associated water supply network pipelines, and

1 ADB. 2005. Financial Management and Analysis of Projects. Manila. 2 ADB. 2005. Financial Management and Analysis of Projects. Manila.

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Jilin Urban Development Project (TA 8172-PRC) Final Report

physical contingencies but excludes price contingencies and financial charges during development (as a result of debt financing). • The revenues from the revenue-generating component will be derived from the water sales. • Net cash flows from the component were determined after income taxes. Income tax was calculated at 25% and sale tax at 6%. • Expenses also include depreciation at 4% of net fixed assets. For the interest during construction, 5-year swap rate is used (adding maturity premium and plus ADB margin of 0.4%, maturity premium of 0.1%); for projection of debt service, 20-year swap rate is used and a 20-year repayment period for the ordinary capital resources (OCR) loan. • Interest during construction is capitalized. Amortization period remains 25 years including 5-year grace period. Repayment is assumed to be in straightline method starting in 2020. • Technical data and costs were obtained from the revised project feasibility study report (FSR) to form the basis of the financial analysis and FIRR.

C. Calculation of the Weighted Average Cost of Capital (WACC) And Financial Internal Rate of Return (FIRR)

5. To compute the WACC, it is assumed that the financing sources would consist of both project cities’ equity contributions and ADB foreign currency loan. The Ministry of Finance would re-lend the funds from ADB with the same duration, 25 years with a five-year grace period. The loan rate would be London interbank offered rate (LIBOR) plus ADB margin (of 0.50%) and maturity premium of 0.2%. The cost of equity is calculated at 7.00%, assuming a risk free rate of return of 6.0% plus a 1.0% margin. Income tax is assumed at 25%, with the WACC calculated on an after tax basis. The other assumptions are domestic inflation rate of 3.0% and international inflation rate of 1.90%. As shown in Table A5-1, the real WACC for the subcomponent is 2.58%.

Table A5-1: Weighted Average Cost of Capital

A. Financial component ADB Government Domestic Loan Equity Total B. Amount (CNY million) 210.00 233.95 0.00 0.00 443.95 C. Weighting 47.3% 52.7% 0.0% 0.0% 100.0% D. Nominal cost 4.18% 7.00% 6.30% E. Income tax rate (preferential tax rate) 25% 15% F. Tax-adjusted nominal cost [D x (1 - E)] 3.14% 7.00% 5.36% 0.00% G. Inflation rate 1.90% 3.08% 3.1% H. Real cost [(1+F) / (1+G) - 1] 1.21% 3.80% 2.20% 0.00% I. Weighted component of WACC 0.6% 2.00% 0.00% 0.00% Weighted average cost of capital 2.58%

ADB= Asian Development Bank; WACC = Weighted Average Cost of Capital Source: TA Consultant’s estimates.

6. Water conservation is one of the top priorities in the sectoral agenda of the government of China. To accelerate the tariff reform in water supply, in the Guidance that the NDRC and Ministry of Housing and Urban-Rural Development recently issued (NDRC (2013)-2676), it is required that

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Jilin Urban Development Project (TA 8172-PRC) Final Report by the end of 2015, cities authorities shall apply the tiered water pricing system on all urban residents; towns’ authorities shall actively promote the implementation of the system if conditions allow.3 Increasing block tariffs (IBTs) appears to be a popular tariff structure in many developing countries. In a survey of urban water utilities in Asia, ADB (1993)4 found that the majority of utilities in their samples (20 out of 32) used an IBT structure.

7. In the Guideline, at least three tiers should be set up. The first tier shall in principle be identified according to the water volume covering 80 percent of local households’ monthly average water consumptions to satisfy the basic water use requirement in residents’ lives; The second tier shall in principle be identified according to the water volume covering 95% percent of local households’ monthly average water consumptions to reflect the reasonable water use requirement to improve residents’ life quality; The third tier shall be identified as the water volume exceed the second tier. The Guideline also specifies that for Jilin province, the first tier is from 0 to 2.4 tons/capita/month, and the second tier ranges from 2.4/t/c/m to 4.1t/c/m, and the third tier corresponds to 4.1t/c/m and upward.

8. According to the Urban Water Supply Tariff Management Guidelines issued in 2004, the price ratios of the three tiers are set at 1:1.5:2. Thus preserving the current uniform residential water tariff at CNY2.30/t at the first tier, the prices for the second and third tiers are therefore CNY3.45/t and CNY4.60/t respectively.

Figure. Proposed Increasing Block Tariff (IBT) for Water Supply in Jilin

9. Given the aforementioned water tariff assumption, and assume that leakage ratio for the newly constructed distribution network is 15%, and the plant operates at its full capacity, the financial internal rate of return for Baishan water supply component is calculated at 6.64%, which is higher than the WACC at 2.42%. At 10% discount rate, the net present value is negative

3 The increasing block tariffs (IBTs) or tiered water pricing is based on the volumetric component. In this tariff structure, water use per billing period is divided into a number of discrete blocks for which separate prices apply. 4 Asian Development Bank, 1993. Water Utilities Handbook: Asian and Pacific Region. Manila, Philippines.

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Jilin Urban Development Project (TA 8172-PRC) Final Report

CNY235.86 million. The detailed computation of the FIRR is shown in Table A5 -3.

10. The results of sensitivity analysis are shown in Table A5-2. The project is most sensitive to benefit reduction of which FIRR falls to 4.46% if the capital cost overrun by 5%. The sensitivity analysis shows that the FIRR of the water supply subproject is robust against negative impacts.

Table A5-2 FIRR and Sensitivity Analyses

Cases FIRR NPV(CNY million) Base Case 5.82% 155.4 (i) Revenues reduction 5% 4.46% 79.5 (ii) Investment cost overrun 5% 4.74% 97.0 (iii) O&M Cost Increase 10% 5.03% 105.8 (iv) Delay in Implementation one year 5.20% 114.0 (v) Combination of (i), (ii), and (iii) 3.83% 54.4

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Jilin Urban Development Project (TA 8172-PRC) Final Report

Table A5-3: Detailed Computation Financial Internal Rate of Return Capital Costs O&M Adjusted Net Sales Net Cash Year Income Tax Flow 2014 7.40 0.00 0.00 0.00 (7.40) 2015 55.47 0.00 0.00 0.00 (55.47) 2016 110.94 0.00 0.00 0.00 (110.94) 2017 166.40 0.00 0.00 0.00 (166.40) 2018 29.58 0.00 0.00 0.00 (29.58) 2019 0.00 11.39 4.86 45.77 29.52 2020 0.00 12.10 3.98 45.77 29.69 2021 0.00 12.10 3.98 45.77 29.69 2022 0.00 12.10 3.98 45.77 29.69 2023 0.00 12.10 3.98 45.77 29.69 2024 0.00 12.10 3.98 45.77 29.69 2025 0.00 12.10 4.35 47.27 30.82 2026 0.00 12.10 4.35 47.27 30.82 2027 0.00 12.10 4.35 47.27 30.82 2028 0.00 12.10 4.35 47.27 30.82 2029 0.00 12.10 4.35 47.27 30.82 2030 0.00 12.10 6.58 56.17 37.49 2031 0.00 12.10 6.58 56.17 37.49 2032 0.00 12.10 6.58 56.17 37.49 2033 0.00 12.10 6.58 56.17 37.49 2034 0.00 12.10 6.58 56.17 37.49 2035 0.00 12.10 7.09 58.21 39.02 2036 0.00 12.10 7.09 58.21 39.02 2037 0.00 12.10 7.09 58.21 39.02 2038 0.00 12.10 7.09 58.21 117.36 WACC 2.58 % NPV= 155.44

5.82 %

Note: FIRR = Financial Internal Rate of Return; NPV = Net Present Value Source: TA Consultant’s estimates.

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Guangdong Chaonan Water Resources Development and Appendix 5 Protection Demonstration Project (TA 8112-PRC) Draft Final Report

D. Affordability

11. In accordance with PRC government policy all local governments are expected to charge reasonable fees for water supply. Water tariffs for end users are established based on the cost of operating the facilities and the affordability of consumers. In case profitability is not possible, local governments are encouraged to set a minimum price that can cover O&M costs.

12. According to the Urban Water Supply Tariff Management Guidelines issued in 2004, the price ratios of the three tiers are set at 1:1.5:2. Assume that to maintain the current uniform residential water tariff at CNY2.30/t at the first tier, the prices for the second and third tiers are therefore CNY3.45/t and CNY4.60/t respectively. Since Increasing Block Tariff is rare in China for water consumption, there is few existing studies quantifying the impact of IBT on water consumption. Thus assume that the introduction of IBT will make the household consumption of water and urban comprehensive per capita water consumption to decrease from 210l/d/c to 140l/d/c.

13. Based on generally accepted criteria employed by the World Bank, the water Tariff is affordable where it does not exceed 5% of annual household incomes for water consumption. Estimates were made of annual water bill for low income and average household based on household size. The annual water bill is below 3% of the average household income for consuming 120 liters/capita/day (lpcd), while low income households consuming 90 lpcd are paying below 5% of their annual household income since 2019. Based on the analysis summarized in Table A5-8, low income households will have not a problem with affordability of the above proposed water tariff increase since the share of income expended on water is below the benchmark of 5% of household income annual. Table A5-5: Affordability Analysis Items 2019 2020 2021 2022 2025 2030 2035 Domestic Tariff (CNY/m3) 2.80 2.80 2.80 2.80 2.80 3.20 3.20 Average Income HH 35293 38116 41165 44459 56005 82290 120911 Water bill CNY/year 164 164 164 164 164 187 187 Affordability (% HH Income) – Water 0.46% 0.43% 0.40% 0.37% 0.29% 0.23% 0.15%

Low Income HH 2516 2717 2934 3169 3992 5866 8619 Water bill CNY/annual a 92 92 92 92 92 105 105 Affordability (% HH Income) – Water 3.66% 3.39% 3.13% 2.90% 2.30% 1.79% 1.22%

Note: HH = Household; m3 = cubic meter. a consumption of 90 lpcd for low income household and 120 lpcd for the average income household. Source: Income data from PMO.

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Guangdong Chaonan Water Resources Development and Appendix 5 Protection Demonstration Project (TA 8112-PRC) Draft Final Report

FINANCIAL SUSTAINABILITY ANALYSIS FOR NON-REVENUE GENERATING

Introduction

1. Financial sustainability analysis has been prepared in accordance with Asian Development Bank (ADB) Guidelines for the Financial Management and Analysis of Projects.5 An assessment of financial performance has been completed for the BSMG and BCMG. The objectives of this report are to:

(i) Review the past revenue generation capacity of BSMG/BCMG and the share of revenues from upper level government namely Municipal and State sources over the period 2007 to 2012, and the level of expenditure that this supports; (ii) Based on the revenue generating capacity of BSMG/BCMG in the past assess the financial capacity of providing in total counterpart funding over 2013 to 2017 from BSMG/BCMG; (iii) Assess the governmental ability to meet debt service on the ADB loans and the O&M for the three non-revenue generation components.

2. Based on generally accepted criteria employed by the World Bank, the counterpart contributions are considered to be affordable by the city if the required annual counterpart contribution does not exceed approximately 15-20% of the projected total annual construction budget. However, it is not possible to identify the construction or investment sub-component of the city budget as reporting is by sector and includes both recurrent and investment expenditure under the same heading. Therefore the annual contribution is compared with overall annual city expenditure and also as a share of special infrastructure projects, which are municipal or State sponsored projects financed by upper level government. It could be argued that the current project is a special infrastructure project.

3. In the case of debt service there is no accepted criteria of the level of debt service that would be regarded as affordable, but where contributions exceed some 2.5% of city local revenue base or 1.0% of total city revenues or expenditures then the debt service may be a cause for concern and crowd out other programs, especially those targeted to the poor.

A. Historical Revenues and Expenditures

4. The historical financial performance of BSMG/BCMG is analyzed to determine whether it can provide the required counterpart funds during the construction period and necessary funds for O&M and debt service during the operating period. In addition, annual average growth rates (AAGR) of revenues and expenditures during the project period are calculated. The average income growth rate is 16% per year. The same growth rates are used in projecting the revenues of BSMG/BCMG during the implementation of the Project. The sources of income are from tax (VAT, business tax, income tax, resource tax, real property tax) and non-tax revenues and from subsidies and/or direct transfers from the municipal and the regional governments. On the other hand, expenditures are categorized into general public services, education, public safety, personnel welfare, environmental protection, agriculture, forestry and water and transportation. Table A5-6 shows that the revenue of BSMG has grown at an average rate of 25% over the last six years to CNY5229.9 million in 2012 from CNY1377.3 million in 2007. Over the same period, expenditures have grown at 22% per annum. The revenue of BCMG has grown at an average of 25% over the past six years, reflected in Table A5-7.

5 ADB. 2005. Financial Management and Analysis of Projects. Manila.

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Guangdong Chaonan Water Resources Development and Appendix 5 Protection Demonstration Project (TA 8112-PRC) Draft Final Report

Table A5-6: Revenues and Expenditures For BSMG (2007-2012) Item 2007 2008 2009 2010 2011 2012 Growth Rate

Revenues (CNY, million) Municipality Fiscal 1377.26 1930.3 3133.03 4073.59 4324.99 5,229.90 25 % Revenues 1. General Budget 1,096.70 1,558.68 1,977.69 2,527.08 3,553.08 4,363.04 26 % Revenue 2.Funds Revenues 280.56 371.62 1,155.34 1,546.51 771.91 866.86 21%

Provincial transfers 133.13 191.79 213.90 225.29 284.79 328.50 15 % Central Government 860.82 1,261.53 1,445.76 1,572.28 1,960.99 2,029.56 19% Transfers Total 2,371.21 3,383.62 4,792.69 5,871.16 6,570.77 7,587.96 21% Expenditures (CNY million) General Public Service 777.66 945.76 1,164.50 1,330.63 1,469.72 1,328.43 9%

Public Safety 257.63 338.05 438.05 548.02 589.40 788.87 21%

Education 716.65 890.03 1,147.94 1,171.97 1,481.97 2,420.13 22%

Science and Technology 20.93 30.35 27.87 52.11 48.99 69.51 18% Social Insurance and 1,005.93 1,364.39 1,995.20 1,966.25 2,229.18 2,313.26 15% Employment Medical and Sanitation 211.20 294.29 532.14 764.70 913.44 937.07 28%

Environmental Protection 57.75 137.06 214.40 562.51 959.87 708.35 52% Agriculture, Forestry and 401.23 531.10 736.57 988.04 1,232.01 1,358.44 23% Water Affairs Transportation 128.30 170.41 221.07 510.54 673.65 550.55 27%

Others 108.56 101.77 163.88 1,246.53 2,045.16 2,314.33 56%

Total 4,531.10 6,330.96 9,005.81 11,911.34 13,927.93 15,199.33 22%

Surplus -2,159.8 -2,947.34 -4,213.12 -6,040.18 -7,357.16 -7,611.37 AAGR – annual average growth rate. Source: Baishan Finance Bureau.

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Guangdong Chaonan Water Resources Development and Appendix 5 Protection Demonstration Project (TA 8112-PRC) Draft Final Report

Table A5-7: Revenues and Expenditures For BCMG (2007-2012)

Annual Item 2007 2008 2009 2010 2011 2012 Averag

Revenues (CNY, million)

Municipality Fiscal Revenues 832.45 1090.65 1263.46 1801.31 2457.26 3102.87 25%

1. General Budget Revenue 832.45 1090.65 1263.46 1801.31 2457.26 3102.87 25%

2.Out -budget Revenues 0% Upper Level Government Allocations 960.81 1222.4 1057.37 1480.12 1792.44 1758.48 11%

Total 1796.90 2313.05 2320.83 3281.43 4249.70 4861.35 18%

Expenditures (CNY million)

General Public Service 523.05 635.58 687.03 830.08 980.96 1,007.63 12%

Public Safety 282.97 344.56 424.88 496.59 518.93 633.50 14%

Education 984.86 1,165.68 1,333.29 1,465.18 1,785.92 2,935.02 20%

Science and Technology 44.45 38.32 42.42 46.85 53.68 61.33 6%

Culture P.E. 78.28 85.12 111.64 152.84 142.85 155.64 12%

Social Insurance and Employment 1,003.47 1,205.80 1,888.60 1,672.59 2,004.11 2,036.86 13%

Medical and Sanitation 313.31 407.70 680.78 788.76 1085.42 1128.46 24%

Environmental Protection 65.12 245.13 295.27 483.86 503.45 608.88 45%

Urban and rural affairs 215.92 419.16 305.40 439.38 555.95 735.46 23% Agriculture, Forestry and Water Affairs 791.76 1073.92 1741.88 1627.96 1862.91 2387.74 20%

Transportation 145.95 158.74 223.33 255.42 394.99 475.50 22%

Gov’t fund spendings 431.49 468.59 397.23 659.84 1009.15 1450.47 22% Transferred to Upper Level Government

Total 4,880.6 6,248.3 8,131.8 8,919.4 10,898.3 13,616.5 19%

Surplus - 3,083.7 - 3,935.3 - 5,810.9 - 5,637.9 - 6,648.6 - 8,755.1 Source: Baishan Finance Bureau.

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Guangdong Chaonan Water Resources Development and Appendix 5 Protection Demonstration Project (TA 8112-PRC) Draft Final Report

B. Fiscal Affordability Assessment

5. The average annual growth rates derived above are utilized to forecast the government revenues and expenditures for the coming years. Assume the fiscal revenue of BSMG will continue to grow at the pace of the past 6 years’ average. The financial sustainability analysis involves comparing the estimated counterpart funds with the government revenues during the implementation period, and comparing the necessary supporting funds disbursed annually, including the O&M for two non-revenue generating components, and debt service with the government revenues during the operating period.

6. BSMG will provide about CNY138.8 million counterpart funds during implementation. The annual counterpart funds comprise 0.08% to 0.61% of projected revenues during the implementation period. On the other hand, the O&M for the non-revenue generating component, and the debt service are about 0.01% to 0.02% of annual projected revenues till 2030, and represents reasonable proportion of the government expenditures at the operating period. The analysis indicates that the Project should have sufficient funds available for counterpart funds during implementation and O&M costs for non-generating components and debt service during operation. This indicates acceptable fiscal risk since it is expected that fiscal revenues of the local government will grow in line with economic development, providing more resource mobility for the government to finance the proposed project components. The detailed fiscal impact analysis of the provision of counterpart funds, debt service and operating and maintenance to the proposed subcomponents is shown in Table A5-8.

7. Likewise, assume the fiscal revenue of BCMG will continue to grow at the pace of the past 6 years’ average. BCMG will provide about CNY1142.7 million counterpart funds during implementation. The annual counterpart funds comprise 0.72% to 3.18% of projected revenues during the implementation period. On the other hand, the O&M for the non-revenue generating component, and the debt service are about 0.03% to 0.23% of annual projected revenues till 2030, and represents reasonable proportion of the government expenditures at the operating period. The analysis indicates that the Project should have sufficient funds available for counterpart funds during implementation and O&M costs for non-generating components and debt service during operation. This indicates acceptable fiscal risk since it is expected that fiscal revenues of the local government will grow in line with economic development, providing more resource mobility for the government to finance the proposed project components. The detailed fiscal impact analysis of the provision of counterpart funds, debt service and operating and maintenance to the proposed subcomponents is shown in Table A5-9. 8.

