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 should make sure that all the necessary data and studies are provided to the technical support facility for the evaluation of the project and to arrive at a conclusion with respect to the project’s possible registration under CDM.
B. Impact and Outcome
8. The impact will be improved energy efficiency and a cleaner environment in Heilongjiang province. The outcome will be improved air quality and reduced GHG emissions in eight urban areas in Heilongjiang province.
C. Outputs
9. The outputs will be (i) expanded district heating coverage in eight project cities without net increase in emissions (footnote 2), (ii) improved energy efficient heat generation capacity in three project cities,6 and (iii) promotion of private sector participation in district heating in two project cities.7 A detailed summary of the subprojects under component A is in Table 1. The project’s design and monitoring framework is in Appendix 1.
Table 1: Summary of Subprojects New Heating Heating Number of Heating Area Source Heat SCADA Pipeline Small Boiler (million No. Subproject (MWth)a Exchanger System (km) Closure m2) 2 x 116 Harbin Taiping HP MWth 40 Yes 22 18 4.0 1. and DH CFB 2. Jiagedaqi DH 30 Yes 21 68 6.0 3. Jiamusi West DH 111 Yes 68 218 14.8
6 The three project cities are Harbin, Raohe, and Tongjiang. 7 The two project cities include Raohe and Tongjiang. 3
New Heating Heating Number of Heating Area Source Heat SCADA Pipeline Small Boiler (million No. Subproject (MWth)a Exchanger System (km) Closure m2) 4. Jidong County DH 34 Yes 7 32 0.9 5. Qitaihe DH 33 Yes 30 15 7.6 3 x 14 Raohe Town HP MWth 0b Yes 8 19 0.6 6. and DH CFB 3 x 58 Tongjiang City HP MWth 24 Yes 17 36 2.7 7. and DH CFB Yichun City– 22 Yes 27 16 1.5 8. Tangwanghe DH Yichun City– 27 Yes 17 48 2.7 9. Xinqing DH Total 448 321 217 470 40.8 CFB = circulating fluidized-bed, DH = district heating, HP = heating plant, km = kilometer, m2 = square meter, MWth = megawatt thermal, No. = number, SCADA = supervisory control and data acquisition. a The subprojects which do not have new heat source installation will purchase heat from existing combined heat and power plants. b Since the heating area is small, the subprojects adopt direct heating system which do not require heat exchanger. Sources: Subproject feasibility studies.
II. IMPLEMENTATION PLANS
A. Project Readiness Activities
Table 2: Project Readiness Activities
2012 2013 Indicative Aug Sep Oct Nov Dec Jan Feb Mar Who is responsible Activities PMO, implementing Advance agencies, tendering contracting actions company, procurement consultant, ADB executing agency, Retroactive implementing agencies, financing actions PMO, ADB Loan Negotiations MOF, NDRC, ADB ADB Board approval ADB Loan signing MOF, ADB Government legal opinion provided executing agency Government budget executing agency, inclusion implementing agencies Loan effectiveness executing agency, ADB ADB = Asian Development Bank, MOF = Ministry of Finance, NDRC = National Development and Reform Commission, PMO = project management office. Note: In addition, individual subprojects’ feasibility reports and environmental impact assessment reports are already approved by the appropriate authorities in the People’s Republic of China.
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B. Overall Project Implementation Plan
10. The project will be implemented over 5 years from 2013 to 2017 (Table 3).
Table 3: Project Implementation Plan
2013 2014 2015 2016 2017
No. Item 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 Harbin Taiping HP and DH 1. a. Tender documents preparation and approval b. Tender invitation, evaluation, and contract award c. Construction
d. Testing and commissioning
Yichun City-Tangwanghe DH 2. a. Detailed design and approval
b. Tender documents preparation and approval c. Tender invitation, evaluation, and contract award d. Construction
e. Testing and commissioning
Yichun City - Xinqing DH 3. a. Detailed design and approval
b. Tender documents preparation and approval c. Tender invitation, evaluation, and contract award d. Construction
e. Testing and commissioning
Jiamusi West DH 4. a. Tender documents preparation and approval b. Tender invitation, evaluation, and contract award c. Construction
d. Testing and commissioning
Jiagedaqi DH 5. a. Detailed design and approval
b. Tender documents preparation and approval c. Tender invitation, evaluation, and contract award d. Construction
e. Testing and commissioning
Jidong County DH 6. a. Detailed design and approval
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2013 2014 2015 2016 2017
No. Item 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 b. Tender documents preparation and approval c. Tender invitation, evaluation, and contract award d. Construction e. Testing and commissioning
Qitaihe DH 7. a. Detailed design and approval
b. Tender documents preparation and approval c. Tender invitation, evaluation, and contract award d. Construction
e. Testing and commissioning
Raohe Town HP and DH 8. a. Detailed design and approval
b. Tender documents preparation and approval c. Tender invitation, evaluation, and contract award d. Construction
e. Testing and commissioning
Tongjiang City HP and DH 9. a. Detailed design and approval
b. Tender documents preparation and approval c. Tender invitation, evaluation, and contract award d. Construction
e. Testing and commissioning
10. Implementation of labor retrenchment plan 11. Project Monitoring and Impact Evaluation DH = district heating, HP = heating plant. Sources: Project implementing agencies and Asian Development Bank estimates.
III. PROJECT MANAGEMENT ARRANGEMENTS
A. Project Stakeholders—Management Roles and Responsibilities
Table 4: Roles and Responsibilities of Key Project Stakeholders Project Stakeholders Management Roles and Responsibilities Executing Agency Provide overall guidance during preparation and Heilongjiang provincial government implementation The project leading group is under a vice-governor of Ensure counterpart contributions are provided for Heilongjiang provincial government which includes the project implementation on time provincial representatives from the Development and Reform Commission, Finance Bureau, Construction Bureau, and Environment Protection Bureau 6
Project Stakeholders Management Roles and Responsibilities Project Management Office under the Heilongjiang Coordinate the implementation of subprojects Development and Reform Commission Ensure environment and social safeguards compliance Submit quarterly progress reports to ADB Submit the withdrawal applications Retain supporting documents Establish and maintain the imprest account Submit annual audit report and financial statements Implementing Agency 1 Implement Harbin Taiping Heating Plant and District Harbin Taiping Heating Company Heating Subproject Implementing Agency 2 Implement Yichun City-Tangwanghe District Heating Heilongjiang Tangwanghe Forest Bureau Subproject Implementing Agency 3 Implement Yichun City-Xinqing District Heating Subproject Heilongjiang Xinqing Forest Bureau Implementing Agency 4 Jiamusi Xinshidai Urban Infrastructure Investment Company Implement Jiamusi West District Heating Subproject Implementing Agency 5 Daxing'anling Power Industrial Bureau Implement Jiagedaqi District Heating Subproject Implementing Agency 6 Jidong Heat and Power Company Implement Jidong County District Heating Subproject Implementing Agency 7 Qitaihe Heating Company Implement Qitaihe District Heating Subproject Implementing Agency 8 Implement Raohe Town Heating Plant and District Heating Raohe County Chenguang Heating Company Subproject Implementing Agency 9 Implement Tongjiang City Heating Plant and District Tongjiang Changheng Cogeneration Company Heating Subproject Asian Development Bank Provide overall project administration. Provide orientation to executing agency and implementing agencies including the project management office. Review draft bidding documents and approval of bid evaluation report. Disburse Asian Development Bank loan proceeds.
B. Key Persons Involved in Implementation
Table 5: Key Persons Involved During Implementation Executing Agency Government of Heilongjiang Mr. Wang Xiquan Director, Department of Foreign Capital Utilization and Overseas Investment, Heilongjiang Provincial Development and Reform Commission Telephone No.+86 451 8262 9329 Email address: [email protected] Office Address: 202 Zhongshan Road, Nangang District, Harbin, Heilongjiang, China, 150001 Asian Development Bank Division Director Mr. Ashok Bhargava Director, Energy Division East Asia Department, ADB Telephone No.: +63 2 632 6387 Fax No. +63 2 636 2302 Email address: [email protected] Office Address: Room 6648 east core, Asian Development Bank, 6 ADB Avenue, Mandaluyong City, 1550 Metro Manila, Philippines Mission Leader Mr. Teruhisa Oi Senior Energy Specialist, Energy Division East Asia Department, ADB 7
Telephone No.+63 2 632 5706 Fax No. +63 2 636 2302 Email address: [email protected] Office Address: Room 6640 south core, Asian Development Bank, 6 ADB Avenue, Mandaluyong City, 1550 Metro Manila, Philippines 8
Figure 1: Project Organizational Structure
Government of Heilongjiang Province
(Executing Agency)
Project Leading Group (Provincial DRC, FB, EPB)
Project Management Office
Harbin Yichun Jiamusi Municipal Daxing’anling Jidong Raohe Tongjiang Qitaihe Municipal Municipal Government Prefecture County County City Municipal Government Government /Project Government/Project Government Government Government/ Government/ /Project /Project Coordination Coordination Office /Project /Project Project Project Coordination Coordination Office Coordination Coordination Coordination Coordination Office Office Office Office Office Office
Qitaihe Harbin Heilongjiang Heilong Jiamusi Daxing'anling Jidong Raohe Tongjiang Heating Taiping Tangwanghe jiang Xinshidai Power Heat and County Changheng Company Heating Forest Xinqing Urban Industrial Power Chenguang Cogeneration Company Bureau Forest Infrastructure Bureau Company Heating Company Bureau Investment Company Company
DRC = Development and Reform Commission, EPB = Environmental Protection Bureau, FB = Finance Bureau. Source: Project preparatory technical assistance. 9
Table 6: Summary of Subproject Names, Implementing Agencies and Percentage of Ownerships Ownership Name of Subproject Project Implementing Agency Harbin Taiping HP and DH Harbin Taiping Heating Company State-owned enterprise (100%) Yichun City-Tangwanghe DH Heilongjiang Tangwanghe Forest Bureau State-owned holdings (100%) Yichun City-Xinqing DH Heilongjiang Xinqing Forest Bureau State-owned holdings (100%) Jiamusi West DH Jiamusi Xinshidai Urban Infrastructure Investment State-owned holdings Company (100%) Jiagedaqi DH Daxing'anling Power Industrial Bureau State-owned enterprise (100%) Jidong County DH Jidong Heat and Power Company State-owned enterprise (100%) Qitaihe DH Qitaihe Heating Company State-owned enterprise (100%) Raohe Town HP and DH Raohe County Chenguang Heating Company Private, personal holdings (100%) Tongjiang City HP and DH Tongjiang Changheng Cogeneration Company Private, personal holdings (100%) DH = district heating, HP = heating plant. Source: Heilongjiang project management office
IV. COSTS AND FINANCING
11. The project investment cost is estimated at $353 million, including physical and price contingencies and financial charges during construction. ADB will finance $150 million (42%) of the total project cost. The remaining $117 million (34%) will be financed by the implementing agencies and $86 million (24%) from domestic banks. The implementing agency financing includes internally generated funds and parent company or local government contributions. The ADB loan will be used for civil works, equipment and supplies, project management, interest, and commitment charges during construction. The implementing agencies will finance civil works, equipment and supplies, and contingencies.
A. Detailed Cost Estimates by Expenditure Category
12. The detailed cost estimates by expenditure category is in Table 7.
Table 7: Detailed Cost Estimates by Expenditure Category ($ million) Estimated Cost ADB Foreign Local Total Expenditure Category Loan Exchange Currency Cost A. Harbin Taiping Heating Plant and District Heating 1. Base Cost a. Civil works 3.0 15.6 15.6 b. Equipment 21.3 25.5 25.5 c. Other engineering cost 5.9 5.9 2. Contingencies a. Physical 2.6 2.1 4.7 b. Price 0.01 0.9 0.9 3. Interest during construction 1.4 1.4 0.8 2.2 4. Commitment charges 0.1 0.1 0.1 Subtotal (A) 25.9 29.6 25.3 54.9
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Estimated Cost ADB Foreign Local Total Expenditure Category Loan Exchange Currency Cost B. Jiagedaqi District Heating 1. Base Cost a. Civil works 6.9 6.9 b. Equipment 17.9 24.0 24.0 c. Other engineering cost 3.2 3.2 2. Contingencies a. Physical 2.4 1.0 3.4 b. Price 0.0 0.4 0.4 3. Interest during construction 1.1 1.1 1.5 2.6 4. Commitment charges 0.1 0.1 0.1 Subtotal (B) 19.1 27.6 13.0 40.6 C. Jiamusi West District Heating 1. Base Cost a. Civil works 28.6 28.6 b. Equipment 32.0 32.0 15.0 47.0 c. Other engineering cost 10.3 10.3 2. Contingencies a. Physical 3.2 5.4 8.6 b. Price (0.1) 2.4 2.2 3. Interest during construction 1.5 1.5 3.5 5.1 4. Commitment charges 0.1 0.1 0.1 Subtotal (C) 33.6 36.7 65.2 101.9 D. Jidong County District Heating 1. Base Cost a. Civil works 0.5 0.5 b. Equipment 2.7 4.0 4.0 c. Other engineering cost 0.9 0.9 2. Contingencies a. Physical 0.4 0.1 0.5 b. Price 0.0 0.1 0.1 3. Interest during construction 0.17 0.17 0.17 4. Commitment charges 0.01 0.01 0.01 Subtotal (D) 2.9 4.6 1.6 6.2 E. Qitaihe District Heating 1. Base Cost a. Civil works 3.8 18.2 18.2 b. Equipment 23.0 23.0 6.8 29.8 c. Other engineering cost 7.4 7.4 2. Contingencies a. Physical 2.3 3.2 5.5 b. Price (0.2) 1.5 1.2 3. Interest during construction 1.89 1.89 1.9 4. Commitment charges 0.07 0.07 0.1 Subtotal (E) 28.7 27.0 37.1 64.1 F. Raohe Town Heating Plant and District Heating 1. Base Cost a. Civil works 2.6 2.6 b. Equipment 4.8 5.7 5.7 c. Other engineering cost 1.2 1.2 2. Contingencies a. Physical 0.6 0.4 1.0 b. Price 0.0 0.2 0.2 3. Interest during construction 0.3 0.3 0.1 0.4 11
Estimated Cost ADB Foreign Local Total Expenditure Category Loan Exchange Currency Cost 4. Commitment charges 0.0 0.0 0.0 Subtotal (F) 5.1 6.6 4.5 11.1 G. Tongjiang City Heating Plant and District Heating 1. Base Cost a. Civil works 5.6 14.8 14.8 b. Equipment 13.5 13.5 5.5 19.0 c. Other engineering cost 4.2 4.2 2. Contingencies a. Physical 1.4 2.5 3.8 b. Price (0.01) 1.1 1.1 3. Interest during construction 1.3 1.3 0.2 1.4 4. Commitment charges 0.1 0.1 0.1 Subtotal (G) 20.5 16.2 28.3 44.5 H. Yichun City-Tangwanghe District Heating 1. Base Cost a. Civil works 2.3 2.3 b. Equipment 5.0 5.9 5.9 c. Other engineering cost 1.8 1.8 2. Contingencies a. Physical 0.6 0.4 1.0 b. Price 0.0 0.2 0.2 3. Interest during construction 0.3 0.3 0.3 4. Commitment charges 0.0 0.0 0.0 Subtotal (H) 5.4 6.9 4.7 11.5 I. Yichun City-Xinqing District Heating 1. Base Cost a. Civil works 0.0 4.2 4.2 b. Equipment 7.2 8.0 8.0 c. Other engineering cost 2.2 2.2 2. Contingencies a. Physical 0.8 0.6 1.4 b. Price 0.0 0.3 0.3 3. Interest during construction 0.5 0.5 0.5 4. Commitment charges 0.02 0.0 0.0 Subtotal (I) 7.7 9.3 7.3 16.6 J. Project Management 1. Base Cost 1.2 1.2 1.2 2. Contingencies 0.1 0.1 3. Interest during construction 0.02 0.02 0.02 4. Commitment charges 0.003 0.003 0.003 Subtotal (J) 1.2 1.3 1.3 Total Project Cost 150.0 165.7 187.1 352.8 () = negative, ADB = Asian Development Bank. Notes: 1. Physical contingency is 10% of the total base cost. Price contingency is based on domestic and international inflation rates during construction. 2. Numbers may not sum precisely because of rounding. Sources: Project implementation agencies and Asian Development Bank estimates.
