PPER PRC Chengdu-Nanchong Expressway Project
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ASIAN DEVELOPMENT BANK Operations Evaluation Department PROJECT PERFORMANCE EVALUATION REPORT IN THE PEOPLE’S REPUBLIC OF CHINA In this electronic file, the report is followed by Management’s response. Performance Evaluation Report Project Number: PPE: PRC 30082 Loan Number: 1638-PRC November 2006 People’s Republic of China: Chengdu–Nanchong Expressway Project Operations Evaluation Department CURRENCY EQUIVALENTS Currency Unit – yuan (CNY) At Appraisal At Project Completion At Operations Evaluation (July 1998) (August 2004) (November 2006) CNY1.00 = $0.1208 $0.1208 $0.1272 $1.00 = CNY8.2768 CNY8.2768 CNY7.8647 ABBREVIATIONS ADB – Asian Development Bank EIRR – economic internal rate of return FIRR – financial internal rate of return GDP – gross domestic product ICB – international competitive bidding LCB – local competitive bidding MOC – Ministry of Construction NTHS – national trunk highway system O&M – operation and maintenance PCR – project completion report PRC – People’s Republic of China RRP – report and recommendation of the President SCELLC – Sichuan Chengnan Expressway Limited Liability Company SPCD – Sichuan Provincial Communications Department SPSB/TA – Sichuan Province Security Bureau/Traffic Administration TA – technical assistance VOC – vehicle operating cost NOTE In this report, “$” refers to US dollars. Key Words asian development bank, development effectiveness, expressways, people’s republic of china, performance evaluation, sichuan province, transport Director : R. B. Adhikari, Operations Evaluation Division 2, OED Team Leader : M. Gatti, Senior Evaluation Specialist, Operations Evaluation Division 2, OED Team Members : V. Buhat-Ramos, Evaluation Officer, Operations Evaluation Division 2, OED : A. Silverio, Operations Evaluation Assistant, Operations Evaluation Division 2, OED : I. Garganta, Operations Evaluation Assistant, Operations Evaluation Division 2, OED Operations Evaluation Department, PE-692 CONTENTS BASIC DATA iii EXECUTIVE SUMMARY v MAPS ix I. INTRODUCTION 1 A. Evaluation Purpose and Process 1 B. Expected Results 1 II. DESIGN AND IMPLEMENTATION 3 A. Formulation 3 B. Rationale 3 C. Cost, Financing, and Executing Arrangements 4 D. Procurement, Construction, and Scheduling 5 E. Design Changes 6 F. Outputs 7 G. Consultants 8 H. Loan Covenants 8 I. Policy Setting 8 III. PERFORMANCE ASSESSMENT 9 A. Overall Assessment 9 B. Relevance 10 C. Effectiveness 11 D. Efficiency 12 E. Sustainability 14 IV. OTHER ASSESSMENTS 15 A. Impact 15 B. ADB Performance 17 C. Borrower Performance 18 V. ISSUES, LESSONS, AND FOLLOW-UP ACTIONS 18 A. Issues 18 B. Lessons 19 C. Follow-Up Action 19 In accordance with the guidelines formally adopted by the Operations Evaluation Department (OED) on avoiding conflict of interest in its independent evaluations, the director general of OED did not review this report and delegated approval of this evaluation to the director of Operations Evaluation Division 2. The mission leader, Marco Gatti, was briefly involved in the processing of the Chengdu–Nanchong Expressway Project during his previous assignment as programs officer in Programs East Division 1. His involvement was limited to participation for 5 days in the loan appraisal mission and attending the staff review committee meeting for the loan. He was not involved in the loan negotiations or in the other processing activities. Given his minimal involvement, his leading of the evaluation team is not considered a conflict of interest. The fieldwork was undertaken by Geoffrey Connor, Peter Biggs, Mingxin Shu, and Bingfang Zhong (staff consultants) under the guidance of the mission leader. To the knowledge of the management of OED, there were no conflicts of interest of the persons preparing, reviewing, or approving this report. APPENDIXES 1. Design and Monitoring Framework 21 2. Appraisal and Actual Costs and Financing 26 3. Sichuan Chengnan Expressway Limited Liability Company Organization Chart 27 4. Chronology of Major Events in the Project’s History 28 5. Design Changes 29 6. Summary of Physical Accomplishments 30 7. Assessment of Overall Performance 31 8. Traffic Safety 32 9. Socioeconomic Development in Project Impact Areas 34 10. Traffic Analysis and Forecast 40 11. Economic Re-estimation 44 12. Financial Re-estimation 50 Attachment : Management Response BASIC DATA Chengdu–Nanchong Expressway Project (Loan 1638-PRC) Project Preparation/Institution Building TA No. TA Name Type Person- Amount Approval Months ($’000) Date TA 2777 Chengdu-Nanchong Expressway PPTA 32 600 7 Apr 1997 (formerly Sichuan Highway II) As per ADB Key Project Data ($ million) Loan Documents Actual Total Project Cost 667.2 772.2 Foreign Exchange Cost 317.0 301.1 Local Currency Cost 350.2 471.1 ADB Loan