Document of The World Bank

FOR OFFICIAL USE ONLY

Public Disclosure Authorized Report No: 55660 - CN

PROJECT APPRAISAL DOCUMENT

ON A Public Disclosure Authorized PROPOSED LOAN

IN THE AMOUNT OF US$100 MILLION

TO THE

PEOPLE‟S REPUBLIC OF

FOR AN

ANHUI SHAYING RIVER CHANNEL IMPROVEMENT PROJECT Public Disclosure Authorized

March 15, 2011

China and Mongolia Sustainable Development Unit Sustainable Development Department East Asia and Pacific Region

Public Disclosure Authorized This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

CURRENCY EQUIVALENTS

(Exchange Rate Effective August 24, 2010)

Currency Unit = RMB (Renminbi or Chinese Yuan) RMB1.00 = US$0.147 US$1.00 = RMB6.8003

FISCAL YEAR January 1 – December 31

ABBREVIATIONS AND ACRONYMS

AAES Academy of Environmental Sciences APAO Anhui Provincial Audit Office APEPB Anhui Provincial Environmental Protection Bureau APFD Anhui Provincial Finance Department APMO Anhui Project Management Office APPSCIG Anhui Provincial Port & Shipping Construction Investment Group Co. Ltd. APPSMB Anhui Provincial Port and Shipping Management Bureau APTD Anhui Provincial Transport Department BCR Benefit-cost Ratio CFAA Country Financial Accountability Assessment CNAO China National Audit Office CPS Country Partnership Strategy CQS Selection Based on Consultants‟ Qualifications DA Designated Account DO Development Objective EIRR Economic Internal Rate of Return EMP Environment Management Plan FM Financial Management FMM Financial Management Manual FMS Financial Management Specialist FMSB Financial Management Sector Board FSL Fixed-Spread Loan GHG Greenhouse Gases GOC Government of China IBRD International Bank for Reconstruction and Development ICB International Competitive Bidding ICR Implementation Completion and Results Report IDA International Development Association IP Indigenous Peoples IWT Inland Waterway Transport LIBOR London InterBank Offered Rate MOT Ministry of Transport NCB National Competitive Bidding NIWPP2020 National Inland Waterways and Ports Plan to 2020 O&M Operation and Maintenance RAP Resettlement Action Plan RIS River Information Systems RMB Renminbi or Yuan (Chinese Currency) RPF Resettlement Policy Framework RP Resettlement Plan SBD Standard Bidding Document SOE Statement of Expenditures SSS Single-Source Selection SSSRI Shanghai Ship & Shipping Research Institute TA Technical Assistance VSL Variable-Spread Loan WAs Withdrawal Applications

Vice President: Mr. James W. Adams, EAPVP Country Director: Mr. Klaus Rohland, EACCF Country Manager: Mr. Klaus Rohland, EACCF Sector Managers: Mr. Ede Jorge Ijjasz-Vasquez, EASCS, and Mr. Vijay Jagannathan, EASIN Task Team Leaders: Mr. Wenlai Zhang, EASCS, and Mr. Jian Xie, EASER

CHINA China: Anhui Shaying River Channel Improvement Project

CONTENTS

Page

I. STRATEGIC CONTEXT AND RATIONALE ...... 1 A. Country and sector issues ...... 1 B. Rationale for Bank involvement ...... 3 C. Higher level objectives to which the project contributes ...... 3

II. PROJECT DESCRIPTION...... 4 A. Lending instrument ...... 4 B. [If Applicable] Program objective and Phases ...... 4 C. Project development objective and key indicators ...... 4 D. Project components ...... 4 E. Lessons learned and reflected in the project design...... 5 F. Alternatives considered and reasons for rejection ...... 6

III. IMPLEMENTATION ...... 6 A. Institutional and implementation arrangements ...... 6 B. Monitoring and evaluation of outcomes/results ...... 7 C. Sustainability ...... 7 D. Critical risks and possible controversial aspects ...... 8 E. Loan/credit conditions and covenants ...... 9

IV. APPRAISAL SUMMARY ...... 9 A. Economic and financial analyses ...... 9 B. Technical ...... 9 C. Fiduciary...... 10 D. Social...... 10 E. Environment ...... 11 F. Safeguard policies ...... 11 G. Policy exceptions and readiness ...... 12

Annex 1: Country and Sector or Program Background ...... 13

Annex 2: Major Related Projects Financed by the Bank and/or other Agencies ...... 18

Annex 3: Results Framework and Monitoring ...... 19

Annex 4: Detailed Project Description...... 22

Annex 5: Project Costs ...... 27 Annex 6: Implementation Arrangements ...... 28

Annex 7: Financial Management and Disbursement Arrangements ...... 31

Annex 8: Procurement Arrangements ...... 38

Annex 9: Economic and Financial Analysis ...... 41

Annex 10: Safeguard Policy Issues ...... 45

Annex 11: Project Preparation and Supervision ...... 54

Annex 12: Documents in the Project File ...... 55

Annex 13: Statement of Loans and Credits ...... 56

Annex 14: Country at a Glance ...... 60

Annex 15: Maps (IBRD Nos. 37399, 37400 and 37401) ...... 62

CHINA

CHINA: ANHUI SHAYING RIVER CHANNEL IMPROVEMENT PROJECT

PROJECT APPRAISAL DOCUMENT

EAST ASIA AND PACIFIC

EASCS

Date: March 15, 2011 Team Leader: Wenlai Zhang / Jian Xie Country Director: Klaus Rohland Sectors: Ports, waterways and shipping Sector Manager/Director: Ede Jorge Ijjasz- (100%) Vasquez Themes: Water resource management (50%); Infrastructure services for private sector development (20%); Other rural development (20%); Climate change (10%) Project ID: P118647 Environmental category: Full Assessment Lending Instrument: Sector Investment and Joint IFC: Maintenance Loan Joint Level:

Project Financing Data [X] Loan [ ] Credit [ ] Grant [ ] Guarantee [ ] Other:

For Loans/Credits/Others: Total Bank financing (US$ million): 100.00 Proposed terms: The loan will be payable in 20 years, including 6 years of grace period, annuity repayment at six-month LIBOR-based US Dollar plus variable spread, and with all conversion options. Financing Plan (US$ million) Source Local Foreign Total Borrower 191.14 0.00 191.14 International Bank for Reconstruction and 0.00 100.00 100.00 Development Financing Gap 0.00 0.00 0.00 Total: 191.14 100.00 291.14

Borrower: The People‟s Republic of China Responsible Agency: Anhui Provincial Transport Department 8th Floor, Huayi Mansion No. 95 Shouchun Road , Anhui Province China Tel: (86-551) 262-9089 Fax: (86-551) 263-0290 E-mail: [email protected] Anhui Provincial Ports & Shipping Construction and Investment Group No.1157, Changjiang East Road Hefei, Anhui Province China Tel: (86-551) 429-9912 Fax: (86-551) 429-9522 E-mail: [email protected]

Estimated disbursements (Bank FY/US$ million) FY 2012 2013 2014 2015 2016 2017 Annual 10.00 15.00 20.00 25.00 25.00 5.00 Cumulative 10.00 25.00 45.00 70.00 95.00 100.00 Project implementation period: Start: January 1, 2011 End: June 30, 2016 Expected effectiveness date: August 1, 2011 Expected closing date: December 31, 2016

Does the project depart from the CPS in content or other significant respects? [ ]Yes [X] No Ref. PAD I.C. Does the project require any exceptions from Bank policies? Ref. PAD IV.G. [ ]Yes [X] No Have these been approved by Bank management? [ ]Yes [ ] No Is approval for any policy exception sought from the Board? [ ]Yes [ ] No Does the project include any critical risks rated “substantial” or “high”? [ ]Yes [X] No Ref. PAD III.E. Does the project meet the Regional criteria for readiness for implementation? [X]Yes [ ] No Ref. PAD IV.G.

Project development objective Ref. PAD II.C., Technical Annex 3 The development objective of the proposed Project is to contribute to the increased cargo throughput of the Shaying River in Anhui Province through infrastructure improvements and capacity building. Project description [one-sentence summary of each component] Ref. PAD II.D., Technical Annex 4 Component A - Navigation Infrastructure and Facilities. This component includes river channelization and dredging works, river bank strengthening and protection works, and provision of navigation aids and service facilities. Component B - Reconstruction and Relocation of Existing Infrastructure and Facilities. This component includes reconstruction and reinforcement of existing cross-river bridges that have insufficient clearance and relocation of other existing cross-river facilities that impede navigation. Component C – Erection of Waterway Transport Management Systems. This component includes provision and installation of the plants and equipment which are needed for building the management systems to be developed by the two technical studies under Component D. Component D - Technical Assistance. This component includes technical studies and training programs that are designed to build the institutional capacity of the IWT sector to enable sustainable IWT development in Anhui Province. Which safeguard policies are triggered, if any? Ref. PAD IV.F., Technical Annex 10 Environmental Assessment (OP/BP 4.01) Natural Habitats (OP/BP 4.04) Involuntary Resettlement (OP/BP 4.12) Significant, non-standard conditions, if any, for: Ref. PAD III.F. Board presentation: N/A Loan/credit effectiveness: None.

I. STRATEGIC CONTEXT AND RATIONALE

A. Country and sector issues

1. Inland Waterway Transport Development in China. China has 123,000 km of navigable waterways, of which 61,000 km are officially classified for commercial navigation purposes. Most of the commercial waterways are well positioned to link the prosperous eastern coastal regions, which have increasing demand for raw materials, with the resource-rich but less- developed inland and western regions. This mutually beneficial connection helps to achieve the nation‟s central and western development strategies.

2. China‟s inland waterway transport (IWT) industry already handles about the same volume of freight as the USA and the EU waterways combined. Accelerated economic growth in China is generating a greater demand for the transport of coal, construction materials and other bulk materials and goods. Accordingly, IWT has been increasing rapidly in recent years with an annual average growth rate of 8.8 percent during the period 2000-2008 (and 13.1 percent p.a. in tonne-kms).

3. Despite the fast growth in the past years, IWT in China is still under-developed compared with other transport modes. Its share in the total freight of all transport modes was only 3.8 percent in tonne-kms in 2008. Currently, the main constraint of IWT is weak infrastructure. A high proportion of the classified waterways has poor navigation infrastructure, which sometimes limits navigation capacity and particularly restricts the ability to reliably handle larger vessels that can deliver much lower unit cost of transport than smaller vessels. Therefore investment in IWT infrastructure is critical to realize the mode‟s major development potential.

4. The Government of China (GOC), recognizing the higher energy efficiency, lower greenhouse gas emissions, and lower use of scarce land resources associated with IWT, plans to increase the contribution of IWT to China‟s transport needs. In 2007, China adopted the National Inland Waterways and Ports Plan to 2020 (NIWPP2020) that aims to develop a „high- class‟ waterway network (Class IV to Class I) of around 19,100 km (from the current 15,000 km). This waterway network will extend to twenty provinces and serve a catchment area that contains approximately a quarter of China‟s population. An analysis carried out for the NIWPP2020 estimates that the total IWT cargo traffic in China will increase from 1.16 billion tonnes in 2006 to 1.6 billion tonnes in 2010, and further to 2.35 billion tonnes in 2020.

5. IWT Development in Anhui Province. Anhui Province, with a population of about 65 million and an area of 139,600 square kilometers, is a land-locked province in central China. Anhui is one of the six economically under-developed central provinces supported by GOC‟s “Rise of Central China” initiative. Transport is one of the priorities in the provincial development strategy. Over the past decade, the growth of IWT has lagged behind road and rail transport in Anhui though it has a good natural river network. The Province has now decided to pursue a more balanced transport strategy that gives more prominence to IWT, which can supplement road and rail transport by providing competitive services for bulk and low-value cargo.

1 6. Anhui, despite its land-locked location, is rich in water resources with many rivers running through it, which contribute to three big water systems: the River, the , and the Xin‟an River systems. The total length of inland waterway network in Anhui is over 6,500 km, with around 1,100 km of high class waterways (Class IV and above); Anhui has the seventh longest provincial network in China. There are 17 main ports in Anhui, in addition to thousands of small local wharves and jetties. Around 30,000 commercial vessels are registered in the Province.

7. The Anhui Provincial Government has established ambitious targets for IWT development in the Anhui Inland Waterway Transport Development Plan (2005-2020). During the period 2007 - 2020, the Plan aims to increase the total IWT freight volume in Anhui from 98 million to 395 million tonnes, and the total tonne-km from 45 billion to 158 billion through a total investment of RMB25 billion. The Plan divides navigable inland waterways in Anhui into three levels of importance: national high-class, regional, and local. A “Two-Trunk and Three- Branch” waterway network of national high-class commercial waterways in the Province has been laid out. The Shaying River, one of the three branches, is planned to be upgraded to Class IV for year-round navigation of 500 dwt vessels.

8. Shaying River. The Shaying River is the largest tributary of the Huai River in central China. It originates from Province and converges with the Huai River in Anhui Province. The total length of the River is 620 km, of which 206 km flows through Anhui Province. The River‟s hinterland has extensive reserves of coal and other minerals and is also a major producer of farming products, cement and fertilizers. The Shaying River provides a continuous waterway link to the prosperous and fast-growing industrial Yangtze Delta area via the Huai River and the . Given the increasing demand for transport in the river basin and the cost- effectiveness of waterway transport, particularly for coal, building materials, chemicals and grains, waterway traffic on the Shaying River has grown at an annual average of 10.6 percent in the period 1995-2008, reaching 5.26 million tonnes by 2008.

9. Nonetheless, future traffic growth is severely constrained by the low capacity of navigation infrastructure along the River. The river section upstream of has a mixture of standards and generally only permits navigation of 300 dwt vessels in the low-water season. The section downstream of Fuyang was blocked in the 1980s by the construction of a sluice dam across the River at Fuyang, which resulted in all upstream shipping being diverted to the Cihuaixin River - a man-made canal whose primary purposes are irrigation and supply of drinking water. Waterway traffic often suffers from low water levels when the Cihuaixin River water is needed for these primary purposes. Traffic is further impeded by four small-sized locks which become congested at busy periods. The Cihuaixin route has almost reached its capacity, and due to its primary water resources functions, cannot be upgraded. This restricts further growth of traffic in the upper Shaying River.