B. Detailed Cost Estimate by Financiers
13. The detailed cost estimates by financiers is in Table 8.
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Table 8: Cost Estimates by Financiers ($ million) Implementing
ADB Loan Agencies Domestic Banks Total Item Amount % Amount % Amount % Amount A. Investment Cost 1. Civil works 12.4 13.2 39.9 42.5 41.5 44.2 93.7 a. Harbin Taiping HP 3.0 19.6 4.8 31.0 7.7 49.4 15.6 and DH a1. Civil works of boiler house and 3.0 49.0 3.1 50.8 0.0 0.0 6.1
auxiliaries a2. Civil works and installation of HESs 0.0 0.0 1.7 18.3 7.7 81.2 9.5
and pipelines b. Jiagedaqi District Heating 0.0 0.0 0.0 0.0 6.9 100.0 6.9
b1. Civil works of HESs 0.0 0.0 0.0 0.0 2.1 100.0 2.1 b2. Civil works and installation of 0.0 0.0 0.0 0.0 4.8 100.0 4.8
pipelines c. Jiamusi West DH 0.0 0.0 11.2 39.1 17.4 60.9 28.6 c1. Civil works of HESs 0.0 0.0 6.0 52.4 5.5 47.6 11.5 c2. Civil works and installation of 0.0 0.0 5.2 30.3 12.0 69.7 17.2
pipelines d. Jidong County DH 0.0 0.0 0.5 100.0 0.0 0.0 0.5 d1. Civil works of HESs and other relevant 0.0 0.0 0.5 100.0 0.0 0.0 0.5
buildings e. Qitaihe DH 3.8 20.7 14.5 79.3 0.0 0.0 18.2 e1. Pipeline civil works 3.8 40.0 5.6 60.0 0.0 0.0 9.4 and installation e2. Civil works of HSE 0.0 0.0 2.3 100.0 0.0 0.0 2.3 e3. Pipeline civil works 0.0 0.0 6.6 100.0 0.0 0.0 6.6 and installation f. Raohe Town HP and DH 0.0 0.0 0.9 34.5 1.7 65.5 2.6 f1. Civil works of boiler 0.0 0.0 0.4 19.3 1.7 80.7 2.1 house
f2. Civil works of HESs and pipelines and 0.0 0.0 0.5 100.0 0.0 0.0 0.5
pipelines installation
g. Tongjiang City HP and DH 5.6 37.6 1.5 10.2 7.7 52.2 14.8
g1. Civil works of boiler 5.6 50.7 0.0 0.0 5.4 49.3 11.0 plant g2. Civil work and installation of heat 0.0 0.0 1.5 39.5 2.3 60.5 3.8 pipeline and civil works of HESs 13
Implementing
ADB Loan Agencies Domestic Banks Total Item Amount % Amount % Amount % Amount h. Yichun City-Tangwanghe 0.0 0.0 2.3 100.0 0.0 0.0 2.3 DH h1. Civil works of HESs and pipelines and 0.0 0.0 2.3 100.0 0.0 0.0 2.3
pipelines installation i. Yichun City-Xinqing DH 0.0 0.0 4.2 100.0 0.0 0.0 4.2 i1. Civil works of HESs and pipelines and 0.0 0.0 4.2 100.0 0.0 0.0 4.2
pipelines installation 2. Equipment 127.5 33.4 15.2 4.0 26.2 6.9 381.6 a. Harbin Taiping HP and 21.3 83.7 0.0 0.0 4.2 16.3 25.5 DH a1. Supply and installation of 15.3 100.0 0.0 0.0 0.0 0.0 15.3 boilers, HESs, and SCADA A2. Supply of heat 6.0 59.1 0.0 0.0 4.2 40.9 10.2 pipelines b. Jiagedaqi District Heating 17.9 74.8 0.0 0.0 6.0 25.2 24.0
b1. Supply and installation of 9.4 100.0 0.0 0.0 0.0 0.0 9.4 equipment in HESs and SCADA b2. Supply of heat 8.5 58.4 0.0 0.0 6.0 41.6 14.5 pipelines c. Jiamusi West DH 32.0 68.1 0.0 0.0 15.0 31.9 47.0 c1. Supply and installation of 12.3 100.0 0.0 0.0 0.0 0.0 12.3 equipment in HESs and SCADA c2. Supply of heat 19.7 100.0 0.0 0.0 0.0 0.0 19.7 pipelines c3. Supply of heat 0.0 0.0 0.0 0.0 15.0 100.0 15.0 pipelines d. Jidong County DH 2.7 67.5 1.3 32.5 0.0 0.0 4.0 d1. Supply and installation of 1.5 100.0 0.0 0.0 0.0 0.0 1.5 equipment in HESs, and SCADA d2. Supply of heat 1.2 48.1 1.3 51.9 0.0 0.0 2.5 pipelines e. Qitaihe DH 23.0 77.3 6.8 22.7 0.0 0.0 29.8 e1. Supply of heat 23.0 100.0 0.0 0.0 0.0 0.0 23.0 pipeline e2. HSE and installation 0.0 0.0 6.8 100.0 0.0 0.0 6.8 f. Raohe Town HP and 4.8 83.5 0.0 0.0 0.9 16.5 5.7 DH f1. Supply and installation of boilers 2.6 100.0 0.0 0.0 0.0 0.0 2.6
and auxiliaries 14
Implementing
ADB Loan Agencies Domestic Banks Total Item Amount % Amount % Amount % Amount f2. Supply and installation of heat 2.2 69.6 0.0 0.0 0.9 30.4 3.1
pipelines g. Tongjiang City HP and DH 13.5 71.1 5.5 28.9 0.0 0.0 19.0
g1. Supply and installation of boilers, HESs, 13.5 100.0 0.0 0.0 0.0 0.0 13.5
SCADA, and heat pipeline g.2 Supply and installation of boilers 0.0 0.0 5.5 100.0 0.0 0.0 5.5 and heat exchangers h. Yichun City- 5.0 84.5 0.9 15.5 0.0 0.0 5.9 Tangwanghe DH h1. Supply and installation of 3.0 100.0 0.0 0.0 0.0 0.0 3.0 equipment in HESs and SCADA h2. Supply of heat 2.0 69.0 0.9 31.0 0.0 0.0 3.0 pipelines i. Yichun City-Xinqing DH 7.2 90.4 0.8 9.6 0.0 0.0 8.0 i1. Supply and installation of 4.1 100.0 0.0 0.0 0.0 0.0 4.1 equipment in HESs and SCADA i2. Supply of heat 3.1 80.1 0.8 19.9 0.0 0.0 3.9 pipelines 3. Other Engineering Cost 0.0 0.0 31.8 85.5 5.4 14.4 37.2 Subtotal (A) 139.9 46.7 86.9 29.0 73.0 24.3 299.8 B. Project Management 1.2 100.0 0.0 0.0 1.2 C. Contingencies 0.0 0.0 36.7 100.0 0.0 0.0 36.7 D. Finance Charges during 9.0 59.7 0.0 0.0 6.1 40.3 15.1 Construction Total 150.0 42.5 123.6 35.0 79.1 22.4 352.8 $ = US dollars, % = percentage, ADB = Asian Development Bank, DH = district heating, HES = heat exchange station, HP = heating plant, SCADA = supervisory control and data acquisition. Note: Numbers may not sum precisely because of rounding. Sources: Project implementing agencies and Asian Development Bank estimates.
C. Allocation and Withdrawal of Loan Proceeds
14. The allocation and withdrawal of loan proceeds is in Table 9.
15
Table 9: Allocation and Withdrawal of Loan Proceeds Total Amount Allocated for ADB Financing Basis ADB Financing Percentage of ADB ($ million) Financing from the Loan No. Item Category Subcategory Account A. Civil Works 12.4 1. Harbin Taiping HP and DH 3.0 49% of total expenditure 2. Qitaihe DH 3.8 40% of total expenditure 3. Tongjiang City HP and DH 5.6 51% of total expenditure B. Goods for Harbin Taiping HP and DH 21.3 Supply and installation of boilers and 1. 15.3 100% of total expenditure ancillary equipments Supply of heat pipelines, HESs, and 2. 6.0 59% of total expenditure SCADA C. Goods for Jiagedaqi DH 17.9 Supply and installation of equipment in 1. 9.4 100% of total expenditure HESs and SCADA 2. Supply of heat pipelines 8.5 58% of total expenditure D. Goods for Jiamusi West DH 32.0 Supply and installation of equipment in 1. 12.3 100% of total expenditure HESs and SCADA 2. Supply of heat pipelines 19.7 100% of total expenditure E. Goods for Jidong County DH 2.7 Supply and installation of equipment in 1. 1.5 100% of total expenditure HESs, and SCADA 2. Supply of heat pipelines 1.2 48% of total expenditure F. Goods for Qitaihe DH 23.0 100% of total expenditure G. Goods for Raohe Town HP and DH 4.8 Supply and installation of boilers and 1. 2.6 100% of total expenditure auxiliaries 2. Supply and installation of heat pipelines 2.2 70% of total expenditure H. Goods for Tongjiang City HP and DH 13.5 100% of total expenditure I. Goods for Yichun City-Tangwanghe DH 5.0
Supply and installation of equipment in 1. 3.0 100% of total expenditure HESs and SCADA 2. Supply of heat pipelines 2.0 69% of total expenditure J. Goods for Yichun City-Xinqing DH 7.2 Supply and installation of equipment in 1. 4.1 100% of total expenditure HESs and SCADA 2. Supply of heat pipelines 3.1 80% of total expenditure K. Project Management 1.2 100% of total expenditure L. Interest and Commitment Charge 9.0 100% of amount due Total 150.0 ADB = Asian Development Bank, DH = district heating, HES = heat exchange station, HP = heating plant, SCADA= supervisory control and data acquisition. Note: Numbers may not sum precisely because of rounding. Source: Asian Development Bank estimates.
D. Contract and Disbursement S-curves
15. The contract and disbursement S-curve is shown in Figure 2.
16
Figure 2: Contract and Disbursement S-Curves Contract And Disbursement S-Curves
160.0 150.0 140.0 130.0 120.0 110.0 100.0 90.0 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 13 13 13 13 14 14 14 14 15 15 15 15 16 16 16 16 17 17 17 17 18 18
Contract Award Disbursement
Note: The difference in the loan amount is due to the interest during construction financed under the loan.
2013 2014 2015 2016 Item Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Contract Award 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 45.3 60.5 60.5 60.5 73.2 84.7 116.7 116.7 Disbursement 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 4.4 4.7 7.0 7.0 9.5 9.8 23.9 52.6
2017 2018 Item Q1 Q2 Q3 Q4 Q1 Q2 Contract Award 128.3 128.3 141.0 141.0 141.0 141.0 Disbursement 55.0 55.3 86.2 119.3 119.3 141.0
E. Fund Flow Diagram
16. The borrower is the government, which will make the proceeds of the ADB loan available to HPG through a subsidiary loan agreement and to the municipality and county governments and implementing agencies through onlending agreements. The HPG will assume the risks for foreign exchange and interest variation. The fund flow diagram is presented in Figure 3.
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Figure 3: Fund Flow Diagram
ADB
Withdrawal application, and supporting documents a
reimbursement Executing Agency (PMO)
imprest fund direct payment Imprest Account
supporting documents
Implementing Agencies
supporting documents
Contractors/suppliers
= cash fund flow, = documentation flow. ADB = Asian Development Bank, PMO = project management office. a Supporting documents required for direct payment procedure include contract and invoice. For imprest fund procedure, statement of expenditure, corresponding bank statement, and reconciliation statement. For reimbursement procedure, summary sheet, contract, invoice, receipt of payment, or statement of expenditure. Source: Heilongjiang provincial government. 18
V. FINANCIAL MANAGEMENT
A. Financial Management Assessment
17. The financial management assessment of the implementing agencies8 indicates that the systems generally are in place for financial reporting, and the accounting system is developed and adequate for the purpose of loan implementation. As this is the first externally-funded project for most of the implementing agencies, extensive training will be required covering ADB procedures and requirements on procurement, disbursement, financial reporting, and various aspects of project monitoring. Financial projections were prepared to assess the financial performance of the implementing agencies. These are presented below. The projections estimate the tariffs required for an appropriate level of financial performance. Periodic tariff reviews will be required to ensure positive financial performance.
B. Financial Performance and Projections
18. Harbin Taiping Heating Company. The implementing agency of Harbin Taiping Heating Plant and District Heating Subproject is an SOE founded in 2004 with a registered capital of CNY80.46 million. It is located at the Harbin Economic and Technical Development Zone and is engaged in heating supply. The company had 230 employees, total assets of CNY497.7 million with a liability-asset ratio of 70.9%, sales revenue of CNY71.9 million, and a net profit of CNY1.3 million in 2010. Its sales revenue increased by 122% in 2010 from 2008, however its profitability remained low, with a net profit margin of 1.8% in 2010. The company had high current ratio level equivalent to more than 1.3 throughout 2008–2010. The company obtained long-term loans from a domestic bank to partially finance its construction and the debt service coverage ratio was 1.1 in 2010. The counterpart financing for the subproject will be provided from self-raised funds and long-term loan obtained from a local bank.
19. Daxing’anling Power Industrial Bureau. The implementing agency of Jiagedaqi District Heating Subproject is a state-owned company (subcompany of Daxing’anling Forest Group Company) established in 1965 with a total registered capital of CNY61.2 million. Its main business is on electricity generation, and heat production and supply. It had 2,381 employees, total assets of CNY507.1 million with a liability-asset ratio of 62.6%, sales revenue of CNY207.6 million, and a net profit of CNY0.1 million in 2010. The asset revenue increased by 10% and sales revenue increased by 12.7% in 2010 from 2008. The profitability remained low with a net profit margin of 0.1% in 2010 and the current ratios were less than 1 throughout 2008–2010. There were long-term and short-term loans from domestic banks, and the debt service coverage ratio was 1.1 in 2010. Counterpart financing for the subproject will be provided from the local government and long-term loan obtained from a local bank.
20. Jiamusi Xinshidai Urban Infrastructure Investment Company. The implementing agency of Jiamusi West District Heating Subproject is a state-owned company founded in Jiamusi city in 1999 with a registered capital of CNY3,804.5 million. It had 99 employees, total assets of CNY9,215.2 million with a liability-asset ratio of 35.9%, sales revenue of CNY2,233.9 million, and a net profit of CNY765.8 million in 2010. Its main businesses are on investment, construction, and management in urban infrastructure projects. Its sales revenue and current assets increased while the fixed assets decreased from 2009 to 2010. There were many other incomes throughout 2008–2010, which needs to be explained by the company. There were long-term and short-term loans from domestic banks, and the debt service coverage ratio was
8 Financial management assessment was conducted under the project preparatory technical assistance in 2011. 19
21.9 in 2010. Counterpart financing for the subproject will be provided from the self-raised funds and long-term loan obtained from a local bank.
21. Jidong Heat and Power Company. The implementing agency of Jidong County District Heating Subproject is a joint venture company between Heilongjiang Zhongmeng Group Company (state-owned, 55% equity share) and Heilongjiang Zhongmeng Heating and Power Company (state-owned, 45% equity share). It was established in Jidong county in 2000. It had 465 employees, total assets of CNY387.9 million with a liability-asset ratio of 67.6%, sales revenue of CNY124.1 million, and a net profit of CNY8.1 million in 2010. It mainly generates electricity and supplies heat, and in addition, it supplies water for the county. Increase in assets revenue by 8.4% and sales revenue by 16% in 2010 from 2008. Meanwhile, its net profit margin decreased to 6.5% in 2010, from 8.8% in 2008. The company had a long-term loan from a commercial bank and a debt-service coverage ratio of 3.7 in 2010. Counterpart financing for the subproject will be provided from the self-raised funds.
22. Qitaihe Heating Company. The implementing agency of the Qitaihe District Heating Subproject is a state-owned company established in 1983. It is responsible for providing district heating services to the three areas of the city with an estimated area of 4.5 million m2. The company has 36 heat exchange stations and 94 kilometers of heating pipelines. The subproject will cover additional 5.8 million m2 when completed. The company had 360 employees, including 58 management staff and 35 technical staff; total assets of CNY223.6 million and a liability-asset ratio of 56.7%; sales revenue of CNY135.4 million; and loss of CNY0.8 million in 2010; which is significantly lower than the losses in 2008 and 2009. This is primarily due to high operating costs and low heating tariff. Counterpart financing for the subproject will be provided through local government funds.
23. Raohe County Chenguang Heating Company. The implementing agency of Raohe Town Heating Plant and District Heating Subproject is a private company established in 2003 with a registered capital of CNY4.2 million. It obtained its registered capital with the restructuring of the former heat and power company which was established in 1956. Its main businesses are on power generation and hot water supply. The company had 178 employees, total assets of CNY107.1 million with a liability-asset ratio of 36.8%, sales revenue of CNY30.1 million, and net profit of CNY4.5 million in 2010. The profitability level has shown obvious improvement since 2008, and its net profit margin was 15% and returns on asset and equity were 4.2% and 6.7% in 2010. There were long-term and short-term loans from domestic banks, and the debt service coverage ratio was 14.3 in 2010. Counterpart financing for the subproject will be provided from self-raised funds and long-term loan obtained from a local bank.
24. Tongjiang Changheng Cogeneration Company. The implementing agency of Tongjiang City Heating Plant and District Heating Subproject is a private company established in Tongjiang city in 2008 with a registered capital of CNY65 million. It obtained its registered capital with the restructuring of the former Tongjiang power company which was established in 1966. Its main business is on hot water supply. The company had 174 employees, total assets of CNY138.6 million with a liability-asset ratio of 33.4%, sales revenue of CNY55.4 million, and net profit of CNY6.7 million in 2010. The profitability level has shown consistent improvement since 2008 and its net profit margin was 12.1% and returns on asset and equity were 4.9% and 7.3% in 2010. The current ratios were more than 1.6 during the 2008–2010. There were only short-term domestic loans in 2010. Counterpart financing for the subproject will be provided from the self-raised funds.
20
25. Heilongjiang Tangwanghe Forest Bureau. The implementing agency of Yichun City– Tangwanghe District Heating Subproject is an SOE founded in Tangwanghe district of Yichun city in 1958 with a registered capital of CNY84.8 million. Its main business is on timber marketing. The company had 8,998 employees, total assets of CNY480.1 million with a liability- asset ratio of 50.9%, sales revenue of CNY140.7 million, and net profit of CNY29.7 million in 2010. Its sales revenue increased by 22.8% in 2010 from 2008. The profitability remained relatively high with a net profit margin of 21.1% in 2010. The company had a high current ratio equivalent to more than 1.3 throughout 2008–2010. The company obtained long-term loans and short-term loan from a domestic bank and the debt service coverage ratio was 14.0 in 2010. Counterpart financing for the subproject will be provided from the self-raised funds.
26. Yichun-Xinqing Forest Bureau. The implementing agency of Yichun City–Xinqing District Heating Subproject is an SOE founded in Xinqing District of Yichun city in 1957 with a registered capital of CNY79.2 million. The company had 10,615 employees, total assets of CNY440.8 million with a liability-asset ratio of 46.1%, sales revenue of CNY131.7 million, and a net profit of CNY21.3 million in 2010. Decrease in assets revenue by 4.6% and sales revenue by 5.4% in 2010 from 2008. The profitability remained relatively high, with a net profit margin of 16.2% in 2010. The company had a high current ratio of 1.8 in 2010. The company obtained long-term loans and short-term loan from a domestic bank and the debt service coverage ratio was 4.4 in 2010. Counterpart financing for the subproject will be provided from the self-raised funds.