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Table A5-8 BSMG Fiscal Affordability Assessment

Item 2014 2015 2016 2017 2018 2019 2020 2024 2025 2030 Revenues (CNY, million)

Municipality Fiscal Revenues 8159.29 10191.3 12729.5 15899.7 19859.6 24805.6 30983.4 75413.36 94195.0 286368.8

1. General Budget Revenue 6859.92 8635.14 10869.7 13682.6 17223.4 21680.5 27291.0 68520.61 86252.4 272597.9 2.Funds Revenues 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Provincial transfers 1306.72 1577.02 1903.23 2296.91 2772.03 3345.43 4037.44 8564.88 10336.5 26463.3 Central Government Transfers 3401.47 3928.24 4536.59 5239.16 6050.52 6987.55 8069.68 14354.34 16577.3 34054.4

Total 11568.10 14140.3 17309.6 21218.7 26045.9 32013.5 39398.1 91439.83 113166.3 333115.7 Expenditures (CNY million)

General Public Service 1777 2174 2660 3255 3982 4872 5961 13358 16343 44808

Public Safety 1163 1423 1741 2130 2606 3189 3901 8743 10697 29327 Education 3627 4437 5429 6643 8127 9944 12166 27262 33356 91451

Science and Technology 104 127 156 190 233 285 348 781 955 2619 Cultural PE 267 327 400 489 598 732 896 2007 2456 6733 Social Insurance and Employment 3463 4237 5184 6342 7760 9494 11616 26030 31847 87315

Medical and Sanitation 1403 1716 2100 2569 3143 3846 4705 10544 12901 35370 Environmental Protection 1060 1297 1587 1942 2376 2907 3557 7971 9752 26737

Urban and rural affairs 1361 1665 2037 2492 3049 3731 4565 10229 12515 34312 Agriculture, Forestry and Water Affairs 2034 2488 3044 3724 4557 5575 6821 15286 18702 51275

Transportation 824 1008 1234 1509 1847 2260 2765 6195 7580 20781 Industrial and financial affairs 189 232 283 347 424 519 635 1423 1741 4774 Others 2178 2665 3261 3989 4881 5972 7306 16373 20032 54921

Transfer to upper govt 0 0 0 0 0 0 0 0 0 0 Govt fund spending 1781 2180 2667 3263 3992 4884 5976 13391 16383 44918

Total 19450 23797 29115 35623 43584 53325 65243 146201 178876 490422 Surplus (7882) (9656) (11806) (14404) (17538) (21312) (25845) (54761) (65710) (157307) Annual counterpart funds (CNY million) 16.42 67.49 106.35 112.48 42.94 25.32 Counterpart funds as a % of revenues 0.14% 0.48% 0.61% 0.53% 0.16% 0.08% Annual debt service, and O&M for non-generating 7.1 7.1 7.1 7.1 Annual debt service, subsidy and O&M for non-generating 0.02% 0.01% 0.01% 0.00% Table A5-9 BCMG Fiscal Affordability Assessment

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Guangdong Chaonan Water Resources Development and Appendix 5 Protection Demonstration Project (TA 8112-PRC) Draft Final Report

Item 2014 2015 2016 2017 2018 2019 2020 2024 2025 2030

Revenues (CNY, million) Municipality Fiscal Revenues 4810.96 5990.54 7459.34 9288.27 11565.6 14401.3 17932.3 43109.64 53679.5 160686.6 1. General Budget Revenue 4810.96 5990.54 7459.34 9288.27 11565.6 14401.3 17932.3 43109.64 53679.5 160686.6

2.Funds Revenues 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Provincial transfers 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Central Government Transfers 2421.71 2678.38 2962.25 3276.21 3623.44 4007.4 4432.22 6631.6 7334.52 12137.2 Total 7232.67 8668.92 10421.5 12564.4 15189.0 18408.8 22364.5 49741.2 61014.0 172823.9

Expenditures (CNY million) General Public Service 1333.60 1582.31 1877.39 2227.51 2642.93 3135.81 3720.62 7373.51 8748.62 20571.39 Public Safety 859.70 1020.02 1210.25 1435.95 1703.75 2021.48 2398.47 4753.29 5639.75 13261.23 11654.8 Education 4177.49 4956.56 5880.92 6977.66 8278.94 9822.90 0 23097.46 27404.95 64439.69 Science and Technology 76.78 91.10 108.09 128.24 152.16 180.54 214.20 424.51 503.68 1184.34

Cultural PE 207.08 207.08 245.69 291.52 345.88 410.38 486.92 964.97 1144.93 2692.18 Social Insurance and Employment 2867.42 3402.17 4036.65 4789.45 5682.64 6742.41 7999.82 15854.03 18810.69 44231.23 Medical and Sanitation 1588.61 1884.87 2236.38 2653.45 3148.30 3735.43 4432.06 8783.44 10421.49 24504.96

Environmental Protection 857.16 1017.01 1206.68 1431.71 1698.72 2015.51 2391.39 4739.26 5623.09 13222.07

Urban and rural affairs Agriculture, Forestry and Water Affairs 3361.37 3988.24 4732.02 5614.50 6661.57 7903.90 9377.91 18585.13 22051.11 51850.73 Transportation 669.39 794.23 942.35 1118.09 1326.60 1574.00 1867.54 3701.09 4391.31 10325.67 others 2041.92 2422.72 2874.54 3410.62 4046.67 4801.35 5696.76 11289.83 13395.29 31497.54 Transfer to upper govt 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Total 18040.51 21366.3 25350.9 30078.7 35688.1 42343.7 50240.4 99566.52 118134.9 277781.0 ------Surplus 10807.84 12697.3 14929.3 17514.2 20499.0 23934.8 27875.9 49825.23 57120.86 104957.1 Annual counterpart funds (CNY million) 51.75 212.54 331.85 346.99 127.54 71.98 Counterpart funds as a % of revenues 0.72 2.45 3.18 2.76 0.84 0.39 Annual debt service, and O&M for non-generating 50.71 50.71 50.71 50.71 Annual debt service, subsidy and O&M for non-generating subprojects as % of revenues 0.23 0.10 0.08 0.03

App 5 - 12

Supplementary Appendix 7 Economic Analysis

Project Number: 46079 / TA 8172 - PRC February 2014

Jilin Urban Development Project Jilin Urban Development Project (TA 8172-PRC) Final Report

ECONOMIC ANALYSIS

A. Introduction

1. The central government of PRC is accelerating the development of small- and medium- sized cities. Small and medium-sized cities contributed to 56.22 percent of the country's overall economy last year, with a combined GDP of CNY 26.51 trillion. China’s urbanization rate reaches 52.57% by the end of 2012, measured by the urban population, up 1.3% from a year earlier1. Urbanization is thought a key for China’s modernization. By clustering the production and innovation capacities in the cities, economies of scale can achieve. However, incomplete urbanization will not only impede its growth, but also become a source of widened income inequality and consequent social tension and instability. Adequate infrastructure would help to mitigate the negative impact of rapid urbanization in medium-sized cities. This is because adequate infrastructure will ensure that local or migrant workers can get easier access to better public transportation system, sanitation water supply, public services, affordable housing and education as urban residents. These benefits can eventually yield better employment opportunities for the vulnerable groups at a lower cost.

2. The outer economic circle of Jilin Province includes four regions: Yanbian, Baishan, Tonghua, and Baicheng. This is an open circle, which includes the eastern and western Jilin Province. The middle one includes Jilin, Liaoyuan, Siping, and Songyuan. The inner one is comprised of Changchun, which includes Gongzhuling, Yitong, Nong’an, Jiutai, and Dehui. The proposed project will extend the investment to address urban development in Baishan and Baicheng Cities’ two prefecture capitals located at the remote southeast and northwest regions of Jilin Province.

3. Baicheng municipality was established in 1993 and gained rapid economic growth. The GDP grew from CNY3.428 billion in 1993 to CNY 61.54 billion in 2012, or 17.8 times of that in 1993. Capital investment grew from CNY1.1 billion to CNY46.7 billion, or a 43 times increase. Fiscal revenue increased from 0.25 billion to CNY4.86 billion in the same period of time. At the same time, infrastructure developed considerably, e.g., a total of 418 km of urban roads were constructed, and over 40 km of sewer pipeline networks were either newly built or renovated, while the sewage treatment ratio increased from 26.4% to over 60%. By the end of 2012, urban residents’ per capita disposable income reached CNY 19500, a 10.2 times increase of 1993 level. Rural residents’ net income reached CNY6200, or 7.9 times of 1993 level.

4. In the most recent 5 years, Baicheng’s annual GDP growth rate sat at 19%, and the net growth ranked the first in Jilin for two consecutive years. Per capita GDP reaches CNY26100, or 2.8 times of the value in 2006. Annual total fiscal revenue growth was 22%. The city implemented 726 projects with single project investment value over CNY30 million. Foreign capital utilization reached CNY124.7 billion in the past 5 years, or 4 times of the previous 5 year span.

5. The city of Baishan experienced similar growth pattern. In 2012, total GDP of Baishan was CNY60.06 billion, or 12.4% growth at constant price. Per capita GDP was CNY46853. Total budgetary fiscal revenue was CNY6.72 billion, an increase of 15.9%. Foreign direct investment continued at a fast pace, with US$178.6 million, an increase of 16.3%. In 2012, per capita disposable income for the urban residents was CNY21282, an increase of 15.1%.

6. However, both cities are growing and face urgent needs for investments on their infrastructures. The proposed project will deal with the demand for solid waste management in both cities, urban road networks in the new area in Baicheng, and water supply in Baishan. The methodology, baseline assumptions, analysis, and results of the FSR were reviewed.

1 This rate was 39.09% in 2002.

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B. Justification

7. The total MSW amount increased from 31.3 million tons in 1980 to 164 million tons in 2011. Currently, waste composition in China is dominated by a high organic and moisture content, since the concentration of kitchen waste in urban solid waste makes up the highest proportion (at approximately 60%) of the waste stream. According to China Statistical Yearbook series, the total amount of MSW collected and transported was 164 million tons in 2011, of which 80% was treated and 76.9% of the treated SW was landfilled, 19.9% was incinerated and 3.3% in other category.

8. Currently, there are about 660 cities in China that produce about 160 million tons of municipal solid waste annually and, account for 28% of the world’s MSW each year. In 2004, China surpassed the United States as the world’s largest waste generator. China’s per capita waste generation rate is 0.5 to 1.0 kg/ capita/day, while a typical developed country generates 1.43 to 2.08 kg/capita/day. The MSW generation rate also varies among different cities in China, e. g., with rates of about 1.00 kg/capita/day in Beijing in 2011, 0.92 kg/capita/day in Shanghai, 0.85 kg/capita/day in Jilin’s urban areas, and only 0.41 kg/capita/day in Jiangxi’s cities.

9. For residential areas, there are two type of urban solid waste collection: collection at roadsides and household collection. Road- side waste collection is a method whereby residents sort recyclable items into the specific collection containers offered by the local authorities. With fast urbanization, high- rise buildings are appearing in large numbers. Now residents are advised to place their waste in bags and deposit their garbage in the appointed garbage bins outside the residents’ house for collection under the new system, and then the waste is transported by truck to a transfer station. This system is usually carried out by a community or business entity in China.

10. There are several main problems in China’s MSW management. First, China’s overall MSW collection includes both formal and informal waste collection which is composed by freelance garbage collectors who retrieve valuables from the waste, and indeed, there are twice as many people in the informal sector as those in the formal sector. Unfortunately, these informal waste collection systems make it more difficult to regulate and implement an efficient and standardized waste treatment system. In addition, rummaging through the solid waste may have a negative impact on the health and hygiene of these scavengers and waste collectors. When the scavengers sort through and remove the recyclables from the waste collection containers or stations, they also often scatter about the remaining unwanted waste on the street which can cause sanitation problems. Waste minimization and recycling will remain a major challenge in the future. The most important driving force for changing the current freelance scavenge collection method should be based on the consideration of systematic waste separation, which is a critical component of a successful integrated waste management system and enables better financing of waste management while minimizing the energy and labor input in the downstream process. The proposed project which includes pilot waste separation components echoes the call for such changes.

11. For landfill, recovery rate of landfill gas in western countries is approximately 60%, in China it is less than 20%. Another highly contaminating pollutant associate with landfill is leachate. Often in China, only a negligible quantity of leachate is treated before being discharged into the groundwater, endangering land, air and groundwater. Also, siting landfills at greater distances from the central collection areas, implies higher transfer costs. Now, with urbanization in China, land acquisition cost rose significantly, as a result, additional investments in the infrastructure intensifies the financial problems of the responsible authorities. Moreover, most existing landfill sites are already approaching their closure dates, and this problem is

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compounded by overloading which shortens their planned operational life, due to unexpected increase in the volumes of waste generated.

12. More importantly, solid waste disposal and/or collection/treatment fee levies are extremely low and could barely cover costs and only offset a small fraction of collection, transport and treatment cost for the safe disposal of waste. Moreover, existing policies in China are based on a flat rate charging systems regardless of the use of the service and thus present no economic incentives for waste reduction and recycling for waste generation. For example, in many of Jilin’s cities, the MSW fee per household is now 5 RMB/month (US$0.8/month). It is documented in the literature that the construction cost of municipal solid waste disposal establishments in was far more than the fees collectable. Such a strict flat rate approach performs poorly as it is contrary to the “polluter pays” principle and is unable to create economic incentives for waste producers to reduce and recover waste. On the other hand, although a weight/ volume-based Pay-As-You-Throw (PAYT) system may provide incentives to reduce waste generation, it will likely increase the authorities’ administrative costs and cause illegal dumping. It is concluded that pilot projects and successful experience adopting PAYT system should be promoted.

Table 1. China’s municipal solid waste collection and treatment for selected areas

Region per capita Collected Treated Treatment per capita 03 -11 Per capita

SW in 2011(kg) (10k tons) (10k tons) Landfill Incineration Others Ratio (%) SW in 2003 (kg) growth%) rate(

National 0.65 16395.28 13089.64 10063.74 2599.28 426.62 79.70 1.09 - 0.40 Beijing 1.00 634.35 623.20 429.57 94.46 99.17 98.24 1.49 - 0.33 Liaoning 0.85 876.00 704.72 704.72 80.45 1.10 - 0.22

Jilin 0.92 493.00 242.62 197.71 44.91 49.21 1.33 - 0.31

Helongjiang 1.01 796.64 348.06 338.68 9.38 43.69 1.63 - 0.38

Shanghai 0.92 704.00 429.69 362.71 59.23 7.75 61.04 1.54 - 0.40 Guangdong 0.78 1978.80 1449.01 1094.19 326.42 28.40 72.12 1.08 - 0.28 Source: China Statistical Yearbook series

13. Both project cities are lacking sound waste collection systems, leading small dump sites within the urban area, contaminating the surface and ground waters, and the air quality. There is also no systematic waste sorting, retrieval of landfill gases, and minimal effort in MSW reduce, reuse and recycle.

14. The proposed project also includes a water supply subproject in Baishan city. Water supply in Baishan relies on surface water sources (Qujiaying reservoir) with a current capacity of 60,000 tons per day and shallow groundwater sources at 24,000 tons capacity. However the reservoir is outdated and needs urgent rehabilitation. The groundwater suffers from severe pollution and must be phased out as early as possible. The current scheme is also inadequate to serve the population and can not ensure 24-hour water supply service. The non-revenue water level is surprisingly high, i.e., estimated at around 65%. Xibeicha reservoir is a suitable alternative source and the proposed project will finance the treatment facility of 40,000 m3/day with pipeline networks.

15. Due to the rapid urbanization process, the exiting urban area at the center of Baicheng City cannot meet the urban development needs. A new urban area in the west of the present city is to be developed to facilitate urbanization. According to Baicheng urban development master plan, the western and southern parts of the city will be the new urban center to host the municipal government, as well as the new cultural and residential center. In the past several years, the BMG has already invested and built the new areas by constructing some of the new urban roads and municipal facilities. However, the urban road network is still largely incomplete

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with the missing links and sections. The proposed project will build the remaining urban roads and bridges, water supply, sanitary sewers, power supply, stormwater drainage, public transport, street lightings, etc.

16. The project will deliver four outputs: (i) Efficient Integrated Solid Waste Management (ISWM) System in Baishan & Baicheng; (ii) Improved Water Supply Management in Baishan; (iii) Improved Coverage of Urban Roads and Municipal Services in Baicheng; (iv) Improved Capacity and Institutional Arrangement.

C. Demand Analysis

17. Daily solid waste generation is about 322 tons in Baishan, or 1.18kg per head, based on the urban population of 273 thousand in Baishan. Currently there is a sanitation landfill with an area of 4.28 ha, and daily treatment capacity of 350t. However, due to low design standard and lack of funds and experience, breakages occur in bottom and sides of the impermeable membrane and causing contamination of the downstream water bodies by the leachate. Local residents blockaded the entrance of the landfill and the waste transfer trucks can not enter. Thus currently solid waste is dumped at Nanshan landfill which is already abandoned. The 15 garbage collection and transfer stations are in poor conditions and rehabilitation is needed. Thus, the proposed project will rehabilitate and extend the existing sanitary landfill with a total capacity of 350 wet tons per day; rehabilitate 15 existing transfer stations and procurement of compressible waste containers, waste transfer vehicles, collection trucks etc.; and procure waste collection, street cleaning and snow removal equipment.

Table xx. Solid waste generation projection for Baishan

Year Population (10k) Per capita SW (kg/capita/d) Daily SW generation (t/d) 2011 27.30 1.18 322.14 2012 28.06 1.16 325.54 2013 28.85 1.14 328.89 2014 29.66 1.12 332.16 2015 30.49 1.10 335.36 2016 31.34 1.08 338.48 2017 32.22 1.06 341.51 2018 33.12 1.04 344.45 2019 34.05 1.02 347.28 2020 35.00 1.00 350.00

18. Baicheng has a total urban population of 350 thousand in 2012. Its daily solid waste generated is 420t and per capita level is 1.2 kg. By 2020, it is projected that the urban population will be 509 thousand and daily per capita solid waste will be reduced to 1.0 kg. The water and organic content is high for domestic solid waste for Baicheng. Leachate is therefore a serious problem. The 4 operating garbage collection and transfer stations are very inefficient and the equipment and vehicles are out-of-date. The proposed project will seal the existing landfill site; upgrading the MSW stations, and purchase treatment facilities. In particular, the north side new landfill will need operating vehicles, and the south side needs upgrading of the leachate treatment plant, gas collection and treatment, and surface sealing. 10 new mobile waste compaction transfer stations are to be constructed and the associated compaction vehicles are to be procured. Similar to Baishan, equipment for waste collection, street cleaning and snow removal are to be procured under the project.

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Table xx. Solid waste generation projection for Baicheng

Year Population Per capita Daily SW Collection Target Treatment (10k) SW generation rate (%) treatment volume (kg/capita/d) (t/d) ratio (%) (t/d) 2012 35 1.2 420 95 87 365.40 2013 35.8 1.16 415.67 95 88 365.79 2014 36.7 1.13 414.33 95 89 368.76 2015 37.5 1.1 412.5 0 100 90 371.25 2016 40.18 1.08 433.94 100 91 394.89 2017 42.86 1.06 454.32 100 92 417.97 2018 45.54 1.04 473.62 100 93 440.46 2019 48.22 1.02 491.84 100 94 462.33 2020 50.9 1 509 100 95 483.55 Average 442.32 403.06

19. There are four water sources for Baishan water supply. Qiujiaying Reservoir can provide a steady water supply to the city. The water supply capacity is 100,000 m3/d, and currently it supplies 80,000 m3/d water for Baishan. The other water sources are Pearl Gate (Zhenzhumen Gate), Kucanggou, and Jinying, with the capacities of 9,000 m3/d, 5,000 m3/d, 10,000 m3/d respectively, all of which are ground water sources. It is a consensus that due to severe groundwater pollution, groundwater sources are to be phased out.

20. Currently, Qujiaying reservoir supplies 80 thousand m3 daily, or almost full capacity, but the facility is aged and the leakage in the source water transmission tunnel is serious, threatening the reliability of water supply in the city. The Nanshan treatment plant which treats water from Qujiaying reservoir, is outdated and using old standards that can not meet the new state requirements for water quality. Some pipelines are eroded and need to be replaced. Most importantly, it is projected that water demand will increase and current water supply system can not meet the growing demand even at full treatment capacity. The following table, adapted from the FSR, shows the projection of maximum daily domestic water consumption in Baishan, both in per capita and aggregate terms.

Table xx. Composite domestic water consumption 2015 2020

Planned urban population (10k) 32.1 34.5

Water supply ratio (%) 100 100

Comprehensive daily domestic 190 210 water consumption (L/capita/d)

Comprehensive daily domestic 5.49 7.25 water consumption (10km3/d)

21. The FSR assumes that the comprehensive daily domestic water consumption per capita is averaged at 200 liters which implies total water demand to be at 84.9 kt (thousand tons) per day in 2015 and 116.7 kt in 2020. The second approach is the maximum daily per capita domestic water consumption approach which assumes maximum daily per capita water consumption is 350l in 2015 and 400l in 2020. With proper conversion, the average daily total

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water demand is then 112.35 kt in 2015 and 138.0 kt in 2020. The third approach is based on the construction areas which results a projection of daily total water demand of 118.8 kt in 2015 and 133.4 kt in 2020. The average of the three approaches yields a water demand of 105.4 kt in 2015 and 129.4 kt in 2020.

Table xx. Total urban water supply and daily per capita consumption in China, 2011 Total water supply HH domestic water Composite daily City (10k tons) consumption (10k tons) average per capita (l) National 4261890 1448744 93.58 Beijing 151815 58954 330.68 Tianjin 70138 20897 195.11 Liaoning 263441 48681 169.76 Jilin 74873 17549 81.90 Changchun 30287 6813 109.34 Jilin city 24268 4100 153.19 Siping 2398 427 19.29 Liaoyuan 3060 396 67.75 Tonghua 3829 989 46.39 Baishan 2880 820 61.31 Songyuan 4650 2730 43.92 Baicheng 3501 1274 47.33 Helongjiang 164186 37827 118.56 Shanghai 341389 97327 662.25 Shandong 191634 66842 55.06 Henan 141665 44285 35.45 Guangdong 717666 258881 230.73 Source: China Urban Statistic Yearbooks, China Statistics Yearbook

22. Observe that from the table above, national average for per capita composite water consumption is only 93.6 liters. Notice Jilin’s average is merely 81.90 liters and in particular, Baishan’s per capita water consumption is just 61.31 liters in 2011. The assumptions used in the FSR are based on national standard and master-plans, complying the design standard in PRC.

