Shanxi Energy Efficiency and Environment Improvement Project

Social Development and Resettlement Progress Report

3rd Semestral Report Project Number: 44013-013 July 2017

PRC: Shanxi Energy Efficiency and Environment Improvement Project

Prepared by Shanxi Provincial PMO

This social development and resettlement progress report is a document of the borrower. The views expressed herein do not necessarily represent those of ADB’s Board of Director, Management or staff, and may be preliminary in nature.

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

ADB-financed Shanxi Energy Efficiency and Environment Improvement Project (Loan No.: 2885-PRC)

Social Development and Resettlement Progress Report for January-June 2017

Shanxi Provincial PMO

July 2017

Contents 1 Introduction to the Project and Basic Information ...... 1 1.1 Background of the Project ...... 1 1.2 Preparation of the RP and the Gender Action Plan ...... 1 1.3 Socioeconomic Profile of the Project Area in 2015 ...... 2 1.4 Reporting Period ...... 3 2 Construction and Resettlement Progress ...... 4 2.1 Construction Progress ...... 4 2.1.1 Subproject 1 – Jinzhong District Heating Facilities Development ...... 4 2.1.2 Subproject 2 – Licheng District Heating Facilities Development ...... 6 2.1.3 Subproject 3 – Qin District Heating Facilities Development ...... 7 2.1.4 Subproject 4 – Zhonyang District Heating Facilities Development ...... 9 2.1.5 Subproject 5–Coal Mine Methane Gas Supply and Distribution in Liuling ...... 10 2.2 Resettlement Progress and Updated Resettlement Impacts ...... 12 2.3 Evaluation of Resettlement Progress and Adjustment ...... 13 3 Social Development ...... 15 3.1 Promoting Employment and Poverty Reduction ...... 15 3.2 Absorbing Surplus Labor ...... 16 3.3 Site Management...... 16 3.4 Other ...... 16 4 Implementation of the Gender Action Plan ...... 17 5 Organizational Structure ...... 19 6 Information Disclosure and Public Participation ...... 21 7 Grievance Redress ...... 22 7.1 Grievance Redress Procedure ...... 22 7.2 Recording and Feedback of Grievances and Appeals ...... 22 7.3 Contact Information for Grievances and Appeals ...... 23 7.4 Grievances and Appeals during the Reporting Period ...... 23 8 Conclusions and Suggestions...... 24 8.1 Conclusions ...... 24 8.2 Suggestions ...... 24 Appendix 1 Approval of Pipeline Rerouting of the Liulin County Subproject in Dongshan New District 26 Appendix 2 Reply of the Shanxi Provincial Government on the Second Batch of Construction Land of Liulin County in 2013 ...... 27

Appendix 3 Minutes of the Liulin County Head’s Executive Meeting ...... 29 Appendix 4 Land Occupation Agreement ...... 31

Abbreviations

ADB - Asian Development Bank AP - Affected Person CMM - Coal Mine Methane IA - Implementing Agency MLS - Minimum Living Security PRC - People’s Republic of China RP - Resettlement Plan PMO - Project Management Office PPTA - Project Preparatory Technical Assistance SCDA - Supervisory Control and Data Acquisition

Units

Currency unit = Yuan (CNY) 1.00 yuan = $0.15 1 hectare = 15 mu

1 Introduction to the Project and Basic Information 1.1 Background of the Project Shanxi is an underdeveloped inland province in the north-central region of the People’s Republic of China (PRC). It covers an area of about 156,300 square kilometers. The heating season lasts for 5 months and temperatures can fall below 20℃. Shanxi's per capita GDP in 2010 was $4,107 equivalent,

which is about 88% of the national average ($4,686). It ranks 18th among the PRC's provinces. Shanxi is well known for its rich coal resources, estimated at about one-third of the PRC's total coal reserves. In 2011, it produced 870 million tons of coal, about one-fourth of the PRC's total coal production and an increase of 17.7% over 2010 production. It faces serious pollution and environmental problems that are closely related to the mining, use, and transport of coal. The underground coal mines in Shanxi release large amounts of methane during operation, commonly referred to as coal mine methane (CMM). The capture and use of CMM not only helps avoid serious mining accidents but provides large environmental and climate change mitigation benefits. At same time, like in many other provinces, Shanxi's rapid urbanization is fuelling demand for housing and urban infrastructure. Likewise, strong economic growth, higher incomes, and the privatization of housing are driving demand for district heating. Thus, Shanxi has rapidly expanded its coverage of heat supply. To utilize CMM and improve local environment, the Shanxi Provincial Government has applied for an ADB loan of US$100 million to implement the Shanxi Energy Efficiency and Environment Improvement Project (hereinafter the “Project”). The Project aims to improve energy utilization efficiency and the air quality of 5 cities/counties in Shanxi Province. The Project consists of: 1) improvement of urban central heating systems of 4 project cities/counties; 2) expansion of the CMM supply system of Liulin County; and 3) institutional capacity building. The gross investment in the Project is US$166.12 million including contingencies, financing charges, and taxes and duties, of which US$100 million is loaned by the ADB to the PRC and then on- lent to SPG. The counterpart funding of the Project is about US$66.12 million which is to be raised by the project company. The loan agreement of the Project was signed on March 27, 2013 and became effective in April 26, 2013. The closing date of the Project will be December 31, 2017.