C. Disbursement Arrangements
27. The ADB loan will be disbursed in accordance with ADB's Loan Disbursement Handbook (2012, as amended from time to time). To expedite project implementation through the timely release of the loan proceeds, HPFB,9 under the HPG, will establish an imprest account in US dollars upon loan effectiveness at a commercial bank acceptable to ADB.10 The imprest account will be established, managed, replenished, and liquidated by HPG in accordance with ADB's Loan Disbursement Handbook. The HPG will submit the withdrawal application to ADB for an initial advance based on approved contracts and planned expenditures for the first 6 months of the project, which is not to exceed the approved ceiling. The ceiling of the imprest account will be set at either the estimate expenditures for the next 6 months to be funded from the imprest account or 10% of the loan amount, whichever is lower. If HPG initially funds eligible expenditures from its own resources, the reimbursement procedure will be used. To expedite funds flow and simplify documentation procedures, the statement of expenditures procedure will be used for the liquidation and replenishment of imprest accounts and the reimbursement of eligible expenditures not exceeding $200,000 per individual payment.11
28. Before the submission of the first withdrawal application, the borrower should submit to ADB sufficient evidence of the authority of the person(s) who will sign the withdrawal applications on behalf of the borrower, together with the authenticated specimen signatures of
9 HPFB is part of PMO. 10 Bank charges will be financed under the ADB loan. 11 Since the down payment for each contract is likely to be more than $100,000, the ceiling for the statement of expenditures procedures of $200,000 is recommended. This ceiling has been applied for ADB financed projects in Heilongjiang province such as Heilongjiang Road Network Development Project (2007) ADB. 2006. Report and Recommendation of the President to the Board of Directors: Proposed Loan to the People's Republic of China for Heilongjiang Road Network Development Project. Manila (Loan 2247-PRC, approved on 26 July, for $200,000,000). Second Heilongjiang Road Network Development Project. ADB. 2010. Report and Recommendation of the President to the Board of Directors: Proposed Loan to the People's Republic of China for the Second Heilongjiang Road Network Development Project. Manila (Loan 2631-PRC, approved on 20 April, for $200,000,000). 21 each authorized person. The minimum value per withdrawal application is $100,000, unless otherwise approved by ADB. The borrower is to consolidate claims to meet this limit for reimbursement and imprest account claims. The HPG requires to furnish withdrawal application, applicable summary sheet, the corresponding bank statement, and reconciliation statement to ADB for liquidation and replenishment of imprest account. Withdrawal applications and supporting documents will demonstrate, among other things that the goods, and/or services were produced in or from ADB members, and are eligible for ADB financing.
D. Accounting
29. The executing agency and each implementing agency will maintain separate project accounts and records that identify goods, work, and services from loan proceeds, financing resources received, expenditures incurred, and use of local funds. These accounts will be established and maintained in accordance with sound accounting principles and internationally accepted accounting standards.
E. Auditing
30. The executing and implementing agencies will cause the detailed consolidated project accounts to be audited in accordance with the international standards on auditing and/or in accordance with the government's audit regulations by the provincial auditing bureau at no charge. The audited accounts will be submitted in the English language to ADB within 6 months of the end of the fiscal year by the executing agency. The annual audit report will include a separate audit opinion on the use of the imprest account, and the statement of expenditure procedures. The government, executing agency, and implementing agencies have been made aware of ADB’s policy on delayed submission, and the requirements for satisfactory and acceptable quality of the audited accounts. ADB reserves the right to verify the project's financial accounts to confirm that the share of ADB’s financing is used in accordance with ADB’s policies and procedures. For revenue generating projects, ADB requires audited financial statements for each executing and/or implementation agency associated with the project.
VI. PROCUREMENT AND CONSULTING SERVICES
A. Advance Contracting and Retroactive Financing
31. To expedite project implementation, HPG has requested advance contracting and retroactive financing. This will include the procurement of goods, civil works, and the project management. All advance contracting and retroactive financing will be undertaken in conformity with ADB’s Procurement Guidelines (2010, as amended from time to time) 12 and ADB’s Guidelines on the Use of Consultants (2010, as amended from time to time).13 The amount to be retroactively financed will not exceed $30 million (equivalent to 20% of the ADB loan) and may finance costs incurred before loan effectiveness but not more than 12 months before the signing of the loan agreement. The issuance of invitations to bid, under advance contracting and retroactive financing, will be subject to ADB approval. The borrower, executing and implementing agencies have been advised that approval of advance contracting and retroactive financing does not commit ADB to finance the project.
12 Available at: http://www.adb.org/Documents/Guidelines/Procurement/Guidelines-Procurement.pdf 13 Available at: http://www.adb.org/Documents/Guidelines/Consulting/Guidelines-Consultants.pdf 22
B. Procurement of Goods, Works and Consulting Services
32. All procurement of goods and works shall be carried out in accordance with ADB's Procurement Guidelines. ADB-financed civil works contracts, costing $10 million or more, and goods contracts costing $1 million or more, will be procured through international competitive bidding procedures using ADB's standard bidding documents. Goods contract packages costing more than $100,000 and less than $1 million will be procured using national competitive bidding, as will civil works contracts costing more than $100,000 and less than $10 million. Civil works and goods contract packages costing less than $100,000 will be procured using shopping procedures. The relevant sections of ADB's Anticorruption Policy (1998, as amended to date) will be included in all documents and contracts.
33. An 18-months procurement plan indicating threshold and review procedures, goods, works, and consulting service contract packages and national competitive bidding guidelines is in Appendix 2.
C. Procurement Plan
Table 10: Project Information Country People’s Republic of China Name of Borrower People’s Republic of China Project Name Heilongjiang Energy Efficient District Heating Project Loan Reference 44011-013 Date of Effectiveness (TBD) Amount $150 million Executing Agencies Government of Heilongjiang Province Approval Date of Original Procurement Plan 01 December 2011 Approval of Most Recent Procurement Plan 20 August 2012 Period Covered by this Plan August 2012–January 2014
D. Consulting Services
34. All consultants will be recruited according to ADB’s Guidelines on the Use of Consultants.14 The terms of reference for consulting services are detailed in Appendix 3.
1. Objectives of Consulting Services
35. The main objectives of the consulting services are to assist the executing agency and implementing agencies in (i) monitoring the environment and land acquisition impacts, (ii) reviewing engineering design, (iii) preparing bidding documents in accordance with ADB’s Procurement Guidelines, (iv) preparing the disbursement documents in accordance with ADB’s Loan Disbursement Handbook, (v) monitoring the progress of district heating subsector reform, and (vi) preparing the report acceptable to the PMO and ADB.
2. Cost Estimate and Proposed Financing Arrangement
36. The total cost of the project management is $1,200,000 equivalent, of which $1,200,000 will be financed by the ADB loan. The government will provide in-kind counterpart costs and
14 Checklists for actions required to contract consultants by method available in e-Handbook on Project Implementation at: http://www.adb.org/documents/handbooks/project-implementation/ 23 services including counterpart staff, office space, and local city transport and logistics costs. The detailed cost estimate is in Table 11.
Table 11: Cost Estimates and Financing Plan ($ 000) Total Item Cost Asian Development Banka 1. Consultants a. Remuneration and per diem i. National consultants (48 person-months) 251.00 b. Local travel 19.00 c. Reports, translations, and communications 116.00 2. Equipmentb 20.00 3. Workshops, training, seminars, and conferencesc 250.00 4. Surveysd 240.00 5. Miscellaneous administration and support costse 200.00 6. Contingencies 104.00 Total 1,200.00 a Proposed for financing from the proposed loan of Heilongjiang Energy Efficient District Heating Project. b Equipment (to be procured by the project management unit and implementing agencies) Type Quantity Cost Photocopier 1 $4,000 Laptop computer 4 $10,000 Printer 4 $4,000 Other office equipment 1 $2,000 c Workshops, training, seminars, and conferences (to be administered by the project management unit) Purpose Venue Project monitoring workshops (four times) Harbin, Heilongjiang Project implementation training (four times) Harbin, Heilongjiang Regional district heating conference Harbin, Heilongjiang Overseas district heating technical training Advanced district heating counties Domestic district heating technical training Northern provinces The proposed regional conference will be primarily funded under the project management financed by ADB loan. Potential grant fund to supplement the funding of the proposed conference will be actively sought by both the Heilongjiang provincial government and ADB. d For independent environment and land acquisition monitoring and impact evaluation. e The cost of remuneration of administration staff, transportation, reporting, and logistics expenses for project management office and onsite monitoring of each subprojects. Source: Asian Development Bank estimates.
3. Implementation Arrangements
37. The executing agency will be the HPG and the implementing agencies will be the nine subproject companies.15 The PMO, under HPDRC, will provide overall guidance to the nine implementing agencies on project management, implementation, monitoring, and coordination among related government departments and subprojects. The project management will require a total of 48 person-months of national consulting services on individual basis. The required positions and person-months are indicated in Table 12. Individual consultants will be recruited by the PMO directly or through a firm in accordance with ADB’s Guidelines on the Use of Consultants. The executing agency, through the PMO, will facilitate the procurement of
15 Daxing'anling Power Industrial Bureau, Harbin Taiping Heating Company, Heilongjiang Tangwanghe Forest Bureau, Heilongjiang Xinqing Forest Bureau, Jiamusi Xinshidai Urban Infrastructure Investment Company, Jidong Heat and Power Company, Qitaihe Heating Company, Raohe County Chenguang Heating Company, and Tongjiang Changheng Cogeneration Company. 24 equipment, following ADB’s Procurement Guidelines. The proceeds of the project manegement will be disbursed in line with ADB’s Loan Disbursement Handbook.
Table 12: Allocation of Consultants’ Person-months National Consultants 16 person-months (100 working days of home office, and Project management specialist (heating engineer) 252 working days of field service), on intermittent basis 16 person-months (100 working days of home office, and Procurement and disbursement specialist 252 working days of field service), on intermittent basis 16 person-months (100 working days home office and 252 Environment monitoring specialist working days field service), on intermittent basis Total 48 person-months
38. The executing agency and implementing agencies will provide support to the consultants, including (i) a suitably furnished office with utilities and telecommunication access; (ii) city transport for consultants; (iii) providing access to all data which is permitted by the PRC law, including documents, reports, accounts, drawings and maps; and (iv) permission to enter works and offices, as appropriate and necessary to undertake the work. The project management will be implemented over a period of 60 months and is expected to start in January 2013 and be completed by December 2017.
4. Reporting Requirements
39. The executing agency and each implementing agencies, through the PMO, will provide ADB with (i) quarterly progress reports in a format consistent with ADB's project performance reporting system; (ii) consolidated annual reports, including (a) the use of the loan proceeds, (b) progress achieved by output as measured through the indicator's performance targets, (c) key implementation issues and solutions, (d) updated procurement plan, and (e) updated implementation plan for the next 12 months; and (iii) a project completion report within 6 months of physical completion of the project. To ensure that the project continues to be both viable and sustainable, project accounts and the executing agency’s annual financial statements, together with the associated auditor's report, should be adequately reviewed. In addition, the implementing agencies will also submit (i) semiannual and annual environmental monitoring reports during construction and operation respectively, (ii) semiannual reports on social and poverty aspects, (iii) annual financial reports, and (iv) a project completion report submitted not later than 3 months after project completion.
VII. SAFEGUARDS
A. Involuntary Resettlement
40. None of the subprojects will entail the permanent land acquisition, thus there are no affected people. Laying the underground heating pipelines will temporarily occupy the publicly- owned land (road and sidewalks) for a maximum of 6 months, which will not affect any people. There is no involuntary resettlement, restriction in land use, displacement of housing, and structure demolition under the all subprojects.
41. If there’s any change in scope, in the subprojects, which may result in affecting people by land acquisition, structure demolition, and involuntary resettlement, the respective implementing agencies are requested to inform ADB of the situation in advance through the PMO, and prepare and submit a resettlement plan to ADB, through the PMO, for review and 25 approval, in accordance with ADB’s Safeguard Policy Statement (2009). 16
B. Environment
42. The project would provide considerable benefits to the environment and climate change by switching from inefficient heating supply to more energy-efficient centralized heating systems. Around 418,889 t of standard coal per year would be saved, which results in an annual reduction of (i) 1 million t of carbon dioxide, (ii) 4,500 t of sulfur dioxide, (iii) 1,961 t of nitrogen oxide, and (iv) 22,819 t of particulate matter.
43. The project is classified as category B according to the ADB’s Safeguard Policy Statement. The initial environmental examination (IEE) identifies potential environmental adverse impacts. During construction, these would include (i) soil erosion; (ii) noise, vibration, and dust, particularly from demolition of small boilers; (iii) solid waste, (iv) community disturbance and public safety, and (v) occupational health and safety. During operations, potential adverse impacts would be (i) pollutants emission from the heat sources, (ii) noise from the heat sources and the heat exchange stations, (iii) waste water, (iv) solid waste of ash and slag, (v) fugitive dust, (vi) occupational health and safety; and (vii) inappropriate storage of hazardous materials. To properly mitigate adverse impacts, the environmental management plan (EMP) has been developed. The EMP specifies mitigation measures, monitoring, and institutional responsibilities to ensure proper environmental assurance throughout project construction and operation.
44. HPG and the implementing agencies will be responsible for ensuring the project to be designed, constructed, decommissioned, and operated in accordance with national and local government environmental, health and safety laws, regulations, procedures, and guidelines; ADB's Safeguard Policy Statement; and the IEE including EMP. HPG holds the final responsibility for the implementation and compliance with the EMP and monitoring plan, and the submission of environmental safeguards monitoring reports (EMP monitoring reports). The PMO is responsible for overseeing the implementation of the EMP. The nominated environment officer will undertake effective environmental management activities specified in the EMP. The effectiveness of mitigation measures will be evaluated through ADB review missions and EMP monitoring. The contractors and construction supervision companies will be responsible for internal environmental monitoring during construction. The environmental officer in the PMO and the municipal environmental protection bureaus will be responsible for supervising the contractors. The implementing agencies are responsible for ensuring that environmental mitigation measures in the EMP will be properly implemented. The environmental management unit, under the implementing agencies, will be responsible for internal monitoring during operation. To ensure proper environmental assurance, environmental consultants will provide trainings to construction supervision companies and implementing agencies on the ADB Safeguards Policy and the EMP.
45. The PMO is responsible for preparing and submitting environmental safeguards monitoring reports (EMP monitoring reports) to ADB semiannually during construction and annually during operation. The environment management plan with mitigation measures, monitoring plan, and institutional arrangements, will be updated during engineering design and incorporated in the bidding documents and civil works contracts. HPG shall make available, and cause the implementing agencies to make available, the necessary budgetary and human resources to fully implement the EMP. If any unanticipated environmental and/or social risks and impacts arise during construction, implementation or operation of the project that were not
16 ADB. 2009. Safeguard Policy Statement. Manila. 26 considered in the IEE and/or EMP, HPG, through the implementing agencies should promptly inform ADB in writing of the occurrence of such risks or impacts, with detailed description of the event and the proposed action plan for incorporation in the updated EMP.
46. Environmental grievances may occur during construction and operation. HPDRC and the implementing agencies agreed to establish a project public complaints unit (PPCU) in each implementing agency under the supervision of its local environmental protection bureau. The PPCU will receive environmental grievances and act according to the designed environmental Grievance Redress Mechanism of the project. Procedures and timeframes for the grievance redress process are described in the IEE.17 The project will provide training to the members of the PPCUs and the contact persons of the Grievance Redress Mechanism entry points to ensure that responsibilities and procedures are clear.
VIII. GENDER ACTION PLAN
A. Background
47. The Project and gender impacts. Heating services in a cold climate region, such as Heilongjiang where temperatures fall below –40°C and the heating season lasts for up to 6 months, meets one of the basic human needs and provides essential support to socioeconomic activities. The proposed project will upgrade the district heating system which will allow the closing of around 470 small and inefficient coal-fired boilers and replacing 275,166 household stoves. Switching to energy efficient centralized heating system from heating supply of small and inefficient heat-only boilers and household stoves will directly benefit over 1.63 million urban residents especially the female of the project districts and counties, including 130,000 poor (8.7%), and provide direct benefits to 174,625 children in 314 schools, and patients and medical staff in 108 hospitals. The project’s impact on women include: (i) access to cleaner, safer, and reliable heating system; (ii) reduced domestic chores related to space heating (1 hour per day); (iii) reduced incidence of respiratory diseases related to indoor air pollution; and (iv) reduced incidence of carbon monoxide poisoning and accidental fires. The project will also safeguard the livelihood of poor households headed by women through the heating assistance to be provided by the local government and implementing agencies. The poor households, under the government’s minimum living standard security program, including poor households headed by women, will be subsidized 70% of heating tariff by the local government and waived 100% of connection fee from the heating company.
B. Gender Issues
48. Lack of awareness on demand-side energy conservation. Women and children proportionally receive more benefits on heating service than men as they spend more time at home in general. Lack of awareness in the energy conservation of district heating is an issue among heat users. Large amounts of energy can be saved on district heating by adjusting the temperature control device at the radiator, thus preventing overheating the room. Proper education on energy conservation to women, who are the primary user of heat, is needed.
49. Weak gender responsive customer orientation in the service delivery. Weak customer orientation in the service delivery by heating companies causes lower tariff collection rate. Bill collection is the primary interface between service providers and customers. During the settlement of bill, customers often provide feedback on the quality of heating service. Given that women are responsible for settling the heating bills in general, female bill collectors should be
17 Initial Environmental Examination (accessible from the list of linked documents in Appendix 2 27
promoted for gender responsive customer services. Also, there is no venue to express collective opinions from women’s perspectives on weakness in heating services, therefore such venue should be provided through the sessions and conferences organized under the project. Weak customer orientation in the service delivery by state-owned enterprises causes lower tariff collection rate.
C. Actions and Targets
50. The actions and target indicators are described in the table below.
Actions and Target Indicators Data Sources and Project Reporting Organizations Outputs Activities Target Indicators Mechanisms Involved Organize energy conservation awareness campaigns targeting About 800,000 female women in partnership with the (100%) in subproject 1. Coverage of women’s federation area by 2017 the district 174,625 children in heating Decommission small polluting 314 schools and 108 system in neighborhood boilers and supply hospitals covered by eight project heat by cleaner centralized district the new heating cities heating systems system by 2017 without net Ensure heating assistance to 37,000 increase in poor households, including 1,300 emissions poor households headed by women expandeda through 70% subsidy of heating tariff At least 1,300 by the local government and 100% households headed waiver of connection fee from the by women assisted by Project heating company 2017 management Domestic chores 2. Energy office, working hour reduced efficient heat Reports from implementing by one hour by 2017 generation project agencies, and
capacity in management project No cases of carbon three project office implementation Remove 275,166 household stoves monoxide poisoning cities consultant, and connect to district heating and fire accident improvedb women’s systems by 2017 reported by 2017 federation Organize a session on “gender responsive district heating” in partnership with the women’s At least one session federation in the knowledge sharing participated by a 3. Private sessions between private and state- female representative sector d owned district heating companies of heat users participation Organize a session on “gender in district responsive district heating” in At least one session heating in partnership with the women’s participated by a two project federation in the regional conference female representative cities on district heating of heat users promotedc 50% of heating bill Promote the creation of job collectors as women opportunities for women as heating by 2017 (baseline: bill collectors 30%) a The eight project cities include Harbin, Jiagedeqi, Jiamusi, Jixi, Qitaihe, Raohe, Tongjiang, and Yichun. b The three project cities include Harbin, Raohe, and Tongjiang. c The two project cities include Raohe and Tongjiang. d Topics include, but not limited to, gender responsive human resource management strategy, service delivery for women and poor, and heating access and affordability for poor households headed by women. Source: Asian Development Bank estimates. 28
D. Reporting and Monitoring Mechanism
51. Implementing agencies, supported by PMO, are responsible for the implementation of the gender action plan. The PMO is primarily responsible for monitoring the implementation of the gender action plan, and for reporting the implementation progress through semiannual reports to ADB.