10. Traffic capacity of the Shaying River is therefore at a plateau, and without a solution to the constraints described, cannot play a more significant role in the continuing economic development of its hinterland. As noted, both national and provincial governments are committed to improving the transport capacity of the River by eliminating infrastructure constraints. Anhui and Henan provinces have been working together with the support of MOT to re-open the Shaying River route and raise its navigation standards. In the past three years, Anhui

2 Province has built two new large locks, the Genglou upstream of Fuyang and the Yingshang downstream of Fuyang, that allow larger vessels to pass through the existing sluice dams. The third lock at Fuyang is currently under construction with domestic funds, and when completed, will finally re-open the River for through navigation. By then, the waterway traffic downstream of Fuyang will be diverted back to the Shaying River from the current Cihuaixin route. Alongside the through navigation, according to the national and provincial inland waterway plans, the river channel is to be upgraded to attain Class IV standard. The river channel improvement is the main physical component of the proposed Bank-funded Project. B. Rationale for Bank involvement 11. In response to a proposal from Anhui Province, GOC has requested the Bank‟s financial and technical support for the implementation of a Project to re-open and upgrade the Shaying River to Class IV navigation standards. The improved Shaying route will be capable of handling year-round 500 dwt vessels and even larger vessels outside the dry season. 12. The World Bank has already provided financial and technical support to China‟s inland waterway development through six projects in seven provinces over the past fifteen years. In 2009, the Bank also completed a major IWT sector review in China, with the objective of identifying impediments to its sustainable development. The outcomes of the study will underpin Bank support for developing IWT in China. Through its involvement in the strategic review and in lending interventions, the Bank has become the leader among international financial institutions in supporting China‟s IWT sector. The Bank‟s expertise and experience, both international and national, can contribute to successful project implementation and strengthen the institutional capacities of IWT in Anhui Province. 13. The objective of the Project is consistent with the Bank‟s China Country Partnership Strategy (CPS) for 2006-2010 (Report No. 35435-CN), approved by the Board on May 23, 2006. The Bank‟s involvement in the Project will support two of the five pillars of the CPS. • It addresses the pillar of ‘reducing poverty, inequality, and social exclusion’, by promoting inter-regional transport links, particularly for industries, between the lagging inland provinces of Anhui and Henan with the dynamic coastal regions. • It addresses the pillar of “managing resource scarcity and environmental challenge, through reducing air pollution, conserving water resources, and optimizing energy use”, by facilitating the use of IWT, a transport mode that is more energy efficient, generates lower greenhouse gases and uses less land than other transport alternatives. 14. GOC has requested that the new CPS for 2011-2015 be co-terminous with, and aligned to, its 12th Five Year Plan covering 2011-2015, which will be available in spring 2011. The objective of the Project is expected to be consistent with the new CPS.

C. Higher level objectives to which the project contributes 15. The immediate transport benefit of the Project will be to allow use of the Shaying River by more cost-efficient vessels carrying a greater cargo volume. This will contribute to two higher-level objectives. Improvement in transport will boost the medium to long-term economic development of the affected hinterlands in Anhui and Henan provinces, through providing improved and less expensive market access to the Yangtze Delta for bulk raw materials. The Project will also contribute to China‟s objective of creating a less-energy-and-carbon-intensive

3 transport system. Specific estimates for China are not available, but a recent US report1 found that the fuel efficiency in tonne-km for IWT in USA is nearly four times than that of road 2 transport. The major EU study in this field estimated that CO2 emissions per tonne-km are nearly three times as high for freight carried by road transport as by inland waterway vessels.

II. PROJECT DESCRIPTION

A. Lending instrument 16. The Bank will finance the Project through a specific investment loan. The Borrower has selected the variable-spread loan (VSL) option in which the spread over London InterBank Offered Rate (LIBOR) is reset each semester. The Borrower‟s main reason for selecting the VSL rather than a fixed-spread loan (FSL) is because FSL charges are slightly higher than VSL charges. The Borrower will also elect to retain the conversion options. VSL repayment terms are governed by standard country terms.

B. [If Applicable] Program objective and Phases 17. Not applicable. C. Project development objective and key indicators 18. The development objective of the proposed Project is to contribute to the increased cargo throughput of the Shaying River in Anhui Province through infrastructure improvements and capacity building. 19. Achievement of the Project‟s objective will be measured by a combination of indicators, as shown in the Result Framework (Annex 3), of which the main ones are: • Increase in aggregate traffic volumes. • Increase in use by vessels of 500 dwt and above.

D. Project components 20. The proposed Project will re-open and upgrade the 205.6 km long Shaying River channel between Changshenggou on the Henan-Anhui border and Mohekou at the confluence of the Shaying River with the Huai River. The improvement works will raise the standard of the channel and associated infrastructure to national standard Class IV, that will permit year-round navigation of laden or unladen powered vessels of 500 dwt. The Project consists of the following four main components: 21. Component A – Navigation Infrastructure and Facilities. (Total US$189.05 million, IBRD US$66.23 million). This component includes river channelization and dredging works, river bank strengthening and protection works, and provision of navigation aids and service facilities.

1 Center for Ports and Waterways of the Texas Transportation Institute „Waterways Working for America: a Modal Comparison of Domestic Freight Transportation Effects on the General Public (December 2007) 2 Institut für Energie und Umweltforschung Heidelberg GmbH 2006. TREMOD: Transport Emission Model - Energy Consumption and Emissions of Transport in Germany 1960-203-0. Final Report.

4 • River channelization and dredging works. Improve the 205.6 km channel to Class IV standard by dredging and bank cusp-cutting, with the following key technical parameters: channel width of 50m, minimum navigable water depth of 2.8m, minimum bending radius of 330m, and 11 locations of bank cusp-cutting for total earthworks of about 18.36 million m3. • River bank strengthening and protection works. Extend and strengthen the existing river bank protection, and build new bank protection works in the river sections with deep and narrow channel, for a total length of about 43.87 km. • Navigation signals. Install about 213 navigation signals at key sections and locations. • Service facilities. Provide two service areas, six public anchorage areas, a communication and monitoring system, and other navigation aids facilities. 22. Component B – Reconstruction and Relocation of Existing Infrastructure and Facilities. (Total US$71.04 million, IBRD US$27.44 million). This component includes reconstruction and reinforcement of existing cross-river bridges that have insufficient clearance and relocation of other existing cross-river facilities that impede navigation. • Reconstruct four existing bridges, including Yumin Bridge and Shaying Bridge in City, and Bridges #1 and #2 in Taihe County; as well as reinforcing and anti-collision works to the navigiable opening under other existing bridges. • Relocate or elevate existing cross-river power cables and telephone lines. 23. Component C – Erection of Waterway Transport Management Systems. (Total US$6.75 million, IBRD US$3.82 million). This component includes provision and installation of the plants and equipment which are needed for building the management systems to be developed by the two technical studies under Component D. 24. Component D - Technical Assistance. (Total US$1.74 million, IBRD US$0.78 million). This component includes technical studies and training programs that are designed to build the institutional capacity of the IWT sector to enable sustainable IWT development in Anhui Province. The two technical studies are: (a) Shaying River Waterway Transport Management and Emergency Service System; and (b) Comprehensive Ship Lock Management System. E. Lessons learned and reflected in the project design 25. The design of the Project reflects the following lessons learned from previous Bank- funded inland waterway projects in China. • Institutional coordination. It is important to establish coordination and information exchange among the various agencies involved to maximize the benefits of water resource utilization. In addition, close coordination with and support from the local governments on land acquisition and resettlement is also critical to smooth project implementation. • Market demand and traffic projection. A thorough assessment of market demand and a careful evaluation of traffic projections are essential for inland waterway projects. Traffic projections have been based on regional economic forecasts with a derived total volume of cargo categorized into major commodity types.

5 • Work variations. Previous projects had a great number of work variations during the construction phase, which were mainly attributed to insufficient geotechnical investigation, and changes to primary design parameters. The task team has given specific attention to the quality of engineering design, in particular the comprehensiveness of the geotechnical and hydrological investigations and engineering optimization. • Procurement delay. Previous projects experienced delays in processing civil works procurement contracts, which resulted in delayed commencement and late achievement of project benefits. This has been addressed by developing a realistic procurement plan and strengthening the procurement capacity of APMO. F. Alternatives considered and reasons for rejection 26. The engineering design seeks to achieve a harmony between the human and natural environments, and takes advantage of other existing infrastructure recently constructed on Shaying River to avoid replication and degradation. The feasibility study and preliminary design analyzed a number of alternatives and design optimizations (e.g., appropriate selection of sites for dredge disposals), and optimized design for river bank protection works to balance water conservation and flood protection. (See Annex 4 for more details.) 27. The alternatives were compared with a focus on the key technical elements which are decisive for the technical feasibility and financial viability of the Project. The alternative analysis was based on information obtained through survey and consultation with the waterway stakeholders, and adopted appropriate criteria for the purpose of analysis and comparison.

III. IMPLEMENTATION

A. Institutional and implementation arrangements 28. Implementing agencies. Anhui Provincial Transport Department (APTD) will take overall responsibility for the management and coordination of project implementation. APTD has established Project Management Office (APMO) which has satisfactorily implemented three Bank-funded highway and road projects in Anhui Province. APMO will monitor and coordinate project implementation, handle procurement, process disbursement, and implement training programs under the Project. 29. Anhui Provincial Port & Shipping Construction Investment Group Co. Ltd. (APPSCIG), under the supervision of and in coordination with APTD, will be the implementing unit for the physical infrastructure and facilities component, and the TA program on comprehensive ship lock management system. 30. Anhui Provincial Port and Shipping Management Bureau (APPSMB) will implement for the TA program to develop the Shaying River waterway transport management and emergency service system. 31. Institutional coordination. The Project is located in Fuyang City. Effective coordination and cooperation between APTD and the local government of Fuyang City will be important for smooth implementation of the Project. APTD and Fuyang Government have reached a framework agreement stipulating their respective roles and responsibilities for land acquisition and resettlement, as well as counterpart fund contributions for, and the reconstruction of the four

6 existing bridges. Detailed agreements will be signed between APPSCIG with Jieshou and Taihe Counties of Fuyang on cost-sharing and availability of funds contributed by each county during implementation. B. Monitoring and evaluation of outcomes/results 32. Achievement of Project objectives will be measured by a combination of indicators as shown in the Result Framework (Annex 3). Information for measuring these indicators will be provided by APTD, APPSMB and APPSCIG, who have standard mechanisms and instruments to regularly collect and process the data needed for monitoring and evaluation. The Bank task team and APTD will jointly monitor and evaluate emerging results which will be reflected in project progress reports, and take appropriate corrective actions when needed. C. Sustainability 33. The Bank‟s Transport Business Strategy3 defines sustainability in transport systems as having financial, economic, operational, environmental and social dimensions. 34. Financial sustainability of this Project is to be assured by the direct funding of APTD from the provincial fiscal budget. APTD will use part of the IWT budget to cover the costs of maintenance and operation of the navigation infrastructure for which the Province is responsible, including the costs of maintaining the upgraded Shaying River. Resources of the IWT budget consist mainly of a share of the national fuel tax, vessel registration charges, profit from related activities (such as hydropower generation at dams), and some lock charges. 35. The Project‟s economic sustainability depends on attaining the overall economic benefits of the Project. In this regard, economic viability has been assessed to be positive and will increase over time. Transport cost savings over other modes is likely to increase over time because productivity in the barging industry is expected to grow faster than in competing rail and road transport, which are already well-developed. In addition, the economic value of external benefits, such as reduced greenhouse gas emissions, is expected to increase in the future. The surplus of economic benefits over financial return is therefore expected to widen. 36. There are no obvious risks to the operational sustainability of the Project. APTD has the experience and technical expertise in managing a large provincial waterway system, including advanced IWT infrastructure in the Province. Of the three major new ship locks required to facilitate through-navigation, two have been completed and the third is under construction. The Fuyang Ports Plan (described in Annex 1) aims to progressively deliver up to 52 new 500 dwt vessel berths over the next fifteen years, which will be sufficient to meet the traffic projections for the Shaying River. The major IWT transport users, the coal mining and building materials industries, already own and/or operate most IWT terminals and have strong commercial incentives to upgrade terminals to handle the increased traffic and larger vessels. 37. The environmental sustainability of China‟s transport system is one of the key motivations for GOC to support this and other projects in NIWPP2020. The expanded use of the Shaying River for transport will, compared to other modes, help minimize the loss of agricultural land, reduce congestion on roads, reduce road accident costs, reduce the average energy consumption of freight transport, and reduce the greenhouse gases (GHG) that contribute to climate change. In regard to the environmental performance of the shipping industry itself, the

3 World Bank Group Transport Business Strategy: Safe, Clean and Affordable Transport for Development, 2008

7 Project will provide special environmental service areas for vessel waste disposal, and will also develop and adopt a waterway transport management and emergency service system on the Shaying River. 38. The social sustainability of the Project‟s benefits will largely depend on the affordability of the transport services that it offers to the users. The capacity to handle larger vessels more reliably will reduce the average operating costs of barges that will use the Shaying River. Because the barging industry itself is a very competitive and mainly privately-owned industry, these cost savings are likely to be passed on through competitively-priced freight tariffs. Development of the IWT system will also help support the traditional livelihoods of the many independent and family/owned barge operators. 39. In addition, the Project has some technical features that improve adaptability to potential impacts of climate change, e.g., extremely low water levels or flooding. D. Critical risks and possible controversial aspects 40. APTD and APMO have a proven track record for implementing Bank-funded transport projects in Anhui Province. ICRs of previous transport projects implemented by APTD rated project implementation as satisfactory. APTD has also shown a robust capacity to implement a provincial transport development program. Furthermore, the proposed Project does not present more specific engineering complexities than other inland waterway or highway projects. Nonetheless, given that APPSCIG and APPSMB, the specific implementing units under APTD, have not implemented Bank-funded projects, several risks were identified. Most of these risks can be reduced to low by taking appropriate mitigation measures. The following table shows the various risks associated with the project and the proposed mitigation measures. The overall project risk is low. Risk Rating Risk Mitigation with Mitigation • Enhance engineering designs based on sufficient geotechnical and hydrological investigations, with appropriate internal review process and Large number of the Bank team‟s spot review on critical design elements. variations/changes • Tailor bid packages to the capacity of potential contractors, and ensure to design and qualified and capable contractors are selected. work quantities L • Establish a practical internal mechanism for reviewing and clearing during variations. construction. • Bank supervision will review variations and provide training as needed

to ensure that variations are handled in accordance with contracts and Bank procurement guidelines. Inadequate • Ensure qualified and experienced staff are assigned to the implementing capacity of units and are retained. implementing • Provide training on Bank procedures and construction management to L units. strengthen implementation capacity. • Encourage cross-fertilization learning with inland waterway agencies in other provinces. Delay in • Ensure that the procurement plan allows reasonable time for processing processing procurement. M procurement. • Provide training on Bank procurement policies/procedures. • Hire tendering agent for ICB procurement. Deficient • Deploy independent external monitoring for safeguards compliance. L definition and • Assess safeguards-related risks and develop relevant management plans

8 application of and mitigation measures during project preparation. social and • Involve Bank environmental and social safeguards specialists in project environmental supervision to monitor safeguards implementation. safeguards. Bank loan is not • Each Bank loan disbursement will be reviewed by APFD, whose control used for the and management of Bank loan proceeds will further strengthen fiduciary purposes assurance. intended. • A financial management manual, acceptable to the Bank, will be adopted before implementation. L • Financial transactions will be audited annually by an auditor acceptable to the Bank. • Bank financial management specialist will review the financial management system, and will provide training and guidance on financial management. Deficiency or • Obtain a copy of the commitment letter or agreement from the relevant unavailability of responsible government agencies confirming the provision of counterpart funds. counterpart funds. M • Obtain a copy of the Line of Credit issued by the commercial bank which intends to provide counterpart loan to the Project. Overall Risk Rating M High Risk (H) – Substantial Risk (S) – Modest Risk (M) – Low Risk (L)

E. Loan/credit conditions and covenants Effectiveness conditions: • No non-standard conditions. Covenants: • Standard convenants relating to procurement, financial management and safeguards.