1.2 Preparation of the RP and the Gender Action Plan The Project falls into Class B in terms of involuntary resettlement, in which only the Liulin County subproject involves land acquisition, while the other subprojects will be implemented on public land or existing buildings, and involve no land acquisition, restricted land use or house demolition.

According to the feasibility study, 24.7 mu of rural collective land will be acquired permanently for the Liulin County subproject, in which 15 mu of cultivated land will affect 4 households with 17 persons, while the remaining 7.7 mu of wasteland and 2 mu of woodland will affect no one. For this purpose, Liulin County Coal Gasification Company prepared a resettlement plan (RP) for the Liulin County subproject, which was approved by ADB in March 2012. Since women and children are particularly susceptible to high indoor pollution, the Project’s gender mainstreaming is effective. In view of this, a Gender Action Plan was prepared at the PPTA stage (2012), which has been confirmed by ADB and the Shanxi Provincial Government.

1.3 Socioeconomic Profile of the Project Area in 2015

Table 1-1 Socioeconomic Profile of the Project Area in 2015 Shanxi Jinzhong Zhongyang Liulin Licheng Qin No. Indicator Unit China Province City County County County County 1 Registered population 0,000 138271 3364.12 334.87 14.59 33.04 16.1 17.3 Where: female population 0,000 67456 1785.03 162.04 7,.44 15.69 7.8 8.2 79298 Urban population 0,000 2070 177 9.04 13.76 6.3 4.3

2 GDP 00 744127 12928.3 1091 45.03 121.8 36.6 23.53 2.1 Primary industries million 63671 784.6 108.7 3.3 2.2 Secondary industries yuan 296236 4926.4 468.2 16.7 00m 2.3 Tertiary industries 341567 7217.4 514.2 16.6 yuan 3 Per capita GDP yuan 53980 35199 32646 22780 12056 Per capita disposable 2841 8 yuan 33616 27352 29149 19328 14719 17489 income of urban residents 5 Per capita net income of 1058 9 yuan 12363 10082 11525 6018 6868 5650 rural residents 3 1480200 10 Urban MLS population / 531000 11101 8031 4252 2871 4297 0 3.08 10.1 Urban poverty incidence 2% 2.57% 0.3% 9.13% 4.56% 9.99% %

In 2016, the monthly benefit of urban minimum living security (MLS) in Shanxi Province was CNY367-553, increased at least 20 CNY comparing with 2015.

Ethnic minorities: Shanxi is a province in which minority population is scattered, and its minority population (over 120,000) accounts for 0.35% of its gross population. Minority population can be found in 44 villages, 50 sub-districts and over 100 communities in 118 counties (cities/districts) in 11 cities. The project area is the urban areas of the 5 county towns, where there is no minority community, so the Project falls into Class C in terms of ethnic minorities.

1.4 Reporting Period According to the Loan Agreement, the provincial PMO should submit a social development and resettlement progress report every 6 months, namely in January (covering the half year as of December 31) and July (covering the half year as of June 30). This report covers the period of January-June 2017, and was prepared based on data provided by the IAs with the assistance of the consultants employed by the provincial PMO.

2 Construction and Resettlement Progress 2.1 Construction Progress By the end of June 2017, the constructions of the remaining works for the two ongoing subprojects including Jinzhong and Liuling were not progressed as planned. In case of Jinzhong subproject, due to the delay of the layout design finalization for the road construction in the section of Anning street, the constructions of heat supply pipelines in this section have to be pended. In case of Liuling subproject, as the local counterpart funds were not in place, all the remaining implementation activities were pending. The remaining activities of 3 subprojects that have almost been completed were carried out as planned, including the closure and demolishment of small coal boilers. No major issues related to the Project implementation were existed. Implementation progress of the subprojects is reported below.