52. Labor retrenchment. A total of 2,075 boiler workers (520 full time and 1,555 seasonal workers) will be affected with the closing of around 470 small coal-fired boilers. A labor retrenchment and reemployment plan was prepared in accordance with applicable national labor laws to safeguard the livelihood of the affected workers (Appendix 4). The employment status of all 520 full time workers under Jiagedaqi, Jiamusi, Yichun City-Xinqing, and Yichun City-Tangwanghe subprojects will be maintained and transferred to the operation and maintenance of heat exchange stations. As for temporary seasonal workers, the implementing agencies will inform the workers of the status of the boiler closure before the end of the final heating season. Since they are contractual workers on seasonal basis, the implementing agencies are not obliged to retain them and provide employment assistance in principle. However, if they would like to work at the heat supply plants as seasonal worker, they are eligible to participate in the technical training for potential new positions. Those who have completed the training course may be hired on contractual or permanent basis depending on vacancy and proficiency.
IX. PERFORMANCE MONITORING, EVALUATION, REPORTING AND COMMUNICATION
A. Project Performance Monitoring
53. A project performance management system has been prepared, including a set of measurable indicators based on the project design, impact, and risks. The indicators include (i) energy efficiency improvements, (ii) reductions in emissions, (iii) installation of infrastructure, (iv) improvements on ambient air quality, (v) social impact targets including gender and labor retrenchment, and (vi) decommissioning of polluting facilities. Performance in meeting the proposed indicators will be reported in the quarterly progress reports, the two environmental reports every year during construction and the annual environmental report during operation, and/or the annual report on resettlement and social objectives, as suitable. Each implementing agencies will establish a safeguard management unit to coordinate the environmental and land acquisition (if any) management issues during construction and operation. The consultants supervising the implementation will help HPG monitor project impacts and prepare periodic reports. The monitoring and evaluation system will include specific and measurable targets and identify key risks and institutional arrangements for effective monitoring. The consultant supervising the implementation will provide training, where necessary, on monitoring. One month before the midterm review, the PMO will submit to ADB a comprehensive report on each of these issues.
54. Compliance with Major Loan Covenants
Status/Action Project Specific Covenants Reference Due Date to be Taken Implementation Arrangements 1. The HPG, through the Project Implementing PA, Schedule, Agencies, shall ensure that the Project is implemented paras. 1 and 2 in accordance with the detailed arrangements set forth 29
Status/Action Project Specific Covenants Reference Due Date to be Taken in the PAM. Any subsequent change to the PAM shall become effective only after approval of such change by the HPG and ADB. In the event of any discrepancy between the PAM and this Project Agreement, the provisions of this Project Agreement shall prevail.
The HPG shall ensure that the PMO is equipped with professionally skilled staff, reasonable office space, equipment and adequate financial resources required throughout the Project implementation. Environment 2. The HPG shall ensure, and cause the Project PA, Schedule, Implementing Agencies to ensure, that the para. 3 preparation, design, construction, implementation, operation and decommissioning of the Project and all Project facilities comply with (i) all applicable laws and regulations of the Borrower relating to environment, health and safety; (ii) the Environmental Safeguards; and (iii) all measures and requirements set forth in the IEE, EMP and any corrective or preventative actions set forth in a Safeguards Monitoring Report. Land Acquisition, Involuntary Resettlement and Indigenous Peoples 3. The HPG shall ensure, and cause the Project PA, Schedule, Implementing Agencies to ensure, that all land and all para. 4 rights-of-way required for the Project are made available to the works contractor in accordance with the schedule agreed under the related works contract. The HPG shall further ensure that the project does not have any indigenous peoples or involuntary resettlement impacts, all within the meaning of the Safeguard Policy Statement (2009).a In the event that the project does have any such impact, the HPG shall take all steps required to ensure that the project complies with the applicable laws and regulations of the Borrower and with the Safeguard Policy Statement. Human and Financial Resources to Implement Safeguards Requirements 4. The HPG shall make available, and cause the PA, Schedule, Project Implementing Agencies to make available, the para. 5 necessary budgetary and human resources to fully implement the EMP. Safeguards-Related Provisions in Bidding Documents and Works 5. The HPG will ensure and cause the implementing PA, Schedule, agencies to ensure that all bidding documents and para. 6 contracts for works contain provisions that require contractors to: (i) comply with the measures relevant to the contractor set forth in the IEE, EMP, and any corrective or preventative actions set forth in a safeguards monitoring report;
30
Status/Action Project Specific Covenants Reference Due Date to be Taken (ii) make available a budget for all, such as environmental and social measures; and (iii) provide HPG, through the implementing agencies, with a written notice of any unanticipated environmental, resettlement or indigenous peoples risks or impacts that arise during construction, implementation or operation of the project that were not considered in the IEE and EMP. Safeguards Monitoring and Reporting 6. The HPG will do the following and cause the PA, Schedule, implementing agencies to do the following: (i) submit para. 7 (a) semiannual Safeguards Monitoring Reports during construction, and (b) annual Safeguard Monitoring Reports for environment during operation of Project facilities, to ADB for review and disclose relevant information from such reports to affected persons promptly upon submission; (ii) if any unanticipated environmental and/or social risks and impacts arise during construction, implementation or operation of the Project that were not considered in the IEE and/or EMP, promptly inform ADB of the occurrence of such risks or impacts, with detailed description of the event and proposed corrective action plan; and (iii) report any actual or potential breach of compliance with the measures and requirements set forth in the EMP promptly after becoming aware of the breach. Prohibited List of Investments 7. The HPG shall ensure and cause the Project PA, Schedule, Implementing Agencies to ensure that no proceeds of para. 8 the Loan are used to finance any activity included in the list of prohibited investment activities provided in Appendix 5 of the Safeguard Policy Statement (2009). Gender and Development 8. The HPG shall cause the Project Implementing PA, Schedule, Agencies to follow the principles of ADB's Policy on para. 9 Gender and Development (1998) during the implementation of the Project, including taking all the necessary actions to encourage women living in the Project area to participate in the planning and implementing Project activities. The HPG shall cause the Project Implementing Agencies to implement in full the Gender Action Plan as agreed for the Project. Health and Social Risks 9. The HPG shall cause the Project Implementing PA, Schedule, Agencies to ensure that the Project Implementing para. 10 Agencies, together with the appropriate government authorities, require contractors employed under the Project, to disseminate information (in local languages) on the risks of sexually transmitted infections, including HIV/AIDS, in health and safety programs to those employed during implementation. Specific provisions to this effect shall be included in the bidding documents and Works contracts, and 31
Status/Action Project Specific Covenants Reference Due Date to be Taken compliance shall be strictly monitored by the HPG and the Project Implementing Agencies. Labor and Employment 10. The HPG will ensure and will cause the PA, Schedule, implementing agencies to ensure that project para. 11 contractors are: (i) encouraged to use local labor and local materials in works; (ii) provide equal pay to men and women for work of equal type; (iii) provide safe working conditions for both male and female workers; (iv) maximize employment for the affected persons with equal access to women, including disadvantaged women; (v) comply with applicable labor laws; and (vi) abstain from child labor in construction, operation and maintenance activities on project facilities. Counterpart Funding 11. The HPG shall ensure and cause the concerned PA, Schedule, cities, county governments and the Project para. 12 Implementing Agencies to ensure that all financing (other than from the loan proceeds), including cash injection and equity contributions are provided on a timely basis to enable the full and timely completion of the Project. In the event of any shortfall or disruption in the financing of the Project due to, inter alia, the lack or inadequacy of funding of, or delay in financing by, or change of control within, any of the Project Implementing Agencies, the HPG shall promptly inform the Borrower and ADB and provide additional funds as may be necessary for the successful implementation of the Project. Disbursement to a Particular Subproject 12. The HPG shall ensure that no disbursement is PA, Schedule, made to a particular Subproject, until the respective para. 13 appropriate onlending arrangements shall have been in place. Change in Ownership and Operation 13. In the event of (i) any change in ownership of the PA. Schedule, project facilities, or (ii) any sale, transfer or para. 14 assignment of shares or interest or other change of control in any implementing agency is anticipated, the HPG will consult and cause the concerned implementing agency to consult with ADB at least 6 months prior to the implementation of such change. The HPG will ensure and cause the concerned implementing agency to ensure that such change be carried out in a lawful and transparent matter. Closure of Small Coal-fired Heat Boilers 14. The HPG shall cause the project Implementing PA, Schedule, Agencies to complete the closure of around 470 small para. 15 coal-fired heat boilers identified for closure under the Project by 2017. The demolition of boilers, in particular, the handling and disposal of wastes including asbestos or asbestos contaminated materials, if any, shall be carried out in accordance with the provisions set forth in the IEE and EMP. The 32
Status/Action Project Specific Covenants Reference Due Date to be Taken cost associated with the handling, transport and disposal of asbestos or asbestos contaminated materials shall be included in the project. The HPG shall ensure that before project completion, site investigation of contaminated land has been conducted, and site-specific remedial measures have been developed, reviewed and cleared by the concerned local environment protection bureaus and ADB. The HPG shall cause the project implementing agencies to ensure that (a) all permanent employees affected by the closure of such small boilers under the project are reemployed in a timely manner and in accordance with the Labor Retrenchment and Reemployment Plan, so that they shall be at least as well off as they would have been in the absence of the project; (b) casual workers are reemployed, where possible; (c) employment training is arranged for the remaining unemployed seasonal workers; (d) adequate staff, resources and budget are committed for monitoring and supervision of the Labor Retrenchment and Reemployment Plan; and (e) implementation of the Labor Retrenchment and Reemployment Plan is reported to the HPG and ADB through semiannual progress reports, and project completion reports. Implementation of Heating Tariff Reforms 15. The HPG shall cause the Project Implementing PA, Schedule, Agencies to progressively implement key heating tariff para. 16 reforms at the city level including: (i) installation of lock valves in individual apartment units in buildings to improve tariff collection; (ii) installation of radiator control valves in apartment units in buildings to encourage heat conservation; (iii) provision of two-part heating tariff structure that the variable charge shall be based on heat consumption, under which the overall heating tariff level is cost-reflective and promote economic efficiency; (iv) installation of heat measuring devices at client level, where applicable, to support consumption-based billing systems; and (v) conversion from enterprise-based tariff payment system to individual-based payment system. Heating Assistance to the Poor 16. The HPG shall ensure that the local governments PA, Schedule, within the project area and project implementing para. 17 agencies implement the pro-poor programs that provide heating tariff discounts to the poor. The HPG shall further ensure that the government-funded heating assistance programs to assist the poor and those with incomes marginally higher than the poverty level to pay heating bills are established in the Project area. Financial Performance of the Project Implementing Agencies 17. The HPG shall cause the Project Implementing PA. Schedule, 33
Status/Action Project Specific Covenants Reference Due Date to be Taken Agencies to establish and maintain sound financial para. 18 management systems in accordance with ADB’s Guidelines on the Financial Management and Analysis of Projects,b including the establishment of separate Project accounts and the maintenance of minimum balances to ensure smooth cash flow and the timely settlement of construction liabilities under the Project and future debt servicing. Institutional Strengthening 18. The HPG shall ensure that the Project PA, Schedule, Implementing Agencies strengthen their financial and para. 19 institutional capacity, in particular with regard to improving financial management and reporting, corporate governance, and management administration, in accordance with the implementation plan agreed upon between the HPG and ADB. Heating Supply Agreements 19. The HPG shall cause the Project Implementing PA, Schedule, Agencies to sign and execute long-term heating para. 20 supply agreements with large prospective customers to ensure the demand of the heating. Grievance Redress Mechanism 20. The HPG shall ensure that, within 2 months of the PA, Schedule, Effective Date, a grievance redress mechanism, para. 21 acceptable to ADB and in accordance with the PAM, is established and functioning effectively to (i) review and document eligible complaints of project stakeholders; (ii) proactively address grievances; (iii) provide the complainants with notice of the chosen mechanism/action; and (iv) prepare periodic reports to summarize the (a) number of complaints received and resolved, (b) chosen actions, and (c) final outcomes of the grievances and make these reports available to ADB. Eligible complaints shall include (i) those related to the project, (ii) any of the service providers, (iii) any person responsible for carrying out the project, (iv) complaints on misuse of funds and other irregularities, and (v) grievances due to any safeguards and gender issues. Governance and Anticorruption 21. The HPG (i) acknowledges ADB's right to PA, Schedule, investigate, directly or through its agents, any alleged para. 22 corrupt, fraudulent, collusive or coercive practices relating to the project; and (ii) agrees to cooperate, and shall cause the Project Implementing Agencies, and all other government offices, organizations and entities involved in implementing the project to cooperate, fully with any such investigation and to extend all necessary assistance, including providing access to all relevant books and records, as may be necessary for the satisfactory completion of any such investigation. In particular, the HPG shall ensure that (i) periodic inspections of the project contractors’ activities related to fund withdrawals and settlements 34
Status/Action Project Specific Covenants Reference Due Date to be Taken are carried out; (ii) relevant provisions of ADB’s Anticorruption Policy are included in all bidding documents for the project; and (iii) contracts, financed under the project, include provisions specifying the right of ADB to audit and examine the records and accounts of the project implementing agencies, PMO, contractors, suppliers, consultants, and other service providers as they relate to the project. Monitoring and Evaluation 22. The HPG, through the PMO, shall ensure and PA, Schedule, cause the Project Implementing Agencies to ensure para. 23 that project outcomes and outputs are monitored and evaluated through a project performance monitoring system, as agreed to by the HPG and ADB in accordance to the PAM. ADB = Asian Development Bank, IEE = initial environmental examination, EMP = environmental management plan, HIV/AIDS = human immunodeficiency virus/acquired immune deficiency syndrome, HPG = Heilongjiang provincial government, PMO = project management office, PA = project agreement, PAM = project administration manual. a ADB. 2009. Safeguard Policy Statement. Manila. b ADB. 2011. Guidelines on Financial Governance and Management on Investment Projects. Source: Asian Development Bank estimates.
B. Project Review and Evaluation
55. ADB will undertake annual project reviews between 2013 and 2017. Additionally, ADB, the executing agency, and implementing agencies will undertake a midterm review of the project in 2015, covering all institutional, administrative, organizational, technical, environmental, social, poverty reduction, resettlement, economic, financial, procurement, and other relevant aspects that may have an impact on the performance of the project and its continuing viability. The review will (i) examine the progress in sector reform; (ii) evaluate environment, social, gender, and poverty impact; (iii) ensure compliance with assurances in the loan agreement; and (iv) evaluate effectiveness of the procurement implementation activities of the executing agency and tendering company using procurement review for effective implementation (PERI) evaluation. The review shall also undertake a comprehensive review of potential loan savings, identify areas for reallocation of loan proceeds, and change disbursement percentages, as appropriate. Within 6 months of physical completion of the project, the executing agency will submit a project completion report to ADB.18
C. Reporting
56. The executing agency and each implementing agency, through the PMO, will provide ADB with (i) quarterly progress reports in a format consistent with ADB's project performance reporting system; (ii) consolidated annual reports including (a) the use of the loan proceeds, (b) progress achieved by output as measured through the indicator's performance targets, (c) key implementation issues and solutions, (d) updated procurement plan, and (e) updated implementation plan for next 12 months; and (iii) a project completion report within 6 months of physical completion of the project. To ensure projects continue to be both viable and sustainable, project accounts and the executing agency annual financial statements, together with the associated auditor's report, should be adequately reviewed. In addition, implementing
18 Project completion report format is available at: http://www.adb.org/Consulting/consultants-toolkits/PCR-Public- Sector-Landscape.rar 35 agencies will also submit (i) two environmental monitoring reports every year, (ii) semiannual reports on gender and labor retrenchment, (iii) annual financial reports, and (iv) project completion report submitted not later than 6 months after project completion. Table 13 summarizes the key reporting requirements during project implementation.
Table 13: Summary of Key Reporting Requirements During Implementation Name of Report/Document Timing of Reporting Quarterly progress reports on project implementation, with the fourth quarter reports serving as the annual Every 3 months until loan completion reports for the years concerned Safeguards (EMP) monitoring reports Until the loan completion -environmental monitoring report -every 6 months during project construction and annually during operation; -social monitoring report -every 6 months Audited financial statements and audited project accounts Auditor’s report (including auditor’s opinion) on statement Before 30 June of each year from 2013 throughout the of expenditures implementation period Project completion report Within 6 months after project and loan completion Source: Asian Development Bank guidelines.
X. ANTICORRUPTION POLICY
57. ADB reserves the right to investigate, directly or through its agents, any violations of the Anticorruption Policy relating to the project. 19 All contracts financed by ADB shall include provisions specifying the right of ADB to audit and examine the records and accounts of the executing agency and all the project contractors, suppliers, consultants and other service providers. Individuals/entities on ADB’s anticorruption debarment list are ineligible to participate in ADB-financed activity and may not be awarded any contracts under the project.20
58. To support these efforts, relevant provisions are included in the loan agreement and the bidding documents for the project. For the project, the executing agency will undertake anticorruption actions, including (i) engaging a consultant to advise and assist in the procurement of goods and services and the engagement of other consultants; and (ii) having full time officials from the HPFB review bidding, construction, and operations, as well as conduct periodic inspection of the contractors’ activities related to fund withdrawals and settlements.