23. Water demand. Water demand projections are based on projected service area population, and current and future consumption. Assumptions include the following: (i) per capita water consumption assumptions specified above; (ii) annual population increase by 0.8% to 2.1% in different project areas; (iii) constant household size; (iv) 50% of households connected to water supply in first year of operation, 70% in the second year and 100% since the third years for all subcomponents; (v) non-domestic demand based on actual conditions; and (vi) losses at 30% of water production2.

24. The urban road and municipal service component in Baicheng will improve the urban infrastructures and municipal services in the new south and west urban areas of Baicheng. The component is an important part of Baicheng’s masterplan for urbanization process and it includes: i) construction of nine urban roads with a total length of 45.5 km; ii) construction of a 330 m bridge; iii) installation of a 29.8 km water supply piping network; iv) installation of a 23.5

2 See in a recent ADB financed Project in China (http://www2.adb.org/Documents/RRPs/PRC/40634/40634-01-prc- ea.pdf)

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km sanitary sewer piping network, including two pump stations; v) installation of a 34.3 km stormwater piping network with two pump stations; vi) installation of a 32.0 km 10 KV power line; vii) installation of a 32.0 km communication line; viii) installation of a 13.1 km Class I heating pipe network; ix) provision of street lighting, landscaping, and other associated facilities; x) introduction of a people centered urban transport system with emphasis on developing pedestrian/bicycle and public transport.

D. Assumptions

25. The economic evaluation of the project was carried out by comparing with-project and without-project scenarios. All benefits and costs are in constant 2013 prices. The economic costs of the project components include (i) capital cost, including land acquisition and resettlement, and environmental mitigation and monitoring; and (ii) operation and maintenance costs, including replacement cost of depreciated equipment. Tradable commodities were valued at border prices at the prevailing exchange rate. Non-tradable commodities were valued through shadow prices using a standard conversion factor of 0.987, and specific conversion factors: 1.00 for equipment and civil works, 1.00 for skilled labor, and 0.67 for unskilled labor. A shadow price was used to put an economic value on the wages paid to unskilled labor but not on the wages paid to skilled labor.

E. Least-Cost Analysis

26. Least-cost analysis is used for alternative analysis. For example, the engineering choices of sanitation landfill, incineration, and compost were assessed. In comparison with developed countries, the net caloric value of MSW in China is far too low for waste heat utilization and poorly suited to incineration because of the high concentration of foods waste and the moisture content which may not be economically viable. Air pollution control (APC) residues are another significant concern. Although dioxin levels are controlled to comply with the standard, experience from China’s first large-scale MSW incinerator in China located in the Pudong New Area of Shanghai shows that the level of Pb substantially exceeded the permitted level of leachate toxicity for the landfill, and the residues also contained considerable amounts of soluble salts, with a strong potential to pollute the groundwater after landfilling. In view of the high cost, incineration is not considered in this project.

27. Although landfilling is financially least cost option, the ISWM components of the project aim to implement the principles of reduce, reuse, and recycle as well as environmental protection. Therefore, in Baishan ISWM, waste sorting and compost will be implemented for newly constructed communities and a few others with well equipped facilities. The product of compost will be used for horticulture of municipal gardens. Similar choices are applied for Baicheng ISWM.

Table xx. Cost for landfill leachate treatment options (capacity: 150t/d) Two stage DTRO MBRNFRO MVC-AP RO Investment cost CNY11.0 million CNY10.5 million CNY11.0 million O&M cost CNY35~50/t CNY30~40/t CNY25~30/t

28. For the engineering choices of leachate treatment, three options are compared, i.e., two-stage DTRO, MVC-AP and RO, and MBR+NF+RO. The MVC-AP and RO option is more stable, requires smaller space, low labor input, and moderate investment and O&M costs. The MBR+NF+RO has the lowest investment cost, but requires larger space and high labor input. The two stage DTRO is costly. Hence the MVC-AP and RO option is chosen.

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29. For Baishan water supply component, least cost analysis is conducted for watershed transmission pipeline routing, water treatment plant siting, as well as water treatment engineering options etc. The FSR compares two alternative routing plans for the transmission pipelines for Jiangyuan District and Hunjiang District respectively. The results are summarized in the following tables. Table xx. Least cost choice for transmission pipelines for Jiangyuan District

Option 1 Option 2

Transmission pipelines DN800 L=7500m PN0.6MPa DN800 L=6868m PN0.6MPa

Diameter, Length, Pressure

Total investment 58.875 million RMB 20.139 million RMB

Table xx. Least cost choice for transmission pipelines for Hunjiang District

Option 1 Option 2

Transmission pipelines DN900 L=19000m PN0.6MPa DN900 L=16750m PN0.6MPa

Diameter, Length, DN900 L=1500m PN1.0MPa DN900 L=900m PN1.0MPa

Pressure DN900 L=3831m PN1.6MPa DN900 L=2975m PN1.6MPa

Total investment 97.8298 million RMB 212.8875 million RMB

In Option 1 in Jiangyuan District and Option 2 in Hunjiang District, all transmission pipelines are installed beneath the riverbed hence installation costs are substantially higher. In addition, total lengths in the aforementioned two options are larger, making these two options financially and economically undesirable. The maintenance costs are also higher for the riverbed case. Thus, options 2 in Jiangyuan District and 1 in Hunjiang District are chosen according to the least cost principle. For the locational choice of the treatment plant, the FSR considers four options including the reservoir area, Shangdianzi village, Nanshan WTP, and Hunjiang District Tongjiang bridge area. The comparison boils down to reservoir area against Shangdianzi village. The two options are equivalent in terms of energy consumption, but the latter requires less pipeline investment and no land acquisition and resettlement. The estimated costs are RMB 153.02 million for reservoir area versus RMB 125.87 million for Shangdianzi village, thus the latter is chosen as the least cost option. F. Economic Cost

30. Financial costs, including physical contingencies, were converted to economic costs through different approaches. For the road component, the project costs included (i) the economic costs of construction, including monetary compensation for land acquisition and resettlement triggered by the road construction; and (ii) the economic costs of road operation and maintenance.

G. Economic Benefit

31. The economic returns are mainly in the form of savings in road-user costs due to the provision of a better road facility. The benefits depend on the future transport demand in the area. The FSR applies standard transport model through simulations of the traffic load using

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existing data for calibration. By modifying the number of trips generated and attracted by each area, it is possible to simulate changes in average daily intensities for each route, both with and without the Project. Three types of benefits are taken into account: those due to changes in the vehicles' operation costs, changes in accidents' costs, and user travel time savings.

32. The operation costs include: (i) maintenance, repairs and spare parts; (ii) tyres' wear and tear; and (iii) fuel costs. Fuel consumption is calculated as a function of petroleum prices, distances travelled and travelling speed. Average consumption per km at each speed is estimated using national data. Accidents' costs with and without the Project are computed as a function of total travelled distance. Note that theoretically this benefit can be negative in net since although improve road infrastructure reduces the number of accidents which would take place, would increase average driving speeds, thus increases the probability of death in each accident. When converting travel time savings by absolute time values into monetary units, a value for travel time savings needs to be chosen.

33. For quantification of economic benefits of the water supply project, normally the health benefits constitute the large part. On top of the direct health benefits, the productivity and production capacity of private sectors, such as agriculture and industries, also depend on secure sanitary water availability. However these benefits, along with minor ones such as benefits accrued to amenity values, local tourism, and fishery industries are difficult to quantify not only because of their insignificant scale, possible double counting, but also due to the lack of data. Thus estimating total economic gains per expenditure approach yields too large variation. In the current analysis, the valuation of the benefits of is measured by appropriate estimation of society's willingness to pay for the benefits. Formally, the economic benefits of the project are measured by residents’ willingness-to-pay (WTP) estimated by the consultant based on social and economic survey.3

H. Economic Cost-Benefit Analysis

34. The base case EIRR calculation for Baicheng urban road infrastructure and service component is presented in the following table. At a 12% discount rate, the project is found to be economically viable. The NPV for the whole project is CNY 553.9 million and the base case EIRR for the whole project is 16.0%, which exceeds the EOCC. The EIRRs for the Baishan Improved Coverage of Urban Roads and Municipal Service, Baishan Improved Water Supply Management, and Baishan efficient ISWM are 16.0%, 16.0%, and 15.1%. The sensitivity analysis shows that the project’s economic return is robust against negative impacts from benefit reduction, cost overrun and project implementation delay. The results of the sensitivity analysis, EIRR for each subproject, as well as the whole project, are presented below.

Table xx. Sensitivity Analysis Cases EIRR NPV(CNY million) Base Case 16.0% 553.9 (i) Benefits reduce 10% 14.7% 363.6 (ii) Investment cost increase 10% 14.9% 433.9 (iii) delay one year 14.7% 409.9 (iv) Combination of (i), (ii), and (iii) 12.5% 70.2

3Willingness-to-pay estimation is explained in detail as an appendix.

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Table 6.x Economic Internal Rate of Return for Baicheng subproject (CNY million) BENEFITS for Road Benefit for COSTS VOC Savings Passenger Savings in Solid Waste Total Net Total O&M Normal Generated Time Savings Maintenance Management Benefit Capital Costs Cost Benefits 2014 0.00 0.00 0.00 0.00 0 201.62 0.00 201.62 - 201.62 2015 0.00 0.00 0.00 0.00 0 403.23 0.00 403.23 - 403.23 2016 0.00 0.00 0.00 0.00 0.00 604.85 0.00 604.85 - 604.85 2017 0.00 0.00 0.00 0.00 0.00 107.53 0.00 107.53 - 107.53 2018 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2019 129.24 31.92 27.10 0.00 2.60 190.86 3.21 3.21 187.65 2020 142.35 35.11 30.43 0.00 2.60 210.49 3.30 3.30 207.19 2021 156.84 38.63 34.16 0.00 2.60 232.23 3.40 3.40 228.83 2022 172.84 42.51 38.36 0.00 2.60 256.31 3.50 3.50 252.81 2023 181.01 51.82 42.15 0.00 2.60 277.58 18.04 18.04 259.54 2024 189.62 62.31 46.35 0.00 2.60 300.89 3.61 3.61 297.28 2025 198.70 74.14 51.00 0.00 2.60 326.45 3.72 3.72 322.74 2026 208.29 87.46 56.16 0.00 2.60 354.51 3.83 3.83 350.68 2027 218.41 102.43 61.89 0.00 2.60 385.33 3.94 3.94 381.38 2028 229.10 119.26 68.24 0.00 2.60 419.20 40.61 40.61 378.59 2029 240.41 138.17 75.29 0.00 2.60 456.47 4.06 4.06 452.41 2030 252.37 159.39 83.13 0.00 2.60 497.50 4.18 4.18 493.31 2031 265.04 183.22 91.85 0.00 2.60 542.70 4.31 4.31 538.39 2032 278.46 209.94 101.54 0.00 2.60 592.55 4.44 4.44 588.11 2033 292.69 239.93 112.33 0.00 2.60 647.56 22.85 22.85 624.70 2034 307.80 273.56 124.35 0.00 2.60 708.31 4.57 4.57 703.74 2035 323.85 311.27 137.74 0.00 2.60 775.46 4.71 4.71 770.75 2036 340.91 353.58 152.67 0.00 2.60 849.75 4.85 4.85 844.90 2037 359.06 401.02 169.32 0.00 2.60 932.00 4.99 4.99 927.00 2038 370.91 454.25 187.90 0.00 2.60 1015.66 5.14 5.14 1010.52 PV 852.61 428.50 511.89 IRR 16.0%

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Table 6.x Economic Internal Rate of Return for Baishan water supply subproject (CNY million)

Benefit Cost Net Year Water Investment O&M Total Total Benefits Supply Cost Cost 2014 0.00 0.0 7.0 0.0 7.0 -07. 2015 0.00 0.0 52.6 0.0 52.6 -652. 2016 0.00 0.0 91.1 0.0 91.1 -191. 2017 0.00 0.0 143.7 0.0 143.7 -7143. 2018 0.00 0.0 28.0 0.0 28.0 -028. 2019 66.58 66.6 0.0 10.6 10.6 56.0 2020 83.22 83.2 0.0 11.2 11.2 72.0 2021 83.22 83.2 0.0 11.2 11.2 72.0 2022 83.22 83.2 0.0 11.2 11.2 72.0 2023 83.22 83.2 0.0 11.2 11.2 72.0 2024 83.22 83.2 0.0 11.2 11.2 72.0 2025 83.22 83.2 0.0 11.2 11.2 72.0 2026 83.22 83.2 0.0 11.2 11.2 72.0 2027 83.22 83.2 0.0 11.2 11.2 72.0 2028 83.22 83.2 0.0 11.2 11.2 72.0 2029 83.22 83.2 0.0 11.2 11.2 72.0 2030 83.22 83.2 0.0 11.2 11.2 72.0 2031 83.22 83.2 0.0 11.2 11.2 72.0 2032 83.22 83.2 0.0 11.2 11.2 72.0 2033 83.22 83.2 0.0 11.2 11.2 72.0 2034 83.22 83.2 0.0 11.2 11.2 72.0 2035 83.22 83.2 0.0 11.2 11.2 72.0 2036 83.22 83.2 0.0 11.2 11.2 72.0 2037 83.22 83.2 0.0 11.2 11.2 72.0 2038 83.22 83.2 0.0 11.2 11.2 72.0 NPV 344.3 344.3 220.2 47.1 267.4 76.9 EIRR 16.0%

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Table 6.x Economic Internal Rate of Return for Baishan ISWM subproject (CNY million)

Benefit Cost

Year Solid Waste Capital Net Benefits Fertilizer Total O&M Total Management Cost

2014 0.00 0.0 0.0 3.6 0.0 3.6 -63. 2015 0.00 0.0 0.0 27.2 0.0 27.2 -227. 2016 0.00 0.0 0.0 54.5 0.0 54.5 -554. 2017 0.00 0.0 0.0 81.7 0.0 81.7 -781. 2018 0.00 0.0 0.0 14.5 0.0 14.5 -514. 2019 30.67 27.4 58.0 0.0 21.4 21.4 36.7 2020 30.67 27.4 58.0 0.0 21.4 21.4 36.7 2021 30.67 27.4 58.0 0.0 21.4 21.4 36.7 2022 30.67 27.4 58.0 0.0 21.4 21.4 36.7 2023 30.67 27.4 58.0 0.0 21.4 21.4 36.7 2024 30.67 27.4 58.0 0.0 21.4 21.4 36.7 2025 30.67 27.4 58.0 0.0 21.4 21.4 36.7 2026 30.67 27.4 58.0 0.0 21.4 21.4 36.7 2027 30.67 27.4 58.0 0.0 21.4 21.4 36.7 2028 30.67 27.4 58.0 0.0 21.4 21.4 36.7 2029 30.67 27.4 58.0 0.0 21.4 21.4 36.7 2030 30.67 27.4 58.0 0.0 21.4 21.4 36.7 2031 30.67 27.4 58.0 0.0 21.4 21.4 36.7 2032 30.67 27.4 58.0 0.0 21.4 21.4 36.7 2033 30.67 27.4 58.0 0.0 21.4 21.4 36.7 2034 30.67 27.4 58.0 0.0 21.4 21.4 36.7 2035 30.67 27.4 58.0 0.0 21.4 21.4 36.7 2036 30.67 27.4 58.0 0.0 21.4 21.4 36.7 2037 30.67 27.4 58.0 0.0 21.4 21.4 36.7 2038 30.67 27.4 58.0 0.0 21.4 21.4 36.7 NPV 130.0 116.0 246.0 123.9 90.5 31.6 EIRR 15. 1%

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Table 6.x Economic Internal Rate of Return for the whole project (CNY million)

Benefits Costs Baishan Year Baicheng Baishan Capital Net Benefits Water Total O&M Total subproject ISWM Costs Supply 2014 0 0.0 0.0 0.0 212.3 0.0 212.26 (212.26) 2015 0 0.0 0.0 0.0 483.0 0.0 483.04 (483.04) 2016 0 0.0 0.0 0.0 750.5 0.0 750.45 (750.45) 2017 0 0.0 0.0 0.0 332.9 0.0 332.93 (332.93) 2018 0 0.0 0.0 0.0 42.6 0.0 42.56 (42.56) 2019 190.86 66.6 58.0 315.5 0.0 35.1 35.12 280.36 2020 210.49 83.2 58.0 351.8 0.0 35.8 35.85 315.91 2021 232.23 83.2 58.0 373.5 0.0 35.9 35.95 337.55 2022 256.31 83.2 58.0 397.6 0.0 36.1 36.05 361.53 2023 277.58 83.2 58.0 418.8 0.0 50.6 50.59 368.26 2024 300.89 83.2 58.0 442.2 0.0 36.2 36.16 406.00 2025 326.45 83.2 58.0 467.7 0.0 36.3 36.26 431.45 2026 354.51 83.2 58.0 495.8 0.0 36.4 36.38 459.40 2027 385.33 83.2 58.0 526.6 0.0 36.5 36.49 490.10 2028 419.20 83.2 58.0 560.5 0.0 73.2 73.16 487.31 2029 456.47 83.2 58.0 597.7 0.0 36.6 36.61 561.13 2030 497.50 83.2 58.0 638.8 0.0 36.7 36.73 602.03 2031 542.70 83.2 58.0 684.0 0.0 36.9 36.86 647.11 2032 592.55 83.2 58.0 733.8 0.0 37.0 36.99 696.83 2033 647.56 83.2 58.0 788.8 0.0 55.4 55.40 733.42 2034 708.31 83.2 58.0 849.6 0.0 37.1 37.12 812.46 2035 775.46 83.2 58.0 916.7 0.0 37.3 37.26 879.47 2036 849.75 83.2 58.0 991.0 0.0 37.4 37.40 953.62 2037 932.00 83.2 58.0 1073.3 0.0 37.5 37.54 1035.72 2038 1015.66 83.2 58.0 1156.9 0.0 37.7 37.69 1119.23 NPV at 12% 1,377.5 166.8 1,349.4 553.9 EIRR 16.0%

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Appendix. Willingness to Pay Estimation

35. In the current project, the economic benefits of the water supply and solid waste management components of the proposed project are measured by residents’ elicited willingness-to-pay (WTP). The WTP estimation is done based on the project social and economic survey results. A total of 199 effective observations are obtained in the sample. The survey elicited the respondents’ WTP by asking a series of value ranges with right censoring.4 Thus a standard Tobit is used to estimate the true WTP. The followings describe the estimation procedures.

36. For censored data, limited dependent variable models such as Probit or Tobit are used instead of ordinary least square regression models. In the standard Probit analysis, which * assumes that the underlying response variable yi defined by the regression relationship * yi=β′ xu ii + * and variable yi is not observable. Only a dummy variable y is observable which is defined by 1, ify* > 0 y =  i 0, otherwise 37. Therefore

Pr(yi= 1) = Pr( ux ii >−β′ )

=−−1 Fx()β′ i where F is the cumulative distribution function of u. If this distribution function is logistic, then it is the logit model. Not all distribution functions yield closed-form solutions for F. For instance, in the Probit model where u follows a normal distribution N ()0,σ 2 , MLE can only estimate βσ/ not β and σ separately. However, as we argue, the logit model only offers odds ratio, which essentially is a probability of whether a given subject is willing to pay above a certain threshold. It does not estimate the mean of the WTP.

38. Hence we use a tobit model to estimate the WTP. The tobit model is defined as follows.

β′xuii+> if RHS 0 yi =  . 0 otherwise 39. It is a censored normal regression model. As such, its estimation is related to the estimation of censored and truncated normal distributions. The log-likelihood function can be written as  112 logLF= log(1 −+ ) log −yx −β′ ∑∑i 1/2 ∑2 ()ii 2 2σ 01()2∏σ 1 where the first sum is over the N0 observations for which yi = 0 and the second product is over

the N1 observations for which yi > 0 . Using maximum likelihood estimation, one obtains the estimates on β .

40. Using Stata, the β is estimated by the tobit model. A number of variable combinations were attempted and the most appropriate models are chosen. In particular, for the WTP on water supply, the constant, household assets, and household income are statistically significant.

4 The survey questions including WTP related questions in the questionnaires were designed by the consultant team and revised according to ADB comments.