IV. APPRAISAL SUMMARY

A. Economic and financial analyses 41. Economic Analysis. A cost-benefit analysis was employed to examine the economic viability of the Project. The economic internal rate of return (EIRR) of the Project is 14.58%. Sensitivity analysis (assuming 20% increase in costs and 20% decrease in economic benefits) shows that the economic return is still favorable with an EIRR of 11.05% under the combined conservative assumptions. 42. Financial Analysis. Financial analysis was carried out to assess the fiscal sustainability and debt repayment capacity of Anhui Provincial Government. Counterpart funds required during the construction period are estimated to be, at their peak, only 0.124% of provincial financial revenues in 2012. The estimated ratio of loan repayment versus total provincial financial revenues would be the highest at 0.005% in the first year of loan repayment and lower during the rest of the loan repayment period. Anhui Province‟s financial capacity to provide counterpart funds and repay the debt is satisfactory. B. Technical 43. The Shaying River is one of the key navigable waterways in the national NIWPP2020 as well as in the Anhui Inland Waterway Transport Development Plan (2005-2020). The

9 engineering design is based on reliable and adequate information obtained through detailed geological and hydrological investigations, as well as consultations with the stakeholders of the Shaying River. During the feasibility study and preliminary design phases, a number of alternatives were analyzed and design optimizations were carried out. These efforts will effectively limit unforeseen changes which might otherwise cause large variations during construction. A realistic construction schedule has been specified in the tendering documents, based on up-to-date information. C. Fiduciary 44. Financial Management. The adequacy of the project financial management system was assessed based on guidelines issued by the Financial Management Sector Board (FMSB) on March 1, 2010. The assessment concludes that the Project meets the minimum Bank financial management requirements, as stipulated in OP/BP10.02. The Project will maintain adequate financial management arrangements acceptable to the Bank, and as part of the overall arrangements that the Borrower has in place for implementing the operation, provide reasonable assurance that the proceeds of the loan will be used for the purposes for which the loan was granted. The financial management risk is the risk that World Bank loan proceeds will not be used for the purposes intended and is a combination of country, sector and project specific risk factors. Taking into account the risk mitigation measures proposed under the Project, a “Low” financial management risk rating was assigned to the Project at appraisal. 45. Procurement. The key procurement issue and risk for the Project is delay in processing procurement. Mitigation measures include: (a) a realistic procurement plan that allows reasonable time for processing procurement; (b) training to APMO staff on Bank procurement policies/procedures; and (c) hiring a tendering agent for ICB and NCB procurement. The overall procurement risk is moderate. In addition to the prior review supervision to be carried out from Bank offices, the capacity assessment has recommended one mission (including special procurement supervision for post review/audits) every 12 months. D. Social 46. The Project triggers the Bank policy OP 4.12. A resettlement plan (RP), including a resettlement policy framework (RPF), has been prepared. A plan for land improvement for dredged sediment disposal has also been prepared to save farmland for local communities. This plan will change1,607 mu (107.1 ha) wasteland into farmland, and improve 3,080 mu (205.3 ha) of farmland. 47. A number of mitigation measures were considered to reduce land acquisition and house demolition during the planning and design of the Project. The main resettlement impacts involve: 1,658mu (111 ha) of permanent land acquisition; 9,874mu (658 ha) of temporary land acquisition; and relocation of 364 households involving1,489 people. In addition, 34 disposal sites for dredged sediment will involve temporary land use which affect 2,891 households (10,316 people). In total 3,679 households (13,456 people) will be affected by resettlement. 48. Based on consultation with the affected persons and other stakeholders, the draft RP recorded the detailed impacts, explored restoration measures (including compensation and assistance), determined the institutional and financial arrangements, and designed monitoring mechanisms. The key issues cover restoration of temporarily used land, social security assurance for the resettlers, and house rebuilding, which will be given special attention.

10 49. The RP is compliant with Bank requirements and has been endorsed by APMO and the Bank. The final RP was placed in county project offices and the Bank‟s Infoshop for public disclosure, along with an announcement in the local newspapers. The RP will be implemented under the overall coordination of APMO. E. Environment 50. The Project has been rated Category A for environmental purpose. The final EA documents were submitted to the Bank in April 2010 and further updated in September 2010, and include (i) the EIA report, (ii) the Environmental Management Plan (EMP), and (iii) the EA Executive Summary. 51. The Project is anticipated to have beneficial impacts related to increased mobility and river assimilation capacity, and the promotion of economic development in the project region. The major environmental concerns include water quality deterioration caused by dredging activity and silt disposal, and other impacts and disturbance caused by construction activities; and water pollution, waste and safety control during operation. These environmental concerns have been adequately addressed during EA preparation, and necessary mitigation measures have been included in the EMP. The EMP specifies the environmental management organization and responsibilities, mitigation measures, capacity building plan, monitoring plan, and budget estimates for EMP implementation. APTD and APPSCIG are committed to ensure that the contractors implement the relevant obligations stipulated in the EMP. 52. Two rounds of public consultation were carried out in accordance with Chinese EIA regulations and the Bank‟s OP 4.01, by individual interviews, public meetings and questionnaire surveys. Feedback from the public has been incorporated into the EIA/EMP reports and the project design. The summary of the draft EIA report was disclosed on the Fuyang Municipal Maritime Bureau website, with an announcement of such disclosure in the Yingzhou Evening Newspaper on May 15, 2008. The final full EIA was disclosed in local maritime bureaus, with announcement of such disclosure on websites and Fuyang Daily Newspaper. The final EIA, EMP and RAP were also sent formally to the Bank‟s Infoshop in Washington DC, and the Public Information Center in the Bank‟s Beijing Office. F. Safeguard policies

Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OP/BP 4.01) [√] [ ] Natural Habitats (OP/BP 4.04) [√] [ ] Pest Management (OP 4.09) [ ] [√ ] Indigenous Peoples (OP/BP 4.10) [ ] [√] Physical Cultural Resources (OP/BP 4.11) [ ] [√] Involuntary Resettlement (OP/BP 4.12) [√] [ ] Forests (OP/BP 4.36) [ ] [√] Safety of Dams (OP/BP 4.37) [ ] [√] Projects on International Waterways (OP/BP 7.50) [ ] [√] Projects in Disputed Areas (OP/BP 7.60)* [ ] [√]

* By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties' claims on the disputed areas.

11

G. Policy exceptions and readiness 53. The Project entails no policy exceptions. The Project meets regional criteria of readiness for implementation.

12 Annex 1: Country and Sector or Program Background CHINA: Anhui Shaying River Channel Improvement Project

Inland Waterway Transport Development in China 1. Overview. China‟s inland waterway transport (IWT) network is the world‟s largest, in terms of length and freight tonnage. China has 123,000 km of navigable waterways, of which 61,000 km are officially classified for commercial navigation purposes. Most of the commercial waterways are well positioned to link the prosperous eastern coastal regions, which have increasing demand for raw materials, with the resource-rich but less-developed inland and western regions. This mutually beneficial connection helps to achieve the nation‟s central and western development strategies. 2. China‟s IWT industry already handles about the same volume of freight tonnes as the USA and the EU waterways combined. Accelerated economic growth in China is generating a greater demand for the transport of coal, construction materials and other bulk materials and goods. Accordingly, IWT has been increasing rapidly in recent years with an annual average growth rate of 8.8 percent in tonnes during the period 2000-2008 (and 13.1 percent p.a. in tonne- kms). 3. Despite the fast growth in the past, IWT in China is still under-developed compared with other transport modes. Its share in the total freight of all transport modes was only 3.8 percent in tonne-kms in 2008. Obviously, the waterway option does not exist in all transport corridors. Where the option is available, IWT modal share is much higher. For example, along the Yangtze River corridor itself, IWT carries more than 90 percent of all the east-west bulk cargo. 4. Currently, the main constraint for IWT is weak infrastructure. A high proportion of the classified waterways have poor navigation infrastructure, which limits navigation capacity generally, but more particularly restricts the ability to reliably handle larger vessels that can deliver much lower unit costs of transport than smaller vessels. Investment in IWT infrastructure is therefore critical to realize the mode‟s major development potential. 5. Development plan. The Government of China (GOC), recognizing the higher energy efficiency, lower greenhouse gas emissions, and lower use of scarce land resources associated with IWT, plans to increase the contribution of IWT to meet China‟s transport needs. GOC, through the improvement of IWT, seeks to spread the benefits of development from the richer coastal belt to the poorer central and western areas. In 2007, China adopted the National Inland Waterways and Ports Plan to 2020 (NIWPP2020) that aims to develop a „high-class‟ waterway network (Class IV to Class I) of around 19,100 km (from the current 15,000 km). This waterway network will extend to twenty provinces and serve a catchment area that contains approximately a quarter of China‟s population. An analysis carried out for NIWPP2020 estimates that total cargo traffic by IWT in China will increase from 1.16 billion tonnes in 2006 to 1.6 billion tonnes in 2010, and to 2.35 billion tonnes in 2020. 6. Institutions and policies. China has a tripartite system of IWT management. The Ministry of Transport (MOT) is responsible for policies and regulations of the IWT sector, as well as planning of the nationally important waterway systems. Delivery of IWT infrastructure and enforcement of regulations on the two most important sub-systems, the Yangtze and the Pearl Rivers, are delegated to two specialized river administrations that are responsible to MOT.

13 Provincial governments are responsible for other parts of the national and provincial networks, which are administered through provincial navigation administrations such as that of the Anhui Provincial Transport Department (APTD). This delegated and decentralized structure is a result of earlier reforms in the transport sector. 7. China operates a policy of cabotage in IWT (like the USA), but is trying to encourage international investment and participation in inland ports and logistics industries. China‟s IWT shipping sector has a high rate of private participation and a low industry concentration. IWT transport services operate largely in a competitive market. The average vessel size is relatively small by international standards, but MOT has implemented policy measures to encourage larger and standardized vessels. In general, IWT infrastructure standards and markets remain very varied and the fleet is accordingly very disparate in its characteristics. 8. China‟s port reforms since the 1980s have seen a major decentralization, corporatization and commercialization of the ports function, including those ports serving IWT. There remains a high degree of public ownership of common user IWT ports at lower levels of governments (as in the USA and the EU) but China is making good progress toward implementing the international practice of leasing out stevedoring operations to private operators.

Inland Waterway Transport Development in Anhui Province 9. Overview. Anhui Province, with a population of about 65 million and land area of 139,600 square kilometers, is a land-locked province in central China. Its per capita GDP ranks it one of the poorest provinces in China. Anhui is one of the six economically under-developed central provinces supported by GOC‟s “Rise of Central China” initiative. Transport is one of the priorities in the provincial development strategy. Over the past decade, the growth of IWT has lagged behind road and rail transport in Anhui, though it has a good natural river network. The Province has now decided to pursue a more balanced transport strategy that gives more prominence to IWT, which can supplement road and rail transport by providing competitive services for bulk and low-value cargo. 10. Anhui is rich in water resources with many rivers running through it, which contribute to three big water systems: the Yangtze River, the Huai River, and the Xin‟an River systems. The total length of inland waterway network in Anhui is over 6,500 km, with around 1,100 km of higher class waterways (Class IV and above), which is the seventh longest provincial network in China. There are 17 main ports within Anhui, in addition to thousands of small local wharves and jetties. 11. The local shipping industry is primarily privately owned and is highly competitive. In 2009 there were about 30,000 freight vessels registered in Anhui Province. The aggregate fleet capacity has grown continuously since 1990 from about 2 million dwt to 14.47 million dwt and the average vessel size has increased from 58 dwt to 474 dwt. The fleet consists mainly of motorized barges but also contains significant numbers of „dumb‟ barges that are moved in convoy by a motorized barge or tug. 12. Buoyed by favorable policies of MOT and the Province, the shipping industry is modernizing and standardizing vessels in order to provide lower cost services with larger barges and market these to industrial customers. Experience of previous Bank-funded inland waterway projects shows that the shipping industry responds rapidly and positively to improvements in

14 capacity of waterway infrastructure. Competition between barging operators ensures that productivity improvements in the IWT system get passed through to industrial customers. 13. Development plan. The Anhui Provincial Government has established ambitious targets for IWT development in theAnhui Inland Waterway Transport Development Plan (2005-2020). The Plan aims to increase the total IWT freight volume in Anhui to 395 million tonnes and total tonne-kms to 158 billion by 2020 from the respective 98 million tonnes and 45 billion tonne-kms in 2007, through a total investment of RMB25 billion. To achieve the targets, the Plan divides navigable inland waterways in Anhui into three levels of importance, namely national high class, regional, and local. A “Two-Trunk and Three-Branch” waterway network of national high class commercial waterways in the Province has been laid out. (See Map 37400 in Annex 15.) The Shaying River, which is one of the three branches, is planned to be upgraded to Class IV for year-round navigation of 500 dwt vessels. 14. Apart from physical components, the Plan also contains specific measures to improve ports, build administrative capacity in the sector, raise training and skill standards in the industry, improve navigation aids, introduce River Information Systems (RIS), improve the safety and environmental performance of the barging industry, and upgrade ways and regulations for handling hazardous cargoes, including emergency procedures to deal with spills. Inland Waterway Transport on Shaying River 15. Overview. The Shaying River is the largest tributary of the Huai River in central China. It originates from the Funiu Mountain in Henan Province and converges with the Huai River at Mohekou in Anhui Province. The total length of the River is 620 km, of which 206 km flows through Anhui Province. The total area of the Shaying River basin is 36,651 square kilometers, covering most of Fuyang City in Anhui Province, and parts of City, City, and Pingdingshan City in Henan Province. The hinterland of Shaying River has a population of 40 million, i.e., 24 percent of the total population of Anhui and Henan Provinces. 16. The River‟s hinterland has extensive reserves of coal and other minerals and is also a major producer of farming products, cement and fertilizers. The Shaying River provides a continuous waterway link to the prosperous and fast growing industrial Yangtze Delta area via the Huai River and the Grand Canal. Given the increasing demand for transport in the river basin and the cost-effectiveness of waterway transport, particularly for coal, building materials, chemicals and grains, waterway traffic on the Shaying River has grown at an annual average of 10.6 percent in the period 1995-2008, reaching 5.26 million tonnes by 2008. 17. Navigation conditions. The Shaying River has a long history of navigation. It used to be part of the famous man-made “Hong Gou” Canal, China‟s earliest man-made canal linking the and the Huai River, which began to be constructed in 361 BC during the Warring States Period, and had been used for almost 1,000 years. In late 1950s the main channel of the Shaying River had about 460 km open to waterway traffic, with about 2.21 million tonnes of cargo per year. In the 1960s the Government constructed regulating sluices for flood control at several locations in Fuyang City, which blocked through navigation along the River. In the 1980s the man-made Cihuaixin River was excavated and commissioned as a diversionary route to the Huai River for the waterway traffic upstream of Fuyang downtown to avoid blockage by sluices.