XI. ACCOUNTABILITY MECHANISM
59. People who are, or may in the future be, adversely affected by the project may submit complaints to ADB’s Accountability Mechanism. The Accountability Mechanism provides an independent forum and process whereby people adversely affected by ADB-assisted projects can voice, and seek a resolution of their problems, as well as report alleged violations of ADB’s operational policies and procedures. Before submitting a complaint to the Accountability Mechanism, the affected people should make a good faith effort to solve their problems by working with the concerned ADB operations department. Only after doing that, and if they are still dissatisfied, should they approach the Accountability Mechanism.21
19 Available at: http://www.adb.org/Documents/Policies/Anticorruption-Integrity/Policies-Strategies.pdf 20 ADB's Integrity Office website is available at: http://www.adb.org/integrity/unit.asp 21 For further information see: http://www.adb.org/site/accountability-mechasim/main 36
XII. RECORD OF PAM CHANGES
60. All revisions/updates during the course of implementation should be retained in this section to provide a chronological history of changes to implemented arrangements recorded in the PAM.
Dates PAM Changes
Appendix 1 37
DESIGN AND MONITORING FRAMEWORK
Performance Targets and Data Sources and Design Summary Indicators with Baselines Reporting Mechanisms Assumptions and Risksa Impact Assumptions Improved energy By 2020, energy intensity Data from Heilongjiang The required investments efficiency and a cleaner improved by 20% compared Provincial Environment are made by the environment in with 2010 Protection Bureau Heilongjiang provincial Heilongjiang province government and By 2020, emission of SO2 is enterprises in other urban reduced by at least 2% and areas. NOx by 3% compared with 2010 Local environmental protection bureaus enforce existing air pollution laws and standards.
Risk Air emission improvements are negated by the establishment of new polluting industries. Outcome Assumptions Improved air quality and By 2018, the project reduces Heilongjiang province Heating sector reforms and reduced greenhouse annual coal consumption of statistical year book demand-side energy gas emissions in eight more than 418,889 t, thereby conservation measures are urban areas in avoiding annual emissions of implemented. Heilongjiang province 1 million t of carbon dioxide, 4,500 t of SO2, 22,819 t of The energy efficiency total suspended particulates, improvements in district and 1,961 t of NOx, compared heating remain a priority for with 2012 the government.
By 2018, the air quality in the Risk project targeted areas Delays in project improves to at least class II implementation. (baseline: Class III in 2011) Outputs Assumption 1. Coverage of the By 2017, 427,000 urban Heilongjiang province Sufficient counterpart funds district heating households (270,000 new statistical year book available. system in eight and 157,000 existing project cities households including 37,000 Environment monitoring Risk without net increase poor households and 1,300 report Inadequate capacity of the in emissions households headed by project implementing expandedb women), covering about 40.8 Loan review missions and agencies. million square meters of project performance heating area, have access to reports district heating systems
By 2017, energy conservation awareness campaign targeting women is organized in each subproject area (target: 800,000 women)
2. Energy efficient By 2017, 448 megawatt heat generation thermal-equivalent of energy capacity in three efficient heat generation project cities capacity is successfully improvedc installed (at least 87% efficiency) (baseline: 55% efficiency) 38 Appendix 1
Performance Targets and Data Sources and Design Summary Indicators with Baselines Reporting Mechanisms Assumptions and Risksa By 2017, around 470 small and inefficient boilers are closed, and 275,166 household stoves are replaced (equivalent to 1,014 megawatts)
3. Private sector By 2017, supported two participation in private heating companies district heating in two project cities By 2017, five knowledge- promotedd sharing sessions between private and state-owned heating companies conducted
By 2017, 50% of heating bill collectors are women (baseline: 30%) Activities with Milestones Inputs 1. Coverage of district heating system in eight project Loan cities without net increase in emissions expanded 1.1 Construct 217 kilometers of heating pipeline and 321 heat ADB: $150 million exchange stations, and install nine SCADA systems in nine Item Amount ($ million) urban areas (from Q2 2014 to Q3 2017). Civil works 12.4 1.2 Conduct energy conservation awareness campaigns in Equipment 127.4 subproject cities (from Q2 2014 to Q3 2017). Finance charge during 9.0 construction 2. Energy efficient heat generation capacity in three Project management 1.2 project cities improved 2.1. Construct three energy efficient boilers (from Q2 2014 to Q3 Implementing agencies: $117 million 2017). Item Amount ($ million) 2.2. Decommission around 470 small boilers and household Civil works 40.0 stoves (from Q4 2015 to Q4 2017). Equipment 8.0
Other engineering cost 32.0 3. Private sector participation in district heating in two Contingencies 37.0 project cities promoted
3.1 Conduct knowledge-sharing workshops (annually from 2014 Domestic banks: $86 million to 2017). Item Amount ($ million) 3.2 Conduct regional knowledge-sharing workshop (2015 and 2017). Civil works 41.0 3.3. Pilot household heat metering (Q2 2016 and Q2 2017). Equipment 34.0 Other engineering cost 5.0 Finance charge during 6.0 construction ADB = Asian Development Bank, NOx = nitrogen oxide, Q = quarter, SCADA = supervisory control and data acquisition, SO2 = sulfur dioxide, t = ton. a Ambient air quality standard is categorized from class I to III, which measures pollutants of sulfur dioxide, inhalable particulate matter, and nitrogen oxide, as stipulated in the People’s Republic of China Ambient Air Quality Standard (GB3095-1996) and its amendments in 2000. b The eight project cities are Harbin, Jiagedaqi, Jiamusi, Jixi, Qitaihe, Raohe, Tongjiang, and Yichun. C The three project cities are Harbin, Raohe, and Tongjiang. d The two project cities are Raohe and Tongjiang.
Appendix 2 39
PROCUREMENT PLAN
1. Project Procurement Thresholds
1. Except as the Asian Development Bank (ADB) may otherwise agree, the following process thresholds shall apply to the procurement of goods and services:
Table 1: Procurement of Goods and Services Method Threshold Prior or Post ICB for Works Equal to or more than $10 million Prior ICB for Goods Equal to or more than $1 million Prior NCB for Works Equal to or more than $100,000 and less than $10 million Posta NCB for Goods Equal to or more than $100,000 and less than $1 million Posta Shopping Works Less than $100,000 Prior Shopping Goods Less than $100,000 Prior ICB = international competitive bidding, NCB = national competitive bidding. a The first national competitive bidding works and goods packages are required to have prior review by the Asian Development Bank.
2. Goods and Works Contracts Estimates to Cost More Than $1 Million
2. The following table lists goods and works contracts for which procurement activities are either ongoing or expected to commence within the next 18 months. The procurement packages were estimated based on the detailed cost estimates in the approved feasibility study and implementation schedule. It was concluded during the fact-finding mission that the estimates are fairly accurate.
Table 2: Goods and Works Contracts Estimates Within the Next 18 Months Procure- Anticipated Advance Prior ADB ment Advertising Procure- Approval No. Description Method Date ment (y/n) A. Harbin Taiping Heating Plant and District Heating Supply and installation of boilers and 1. ICB Yes Q3 2012 Yes auxiliaries Supply and installation of boiler ancillary 2. ICB Yes Q4 2012 Yes equipment Supply and installation of heat pipelines, 3. ICB Yes Q1 2013 No HESs, and SCADA 4. Civil works of heat source NCB Yes Q4 2012 Yes
B. Jiagedaqi District Heating Supply and installation of equipment in No 1. ICB Yes Q2 2013 HESs and SCADA 2. Supply of heat pipelines ICB Yes Q2 2013 No
C. Jiamusi West District Heating Supply and installation of equipment in 1. ICB Yes Q1 2013 Yes HESs and SCADA 2. Supply of heat pipelines ICB Yes Q4 2012 Yes
D. Jidong County District Heating Supply and installation of equipment in No ICB Yes Q2 2013 1. HESs and SCADA 2. Supply of heat pipelines ICB Yes Q2 2013 No 40 Appendix 2
Procure- Anticipated Advance Prior ADB ment Advertising Procure- Approval No. Description Method Date ment (y/n) E. Qitaihe District Heating No 1. Supply of heat pipeline ICB Yes Q2 2013
2. Supply of heat pipeline ICB Yes Q2 2014 No
3. Pipeline civil works and installation NCB No Q2 2013 No
F. Raohe Town Heating Plant and District Heating Supply and installation of boilers and No ICB Yes Q2 2014 1. auxiliaries 2. Supply and installation of heat pipelines ICB Yes Q2 2014 No
G. Tongjiang City Heating Plant and District Heating Supply and installation of boilers and No 1. ICB Yes Q2 2013 auxiliaries 2. Supply of HESs and SCADA ICB Yes Q2 2013 No
3. Supply of heat pipeline ICB Yes Q2 2014 No
4. Civil works of boiler plant ICB Yes Q2 2014 No
H. Yichun City-Tangwanghe District Heating Supply and installation of equipment in No 1. ICB Yes Q2 2013 HESs and SCADA 2. Supply of heat pipelines ICB Yes Q2 2013 No
I. Yichun City-Xinqing District Heating Supply and installation of equipment in No 1. ICB Yes Q2 2013 HESs and SCADA 2. Supply of heat pipelines ICB Yes Q2 2013 No ADB = Asian Development Bank, HES = heat exchange station, ICB = international competitive bidding, NCB = national competitive bidding, SCADA = supervisory control and data acquisition. Sources: Implementing agencies and Asian Development Bank estimates.
3. The following table lists the consulting services contracts for which procurement activity is expected to commence within the next 18 months.
Table 3: Consulting Services Contracts Estimated to Cost More than $100,000 Estimated Cost Recruitment Post or Prior Advertisement Date Contract Description ($ million) Method Review (quarter/year) Project implementation supervision consultants 0.39 Individual Prior Q1 2013 Sources: Implementing agencies and Asian Development Bank estimates.
4. The executing agency will contract the experienced tendering company which has a track record of tendering activities under ADB or the World Bank-financed project and familiar with ADB’s Procurement Guidelines (2010, as amended from time to time).1 The executing
1 Available at: http://www.adb.org/Documents/Guidelines/Procurement/Guidelines-Procurement.pdf Appendix 2 41 agency assisted by the procurement and disbursement specialist will supervise the selected tendering company.
3. National Competitive Bidding
5. The borrower’s Law of Tendering and Bidding of the People’s Republic of China (PRC) promulgated by Order No. 21 of the President of the PRC on 30 August 1999 is subject to the following clarifications required for compliance with the Procurement Guidelines (2010, as amended from time to time):
(i) All invitations to prequalify or to bid shall be advertised in the national press, or official gazette, or a free and open access website in the borrower’s country. Such advertisement shall be made in sufficient time for prospective bidders to obtain prequalification or bidding documents and prepare and submit their responses. In any event, a minimum preparation period of 30 days shall be given. The preparation period shall be counted from (a) the date of advertisement, or (b) when the documents are available for issue, whichever date is later. The advertisement and the prequalification and bidding documents shall specify the deadline for such submission. (ii) Qualification requirements of bidders and the method of evaluating the qualification of each bidder shall be specified in detail in the bidding documents, and in the prequalification documents if the bidding is preceded by a prequalification process. (iii) If bidding is preceded by a prequalification process, all bidders that meet the qualification criteria set out in the prequalification document shall be allowed to bid and there shall be no limit on the number of prequalified bidders. (iv) All bidders shall be required to provide a performance security in an amount sufficient to protect the borrower and executing agency in case of breach of contract by the contractor, and the bidding documents shall specify the required form and amount of such performance security. (v) Bidders shall be allowed to submit bids by mail or by hand. (vi) All bids shall be opened in public; all bidders shall be afforded an opportunity to be present (either in person or through their representatives) at the time of bid opening, but bidders shall not be required to be present at the bid opening. (vii) All bid evaluation criteria shall be disclosed in the bidding documents and quantified in monetary terms or expressed in the form of pass or fail requirements. (viii) No bid may be rejected solely on the basis that the bid price falls outside any standard contract estimate or margin or bracket of average bids established by the borrower and executing agency. (ix) Each contract shall be awarded to the lowest evaluated responsive bidder, that is, the bidder who meets the appropriate standards of capability and resources and whose bid has been determined (a) to be substantially responsive to the bidding documents, and (b) to offer the lowest evaluated cost. The winning bidder shall not be required, as a condition of award, to undertake responsibilities for work not stipulated in the bidding documents or otherwise to modify the bid as originally submitted. (x) Each contract financed with the proceeds of the loan shall provide that the suppliers and contractors shall permit ADB, at its request, to inspect their accounts and records relating to the performance of the contract and to have said accounts and records audited by auditors appointed by ADB. 42 Appendix 2
(xi) Government-owned enterprises in the borrower’s country may be permitted to bid if they can establish that they (a) are legally and financially autonomous, (b) operate under commercial law, and (c) are not a dependent agency of the borrower and/or executing agency. (xii) Rebidding shall not be allowed solely because the number of bids is less than three.
Appendix 3 43
OUTLINE TERMS OF REFERENCE FOR PROJECT IMPLEMENTATION
A. Consulting Services
1. Project Management Specialist (Heating Engineer) (national, 16 person-months, intermittent). The expert should have a post graduate degree in heating engineering, and at least 10 years of work experience in similar projects and 5 years of experience in procurement. At least 3 years of work experience in Asian Development Bank (ADB)-financed loan projects is required. The expert should have good command of English. The expert will undertake the following activities: (i) Assist the project management office (PMO) and implementing agencies in communicating with ADB to ensure smooth project implementation and attend the meetings held by ADB missions for the project. (ii) Visit the project site at regular intervals during project implementation; monitor the progress and report to the PMO on critical activities, providing details of the progress, and recommendations. (iii) Review the tender design, technical specifications, tender drawings and all other parts of the bidding documents to ensure that the documents are technically and contractually in accordance with ADB requirements for international competitive bidding (ICB), local competitive bidding or international shopping, and appropriate for international tendering. (iv) Arrange the translation of all tendering documents for ICB into English for submission to ADB. (v) Assist the tendering company in the preparation of the advertisement for pre- qualification of bidders, bidding documents, etc. (vi) Assist the PMO in the contract negotiations for contracts controlled under ADB procurement procedures. (vii) Assist in the assessment of contract variations and their verification. (viii) Assist in claims avoidance practices, particularly for international contractors. (ix) Monitor the progress of district heating subsector reform (i.e., implementation of two part tariff system, and consumption-based billing). (x) Collect and review the data for performance targets and indicators of outcome and outputs specified in the design and monitoring framework (Appendix 1). (xi) Assist the PMO in the implementation of labor retrenchment plan and gender action plan. (xii) Prepare quarterly project progress report information, including (a) progress status of physical construction, (b) contract award and disbursement projection inputted by the procurement and disbursement specialist, (c) environment report inputted by the environment monitoring specialist, (d) status on compliance with loan covenants, (e) implementation status of labor retrenchment plan and gender action plan, and (f) any issues and concerns.
2. Procurement and Disbursement Specialist (national, 16 person-months, intermittent). The expert should have a graduate degree in accounting, law, commerce, and a recognized qualification in accountancy, and at least 5 years of work experience in project management in procurement and disbursement. At least 3 years of work experience in ADB-financed loan projects is required. The expert should have good command of English and business terminology. The expert will undertake the following activities: (i) Assist the executing and implementing agencies to prepare the required disbursement document submitted to ADB in accordance with ADB’s Loan Disbursement Handbook (2012, as amended from time to time). 44 Appendix 3
(ii) Assist the executing and implementing agencies in preparing bidding documents in accordance with ADB’s Procurement Guidelines (2010, as amended from time to time). (iii) Prepare quarterly contract award projection and disbursement report and submit it to the implementing agency and ADB. (iv) Evaluate any bids which granted a margin of domestic preference under ICB to comply with paragraphs 2.55 (a) and 2.56 of the Procurement Guidelines for domestically manufactured Goods. (v) Provide procurement and disbursement trainings including application of domestic preference to financial evaluation of goods to the tendering company, executing agency, and implementing agencies. (vi) Ensure that progress against the procurement plan is tracked and monitored to ensure that all documents requiring prior review are promptly received by ADB.
3. Environment Monitoring Specialist (national, 16 person-months, intermittent). The expert should have a post graduate degree in environment management or relevant field, and at least 10 years of work experience in environment management and monitoring. At least 3 years of work experience in ADB-funded loan projects. The expert should have good command of English. The expert will undertake the following activities: (i) Assist the PMO to update the environmental management plan (EMP) and environmental monitoring program. (ii) Verify the implementation of the environmental protection measures specified in the EMP. (iii) Collect relevant information from the implementing agencies and relevant local government agencies on environment impact. (iv) Review monitoring reports and the semiannual environmental performance reports. (v) Prepare semiannual environmental safeguards (EMP) monitoring reports and a project completion report. (vi) Provide training to the PMO, implementing agencies, contractors and construction supervision companies on environmental management implementation and monitoring. (vii) Identify any environment-related implementation issues and suggest necessary corrective actions, and reflect these in a corrective action plan. (viii) Undertake site visits, as required, to assess the environment impact at community and household levels. (ix) Collect other relevant environment indicators to measure the positive environment impact (i.e., emissions reduction brought by the project). (x) Collect and review the data for performance targets and indicators of outcome and outputs specified in the design and monitoring framework (Appendix 1).
B. Reporting Requirements
4. Project progress reports. During the consulting services, consultants shall submit to PMO and ADB, both in English and Chinese, the quarterly project progress report information, including the (i) progress status of physical construction, (ii) contract award and disbursement projection inputted by the procurement and disbursement specialist, (iii) environment report inputted by the environment monitoring specialist, (iv) status on compliance with loan covenants, and (v) any issues and concerns.
Appendix 3 45
5. Environment monitoring reports. The consultants will submit semiannual environment monitoring reports, both in English and Chinese, to PMO and ADB. 46 Appendix 4
LABOR RETRENCHMENT AND REEMPLOYMENT PLAN
A. Background
1. The Heilongjiang Energy Efficient District Heating Project, consisting of nine subprojects, will result in the closing of around 470 small boilers and will affect a total of 2,075 workers (Table 1).
Table 1: Small Boiler Houses to be Closed and the Affected Workers Number of Small Affected workers Subproject Boilers to be Closed Full-time Temporary Total 1. Qitaihe DH 15 0 30 30 2. Harbin Taiping HP and DH 18 0 54 54 3. Jiagedaqi DH 68 214 0 214 4. Jiamusi West DH 218 143 1,247 1,390 5. Jidong County DH 32 0 80 80 6. Raohe Town HP and DH 19 0 36 36 7. Tongjiang City HP and DH 36 0 108 108 8. Yichun City-Tangwanghe DH 16 70 0 70 9. Yichun City-Xinqing DH 48 93 0 93 Total 470 520 1,555 2,075 DH = district heating, HP = heating plant. Source: Feasibility study reports and local consultations.