2.1.1 Subproject 1 – Jinzhong District Heating Facilities Development

This subproject uses an existing heat and power plant (CHP) as heat source and to construct the facilities under the Project including: 1) expansion of heat supply network pipelines by 89.9km (totaling length of 179.97km for parallel pipes); 2) installation of 58 heat exchange stations; 3) installation of a supervisory control and data acquisition system (SCADA) for the heat supply network and 4) construction of one energy management center to service 3 million m2 heating areas. The heating service coverage of this subproject will include 2.3million m2 residential buildings, 0.2million m2 business buildings and 0.5million m2 public buildings. During the implementation, the installation of 58 normal heat exchange stations has been replaced by the installation of 85 building level heat exchange units with higher energy efficiency. In this reporting period, due to the delay of the layout design finalization for the road construction in the section of Anning street, the constructions of heat supply pipelines in this section have to be pended, which has cause the implementation of the remaining works unable to proceeded as planned. During the reporting period, this subproject project has made 4.4% physical implementation progress. As of 30 June 2017, the overall progress of this subproject was estimated at 92.8%. This subproject has commissioned to operate starting from the 2014 heating season. In 2014, it achieved 78% of the designed heat area with the total heat service area of 2.34 million m2, while in 2015 it achieved 92% of the designed heat area up to 2.75 million m2. Another 1.35 million m2 heat area has been served in 2016 heating season, which has made the total heat areas up to 4.11million m2, achieving 137% of the designed capacity of 3million m2. As the energy efficiency of the district heat system established by the project, 4million m2 heat area serviced by the system are anticipated to be achieved at the project completion. The implementation progress of various project activities is summarized in the Table 2-1：

Table 2-1：Summary of Progress of Targeted Project Activities under Jinzhong

Construction Target Achievement up to the End of Reporting Period

1）Expansion of heat supply network pipelines 161.66 km long parallel network pipelines by 89.9km (totaling length of 179.97km for installed parallel pipes

2）Installation of 85 building level heat 81 building level heat exchange units installed exchange units

3）Installation of a SCADA Installation of a SCADA completed

4）construction of one energy management Construction of one energy management center center completed

As end June 2017, all the ADB loan financing contracts including one civil works contract and one goods supply contract have been awarded, with the total contracted amount of CNY339.3million, of which equivalent to US$41.06million are to be financed by the ADB loan, accounting for 97.7% of the total ADB loan allocated to this subproject.

Two contracts awarded are still being executed. Except that the equipment supply contract 13CN01GTF3IWD0004 has not been completed within the period stipulated in the contract and the delay of the layout design finalization for the road construction in the section of Anning street has affected the construction of the civil work contract 14CN01GTF3IWT0007, no other issues related to performing the contracts have been found.

As end June 2017, the Project expenditures for this subproject have totaled to CNY428.7million, accounting for 90.25% of the total costs of CNY475million estimated at the Project appraisal, while the ADB loan proceeds of $39.61million have been disbursed, accounting for 90% of the total ADB loan amount of $43.22million allocated for this subproject, and the local counterpart funds with the total amount of CNY167.4million have been mobilized, which accounts for 83.8% of the total counterpart funds of CNY199.76million planned at appraisal.

2.1.2 Subproject 2 – Licheng District Heating Facilities Development

Supported by the Project, this subproject replaces small coal-fired boilers with high efficient boiler to develop the district heating facilities including: 1) construction and installation of 2 x 58 MW coal boiler; 2) installation of 10.1km long heat supply network pipelines; 3) installation of 10 heat exchange stations; and 4) installation of a supervisory control and data acquisition system (SCADA) for the heat supply network. The heating service coverage of this subproject will include 1.04million m2 residential buildings and 0.56million m2 business buildings. This subproject will demolish 121 small coal-fired boilers with the total capacity of 172MW. This subproject has started to implement since 2013. All the implementation activities have been proceeded in line with the planned schedule, no problems/difficulties that materially affected the project implementation have been existed. During this reporting period, the main activities of subproject implementation included the demolishment of small coal-fired boilers, achieving the physical progress of 3%. Except for demolishment of small coal-fired boilers that has achieved 68% of the targeted tasks, the sub-project implementation activities have almost completed. As of 30 June 2017, the overall progress of this subproject was estimated at 98.4%. The implementation progress of various project activities is summarized in the Table 2-2： Table 2-2：Summary of Progress of Targeted Project Activities under Licheng

Construction Target Achievement up to the End of Reporting Period

1）Construction and installation of 2 x 58 MW The boiler with the capacity of 2 x 58MW has coal boiler been installed

2）installation of 10.1km long heat supply Heat supply network pipelines with total length network pipelines of 10.1km have been laid out

3) Installation of 10 heat exchange stations Installation of 10 heat exchange stations

4）Installation of a SCADA The installation of a SCADA has been completed

5）Demolishment of 121 small coal-fired boilers 82 small coal-fired boilers have been demolished

The construction and installation of DH facilities were started in 2014. As end June 2017, it has completed the construction and installation of most DH facilities including boiler, heat supply network pipelines, heat exchange stations and SCADA, meanwhile, 69 small coal-fired boilers have been demolished as well. This subproject has commissioned to operate starting from the 2014 heating season. In 2014, it achieved 21% of the designed heat area with the total heat service area of 0.33 million m2, and in 2015 it achieved 44% of the designed heat area with the heat service area of 0.69 million m2, while 68% of the designed heat area with the heat service area of 1.09million m2 has been serviced in 2016 heating season and full designed capacity of 1.6 million m2 is anticipated to be achieved in 2017.