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In the WTP for solid waste treatment, the household average education level is also statistically significant. The regression results are shown below in table 6.x.

Table 6.x Tobit Regression Result for water supply Tobit regression Number of obs = 199 LR chi2(2) = 13.23 Prob > chi2 = 0.0013 Log likelihood = -222.69133 Pseudo R2 = 0.0288

Table 6.x Tobit Regression Result for ISWM Tobit regression Number of obs = 199 LR chi2(3) = 69.36 Prob > chi2 = 0.0000 Log likelihood = -731.12001 Pseudo R2 = 0.0453

41. Given average per capita income, household asset levels, and education levels in Baishan and Baicheng cities, the estimated results yield an average WTP for water supply of CNY4.13 per ton in Baishan and CNY 27.51 per household per month for solid waste fees.

S App 7 - 15

Supplementary Appendix 8 Financial Management Assessment

Project Number: 46048 / TA 8172 - PRC

Jilin Urban Development Project

Jilin Urban Improvement Project Supplementary Appendix 8 (TA 8172-PRC) Final Report

FINANCIAL MANAGEMENT ASSESSMENT

A. Summary

1. Effective financial management is crucial for a project’s success in implementation. The purpose is to ensure that the IA has adequate financial management capability to implement the Project. The EA/IA’ financial management arrangements should be capable in recording all transactions and balances, timely provision of regular and reliable financial statements, safeguarding the entity’s assets, and compliance with ADB requirements.

2. The assessment follows ADB’s Guidelines for Financial Management and Analysis of Projects (2005). The FMA has been conducted to assess the financial management capacity of the IAs, funds flow arrangements, staffing, accounting policies and procedures, internal and external auditing arrangements, reporting and monitoring aspects, and financial information systems. Issues or risks associated with the IAs’ financial management systems were identified, and appropriate risk mitigation measures were suggested to facilitate more effective project design and implementation.

3. A full set of financial assessment questionnaires were completed, attached in the Appendix. The overall FM risk-rating of the Project is medium. The identified risks in financial management will be closely monitored during project implementation.

B. Project

4. The Project will include three outputs/components: (i) improved water resources protection; (ii) inclusive urban and rural water supply system; and (iii) strengthened institutional and staff capacity. The project’s estimated costs and implementing arrangement are shown in Table 1 below. Estimated No. P roject components costs($ Mi Implementing Agencies llion)

1 398.82 Improved Urban Road and Municipal 2 Baicheng Municipal Government Services in Baicheng 238.40

3 Baishan Urban Water Supply Baishan Municipal Government 61.70

4 Baishan Urban Solid Waste Management Baishan Municipal Government 29.43

C. Executing Agency

5. Jilin Provincial Government (JPG) will be the executing agency (EA), responsible for overall planning and management of the Project. The responsibilities of the JPG relating to financial management, at least, include the following:

(1) Providing counterpart funding; (2) Monitoring implementation progress; (3) Payment of the procurement contract; (4) Reviewing the progress reports and semi-annual reports submitted to ADB; (5) Conducting all correspondence with the ADB; and (6) Borrowing and repaying the principal and interest of the ADB loan.

6. The IAs do not have experience with foreign funded projects. But they attach proper importance to this project. The IAs have already set up the leading groups, specifically

S App 8 - 1 Jilin Urban Improvement Project Supplementary Appendix 8 (TA 8172-PRC) Final Report

responsible for the implementation of the project. The JPG has ADB project management experience and it will provide guidance and assistance to IAs when needed. JPG has designated staff responsible for the guidance and tracking the project has been assigned.

7. Therefore, it is suggested to adjust the project management staff by strengthening the study and training. Special attention shall be directed to the reporting system, cost control and audit process, loan proceeds disbursement and loan repayment, fund monitoring and management and contract implementation etc.

D. Implementing Agencies

1. There will be two Implementing Agencies for the Project including (1) Baishan Municipal Government (BSMG); (2) Baicheng Municipal Government (BCMG). Both have established PLGs. The PLG of the Baishan Government is headed by the executive vice mayor. The members include two vice mayors and the heads of the municipal Water Affairs Bureau (WAB), Housing and Urban Construction Bureau (HUCB), Development Reform Commission (DRC), and Finance Bureau (FB). A PIU has been established under the Baishan DRC, headed by the director of the bureau. The PIU will be responsible for preparing and implementing the water supply subproject and ISWM system subproject. The PIU includes the general manager of Baishan Xibeicha Qiyuan Hydropower Co. Ltd, who will coordinate the implementation of water supply component and the general manager of Baishan Solid Waste Disposal Co. Ltd, who will be coordinating for the implementation of the ISWM component. The solid waste disposal facilities will be transferred to Baishan Environmental Sanitation Management Department for O&M. At present, it is not undecided if the project water supply facilities will be transferred to Baishan Water Group Co. for operation and maintenance (O&M) when the construction is completed.

2. The Baicheng PLG is headed by the executive vice mayor. The members include two vice mayors and the heads of the municipal DRC, HUCB, FB, Supervisory Bureau, Land Resources Bureau, Environment Protection Bureau (EPB), Forestry Bureau, Auditing Bureau, Planning Bureau, and Financing Office, Baicheng Industrial Park, Management Committee of Baicheng Economic Development Zone (BEDC), and Command Office for New District Construction. A PIU has been established under the Management Committee of BEDC. The director of the Management Committee acts as the director the PIU. The PIU will be responsible for preparing and implementing the Baicheng infrastructure subproject. After construction, the municipal environmental sanitation departments of various districts will be responsible for future O&M of the facilities.

8. The responsibilities of the PLGs relating to financial management, at least, include the following:

(1) Certification of contractor payments; (2) Preparation of reimbursement applications; (3) Maintenance of consolidated financial and physical progress reports; (4) Monitoring of counterpart fund utilization; (5) Consolidation of financial statements of all project components; (6) Preparation of progress reports and semi-annual reports.

9. The proposed project involves four components and the PLGs will coordinate and guide the implementation the components. These PIUs/PLGs assume financial management and project management in the process of construction, operation and maintenance. Therefore, a thorough understanding of the ADB and national management requirements, as well as an integrated and unified form of project management in accounting, financial management, procurement and disbursement are all highly encouraged. Early development of the project management system

S App 8 - 2 Jilin Urban Improvement Project Supplementary Appendix 8 (TA 8172-PRC) Final Report

in key areas will considerably improve the project’s effectiveness and efficiency. The working rules and procedures should be gradually established and specified in a forthcoming project management manual. Therefore, it calls for attention to quickly strengthen the capacity of the PLGs. More professional staff members will have to be recruited in the PMO. With the support of the consultants, the PLGs should realistically assess and identify the project’s management and coordination requirements, in order to prepare a preliminary project management manual that will guide the future institutional setup and management of the project.

10. Individual financial management assessments are presented below.

Baicheng Economic Development Zone Investment Company Co. (BEDZIC)

11. The BEDZIC will implement the Baicheng project components. The BEDZIC is a state-owned enterprise established in August, 2009. Its registered capital is CNY 5.01 million. Its business scope includes state-owned asset operation, agribusiness, stock investment, venture investment, rental, guarantee etc. There are 2 staff members working in the Financial Department: 1 accountant and 1 cashier. All financial personnel have accounting qualification.

12. It has been found during the preliminary assessment that BEDZIC’s current accounting records and statements are adequate and effective. It complies with enterprise accounting standard and regulations. The General Ledger and subsidiary ledgers are reconciled and balanced. Document management is based on the PRC Accounting Law and Archives Law. It is able to provide related financial information and statements in a timely manner. Monthly and yearly financial statements are prepared for BEDZIC. Annual statements are available within 15 days of year-end. But the company does not have internal audit department. The external audit department does not audit it each year.

13. However, the company does not have experience with foreign funded projects. Its staff expressed a desire to receive training regarding ADB procedures and policies. The company agreed to set up a special account for the project and accounting according to "accounting system of state-owned construction units" and provide relevant financial monitoring statements and/or reports to meet the ADB requirements.

14. It is suggested to strengthen the followings: establishing internal controls and audit systems; applying a computerized financial management system; adding more staff members; developing reporting and monitoring information systems.

Baishan Xibeicha Qiyuan Hydropower Co. Ltd. (BXQHC)

15. BXQHC will implement the Improved Water Supply Management in Baishan. It is a state-owned enterprise directly under the supervision of Baishan Water Affairs Bureau. It will coordinate the preparation and implementation of the IWSM subproject. According to the current arrangement, once the project construction is completed, the water supply facilities will be transferred to Baishan Water Group Co.

16. The preliminary assessment of BXQHC reveals that its current accounting records, statements, and procedures are adequate and effective. Document management is based on the PRC Accounting Law and Archives Law. It is able to provide related financial information and statements in a timely manner.

17. Likewise, the company does not have experience with foreign funded projects. But the company does not show an interest in receiving training on foreign exchange risk hedging, as indicated in the completed questionnaire. It is then recommended to strengthen the BXQHC’s financial department by recruiting dedicated staff for the project, and receiving relevant training on ADB procedures and policies, together with other IAs and PIUs.

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Baishan Solid Waste Disposal Co. Ltd. (BSWDC)

18. The BSWDC was established in 2002 with a registered capital of 8 million RMB. It is under the direct supervision of Baishan Housing and Urban Construction Bureau. The preliminary assessment shows that its accounting department can provide related financial information and statement in a timely manner. Its financial procedures and statement comply the enterprise accounting standard and regulations. Document management is based on the PRC Accounting Law and Archives Law. However the company does not have a computerized accounting system, and there is no external auditing.

19. It is suggested to strengthen the followings: receive external audit and gradually establish its own internal audit system; establish a computerized financial management system; adding more staff members to the financial department; receiving relevant trainings on ADB procedures and policies.

E. Fund Flow Mechanism

20. The proposed lending and on-lending process of the Project is illustrated in below Figure. Once the Loan Agreement is signed between ADB (the Lender) and the Ministry of Finance (MOF) of the PRC (the Borrower), the MOF will make the proceeds of the ADB loan available to Jilin Provincial Government (JPG) through a subsidiary loan agreement. An imprest account will be established under the JPFD on behalf of JPG after the loan becomes effective. The JPFD will be responsible for the use, management, replenishment and liquidation of the imprest account and the imprest account will be exclusively used to finance the ADB share of the eligible expenditures. The JPFD will further sign an onlending agreement with the BSMG and BCMG. The IAs will make the project implementation arrangements with the PIUs for the project fund disbursements.

21. The IAs will, as the end borrower, repay the debt and assume the foreign exchange and interest rate variation risks for the ADB loan. The IAs, on behalf of the JPG, will be responsible for disbursement control and approval of all subprojects. It needs to perform effective management of the loan proceeds utilization to maximize the benefits of the loan.

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Asian Development Bank

reimbursement/re plenishment of Loan imprest account

Direct payments to Ministry of Finance(on behalf of PRC Central supplies/consultant G) Relending

JilinP rovincial Finance Bureauon behalf of Jilin Provincial Government Imprest Account P ayments from imprest account On lending

Baishan and Baicheng Municipal Finance Bureaus (on behalf of BSMG and BCMG respectively)

On lending

Counterpart funding PIU (1) IA4 IA6 and payments BEDZIC BXQHC BSWDC

Contractors, Consultants, and Supplies

Lending, relending, onlending EA=executing agency IA=implementing agency PIU=project implementing unit; ADB repayment Counterpart funding and payments Payment claims and withdrawal applications S App 8 - 1 Jilin Urban Improvement Project Supplementary Appendix 8 (TA 8172-PRC) Final Report

F. Summary of findings

22. The following risk assessments are based on existing circumstances, staffing and procedures and include recommendations for risk mitigation measures. The assessments also include if the accounting systems and internal control are adequate to ensure that project funds are used economically and efficiently and for the purpose intended, and that the use of the funds will be properly reported. The results of the risk assessments are listed in Table 1 and Table 2.

Table 1: Summary Risk Analysis of Executing Agency

Particulars Risk Assessment Remarks

Although JPG has implemented a number of ADB projects. It is understaffed and not deeply involved in 1.Executing Agency Medium project management.

2. Funds Flow Low JPG has experience on onlending.

3. Staffing Medium The personnel only macro-manages the project and not very into the details

4. Accounting Policies Low Accounting policies and procedures is based on generally accepted accounting standards. and Procedures

5. Internal Audit Low An internal audit section is in place in JPG. During the project implementation, the Jilin Financial Bureau will be audited by Jilin Provincial Audit 6. External Audit Low Department 7. Reporting and Low The EA does not need to submit reports and the monitoring is covered by the audit. Monitoring

8. Information Systems Low JPG uses an automated accounting system.

S App 8 - 1 Jilin Urban Improvement Project Supplementary Appendix 8 (TA 8172-PRC) Final Report

Table 2: Summary Risk Analysis of Implementing Agencies

Particulars Risk Assessment Remarks

IAs will be responsible for the implementation, operation and maintain management of the Project. They 1. Implementing Agencies Medium have no experience in managing and implementing construction projects.

Although IAs are not in charge of fund payment, their lack of ADB loan experience will make the 2. Funds Flow Medium supervision of PIU less effective.

Some IAs have no sufficient staffs and experienced staff. However, the finance staff will receive training 3. Staffing Medium in ADB financial management and disbursement procedures.

4. Accounting Policies and The IAs will adopt an accounting policy that is based on Generally Accepted Accounting Standards Low Procedures (GAAS).

5. Internal Audit Medium The project accounts will be audited by an independent external auditor on an annual basis. The audit 6. External Audit Low will be done in accordance with the Chinese accounting and auditing system and will comply with the requirements of ADB. The IAs have no experience of construction project financial reporting, but would like to strengthen the 7. Reporting and Monitoring Low study and training in order to meet the requirements.

8.Information Systems Medium The IAs will adopt accounting system software for financial reporting for the Project.

23. Therefore, the overall FM risk-rating of the project at appraisal stage is medium. The main problem is the lack of management ADB project experience and sufficient accountants; lack of accountants for review procedure; and insufficient auditing. The identified risks in financial management will be closely monitored during project implementation. There are no other significant weaknesses are identified on top of the aforementioned risks.

G. Conclusion and Recommendations

24. This section summarizes the actions identified throughout the assessment for managing the risks to the proposed Project.

25. The followings are the proposed actions to be undertaken during the implementation of the proposed Project:

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(i) Add PMO and IAs’ financial staff; (ii) Complete and develop financial policies and procedures manual in order to guide staff activities and ensure staff accountability; (iii) Develop regular training plan for accounting staff and training policies. Regular training on ADB disbursement policies to be provided; (iv) Purchase financial software and receive training for operating the system. (v) Regular backup of all accounting systems and appropriate security measures over the backup data;

26. The PMO and IAs agree the aforementioned recommendations and will undertake them during the implementation.

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Responses to the Financial Management Assessment Questionnaire – Baicheng Economic Development Zone Investment Company

Topic Response Name of agency Baicheng Economic Development Zone Investment Company Co. (BEDZIC) Project component that agency is responsible for Improved coverage of urban roads and municipal services in Baicheng Name of person responsible for filling this form Sun, Hongguang Position and title of person responsible for filling this form Baicheng Economic Development Zone Financial Bureau, deputy director Nature of agency’s responsibility for the Project (check all that apply) √ Provide counterpart funding √ Sign a follow on loan contract for ADB funds √ Management of project construction √ Management of contributions from NGOs or project beneficiaries √ Project operation and maintenance √ Financial management of project  Generate funds from tariffs, taxes or other sources to service the ADB loan Other – describe

1 Implementing Agency

1.0 What is your agency’s legal status and registration? State majority share controlled 1.1 What is your agency’s governing body? Baicheng Economic Development Zone Administrative Committee 1.2 What is the governing body’s relationship to the Government? government functional departments 1.3 Can the governing body make decisions independently of Government? If √SYE NO, please explain what decisions need government approval. NO explain: 1.4 Has your agency implemented an externally-financed project in the past? If SYE  briefly describe yes, please provide details? √NO 1.5 What are the statutory reporting requirements for your agency with respect According to accounting law, prepare annual financial reports to finance? 1.6 Describe your agency’s organizational structure? (please attach an √ Organization chart attached

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Topic Response organization chart) 董事长

总理

项目部财部综合部

Organization chart not attached 1.7 Is the organizational structure appropriate for the needs of the Project? Yes, but since no experience on foreign funded projects, capacity strengthening is required. 1.8 Has or will your agency established a project management office? √SYE , already have project office, established on April 2012 SYE , will set up project office NO

1.8.1 organization chart

主任

副主任

移民社合同管工程组会计组行政组会与环理组境组

1.8.2 Please describe the setup of the PMO, names and positions of staff Engineering team: Sun Changming, Hou Yuliang, Liu Yuchen, Contract management team: Dai Ping, Zhuang Hong, Lv Tiezheng, Accounting team: Sun Hongguang, Gu Jianqiang, Sun Yaying Administrative team: Guan Tingzhi, Li Na, Hu Nan, Yang He

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Topic Response Resettlement, Social and Environment Team: Xu Zhongmin, Wang Wei, Song Lei 1.8.3 responsibility and background of the leaders Engi neering team: Sun Changming, Contract management team: Dai Ping, Accounting team: Sun Hongguang, Certified Accountant Administrative team: Guan Tingzhi, Resettlement, Social and Environment Team: Xu Zhongmin, 1.8.4 please describe the responsibilities of each department: Engineering team: review and manage the FSRs; supervise the implementation of the project with the assistance of consulting team; coordinate the implementation contractors to ensure proper progress and quality; document preparation; progressive report review and submission to provincial PMO; Contract management team: coordinate procurement and contract negotiation; review detailed design, budget, bidding and engineering standards with the assistance of consulting team; design and implement annual procurement plans; prepare and manage contracts; review project progress; submit procurement and project implementation report to provincial PMO; Accounting team: prepare payment tracking and forecast; preview the payment request to the contractors prior to submission to provincial PMO; financial management including cost estimate, financial report preparation, budget management, audit; prepare ADB loan repayment plan; internal financial controal, including software development and application. Administrative team: daily administrative duties; coordinate with ADB, PPMO, consulting team, bidding agent, contractors, construction supervisor etc.; project documentation, reporting, translation, and meetings; Resettlement, social and environmental team: prepare and implement social evaluation; prepare resettlement action plan; implement environmental management plan, implement environment monitoring; edit, review and submit other documents with the assistance of consulting team. 1.9 If the ADB loan is approved, what staffing changes will you make to assist R ecruit staff with foreign funded project experience and higher levels to with project implementation? assist the implementation of the project 1.10 Does the Project have written job descriptions that define duties, √SYE – have already prepared these (attach job descriptions for the top responsibilities, lines of supervision, and limits of authority for staff? two positions) Written job descriptions are being or will be prepared NO

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Topic Response 1.11 Do you have regular training acitivities? If so, please describe the area, Y es, regular annual training for accountants format and frequency of the training. 1.12 Do you have specific training targeted at the current project? If so, please Yes, we will diligently participate every training event organized by ADB describe detailed plans. 1.13 Do you have development plans for human resources, please describe. no

2 Funds Flow Arrangements

2.0 Describe proposed project funds flow arrangements. Include a chart and ADB Loan: ADB →Ministry of Finance → Jilin Provincial Finance Bureau explanation of the flow of funds from ADB, government and other → Baicheng Municipal Finance Bureau →Baicheng Economic Development financiers to each lower level that will receive funds. Zone Finance Bureau→contractors 2.1 Are the (proposed) arrangements to transfer the proceeds of the loan from √SYE the government to the implementing agency satisfactory? NO briefly explain why not  Not applicable 2.2 Describe any past problems experienced in receiving investment funds from No problem funding sources? 2.3 Describe proposed on-lending arrangements from the Government to your Baicheng government assumes the repayment responsibility agency, including on-lending terms and conditions. 2.4 Will your agency use an imprest account to manage ADB funds? If YES, in √SYE  name of bank Bank of China, Baicheng Branch which bank will the Imprest Account be opened? NO 2.5 Does your agency have experience in the management of disbursements no experience from ADB? 2.6 Does your agency have experience managing foreign exchange risks? SYE √NO 2.7 Will your agency need to develop capacity to manage foreign exchange √ YES.  Explain capacity building arrangements: Propose training on risks? If yes, what arrangements have been made to develop this how to reduce risk of exchange rate and interest rate, by higher level of capacity? finance bureaus, foreign exchange bureaus or ADB consultants.  NO 2.8 Is your agency is responsible for providing counterpart funds? If YES answer YES answer questions 2.8.1 to 2.8.3 the next 3 questions. √NO 2.8.1 What is the source of the counterpart funds: revenues generated by your business activity, government tax funds, other?