2. The labor retrenchment and reemployment plan will safeguard the benefits of the affected workers as per Asian Development Bank and the People’s Republic of China policy requirements.
B. Profile of Affected Workers
3. Full time employees. The 520 full time workers who have been employed by the five implementing agencies (out of the nine) are all male due to the nature of work. In the case of Jiagedaqi, Yichun City-Xinqing, Yichun City-Tangwanghe subprojects, all affected workers are full time employees. These full time workers operate small boiler houses for 6–7 months during heating season and maintain the boilers during non-heating season.
4. Seasonal workers. During the 2010 heating season, a total of 1,555 seasonal unskilled workers were hired by the owners of small boiler houses from the six subproject areas. These are farmers or migrant workers from the rural areas needing job during the non-agricultural season. These workers are paid on a daily basis and do not necessarily have to be re-hired during the next heating season.
5. Result of social survey. The interview results of the 13 workers, including the three full time staff and 10 migrant workers, are provided below:
(i) For the three full time workers, they: (a) are aware of the closing of the small boilers due to the implementation of the centralized heating system, (b) have worked in small boiler houses for more than 10 years, (c) have a monthly income of around CNY1,000, and Appendix 4 47
(d) are aware that they will be transferred to another position with the new district heating system.
(ii) For the 10 migrant workers: (a) eight workers are aware of the closing of the small boilers due to the implementation of centralized heating system; (b) six works as stokers for the first time, three have about 2–3 years experience in small boiler houses, and one has worked in small boiler houses for more than 7 years; (c) all have contractual agreement for one heating season for 6 months; (d) four workers have monthly income above CNY2,000 during the heating season and the remaining six, who are working as stokers for the first time, earn less than CNY1,500 per month; (e) six workers contribute 30%–50% of their family’s total annual income and the remaining four contribute above 50%; (f) seven workers do not have other employment skills and find jobs, such as porters during non-heating season. Three migrant workers are employed as temporally workers like electrician and maintenance workers; (g) eight workers feel that it is difficult to obtain employment opportunities in urban areas; and (h) Six workers would like that the government or project clients offer new jobs or introduce employment opportunities for them, and two are confident that they could get employment themselves.
C. Action Plan
6. Legal framework. Reemployment of affected workers will be conducted in accordance with the Labor Contract Law in the People's Republic of China, enacted on 1 January 2008.
7. Full time workers. The employment status of all 520 full time employees under Jiagedaqi, Jiamusi, Qitaihe, Yichun City-Xinqing, and Yichun City-Tangwanghe subprojects will be maintained and transferred to the operation and maintenance of heat exchange stations.
8. Seasonal temporary workers. The implementing agencies will inform the workers of the status of the boiler closure before the end of the final heating season. Since they are contractual workers on seasonal basis, the implementing agencies are not obliged to retain them and provide employment assistance in principle. However, if they would like to work at the heating supply plants as contractual workers, they are eligible to participate in the technical training for potential new positions. Those who have completed the training course may be hired on contractual or permanent basis depending on vacancy and proficiency. Also, the reference to the available jobs in project cities in coordination with local employment office will be made to the temporary workers, if requested.
9. Training and cost estimates. With the shift of heating supply method from small boiler to centralized heating, workers need to undertake training to acquire new skills and knowledge to operate the new heating system. Both full time and seasonal workers who are willing to work at the new heating system are eligible to join the technical training program.
10. Training topics will include (i) pipe maintenance, (ii) stoker operation, (iii) laboratory technical work, (iv) machine maintenance, (v) electric maintenance, (vi) cybernation technique, and (vii) heating relay station equipment maintenance. Respective implementing agencies will 48 Appendix 4 provide trainings supported by the local quality and technology inspection bureau. The training program is scheduled to start in January 2013 and will be completed in December 2017. The total training cost is estimated at CNY986,500 (Table 2).
Table 2: Cost Estimates for Training Number of Workers Budget per worker (CNY) Total (CNY) Full time workers 520 1,000 520,000 Seasonal workers 1,555 300 466,500 Total 2,075 986,500 CNY= Chinese yuan. Source: Social survey under the project preparatory technical assistance.
11. Re-employment procedures and schedule. The project management office (PMO) and the respective implementing agencies are responsible for implementing the plan, with support from relevant government departments, such as labor bureaus, civil affairs bureaus, construction bureaus, and re-employment centers. The basic procedures and schedule to be followed by the PMO and the implementing agencies are given in Table 3.
Table 3: Re-employment Procedures and Schedule for Affected Workers Actions Responsible Agency Timing A. For full time workers 1. Detailed survey and consultation of Implementing agencies supported by April–May in 2013–2017 affected workers’ willingness relevant local government offices
2. Provide technical training Operation team of implementing June–August in 2013–2017 agencies with manufactures
3. Provide on-the-job training Operation team of implementing October–April in 2013–2017 agencies
B. For temporary workers 1. Notice of boiler closure and explanation Implementing agencies supported by March in 2013–2017 (before of training courses relevant local government offices the end of heating season)
2. Sign up for training course Affected workers on voluntary basis April–May in 2013–2017
3. Provide technical training Operation team of implementing June–August in 2013–2017 agencies with manufactures
4. Sign the permanent or temporary Implementing agencies and workers September in 2013–2017 employment contract 5. Provide on-the-job training Operation team of implementing October–April in 2013–2017 agencies 6. Reference to other job opening in the Implementing agencies and local March in 2013–2017 (before project cities employment office the end of heating season) Source: Social survey under the project preparatory technical assistance.
D. Participation and Consultation
12. From April to May in 2013–2017, all affected workers will be consulted on the (i) scope of the impact of the component, (ii) schedule of closure of small boilers, (iii) working positions to be offered, (iv) training course and schedule plan, (v) income and welfare, (vi) workshop environment and conditions, and (vii) contents of labor agreement. The implementing agencies Appendix 4 49
will organize the meeting with the affected workers, while the PMO will monitor the implementation of the process to ensure all affected workers have the opportunity to express their opinions, and assist the local governments to issue a reasonable and fair document for the re-employment of the affected workers.
E. Complaints and Appeal
13. Complaints regarding employment arrangements, training, salary and benefits, should be directed to the respective implementing agencies and the PMO. The implementing agencies will record and contact the related institutions or companies as soon as possible to resolve the issues under the coordination of the implementing agencies. If the implementing agencies have no authority to solve the issues, it can request help from the PMO and relevant local government departments such as labor bureaus, civil affairs bureaus, and re-employment centers. In either events, the implementing agencies should be responsible for the appeal until the issues are resolved. If the PMO and local governments still cannot resolve the issues, the affected workers have the right to file the case in the local court.
F. Monitoring and Evaluation
14. The respective implementing agencies are requested to report the status of the affected workers through semiannual progress reports. Also, the Asian Development Bank mission, during the midterm review and project completion assisted by the PMO, will confirm the status of the affected workers. 50 Appendix 5
ENVIRONMENTAL MANAGEMENT PLAN
A. Objectives
1. The objective of the environmental management plan (EMP) is to ensure implementation of identified mitigation and management measures to avoid, reduce, mitigate, and compensate for anticipated adverse environment impacts, while complying with ADB’s Safeguard Policy Statement (SPS, June 2009) and PRC’s environmental laws, standards and regulations. Organizational responsibilities and budgets are clearly identified for execution, monitoring and reporting.
B. Potential Impacts and Mitigation Measures
2. The potential impacts of the project during project implementation as identified by the domestic environmental impact assessments (EIAs) and the initial environmental examination (IEE) and corresponding mitigation measures are summarized in Table A5.1. The mitigation measures will be (i) incorporated in detailed design, bidding documents, construction contracts and operational management manuals; (ii) implemented by design institutes, contractors and implementing agencies; and (iii) supported by loan implementation environmental consultants, project management office (PMO), and local environment protection bureau (EPBs) of the nine project cities and towns. The effectiveness of mitigation measures will be evaluated through environmental inspections and monitoring results.
C. Environment Monitoring Plan
3. The environment safeguards monitoring (EMP monitoring) plan is presented in Table A5.2.
4. Wastewater and ambient air will be monitored by the environmental monitoring contractors, supported by the construction supervision companies (CSCs) during construction. Emissions will be monitored by the environmental monitoring contractors hired by the implementing agencies during operation. The environmental management unit (EMU), under the implementing agencies, shall be responsible for their environmental safeguards monitoring (EMP monitoring) during project implementation. The environmental officer in the PMO shall be responsible for supervising the implementing agencies and EMUs to ensure (i) environmental safeguards monitoring (EMP monitoring) to be properly conducted, and (ii) environmental mitigation measures in the EMP to be adequately implemented. At the start of the project implementation, the PMO, implementing agencies, loan implementation environment consultants, and Asian Development Bank (ADB) will prepare more detailed environmental safeguards monitoring (EMP monitoring) programs to be implemented during construction and operation, if necessary.
Table A1.1: Environment and Social Impacts and Mitigation Measures
Responsibility
Potential Impacts and Implemented by Supervised Item Issues Mitigation Measures and/or Safeguards Source of Funds by A. Construction Phase Soil Soil erosion due to (i) Minimize active open excavation areas during pipeline Contractors, IAs, Local EPB, Included in construction activities trenching activities and some foundation works, and use CSCs PMO construction appropriate compaction techniques for those constructions. contract (ii) Construct intercepting ditches and drains to prevent runoff entering construction sites, and divert runoff from sites to existing drainage. (iii) Limit construction and material handling during periods of rains and high winds. (iv) Stabilize all earthwork disturbance areas within maximum 14 days after earthworks have ceased at the sites. (v) Plant grass in the heating plants to protect ground, especially on sandy soil areas. (vi) Properly slope or re-vegetate disturbed surfaces, such as compacted pipeline trenches. (vii) Appropriately set up temporary construction camps and storage areas to minimize land area required and impact on soil erosion. Soil contamination (i) Properly store petroleum products, hazardous materials and Contractors, IAs, Local EPB, Included in wastes on impermeable surfaces in secured and covered CSCs PMO,LIECs construction areas, and use the best management practice to avoid soil contract contamination. (ii) Remove all construction wastes from the site to approved spoil disposal sites. (iii) Provide spill cleanup measures and equipment at the construction site and require contractors to conduct training in emergency spill response procedures. 5 Appendix Wastewater Surface and (i) All areas where construction equipment is being washed will Contractors, IAs, Local EPB, Included in groundwater be equipped with water collection basins and sediment traps. CSCs PMO, LIECs construction
contamination from (ii) Septic treatment and disposal systems will be installed at contract 51 construction wastewater, construction camps along with proper maintenance protocols. and domestic water (iii) For areas with oily wastewater discharges, oil-water separators will be installed before the sedimentation basin.
52
Responsibility
Potential Impacts and Implemented by Supervised 5 Appendix Item Issues Mitigation Measures and/or Safeguards Source of Funds by Noise Noise from construction, (i) Ensure that noise levels from equipment and machinery Contractors, IAs, PMO, local Included in machinery operation, conform to the National standard, and properly maintain CSCs EPBs, LIECs construction and transportation machinery to minimize noise. contract activities (ii) Apply noise reduction devices or methods where piling equipment is operating within 500 m of sensitive sites such as schools, hospitals, and residential areas. (iii) Locate sites for rock crushing, concrete-mixing, and similar activities at least 1 km away from sensitive areas. (iv) To reduce noise at night, restrict the operation of machinery generating high levels of noise, such as piling, and movement of heavy vehicles along urban roads between 8 pm and 7 am the next day based on international best/common construction practice. (v) Public notification of construction operations will incorporate noise considerations; information procedure of handling complaints through the Grievance Redress Mechanism will be disseminated. (vi) Place temporary hoardings or noise barriers around noise sources during construction, if necessary. (vii) If noise standards are exceeded, equipment and construction conditions shall be checked, and mitigation measures shall be implemented to rectify the situation. Vibration Vibration generating by Prohibition of, pipeline trench compacting, pilling and road roller Contractors, IAs, PMO, local Included in compacting and rolling operation at night. CSCs EPBs, LIECs construction contract Ambient Air Dust generating by (i) Spraying water on construction sites and material handling Contractors, IAs, PMO, LIEC, Included in construction activities routes where fugitive dust is being generated. CSCs local EPBs, construction (ii) Pay particular attention to dust suppression near sensitive LIECs contract receptors such as schools, hospitals, or residential areas. (iii) Cover materials during truck transportation, in particular, the fine material, to avoid spillage or dust generation. (iv) Pay particular attention to dust suppression near sensitive receptors such as schools, hospitals, or residential areas.
Responsibility
Potential Impacts and Implemented by Supervised Item Issues Mitigation Measures and/or Safeguards Source of Funds by Air emission from (i) Store petroleum or other harmful materials in appropriate Contractors, IAs, Local EPB, Included in vehicles and places and covering to minimize fugitive dust and emission. CSCs PMO, LIECs construction construction equipment (ii) Ensure vehicle emissions are in compliance with PRC contract standards of GB18352-2005, GB17691-2005, GB11340-2005, GB2847-2005, and GB18285-2005. (iii) Maintain vehicles and construction machineries to a high standard to ensure efficient running and fuel-burning and compliance with the PRC emission standards. Solid Waste Solid waste from (i) Establish temporary storage for solid wastes away from water Contractors, IAs, Local EPB, Included in construction activities bodies or other environmental sensitive areas, and regularly CSCs PMO, LIECs construction haul to an approved landfill or designated dumping site. contract (ii) Provide appropriate waste storage containers and reach agreement with local villages or residential communities for disposal of worker’s camp domestic waste through appropriate local facilities. These arrangements will be made prior to commencing construction. (iii) Hire a contractor with proper credentials to remove all wastes from sites to approved waste disposal sites, according to appropriate domestic standards. (iv) Hold contractors responsible for proper removal and disposal of any significant residual materials, wastes, and contaminated soils that remain on the ground after construction. Any planned paving or vegetating of the area shall be done as soon as the materials are removed to protect and stabilize the soil. (v) Prohibit waste incineration. Appendix 5 Appendix 53 53
54
Responsibility
Potential Impacts and Implemented by Supervised 5 Appendix Item Issues Mitigation Measures and/or Safeguards Source of Funds by Solid Waste Hazardous and Polluting (i) Prepare and implement the protocol for the handling and Contractors, IAs, Local EPB, Included in Materials from disposal of hazardous and pollution construction materials CSCs PMO, LIECs construction construction activities including a spill prevention and emergency plan. contract (ii) Storage facilities for fuels, oil, and other hazardous materials shall be within secured areas on impermeable surfaces, and provided with bunds and cleanup installations. (iii) Vehicles and equipment will be properly staged in designated areas to prevent contamination of soil and surface water; vehicle, machinery and equipment maintenance and refueling shall be properly carried out so that spilled materials do not seep into the soil. (iv) Oil traps shall be provided for service areas and parking areas; and fuel storage and refilling areas will be located at least 300 m from drainage structures and important water bodies. (v) Contractors’ fuel suppliers shall be properly licensed. They shall follow proper protocol for transferring fuel and the standard of Transportation, Loading and Unloading of Dangerous or Harmful Goods of JT 3145-88. Small boiler site (i) A month before demolishing the small boilers, a survey and Local EPB HHWDC, PMO, Included in investigation for the small boiler sites will be conducted by the LIECs construction IAs and the local EMSs under supervision of the local EPBs. contract The assessment will include contamination status of soil, groundwater, structures and surface water bodies if nearby. Base on the survey and investigation, if the environments are contaminated, the site restoration plan shall be developed taking into account the World Bank’s Group General EHS Guidelines on Construction and Decommissioning and follow up activities will be conducted by the IAs under the supervision of the local EPBs. (ii) Asbestos risk assessment will be conducted by the project city EPB under the supervision of Harbin Hazardous Wastes Disposal Center (HHWDC), which will be shared by the local EPBs, the PMO and ADB.
Responsibility
Potential Impacts and Implemented by Supervised Item Issues Mitigation Measures and/or Safeguards Source of Funds by Solid Waste In case of asbestos (i) If unexpected asbestos and ACM is identified through the Demolition IAs, Local EPB, In case of impact during assessment, the removal, transport and disposal of asbestos Contractor, PMO, LIECs asbestos demolishing small and ACM will be carefully and professionally conducted. The HHWDC presence, the cost boilers houses associated costs will be included in the project. will be borne by (ii) Identify, properly label and pack asbestos as well as small the boiler demolishing debris contaminated with asbestos during owner demolishing small boilers, and transport them in specific closed vehicles to the secured landfill of HHWDC in Harbin in accordance with the World Bank’s EHS Guideline. (iii) Proper protective clothing and specific equipment shall be provided by HHWDC to its trained team and demolishing contractors’ workers involving demolishing and disposal of asbestos during deconstruction of the small boilers. (iv) Train workers on the hazards, danger and procedures of working in areas contaminated with asbestos. (v) A site contamination investigation will be undertaken in consultation with the local city EPB, and if necessary site specific plans taking into account the World Bank’s Group General EHS Guidelines on Construction and Decommissioning will be developed to address any site contamination. The plans will be reviewed by the local EPB and ADB. Contaminated spoil will be transported to suitable spoil disposal sites approved by the local EPB, and clean fill provided. The site will be rehabilitated to a level suitable for its proposed future use; the local EPB will approve the rehabilitation, and will require additional rehabilitation actions if necessary.
Non-hazardous solid (i) Maximize reuse/recycling of deconstruction wastes generated Demolition IAs, Local EPB, Included in the 5 Appendix waste generated by during demolition (e.g. iron, bricks, windows, doors, steel bars Contractors, PMO, LIECs proposed project demolishing small etc.), sell them to local waste recycling stations). CSCs budget, and the boilers houses (ii) Dispose other demolition debris in municipal solid waste budget from small landfills or special construction and demolition debris landfills boiler owners subject to approval by the municipal EPBs. 55 (iii) Throwing waste into the river will be strictly prohibited.