15 18. The river section upstream of Fuyang has a mixture of standards and generally only permits navigation of 300 dwt vessels at low water season. As the primary purposes of Cihuaixin River are irrigation and the supply of drinking water, waterway traffic on Cihuaixin River often suffers from low water levels when the water is needed for the primary purposes. Traffic is further impeded by four small-sized locks on Cihuaixin River which become congested during busy periods. The Cihuaixin route has almost reached its capacity, and due to its primary water resources functions, cannot be upgraded. Further growth of traffic in the upper Shaying River is severely constrained by the low capacity of navigation infrastructure. 19. The traffic capacity of the Shaying River is at a plateau, and without a solution to the constraints described, can not play a more significant role in the continuing economic development of its hinterland. As noted, both national and provincial governments are committed to improving the transport capacity of the River by eliminating the infrastructure constraints. Anhui and Henan provinces have been working together with the support of MOT to re-open the Shaying River route and raise its navigation standards. In the past three years Anhui Province has built two new large locks (the Genglou upstream of Fuyang and the Yingshang downstream of Fuyang) that allow larger vessels to pass through the existing sluice dams. The third lock at Fuyang is currently under construction with domestic funds, and when completed, will finally re-open the River for through navigation. By then the waterway traffic downstream of Fuyang will be diverted back to the Shaying River from the current Cihuaixin route. Alongside the through navigation, the river channel is to be improved to attain Class IV standard according to the national and provincial inland waterway plans. This river channel improvement is the physical component of the proposed Bank-funded Project. 20. Ports. Along the Shaying River section in Anhui there are four main port areas which are (from north to south) located in Jieshou City, Taihe County, Fuyang City, and Yingshang County. These ports collectively have about a total of 6 km long wharves, including 56 berths, which can handle 100-300 dwt vessels. 21. The longer wharves, when dredged, are already capable of handling vessels up to 500 dwt. There is no early constraint of port capacity anticipated when the river channel is improved. However, over the years, attainment of the traffic projections will require progressive investment in port capacity. According to the present Fuyang Ports Plan, there will be 52 new berths with capacity of 500 dwt to be delivered progressively over the next fifteen years, which will be sufficient to handle the traffic volumes projected. Other Transport Modes along the Corridor 22. Other line haul freight transport modes in the region include high standard expressway and railway lines serving all the major cities in the catchment areas, including Fuyang in Anhui Province, and Pingdingshan, Luohe and Zhoukou in Henan Province. 23. Rail transport is a more expensive alternative to shippers for bulk goods in large consignment sizes. Moreover, the local trunk railway lines, like many in China, are already congested. Stakeholder consultations carried out during project identification suggested that coal sent directly to the Yangtze Delta markets by rail costs more than double the expected cost in an unencumbered IWT service. 24. Road transport is not only substantially more expensive for transport of large consignments of bulk goods (up to 4-5 times as much in some circumstances) but also very

16 costly in terms of the social and environmental costs of traffic accidents and greenhouse gas emissions. IWT can supplement road and rail transport by providing competitive services to bulk and low value cargos at lower environmental costs. 25. Of course, for each commodity there will be a range of customers with different logistics needs, different proximities to rail or river, different origin-destination flows, and different abilities to benefit from backloads, all of which impact on costs. At one extreme, it is likely that most coal mined close to the River and virtually all sand and gravel (the two largest predicted traffics) will use IWT. At the other end of the market, only a very small proportion of consumer goods would be attracted to IWT. In between, the relative advantages of one mode over another will differ in each segment. Generally, IWT will be preferred for consignments which are: (a) large enough to justify regular use of large barges; (b) shipped to/from sources closest to the river; (c) neither perishable nor particularly time sensitive; and (d) most sensitive to transport costs (because of relatively low value). Containerized cargo has traditionally faced strong competition from road transport and will increasingly face competition from rail transport as the railway sector improves rail container services. However, Fuyang City intends to improve its container handling facilities to try to attract at least a small part of this market.

17 Annex 2: Major Related Projects Financed by the Bank and/or other Agencies CHINA: Anhui Shaying River Channel Improvement Project

Latest Supervision Sector Issue Projects (PSR) Ratings1 Implementation Development Bank-financed Progress (IP) Objective (DO) • Remove transport bottlenecks by First Inland Waterway S S improving IWT facilities (completed) Second Inland Waterway S S (completed) • Remove transport bottlenecks by Third Inland Waterway improving IWT facilities (completed) S S • Construct power-generating Fourth Inland Waterway facilities as part of integrated (on-going) S S powerhouse/ship lock complex Fifth Inland Waterway (on- S S going) Jiangxi Shihutang Navigation and S S Hydropower Complex Project (on-going) • Develop inter-modal Container Transport transportation serving inland (completed) S S provinces • Remove highway capacity First Jiangxi Highway bottlenecks (completed) S S • Institutional strengthening and Second Jiangxi Highway training (completed) S S • Rural roads and poverty alleviation Third Jiangxi Highway (on- S S • Highway safety going) • Operation and maintenance of Hubei Xiaogan-Xiangfan high-grade highways Highway (completed) S S • Cost recovery Hubei Shiman Highway S S (on-going) • Improve access to irrigation, Jiangxi Integrated drainage and market Agricultural S MS Modernization (on-going) • Promotion of competitive power Ertan Hydroelectric market among independent power (completed) S S producers • Corporate restructuring for small Hubei Hydropower hydro generators in poor areas Development in Poor S S Areas (on-going) Notes: 1. The IP/DO Ratings are: HS (Highly Satisfactory), S (Satisfactory), MS (moderately satisfactory), U (Unsatisfactory), MU (Moderately Unsatisfactory), HU (Highly Unsatisfactory).

18 Annex 3: Results Framework and Monitoring CHINA: Anhui Shaying River Channel Improvement Project

Results Framework

Use of Project Outcome PDO Project Outcome Indicators Information

To contribute to the increased • Utilization of the capacity created Assess the efficacy and benefits of cargo throughput of the Shaying measured by aggregate traffic Project interventions. River in Anhui Province through volumes. infrastructure improvements and • Greater efficiency of vessels capacity building. measured by increase in vessels of 500 dwt and above.

Intermediate Outcome Use of Intermediate Intermediate Outcomes Indicators Outcome Monitoring

Physical Components

• Construction of navigation • Attainment of capacity in the Monitor implementation progress infrastructure and facilities on improved river sections to handle of physical components. Shaying River. 500 dwt vessels all year. • Reconstruction and Relocation of • Length of river channel equipped Existing Infrastructure and with navigation aids. Facilities. • Attainment of required bridge clearances.

TA Component

TA studies and capacity building • Adoption of the recommendations Monitor the application of outputs activities, including training and of technical studies. of the TA studies. study tours. • Number of trainees who attend the Monitor implementation status and training and study tours. effects of the training program.

19 Arrangements for results monitoring

Target Values Data Collection and Reporting Baseline Data Collection Responsibility for Data Project Outcome Indicators 2011 2012 2013 2014 2015 Frequency and Reports 2009 Instruments Collection

Aggregate volume of cargo passing through three verifiable measurement points on the Shaying River (million tonnes/year): • Genglou Lock 1.00 1.84 2.10 2.40 2.70 3.00 Annually reported in Lock throughput • Fuyang Lock 0.00 0.00 0.20 0.38 0.72 1.37 Project Progress records and statistics Reports. • Yingshang Lock 0.172 0.88 1.20 1.65 2.25 3.07 APMO/APPSCIG

Percentage of 500 (dwt) and above vessels among total vessels passing: • Genglou Lock 15% 17% 19% 21% 23% 25% Lock throughput • Fuyang Lock - - 24% 26% 28% 30% records and statistics • Yingshang Lock 20% 22% 24% 26% 28% 30%

Intermediate Outcome Indicators I. Physical Component

Navigation infrastructure • Length of Class IV 0 0 0 45 150 205.6 channel upgraded (km)

Navigation aids Annually reported in Measuring and • Installation of modern 0 0 0 0 0 205.6 Project Progress inspection of APMO/APPSCIG comprehensive navigation Reports construction progress. aids system (km)

Bridge reconstruction • Attainment of required 0 0 0 1 2 4 clearances (no. of bridges) II. Institutional Development

TA Studies Annually reported in Submission of the final APMO/APPSMB/ • Development of time- - Done Project Progress TA reports and the APPSCIG

20 bound implementation plan Reports time-bound based on outputs of the TA implementation plan. study on Water Transport Management and Emergency Service System • Application of the - Done integrated lock management system Training Programs Monitoring the • Number of trainees who - 130 140 140 140 - implementation attend the training and progress of training study tours (Person-Month) programs.

21 Annex 4: Detailed Project Description CHINA: Anhui Shaying River Channel Improvement Project

1. Navigation status and development plan of Shaying River. The Shaying River is one of the key navigation waterways in the national NIWPP2020 as well as in the Anhui Inland Waterway Transport Development Plan (2005-2020). According to these plans, the section of Shaying River from Luohe in Henan Province to Mohekou in Anhui Province will be upgraded to Class IV navigation standard. MOT has a standardized national classification for navigational river channels, which is described in the National Standard of Inland Waterways, and shown in Table 4-1. The total length of this channel section is 378 km, of which 172 km flows in Henan and 206 km in Anhui. This 378 km channel can be divided into several sub-sections based on the current navigation status, as shown in Table 4-2.

Table 4-1: Standard Classification for Navigational Channel Channel Grade I II III IV V VI VII Ship Tonnage (dwt) 3,000 2,000 1,000 500 300 100 50 Water Depth (m) 3.5-4.0 2.6-3.0 2.0-2.4 1.6-1.9 1.3-1.6 1.0-1.2 0.7-0.9

Table 4-2: Sub-sections of Shaying River to be upgraded No. Section Current Status and Plan In Henan province - Status: Not navigable a. Luohe – Zhoukou (84 km) - Plan: To be upgraded to Class IV in 2013 Zhoukou – Changshenggou - Status: Already upgraded to Class V in 2005 b. (Provincial border) (88 km) - Plan: To be upgraded to Class IV in 2013 In Anhui province - Status: Class IV in dry season, but degrades to Class VI Changshenggou – Genglou Lock in flood season due to bridges impeding navigation c. (26.8km) - Plan: To be upgraded to Class IV in 2015 by completion of this Project - Status: Class V channel Genglou Lock – Fuyang Lock d. - Plan: To be upgraded to Class IV in 2015 by completion (53.7 km) of this Project - Status: Class VI channel Fuyang Lock – Yingshang Lock e. - Plan: To be upgraded to Class IV in 2015 by completion (79km) of this Project - Status: Class V channel Yingshang Lock – Mohekou f. - Plan: To be upgraded to Class IV in 2015 by completion (46.1km) of this Project

2. There are three Class IV ship locks on the 206 km river channel in Anhui, namely Genglou, Fuyang and Yingshang locks, which are built at the locations of existing regulating sluices. Technical parameters of the three regulating sluices are shown in Table 4-3 below. The Genglou Lock and the Yingshang Lock were completed and put into operation in 2009; and construction of the Fuyang Lock began in June 2009 and it is expected to be operational by the end of 2011. Operation of these three ship locks will alleviate the constraints of regulating sluices on through navigation. In addition to the operation of the three newly built ship locks, the Project will

22 upgrade the Shaying River channel to Class IV, and reconstruct four bridges that hinder navigation so that the planned 378 km Shaying River channel will be navigable throughout.

Table 4-3: Technical parameters of three existing regulating sluices

Regulating Sluices Genglou Fuyang Yingshang Year of Completion 2009 1959 1981 Scale of sluices 12×7.5m 12×12m 24×5m Top elevation of base slab (m) 21.0 20.4 19.0 Normal water level (m) 33.5 28.9 23.9

Design flood level Upstream 37.02 33.10 28.64 (m) Downstream 36.77 32.65 28.33

Highest navigable Upstream 35.86 31.40 27.13 water level (m) Downstream 35.66 31.10 27.05 Lowest navigable Upstream 28.00 24.35 19.13 water level (m) Downstream 24.50 20.20 17.00

3. Hydrology and sediment discharge of Shaying River. The Shaying River basin lies in the warm-temperate, semi-humid monsoon climate zone, where winter and spring are dry while summer is hot and rainy. Heavy rains mostly concentrate in the flood season from June to August, and usually reach a peak in July. Floods are caused mainly by rainstorms. The average annual precipitation in Shaying River basin is 800 mm, and precipitation in flood season accounts for about 60 percent of the total. 4. The main source of river sediment is the basin upstream of Zhoukou. As the downstream river section widens, the water flow slows down and most of the sediment gradually deposits. Therefore, in the 200 km section from Zhoukou to Yingshang Lock, sediment concentration becomes much lighter. 5. Engineering geology. The project area is located in the plain to the northwest of the Huai River, with general ground elevation ranging from 25 m to 35 m. The main strata exposed in the region belong to the Quaternary Period. The distribution of strata shows a feature of duality, that is, commonly exposed strata in the region are Q3 sediment layers consisting of silty clay, silty loam, sandy loam and sand, while both sides of the River expose Q4 sediment layers that consist of sandy loam and silty loam. 6. The Dongshan Overthrust Fault and Yingshang Fracture Zone go underneath the project area, but no geotectonic movement is foreseen, and the regional tectonic structure will remain stable. The project area belongs to the Henan-Anhui seismotectonic zone, with seismic activity of low intensity and low frequency. According to “ Seismic Ground Motion Parameter Zonation Map of China” (1: 4 million, GB18306-2001), the basic seismic intensity of the project area is six degrees, except for the 30 km section from Cihepu to Luqiaogou in Fuyang, where the basic seismic intensity is seven degrees. 7. Physical channel condition and engineering solutions. The Shaying River channel is curving, and the cross-section is basically “U” shaped, with the width ranging from 100 to 200 meters, and depth from 8 to 12 meters. Quay is relatively steep, and the side bank is well-