Amount/Utilization 250.0 250.0 ADB Loan Amount/Cancellation – Key Dates Expected Actual Fact-Finding 20 Apr–1 May 1998 Appraisal 6–19 July 1998 Loan Negotiations 12–14 October 1998 Board Approval 10 November 1998 Loan Agreement 23 February 1999 Loan Effectiveness 24 May 1999 24 August 1999 First Disbursement 20 December 1999 Project Completion June 2003 23 December 2003 Loan Closing 31 December 2003 30 April 2004 Months (effectiveness to completion) 49.0 56.0 Economic Internal Rates of Return (%) Appraisal PCR PPER Economic Internal Rate of Return 24.9 15.8 24.0 Financial Internal Rate of Return 8.3 5.7 6.8 Borrower People’s Republic of China Executing Agency Sichuan Provincial Communications Department Mission Data Type of Mission No. of Missions No. of Person-Days Fact-Finding 1 66 Appraisal 1 55 Inception 1 4 Project Administration Handover 1 6 Review 4 47 Project Completion 1 40 Operations Evaluation 1 75 PPTA = project preparatory technical assistance, TA = technical assistance. EXECUTIVE SUMMARY This report details the findings of an evaluation of the Chengdu–Nanchong Expressway Project in Sichuan province, People’s Republic of China (PRC). The Project was the Asian Development Bank’s (ADB) fourteenth transport project in the PRC and first transport project in Sichuan. In November 1998, ADB approved a loan for $250 million equivalent to the PRC to build a 208-kilometer (km) expressway between Chengdu and Nanchong municipalities and to upgrade 302 km of county roads in poor counties in the project area. The Project also procured equipment for traffic management and road maintenance, and consulting services for construction supervision of the project and training. The total project cost was estimated at $667.2 million, of which 47.5% was foreign exchange cost. The executing agency was to be the Sichuan Provincial Communications Department (SPCD) and the implementing agency the Sichuan Chengnan Expressway Limited Liability Company (SCELLC). The Chengdu–Nanchong expressway was a priority section of the national trunk highway system. The expressway would run from Chengdu, the capital of Sichuan, to Nanchong, a municipality in the poorer, eastern part of the province. The Project aimed to promote economic and social development in southwestern PRC and was in line with ADB’s strategic objective of reducing poverty in inland provinces. The Project’s expected outcomes were (i) road infrastructure in the Chengdu–Nanchong corridor and (ii) access to poor communities and disadvantaged areas. The Project was designed to promote sector reforms initiated under earlier ADB-financed projects and, finally, it aimed to support human resource development and to strengthen institutions responsible for highway operation and maintenance, traffic safety, quality assurance, enterprise reform, social impact evaluation, and environmental monitoring and mitigation measures. The expected direct beneficiaries were the transport operators and bus passengers who would travel on the expressway and the inhabitants of villages and townships along the county roads. A project preparatory technical assistance (TA) grant was provided to (i) review the Government’s project feasibility report and feasibility design, (ii) help SPCD formulate contract packages and an implementation schedule, (iii) prepare a summary environmental impact assessment and an environmental mitigation program (EMP), and (iv) prepare a resettlement plan. The plan laid out the design to relocate people affected by the Project, and the EMP established a monitoring system to determine the effects of the Project on air and water quality and noise in the project area. SCELLC was responsible for constructing the expressway and is responsible for operating and maintaining it. During the Project, the municipalities, counties, and districts along the expressway set up local coordinating teams with representatives from the local governments to assist in land acquisition, resettlement and relocation, environmental protection, and coordination with local governments. SCELLC audited accounts show that the overall project cost was $772.2 million, 15.7% higher than the estimate at appraisal, including interest during construction and county road upgrading. The increase in project costs was caused mainly by design changes that resulted in additional civil works. Physical construction was generally as planned. Problems arose because bidding was carried out and contracts awarded based on preliminary designs rather than on detailed vi engineering. Once detailed design documents were prepared, numerous contract variations were necessary improve to the expressway alignment, modify the pavement, optimize the design of an interchange, and add more overpasses and underpasses. A major landslide occurred during construction as a result of unexpected