As end June 2017, the Project expenditures for this subproject have totaled to CNY159.75million, accounting for 90.8% of the total costs of CNY175.87million estimated at the Project appraisal, while the ADB loan proceeds of $15.49million have been disbursed, accounting for 84.3% of the total ADB loan amount of $18.38million allocated for this subproject, and the local counterpart funds with the total amount of CNY59.12million have been mobilized, which accounts for 100.6% of the total counterpart funds of CNY58.793million planned at appraisal.

2.1.3 Subproject 3 – Qin District Heating Facilities Development

Supported by the Project, this subproject replaces small coal-fired boilers with high efficient boiler to develop the district heating facilities including: 1) construction and installation of 2 x 58 MW coal boilers; 2) installation of 14.9km long heat supply network pipelines; 3) installation of 25 heat exchange stations; and 4) installation of a supervisory control and data acquisition system (SCADA) for the heat supply network. The heating service coverage of this subproject will include 1.08million m2 residential buildings and 0.59million m2 public buildings. This subproject will demolish 88 small coal-fired boilers with the total capacity of 132MW. The implementation of this subproject started in 2013. The physical construction and installation activities have been progressively implemented starting from 2014. No problems/difficulties have been found. The subproject has mainly carried out remaining construction activities and demolishment of small coal-fired boilers in this reporting period, achieving the physical progress of 1.9%. As of 30 June 2017, the overall progress of this subproject was estimated at 93.3%. The implementation progress of various project activities is summarized in the Table 2-3: Table 2-3 Summary of Progress of Targeted Project Activities under Qin

Construction Target Achievement up to the End of Reporting Period

1）Construction and installation of 2 x 58 MW The installation of boiler with the capacity of 2 x coal boiler 58MW has been basically completed.

2）installation of 14.9km long heat supply Heat supply network pipelines with total length network pipelines of 11km have been laid out

21 HESs has been installed and put into trial 3) Installation of 25 heat exchange stations operation.

The SCADA has been installed and put into 4）Installation of a SCADA operation

5）Demolishment of 88 small coal-fired boilers 75 small coal-fired boilers have been demolished

As end June 2017, all the ADB loan financing contracts including one civil works contract and one goods supply contract have been awarded. These two contracts have been almost executed completely. The contractor and supplier can perform their obligations set in the contracts. No issues/problems related to the contract execution have been occurred. The civil work contract was basically completed at the end of October 2016, while the equipment supply contract has been completed at end June 2017.

The constructions of DH facilities including heat source, 11 km long heat supply network pipelines, 21 EHS and one SCADA etc. have been basically completed by the end June 2017. Meanwhile, 75 small coal-fired boilers have been demolished as well. This subproject has commissioned to operate in the 2016 heating season, achieving 45% of the designed heat area with the total heat service area of 0.75 million m2.

As end June 2017, the Project expenditures for this subproject have totaled to CNY185million, accounting for 72.2% of the total costs of CNY256.09million estimated at the Project appraisal, while the ADB loan proceeds of $20.02million have been disbursed, accounting for 88% of the total ADB loan amount of $22.75million allocated for this subproject, and CNY 57.45million local counterpart funds have been mobilized, which accounts for 51.4% of the total counterpart funds of CNY111.81million planned at appraisal.

2.1.4 Subproject 4 – Zhonyang District Heating Facilities Development

Supported by the Project, this subproject replaces small coal-fired boilers with high efficient boiler to develop the district heating facilities including: 1) construction and installation of 1x 58 MW coal boiler; 2) installation of 10.8km long heat supply network pipelines; 3) installation of 7 heat exchange stations; and 4) installation of a supervisory control and data acquisition system (SCADA) for the heat supply network. The heating service coverage of this subproject will include 0.3million m2 residential buildings and 0.22million m2 business buildings. This subproject will demolish 23 small coal-fired boilers with the total capacity of 36MW. In 2013, the design of heat source was changed from coal boiler to gas boiler. The start of this subproject implementation was not in line with the original schedule set at appraisal and delayed by one year from 2013 to 2014. The physical construction and installation activities have been progressively implemented starting from 2015. In this reporting period, the subproject has mainly carried out remaining construction activities, achieving 2.5% physical progress, no problems/difficulties that have materially impacts on the implementation have been found. As of 30 June 2017, the overall progress of this subproject was estimated at 92%. The implementation progress of various project activities is summarized in the Table 2-4: Table 2-4：Summary of Progress of Targeted Project Activities under Zhonyang

Construction Target Achievement up to the End of Reporting Period

The boilers with the capacity of 2 x 58MW have 1）Construction and installation of 1 x 58 MW been installed and put into commission in Oct. coal boiler 2016