23 developed. With cascade regulating sluices and dikes being built, and river banks being regulated and improved, the Shaying River section in Anhui has evolved from a natural river to a channelized river, with a controlled river regime and a stable profile. The major factors that hinder navigation are deficient bending radius at several locations and deficient water depth at shoals during dry seasons. 8. Major engineering solutions in the Project include dredging in the main channel, bend cut- off or bank cusp-cutting. Protections are provided to narrow and deep banks adjacent to the channel. The central line of the channel follows the existing thalweg and keeps the original shape of the River by smooth connecting the straight lines and arches. At places where the river width is not sufficient or the bending radius is not enough, engineering measures such as bank cusp-cutting and dredging are used. 9. Hindering bridges and engineering solutions. There are 18 bridges over the Shaying River section in Anhui. The feasibility study and preliminary design conducted detailed investigations and analysis on the condition of each bridge that hinders navigation, and provided engineering solutions accordingly. The clearance of 9 bridges meets the navigation standard of Class IV; 5 bridges with clearance that already meets the standard of Class V will be kept, because they only occasionally constrain navigation, in which case necessary reinforcing and anti-collision works will be provided to the navigable bridge openings and navigation will be controlled; the remaining 4 bridges which severely constrain navigation will be reconstructed, including the Yumin Bridge and the Shaying River Bridge (on the old S204) in Jieshou City, and the Ying River Bridges #1 and #2 in Taihe County. 10. In addition, there are a number of power cables and communication lines hanging cross the Shaying River, which will be elevated or relocated during the construction period. 11. Alternative analysis and design optimization. The engineering design seeks to achieve a harmony between the human and natural environments, and takes advantage of existing infrastructure on Shaying River to avoid replication and degradation. The feasibility study and preliminary design analyzed a number of alternatives and design optimizations, which include:  To solve the problem of insufficient bending radius, two alternative solutions were proposed, i.e., bend cut-off and bank cusp-cutting. The bank cusp-cutting method has been chosen to reduce disturbance to the current riverbed and to save cost.  The designed navigable water depth has been increased from 2.5 m to 2.8 m, based on a survey of current vessel sizes and forecasts of future developments.  The navigation alignment of the Shaying River has been optimized after on-site investigation and complementary measurement, which results in the reduction of bank cusp-cutting locations from 17 to 11.  Disposal sites for dredged sediment were diligently reviewed with the following considerations: (a) choosing nearby low-lying land, shoaly land and existing borrow pits for building dikes to not only minimize use of farmland, but also generate new farmland; (b) filling ponds and strengthening the foundation of the dikes to benefit water conservation and flood protection; (c) keeping away from built-up areas to avoid pollution by mud disposal; and (d) meeting relevant technical specifications and adding greening and beautification design for the urban sections.  Design of bank protection works has been integrated with existing infrastructure for water

24 conservation and flood protection to optimize the location and scope of bank protection. Priority has been given to flexible and/or ecological revetment, covered with plants.  The hindering bridges with insufficient clearance were analyzed in detail, including the average number of days of navigation impedance and the ratio of guaranteed navigable days. Four bridges have been targeted for reconstruction, and reinforcing and anti-collision designs will be applied to exit bridges. 12. Adaptation to potential climate change. Potential impacts of climate change on the Project may include extremely low water level due to extraordinary drought and flooding due to extraordinary rainfall. Based on historical meteorological and hydrological data, including available rainfall records and statistical extremum water levels along the Shaying River for the past two decades, no extreme drought or flooding conditions were identified. Nevertheless, some technical features in the design will improve adaptability to potential climate change. The increase in navigable water depth will allow for larger vessels under normal conditions, and will provide more flexibility for the standard 500 dwt vessels when the water level is abnormally low. The Project will strengthen and extend the existing river bank protection works to make them more resistant to extraordinary floods. 13. Project components. The proposed Project will re-open and upgrade the 205.6 km long Shaying River channel between Changshenggou on the Henan-Anhui border and Mohekou at the confluence of the Shaying River with the Huai River. The Project consists of the following four main components: 14. Component A – Navigation Infrastructure and Facilities. (Total US$189.05 million, IBRD US$66.23 million). This component includes river channelization and dredging works, river bank strengthening and protection works, and provision of navigation aids and service facilities.  River channelization and dredging works. Improve the 205.6 km long river channel to Class IV standard by dredging and bank cusp-cutting, with the following key technical parameters: channel width of 50 m, minimum navigable water depth of 2.8 m, minimum bending radius of 330 m, and bank cusp-cutting at 11 locations for total earthworks of about 18.36 million m3.  River bank strengthening and protection works. Extend and strengthen the existing river bank protection, and build new bank protection works for river sections with deep and narrow channel, for a total length of about 43.87 km.  Navigation signals. Install about 213 navigation signals at key sections and locations.  Service facilities. Provide two service areas, six public anchorage areas, a communication and monitoring system, and other navigation aids. 15. Component B – Reconstruction and Relocation of Existing Infrastructure and Facilities. (Total US$71.04million, IBRD US$27.44 million). This component includes reconstruction and reinforcement of existing cross-river bridges that have insufficient clearance and relocation of other existing cross-river facilities that impede navigation.  Reconstruct four existing bridges, including the Yumin Bridge and the Shaying Bridge in Jieshou City, and Ying River Bridges #1 and #2 in Taihe County; as well as reinforcing and anti-collision works to the navigiable opening under other existing bridges.

25  Relocate or elevate existing cross-river power cables and telephone lines. 16. Component C - Erection of Waterway Transport Management Systems. (Total US$6.75 million, IBRD US$3.82 million). This component includes provision and installation of the plants and equipment which are needed for building the management systems to be developed by the two technical studies under Component D. 17. Component D – Technical Assistance. (Total US$1.74 million, IBRD US$0.78 million). This component includes technical studies and training programs that are designed to build institutional capacity of the IWT sector to enable sustainable IWT development in Anhui Province. The two technical studies are: (a) Shaying River Waterway Transport Management and Emergency Service System; and (b) Comprehensive Ship Lock Management System. 18. TA study (a) includes four main elements: (i) development of a safety monitoring and management, and fast-response emergency salvage system; (ii) integrated application of advanced IT instruments into waterway safety management; (iii) establishment of an intelligent monitoring and salvage system on waterway pollution; and (iv) capacity building for waterway public services. 19. TA study (b) aims to improve the operational capacity and passage efficiency of the ship locks for which APPSCIG is responsible, through a comprehensive IT-based lock management system, which includes tolling, real-time monitoring, operational control, asset and personnel management.

26 Annex 5: Project Costs CHINA: Anhui Shaying River Channel Improvement Project US$1=RMB6.8003 Counterpart IBRD Total Total Financing Financing Project Cost By Component and/or Activity US$ US$ US$ RMB million million million million A. Navigation Infrastructure and Facilities 122.82 66.23 189.05 1,285.62 1. Civil Works 92.60 62.24 154.84 1,052.94 2. Equipment and Goods 0.00 3.99 3.99 27.15 3. Land Acquisition and Resettlement 16.13 0.00 16.13 109.68 4. Supervision 7.60 0.00 7.60 51.67 5. Design and Consulting 3.03 0.00 3.03 20.60 6. Miscellaneous Costs 3.47 0.00 3.47 23.58 B. Reconstruction and Relocation of Existing Infrastructure and Facilities 43.60 27.44 71.04 483.11 1. Works 32.35 27.44 59.79 406.61 2. Land Acquisition and Resettlement 6.67 0.00 6.67 45.38 3. Supervision 1.31 0.00 1.31 8.90 4. Design and Consulting 2.57 0.00 2.57 17.48 5. Miscellaneous Costs 0.70 0.00 0.70 4.74 C. Erection of Waterway Management Systems 2.93 3.82 6.75 45.90 1. Erection of Waterway Transport Management and Emergency Service System 2.54 3.33 5.87 39.90 2. Erection of Comprehensive Ship Lock Management System 0.39 0.49 0.88 6.00 D. Technical Assistance (TA) 0.96 0.78 1.74 11.84 1. TA studies 0.59 0.30 0.89 6.04 - Waterway Transport Management and Emergency Service System 0.29 0.30 0.59 4.04 - Comprehensive Ship Lock Management System 0.29 0.00 0.29 2.00 2. Capacity Building 0.37 0.48 0.85 5.80 - Domestic Training and Study Tours 0.37 0.37 2.50 - Overseas Training and Study Tours 0.00 0.48 0.49 3.30 Total Baseline Cost 170.32 98.27 268.59 1,826.47 Physical & Price Contingencies 13.42 0.00 13.42 91.25 1 Total Project Costs 183.73 98.27 282.01 1,917.72 Interest during construction 7.40 1.48 8.88 60.41 Front-end Fee 0.00 0.25 0.25 1.70 Total Financing Required 191.14 100.00 291.14 1,979.83

1 Identifiable taxes and duties are US$8.06 million, and the total project cost, net of taxes, is US$273.94 million. The share of project cost net of taxes is 97.14%.

27 Annex 6: Implementation Arrangements CHINA: Anhui Shaying River Channel Improvement Project

1. Overall institutional framework. As discussed in Annex 1, China‟s governments at national and provincial levels have developed national and provincial plans for IWT development and adopted a set of policies, regulations and standards to regulate the IWT sector. In Anhui Province, the overall responsibility for development and implementation of these IWT- related regulations, policies and regulations rests with APTD, which also conforms to the general sector policies and technical guidelines issued by MOT. 2. APTD is directly responsible for investment planning and supervision of provincial-level transport networks, including waterways in Anhui Province. In particular, it is responsible for development of IWT infrastructure directly or through providing financial incentive and technical guidance. 3. APTD has over 70 permanent staff (about 50 are managerial and technical staff), and has ten divisions in its headquarters located in Hefei, the provincial capital. In addition, there are eight subordinate semi-administrative, supervision, research or investment entities with a total of over 1,000 staff under the oversight of APTD. Among them are Anhui Provincial Port and Shipping Management Bureau (APPSMB) and Anhui Provincial Port & Shipping Construction Investment Group Co. Ltd. (APPSCIG), which are directly involved in the implementation of this Project. The figure in the next page presents the detailed organization structure of APTD. 4. Under the oversight of APTD, APPSMB (also with the names of Local Waterway Transport Safety and Accident Management Bureau and Vessel Inspection Bureau) is authorized to implement regulations, policies and standards related to waterway traffic management, waterway system operation and maintenance, safety control, vessel registration, accident prevention and response, etc. 5. Established in 2006, APPSCIG is a state-owned company specialized in investment, construction management and operation of IWT infrastructure. It is solely owned by APTD. The company has over 300 employees, including over 80 professional staff, who work in six divisions in charge of construction, asset operation, financial management, human resources, etc. APPSCIG currently has 5 projects under operation, 8 projects under construction, and 5 under preparation. 6. Institutional arrangement for project implementation. APTD will take overall responsibility for the management and coordination of project implementation. APTD has a readily established Project Management Office (APMO) which was set up in 1997 and has implemented three Bank-financed highway projects in Anhui. APMO has about 30 staff working in six sub-divisions which are in charge of monitoring compliance with environmental and social safeguards policies, technical and engineering quality assurance, procurement and financial management. APMO will monitor and coordinate project implementation, handle the procurement and process disbursement, and implement the training programs under the Project. It will act as the key counterpart contact with the Bank task team.

28 Retired Cadre Administration

Discipline Inspection Supervision

Party Committee of the Org. APTD Foreign Capital Utilization Transport Administration Division Office, Anhui PCD Communication Guarantee Provincial Port & Shipping

Division Management Bureau

Infrastructure Construction Provincial Port & Shipping Division Construction Investment Group Co. Ltd. Personnel & Education Division Provincial Highway Bureau Financial Division Provincial Transportation Quality

Comprehensive Planning Division Control Station Provincial Transportation Anhui Provincial Government Provincial Anhui General Office Vocational & Technical Institute Policy & Regulation Division Provincial Transportation Research Institute Technology Division Provincial Transportation Administrations Bureau Safety Supervision Division Municipal Municipal Communications Governments Bureau

7. APPSCIG, under the supervision and coordination of APTD, will be the implementing unit for the physical infrastructure and facilities component under the Project, and the TA program on comprehensive ship lock management system. With over 80 professional staff and requisite past experience, APPSCIG has the necessary capacity for implementing the Project. APPSCIG has established a project implementation office to manage project construction. 8. APPSMB will manage the TA program to develop the Shaying River waterway transport management and emergency service system. APPSMB will be responsible for the administration and maintenance of the river channel along the Shaying River upon completion. These mandates underpin its ownership and accountability for the TA program for which it is responsible, and the regular budget allocation can ensure its role for administration and maintenance of the completed river channels. 9. Fuyang City government will play a role in assisting APTD in land acquisition and resettlement related to this Project and will co-finance the reconstruction of the four cross-river bridges. 10. Institutional coordination. The Project is located in Fuyang City. Effective coordination and cooperation between APTD and the government of Fuyang City will be important for smooth implementation of the Project. APTD and Fuyang Government have reached a framework agreement stipulating their respective roles and responsibilities for land acquisition and resettlement, as well as counterpart fund contributions for, and the reconstruction of the four existing bridges. Detailed agreements on cost-sharing and availability of funds contributed by Jieshou and Taihe Counties of Fuyang will be signed between APPSCIG and the two project

29 counties during implementation. Fuyang Government has designated its Municipal Transport Bureau to coordinate with APPSCIG for land acquisition and resettlement.

30 Annex 7: Financial Management and Disbursement Arrangements CHINA: Anhui Shaying River Channel Improvement Project

1. Introduction. The Financial Management Specialist (FMS) has conducted an assessment of the adequacy of the project financial management system of the Project. The assessment, based on guidelines issued by the Financial Management Sector Board (FMSB) on March 1, 2010, has concluded that the Project meets the minimum Bank financial management requirements, as stipulated in OP/BP 10.02. In the FMS‟ opinion, the Project will maintain adequate financial management arrangements acceptable to the Bank, and as part of the overall arrangements that the Borrower has in place for implementing the operation, provide reasonable assurance that the proceeds of the loan will be used for the purposes for which the loan was granted. Financial management risk is the risk that World Bank loan proceeds may not be used for the purposes intended and is a combination of country, sector and project specific risk factors. Taking into account the risk mitigation measures proposed under the Project, a “Low” financial management risk rating was assigned to the Project at appraisal. 2. Funding sources for the Project will include the Bank loan and counterpart funds. Bank loan proceeds will flow from the Bank into a project designated account (DA) to be set up at and managed by Anhui Provincial Finance Department (APFD). The Bank loan will then be disbursed to APMO, and finally to APPSCIG, based on withdrawal applications. The Bank Loan Agreement will be signed between the Bank and the People‟s Republic of China, through its Ministry of Finance (MOF). On-lending agreements will be signed between MOF and Anhui provincial government. APFD will represent Anhui provincial government to further on-lend the Bank loan to APTD. Counterpart funds will comprise subsidies from MOT and APTD, local government contributions and domestic loans. 3. No outstanding audits or audit issues exist with any of the implementing units involved in the proposed Project. 4. Country issues. To date, no Country Financial Accountability Assessment (CFAA) has been carried out by the Bank for China. Our knowledge of the system is however fairly comprehensive, thanks to several studies carried out by the Government, the Bank and others.4 Based on the studies and materials produced, our observations of development in the areas of public expenditures, accounting and auditing, and Bank experience in China projects for the past several years, we noted that substantial progress has been made in the aforementioned areas and further improvement is expected in the next few years. The Government of China (GOC) realizes the importance of establishing and maintaining an efficient and effective market mechanism to ensure transparency and accountability, and minimize potential for fraud or corruption. 5. Due to the rather unique arrangement by GOC, funding of Bank projects is controlled and monitored by MOF and its extension at sub-national levels (i.e., finance departments/bureaus at provincial, municipal/prefecture and county levels). However, project activities are usually carried out by implementing entities of a specific industry or sector due to the level and

4 Financial Management and Governance Issues in China (ADB 2000), Public Sector Management Issues in China (Christine Wong 2005), Government Budgeting and Accounting Reforms in China (Lou Jiwei 2001), and China ROSC A&A review (World Bank 2009).