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Topic Response 2.8.2 How will you access the counterpart funds? Are they drawn from revenues coming directly to you or do you obtain them as government transfers? 2.8.3 How are payments made from the counterpart funds? 2.9 Will user charges that you receive as revenue is used to generate SYE counterpart funds? √NO 2.10 Will user charges that you receive as revenue is used to help finance the SYE ADB loan? √NO 2.11 Is part of the Project implemented by communities, project beneficiaries or SYE  describe arrangements NGOs under your direction? If YES, describe reporting and monitoring √NO arrangements that you have in place to track the use of project funds used by these groups? 2.12 Are project beneficiaries under your direction required to contribute in the SYE  describe guidelines form of labor to project costs? If YES, briefly describe guidelines and √NO arrangements formulated to record and value the labor contribution?

3 Staffing

3.0 What is your agency’s organizational structure for accounting and finance? Please attach an organization chart. 财组

预算人会计人出纳人审核人员员员员

3.1 Identify key finance and accounting staffs including job title, responsibilities, educational background and professional certification. 3.1.1 Job title Director of Financial Department 3.1.1.1 Staff Sun Hongguang 3.1.1.2 Main responsibilities Review and approval of accounting issues 3.1.1.3 Training and Certification C ertified accountant

S App 8 - 8 Jilin Urban Improvement Project Supplementary Appendix 8 (TA 8172-PRC) Final Report

Topic Response 3.1.2 Job title accountant 3.1.2.1 Staff Gu Jianqiang 3.1.2.2 Main responsibilities Accounting bookkeeping, financial report preparation 3.1.2.3 Training and Certification Accountant 3.1.3 Job title cashier 3.1.3.1 Staff Sun Yaying 3.1.3.2 Main responsibilities Cash keeping, daily bank deposit bookkeeping 3.1.3.3 Training and Certification accountant 3.1.4 Job title 3.1.4.1 Staff 3.1.4.2 Main responsibilities 3.1.4.3 Training and Certification 3.1.5 Job title 3.1.5.1 Staff 3.1.5.2 Main responsibilities 3.1.5.3 Training and Certification 3.2 Attach job descriptions and CVs of key accounting staff. √ job descriptions, CVs attached job descriptions, CVs not attached 3.3 Is the project finance and accounting function staffed adequately? √SYE NO 3.4 Is the finance and accounts staff adequately qualified and experienced? √SYE NO 3.5 Are the project accounts and finance staff trained in ADB procedures? If NO, SYE what arrangements will be made for training? √ NOdescribe training arrangements training for ADB’s financial management, accounting and payment etc. 3.6 What is the duration of the work contract for project finance and accounts 02013-202 staff?

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Topic Response 3.7 Indicate key project finance and accounts staff positions not filled yet, and Date ____ Position ______the estimated date of appointment. Date ____ Position ______Date ____ Position ______Date ____ Position ______Date ____ Position ______3.8 Does the Project have written position descriptions that clearly define duties, √SYE responsibilities, lines of supervision, and limits of authority for all of the NO officers, managers, and staff? 3.9 At what frequency are personnel transferred? All accountants and financial staff are full time 3.10 What is training policy for the finance and accounting staff? P rocedures and policies of ADB and upper level financial bureaus

4 Accounting Policies and Procedures

4.0 General 4.0.1 Will the Project use your agency accounting system? Yes 4.0.2 Describe how your agency accounting system will record project set up special subsidiary ledger, focus on business-related parties and financial transactions. record the usage of each funds daily 4.0.3 Describe how your agency accounting system will allocate project Expenses receipts enter into accounting subproject according to different expenditures in accordance with the respective components, departments, cost allocation in accordance with departments and disbursement categories, and sources of funds? categories. 4.0.4 Describe controls in place to ensure that all transactions are correctly Account checking with clients every month, print of client confirmation slip, made, adequately explained, prepared and approved. checking out the reasons immediately if having doubts, problems being solved within one month. 4.0.5 Will you have to change your chart of accounts to properly account for SYE  describe changes and report on project activities and disbursement categories? If YES, √NO describe the changes? 4.0.6 Describe arrangements in place to ensure that cost allocations to the S trict review and approval procedures for costs, for the purpose of clearer various funding sources will be made accurately and in accordance cost allocations. with established agreements. 4.0.7Are the General Ledger and subsidiary ledgers reconciled and in √SYE balance? NO 4.0.8 Are all accounting and supporting documents retained on a permanent √SYE

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Topic Response basis in a defined system that allows authorized users easy access? NO 4.0.9 Describe the system for storing and accessing accounting documents A ccounting documents and materials are archived, consulting is allowed for and materials? designated personnel. 4.1 Segregation of Duties 4.1.1 Who is responsible for the following duties (give name and title): 4.1.1.1 authorize execution of transactions Ren Lixin, Head of Finance Bureau 4.1.1.2 record transactions Gu, Jianqiang, member of Finance Bureau 4.1.1.3 maintain custody of assets involved in transaction Sun Yaying, member of Finance Bureau 4.1.2 Are responsibilities for ordering, receiving, accounting for, and paying for √SYE goods and services separated? If NO, briefly describe how they are NO describe not separated. 4.1.3 Are bank reconciliations prepared by someone other than those who √SYE make or approve payments? NO 4.2 Budgeting System 4.2.1 Are annual budgets based on physical and financial targets? YES – with financial targets only √SYE – with physical and financial targets NO 4.2.2 Are multiple year budgets and financing plans prepared for capital SYE expenditures? √NO 4.2.3 Are separate budgets prepared for: 4.2.3.1 Individual departments? √SYE NO 4.2.3.2 Individual work units? SYE √NO 4.2.3.3 Distinct andsignificant functional activities (e.g. maintenance)? √SYE NO 4.2.3.4 All major capital projects? √S YE NO

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Topic Response 4.2.4？Is there sufficient detail in annual budgets to provide a meaningful tool √SYE for performance monitoring? NO 4.2.5 Are budgets used to monitor and control the performance of individual √SYE departments and units? NO 4.2.6 How frequently are actual expenditures compared to the budget? √ at least once every month once every 2 to 3 months once every 4 to 6 months once every 6 to 12 months never 4.2.7 What happens if there are significant variations from the budget? Are Further explanation needed. explanations required? 4.2.8 Are approvals for variations from the budget required in advance or are yes they obtained after the fact? 4.2.9 Who is responsible for preparation and approval of budgets? Liu Lili 4.2.10 How are budgets prepared and approved? Annual budget is prepared according to budget law, and approved by people’s congress. 4.2.11 Describe procedures used to plan project activities, collect prepare budget according to departments information from units in charge of project components, and prepare budgets? 4.2.12 What due diligence measures are there to assure that project plans R ecruit budget experts to prepare, and invite review organizations to review and budgets are based on valid assumptions, are developed by knowledgeable individuals and are realistic? 4.3 Payments 4.3.1 During invoice-processing procedures are: 4.3.1.1 Copies of purchase orders and receiving reports obtained directly √SYE from issuing departments? NO 4.3.1.2 Comparison made of invoice quantities, prices and terms, with √SYE those indicated on the purchase order and with records of goods NO actually received? 4.3.1.3 Comparison of invoice quantities with those indicated on the √SYE

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Topic Response receiving reports? NO 4.3.1.4 The accuracy of calculations checked? √SYE NO 4.3.2 Are all invoices: 4.3.2.1 dated, reviewed and approved √SYE NO 4.3.2.2 stamped PAID upon payment √SYE NO 4.3.2.3 Marked for account code assignment? √SYE NO 4.3.3 What controls exist for the preparation of the payroll? Pay roll is prepared by human resource department personnel with separation of positions and staff 4.3.4 How are changes to the payroll authorized? Signatures from main responsible person, deputy responsible person, and human resource are required 4.4 Policies And Procedure 4.4.1 What is the basis of accounting (e.g., cash, accrual)? cash basis 4.4.2 What accounting standards are followed (PRC, ISA, other)? People’s Republic of China Accounting Standards 4.4.3 Does the Project have an adequate policies and procedures manual to √SYE guide activities and ensure staff accountability? NO 4.4.4Does the accounting policy and procedure manual need to be updated √SYE  explain how? Adjust by needs for the project activities? If YES, explain how this will this be done? NO 4.4.5 Are there written policies and procedures covering all routine financial √SYE management and related administrative activities? NO 4.4.6 How are new accounting principles, policies or procedures implemented A ccording to accounting system of state-owned construction unit within your agency? 4.4.7 Do procedures exist to ensure that only authorized persons can alter or √SYE establish a new accounting principle, policy or procedure to be used NO by your agency? 4.4.8How do policies and procedures define conflict of interest and provide Coordinate with a transparent and fair manner

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Topic Response safeguards to protect the organization from them? 4.4.9 How do policies and procedures define related party transactions (real Related party transactions refer to the transactions with company or and apparent)? subsidiary companies have direct or indirect stakes with our company. 4.4.10 What safeguards are there to protect the organization from conflict of A ccounting reports preparation under accounting policies and institutions, interest and related party transactions? establish internal and external audit systems. 4.4.11 Who has a copy of the policies and procedures manual? Leaders and all staff in financial department. 4.5 Cash and Bank 4.5.1 Indicate names and positions of authorized signatories in the bank accounts. 4.5.1.1 Name：Liu Fubiao Position：director of Baicheng Economic Development Zone 4.5.1.2 Name: Position: 4.5.1.3 Name: Position: 4.5.1.4 Name Position 4.5.1.5 Name Position

4.5.2 Does the organization maintain an up-to-date cashbook, recording √SYE receipts and payments? NO 4.5.3 What are the controls for the following activities: 4.5.3.1 collection of revenues Record in the subsidiary ledger according to the different capital source 4.5.3.2 timely deposit of receipts deposit of receipts on the day received 4.5.3.3 recording of receipts record the cash revenue in the subsidiary ledger 4.5.4 How frequently are bank and cash reconciled on a monthly basis? √ more frequently than monthly every month every quarter less frequently than every quarter 4.5.5 Are all unusual items on the bank reconciliation reviewed and approved √SYE by a responsible official? NO 4.5.6 How quickly are receipts deposited? the day it happens

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Topic Response 4.6 Safeguard over Assets 4.6.1 Describe the system to record assets and protect them from fraud, waste Execution of interim measures for administration of state-owned assets. and abuse? Establish fixed assets accounting, set up fixes assets consumption subsidiary ledger, user sign, specially-assigned person manages , headman authorize 4.6.2 Are subsidiary records of fixed assets and stocks kept up to date? √SYE NO 4.6.3 Are subsidiary records of fixed assets and stocks reconciled with control √SYE accounts? NO 4.6.4 How often are physical inventories completed of fixed assets and √ at least once a year stocks? every 2 to 3 years every 3 to 5 years less frequently never 4.6.5 Are assets sufficiently covered by insurance policies? √SYE NO 4.7 Other Offices and Implementing Entities 4.7.1 Identify other offices or implementing agencies or units under your supervision or control that are responsible for project implementation or finance? 4.7.2 In relation to these other agencies, has the Project established controls and procedures for: 4.7.2.1 flow of funds SYE NO 4.7.2.2 financial information SYE NO 4.7.2.3 accountability YES NO 4.7.2.4 audits SYE NO 4.7.3 How long does it take for project information to reach your agency from 5 days

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Topic Response other offices or implementing agencies or units? 4.7.4 What checks are there to ensure the accuracy of project information that your agency receives from other offices or implementing agencies or units. 4.7.5 Are periodic reconciliations performed among the different offices and SYE implementing agencies? NO 4.8 Other 4.8.1 Describe the options available to employees, beneficiaries and others for All employees, beneficiaries or others have the rights to report incidence of reporting suspected fraud, waste or misuse of project resources or property fraud, waste and sabotage, to the local discipline bureau. Reward property? the informer if the report is true. 4.8.2 What measures has your agency taken to inform employees, I nvestigate any reported incidence of property fraud, waste and sabotage. beneficiaries and others of their options for reporting suspected fraud, Relevant staff assume legal responsibility. waste or misuse of project resources or property? 4.8.3 Will representatives of the municipal discipline investigation bureau be √SYE involved in project bidding and construction activities? NO 4.8.4 Do contracts let by your agency for civil works and other large √SYE procurements include anticorruption clauses and safeguards. NO

5 Reporting and Monitoring

5.0 Are financial statements prepared for your agency? If YES, what accounting √SYE  accounting standards? The accounting system of state-owned standards are they based on? construction units NO 5.1 How often are financial statements prepared? monthly report 5.2 How quickly are the financial statements prepared at year end? weekly 5.3 Are separate financial statements prepared for the office or unit in your √SYE agency that will implement the Project? NO 5.4 Will the financial reporting system need to be adapted to report on the √SYE project components? NO 5.5 Does the reporting system have the capacity to link financial information with √SYE information on the physical progress of engineering project's? NO

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Topic Response 5.6 Describe procedures and controls used to insure that the physical project establish project management rules and accounting system to ensure the data can be compared and coordinated with the financial data? consistency between project implementation and financial data 5.7 Are there financial management reporting requirements for existing yes engineering projects that specify: 5.7.1 what reports are to be prepared prepare financial statement: project budget, project progress, loan utilization progress, Balance sheet, summary of sources and uses of funds by project component and statement of implementation of loan agreement 5.7.2 what the reports are to contain project pricing, project progress, fund use etc. 5.7.3 how the reports are to be used provide information on project progress, quality and use of funds. 5.8 What information do the financial management reports for engineering √ Total project expenditures to date projects contain? (check all that apply) √ Comparison of actual expenditures with budgets √ Comparison of actual expenditures with work completed √ Expenditures by project component √ Explanations of significant variances of expenditures from budgets 5.9 Are financial management reports used by management? √SYE NO 5.10 Describe a recent action taken by management in response to information 紧项目实施前的各项准备工作 Check whether the capital expenditure provided in a financial management report? corresponds with actual engineering progress in response to the information provided and conduct supervision and adjustment in time 5.11 Are financial reports prepared directly by the automated accounting system prepared by an automated accounting system or are they prepared by spreadsheets or some other manual method? √ prepared by spreadsheets or other method both ways used

6 Internal Audit

6.0 Is there an internal auditor or audit department in your agency? YES  answer questions 6.1 to 6.5 √NO  go to section 7 6.1 What are the qualifications and experience of audit department staff? 6.2 To whom does the internal auditor report? 6.3 Will the internal audit department include the Project in its work program? 6.4 Are actions taken on the internal audit findings? SYE

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Topic Response NO 6.5 Describe the most recent actions taken in response to the internal audit findings?

7 External Audit

7.0 Is your agency financial statement audited each year by an independent √SYE  Who: Baicheng Audit Bureau non -government auditor? If YES, who is the auditor? NO 7.1 How soon following the financial yearend are audit reports issued? issue the audit report one month after financial year-end 7.2 Is the audit of your agency conducted according to International Standards YES on Auditing? √NO 7.3 Were any major accountability issues identified in audit reports over the past SYE three years? √NO 7.4 Will your agency auditor audit the Project financial statements and accounts agency auditor or will another auditor be appointed? √ another auditor 7.5 Has your agency implemented all recommendations made by the auditors in SYE audit reports or management letters over the past three years? If NO, √ NO explain project has not started yet please explain. 7.6 Is the Project subject to any kind of audit from an independent governmental SYE Who: entity (e.g., the supreme audit institution) in addition to the external audit? √NO If YES, who is the independent entity? 7.7 Does your agency have separate terms of reference for annual audits of YES major projects? √NO 7.8 Please provide the audit reports for the past three years.  Provided √ Not provided – please give reason: project has not started yet 8 Information Systems

8.0 Is the financial management system computerized? √SYE NO 8.1 Can the system produce the necessary project financial reports? √SYE

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Topic Response NO 8.2 What training has the staff received to operate the system? training for financial software 8.3 What controls are there to safeguard the confidentiality, integrity and Set permission and password according to department personnel. Paper availability of data in the information system? archive and electric data archive

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Responses to the Financial Management Assessment Questionnaire – Baishan Solid Waste Disposal Company

Topic Response Name of agency Baishan Solid Waste Disposal Co. Ltd. Project component that agency is responsible for Baishan ISWM Name of person responsible for filling this form Dong, Wenyuan Position and title of person responsible for filling this form Office worker Nature of agency’s responsibility for the Project (check all that apply)  Provide counterpart funding Sign a follow on loan contract for ADB funds √Management of project construction Management of contributions from NGOs or project beneficiaries √Project operation and maintenance √ Financial management of project Generate funds from tariffs, taxes or other sources to service the ADB loan √ Other – describe

1 Implementing Agency

1.0 What is your agency’s legal status and registration? Limited Company Registration Capital: 8 million Register number: 220600000009781 1.1 What is your agency’s governing body? Baishan Housing and Urban Construction Bureau 1.2 What is the governing body’s relationship to the Government? subordinate 1.3 Can the governing body make decisions independently of √SYE Government? If NO, please explain what decisions need government NO explain: approval. 1.4 Has your agency implemented an externally-financed project in the SYE  briefly describe past? If yes, please provide details? √NO 1.5 What are the statutory reporting requirements for your agency with prepare financial report in accordance with the accounting law and enterprise respect to finance? accounting system 1.6 Describe your agency’s organizational structure? (please attach an √ Organization chart attached

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Topic Response organization chart)  Organization chart not attached 1.7 Is the organizational structure appropriate for the needs of the To strengthen the management of construction projects Project? 1.8 Has or will your agency established a project management office? SYE , already have project office √SYE, will set up project office NO 1.9 If the ADB loan is approved, what staffing changes will you make to Our unit will deploy professional personnel who meet requirements and they will assist with project implementation? in charge of construction site managementsupervision and operation management. 1.10 Does the Project have written job descriptions that define duties, YES – have already prepared these (attach job descriptions for the top two responsibilities, lines of supervision, and limits of authority for staff? positions) √ Written job descriptions are being or will be prepared NO

2 Funds Flow Arrangements

2.0 Describe proposed project funds flow arrangements. Include a chart ADB Loan: ADB →Ministry of Finance → Jilin Provincial Finance Bureau and explanation of the flow of funds from ADB, government and other → Baishan Municipal Finance Bureau →Contractor/Supplier financiers to each lower level that will receive funds. Counterpart Fund: Baishan Municipal Finance Bureau –Baishan Solid Waste Disposal company →Contractor/Supplier 2.1 Are the (proposed) arrangements to transfer the proceeds of the loan SYE from the government to the implementing agency satisfactory? NO briefly explain why not √ Not applicable 2.2 Describe any past problems experienced in receiving investment No problem funds from funding sources? 2.3 Describe proposed on-lending arrangements from the Government Not applicable to your agency, including on-lending terms and conditions. 2.4 Will your agency use an imprest account to manage ADB funds? If √SYE  name of bank China Agricultural Bank YES, in which bank will the Imprest Account be opened? NO 2.5 Does your agency have experience in the management of no experience disbursements from ADB? 2.6 Does your agency have experience managing foreign exchange YES risks? √NO

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Topic Response 2.7 Will your agency need to develop capacity to manage foreign  YES.  Explain capacity building arrangements: Training on how to reduce exchange risks? If yes, what arrangements have been made to risk of exchange rate and interest rate develop this capacity? √ NO 2.8 Is your agency is responsible for providing counterpart funds? If YES SYE  answer questions 2.8.1 to 2.8.3 answer the next 3 questions. √NO 2.8.1 What is the source of the counterpart funds: revenues generated by your business activity, government tax funds, other? 2.8.2H ow will you access the counterpart funds? Are they drawn from revenues coming directly to you or do you obtain them as government transfers? 2.8.3 How are payments made from the counterpart funds? 2.9 Will user charges that you receive as revenue is used to generate SYE counterpart funds? √NO 2.10 Will user charges that you receive as revenue is used to help finance √SYE the ADB loan? NO 2.11 Is part of the Project implemented by communities, project SYE  describe arrangements beneficiaries or NGOs under your direction? If YES, describe √NO reporting and monitoring arrangements that you have in place to track the use of project funds used by these groups? 2.12 Are project beneficiaries under your direction required to contribute in YES describe guidelines the form of labor to project costs? If YES, briefly describe guidelines √NO and arrangements formulated to record and value the labor contribution?

3 Staffing

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Topic Response 3.0 What is your agency’s organizational structure for accounting and 项目办主任 finance? Please attach an organization chart.