2）installation of 10.8km long heat supply Heat supply network pipelines with total length network pipelines of 10.8km have been laid out

5 HESs has been installed and put into 3) Installation of 7 heat exchange stations commission

4）Installation of a SCADA The SCADA has been installed

5）Demolishment of 23 small coal-fired boilers Not start to implement

As end June 2017, all the ADB loan financing contracts including one civil works contract and one goods supply contract have been awarded. These two contracts have almost been completed. The contractor and supplier can perform their obligations set in the contracts. No issues/problems related to the contract execution have been occurred. The contracts had been basically completed by the end of April 2017. The constructions of DH facilities including heat source, 10.8 km long heat supply network pipelines, 5 EHS and one SCADA etc. have been basically completed by the end June 2017. This subproject has commissioned to operate in the 2016 heating season, the residential and business buildings with the total area of 0.24million m2 have been serviced with the district heating system by the project, achieving 46.2% of the designed heat areas.

As end June 2017, the Project expenditures for this subproject have totaled to CNY35.97million, accounting for 82% of the total costs of CNY43.633million estimated at the Project appraisal, while the ADB loan proceeds of $4.25million have been disbursed, accounting for 94.3% of the total ADB loan amount of $4.51million allocated for this subproject, and CNY 8.89million local counterpart funds have been mobilized, which accounts for 60% of the total counterpart funds of CNY14.905million planned at appraisal.

2.1.5 Subproject 5–Coal Mine Methane Gas Supply and Distribution in Liuling

This will construct a CMM supply and distribution system in Liulin to supply gas to 30,000 households and 120 commercial customers. It will specifically include construction of (i) gas supply pipelines from the extraction points at each of the three coal mines to the storage station (10 kilometers [km]); (ii) a gas storage station with one storage tank of 100,000 m3 capacity; (iii) 20 pressure-regulating stations; (iv) gas distribution pipelines of low (12 km) and medium (21 km) pressure; and (v) a SCADA system. This subproject will demolish 43 small coal-fired boilers with the total capacity of 46MW. Due to the optimization of design, some changes of this subproject have been made including: 1) location change of CMM gas storage station; 2) the change from one gas storage tank to two gas storage tanks; and 3) layout changes of gas pipelines due to the change of CMM gas storage station.

This subproject implementation started in 2013, while the physical construction and installation activities have been progressively implemented starting from 2014. In this reporting period, as the

Construction Target Achievement up to the End of Reporting Period

1）Installation of 43.1km long gas supply The detailed design has been completed network pipelines

2） Construction of two gas storage tanks with The construction of one gas storage tank with total capacity of 0.1million m3 the capacity of 50,000m3 has been completed

3) Construction Installation of 20 pressure The contract has been awarded and the

regulating stations equipment has been delivered to the sites

4) Construction of gas storage station The construction has been basically completed

4）Installation of a SCADA The equipment has been delivered to the site.

5）Demolishment of 43 small coal-fired boilers Not start to implement counterpart funds were not in place, all the remaining implementation activities were pending, and no physical progress was made. As of 30 June 2017, the overall progress of this subproject was estimated at only 61.5 % against an elapsed loan period of 81.26%, indicating this subproject implementation is some 20% behind the time schedule with some delays, which are likely caused by the delay of approval for the preliminary design due to the changes of construction plan and shortage of the local counterpart funds. The implementation progress of various project activities is summarized in the Table 2-5: Table 2-5：Summary of Progress of Targeted Project Activities under Liuling

As end June 2017, one design, supply and installation contract for the ADB loan financing has been awarded through ICB procedure. This contract is being executed in order. The general contractor can perform its obligations set in the contracts. No issues/problems related to the contract execution have been occurred. The contract has been basically completed as the end of 2016. As the local counterpart fund cannot be mobilized in time, the civil works contract related to the construction of gas supply pipelines cannot be procured and executed in line with the planned schedule so that the planned target to put into commission in 2016 was not able to achieve. The commission of subproject will be likely extended to the second half of 2017. 11

As end June 2017, the Project expenditures for this subproject have totaled to CNY62.703million, accounting for 51.7% of the total costs of CNY121.154million estimated at the Project appraisal, while the ADB loan proceeds of $8.099million have been disbursed, accounting for 72.7% of the total ADB loan amount of $11.14million allocated for this subproject, and CNY 10.81million local counterpart funds have been mobilized, which accounts for 21.5% of the total counterpart funds of CNY50.194million planned at appraisal, indicating that the mobilization of local counterpart funds is far behind the project implementation progress, which likely constrains the project implementation as the schedule.