31 complexity of expertise involved. While this segregation of duties provides added fiduciary assurance, the above arrangement then usually requires more coordination on projects, as the multi-level management of the funding and implementation mechanism sometimes works to the detriment of smooth project implementation. 6. Summary of project description. The estimated total cost of the proposed project is US$291.14 million. Proposed Bank loan is US$100 million. See Annex 4 for the detailed project description. 7. Audit arrangements. The Bank requires that project financial statements be audited in accordance with standards acceptable to the Bank. In line with other Bank-financed projects in China, the Project will be audited in accordance with International Auditing Standards and the Government Auditing Standards of the People's Republic of China. Anhui Provincial Audit Office (APAO) has been identified as the auditor for the Project. Annual audit reports will be issued by APAO. The Bank currently accepts audit reports issued by China National Audit Office (CNAO) or provincial/regional audit bureaus/offices for which CNAO is ultimately responsible. 8. The annual audit report of project financial statements will be due to the Bank within 6 months after the end of each calendar year. This requirement is stipulated in the loan agreement. The responsible agency and timing is summarized as follows: Audit Report Submitted by Due date Project financial statements APMO June 30 of each calendar year 9. Risk assessment and mitigation. The following risks, with corresponding mitigating measures, have been identified during the assessment. Risk Risk Conditions of Rating before Incorporated Risk Rating after Negotiations, Risk Mitigating Mitigating Measures Mitigating Board or Measures Measures Effectiveness Inherent Risk Country level Modest Continuous dialogue with related Modest No government entities and technical assistance from the Bank will help the government to improve public sector financial management. In the short-term, annual audit requirements will reduce the risk that project funds are not used for their intended purposes. For those areas where the government system cannot be used, Bank specific requirements will be embedded into the project financial management system. Entity Level Substantial It is the first time for APPSCIG to Modest No implement a Bank financed project and its financial staff does not know Bank financial management requirements and disbursement

32 procedures. To address this weakness, well-designed training sessions will be provided to project financial staff. The project financial management manual (FMM) will be developed and issued as a practical reference. Project Level Modest APMO, an experienced agency, Low No will be substantially involved and lead APPSCIG to implement this project. APFD will review and manage project funds to ensure their appropriate usage. Control Risk Budgeting Modest A standardized project annual plan Modest No has been designed for the Project, which will ease project budgeting, execution, and monitoring. APPSCIG is required to conduct variance analysis semi-annually and report the results to the Bank. Accounting Modest The accounting regulation required Low No by MOF and the Bank is not very different from the one APPSCIG currently uses. The chart of accounts has been documented in the FMM for easy reference. APMO will review and provide guidance to APPSCIG in accounting work. Internal Modest Detailed internal control procedures Low No Control covering request, review, approval, certificate, supervision and reporting have been established, and will be documented in the FMM. Funds Flow Low The funds flow arrangement is the Low No same as for other Bank financed transport projects in Anhui. Both APFD and APMO normally maintain efficient coordination and timely communication to achieve smooth disbursement. Service standards have been set up for reviewing applications and delivering funds. Financial Modest The format and content of financial Modest No Reporting statements have been stipulated by MOF. The project FMM has specified the format, content and timing requirements for such

33 financial reporting. Auditing Low The external auditor APAO has Low No extensive experience in Bank financed projects. Overall Modest Low

10. The overall FM risk rating assigned to this Project at appraisal was Low, provided the proposed mitigation measures are carried out. The FMS will monitor the effectiveness of the mitigation measures and the project FM risk during project implementation. 11. Funds flow and disbursement arrangements. Four disbursement methods are available to the Project: advance, reimbursement, direct payment and special commitment. Supporting documents required for Bank disbursement under different disbursement methods are documented in the Disbursement Letter issued by the Bank. Applications will be supported by: • For reporting eligible expenditures paid from the Designated Account (DA) and for requesting reimbursements: (a) The list of payments against the contracts, and records evidencing eligible expenditures (e.g., copies of receipts, supplier invoices) for the contracts subject to the Bank‟s prior review as required in the Loan Agreement. (b) Statement of Expenditures (SOEs) in the form detailed in the Disbursement Letter for all other expenditures/contracts not subject to Bank prior review. • For requests for direct payment and special commitment: records evidencing eligible expenditures, e.g., copies of receipts, supplier invoices. 12. One designated account (DA) in US Dollar will be opened at a commercial bank acceptable to the Bank and will be managed by APFD. The ceiling of the DA will be determined and documented in the Disbursement Letter. 13. Retroactive financing will be applied for this Project in the amount of US$10 million for eligible payments made under the Project during the 12 month period before the date of the Loan Agreement. 14. The Bank loan would be disbursed against eligible expenditures (taxes inclusive) as in the following table: IBRD Loan Category Allocated Percentage of Expenditures Amount (US$ million) to be financed (1) Civil Works under Component A 62.24 45% (2) Civil Works under Component B 27.44 50% (3) Equipment and Goods under Component A 3.99 100% (4) Plants and Equipment under Component C 3.82 60% (5) TA Study and Training 0.78 100% (6) Interest during Construction 1.48 (7) Front-end Fee 0.25 Total 100.00

15. APFD will be directly responsible for the management, maintenance and reconciliation of the DA activities. Supporting documents required for Bank disbursements will be prepared and

34 submitted by APPSCIG to APFD through APMO. The flow of funds and withdrawal applications (WAs) are as follows:

World APFD APMO of APPSCIG Sub-PMO of Bank APTD APPSCIG

Contractor/ Supplier

WA Flow Funds Flow

16. Financial management – Strength. APFD has extensive prior experience in Bank- financed projects, which will benefit the implementation of this Project. APMO is responsible for overall preparation and coordination of this Project. Besides the ongoing Anhui Highway Rehabilitation and Improvement Project, APMO has successfully implemented two other Bank- financed highway projects, and will share its experience in managing Bank projects with APPSCIG. 17. Weaknesses and action plan. Besides the FM risks identified in para.9 above, no other significant weakness are identified. 18. Implementing agencies. Similar to the previous three Bank-financed transport projects in Anhui, APMO will be continuously responsible for overall project coordination and management, from preparation through implementation. APMO will also implement the training programs. Project construction activities will be implemented by APPSCIG, which will establish a dedicated Sub-PMO with qualified financial staff based in Fuyang City. APPSCIG is currently managing several construction works with an annual investment of RMB1 billion and has accumulated extensive experience in this industry.

19. Budgeting. APMO and APPSCIG will work together to prepare the annual investment plan. A standardized project annual plan has been designed to make the preparation and monitoring more effective and efficient. APMO and APPSCIG will conduct semi-annual variance analysis. The status of counterpart funds availability will also be reflected in the budget report. 20. Accounting. The administration, accounting and reporting of the Project will be set up in accordance with Circular #13 “Accounting Regulations for World Bank Financed Projects” issued in January 2000 by MOF. The Circular provides in-depth instructions on accounting treatment of project activities and covers the following: (a) Chart of account. (b) Detailed accounting instructions for each project account. (c) Standard set of project financial statements. (d) Instructions on the preparation of project financial statements. 21. The above-mentioned standard set of project financial statements has been agreed between the Bank and MOF, and applies to all Bank projects appraised after July 1, 1998. It includes the following:

35 (a) Balance sheet of the project. (b) Statement of sources and uses of fund by project components. (c) Statement of implementation of loan agreement. (d) Statement of designated account. (e) Notes to the financial statements. 22. Both APMO and Sub-PMO of APPSICG will manage, monitor and maintain their respective project accounting records for the activities they execute, and will retain original supporting documents. 23. Adequate project accounting staff, with educational background and work experience commensurate with the work they are expected to assume, is one of the factors critical to successful implementation of project financial management. Based on discussions, observation and review of the educational background and work experience of the staff identified, the task team notes that the financial staff are qualified and appropriate for the work they are expected to assume. However, given that the project financial staff of APPSCIG do not have previous experience with Bank projects, tailored training courses will be provided to them before and during project implementation. 24. To strengthen financial management capacity and achieve consistent quality of accounting work, a project financial management manual (FMM) has been prepared, which provides detailed guidelines on financial management, including internal controls, accounting procedures, fund and asset management, withdrawal application procedures, financial reporting and auditing arrangements, and so on. APMO has updated the FMM of the on-going Anhui Highway Rehabilitation and Improvement Project, for this Project, and will distribute it to all the relevant financial staff before the start of project implementation. 25. Both APMO and Sub-PMO of APPSCIG will use the computerized financial management system User Friend (Yong You), a well-established accounting software package approved by MOF, for this Project. The task team will monitor the processing of accounting work closely, especially in the initial stages, to ensure that complete and accurate financial information is provided in a timely manner. 26. Internal control and internal auditing. The related accounting policies, procedures and regulations were issued by MOF, and the FMM has been prepared and issued to uniformly align financial management and disbursement requirements among concerned parties. 27. There is no formal independent internal audit department for the Project. However, this will not impact the project‟s financial management as management and monitoring from APFD and APTD, which will review each withdrawal application, and annual external audit will serve as the mechanisms to ensure that financial management controls function appropriately. 28. Financial reporting. The format and content of project financial statements represent the standard project financial reporting package as agreed between the Bank and MOF, and have been discussed and agreed with all parties concerned. 29. Both APMO and Sub-PMO of APPSCIG will prepare the project financial statements on their implemented components, which will then be used by APMO for preparing consolidated project financial statements and submitted to the Bank for review and comment on regular basis. The unaudited semi-annual consolidated project financial statements will be prepared and furnished to the Bank by APMO no later than 45 days following each semester (the due dates

36 will be February 15 and August 15 of each calendar year) in form and substance satisfactory to the Bank. 30. Financial covenants. No specific financial covenants are applicable to the Project except for standard financial covenants like project audit and interim financial reports. 31. Supervision plan. The supervision strategy for this Project is based on its FM risk rating, which will be evaluated on a regular basis by the FMS in line with the FMSB guidelines, and in consultation with the task team leader.

37 Annex 8: Procurement Arrangements CHINA: Anhui Shaying River Channel Improvement Project

A. General

1. Procurement for the proposed Project will be carried out in accordance with the World Bank "Guidelines: Procurement Under IBRD Loans and IDA Credits” dated May 2004, revised in October 2006 and May 2010; and "Guidelines: Selection and Employment of Consultants by World Bank Borrowers" dated May 2004, revised in October 2006 and May 2010, and the provisions stipulated in the legal agreements. The various items under different expenditure categories are described in general below. For each contract to be financed by the Loan, the different procurement methods or consultant selection methods, the need for pre-qualification, estimated costs, prior review requirements, and time frame are agreed between the Borrower and the Bank in the Procurement Plan. The Procurement Plan will be updated at least annually, or as required, to reflect project implementation needs and improvements in institutional capacity. 2. Procurement of Works. Works procured under this Project would include: river channel dredging, river bank embankment protection, soil erosion protection, reconstruction of 4 existing bridges, construction of anti-collision facilities and navigation aids facilities, construction of buildings in service areas, etc. Procurement will be undertaken using the Bank SBD for all ICB contracts, and the Chinese Model Bidding Documents, agreed with or satisfactory to the Bank, for all NCB contracts. 3. Procurement of Goods. Goods to be procured under this project would include: communication equipment, monitoring equipment, navigation signs and marking etc., to be used for navigation management. 4. Procurement of Non-consulting Services. Nil. 5. Selection of Consultants. This would include consultant service for a TA study on waterway management and emergency service system. Short list of consultants for services estimated to cost less than $300,000 equivalent per contract may be composed entirely of national consultants, in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines. 6. Operating Costs. Nil. 7. Others. Nil. 8. Procurement procedures and SBDs to be used for each procurement method, as well as model contracts for works and goods procured, are available in the APMO office.

B. Assessment of the Agency’s Capacity to Implement Procurement

9. Procurement activities will be carried out by APMO. A procurement agent will be employed to assist in procurement processing. An assessment of APMO‟s capacity to implement procurement actions for the Project was carried out by the team‟s procurement specialist. The key procurement issue for the Project is delay in processing procurement. Mitigation measures agreed are: (a) realistic procurement plan, that allows reasonable time for processing procurement; (b) training to APMO staff on Bank procurement policies/procedures; and (c) tendering agent for ICB and NCB procurement.

38 10. The overall project risk for procurement after mitigation is moderate.

C. Procurement Plan

11. APMO, at the appraisal, developed a Procurement Plan for project implementation which provides the basis for the procurement methods. This Plan has been agreed between APMO and the Bank task team, and is available at APMO‟s office in Hefei, Anhui Province. It will also be available in the project‟s database and on the Bank‟s external website. The Procurement Plan will be updated in agreement with the Bank annually or as required to reflect project implementation needs and improvements in institutional capacity.

D. Frequency of Procurement Supervision

12. In addition to the prior review supervision to be carried out from Bank offices, the capacity assessment of APMO has recommended one mission (including special procurement supervision for post review/audits) every 12 months.