56
Responsibility
Potential Impacts and Implemented by Supervised 5 Appendix Item Issues Mitigation Measures and/or Safeguards Source of Funds by Flora and Protection of vegetation, (i) Preserve existing vegetation where no construction activity is Contractors, IAs, Local EPB, Included in Fauna re-vegetation of planned, or temporarily preserve vegetation where activity is CSCs PMO, LIECs construction disturbed areas; planting planned for a later date. contract and compensatory (ii) Properly backfill, compact, and re-vegetate pipeline trenches planting trees and grass after heating pipeline installation. (iii) Protect existing trees and grassland during constructions; when a tree has to be removed or an area of grassland disturbed, replant trees and re-vegetate the area after construction. (iv) Remove trees or shrubs only as a last resort if they impinge directly on permanent structures. (v) In compliance with the PRC’s forestry law, undertake compensatory planting of an equivalent or larger area of affected trees and vegetation. Community Traffic congestion and (i) Require contractors to consider the impact on traffic in Contractors, IAs, Local EPB, Included in Disturbance accident, and construction scheduling. A traffic control and operation plan will CSCs PMO, LIECs construction and Safety interruption in public be prepared and it shall be approved by each local traffic contracts utilities management administration before construction. The plan shall include provisions for diverting or scheduling construction traffic to avoid morning and afternoon peak traffic hours, regulating traffic at road crossings, building interim roads, selecting transport routes to reduce disturbance to regular traffic, reinstating roads, and opening them to traffic as soon as the construction is completed. (ii) The plan shall also include coordination with other utility providers to ensure the construction activities will not interfere or interrupt with their services. (iii) Plan construction activities so as to minimize disturbances to utility services. Temporary land occupation will be planned well ahead of construction to minimize its impact. Land will be reinstated to its original condition after construction. (iv) Implement safety measures around the construction sites to protect the public, including warning signs to alert the public to potential safety hazards, and barriers to prevent public access to construction sites.
Responsibility
Potential Impacts and Implemented by Supervised Item Issues Mitigation Measures and/or Safeguards Source of Funds by Occupational Health damage and (i) Identify and minimize, so far as reasonably practicable, the Contractors, IAs, Local EPB, Included in health and accidents during causes of potential hazards to workers. CSCs PMO, LIECs construction safety construction activities (ii) Provide preventive and protective measures, including contract modification, substitution, or elimination of hazardous conditions. (iii) Provide appropriate personal protective equipment (PPE) to minimize risks, including ear protection, hard hats and safety boots. (iv) Provide adequate safety protection equipment including firefighting systems. (v) Provide adequate signage in risk areas. (vi) Provide procedures for limiting exposure to high noise or heat working environments in compliance with PRC noise standards for construction sites (GB12523-1990) and relevant international guidelines. (vii) Provide training for workers, and establish appropriate incentives to use and comply with health and safety procedures and utilize PPE. (viii) Provide training for workers on the storage, handling and disposal of hazardous wastes. (ix) Provide procedures for documenting and reporting occupational accidents, diseases, and incidents. (x) Provide emergency prevention, preparedness, and response arrangements. (xi) Daily reminder on specific safety issues before operation. Physical (i) Establish and conduct chance-find procedures for physical Contractors, IAs, Local EPB, In case of cultural Cultural cultural resources. CSCs PMO, LIECs relic discovered, Resources (ii) Cultural heritage sites will be preserved where identified. the cost for Appendix 5 Appendix Strictly in accordance with PRC regulations, no person shall compensation to destroy, damage, deface, conceal or otherwise interfere with contractor will be the relic. borne by specific (iii) If a new site is unearthed, work should be stopped immediately fund for cultural and the IA and local cultural relic bureau promptly notified, and relic protection 57 construction will resume only after a thorough investigation and with the permission of the appropriate authority.
58
Responsibility
Potential Impacts and Implemented by Supervised 5 Appendix Item Issues Mitigation Measures and/or Safeguards Source of Funds by Subtotal budget A (CNY in 10,000) 3,313
B. Operation Phase Air Quality Air pollution from heat Proper operation and maintenance of desulfurization, denitrification, IAs PMO, Local Included in IAs’ source dust removal equipment and online monitoring instruments. EPBs, LIECs operation budget Dust from coal and ash (i) Water will be sprayed to suppress dust during transporting and IAs PMO, Local Included in IAs’ handling unloading coal. EPBs, LIECs operation budget (ii) Water spraying of coal stockpiles will be optimized to minimize air flow through the stockpile. (iii) Coal stockpiles will be compacted as required to minimize air ingress and the potential for auto ignition and loss of volatiles. (iv) Enclosed trucks will be used for transportation of ash from heating plants to secondary user industry. (v) Water spraying on top layer of ash in the ash dykes will be conducted. Noise Noise from coal crusher, (i) Provide acoustic enclosures, barriers, or shields to reduce Equipment Local EPB, Include in the draft fan, air compressor noise. supply and PMO, LIECs equipment supply and water feed pumps in (ii) Provide green belt all along the heating plants' boundary for installation and installation heat source further attenuation of noise. contractors, IAs contracts (iii) Implement restricted access, and provision of protective equipment such as earmuffs and earplugs for personnel working in high noise generating areas. (iv) Mufflers will be installed on vents of the boiler and air blowers and sound-proof shields will be installed on the power generators to mitigate the noise impact. Noise from heat Install sound-proof shield and double window. Equipment PMO, Local Include in the exchange stations supply and EPBs, LIECs equipment supply installation and installation contractors, IAs contracts Solid Wastes Fly ash and slag could (i) All fly-ash and slag will be stored on site and sold to the local IAs PMO, Local Included in IAs’ affect soil and water construction industry as a raw building material and to be used EPBs, LIECs operation budget quality if not properly as material for road construction. managed
Responsibility
Potential Impacts and Implemented by Supervised Item Issues Mitigation Measures and/or Safeguards Source of Funds by (ii) No permanent on site ash disposal will be allowed.
Boiler decommissioning (i) All demolition wastes will be routinely collected by PMO PMO, Local could affect soil, air and appropriately licensed waste management companies for EPBs water quality if not reuse, recycling (e.g. equipment; steel, iron and other metals; managed properly. salvageable wood and building materials; etc.) or final disposal in a licensed waste facility (e.g. for non-recyclable materials). Waste management will be undertaken in consultation with local authorities. (ii) No onsite landfills will be permitted at any demolition site. (iii) No burning of wastes will be permitted at any demolition site. (iv) A site contamination investigation will be undertaken in consultation with the local city EPB, and if necessary site specific plans will be developed to address any site contamination. Contaminated spoil will be transported to suitable spoil disposal sites approved by the local EPB, and clean fill provided. The site will be rehabilitated to a level suitable for its proposed future use; the local EPB will approve the rehabilitation, and will require additional rehabilitation actions if necessary. (v) Homeowners who choose to dispose their household stoves should be given access to the services of the waste management companies noted above. Appendix 5 Appendix 59 59
60
Responsibility
Potential Impacts and Implemented by Supervised 5 Appendix Item Issues Mitigation Measures and/or Safeguards Source of Funds by Wastewater Water pollution and (i) Wastewater will be treated to achieve maximum reuse and IAs PMO, Local IA’s operation reuse in heat source recycling; EPBs, LIECs budget plant (ii) Leachate and drainage from the coal storage yard will be collected and drained into the storage pond for reuse in spraying the coal storage yard and treated to remove the particles before reuse; (iii) All HSPs’ sanitation facilities will discharge to septic systems and municipal sewer networks that meet relevant PRC standards; (iv) Runoffs from HSPs will be directed to sedimentation basins, and wastewater will be reused if possible, for dust suppression. Solid waste residue in the basins will be cleared as required and transported to local EPB approved landfills; (v) For areas with oily wastewater discharges, oil-water separators will be installed before discharging to the sedimentation basins; and (vi) Wastewater will be treated for removal of oil and grease and it will be re-used on-site for horticulture. (vii) Any oil and grease sludge skimmed out from the treatment process will be collected and handed over to recycler as per PRC standards. Wastewater from heat (i) Regularly clean the sedimentation tank, dispose of IAs PMO, local exchange stations accumulated sludge and sediments in the municipal landfill; EPBS, local and EMCs, LIECs (ii) Conduct environmental monitoring for the backwash effluent based on the EMP before discharging into the sewer. Backwash effluent from Build an equalization and sedimentation tank in each HES for pH Equipment PMO, local Include in the heat exchange stations adjustment and sedimentation (SS≤400mg/L) before the backwash supply and EPBs, local equipment supply effluent is discharged into the municipal sewer; installation EMCs, LIECs and installation contractors, IAs contracts Community Occupational and (i) Conduct regular inspections of the district heating network, and IAs PMO, Local IA’s operation Disturbance community health and repair defects promptly; and EPBs, local budget and Safety safety (ii) Comply with the PRC State Administration of Worker Safety LBs, Laws and Regulations.
Responsibility
Potential Impacts and Implemented by Supervised Item Issues Mitigation Measures and/or Safeguards Source of Funds by Boiler Economic displacement Labor Retrenchment Plan (LRP) developed and implemented in IAs PMO, LIECs IA’s operation Demolition accordance with PRC applicable laws budget Associated heat Compliance with Review environmental monitoring and compliance reports of project’s IAs, PMO municipal EPBs IA’s operation source approved EIAs and associated facilities of the heating plants and transmission budget EMPs tunnel/pipeline, suggest corrective actions if necessary. Subtotal budget of B 2,465 C. Emissions Mitigation Technical Measures Ambient Air Pollutants emission from (i) Build high boiler stack to disperse and minimize the direct Equipment PMO, Local Include in the heating plants impact of emissions on adjacent areas; supply and EPB, local equipment supply (ii) Use electrostatic precipitation (ESP) with a dust removal installation EMCs, LIECs and installation efficiency of at least 99%; contractors, IAs contracts (not (iii) Use desulfurization inside the circulated fluidized bed (CFB) include boiler that is about 70% efficient; construction costs (iv) Use CFB with a total denitrification rate of about 60%, with for stacks, which which the emission concentration will be lower than 300 will be included in mg/m3; and construction (v) Install an online automatic monitor on the smokestack of the contracts) HSPs to monitor SO2 and flue dust.
Subtotal budget of C(CNY in 10,000) 3,924 Grand total budget (A+B+C) (CNY in 10,000) 9,702 CFB = circulating fluidized-bed, CHP = combined heat and power, COD = chemical oxygen demand, CSC = construction supervision company, DI = design institute, EIA = environment impact assessment, EMC = environmental monitoring contractor, EMP = environmental management plan, EMS = environmental monitoring system, EPB = environment protection bureau, GRM = grievance redress mechanism, HES = heat exchange station, HHWDC = Harbin hazardous waters disposal center, HSP = heat source plant, IA = implementing agency, LIEC = loan implementation environmental consultant, LRP = labor retrenchment 5 Appendix plan, mg = milligram, m3 = square meter, PHO = petition handling office, PMO = project management office, PPCU = project public complaints unit, PPE = personal protective environment, PRC = the People's Republic of China, SO2 = sulfur dioxide, SS = suspended solid, TA = technical assistance. Source: Domestic environment assessment reports. 61 61 62 Appendix 5
B. Environment Monitoring Plan
5. The environment safeguards monitoring (EMP monitoring) plan is presented in Table A5.2.
6. Wastewater and ambient air will be monitored by the environmental monitoring contractors, supported by the construction supervision companies (CSCs) during construction. Emissions will be monitored by the environmental monitoring contractors hired by the implementing agencies during operation. The environmental management unit (EMU) under the implementing agencies shall be responsible for their environmental safeguards monitoring (EMP monitoring) during the project implementation. The environmental officer in the PMO shall be responsible for supervising the implementing agencies and EMUs to ensure (i) environmental safeguards monitoring (EMP monitoring) to be properly conducted, and (ii) environmental mitigation measures in the EMP to be adequately implemented. At the start of the project implementation, the PMO, implementing agencies, loan implementation environment consultants, and ADB will prepare a more detailed environmental safeguards monitoring (EMP monitoring) programs to be implemented during construction and operation, if necessary.
Table A5.2: Environmental Monitoring Plan
Implemented Supervised Subject Parameter/Aspects Location Frequency by by Source of Fund
A. Construction Phase Wastewater effluent Inspection of oil or grease in collection Local EMCs, IAs, PMO, Included in EMP Wastewater sites near all Quarterly basins and sediment traps CSCs, LIECs budget construction sites. Inspection of dust mitigation measures (water spraying, cover transport IAs, PMO, All construction sites Local EMCs, Included in EMP Ambient air vehicles, etc); and Inspection of Quarterly LIECs, Local and nearby areas. CSCs budget maintenance and condition of vehicles EPBs and construction equipment. 1 hour dB(A) Nearby construction PMO, LIECs, Included in Noise Monthly Local EMCs, Day and night sites Local EPBs construction Contract Inspection of waste management Construction wastes PMO, LIECs, Included in Solid waste Weekly Contractors measures disposal sites. Local EPBs construction Contract B. Operation Phase Stack sampling of Local EPBs, Included in EMP Air emissions PM SO , NO , Flue dust Monthly IAs 10, 2 2 HSPs PMO, LIECs budget Dust from storages 1m outside of the Included in EMP TSP Twice per heating season. Local EMCs PMO, LIECs of coal and ash HSPs’ boundary budget Wastewater from Septic systems At start of operation Included in EMP heat exchange Wastewater systems, including oil- HESs and then monthly PMO PMO, LIECs budget stations water separators Appendix 5 Heating network Conduct regular inspections of the Once before heating Included in workers’ Heating pipeline safety and district heating network and repair season starts and monthly IAs PMO, LIECs salary and operation network reliability defects promptly. during heating season. budgets
Local EPBs, 63 Noise from heating 1 hour dB(A) 1m outside of the Included in EMP Twice per heating season. Local EMCs IAs, PMO, plant Day and night HSPs’ boundary budget LIECs
64
Implemented Supervised
Subject Parameter/Aspects Location Frequency by by Source of Fund 5 Appendix
Once per heating season, Local EPBs, Noise from heat 1 hour dB(A) Included in EMP 1m outside of the HESs random select 10% of the Local EMCs IAs, PMO, exchange station Day and night budget
HESs LIECs CNY = Chinese Yuan, CSC = consultant supervision company, dB = decibel, EMC = environment monitoring contractors, EPB = environment protection bureau, HES = heat exchange station, HSP = heat source plant, IA = implementing agency, Leq = equivalent continuous noise level, LIEC = loan implementation environment consultant, NO2 = nitrogen dioxide, pH = potential hydrogen, PMO = project management office, PM10 = particulate matter up to 10 micrometers, SO2 = sulfur dioxide, TSP = total suspended particulate. Source: Domestic environment assessment report. Appendix 5 65
7. Quality assurance and quality control for compliance monitoring. To ensure monitoring accuracy, the quality assurance and quality control procedures are established in accordance with the following regulations:
(i) Regulations of quality assurance/quality control Management for Environmental Monitoring issued by SEPA in July 2006; (ii) Quality assurance/quality control Manual for Environmental Water Monitoring (Second edition), published by the State Environmental Monitoring Centre in 2001; and (iii) Quality assurance/quality control Manual for Environmental Air Monitoring published by the State Environmental Monitoring Centre in 2001.
8. Standard Monitoring Methods. The standard monitoring methods, detection limits, and standard code for each of the monitoring parameters are shown in Table A5.3. The data and results of environmental inspection and monitoring activities will be used to assess the: (i) extent and severity of actual environmental impacts against the predicted impacts and baseline before the project implementation; (ii) performance or effectiveness of environmental mitigation measures or compliance with pertinent environmental rules and regulations; (iii) trends in impacts; (iv) overall effectiveness of EMP implementation; and (v) the need for additional mitigation measures and corrective actions if noncompliance is observed.
Table A5.3: Standard Monitoring Methods of Ambient Air, Noise and Water
Detection Standard Media Monitoring Parameter Method (Standard No.) Limit Limit TSP (mg/m3) Gravimetric (GB/T15432-1995) 0.001 0.30 Gravimetric with specific sampler PM (mg/m3) 0.0002 0.15 10 (HJ/T93-2003) a Air Spectrophotometry (GB/T15262- SO (mg/m3) 0.003 0.15 2 1994) Saltzman Method (GB/T15435- NO (mg/m3) 0.002 0.12 x 1995) Equivalent Continuous Acoustimeter Method (GB12524- 60 (day)/ Noiseb 0.5 A Sound (Leq) 90) 50 (night) Glass electrode method pH value 0.02pH 6-9 (GB6920-86) Permanganate index (GB11914- COD (mg/l) 0.5 6 Mn 89) Surface Infrared spectra photograph Petroleum (mg/l) 0.04 0.05 waterc (GB/T16488-1996) Gravimetric method (GB11901- SS (mg/l) 4 250 89) Membrane filter (GB/T575.12- Total coliforms (no./l) 10 10,000 2006) COD = chemical oxygen demand, Leq = equivalent continuous noise level, mg/l = milligram per liter, mg/m3 = milligram per cubic meter, NOx = nitrogen oxide, pH = potential hydrogen, PM10 = particulate matter up to 10 micrometers, SO2 = sulfur dioxide, SS = suspended solid, TSP = total suspended particulate. a All the air parameters are Grade II ambient air standard (daily average). b Grade II standard. c All the water parameters are Grade III standard. Source: People’s Republic of China standards. 66 Appendix 5
D. Reporting Requirements
9. The PMO, with the assistance from environmental consultants, will prepare and submit semiannual environmental monitoring reports to ADB. If any unanticipated environmental and/or social risks and impacts arise during construction, implementation or operation of the project that were not considered in the EIA and EMP are discovered, the PMO shall promptly inform ADB of the occurrence of such risks or impacts, with detailed description of the event and proposed corrective action plan.
10. Monthly environment monitoring reports. The implementing agencies supported by the local EMSs and CSCs will submit the monthly environment monitoring report to the PMO. Information includes (i) project implementation status; (ii) environmental mitigation measures implemented; (iii) monitoring activities; (iv) monitoring data of air, noise and surface water; (v) analysis of monitoring data against relevant standards; (vi) violations of environmental regulations and standards; (vii) any additional mitigation measures and corrective actions required; (viii) environmental training conducted; (ix) occupational health and safety reporting (e.g., accidents during construction, etc.); (x) major events or issues that happened during the reporting period and follow-up actions needed; and (xi) complaints received from the public and how these were resolved through the grievance redress mechanism. Environmental consultants will be responsible to develop a template for monthly report and provide training to CSCs and implementing agencies. The CSC will prepare such report while the implementing agency will verify the information provided in the report. Both the CSC and the implementing agencies are required to sign the report before sending to the PMO.