2.2 Resettlement Progress and Updated Resettlement Impacts The Project falls into Class B in terms of involuntary resettlement, in which only the Liulin County subproject involves land acquisition, while the other subprojects will be implemented on public land or existing buildings, and involve no land acquisition, restricted land use or house demolition. According to the former RP, 24.7 mu of rural collective land will be acquired permanently for the Liulin County subproject, in which 15 mu of cultivated land will affect 4 households with 17 persons, while the remaining 7.7 mu of wasteland and 2 mu of woodland will affect no one. In practice, the design of the Liulin County subproject has changed: 1) The gas storage tank and pipelines have been relocated due to the depressed coal market, where the pipelines in Dongshan New District have been relocated to the north main urban area. After relocation, the pipeline length in Dongshan New District will remain unchanged at 8.4km, and total length will still be 43.1km; 2) The Jiajiagou storage and distribution station will be relocated to Hechang Village, but its investment and scale will remain unchanged. See Appendix 1. As of June 30, 2017, the Hechang storage and distribution station (50,000 m3) had been completed. The Hechang storage and distribution station is located on a piece of sloped wasteland in Hechang Village, involving no house demolition, and having no livelihood or income impact on villagers. This plot has been acquired by the Liulin County Housing and Development Bureau. After relocation, the pipelines will still be laid along completed roads, involving neither house demolition nor permanent land occupation. After the completion of pipeline construction, Liulin County Coal Gasification Company will pay road restoration costs to the Liulin County Construction Bureau.

Figure 2-1 Completed Hechang Storage and Distribution Station

2.3 Evaluation of Resettlement Progress and Adjustment To date, the land acquisition progress of the Project has been sufficient for construction. According to ADB’s Safeguard Policy Statement (2009), the RP of the Liulin County subproject has been updated. The relocated storage and distribution station involves no house demolition, and has no livelihood or income impact on villagers, which complies with ADB’s involuntary resettlement policy. In 2017, Hechang storage station, of Liulin subproject, has been equipped. Due to Liuzhou County detailed master plan is under appraisal and adjustment process, the plan for 43.1 km pipeline is still under improving. The bidding works of the pipeline does not involve the temporary land occupation. As of June 2017, Jinzhongzi subproject has using domestic fund to construct the pipeline network which caused 175927.5 m2 roads and the broken road has been restored. As of June 2017, Qin subproject, together with another domestic road project, has acquisitioned 89 mu land, among which, the phase 1 of Qin Heating project used 35 mu land and the land use right certificate has been handled. Other remaining land will be used by phase 2 of Qian heating project. as the phase 2 component of Qin Heating project is not included in the ADB financed project. Qin County Land Resource Bureau promise to handle the land use right in timely manner.

3 Social Development Due to rich coal resources, central heating in Shanxi Province is based mainly on coal. Many existing urban heating systems are very old and inefficient, and do not have appropriate waste gas discharge equipment. Environmental impacts from these systems are disproportionately high on the poor and women. Central heating has inadequate coverage among low-income urban population, forcing residents to use indoor coal stoves for heating, which is a main cause of respiratory diseases, especially among women and children, because they often stay longer indoors. There, the Project will benefit all the 5 project cities/counties, with a direct beneficiary population of 270,000.

3.1 Promoting Employment and Poverty Reduction The Project will create a better investment and living environment for the project area through urban infrastructure improvement and environmental protection, thereby enhancing the attraction of the project area to investors and visitors. At the construction and operation stages, the Project will also generate jobs directly. It is estimated that 70-80% of the jobs generated by the Project will be unskilled jobs, most of which will be first made available to local women and the poor in order to increase their income. At the operation stage, most small boilers will be closed down, thereby reducing atmosphere pollution, related diseases and medical expenses. As of June 30, 2017, some small boilers had been closed down in Jinzhong City and Licheng County under the Project. In Jinzhong City, 437 boiler works had been reemployed, including 84 in 2012, 105 in 2013, 112 in 2014 and 136 in 2015, mostly with monthly pays of over CNY2,000, higher than before. Licheng subject has cumulatively absorb 281 person for employment, of which, 62 persons in 2015, 105 persons in 2016, and 114 persons in 2017. The average wage of them is 1320 yuan / month. Jincheng subject has cumulatively absorb 437 person for employment, of which, 84 persons in 2012, 105 persons in 2013, and 136 persons in 2015. In both locations, overall heating effect has improved, except for few communities where waste gas discharge is poor due to aged facilities, and preferential policies are offered to vulnerable groups and MLS population. For example, in Licheng County, the specified heating rate is halved for households connected to secondary pipelines, namely CNY45/m2. As of June 2017, the Qin County subproject has demolished a total of 75 boilers. And 10 affected workers are willing to work in the Qin County Heating Company, with an average monthly salary of 2000 yuan. The other workers of is reluctant to work in the heating company.