E. Details of the Procurement Arrangements Involving International Competition

13. Goods, Works, and Non-consulting Services (a) List of contract packages to be procured following ICB and direct contracting: 1 2 3 4 5 6 7 8 Estimated Domestic Review Expected Ref. Procurement Description of Contracts Cost P-Q Preference by Bank Date for Bid No. Method (million US$) (Yes/No) (Prior / Post) Invitation Contract No.QL03 for Demolishing One Existing 1 23.44 ICB No No Prior Feb. 2012 Bridge and Constructing One New Bridge Contract No.HW02 for Procurement of Signs and 2 1.41 ICB No Yes Prior Feb. 2012 Markings for Navigation Aids (K65+000-K205+600) Contract No. HW03 for Procurement of 3 Communications and 2.25 ICB No Yes Prior Feb. 2012 Monitoring Facilities for Navigation Management Contract No. HW04 for Procurement of Navigation 4 Traffic Management and 1.32 ICB No Yes Prior Dec. 2010 Emergency Reaction Facilities Contract No. HW05 for Procurement of Tele- communications Equipment 5 and IT Equipment for 4.54 ICB No Yes Prior Jun. 2012 Waterway Transport Management and Emergency Service

(b) ICB contracts estimated to cost above US$5,000,000 per contract package for works and US$500,000 per contract package for goods, and all direct contracting will be subject to prior

39 review by the Bank. The first contract implemented by APMO, irrespective of contract value, will be subject to Bank prior review. 14. Consulting Services (a) List of consulting assignments with possible short list of international firms. 1 2 3 4 5 6 Estimated Review Expected Ref. No. Selection Description of Assignment Cost by Bank Date for Invitation Method (Million US$) (Prior / Post) for Proposals Study on Waterway Transport ZX-01 Management and Emergency Service 0.30 QCBS Prior Feb. 2011 System (international consulting service)

(b) Consultancy services estimated to cost above US$100,000 for firms and US$20,000 for individuals per contract, and all single source selection of consultants (either firm or individual) will be subject to Bank prior review. The first contract implemented by APMO, irrespective of contract value, will be subject to Bank prior review. Thresholds for Procurement Method Description Thresholds Civil Works

Goods

Consultancy ≤US$200,000 CQS

Thresholds for Prior Review Description Thresholds Civil Works ≥US$5,000,000; all direct contracting; and the first contract irrespective of contract value Goods ≥US$500,000; all direct contracting; and the first contract irrespective of contract value Consultancy Firm being consultant: ≥US$100,000, and all SSS, and the first contract irrespective of contract value Individual being consultant: ≥US$20,000; and all SSS

40 Annex 9: Economic and Financial Analysis CHINA: Anhui Shaying River Channel Improvement Project

Identification of Economic Benefits and Costs 1. Economic benefits. This Project, which aims to increase transport capacity, improve cost- efficiency of the shipping industry, and improve the management of navigation and its environmental impacts on the Shaying River, will generate a variety of economic benefits to local industries, communities, and residents along the River and to the impacted region. The main benefits of this Project include: economic development and living standard improvement benefits through transport cost saving and promotion of local and regional economic development; avoided land use for roads and railways; and local and global environmental benefits through reduction of carbon emissions. These benefits will, in the medium and long term, also boost regional economic development of the affected hinterlands in Anhui and Henan, mainly through facilitating the exploitation and economical transport of coal and other bulk goods to industrial areas in the Yangtze Delta. 2. Economic costs. Economic costs are identified as capital investments, including associated resettlement and environmental mitigation costs of the Project, and operation and maintenance (O&M) costs, including the required dredging and environmental management costs during project operation. General Assumptions, Basic Data and Valuation Methods Used 3. The economic analysis assumes that market prices for most elements of the costs and benefits do not vary much from their economic value (i.e., shadow price), therefore market prices are applied directly without conversion in most cases. Economic benefits and costs are valued at base-year 2009 price levels, net of inflation, duties, and taxes. The life of a waterway transport project is assumed to be 50 years plus the construction period. In China, the discount rate accepted by the Chinese government for public investments is normally 8%. 4. Based on the projection of IWT traffic volumes on the River (see the attachment), cost- benefit analysis has been employed to examine the economic viability of the proposed Project. Economic costs and benefits have been identified and quantified as much as possible. Sensitivity analysis has been conducted to test the robustness of the results of the cost-benefit analysis. 5. A stakeholder consultation workshop was held in December 2009 in Fuyang City. Participants, comprising local waterway administration officials, port operators, ship owners, coal producers, research institutes, and ship-owners association, stressed the inadequacy and constraints of the existing navigation channel along the River and showed great support and interest in a river channel improvement project. Baseline and Alternatives 6. The baseline is based on the assumption of a “non-project scenario” in which: (a) navigation between Jieshou and Cihekou is seasonal; (b) the carrying capacity of Cihuaixin River is full; and (c) the river section between Fuyang Lock and Yingshang Lock is barely navigable due to poor navigation conditions. The project's economic benefit analysis compares the "project scenario" and "non-project scenario" to show IWT increase and incremental cost savings compared with other transport modes such as highways and railways.

41 Cost-benefit Analysis 7. Transport cost saving. The benefits of local economic development are represented by the cost savings of transporting large bulk goods by IWT compared to other transport modes. In particular, the transport cost savings of coal, construction materials, as well as cost savings by increasing barge size due to improved navigation conditions are quantified and summarized. Transport cost savings capture only a part of local economic development benefits, and hence is a conservative estimate. 8. In the “project scenario”, coal produced in Anhui Province does not have to be carried to the Yingshang Lock before it is loaded on a barge. It can be loaded directly on a boat at an upstream port in Fuyang or Liuzhuang, thus reducing road transport by about 60-90 kilometers, depending on the location of coal mines. Road transport cost savings in 2015, 2020, and 2030 are estimated to be RMB27.0 million, RMB86.73 million and RMB117.0 million respectively. 9. In the “non-project scenario”, coal produced in Henan Province has to be carried to Jieshou and Taihe before they are loaded on a barge. In the “project scenario”, the coal can be transported directly by water from ports at Luohe, Zhoukou and Shenqiu. This change can save 200 km road transport, and result in road transport cost savings in 2015, 2020, and 2030 of RMB18.8 million, RMB114.7million and RMB163.2 million respectively. 10. In the “project scenario”, construction materials and minerals from Liuan and Huaibin will be transported through the Cihuaixin River. Some road transport of short distance is needed through Fuyang and other upstream regions. Freight transport through Shaying River will save at least 60 km. Transport cost savings are estimated at RMB58.5 million in 2015, RMB1,003.2 million in 2020 and RMB146.8 million in 2030. 11. The Project will upgrade the navigation level of the river channel from Class V to IV between Jieshou and Mouhekou. As a result, the average vessel size will be 500 dwt instead of the current 300 dwt. This will bring extra benefits of transport cost savings for the existing traffic due to higher transport efficiency. The transport cost savings are estimated at RMB26.5 million in 2015, RMB56.5 million in 2020, and RMB68.6 million in 2030. 12. Benefit of carbon emission reduction. The Project is in line with Chinese national policies related to energy efficiency and conservation through improving IWT capacity and reducing energy consumption in the transport of bulk goods by waterway compared with other transport modes. Estimated energy savings will reach 111,034 tonnes of diesel equivalent per year by 2030, which will avoid carbon emissions of 353,787 tonnes. Avoided global climate damage is about RMB48.1 million (at $20/tonne of CO2). 13. Other benefits. Development of IWT will avoid using scarce land resources for roads and railways. The avoided land use costs, as well as resettlement costs, as observed in transport projects in many places in China, can be considerable. In addition, the Project has a special land restoration plan which will change 1,607 mu (107.1 ha) of wasteland to farmland, and improve an additional 3,080 mu (205.3 ha) of farmland. The increased IWT activities will boost local economies along the River, and will bring more opportunities and positive spillover effects to the local people, including the poor. However, these benefits are hard to quantify and are not included in the analysis. 14. Results. The net present value (NPV) of the total net economic benefits of the Project is RMB1.86 billion and the economic internal rate of return (EIRR) of the Project is 14.58%. The

42 benefit-cost ratio (BCR) is 2.22. Results of the analysis are presented in the Table 9-1. If the global benefits of carbon reduction were excluded, the EIRR will be 13.9%. 15. Sensitivity analysis assumes a 20% increase in total cost and a 20% decrease in total benefits. Under these assumptions, the investment will still yield an EIRR of 11.05% and an NPV of RMB937 million, with a BCR of 1.52. The Project is therefore economically viable and the benefits are robust. Financial Analysis 16. River channel improvement is a typical public service aiming to promote local economic development, saving transport costs, and improving the living standards of local people. Based on experience in China, the Project has a strong case for government involvement and subsidy. 17. The total project investment of $291.14 million will be financed by the Bank (34.3%) and the Borrower (65.7%). The detailed financing plan is provided in Table 9-2. Counterpart funds will come mainly from government revenue, especially intergovernmental transfers and subsidies from the central government and local tax revenue. 18. Table 9-3 further shows the general financial situation and projections of Anhui Province. The 2005-09 data is from annual statistics and those of 2010 onwards are projected data. The Province has enjoyed a rapid GDP growth at over 12% in the past 5 years. The province‟s current foreign debt is less than 0.1% of financial revenue. Counterpart funds for the Project will be equivalent to 0.124% of the total financial revenue in 2012 and will gradually reduce to 0.04% in 2015 (the end of the construction period). Repayment of the World Bank loan is 0.005% of estimated financial revenue in year 2016 and decreases in the following years. Counterpart financing and loan repayment are therefore considered well within the fiscal capacities of Anhui Province. 19. Financial sustainability. The financial sustainability of this Project will be assured by the direct funding of APTD from the provincial fiscal budget. APTD will use part of the IWT budget to cover the costs of maintenance and operation of the upgraded navigation infrastructure of Shaying River. Resources of the IWT budget mainly consist of hypothecated proportion of the national fuel tax, vessel registration charge, profit from related activities (such as hydropower generation at dams), and some lock charges.

43 Table 9-1: Results of Economical Analysis

Present Value Construction Period Item Year 1 2 3 4 5 6 7 8 9 10 11 16 21 55

Economic Benefits

TCS of Construction 58.5 68.5 78.4 88.4 98.3 103.2 127.4 146.8 146.8 Materials in Anhui

TCS of Coal in 27.0 41.1 55.2 69.3 83.3 86.7 103.5 117.0 117.0 Anhui

TCS of Coal in 18.8 41.4 64.1 86.7 109.3 114.7 141.7 163.2 163.2 Henan

TCS by Barge Size 26.45 33.6 40.8 48.0 55.20 56.5 63.2 68.6 68.6 Upgrading

Global Benefit of 10.06 14.1 18.2 22.2 26.29 27.4 32.7 37.05 37.05 CO2 Reduction

Subtotal 3,397.47 0 0 0 0 0 140.8 198.7 256.6 314.6 372.5 388.5 468.6 532.6 532.6 Economic Costs

Capital Investment 1,419.53 266.9 444.8 355.8 444.8 266.9

O&M 69.62 0 0 0 0 0 8.36 8.36 8.36 8.36 8.36 8.36 8.36 8.36 8.36 Subtotal 1,489.15 266.9 444.8 355.8 444.8 266.9 8.4 8.4 8.4 8.4 8.4 8.4 8.4 8.4 8.4

Net Benefit 1,916.05 -266.9 -444.8 -355.8 -444.8 -266.9 132.4 190.4 248.3 306.2 364.1 380.1 460.2 524.3 524.3

EIRR 14.58%

ENPV 1916.05 B/C Ratio 2.28

Table 9-2: Project financing plan RMB US$ % Million Million

Subsidy of Ministry of Transport 920.00 135.29 46.5 World Bank Loan 680.03 100.00 34.3 Contribution of Anhui Province 379.80 55.85 19.2 Total Financing 1,979.83 291.14 100.0

Table 9-3: General financial situation and projections of Anhui Province

Historic data Construction period (Projected) Operation period (Projected) Item 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 1 GDP 537.6 614.2 734.6 887.4 1005.3 1105.8 1216.4 1338.0 1471.8 1619.0 1780.9 1905.6 2039.0 2181.7 2334.4 2497.9

2 GDP growth rate 11.8% 12.9% 13.9% 12.7% 12.9% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 7.0% 7.0% 7.0% 7.0% 7.0%

3 Total financial revenue 86.3 107.0 138.4 178.1 199.5 219.5 241.4 265.5 292.1 321.3 353.4 378.2 404.6 433.0 463.3 495.7

4 Growth rate 26% 24.0% 29.3% 28.7% 12.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 7.0% 7.0% 7.0% 7.0% 7.0%

7 Local budgtary revenue 33.4 42.8 54.4 72.5 76.7 84.3 92.8 102.1 112.3 123.5 135.8 145.3 155.5 166.4 178.1 190.5

8 Total financial expenditure 70 95 126 168 157 172.7 190.0 209.0 229.9 252.9 278.1 297.6 318.4 340.7 364.6 390.1

Where, Annual foreign debt 10 0.46 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 serving Counterpart fund and loan 12 0.20 0.33 0.33 0.33 0.13 0.02 0.02 0.02 0.02 0.02 repayment of this project 13 Counterpart fund 0.20 0.33 0.33 0.33 0.13

14 WB loan repayment 0.020 0.020 0.020 0.020 0.020

% Counterpart fund and loan 15 repayment in total financial 0.082% 0.124% 0.113% 0.102% 0.037% 0.005% 0.005% 0.005% 0.004% 0.004% revenue

44 Annex 10: Safeguard Policy Issues CHINA: Anhui Shaying River Channel Improvement Project

1. Safeguard policies triggered. The Project triggers three World Bank safeguard policies: Environmental Assessment (OP/BP 4.01); Natural Habitats (OP/BP 4.04); and Involuntary Resettlement (OP/BP 4.12). Table 10-1: Safeguards Policies Triggered and Actions. Safeguard Policies Actions Environmental Assessment Category A project. (OP/BP 4.01) Full EIA and EMP have been prepared. Natural Habitats Adequate assessment of impacted areas and mitigation measures are (OP/BP 4.04) incorporated in the EMP. Ecological rehabilitation is incorporated into the project design. Involuntary Resettlement Resettlement Action Plan has been prepared (OP/BP 4.12) Information Disclosure and Combined opinion surveys and public meetings were held in the township Consultation government, village committee and affected villagers‟ homes during preparation of the EIA and the Resettlement Action Plan. 2. As designed, the Project: (a) will not adversely affect or convert critical natural habitats; (b) will not adversely affect resources of high cultural value; and (c) will minimize the need for resettlement and provide adequate and just compensation and income restoration for affected persons.

Environmental Safeguards 3. Environmental category and EA preparation. The Project is rated Category A due to the type and scale of construction activities and the nature and magnitude of potential impacts. APPSCIG retained Anhui Academy of Environmental Sciences (AAES) to carry out the environmental assessment in accordance with Chinese EIA laws/regulations and technical guidelines. The EIA was reviewed and approved by Anhui Provincial Environmental Protection Bureau (APEPB) in 2008. In order to enhance the general quality and meet Bank requirements, APPSCIG retained Shanghai Ship & Shipping Research Institute (SSSRI) to carry out a further EA study during 2009-2010. The final EA documents were submitted to the Bank in April 2010 and further updated in September 2010, and include: (a) the EIA report; (b) the Environmental Management Plan (EMP); and (c) the EA Executive Summary. 4. The EIA report includes comprehensive impacts assessment and necessary mitigation measures to avoid, minimize, and compensate adverse impacts identified. Natural habitats are also addressed as part of the EIA. It concludes that the adverse environmental and social impacts will be minimized to an acceptable level provided the mitigation measures are adequately implemented. 5. Environmental setting. The Shaying River traverses a well developed area. The project area is a flat alluvial plain throughout which agricultural and urban areas are prevalent. The River has been used as a navigation channel for decades, and has been dredged every 10 years since the 1960s. Inadequately managed wastewater discharged by the vessels partly contributes to the bad water quality throughout the River. As such, the project area presents moderate to low sensitivity from an ecological perspective. Key environmental settings include:

45 • Landform. The Shaying River basin is in general a flat plain whose northwestern part is higher than its southeastern part. The flood plain along the River (areas between the flood dike and the river bed) is 30~200 meters wide in general, with certain sections only 10 meters wide or even zero. On the flood plain, there are many pits, ponds and low-lying land which are mostly borrow pits left from the construction of flood dikes. • Hydrology. The Shaying River originates from Funiu Mountain in Henan Province. It enters Anhui Province in Jieshou City, flows through Taihe County, urban Fuyang and finally joins the Huai River in Mohekou, in Yingshang County of Fuyang. Its mean annual runoff is 7.12 billion cubic meters. The flood season is May-September. The main tributaries in Fuyang include and Cihuaixin River; the latter is a man-made canal (built in 1970~1980‟s) and functions as a “shortcut” to Huai River. • Ecology. There have been intensive human activities in the project region. Agriculture and urban areas are prevalent throughout the project corridor. The main vegetation types are farmland, artificial woodland, barren land and bush. There are no endangered or protected fish species, spawning, nursery or wintering sites in the River. A wetland park adjacent to the River in Taihe County was officially announced on December 23, 2009 (after the project identification mission). The park is established for ecological rehabilitation and tourism development purposes. There is no protected fauna or flora living within the boundary of the park. • Environmental quality. The ambient air, soil and underground water are of good quality. The river water is polluted, with total nitrogen (TN) and total phosphorus (TP) considerably exceeding functional standard requirements (Class IV). Test of river sediments showed that all samples meet national standards for agricultural sludge utilization, which means the sediment is not subject to heavy metal contamination. • Social economics. The project area is largely agricultural and economically underdeveloped. However, resources such as coal, metal, and grains are quite abundant, thus creating a huge demand for transportation. 6. Alternative analysis. Alternative locations for service areas and dredging methods have been analyzed during project design. • Service areas. Two service areas will be built under the Project. Locations were compared in terms of environmental impacts, resettlement, traffic disturbance, construction convenience, and compatibility with existing development plans. • Disposal sites for dredged sediments. Disposal sites for dredged sediments were reviewed with the following considerations: (a) choosing nearby low-lying land, shoaly land and existing borrow pits for building dikes to minimize occupation of farmland; (b) filling ponds and strengthening the foundation of dikes to benefit water conservation and flood protection; (c) keeping away from built-up areas to avoid pollution by mud disposal; and (d) meeting relevant technical specifications and adding greening and beautification designs for the urban sections along the River. • Dredging methods. Dredging equipments and operational approaches were compared during project design. It was concluded that cutter-suction dredger is appropriate for this type of dredging and has been adopted.

