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PAM: PRC: Heilongjiang Energy Efficient District Heating Project

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PAM: PRC: Heilongjiang Energy Efficient District Heating Project Project Administration Manual Project Number: 44011 September 2012 People's Republic of China: Heilongjiang Energy Efficient District Heating Project CONTENTS ABBREVIATIONS I. PROJECT DESCRIPTION 1 A. Rationale, Location and Beneficiaries 1 B. Impact and Outcome 2 C. Outputs 2 II. IMPLEMENTATION PLANS 3 A. Project Readiness Activities 3 B. Overall Project Implementation Plan 4 III. PROJECT MANAGEMENT ARRANGEMENTS 5 A. Project Stakeholders—Management Roles and Responsibilities 5 B. Key Persons Involved in Implementation 6 IV. COSTS AND FINANCING 9 A. Detailed Cost Estimates by Expenditure Category 9 B. Detailed Cost Estimate by Financiers 11 C. Allocation and Withdrawal of Loan Proceeds 14 D. Contract and Disbursement S-curves 15 E. Fund Flow Diagram 16 V. FINANCIAL MANAGEMENT 18 A. Financial Management Assessment 18 B. Financial Performance and Projections 18 C. Disbursement Arrangements 20 D. Accounting 21 E. Auditing 21 VI. PROCUREMENT AND CONSULTING SERVICES 21 A. Advance Contracting and Retroactive Financing 21 B. Procurement of Goods, Works and Consulting Services 22 C. Procurement Plan 22 D. Consulting Services 22 VII. SAFEGUARDS 24 A. Involuntary Resettlement 24 B. Environment 25 VIII. GENDER ACTION PLAN 26 A. Background 26 B. Gender Issues 26 C. Actions and Targets 27 D. Reporting and Monitoring Mechanism 28 IX. PERFORMANCE MONITORING, EVALUATION, REPORTING AND COMMUNICATION 28 A. Project Performance Monitoring 28 B. Project Review and Evaluation 34 C. Reporting 34 X. ANTICORRUPTION POLICY 35 XI. ACCOUNTABILITY MECHANISM 35 XII. RECORD OF PAM CHANGES 36 APPENDIXES 1. Design and Monitoring Framework 37 2. Procurement Plan 39 3. Outline Terms of Reference for Project Implementation 43 4. Labor Retrenchment and Reemployment Plan 46 5. Environmental Management Plan (Environment Safeguards) 50 6. Grievance Redress Mechanism 73 Project Administration Manual Purpose and Process The project administration manual (PAM) describes the essential administrative and management requirements to implement the project on time, within budget, and in accordance with the Government and Asian Development Bank (ADB) policies and procedures. The Heilongjiang provincial government, the executing agency, and the nine implementing agencies—(i) Qitaihe Heating Company, (ii) Harbin Taiping Heating Company, (iii) Heilongjiang Tangwanghe Forest Bureau, (iv) Heilongjiang Xinqing Forest Bureau, (v) Daxing'anling Power Industrial Bureau, (vi) Jidong Heat and Power Company, (vii) Raohe County Chenguang Heating Company, (x) Tongjiang Changheng Cogeneration Company, and (ix) Jiamusi Xinshidai Urban Infrastructure Investment Company—are entirely responsible for the implementation of ADB financed projects, as agreed jointly between the borrower and ADB, and in accordance with Government and ADB’s policies and procedures. ADB staff is responsible to support the implementation including compliance by the executing agency and the nine implementing agencies of their obligations and responsibilities for project implementation in accordance with ADB’s policies and procedures. At the loan negotiations on 20 August 2012, the borrower and ADB have agreed to the PAM and it ensures consistency with the loan agreement. In the event of any discrepancy or contradiction between the PAM and the loan agreement, the provisions of the loan agreement shall prevail. After ADB Board approval of the project's report and recommendations of the President, changes in implementation arrangements are subject to agreement and approval pursuant to relevant government and ADB administrative procedures (including the project administration instructions) and upon such approval they will be subsequently incorporated in the PAM. ABBREVIATIONS ADB – Asian Development Bank CDM – Clean Development Mechanism DHS – district heating system DRC – Development and Reform Commission EMP – environmental management plan EPB – Environmental Protection Bureau GHG – greenhouse gas HPDRC – Heilongjiang Provincial Development and Reform Commission HES – heat-exchange station HFB – Heilongjiang Provincial Finance Bureau HPG – Heilongjiang provincial government MOF – Ministry of Finance NDRC – National Development and Reform Commission PAM – project administration memorandum PCR – project completion report PMO – project management office PPCU – Project public complaints unit SOE – state-owned enterprise I. PROJECT DESCRIPTION A. Rationale, Location and Beneficiaries 1. The Project. Heating services in a cold climate region, such as Heilongjiang where temperature fall below –40°C and the heating season lasts up to 6 months, meets one of the basic human needs and provides essential support to socioeconomic activities. The proposed project1 will expand and upgrade district heating systems (DHSs) in eight cities of Heilongjiang province to make the systems energy efficient, thereby reducing emission of greenhouse gases (GHGs) and air pollutants.2 The project will allow the closing of around 470 small and inefficient coal-fired boilers and replacing 275,166 household stoves. 