11. Semiannual environment monitoring reports. The PMO, supported by loan implementation environmental consultant, under the loan supervision, will submit environment safeguards monitoring (EMP monitoring) reports to ADB semiannually during the construction and annually during operation. The report should be discussed for both subprojects financed by ADB and associated facilities such as environmental performance of CHP plants. The report should include information such as (i) project implementation status; (ii) environmental mitigation measures implemented; (iii) monitoring activities including compliance monitoring; (iv) monitoring data of air, noise and surface water; (v) analysis of monitoring data against relevant standards; (vi) violations of environmental regulations and standards; (vii) any additional mitigation measures and corrective actions required; (viii) environmental training conducted; (ix) occupational health and safety reporting (e.g., accidents during construction, etc.); (x) major events or issues that happened during the reporting period and follow-up actions needed; and (xi) complaints received from the public and how these were resolved through the grievance redress mechanism.
12. Environmental acceptance monitoring and audit report. Within 2 months after project completion, environmental acceptance monitoring and audit reports of project completions shall be (i) prepared by the local EMSs in accordance with the PRC Regulation on Environmental Check-and-Acceptance of Project Completion (State Environmental Protection Agency, 2001); (ii) reviewed for approval by the local EPBs, and (iii) reported to the PMO by the local EPBs. The report will be submitted to ADB by the PMO for the information purpose.
13. The environmental reporting requirements are summarized in the Table A5.4.
Appendix 5 67
Table A5.4: Reporting Requirements
Report Prepared by Submitted to Frequency A. Construction Phase Monthly environment IAs supported by PMO Monthly monitoring report Contractors, CSCs
Semiannual environment PMO, LIECs ADB Semiannually monitoring report Construction mitigation Local EPBs, Within a month after IAs, CSCs, Contractor completion report PMO project completion Environmental acceptance Local EPBs, Within 2 month after Local EMSs monitoring and audit report PMO project completion B. Operation Phase Environmental safeguards PMO, LIECs ADB Annually (EMP) monitoring report ADB = Asian Development Bank, CSC = construction supervision company, EMS = environment monitoring station, EPB = environment protection bureau, IA = implementing agency, LIEC= loan implementation environmental consultant, PMO = project management office. Source: Domestic environment impact assessment.
E. Implementation Arrangements
14. The Heilongjiang provincial government (HPG) is the executing agency for the project. A project leading group 23 headed by the provincial deputy governor has been established and is responsible for directing the project and providing policy guidance during project implementation. The PMO has been set up under the project leading group and is responsible for coordinating the implementation of the project activities on behalf of HPG.
15. The PMO is responsible for implementing the EMP. In the design stage, the PMO and the nine implementing agencies will request the design institutes to incorporate mitigation measures specified in the EMP in the detailed designs. The EMP will be updated at the end of the detailed design phase, and construction contractors are requested to comply with the updated EMP. To ensure the contractors comply with the EMP, the PMO and the implementing agencies assisted by the environmental consultants will prepare and provide the following specification clauses to incorporate in the bidding procedures: (i) a list of environmental management requirements to be budgeted by the bidders in their tendering documents; (ii) environmental clauses for contractual terms and conditions; and (iii) environmental monitoring requirements in domestic EIAs, IEE and EMP. The PMO supported by environment consultants, will prepare semiannual environment progress reports and submit them to ADB and the provincial EPB.
16. The PMO will nominate a qualified environment officer to undertake effective environmental management activities specified in the EMP. Environmental engineers of CSCs contracted by each implementing agency will be responsible for the daily inspection, monitoring, and evaluation of mitigation measures.
23 A project leading group, consisting of the Heilongjiang Provincial Development and Reform Commission, Heilongjiang Provincial Finance Bureau, Heilongjiang Construction Bureau, and Heilongjiang Environmental Protection Bureau, will provide policy direction and operational guidance.
68 Appendix 5
17. Implementing agencies will form an EMU, which consists of a leader and an appropriate number of staff to coordinate environmental issues. The EMU will be in charge of the (i) implementation of EMP at each subproject level; (ii) supervising the implementation of mitigation measures during construction; (iii) supervising environmental monitoring contractors for environmental safeguards monitoring (EMP monitoring); (iv) implementation of training programs for contractors with support from CSCs; (v) incorporating environmental management, monitoring, and mitigation measures into the construction and operation management plans; (vi) reporting monthly their environmental monitoring to the PMO; and (vii) arranging reviews of environmental monitoring and responding to any unanticipated impacts. The EMU will be technically supported by loan implementation environmental consultants (LIECs) and supervised by the PMO.
18. The Municipal Environment Protection Bureau (EPB) is responsible for ensuring the project to comply with all the relevant PRC laws and regulations. For that purpose, EPB, if appropriate, will direct the PMO and implementing agencies to address any subproject deficiencies.
19. Contractors are responsible for implementing relevant mitigation measures and internal monitoring during construction specified in EMP supported by the CSC, and under the supervision of the implementing agencies.
20. During the operational stage, the PMO and the municipal EPBs will supervise the environmental management and implementation of mitigation measures conducted by the implementing agencies. The cost of mitigation measures will be borne by the implementing agencies.
21. The environment monitoring contractors (EMCs) of each project city will be hired by the implementing agencies for conducting environmental safeguards monitoring (EMP monitoring) during the project implementation. Local environmental monitoring stations in each project city could be hired as EMC.
22. LIECs will (i) assist the PMO in updating the EMP and environmental monitoring program; (ii) verify the implementation of the environmental protection measures specified in the EMP; (iii) review monitoring reports and semiannual environment performance reports; (iv) prepare semiannual/annual environmental safeguards monitoring (EMP monitoring) reports; (v) provide training to PMO, implementing agencies, contractors, and CSCs on environmental management implementation and monitoring; (vi) identify any environment- related implementation issues and suggest necessary corrective actions, and reflect these in a EMP; and (vii) undertake site visits as required.
23. ADB is responsible for monitoring and supervising the overall environmental performance of the project. ADB will also disclose the project EIA report and subsequent environmental safeguards monitoring (EMP monitoring) reports on its website. ADB will review the semiannual/annual environment safeguards monitoring (EMP monitoring) reports submitted by the PMO, and conduct due diligence on environment issues and the EMP performance indicators which specified in the EMP during the project review missions.
24. If the borrower fails to comply with legal agreements on safeguard requirements, including those described in EIA and EMP, ADB will seek corrective measures and work with the borrower to bring the subproject back into compliance. If the borrower fails to reestablish compliance, then ADB may exercise legal remedies, including suspension, cancellation, or acceleration of maturity, that are available under ADB legal agreements. Before resorting to such measures, ADB will use other available means to rectify the situation satisfactorily to all parties to the legal agreements, including initiating dialogue with the parties concerned to achieve compliance with legal agreements. Appendix 5 69
25. Table A5.5 summarizes the roles and responsibilities of the different institutions in relation to the EMP.
Table A5.5: Institutional arrangement for the EMP
Project Stakeholders Management Roles and Responsibilities Heilongjiang Provincial Government (i) Provides overall guidance during preparation and (the executing agency) implementation. (ii) Ensures counterpart contributions are provided for project implementation on time. (iii) Holds final responsibility to ensure the project to comply with environmental and social safeguards (EMP). Project Management Office (i) Coordinates the implementation of subprojects on behalf of HPG. (ii) Ensures the implementation of EMP through a nominated environment officer. (iii) Prepares and submits environmental safeguards (EMP) monitoring reports to Asian Development Bank. Implementing Agencies (i) Holds direct responsibility of the implementation of the EMP (ii) Forms an EMU. (iii) Ensures environmental safeguards (EMP) monitoring through hiring environmental monitoring contractors. (iv) Prepares monthly environmental reports and submit them to the PMO. Environmental management Units (i) Coordinates environmental issues. (EMUs) (ii) Implementation of EMP at each subproject level. (iii) Supervises the implementation of mitigation measures during construction. (iv) Supervises environmental monitoring contractors for environmental safeguards (EMP) monitoring. (v) Implements training programs for contractors with support from CSCs. (vi) Incorporates environmental management, monitoring, and mitigation measures into the construction and operation management plans. (vii) Reports monthly environmental monitoring to the PMO. (viii) Arrange reviews of environmental monitoring and responding to any unanticipated impacts. Construction supervision companies (i) Is responsible for the daily inspection, monitoring, and (CSCs) evaluation of mitigation measures during the construction. Contractors (construction) (i) Is responsible for implementing relevant mitigation measures and internal monitoring during construction specified in EMP supported by the CSC, and under the supervision of the implementing agencies. Environment Monitoring Contractors (i) Conducts environmental safeguards (EMP) monitoring during (EMCs) the project implementation. (ii) Provides monitoring results to the implementing agencies. Loan Implementation Environment (i) Assists the PMO to update EMP and environmental monitoring Consultants (LIECs) program. (ii) Verifies the implementation of environmental protection measures specified in the EMP. (iii) Reviews monitoring reports and the semiannual environment performance reports. (iv) Prepares semiannual/annual environmental safeguards (EMP) monitoring reports. (v) Provides training to PMO, implementing agencies, contractors and CSCs on environmental management implementation and monitoring. (vi) Identifies any environment-related implementation issues and suggest necessary corrective actions, and reflect these in an environment management plan. (vii) Undertakes site visits as required. Asian Development Bank (i) Provides overall project administration. (ii) Provides orientation to executing agency and implementing agencies including PMO. 70 Appendix 5
Project Stakeholders Management Roles and Responsibilities (iii) Reviews draft bidding documents and approval of bid evaluation report. (iv) Disburses ADB loan proceeds. Municipal Environment Protection (i) Ensure the project comply with all the relevant PRC laws and Bureau (EPB) regulations. (ii) If necessary and appropriate, direct the PMO and implementing agencies to address any subproject deficiencies. ADB = Asian Development Bank, CSC = construction supervision company, HPG = Heilongjiang provincial government, EMP = environmental management plan, EMU = environmental monitoring unit, PMO = project management office, PRC = People’s Republic of China.
26. Institutional Strengthening and Capacity Building. The provincial EPB and environment consultants will offer series of trainings to strengthen the capacity of the PMO and implementation agencies concerned for EMP implementation. The training topics, approach, budgets and number of participants are listed in Table A5.6. Loan implementation environmental consultants will be responsible in developing training materials and providing training.
Table A5.6: Institutional Strengthening and Training Program
Number Budget Period Training Attendees Contents Times of (CNY Source of fund (days) Person 10,000) ADB’s safeguard policy statement and other ADB’s and PRC’s PMO, IAs environmental regulations environmental (particularly Project applicable PRC’s environmental laws, 4 2 40 10 laws, regulations forestry bureaus), policies, standards and regulations and policies contractors International environmental management practice in civil constructions PMO, PPCU, IAs Grievance redress mechanism structure, (particularly responsibilities, and timeframe Grievance forestry bureaus), Types of grievances and eligibility Redress Local EPBs, assessment 2 1 30 4 Mechanism residential Included in the communities, and Basic techniques on grievance loan Stakeholders redress/problem handling implementation Impacts and mitigation measures during technical PMO, IAs construction and operation assistance Implementation of (particularly environment forestry bureaus), Monitoring and auditing mechanism 4 2 40 10 monitoring plan contractors, Reporting requirements CSCs Corrective action of EMP International good Technologies and equipment for IAs (particularly practices and desulfurization, denitrification and dust forestry bureaus), 2 2 40 100 technologies in removal Appendix 5 local EPBs district heating Cleaner heating technologies Total 12 7 150 124
ADB = Asian Development Bank, CNY = Chinese yuan, CSC = construction supervision company, EMP = environmental monitoring plan, EPB = environment protection bureau, IA = implementing agency, PMO = project management office, PPCU = project public complaints unit, PRC = People’s Republic of China.
Source: Discussion under project preparatory technical assistance. 71
72 Appendix 5
F. Estimated Budget for Mitigation and Monitoring
27. Mitigation cost during the construction is estimated at CNY33 million ($5 million), and CNY25 million ($4 million) per year during operation (Table A5.1).
28. Monitoring cost during the construction and operation is estimated at CNY558,000 ($0.89 million), and CNY201,500 ($0.32) million (Table A5.2).
29. The estimated budget for capacity building is CNY1,240,000 or $196,825 (Table A5.6).
Appendix 6 73
GRIEVANCE REDRESS MECHANISM
1. Residents and/or organizations affected by the project activities were encouraged to participate in the preparation of the domestic EIAs, the IEE and the EMP. However, environmental issues and concerns usually develop during both construction and operation periods. Project-level GRMs in the nine project cities/towns have been developed in order to solve problems effectively, as well as guaranteeing that the project will be implemented smoothly and successfully. Grievances and complaints of potentially affected people and organizations will be recorded, addressed and solved completely and quickly through the mechanism.
B. Current Practice
2. Currently, when residents or organizations are negatively affected by project activities, such as noise, dust or safety issues caused by construction activities, they may complain to the contractors and implementing agencies by themselves or through their community committees, or complain directly to local EPBs before they finally appeal to the court. In the case of issues occurring during the construction period, they can complain to the contractors first if the construction is the source of the problem. If the contractors' responses cannot resolve the issues or if the contractors do not respond to the issues, they may contact municipal EPBs or the district/county EPBs, who will record the complaints and then visit the sites to investigate and obtain the contractors’ side of the story. Sometimes, the two sides might contradict, each defending its own argument. In such cases, the local EPBs will need to consult with the contractor or the environmental supervision engineer to acquire relevant project information and collect data. This kind of fact-finding or site investigation is usually time-consuming, thus delaying the mediation process. The major weaknesses of the current system are: (i) the lack of a specialized unit to address grievances on a project level; and (ii) no specific timeframe for the GRM.
C. Proposed Grievance Redress Mechanism for the Project
3. In consultation with Heilongjiang Provincial DRC and the implementing agencies, it was agreed that each implementing agency will, under the supervision of its local EPB, establish a Project Public Complaints Unit (PPCU) in each implementing agency. The PPCU will be coordinated by at least two staff agreed by the PMO. The contact persons for the different GRM entry points (residential community leaders, neighborhood organizations, local authorities, district EPBs, and contractors) will be defined prior to construction. Organizational charts of the GRM, including the contact persons of the entry points and the PPCU, will be disclosed at every construction site. Phone numbers, addresses, and email addresses of all access points and the PPCUs will be disclosed to the public through the project cities’ website and on information boards at each construction site. The project will provide training to the members of the PPCUs and the contact persons of the GRM entry points to ensure that responsibilities and procedures are clear. The concept of the proposed GRM is shown in Figure A6.
D. Types of Grievances Expected and Eligibility Assessment
4. Public grievances addressed by the GRM will most likely relate to environmental issues encountered during the construction phase, as comprehensive consultations with potentially affected people conducted during project preparation confirmed their basic support of the project. Grievances may include damage to public roads due to pipeline construction; vehicle operation and transportation of heavy equipment (such as boilers) and materials; dust
74 Appendix 6
emissions and construction noise; soil erosion and haphazard disposal of waste materials in inappropriate places; safety measures for the protection of the general public and construction workers. Construction-related grievances can be numerous, and managing them is the contractor’s responsibility under its contract with the IAs.
5. Once a complaint is received and filed, the PPCU will identify if the complaint is eligible. Eligible complaints include those where (i) the complaint pertains to the project; and (ii) the issues raised in the complaint fall within the scope of environmental issues that the GRM is authorized to address. Ineligible complaints include those where: (i) the complaint is clearly not project-related; (ii) the nature of the issue is outside the mandate of the environment GRM (such as issues related to resettlement, allegations of fraud or corruption); and (iii) other company or community procedures are more appropriate to address the issue. If the complaint is rejected, the complainant is informed of the decision and the reasons for the rejection.
E. GRM Steps and Timeframe
6. Procedures and timeframes for the grievance redress process are described as follows (Figure A6): (i) Step 1: If a concern arises, the affected person tries to resolve the issue of concern directly with the contractor/operator and/or the project manager. If successful, no further follow-up is required; (i) Step 2: If no solution can be found, the affected person can submit an oral or written complaint to the PPCU or through GRM access points (community leaders, neighborhood organizations, district EPBs and city EPB). For an oral complaint, the PPCU must properly make written records, assess the eligibility of the complaint, identify a solution, give a clear reply within five (5) working days, and timely convey to the complainant and to the implementing agencies, or contractors the suggested solution. The contractors, during construction, and the implementing agencies, during operation, should implement the redress solution and convey the outcome to the PPCU within seven (7) working days; (ii) Step 3: If no solution can be identified by the PPCU or if the complainant is not satisfied with the suggested solution under step 2, the PPCU will organize, within two (2) weeks, a multi-stakeholder hearing (meeting) where all relevant stakeholders, including the complainant, IAs, contractor/operator, and local EPBs will be invited. The Gender Specialist of the Loan Implementation Consultancy will participate in the meeting, if relevant, to ensure gender responsive redress. The hearing should result in a solution acceptable to all, and identify responsibilities and an action plan. The contractors, during construction, and the IAs, during operation should implement the agreed-upon redress solution and convey the outcome to the PPCU within seven (7) working days; and (iii) Step 4: If the multi-stakeholder hearing process is not successful, the PPCUs, through the IA, will inform the PMO and provincial EPB accordingly. The PMO with the consultation from the EPB and ADB can then provide alternative approaches to resolve the issues.
7. The PPCUs as well as the local EPBs will accept the complaints and grievances lodged by the affected persons free of charge. Any costs incurred should be covered by the contingency of the project. Throughout the duration of project implementation and the first 3 years of operation, these grievance redress procedures remain valid so that any affected person may deal with relevant issues. Appendix 6 75
Figure A6: Proposed GRM
Grievances/Complaints entry points (oral or written complaint)
Local EPBs, PMOs, Contractor/OPFs community leaders
Forward Inform AP if solved; Forward if not solved
Project Public Complaint Unit (PPCU) under IAs
Record complaint, assess eligibility
Consult LIEC, IA, Solution not found contractor, identify solution, get back to AP
Conduct multi-stakeholder Solution meeting (contractor, found PMO/IA, AP, EPB, LIEC), identify solution and action Solution found
Implement Solution
During During Construction Operation
Contractor OPFs
AP = affected person, EPB = environmental protection bureau, IA = implementation agency, LIEC = loan implementation environmental consultant; OPFs = Operator of project facilities (during operation), PMO = provincial project management office.