财部部长

会计出纳

3.1.1.2 Main responsibilities 1. Verify the accounting report; 2. Conduct enterprise economic activity analysis; 3. Prepare enterprise financial budget and daily review; 4. Organize enterprise cost management, reduce enterprise cost; 5. Manage enterprise financial system; 6. Deploy enterprise operation funds; 7. Finance for enterprise production and development; 8. Prepare enterprise tax planning; 9. Participate in the enterprise investment decision-making; 10. Coordinate financial relation between different aspects. 3.1.1.3 Training and Certification Assistant accountant 3.1.2 Job title accountant 3.1.2.1 Staff 1 3.1.2.2 Main responsibilities 1. Responsible for recording financial general ledger and all kinds of detail account. Complete formalities, accurate number, net writing, prompt registration and clear account. 2. Responsible for preparing monthly final accounts, quarter final accounts, annual final accounts and related reports on other aspects 3. Assist manager to prepare and implement institute budget.

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Topic Response 4. Verify original certificates carefully, refuse to entry these certificates violating regulations and unqualified into account. Control expenses scope and expenses standards strictly. 5. Verify fixed assets accounts regularly, make the accounts and assets consistent. 6. Responsible for providing data and reporting situation when superior financial authorities inspect performance. 7. Report financial conditions to manager in written form every month serve as manager adviser and perform the financial supervision. 8. Bind accounting document, accounting book and statistical forms etc. regularly, keep and archive carefully. Same year’s accounting archives are kept by the accountant; former accounting archives are kept by school account room. 9. Assist the cashier with payment and bonus issue 10. Responsible for keeping financial seal and controlling the sign and issue of check 11. Fill in auditing statement regularly, self-check carefully and submitting the financial materials 3.1.2.3 Training and Certification accountant 3.1.3 Job title cashier 3.1.3.1 Staff 1 3.1.3.2 Main responsibilities 1. Prepare cash receipt and settlement service; 2. Register cash and bank deposit journal; 3. Keep stock cash and various negotiable securities; 4. keep related seal, blank receipt and blank check

3.1.3.3 Training and Certification accountant 3.1.4 Job title 3.1.4.1 Staff 3.1.4.2 Main responsibilities 3.1.4.3 Training and Certification 3.1.5 Job title 3.1.5.1 Staff

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Topic Response 3.1.5.2 Main responsibilities 3.1.5.3 Training and Certification 3.2 Attach job descriptions and CVs of key accounting staff. √ job descriptions, CVs attached job descriptions, CVs not attached 3.3 Is the project finance and accounting function staffed adequately? √SYE NO 3.4 Is the finance and accounts staff adequately qualified and SYE experienced? √NO 3.5 Are the project accounts and finance staff trained in ADB SYE procedures? If NO, what arrangements will be made for training? √ NOdescribe training arrangements training for ADB’s financial management, accounting and payment etc. 3.6 What is the duration of the work contract for project finance and 20130 -202 accounts staff? 3.7 Indicate key project finance and accounts staff positions not filled yet, Date ____ Position ______and the estimated date of appointment. Date ____ Position ______Date ____ Position ______Date ____ Position ______Date ____ Position ______3.8 Does the Project have written position descriptions that clearly define √SYE duties, responsibilities, lines of supervision, and limits of authority for NO all of the officers, managers, and staff? 3.9 At what frequency are personnel transferred? NO 3.10 What is training policy for the finance and accounting staff? The financial staff attends the training programs organized by Department of Finance.

4 Accounting Policies and Procedures 4.0 General 4.0.1 Will the Project use your agency accounting system? yes 4.0.2 Describe how your agency accounting system will record project set up special subsidiary ledger, focus on business-related parties and record financial transactions. the usage of each funds daily

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Topic Response 4.0.3 Describe how your agency accounting system will allocate Expenses receipts enter into accounting subproject according to different project expenditures in accordance with the respective departments, cost allocation in accordance with departments and categories. components, disbursement categories, and sources of funds? 4.0.4 Describe controls in place to ensure that all transactions are Account checking with clients every month, print of client confirmation slip, correctly made, adequately explained, prepared and approved. checking out the reasons immediately if having doubts, problems being solved within one month. 4.0.5 Will you have to change your chart of accounts to properly SYE  describe changes account for and report on project activities and disbursement √NO categories? If YES, describe the changes? 4.0.6 Describe arrangements in place to ensure that cost allocations to Cost enters according to accounting subject, subject in accordance with the various funding sources will be made accurately and in department. accordance with established agreements. 4.0.7 Are the General Ledger and subsidiary ledgers reconciled and in √SYE balance? NO 4.0.8 Are all accounting and supporting documents retained on a √SYE permanent basis in a defined system that allows authorized NO users easy access? 4.0.9 Describe the system for storing and accessing accounting Archived for 10 years, consulting is not allowed without special approval from documents and materials? general manager. 4.1 Segregation of Duties 4.1.1 Who is responsible for the following duties (give name and title): Dong Wenyan, Director 4.1.1.1 authorize execution of transactions 4.1.1.2 record transactions 4.1.1.3 maintain custody of assets involved in transaction 4.1.2 Are responsibilities for ordering, receiving, accounting for, and √SYE paying for goods and services separated? If NO, briefly describe NO describe how they are not separated. 4.1.3 Are bank reconciliations prepared by someone other than those √SYE who make or approve payments? NO 4.2 Budgeting System

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Topic Response 4.2.1 Are annual budgets based on physical and financial targets? SYE – with financial targets only √SYE – with physical and financial targets NO 4.2.2 Are multiple year budgets and financing plans prepared for SYE capital expenditures? √NO 4.2.3 Are separate budgets prepared for: 4.2.3.1 Individual departments? √SYE NO 4.2.3.2 Individual work units? √SYE NO 4.2.3.3 Distinct andsignificant functional activities (e.g. √SYE maintenance)? NO 4.2.3.4 All major capital projects? √S YE NO 4.2.4 ？Is there sufficient detail in annual budgets to provide a √SYE meaningful tool for performance monitoring? NO 4.2.5 Are budgets used to monitor and control the performance of √SYE individual departments and units? NO 4.2.6 How frequently are actual expenditures compared to the budget? at least once every month once every 2 to 3 months once every 4 to 6 months √once every 6 to 12 months never 4.2.7 What happens if there are significant variations from the budget? S trictly follow the budget. Are explanations required? 4.2.8 Are approvals for variations from the budget required in advance yes or are they obtained after the fact? 4.2.9 Who is responsible for preparation and approval of budgets? Municipal government, municipal congress 4.2.10 How are budgets prepared and approved? Formation: submit annual budget formation according to departments Approval: approved by municipal congress.

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Topic Response 4.2.11 Describe procedures used to plan project activities, collect information from units in charge of project components, and prepare budgets? 4.2.12 What due diligence measures are there to assure that project plans and budgets are based on valid assumptions, are developed by knowledgeable individuals and are realistic? 4.3 Payments 4.3.1 During invoice-processing procedures are: 4.3.1.1 Copies of purchase orders and receiving reports obtained √SYE directly from issuing departments? NO 4.3.1.2 Comparison made of invoice quantities, prices and terms, √SYE with those indicated on the purchase order and with records NO of goods actually received? 4.3.1.3 Comparison of invoice quantities with those indicated on the √SYE receiving reports? NO 4.3.1.4 The accuracy of calculations checked? √SYE NO 4.3.2 Are all invoices: 4.3.2.1 dated, reviewed and approved √SYE NO 4.3.2.2 stamped PAID upon payment √SYE NO 4.3.2.3 Marked for account code assignment? √SYE NO 4.3.3 What controls exist for the preparation of the payroll? Currently the PMO staff is taken care by individual units 4.3.4 How are changes to the payroll authorized? N/A. 4.4 Policies And Procedure 4.4.1 What is the basis of accounting (e.g., cash, accrual)? accrual basis 4.4.2 What accounting standards are followed (PRC, ISA, other)? People’s Republic of China Accounting Standards

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Topic Response 4.4.3 Does the Project have an adequate policies and procedures SYE manual to guide activities and ensure staff accountability? √NO 4.4.4 Does the accounting policy and procedure manual need to be √SYE  explain how? Depends on the progress of the construction project updated for the project activities? If YES, explain how this will NO this be done? 4.4.5 Are there written policies and procedures covering all routine √SYE financial management and related administrative activities? NO 4.4.6 How are new accounting principles, policies or procedures Financial department makes the account in accordance with new accounting implemented within your agency? system; each department conducts it according to regulation and procedure. 4.4.7 Do procedures exist to ensure that only authorized persons can √SYE alter or establish a new accounting principle, policy or procedure NO to be used by your agency? 4.4.8 How do policies and procedures define conflict of interest and Each department proposes rules and regulations, which can be carried out if provide safeguards to protect the organization from them? approved in management conference. 4.4.9 How do policies and procedures define related party transactions Related party transactions refer to the trade between company or underlying (real and apparent)? company and related parties which have links in vested interests and stakes directly and indirectly with our company. 4.4.10 What safeguards are there to protect the organization from Sign contract with related parties and explicit creditor’s rights and debts. conflict of interest and related party transactions? 4.4.11 Who has a copy of the policies and procedures manual? All staff in financial department. 4.5 Cash and Bank 4.5.1 Indicate names and positions of authorized signatories in the Li Hong, Cashier bank accounts. 4.5.1.1 Nam： Position： 4.5.1.2 Name: Position: 4.5.1.3 Name: Position: 4.5.1.4 Name Position 4.5.1.5 Name Position 4.5.2 Does the organization maintain an up-to-date cashbook, √SYE

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Topic Response recording receipts and payments? NO 4.5.3 What are the controls for the following activities: 4.5.3.1 collection of revenues Record in the subsidiary ledger according to the different capital source 4.5.3.2 timely deposit of receipts deposit of receipts on the day received 4.5.3.3 recording of receipts record the cash revenue in the subsidiary ledger 4.5.4 How frequently are bank and cash reconciled on a monthly more frequently than monthly basis? √ every month every quarter less frequently than every quarter 4.5.5 Are all unusual items on the bank reconciliation reviewed and √SYE approved by a responsible official? NO 4.5.6 How quickly are receipts deposited? the day it happens 4.6 Safeguard over Assets 4.6.1 Describe the system to record assets and protect them from Execution of interim measures for administration of state-owned assets. fraud, waste and abuse? Establish fixed assets accounting, set up fixes assets consumption subsidiary ledger, user sign, specially-assigned person manages , headman authorize 4.6.2 Are subsidiary records of fixed assets and stocks kept up to √SYE date? NO 4.6.3 Are subsidiary records of fixed assets and stocks reconciled with √SYE control accounts? NO 4.6.4 How often are physical inventories completed of fixed assets √ at least once a year and stocks? every 2 to 3 years every 3 to 5 years less frequently never 4.6.5 Are assets sufficiently covered by insurance policies? SYE √NO 4.7 Other Offices and Implementing Entities

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Topic Response 4.7.1 Identify other offices or implementing agencies or units under your supervision or control that are responsible for project implementation or finance? 4.7.2 In relation to these other agencies, has the Project established controls and procedures for: 4.7.2.1 flow of funds √SYE NO 4.7.2.2 financial information √SYE NO 4.7.2.3 accountability √SYE NO 4.7.2.4 audits √SYE NO 4.7.3 How long does it take for project information to reach your 5 days agency from other offices or implementing agencies or units? 4.7.4 What checks are there to ensure the accuracy of project Strict content management system, clear labor division system and adequate information that your agency receives from other offices or supporting documents implementing agencies or units. 4.7.5 Are periodic reconciliations performed among the different √SYE offices and implementing agencies? NO 4.8 Other 4.8.1 Describe the options available to employees, beneficiaries and 1, set a fixed box; 2, announced the telephone; 3, direct interview system others for reporting suspected fraud, waste or misuse of project resources or property? 4.8.2 What measures has your agency taken to inform employees, specially-assigned personnel are responsible for it beneficiaries and others of their options for reporting suspected fraud, waste or misuse of project resources or property? 4.8.3 Will representatives of the municipal discipline investigation √SYE bureau be involved in project bidding and construction activities? NO 4.8.4 Do contracts let by your agency for civil works and other large √SYE

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Topic Response procurements include anticorruption clauses and safeguards. NO

5 Reporting and Monitoring

5.0 Are financial statements prepared for your agency? If YES, what √SYE  accounting standards? accounting standards are they based on? NO 5.1 How often are financial statements prepared? monthly report 5.2 How quickly are the financial statements prepared at year end? Ten days 5.3 Are separate financial statements prepared for the office or unit in SYE your agency that will implement the Project? √NO 5.4 Will the financial reporting system need to be adapted to report on √SYE the project components? NO 5.5 Does the reporting system have the capacity to link financial √SYE information with information on the physical progress of engineering NO project's? 5.6 Describe procedures and controls used to insure that the physical Financial personnel participate in the full process of project management, project data can be compared and coordinated with the financial engineering project managers and financial personnel should ensure the timely data? delivery of engineering information and accuracy of verification. 5.7 Are there financial management reporting requirements for existing engineering projects that specify: 5.7.1 what reports are to be prepared prepare financial statement: Balance sheet, summary of sources and uses of funds by project component and statement of implementation of loan agreement 5.7.2 what the reports are to contain Capital source conditions, capital consumption conditions and project construction progress 5.7.3 how the reports are to be used provide information for enterprise’s internal and external managers 5.8 What information do the financial management reports for √ Total project expenditures to date engineering projects contain? (check all that apply) √ Comparison of actual expenditures with budgets √ Comparison of actual expenditures with work completed √ Expenditures by project component √ Explanations of significant variances of expenditures from budgets

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Topic Response 5.9 Are financial management reports used by management? √SYE NO 5.10 Describe a recent action taken by management in response to Check whether the capital expenditure corresponds with actual engineering information provided in a financial management report? progress in response to the information provided and conduct supervision and adjustment in time 5.11 Are financial reports prepared directly by the automated accounting prepared by an automated accounting system system or are they prepared by spreadsheets or some other manual √ prepared by spreadsheets or other method method? both ways used

6 Internal Audit 6.0 Is there an internal auditor or audit department in your agency?  YES  answer questions 6.1 to 6.5 √ NO  go to section 7 6.1 What are the qualifications and experience of audit department staff?

6.2 To whom does the internal auditor report? 6.3 Will the internal audit department include the Project in its work program? 6.4 Are actions taken on the internal audit findings? YES NO 6.5 Describe the most recent actions taken in response to the internal audit findings?

7 External Audit

7.0 Is your agency financial statement audited each year by an √S YE  Who: independent non-government auditor? If YES, who is the auditor? NO 7.1 How soon following the financial yearend are audit reports issued? 7.2 Is the audit of your agency conducted according to International SYE Standards on Auditing? √NO 7.3 Were any major accountability issues identified in audit reports over YES the past three years? √NO

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Topic Response 7.4 Will your agency auditor audit the Project financial statements and agency auditor accounts or will another auditor be appointed? √ another auditor 7.5 Has your agency implemented all recommendations made by the √SYE auditors in audit reports or management letters over the past three NO explain years? If NO, please explain. 7.6 Is the Project subject to any kind of audit from an independent √SYE Who: Baishan audit bureau governmental entity (e.g., the supreme audit institution) in addition to the external audit? If YES, who is the independent entity? NO 7.7 Does your agency have separate terms of reference for annual SYE audits of major projects? √NO 7.8 Please provide the audit reports for the past three years. √ Provided  Not provided – please give reason

8 Information Systems 8.0 Is the financial management system computerized? SYE √NO 8.1 Can the system produce the necessary project financial reports? SYE √NO 8.2 What training has the staff received to operate the system? 8.3 What controls are there to safeguard the confidentiality, integrity and availability of data in the information system?

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Responses to the Financial Management Assessment Questionnaire – Baishan Xibeicha Qiyuan Hydropower Co. Ltd.

Topic Response Name of agency Baishan Xibeicha Qiyuan Hydropower Co. Ltd. (BXQHC) Project component that agency is responsible for Baishan Improved Water Supply System Name of person responsible for filling this form An Minhua Position and title of person responsible for filling this form H ead of financial department Nature of agency’s responsibility for the Project (check all that apply)  Provide counterpart funding Sign a follow on loan contract for ADB funds Management of project construction Management of contributions from NGOs or project beneficiaries Project operation and maintenance Financial management of project  Generate funds from tariffs, taxes or other sources to service the ADB loan Other – describe Assist in the management

1 Implementing Agency

1.0 What is your agency’s legal status and registration? Baishan Xibeicha Qiyuan Hydropower Co. Ltd. 1.1 What is your agency’s governing body? Baishan Water Affairs Bureau 1.2 What is the governing body’s relationship to the Government? S ubordinate 1.3 Can the governing body make decisions independently of Government? SYE If NO, please explain what decisions need government approval. √NO explain: governmental function unit 1.4 Has your agency implemented an externally-financed project in the SYE  briefly describe past? If yes, please provide details? √NO 1.5 What are the statutory reporting requirements for your agency with P repare annual financial report according to accounting law and enterprise respect to finance? accounting system 1.6 Describe your agency’s organizational structure? (please attach an Organization chart attached organization chart) Organization chart not attached 1.7 Is the organizational structure appropriate for the needs of the Project? Yes, but lack of experience of foreign funded projects. Needs to strengthen capacity

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Topic Response 1.8 Has or will your agency established a project management office? SYE , already have project office √SYE, will set up project office NO 1.9 If the ADB loan is approved, what staffing changes will you make to Deployed personnel to assist the implementation of the project assist with project implementation? 1.10 Does the Project have written job descriptions that define duties, SYE – have already prepared these (attach job descriptions for the top two responsibilities, lines of supervision, and limits of authority for staff? positions) √Written job descriptions are being or will be prepared NO

2 Funds Flow Arrangements

2.0 Describe proposed project funds flow arrangements. Include a chart ADB Loan: ADB →Ministry of Finance → Jilin Provincial Finance Bureau and explanation of the flow of funds from ADB, government and other → Baishan Municipal Finance Bureau →Baishan Water Affair Bureau financiers to each lower level that will receive funds. →BXQHC→Contractor/Supplier Counterpart Fund: Baishan Municipal Finance Bureau –Contractor/Supplier 2.1 Are the (proposed) arrangements to transfer the proceeds of the loan SYE from the government to the implementing agency satisfactory? NO briefly explain why not √ Not applicable 2.2 Describe any past problems experienced in receiving investment funds No problem from funding sources? 2.3 Describe proposed on-lending arrangements from the Government to Not applicable your agency, including on-lending terms and conditions. 2.4 Will your agency use an imprest account to manage ADB funds? If √SYE  name of bank Jilin Bank YES, in which bank will the Imprest Account be opened? NO 2.5 Does your agency have experience in the management of no experience disbursements from ADB? 2.6 Does your agency have experience managing foreign exchange risks? YES √NO 2.7 Will your agency need to develop capacity to manage foreign exchange  YES.  risks? If yes, what arrangements have been made to develop this √ NO capacity?

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Topic Response 2.8 Is your agency is responsible for providing counterpart funds? If YES SYE  answer questions 2.8.1 to 2.8.3 answer the next 3 questions. √NO 2.8.1 What is the source of the counterpart funds: revenues generated by your business activity, government tax funds, other? 2.8.2 How will you access the counterpart funds? Are they drawn from revenues coming directly to you or do you obtain them as government transfers? 2.8.3 How are payments made from the counterpart funds? 2.9 Will user charges that you receive as revenue is used to generate SYE counterpart funds? √NO 2.10 Will user charges that you receive as revenue is used to help finance YES the ADB loan? √NO 2.11 Is part of the Project implemented by communities, project beneficiaries YES describe arrangements or NGOs under your direction? If YES, describe reporting and √NO monitoring arrangements that you have in place to track the use of project funds used by these groups? 2.12 Are project beneficiaries under your direction required to contribute in SYE  describe guidelines the form of labor to project costs? If YES, briefly describe guidelines √NO and arrangements formulated to record and value the labor contribution?