3.2 Absorbing Surplus Labor The Qin County PMO will offer training to boiler workers at the operation stage, and only those certified will go to work. Construction contracts will have specific requirements on site management, employment arrangements for the poor, the use of local materials, etc. At the construction stage, several local enterprises will be involved, generating over 200 jobs. Up to now, 31 new job positions in Zhongyang, including 23 regular position, 8 temporary positions, and 101 new job positions in Qin County subproject, including 51 were formal positions and 50 temporary positions have been produced in project implementation phase.

3.3 Site Management 1) Construction camps are cleaned by specially assigned persons on a rolling basis every day; solid waste is piled up and transferred centrally; canteens are managed to ensure a clean and healthy diet; bathrooms are set up and provided with instant water heaters for workers. 2) The local health authority offers health and sexual knowledge education. 3) Toilets for men and women are set up on construction sites.

3.4 Other For the convenience of retirees, the sick and disabled residents, heating charges will be collected in a door-to-door manner.

4 Implementation of the Gender Action Plan

Table 4-1 Implementation of the Gender Action Plan Table: Actions and Target Indicators (2012-2017) Data sources and Project Action Target indicator reporting Implementation output mechanism Decommission small 133,000 women, 100,400 PMO, IAs, Jinzhong City: Heating is polluting neighborhood children in 51 schools, and implementation available to 23 schools and 8 boilers and supply heat patients and medical staff consultants, hospitals, with the total service through cleaner in 17 hospitals are women’s female population of 30560 centralized district heating provided heating services federation persons, 23508 children systems. by 2017. Licheng County: 53 small boilers in the county town have been replaced. Qin County: service for 20000 women, 6 schools and 3 Expanded hospitals coverage and Ensure heating assistance At least 703 women- IAs Jinzhong: provided 58 working improved to poor women-headed headed households are positions for women district households (70% subsidy given assistance by 2017 heating in of heating tariff by the project cities local government and and towns 100% waiver of connection fee from the heating company). Job opportunities for 50% of heating bill IAs Jinzhong City: There are 13 women are created and collectors (from the current collectors, in which 12 are women are given equal 20%) are women by 2017. women. opportunity for Licheng County: There were 15 employment (e.g., female collectors, accounting promoting women as for 88% of the total. heating bill collectors) Zhongyang: 50% collectors are females. Expanded CMM gas is made One hour reduction in time IAs Qin County: The existing gas CMM gas available for cooking, spent on domestic chores company has started distribution heating and other by 2017; baseline construction. network domestic uses information was collected

during the survey and will be monitored in project documentation. Cases of carbon monoxide IAs poisoning and fire accidents caused by household stoves reported zero by 2017 Promote capacity building 100% of female staff IAs Jinzhong City: Training on bill of female staff directly involved with the collection, file management and project will attend training. measurement has been completed, involving all staff, including all female staff. Licheng County: 21 female workers have been trained. Qin County: Worker training will be offered more intensively to strengthen the capacity of female workers at the operation Institutional stage. strengthening Organize a joint session At least one session with IAs Jingzhong will held the meeting and capacity among heating companies participation from female in 2017 heating season. building on “gender responsive representatives and heat Qin County will held it in Oct district heating” and users from each subproject 2017. service delivery feedback area by 2017. mechanism in partnership with women’s federation. Conduct community level Joint knowledge sharing/ IAs In preparation period knowledge sharing awareness campaigns will sessions/ energy target entire female conservation awareness population of 133,000 campaigns for each female beneficiaries in subproject area. subproject areas by 2017.

It is learned that a lot has been done in gender development under the Project. However, such efforts have not been fully reflected due to inadequate file management.

5 Organizational Structure The Shanxi Provincial Government is the executing agency, which has established a provincial project leading group for overall guidance and coordination, headed by a vice governor, and composed mainly of officials from the Shanxi Provincial Reform and Development Commission, Shanxi Provincial Finance Department and Shanxi Provincial Environmental Protection Department. The IAs are Ruiyang CHP Co., Ltd. in Jinzhong City, Wantong Heating Co., Ltd. in Licheng County, Huayang Heating Co., Ltd. in Qin County, Zhongyang Heating and Gas Supply Center, and Liulin County Coal Gasification Company. The provincial PMO is located at the Shanxi Provincial Reform and Development Commission, responsible for daily project management as the secretariat of the leading group. The 5 county PMOs have a total workforce of 15, including 7 females, accounting for 46.67%.

Figure 5-1 Organization Chart

Table 5-1 Resettlement and Social Development Workforce of the Project Resettlement and social Where: Item development workforce females Provincial Project Leading Group 1 1 Provincial PMO 1 1 Ruiyang CHP Co., Ltd. in Jinzhong City 2 1

Wantong Heating Co., Ltd. in Licheng County 3 1 Huayang Heating Co., Ltd. in Qin County 3 1 Zhongyang Heating and Gas Supply Center 3 1 Liulin County Coal Gasification Company 2 1 Total 15 7

It is learned that the resettlement and social development staff of the Project is adequate, but training is inadequate, so that most of them are unfamiliar with the Gender Action Plan. Relevant training should be offered as soon as possible to prepare for the next report.