2. Emission reduction impact. The project results in substantial environmental benefits by replacing around 470 small, old, and inefficient heating boilers and 275,166 household stoves (equivalent to about 1,014 megawatt thermal) with energy efficient combined heat and power (CHP) or heating boilers, and rehabilitating heating pipes to reduce heat losses. The net reduction in annual coal consumption is estimated at 418,889 tons (t) of standard coal, which 3 4 5 results in the reduction of 1 million t of carbon dioxide, 4,500 t of SO2, 1,961 t of NOx and 22,819 t of particulate matter. 3. Social and poverty impact. The project will directly benefit more than 1.63 million urban residents of the project cities, about half of whom (0.81 million) are female and 37,000 of whom are from poor households, and provide direct benefits to 174,625 children in 314 schools and patients and medical staff in 108 hospitals. The project will (i) reduce cases of respiratory diseases through improved indoor and outdoor air quality, reduce CO poisoning by providing safer district heating services, and provide a better medical environment by providing cleaner and reliable heating services to hospitals; (ii) improve living conditions through adequate and reliable heating services; (iii) reduce heating expenditure by switching from individual household stoves and decentralized heating systems to centralized energy efficient heating systems; (iv) provide a better schooling environment during the winter by providing cleaner and reliable heating services; and (v) increase income through job opportunities created during construction and operation (3,413 jobs during construction and 1,339 during operation). 4. Sector assessment. The key issues in the district heating subsector are: (i) inefficiency in DHSs, (ii) slow progress in the application of consumption-based billing, (iii) slow heating tariff adjustment associated with the increase of coal cost, and (iv) weak customer orientation in the service delivery by the state-owned enterprises (SOEs) which causes lower tariff collection rate. 5. Special features. Several measures have been adopted in designing the project to address these issues, such as: (i) purchasing heat from existing combined heat and power 1 The Asian Development Bank (ADB) provided project preparatory technical assistance. ADB. 2010. Technical Assistance to the People’s Republic of China for Preparing Heilongjiang Energy Efficient District Heating Project. Manila. 2 The cities included in the project are Harbin, Jiagedaqi, Jiamusi, Jixi, Qitaihe, Raohe, Tongjiang, and Yichun. 3 ADB will support the efforts of obtaining clean development mechanism benefits through its technical support facility. 4 Equivalent to 45% of provincial reduction target. 5 Equivalent to 8.5% of provincial reduction target. 2 plants or constructing large size heat-only boilers with circulating fluidized-bed technology which have combustion efficiencies of 87% or higher, (ii) adopting the computerized system to control the demand and supply of heat which prevents the overheating of buildings, and (iii) pilot testing the household consumption-based billing system of the two subprojects to moderate the heating demand. 6. In addition, the project will provide support to two private enterprises to promote private sector participation. To benefit from the private sector experiences and for better track record in the tariff collection rate, the knowledge sharing sessions between private and SOEs will be organized during the loan implementation. A regional conference on district heating with likely participation from the neighboring provinces (such as Jilin, Liaoning, and Inner Mongolia), and countries (such as Japan, Republic of Korea, and member countries of Central Asia Regional Economic Cooperation), to foster knowledge sharing and regional cooperation, will be organized by Heilongjiang provincial government (HPG). 7. Potential clean development mechanism application. The proposed project is likely to qualify for carbon credit under Clean Development Mechanism (CDM) of the Kyoto Protocol or other international GHG emission trading mechanism or domestic GHG emission trading mechanism. Asian Development Bank (ADB) will support the efforts of obtaining CDM benefits through its technical support facility. Heilongjiang Provincial Development and Reform Commission (HPDRC), Heilongjiang Provincial Finance Bureau (HPFB), project management office (PMO), and the nine subproject companies
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