3 Staffing

3.0 What is your agency’s organizational structure for accounting and attached finance? Please attach an organization chart. 3.1 Identify key finance and accounting staffs including job title, responsibilities, educational background and professional certification. 3.1.1 Job title Director of Financial Department 3.1.1.1 Staff 1 3.1.1.2 Main responsibilities 1. Verify the accounting report; 2. Conduct enterprise economic activity analysis; 3. Prepare enterprise financial budget and daily review; 4. Organize enterprise

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Topic Response cost management, reduce enterprise cost; 5. Manage enterprise financial system; 6. Deploy enterprise operation funds; 7. Finance for enterprise production and development; 8. Prepare enterprise tax planning; 9. Participate in the enterprise investment decision-making; 10. Coordinate financial relation between different aspects. 3.1.1.3 Training and Certification Assistant accountant 3.1.2 Job title accountant 3.1.2.1 Staff 1 3.1.2.2 Main responsibilities 1. Responsible for recording financial general ledger and all kinds of detail account. Complete formalities, accurate number, net writing, prompt registration and clear account. 2. Responsible for preparing monthly final accounts, quarter final accounts, annual final accounts and related reports on other aspects 3. Assist manager to prepare and implement institute budget. 4. Verify original certificates carefully, refuse to entry these certificates violating regulations and unqualified into account. Control expenses scope and expenses standards strictly. 3.1.2.3 Training and Certification accountant 3.1.3 Job title Cashier 3.1.3.1 Staff 3.1.3.2 Main responsibilities Cashier

3.1.3.3 Training and Certification 3.1.4 Job title statisticians 3.1.4.1 Staff Lihuizhu 3.1.4.2 Main responsibilities Report statistics 3.1.4.3 Training and Certification 3.1.5 Job title statisticians 3.1.5.1 Staff Zhengjuanli

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Topic Response 3.1.5.2 Main responsibilities Financial statistics 3.1.5.3 Training and Certification 3.2 Attach job descriptions and CVs of key accounting staff. job descriptions, CVs attached √ job descriptions, CVs not attached 3.3 Is the project finance and accounting function staffed adequately? √SYE NO 3.4 Is the finance and accounts staff adequately qualified and experienced? √SYE NO 3.5 Are the project accounts and finance staff trained in ADB procedures? If SYE NO, what arrangements will be made for training? √ NOdescribe training arrangements training for ADB’s financial management, accounting and payment etc. 3.6 What is the duration of the work contract for project finance and 20130 -202 accounts staff? 3.7 Indicate key project finance and accounts staff positions not filled yet, Date ____ Position ______and the estimated date of appointment. Date ____ Position ______Date ____ Position ______Date ____ Position ______Date ____ Position ______3.8 Does the Project have written position descriptions that clearly define √SYE duties, responsibilities, lines of supervision, and limits of authority for NO all of the officers, managers, and staff? 3.9 At what frequency are personnel transferred? NO 3.10 What is training policy for the finance and accounting staff? The financial staff attends the annual training programs organized by Municipal Finance bureau

4 Accounting Policies and Procedures

4.0 General 4.0.1Will the Project use your agency accounting system? yes 4.0.2 Describe how your agency accounting system will record project set up special subsidiary ledger, focus on business-related parties and record financial transactions. the usage of each funds daily

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Topic Response 4.0.3 Describe how your agency accounting system will allocate project Expenses receipts enter into accounting subproject according to different expenditures in accordance with the respective components, departments, cost allocation in accordance with departments and categories. disburs ement categories, and sources of funds? 4.0.4 Describe controls in place to ensure that all transactions are Account checking with clients every month, print of client confirmation slip, c orrectly made, adequately explained, prepared and approved. checking out the reasons immediately if having doubts, problems being solved within one month. 4.0.5 Will you have to change your chart of accounts to properly account SYE  describe changes for and report on project activities and disbursement categories? √NO If YES, describe the changes? 4.0.6 Describe arrangements in place to ensure that cost allocations to Cost enters according to accounting subject, subject in accordance with the various funding sources will be made accurately and in department. accordance with established agreements. 4.0.7 Are the General Ledger and subsidiary ledgers reconciled and in √SYE balance? NO 4.0.8 Are all accounting and supporting documents retained on a √SYE permanent basis in a defined system that allows authorized NO users easy access? 4.0.9 Describe the system for storing and accessing accounting Archived for 10 years, consulting is not allowed without special approval from documents and materials? general manager. 4.1 Segregation of Duties 4.1.1 Who is responsible for the following duties (give name and title): 4.1.1.1 authorize execution of transactions An Minhua Director 4.1.1.2 record transactions 4.1.1.3 maintain custody of assets involved in transaction Yue Chunxu accountant 4.1.2 Are responsibilities for ordering, receiving, accounting for, and √SYE paying for goods and services separated? If NO, briefly describe NO describe how they are not separated. 4.1.3 Are bank reconciliations prepared by someone other than those √SYE who make or approve payments? NO 4.2 Budgeting System

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Topic Response 4.2.1 Are annual budgets based on physical and financial targets? SYE – with financial targets only √SYE – with physical and financial targets NO 4.2.2 Are multiple year budgets and financing plans prepared for capital SYE expenditures? √NO 4.2.3 Are separate budgets prepared for: 4.2.3.1 Individual departments? √SYE NO 4.2.3.2 Individual work units? √SYE NO 4.2.3.3 Distinct andsignificant functional activities (e.g. √SYE maintenance)? NO 4.2.3.4 All major capital projects? √S YE NO 4.2.4？Is there sufficient detail in annual budgets to provide a meaningful √SYE tool for performance monitoring? NO 4.2.5 Are budgets used to monitor and control the performance of √SYE individual departments and units? NO 4.2.6 How frequently are actual expenditures compared to the budget? √ at least once every month  once every 2 to 3 months once every 4 to 6 months once every 6 to 12 months never 4.2.7 What happens if there are significant variations from the budget? yes Are explanations required? 4.2.8 Are approvals for variations from the budget required in advance or yes are they obtained after the fact? 4.2.9Who is responsible for preparation and approval of budgets? Preparation: accountant Approval: general manager 4.2.10 How are budgets prepared and approved? preparation: according to the annual/monthly budget submitted by all

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Topic Response departments Approval: approved by general manager on the basis of budget, overspending needs interpretation. 4.2.11 Describe procedures used to plan project activities, collect prepare budget according to departments information from units in charge of project components, and prepare budgets? 4.2.12 What due diligence measures are there to assure that project The personnel who in charge of project implementation and budget execution plans and budgets are based on valid assumptions, are participate in the project preparation. developed by knowledgeable individuals and are realistic? 4.3 Payments 4.3.1 During invoice-processing procedures are: 4.3.1.1 Copies of purchase orders and receiving reports obtained √SYE directly from issuing departments? NO 4.3.1.2 Comparison made of invoice quantities, prices and terms, √SYE with those indicated on the purchase order and with records NO of goods actually received?

4.3.1.3 Comparison of invoice quantities with those indicated on the √SYE receiving reports? NO 4.3.1.4 The accuracy of calculations checked? √SYE NO 4.3.2 Are all invoices: 4.3.2.1 dated, reviewed and approved √SYE NO 4.3.2.2 stamped PAID upon payment √SYE NO 4.3.2.3 Marked for account code assignment? √SYE NO 4.3.3 What controls exist for the preparation of the payroll? Pay list is prepared by human resource department personnel and verified by financial department. 4.3.4How are changes to the payroll authorized? Change request proposed by human resource department, verified by financial

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Topic Response department, approved by general manager. 4.4 Policies And Procedure 4.4.1 What is the basis of accounting (e.g., cash, accrual)? accrual basis 4.4.2 What accounting standards are followed (PRC, ISA, other)? People’s Republic of China Accounting Standards 4.4.3 Does the Project have an adequate policies and procedures manual √SYE to guide activities and ensure staff accountability? NO 4.4.4 Does the accounting policy and procedure manual need to be YES explain how? updated for the project activities? If YES, explain how this will √ NO this be done? 4.4.5 Are there written policies and procedures covering all routine √SYE financial management and related administrative activities? NO 4.4.6 How are new accounting principles, policies or procedures Financial department makes the account in accordance with new accounting implemented within your agency? system; each department conducts it according to regulation and procedure. 4.4.7 Do procedures exist to ensure that only authorized persons can √SYE alter or establish a new accounting principle, policy or procedure NO to be used by your agency? 4.4.8 How do policies and procedures define conflict of interest and Each department proposes rules and regulations, which can be carried out if provide safeguards to protect the organization from them? approved in management conference. 4.4.9 How do policies and procedures define related party transactions Related party transactions refer to the trade between company or underlying (real and apparent)? company and related parties which have links in vested interests and stakes directly and indirectly with our company. 4.4.10 What safeguards are there to protect the organization from Sign contract with related parties and explicit creditor’s rights and debts. conflict of interest and related party transactions? 4.4.11 Who has a copy of the policies and procedures manual? All staff in financial department. 4.5 Cash and Bank 4.5.1 Indicate names and positions of authorized signatories in the bank accounts. 4.5.1.1 Name：Feng Limin Position：general manager 4.5.1.2 Name: Position:

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Topic Response 4.5.1.3 Name: Position: 4.5.1.4 Name Position 4.5.1.5 Name Position

4.5.2 Does the organization maintain an up-to-date cashbook, recording √SYE receipts and payments? NO 4.5.3 What are the controls for the following activities: 4.5.3.1 collection of revenues Telephone and internet confirmation 4.5.3.2 timely deposit of receipts yes 4.5.3.3 recording of receipts yes 4.5.4 How frequently are bank and cash reconciled on a monthly basis? more frequently than monthly √ every month every quarter less frequently than every quarter 4.5.5 Are all unusual items on the bank reconciliation reviewed and √SYE approved by a responsible official? NO 4.5.6 How quickly are receipts deposited? the day it happens 4.6 Safeguard over Assets 4.6.1 Describe the system to record assets and protect them from fraud, Execution of interim measures for administration of state-owned assets. waste and abuse? Establish fixed assets accounting, set up fixes assets consumption subsidiary ledger, user sign, specially-assigned person manages, 4.6.2 Are subsidiary records of fixed assets and stocks kept up to date? √SYE NO 4.6.3 Are subsidiary records of fixed assets and stocks reconciled with √SYE control accounts? NO 4.6.4 How often are physical inventories completed of fixed assets and √ at least once a year stocks? every 2 to 3 years every 3 to 5 years less frequently

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Topic Response never 4.6.5 Are assets sufficiently covered by insurance policies? SYE √NO 4.7 Other Offices and Implementing Entities 4.7.1 Identify other offices or implementing agencies or units under your supervision or control that are responsible for project implementation or finance? 4.7.2 In relation to these other agencies, has the Project established controls and procedures for: 4.7.2.1 flow of funds √SYE NO 4.7.2.2 financial information √SYE NO 4.7.2.3 accountability √SYE NO 4.7.2.4 audits √SYE NO 4.7.3 How long does it take for project information to reach your agency same day from other offices or implementing agencies or units? 4.7.4 What checks are there to ensure the accuracy of project information Project on-site supervision that your agency receives from other offices or implementing agencies or units. 4.7.5 Are periodic reconciliations performed among the different offices √SYE and implementing agencies? NO 4.8 Other 4.8.1 Describe the options available to employees, beneficiaries and The person responsible for the project is the head of the project. If the IA can not others for reporting suspected fraud, waste or misuse of project deal with the issue, it will be reported to the municipal government resources or property? 4.8.2What measures has your agency taken to inform employees, forthcoming beneficiaries and others of their options for reporting suspected

S App 8 - 45 Jilin Urban Improvement Project Supplementary Appendix 8 (TA 8172-PRC) Final Report

Topic Response fraud, waste or misuse of project resources or property? 4.8.3 Will representatives of the municipal discipline investigation bureau √SYE be involved in project bidding and construction activities? NO 4.8.4 Do contracts let by your agency for civil works and other large √SYE procurements include anticorruption clauses and safeguards. NO

5 Reporting and Monitoring

5.0 Are financial statements prepared for your agency? If YES, what √SYE  accounting standards: The accounting system of state-owed unit accounting standards are they based on? NO 5.1 How often are financial statements prepared? annual 5.2 How quickly are the financial statements prepared at year end? ten days 5.3 Are separate financial statements prepared for the office or unit in your SYE agency that will implement the Project? √NO 5.4 Will the financial reporting system need to be adapted to report on the SYE project components? √NO 5.5 Does the reporting system have the capacity to link financial information √SYE with information on the physical progress of engineering project's? NO 5.6 Describe procedures and controls used to insure that the physical E ach department strictly enforces project data can be compared and coordinated with the financial data? 5.7 Are there financial management reporting requirements for existing T imely and accurate delivery of financial management report is required engineering projects that specify: 5.7.1 what reports are to be prepared prepare financial statement: Balance sheet, summary of sources and uses of funds by project component and statement of implementation of loan agreement 5.7.2 what the reports are to contain Capital source conditions, capital consumption conditions and project construction progress 5.7.3 how the reports are to be used provide information for enterprise’s internal and external managers 5.8 What information do the financial management reports for engineering √ Total project expenditures to date projects contain? (check all that apply) √ Comparison of actual expenditures with budgets

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Topic Response √ Comparison of actual expenditures with work completed √ Expenditures by project component √ Explanations of significant variances of expenditures from budgets 5.9 Are financial management reports used by management? √SYE NO 5.10 Describe a recent action taken by management in response to No information provided in a financial management report? 5.11 Are financial reports prepared directly by the automated accounting √ prepared by an automated accounting system system or are they prepared by spreadsheets or some other manual prepared by spreadsheets or other method method? both ways used

6 Internal Audit

6.2 To whom does the internal auditor report? 6.3 Will the internal audit department include the Project in its work program? 6.4 Are actions taken on the internal audit findings? SYE NO 6.5 Describe the most recent actions taken in response to the internal audit findings?

7 External Audit

7.0 Is your agency financial statement audited each year by an independent √SYE  Who: Baishan Chenghua Audit Company non -government auditor? If YES, who is the auditor? NO 7.1 How soon following the financial yearend are audit reports issued? 1 month after the fiscal year 7.2 Is the audit of your agency conducted according to International SYE

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Topic Response Standards on Auditing? √NO 7.3 Were any major accountability issues identified in audit reports over the SYE past three years? √NO 7.4 Will your agency auditor audit the Project financial statements and agency auditor accounts or will another auditor be appointed? √ another auditor 7.5 Has your agency implemented all recommendations made by the YES auditors in audit reports or management letters over the past three √ NO explain: no negative comments were made by the auditor. years? If NO, please explain. 7.6 Is the Project subject to any kind of audit from an independent SYE Who: governmental entity (e.g., the supreme audit institution) in addition to the external audit? If YES, who is the independent entity? √NO 7.7 Does your agency have separate terms of reference for annual audits of SYE major projects? √NO 7.8 Please provide the audit reports for the past three years. √ Provided  Not provided – please give reason

8 Information Systems

8.0 Is the financial management system computerized? √SYE NO 8.1 Can the system produce the necessary project financial reports? √SYE NO 8.2 What training has the staff received to operate the system? training for financial software 8.3 What controls are there to safeguard the confidentiality, integrity and Set permission and password according to department personnel. Paper archive availability of data in the information system? and electric data archive

S App 8 - 48 Jilin Urban Improvement Project Supplementary Appendix 9 (TA 8172-PRC) Final Report

Supplementary Appendix 9 Baicheng Urban Planning Analysis

Jilin Urban Improvement Project Supplementary Appendix 9 (TA 8172-PRC) Final Report

1. Background

1. China endeavors to push forward its ambitious plan of the Chinese-style urbanization, with the preference on the development of small/medium sized towns/cities. The Chinese cities are generally experiencing rapid developments in the past three decades. The pace of urbanization of Baicheng is lagging behind. Although Baicheng is still one of the poorest cities in Jinlin Province, it has a lot of potential due to its strategic location, the existing and planned key transport infrastructure, and the rich resources that support the growth of the city.

2. Baicheng city has a population of 235,000. The city is about 12.5km away from the joint boundary of Jilin Province and Inner Mongolia Autonomous Region (Figure 4) and is also close to Hei Long Jiang Province (about 80km away from the boundary). Being the central city of the three-provincial border region, and the must-pass-through-place from northeast Inner Mongolia Autonomous Region and southwest Hei Long Jiang Province to Jilin Province, Baicheng is planned to be the central hub of this predominantly rural region to serve about 4,000,000 population.

Figure 4 Baicheng locates close to the border of three provinces

3. Baicheng is at a pivot location of the economic corridor (Figure 5) between Mongolia, China and Russia. This corridor is an important part of the Northeast Asia Economic Zone (inc China, Mongolia, Russia, North Korea, South Korea and Japan). In future this corridor will be the main route for Mongolian resources exporting to China, Japan and South Korea and also for industrial products from these countries flowing back to Mongolia.

Jilin Urban Improvement Project Supplementary Appendix 9 (TA 8172-PRC) Final Report

Figure 5 The Mongolia-China-Russia Economic Corridor of East Asia

Resources

• Wind Energy

4. Baicheng has great potential for the capture and utilization of wind energy. According to the climatological data from 1951, there were average 24 days with 8 levels or above gale per annum, average 47 days with below 8 level gale (about 60% windy days are in spring) per annum in Baicheng. And annual average wind speed reached 3.7 meters per second. A survey carried out by Central South Survey and Design Institute in 2009 confirms that the total area of land developable for wind energy in Baicheng is 6,865 sqkm with the installed capacity of 22,800,000 KW. Currently the installed capacity in Baicheng is about 2,130,000 KW. There is, therefore, more than 90% wind energy capacity are waiting to be explored in Baicheng District.

• Water

5. Baicheng is rich in water resource. The total extractable underground water is 1.539 billion cubic meters whilst 0.263 billion cubic meters are currently extracted (accounts for about 17.1% of the total amount). The surface water resource is about 0.189 billion cubic meters whilst 0.041 billion cubic meters are currently used (account for about 21.7% of the total amount). There is great potential for water supply to meet the future development needs of the city.

• Ecology

6. Baicheng has unique natural and ecological resources. There are two National Nature

Jilin Urban Improvement Project Supplementary Appendix 9 (TA 8172-PRC) Final Report Reserve Areas, one Provincial Nature Reserve Area and one National Hunting Area in Baicheng District. They are:  Xianghai National Nature Reserve Area: The world A-Class wetland, it is the home of Red Crowned Crane;  Momoge National Nature Reserve Area: National wetland, the home of White Crane, White Stork and Red Crowned Crane. It is called the paradise of birds.  Baolawendu Provincial Nature Reserve Area: Wetland featured by large area of wild apricot trees.  Donggou National Wetland Hunting Area: it is the permitted hunting area by National Ministry of Forestry. The Hunting area includes 4,000 hectare woodland and two rivers.

7. The natural and ecological resources in Baicheng is not only the natural assets that benefit the environment of Baicheng as a whole, but also the city’s strenghth for culture, leisure and tourism developments.

City Economy

8. According to the Baicheng Government Work Report 2012, agriculture accounts for over 1/3 of Baicheng GDP. This means Baicheng’s economy is still at the basic development stage as agriculture remains the major supporting economic element of Baicheng.

9. Baicheng’s industrial base is relatively weak but the recent five years have seen over 25% annual growth rate of the industrial sector. Among all industries, agro-food processing and energy-related industries (wind and fire power) are the two major industrial types to support Baicheng economy.

10. Baicheng is one of the important energy bases of Jinlin Province, the planned energy generation capacity of Baicheng will reach 10,000,000 KW fire powered electricity and 20,000,000 KW wind powered electricity. The situation is that the existing industry of Baicheng, typically agro-food processing, has relative low energy consumption. So there is a huge amount of energy surplus which needs to be consumed locally. Otherwise the energy will be wasted. There is, therefore, an urgent need to further develop and diversify the industry types in Baicheng in order to melt away the surplus energy supply. Furthermore, if the surplus energy can be consumed by additional industries, it will stimulate the development of wind energy equipment manufacturing sector in Baicheng.

11. Although there are rich natural and ecological resources in Baicheng district, the tourism economy is currently under-developed due to the city’s relative remoteness, the lack of investments in tourism facilities and the absence of overall planning to integrate the tourism resources.

12. In summary, the city’s economy is in need of diversification. Agriculture economy has limited growth potential and industry (with high energy consumption) and tourism are two promising sectors that the city needs to strengthen upon.

Jilin Urban Improvement Project Supplementary Appendix 9 (TA 8172-PRC) Final Report Transport

13. Baicheng occupies a strategic location in terms of transportation. Two provincial capital cities, Changchun and Harbin, are within 230 km radius of Baicheng. There are four railway lines and two high level roads that are interconnected at Baicheng (Figure 6). The city is one of the must pass-through places between Inner Mongolia and North east China.

Figure 6 The regional transportation of Baicheng

Rail 14. Baicheng is the railway/logistic hub of four main/branch railway lines. They are:

 Bai-A Line: Baicheng (Jinlin) – Aershan (Inner Mongolia);  Chang-Bai Line: Baicheng (Jinlin) – Changchun (Capital City of Jilin Province) – Jinlin city (Jinlin Province)  Tong-Rang Line: Tongliao –– Baicheng(Jilin) - Ranghu Lu (Mainly Freight Route to Daqing Oil Plant)  Ping-Qi Line: Qiqihaer (Hei Long Jiang) – Baicheng(Jilin) – Siping (Jilin)

15. According to Baicheng City’s Development and Reform Commision, the National Railway Company is planning to upgrade and extend Bai-A Line and Chang-Bai Line, which will greatly improved the freight transport capacity of these railway lines in future.

Road 16. There are one express way and one Provincial Highways that are inter-connected in Baicheng. G12 Hui-Wu Express Way is the major regional artery passing through Huichun – Dunhua – Jilin – Changchun – Songyuan – Baicheng – Wulanhaote. S207 Provincial Highway is an important south-northwards artery connecting the city with wider areas.