6 Information Disclosure and Public Participation At the preparation stage (March 2012), the RP and the Gender Action Plan were disclosed at ADB’s website. The provincial PMO has also asked the county PMOs to disclose the RP and GAP to local residents timely, and encourage them to participate in the Project. Related project information/biding information/project construction information have also been disclosed to local peoples in time by website, newspaper, TV and radio.

Figure 16-1 some snapshots for the information disclosure of the project

In the future, progress reports and employment information of the Project will be disclosed by means of community bulletin board, etc.

7 Grievance Redress 7.1 Grievance Redress Procedure Since public participation is encouraged during project preparation and implementation, no substantial dispute will arise. However, unforeseeable circumstances may arise during this process. In order to address issues effectively, and ensure the successful implementation of project construction and land acquisition, a transparent and effective grievance redress mechanism has been established. The basic grievance redress system is as follows: Stage 1 If any right of an AP is infringed on in respect of resettlement, he/she may report to the community committee, and either the AP or the community committee may solve the appeal in consultation with the township government within two weeks. Stage 2 If the grievant is dissatisfied with the reply of Stage 1, he/she may file an appeal with the PMO within one month of receipt of the above disposition, which shall make a disposition within two weeks. Stage 3 If the grievant is still dissatisfied with the disposition of Stage 2, he/she may file an appeal with the Provincial Project Leading Group within one month of receipt of the above disposition, which shall make a disposition within two weeks. Stage 4 If the grievant is still dissatisfied with the disposition of Stage 4, he/she may file an action in a civil court in accordance with the Civil Procedure Law of the PRC after receiving the above disposition. At any stage, an AP may bring a suit in a civil court directly if he/she is dissatisfied with the grievance redress procedure or disposition. If any AP may also file an appeal with the Office of the Special Facilitator or Compliance Review Panel of ADB in accordance with ADB’s accountability mechanism. All grievances, oral or written, will be reported to ADB in progress reports. All agencies will accept grievances and appeals from the APs for free, and costs so reasonably incurred will be disbursed from contingencies. During the whole construction period of the Project, these appeal procedures will remain effective to ensure that the APs can use them to address relevant issues.

7.2 Recording and Feedback of Grievances and Appeals During project implementation, the resettlement agencies should register and manage appeal and handling information, and submit such information to the PMO in writing on a monthly basis. The PMO will inspect the registration of appeal and handling information regularly, and will prepare a registration form for this purpose.

Table 7-1 Registration Form of Grievances and Appeals Accepting agency: Time: Location: Proposed Appellant Appeal Expected solution Actual handling solution

Recorder Appellant (signature) (signature) Notes: 1. The recorder should record the appeal and request of the appellant factually. 2. The appeal process should not be interfered with or hindered whatsoever. 3. The proposed solution should be notified to the appellant within the specified time.

7.3 Contact Information for Grievances and Appeals The IAs will appoint persons chiefly responsible to accept and handle grievances and appeals. See Table 7-2.

Table 7-2 Accepting Agencies and Staff of Grievances and Appeals Agency Contact Address Tel Provincial Project Leading Group Lv Zhuyuan Taiyuan City 03513119592 Provincial PMO Zhang Meiqin Taiyuan City 03513119508 Ruiyang CHP Co., Ltd. in Jinzhong City Zhu Jianyong Jinzhong City 13603542818 Wantong Heating Co., Ltd. in Licheng County Li Yong Licheng County 18636519708 Huayang Heating Co., Ltd. in Qin County Wang Qiang Qin County 13934053925 Zhongyang Heating and Gas Supply Center Liu Jianwen Zhongyang County 13903587075 Liulin County Coal Gasification Company Feng Yongxiong Liulin County 13753854063

7.4 Grievances and Appeals during the Reporting Period As of June 30, 2017, no grievance or appeal had occurred.

8 Conclusions and Suggestions 8.1 Conclusions • The gas storage tank and pipelines in the Liulin County subproject have been relocated, where the gas storage tank has been completed. The RP has been updated. • The resettlement progress of the Project is sufficient for construction. • Part subproject involved some temporary land occupation, and all have been restored. 8.2 Suggestions • All sub-PMOs should prepared the Social development and resettlement data, especially the land temporary occupation data, for the coming project completion report.

Appendix 1 Approval of Pipeline Rerouting of the Liulin County Subproject in Dongshan New District

Appendix 2 Reply of the Shanxi Provincial Government on the Second Batch of Construction Land of Liulin County in 2013

Appendix 3 Minutes of the Liulin County Head’s Executive Meeting

Appendix 4 Land Occupation Agreement