Jilin Urban Improvement Project Supplementary Appendix 9 (TA 8172-PRC) Final Report 17. The two main railway lines (Bai-A Line and Chang-Bai Line) and G12 Express Way form part of regional economic corridor between Inner Mongolia – Jilin. In future, this regional economic corridor may form part of the international economic corridor between Mongolia-China-Russia

2. The Proposed Regional Infrastructure

a. High Speed Rail

18. There is a proposed high speed railway line (Figure 7) going through Baicheng, starting from Huichun (border city near Russia) in the east to Aershan (border city near Mongolia) in the west. The designed speed of train will reach over 260km per hour reducing travel time from over 6 hours to about 1 hour from Baicheng to Changchun. In future, there is a possibility that Mongolia and Russia in the west have the equivalent compatible railway to connect in Aershan with the high speed rail network of China

Figure 7 The proposed High Speed Railway Line via Baicheng (Source: http://www.gaotie.cn)

Jilin Urban Improvement Project Supplementary Appendix 9 (TA 8172-PRC) Final Report b. Airport

19. There is a proposed Airport near Baicheng which was supported by the “National Eleventh Fiver-Year Plan”. The Baicheng airport will be one of the four airports to supplement Changchun Longjia Airport - the main airport in Jinlin Province. The airport site locates within Tao Bei District and is about 16.5 km away from Baicheng City.

20. It is estimated that the proposed airport will have the throughput capacity of 203,000 travelers, 1,019 tons freight and 2,459 flight sorties per annum. According to the initial plan, the airport will have flights to Beijing, Dalian, Qingdao, Yanji, Changchun, Shenyang and Harbin.

21. The proposed airport will further strengthen the position of Baicheng as a central city in the region. This will also enable Baicheng to conveniently interact with other major Chinese and international cities. The first foundation of the airport was laid in October 2012. The airport is expected to operate in August 2014 by earliest.

3. The Expansion of City Districts

22. Baicheng is now in the process of rapid expansion. According to Jilin Provincial Urban System Plan, Baicheng is to be forged into a central city in northwest Jilin with strong industrial manufacturing capability. And the population of the city is expected to reach 500,000 by 2020 (current population is 230,000) as stated in the plan. In fact, the rapid industrial developments in recent years have laid a good foundation for the city’s expansion.

23. In order to relief the pressure on the old city, and to support the provincial level plan to build Baicheng into a central city in west Jinlin area, the city has ambitious urban expansion plan to meet the growing needs of the city itself and the development expectations from provincial level. Four new districts have been planned in addition to the old city (Figure 8). They are:

 Economic Development District (EDD)  New Eco-City District (NED)  Industrial Park District (IPD)  Tao Bei Economic Development District.(TEDD)

24. The four districts are in the process of expansion with the aim of promoting more extensive industrial and commercial developments to attract and support more residents to the city.

Jilin Urban Improvement Project Supplementary Appendix 9 (TA 8172-PRC) Final Report

Figure 8 Five districts in Baicheng

Economic Development District (EDD)

25. Baicheng Economic Development District (EDD) was first established in 1998 with the permission by Jinlin Province Government to be a Provincial-Level Development District. According to the Baicheng Masterplan, EDD (Figure 9) will mainly accommodate technology, industrial, commercial, and logistics related developments with supplementary residential developments.

26. EDD currently has 100,000 residents. There are a range of key projects proposed within this area that will enable the creation of 11,118 job opportunities for local people. EDD is the main district that benefits from the proposed West City Infrastructure Project. It is therefore of vital importance for EDD whether the infrastructure project can go ahead with required fund or not.

Table of Proposed Major Projects in Economic Development District (EDD) Project Name Net Land Requirement No. of Estimated No. of (Ha) Employees per Jobs Hectare Car Trading Estate 30 33.4 1,000

Jilin Urban Improvement Project Supplementary Appendix 9 (TA 8172-PRC) Final Report Construction 53 33.4 1,770 Materials Trading Market Agricultural 30 33.4 1,000 Machinery Logistic Park Yiwu Micro 20 66.8 (33.4x2) 1336 Consumer Goods City Agricultural 10 33.4 334 Products Settle Account Center Agricultural 10 33.4 334 Products Networking Center 50 Industrial 160 (3.2x50) 33.4 5344 Enterprises Total 313 11,118

27. (Note: The figures in the above table are estimatied based on the calculation of average number of employees per hectare industrial/commercial land in Baicheng. The proposed major projects will be implemented in near future)

Jilin Urban Improvement Project Supplementary Appendix 9 (TA 8172-PRC) Final Report Figure 9 Economic Development District

New Eco-city District (NED)

28. This District (Figure 10) was just established in 2012. This district will partially benefit from the proposed Infrastructure Project. Some of the roads are there to facilitate the connection between New Eco-city District and the Economic Development District. The total planned area of this district will be 25 km2 and will accommodate 98,000 populations when mature.

29. The main function of this district is a sustainable living district of the city with commercial, Leisure, culture service facilities. San Huan Road will be the key road to connect the area with the adjoining areas;

30. There are four major employment sites within the district. They are: 1. Central Business and Central Municipal District (121 ha) 2. Logistic Trading Park (138 ha) 3. Business & Technology Park (180 ha) 4. North Military Arms Theme Park (144 ha)

(Note: Above data is from the Development Control Plan of the New Eco-city District)

Jilin Urban Improvement Project Supplementary Appendix 9 (TA 8172-PRC) Final Report

Figure 10 : Plan of the New Eco-city District

Table of Planned Employment Sites in New Eco-city District (NED) Project Name Planned Land Net Land for Estimated No. of Area Calculation (Ha) Jobs (Ha) Central Business and 121 242 (121x2) 8,082 Central Municipal District Logistic Trading Park 138 69 (138/2) 2,304 Business & Technology 180 90 (180/2) 3,006 Park North Military Arms 144 38 (144/4) 1202 Theme Park Total 583 14,594

(Note: The figures in the above table are estimated based on the calculation of average number of employees per hectare industrial/commercial land in Baicheng)

Industrial Park District (IPD)

Jilin Urban Improvement Project Supplementary Appendix 9 (TA 8172-PRC) Final Report 31. The Industrial Park District (IPD) (Figure 11) was initially established in 2005 and was formally permitted by Jinlin Province Government in 2011 as a Provincial-level Development District.

Figure 11 The Industrial Park District

32. The IPD covers 22 km2 and is to be developed in three phases. Phase I, II and III cover 5.1 km2, 5.9 km2 and 11 km2 respectively. If the IPD is fully occupied, there will be 36,740 job opportunities in total.

33. Phase I and Phase II areas have already been served by good infrastructure. To date, there are 106 confirmed projects in the industrial park, 26 of them with over 100 million RMB investments. Currently there are 7,458 employees in the park. Phase I development is largely occupied. Phase I & Phase II is planned to be fully occupied in five years time. There are additional 10,912 job opportunities to be created in the next five years according to the plan.

Taobei Economic Development District (TEDD)

34. Taobei Economic Development District (TEDD) (Figure 12) was established in 2010. The district comprises four sub-functional areas including a Modern Logistic Park, a Modern Commercial and Trading Park, an Eco Commercial and Residential Area and a New Industrial Park.

Jilin Urban Improvement Project Supplementary Appendix 9 (TA 8172-PRC) Final Report

Figure 12 The Taobei Economic Development District

35. The total planned area of TEDD is 33sqkm, which is to be developed in five phases. Phase I is 3.2 km2 and it is planned to develop 10sqkm industrial land in total by 2016. Focused on clean energy industry, machinery manufacture, agro-food and pharmacy & medical equipments industry, the district government endeavors to create total 12,000 jobs in TEDD in near future. 4. The Factors to Support the City’s Expansion

36. The ambitious urban expansion plan in four districts of Baicheng matches the city’s potential. There are a range of factors that will support the city’s further developments in the long term:

1). Policy Support in provincial Level The city has been listed into the Jilin Provincial Urban System Plan as a central city in Northwest Jinlin. According to the Plan, Baicheng is to be constructed into an important industrial city with a population of 500,000 in next ten years. The high expectation from provincial level means the city is likely to get the policy backup needed to support the rapid growth of the city.

2). The foreseeable East Asia Co-operation: Baicheng is located at a pivot point of one of the ‘must-pass-through’ route of Mongolia-Russia-North Korea corridor. It is foreseeable that the economic and transport tie

Jilin Urban Improvement Project Supplementary Appendix 9 (TA 8172-PRC) Final Report between Mongolia, China, Russia and North Korea will get stronger and stronger over time as the East Asia economy develops. More comprehensive East Asia co-operation is taking place in the foreseeable future. This will add to Baicheng’s strategic importance in East Asia Economic Zone. In future, the industrial products from Baicheng can easily be transported to Mongolia, Russia and North Korea. There is, therefore, good prospect for the Baicheng’s role in East Asia Economic cohesion, which is a strategic advantage for Baicheng’s long term growth.

3). Proposed regional transport infrastructure The proposed high speed railway and airport will conveniently connect Baicheng with other Chinese cities and possibly with cities in other East Asian Countries in future. The high speed railway will significantly reduce the travel time by rail (previously over 6 hours from Baishan to Changchun reduced to about 1 hour). The airport will immediately open the door for Baicheng to directly interact with the ‘external world’. These are undoubtedly a very important driving force to raise Baicheng’s position in terms of regional, national and international importance.

4). Convenient transport link and the proposed upgrade of rail-based freight transport Baicheng has convenient road and rail transport links with other major cities in the region. This is a necessary prerequisite for industrial developments. The proposed upgrade of two main railway lines further benefits Baicheng’s continuous efforts to attract more industrial enterprises into the city.

5). Sufficient water and energy supply Baicheng benefits from its rich water and wind energy resources, which are particularly helpful for the city’s planned industrial developments. Renewable energy is one of the strategic industries with promising future as sustainable developments are key to China’s economy transition and industrial upgrade. It is a tangible advantage of Baicheng in the use of wind energy and the development of wind energy related equipment manufacturing. This will support Baicheng’s long term growth.

6). Great potential for tourism economy; The unique natural and ecological resources are the treasure of Baicheng. The under-developed tourism industry is where Baicheng’s potential lies. The proposed airport and high speed rail will reduce Baicheng’s remoteness, which will then bring more tourists and create more tourism related employment opportunities in future.

37. Baicheng has great potential to become a city of regional, national, even international importance in the long term. The urban expansion plan suits the city’s future status and is reasonable with reference to the rapid development pace of many precedent Chinese cities.

5. The Necessity of Baicheng Urban Development Project

38. Lack of development fund is one of the main constraints that threat the further development of the city. The City needs the right level of facilities/infrastructure to meet its growing needs for

Jilin Urban Improvement Project Supplementary Appendix 9 (TA 8172-PRC) Final Report finance, technology, market, information, tourism and Living. However, due to the city’s limited capability to raise the required fund, the much needed improvements to key infrastructure such as road, waste collection & disposal and drainage have been delayed. This is undermining the amenity of people who live and work in Baicheng, causing environmental problems and undermining the City’s attractiveness to potential investors.

39. In Baicheng west city area, new residential areas have been developed without proper connection with other parts of the city; population which have been settled into newly developed residential buildings along district roads without proper municipal network are disconnected from the central municipal services. Currently it is estimated that 100,000 (that is almost one third of the city) residents are not yet connected to the central WWTP leading to a wastewater collection rate of 30%. There is an urgent need for the improvement/installation of waste water collection system.

40. The density of Road network and grade of road are noticeably lower than the average level of Jinlin Province. And the drainage system in the old city district is out-dated and disconnected. The rapid growth of the Industrial sector in Baicheng recent years generates more and more job opportunities and is attracting farmers from nearby areas to work and live in the city. This adds to the pressure on the already over-burdened municipal infrastructure.

41. The proposed 9 roads are the critical infrastructure of west city area, which is key to the success of the Economic Development District (EDD) and the New Eco-City District (NED). These roads will conveniently link the west city area with other parts of the city, and also connect new residential areas with the proposed employment sites (Figure 13).

Figure 13 The Proposed 9 roads in West City Area

Jilin Urban Improvement Project Supplementary Appendix 9 (TA 8172-PRC) Final Report 42. The construction of strategic new roads and associated facilities will increase the synergy and create a rational link between the city districts. Moreover it will open well planned urban areas, providing new residential and mixed-use function areas to accommodate future residents and economic activities and organize the future urban growth.

43. In China, infrastructure is one of the key components of the city’s competitiveness of attracting industrial and commercial investments. Poor infrastructure increases the difficulty of developments and raises the running costs of projects, which often scares off potential investors. Baicheng infrastructure development project is an opportunity to show Baicheng government‘s determination on the continuous investments on the city’s infrastructure. This will provide a high level of certainty to potential investors.

44. The proposed Baicheng infrastructure project will create thousands of job opportunities for skilled and non-skilled workers to work directly on the project in additional to indirect employment opportunities. The improvement of city infrastructure would then enable the proposed industrial and commercial development projects in Economic Development District (EDD) and New Eco-city District (NED). The confirmed proposed projects in EDD will create 11,118 local job opportunities as estimated. In NED, the estimated number of local jobs within the district will reach 14,594 in the long term. The project will also enhance the city’s overall attractiveness and then indirectly support the employment growth of other districts in the city.

6. Conclusion

45. Baicheng has the potential to become a city of great importance in northeast China. Currently, the city is at its early stage of growth and is in urgent need of funding to finance the much needed infrastructure improvements such as strategic roads, drains and solid waste collection/disposal. The lack of fund for infrastructure improvements has long been the major problem that restricts Baicheng’s developments.

46. The ADB loan represents a precious opportunity for Baicheng to raise the necessary fund to finance the proposed west city infrastructure project. This project will directly benefit people who live and work in the area, create a considerable number of local jobs, help to attract further investments, and be the catalyst for the continuous growth of the city. The ADB loan is vital to Baicheng’s development at this stage and it is strongly recommended to grant the loan to fuel the city’s journey to success.

Appendix

Table 1 Existing Industrial Enterprises in Industrial Park District (IPD)

Occupied Land Number of Name of Company (ha Employee 1 Baicheng Tongwei New 7.1 62

Jilin Urban Improvement Project Supplementary Appendix 9 (TA 8172-PRC) Final Report Construction Materials Limited Baicheng Guobin Machinery 2 1.0 53 Manufacturing Limited Baicheng Tianpai 3 Petro chemical Engineering 1.0 26 Limited Baicheng Fangyuan Doors & 4 Windows Manufacturing 1.5 37 Limited Baicheng Luyou Road 5 1.2 31 Engineering Limited Baicheng Suotian Building 6 1.0 66 Coating Materials Limited Baicheng Jinshan Steel 7 Structure & Colour Steel Plate 4.8 173 Engineering Limited Jilin Gongyiyuan Organic Food 8 10 .0 236 Limited Baicheng Yonghe Plastic 9 0. 48 45 Textile Limited Baicheng Branch, Jilin Daming 10 1.65 3 Steel Structure Limited Baicheng East Advertising 11 0.5 35 Limited Baicheng Hualong Plastic 12 0.5 28 Printing and Packaging Factory Baicheng MIngrenju Condiment 13 1.36 96 Food Limited 14 Baicheng Yujie Boiler Factory 0.5 19 Jilin Zaowu Light Steel Tile 15 2.0 77 Limited Baicheng Minfu Construction 16 1.5 45 Materials Limited Baicheng Hande New Eco 17 3.0 219 Building Materials Limited Baicheng Beiyuan Water 18 Conservation Irrigation 0.45 15 Equipment Limited Baicheng Zhenglong Gear 19 11 .9 827 Wheel Inc Jinlin Jianzhitai Bio-technology 20 1.0 18 Limited Baicheng Fengshen Rice 21 5.0 167 Processing Limited 17

Jilin Urban Improvement Project Supplementary Appendix 9 (TA 8172-PRC) Final Report Baicheng Hongdi Motor Gear 22 1.2 59 Wheel Limited Baicheng Xinda Oxygen 23 0.45 12 Limited Baicheng Letian New Building 24 2.0 35 Materials Limited Baicheng Nitegu Car 25 1.0 36 Components Limited Jinlin Runze High-efficiency Water Conservation Irrigation 26 10.0 48 Technology Development Limited 27 Jinlin Shengji Bio-chemical Inc 18.0 233 Jinlin Kangxi Bio-technology 28 3.3 31 Limited Baicheng Jincheng Insulation 29 1.0 42 Materials Limited Baicheng Jinqiao Noodle 30 0.5 46 Factory Baicheng Longju Pipeline 31 7.7 230 Engineering Limited Baicheng Chengyuan Eletric 32 5 158 Concrete Products Limited Baicheng Dongjia Grain Food 33 15.1 152 Development Limited Baicheng Xinyu Car Cable 34 1.01 50 Manufacturing Limited Jinlin Zhongzheng Medical 35 2.69 41 Packaging Limited Yihanjiali (Baicheng) Food and 36 23.38 365 Edible Oil Processing Limited 37 Jinlin Tongli Industrial Limited 10.1 286 Baicheng Jinsheng Nickel 38 11.8 431 Industry Limited Baicheng Jiahe Steel Structure 39 3.0 20 Limited Baicheng Tianqi New Energy 40 12.4 241 Equipment Limited Baicheng Shuangshuang Door 41 & Window Manufacturing 1.0 80 Limited Baicheng Longyue Plastic 42 0.45 80 Textile Limited 43 Zhongcai Technology 14.3 403 18

Jilin Urban Improvement Project Supplementary Appendix 9 (TA 8172-PRC) Final Report (Baicheng) Wind Energy Vane Limited Baicheng Zhongtian Steel 44 0.34 50 Structure Limited Baicheng Fuda Steel Bar 45 3.38 200 Rolling Limited Baicheng Longdan Diary 46 18.0 260 Technology Limited 47 Baicheng Yushi Concrete Inc. 2.2 102 Baicheng Tianhe Machinery 48 1.0 35 Limited Baicheng Baiqiang Boiler 49 0.8 35 Manufacturing Limited Huarui Wind Energy 50 34.93 150 Technology (Jilin) Limited Baicheng Tianfu Food & Edible 51 7.2 150 Oil Group Co Limited Baicheng Dongjia Rich Bran Oil 52 7.06 80 Limited Baicheng Hongyue Road and 53 2.6 72 Bridge Limited Baicheng Haodong Concrete 54 3.0 60 Products Limited Dalian Lvbo Baicheng Licorice 55 Technology Development 3.5 110 Limited Baicheng Yongmao Eco 56 Building Materials Products 3.01 80 Limited Baicheng Xinhong Drilling Tools 57 7.04 140 Limited Baicheng Xinhong Electric 58 5.67 60 Equipment Limited 59 Jinlin Tongyi Industrial Limited 4.29 103 Baicheng Fusang Special 60 10.0 176 Vehicle Manufacturing Limited 61 Jilin Shilihe Industrial Limited 6.04 89 Baicheng Sifang Electrical 62 1.0 43 Equipment Limited Baicheng Huigang Printing and 63 2.2 106 Packaging Limited 64 Jilin Jiangyu Textile Limited 4.41 120 65 Huarun Gas Holding Limited 2.0 32

Jilin Urban Improvement Project Supplementary Appendix 9 (TA 8172-PRC) Final Report Jilin Zhongzheng Medical 66 2.58 41 Packaging Limited Baicheng Yida Machinery 67 0.59 62 Limited Jilin Beisuo Medical Packaging 68 5.0 163 Materials Limited 69 Jilin Huayu Edible Oil Limited 2.7 100 Baicheng Sifang Asbestos 70 1.0 43 Drilling Tools Factory

(Note: based on the number of Industrial Enterprises, occupied land and number of employees, the average density is 33.4 person per hectare of industrial land)

Table 2 Existing Industrial Enterprises in Taobei Economic Development District (TEDD)

Occupied Land Name of Industry No. of Employee Ha Jinlin Botai Agriculture 1. 17.1 240 Technology Development Limited Jinlin Yaheng Farming 2. 11.23 300 Technology Development Limited Baicheng Small/Medium 3. 8.5 500 Company Hatching Base Limited Baicheng Hongrun Steel 4. 5 180 Moulding Plate Limited Jinlin Province Ji Cheng 5. Shuangquan Energy Technology 3.3 120 Limited Baicheng Yuanda Steel Structure 6. 1.83 60 Engineering Limited Baicheng Ouruite Medical 7. 0.99 58 Materials Technology Limited Baicheng Electricity Supply 8. 0.032 38 Company 66kv Substation

(Note: based on the number of Industrial Enterprises, occupied land and number of employees, the average density is 31.2 person per hectare of industrial land)