46 • Riverbank protection. Design of bank protection works was integrated with existing infrastructure for water conservation and flood protection to optimize the location and scope of bank protection. Priority will be given to flexible and/or ecological revetment, covered with plants. • Bridge reconstruction. Bridges impeding navigation due to insufficient clearance were reviewed based on the average number of days of navigation impedance and the ratio of guaranteed navigable days taking into account hydrological observation records of the past 22 years. Four bridges will be reconstructed, and anti-collision design will be applied to existing bridges. 7. Sampling and test of dredged sediments. Sampling locations were selected based on the distribution of industry and the pollution discharge pattern along the River. The EIA Report includes a map to indicate all sampling locations. Standard analysis results have been compared against Chinese and international standards, including the Chinese Pollutants Control Standard for Sludge Utilization for Agricultural Purpose (GB 4284-1984), and the USA, the EU and the Canadian standards. The Table 10-2 below compares Chinese and international sludge utilization standards. The analysis concluded that silt quality meets both standards and presents no heavy metal contamination, and is suitable for farmland utilization. Table 10-2: Comparison between Chinese and International Sludge Utilization Standards.

Silt quality of Shaying River meets these standards. Standards/Directives Cu Zn Pb Cd Cr Ni As GB 4284- pH<6.5 250 500 300 5 600 100 75 1984* pH≥6.5 500 1000 1000 20 1000 200 75 China GB 18918- pH<6.5 800 2000 300 5 600 100 75 2002* pH≥6.5 1500 3000 1000 20 1000 200 75 CJ 247-2007* 1500 4000 1000 20 1000 200 75 Clean 1500 2800 1200 39 300 420 41 40 CFR Part Sludge USA 503 Top 4300 7500 3000 85 840 420 75 Standard EU 1500 3000 200 40 - 400 - Canada 500 2000 1000 20 1000 100 10 *GB4282-1984 Pollutants Control Standard for Agricultural Sludge Utilization *GB18918-2002 Pollutants Discharge Standards for Municipal Wastewater Treatment Plan *CJ 247-2007 Sludge Quality of Municipal Wastewater Treatment Plant.

8. Natural Habitats (OP4.04). The Natural Habitats policy applies to the Project because: (a) the Project is in line with the policy requirements on minimizing impacts to, and promoting rehabilitation of, natural habitats; and (b) the Project relates to the Anhui Taihe Shaying River National Wetland Park. 9. Ecological survey through desk review, field investigation and consultation with local authorities, institutes and communities show that artificial ecosystem such as farmland, artificial woodland and urban area is prevalent throughout the project area. No nature reserves, forest parks or scenic areas at any level of protection have been found in the project area. There are no critical natural habitats along the project corridor. Historical data show that some protected fauna such as red fox and black kite used to exist in the project area. However, given the generic

47 ecological environment in the project region, the Project is not anticipated to cause significant conversion or degradation of natural habitats. 10. The Anhui Taihe Shaying River National Wetland Park was officially announced to be established on December 23, 2009. The Park is located along the Shaying River in Taihe County. River, farmland and artificial woodland are currently prevalent in the Park. The Wetland Park comes into being because the recently built Genglou ship lock has resulted in lakes at low-lying alluvial lands in the nearby old Shaying River channel. The local government intends to facilitate the Wetland Park for ecological rehabilitation purpose. According to the master plan of the Wetland Park, the Park is divided into 4 areas: (a) wetland ecology conservative area; (b) entertainment area; (c) display area for wetland ecological functions; and (d) service area. In response to the change, the Project design was refined to meet the relevant national wetland park management regulation. As a result, one river bank cusp-cutting within the wetland park was cancelled. Special consultation was carried out with Park management regarding project activities. Official approval was later obtained from the wetland park authority (Taihe County Forestry Bureau). Potential negative impacts are very limited and temporary. Over the long term, the Project will benefit conservation and tourism in the Wetland Park. 11. Construction impacts. Construction of the Project, such as dredging and silt disposal, slope cutting and stabilization, and bridge reconstruction will cause temporary impacts on the surrounding environment. Typical short-term impacts include water and air quality deterioration, noise and traffic disturbance. If properly planned, impacts of construction on neighborhoods, business, and the natural environment can be minimized. Several aspects of construction have received special attention such as dredging methods, and disposal of dredged materials. • Water pollution. Dredging will result in re-suspension and diffusion of river silt. Building of bridge piers will also cause river bed disturbances and generate slurry. Wastewater from silt disposal areas will be treated before being discharged into the River. The potential impacts are temporary, and can be minimized through of state-of-the-art dredging equipment and/or well-managed operational practices. • Silt disposal. Given the large amount of dredged materials, their proper handling is a major environmental concern. Design has been optimized to minimize impacts caused by silt disposal. Sampling and analysis of silts has been carried out and concluded that silt quality meets standards and presents no heavy metal contamination, and is suitable for farmland utilization. 34 disposal sites have been identified following a series of environmental and social criteria; 10 are abandoned borrow pits or ponds and the rest are low productivity farmland or woodland. • Soil erosion. Temporary retaining walls will be built to prevent earth/stone falling into the water body. Wastewater collection/interception ditches will be dug in the material processing areas. Silt disposal areas will have proper drainage, retaining structure and timely re-vegetation. A special Soil Erosion Control Plan has been developed, as per the requirement of Chinese laws, and is acceptable to the Bank. This Plan includes design and mitigation measures for soil erosion control of all disturbed sites, including slope protection, bridge building, silt disposal sites, construction and camp sites. • Social disturbance. Construction activities will have an impact on local road traffic and disturb people‟s daily lives. Social disturbance will be mitigated through proper provision of temporary access/bridges for local communities, well planned traffic management

48 measures, timely restoration of irrigation facilities, etc. Cultural and behavior education of workers will be provided with special attention to earth excavation, tomb relocation and local spiritual facilities. Health education will also be provided to workers on local epidemics, and HIV/AIDS. • Dust, noise and smell. Construction activities will cause airborne dust, noise and smell, particularly from dredging. The impacts will be temporary, and will be mitigated through standard construction management practices, such as careful scheduling of construction activities, dust control measures, and personal protection facility. 12. Impacts during operation. The main issues during operation of the navigation channel include water pollution, transport safety and service area management. • Wastewater and solid waste management. Wastewater will be generated from service areas and freight fleets during operation. For service areas, those which have the access to public drainage system should have the wastewater collected properly and drained to wastewater treatment facilities through the drainage system; for others, treatment facilities must be built/installed and wastewater must be treated to the level specified in the relevant standard before being discharged. Wastewater generated in fleets should be stored in tanks and discharged to service areas where wastewater will be collected and treated. No direct discharge into the river is allowed. Likewise, solid waste from service areas or fleets must be collected and transported to local solid waste disposal facilities for final disposal. • Transport safety and service area management. It is anticipated that after the Project is completed, the improved channel will attract more transportation fleets, which will impact safety and the environment. Overloading, crash, and spill of hazardous waste are among such potential challenges. In response to these problems, a waterway transport management and emergency service system will be developed as part of the TA component under this Project. The system will compose an IT system, an electronic channel map, mobile supervision, real-time monitoring of safety and fleet pollution, and other functions. 13. Indirect and cumulative impacts. The Project will promote waterway transport at the regional level, and facilitate the development and utilization of waterway transport infrastructure. The Project will also promote water transportation at the regional level. Potential cumulative impacts were assessed, as part of the project environmental assessment. Potential negative cumulative impacts include loss of habitats, riparian vegetation; obstruction of fish migration, and waste discharge. These are considered limited and manageable. Overlapping analysis shows that the Project will impact only a small amount of riparian vegetation. Various development plans stipulate that river shore wetland should be protected to the extent possible. There is no fish spawning area in the Shaying River, probably due to bad water quality. Local fishery authority confirms that spawning areas are found in several tributaries in the watershed. Hence development activities on the Shaying River will have no significant impact on fish spawning. There are three ship locks along the river section under the Project, whose impacts on river hydrology and aquatic ecology are very limited. In addition, the Project will support navigation management that includes significant environmental considerations. Environmental management capacity of the Shaying River is likely to be considerably improved through the implementation of the Project.

49 14. Environmental Management Plan. A stand-alone EMP has been developed based on the findings of the EIA report. The EMP details the environmental management and supervision organizations and responsibilities, mitigation measures, training plan, monitoring plan, and budget estimates of EMP implementation. APMO and APPSCIG are committed to ensure that contractors implement the relevant obligations specified in the EMP. Bank supervision will monitor environmental activities under the Project in order to ensure compliance. 15. EMP implementation will be managed by APPSCIG under the supervision of APTD. Dedicated staff will be appointed to the environmental management office. Qualified environmental staff will be assigned in the contractors‟ team and the supervision engineers‟ team to ensure effective implementation of the EMP. An External Environmental Consultant (EEC) will be engaged by APPSCIG to monitor the EMP performance of contractors and supervision engineers. 16. A two-tier monitoring program has been developed for this Project. Daily and regular monitoring is to be carried out by the contractors and supervision engineers, and periodical compliance monitoring by the EEC and professional environmental monitoring institutes. APMO will be responsible for submitting semi-annual performance reports to the Bank on EMP implementation. 17. Public consultation and information disclosure. Two rounds of public consultation and information disclosure were conducted in April-May 2008 and December 2009-April 2010 respectively. Combined opinion surveys and public consultation meetings in the township, village committee and affected villagers‟ home were carried out during the preparation of the EA and the RAP. Mitigation measures were determined taking into account suggestions from both experts and the public. Most of the concerns have been incorporated either in the project design or in the EMP and the resettlement plan. 18. During the first round of public consultation, a brief version of the EA for the Project was made accessible in May 2008 on the website of Fuyang Maritime Bureau with an announcement in Yingzhou Evening Newspaper, to collect opinions, suggestions and concerns from communities and departments affected by the Project. Opinions and suggestions received were documented and incorporated into the EA as appropriate. 19. During the second round of public consultation, the full version of the EA report was disclosed at the local maritime bureaus (hard copy) and on the websites of APTD, Fuyang Local Maritime Bureau and APPSCIG, with an announcement in Fuyang Daily Newspaper. 20. The EIA, the EMP and the RAP were sent to the Bank‟s Infoshop in Washington on August 11, 2010, and the Public Information Center in the Bank Beijing Office.

Social Safeguards 21. Project social impacts. Project components with potential social impacts include: Component A - Navigation Infrastructure and Facilities; and Component B - Reconstruction and Relocation of Existing Infrastructure and Facilities. 22. The Project will benefit rural and urban residents along the river basin by improving transport and the local economy. On the other hand, land occupation, house and structure demolition, bridge reconstruction, sludge disposal, etc., will cause potential adverse impacts. APPSCIG and APMO, with consultants from Hehai University, established a social team to

50 investigate, record, evaluate and address social impacts during project planning and design. Based on the investigations and evaluations, it is concluded that the Project triggers Bank policy OP 4.12, and a Resettlement Plan (RP) has been prepared for the Project with the involvement of the local government, APPSCIG and APMO. The RP and the Resettlement Policy Framework (RPF) were disclosed locally and in the Bank‟s Infoshop prior to project appraisal. 23. Indigenous Peoples (IP) screening. The Bank team conducted an investigation on IP minority villages along the Project. It was concluded that there are three Hui minority villages in Saijian Township and that they do not meet the IP definition of OP 4.10, mainly because they have the same political and economic system as the dominant society. The population and social characteristics in these villages are shown in the following tables. Table 10-3: Hui Minority Villages in Saijian Township. Village Name Households No. of People Farmland( mu) No. of Hui People Saijian 965 4,206 4,807 2,300 Zhoutai 1,220 4,541 5,128 2,800 Baliduo 879 3,690 4,296 2,600 Note: 1ha = 15 mu. Table 10-4: Social characters of Hui villages in Saijian Township IP Criteria Social characters of three villages Self-identification as members of a distinct The Hui villages self-identify themselves as distinct indigenous indigenous cultural group and recognition of cultural villages, and the surrounding Han villages also do so. this identity by others. Collective attachment to geographically They have the same system of land and other natural resources distinct habitats or ancestral territories in the as the Han villages. Their income level is also equivalent to project area and to the natural resources in others. these habitats and territories. Customary cultural, economic, social, or Economic and political institutions, and even social ones in the political institutions that are separate from three villages are the same as the other Han villages. those of the dominant society and culture. An indigenous language, often different from There is no indigenous language in the three villages. In their the official language of the country or region. religious activities a few words of Arabic language are used. 24. Involuntary Resettlement. An RP with an RPF as an annex, was prepared by APMO and APPSCIG, with assistance from Hehai University. 25. Resettlement impacts. Direct social impacts are from activities in Project Components A and B. The main resettlement impacts involve: 1,658mu (111 ha) permanent land acquisition; 9,874mu (658 ha) temporary land acquisition; and 364 households relocation involving 1,489 persons. 34 disposal sites for dredged sediment will have temporary land use, which affects 2,891 households (10,316 persons). The impacts are summarized in Table 10-5.

51 Table 10-5: Total resettlement impacts

Item Unit Quantity Affected city number 1 Affected county/district number 6 Permanent Land Acquisition (LA) mu 1,658 Temporary Land Acquisition (LA) mu 9,874 Affected households (HH) HH 3,679 Affected people person 13,456 Relocated HH HH 364 Relocated people person 1,489 Note: 1 ha=15 mu 26. Restoration of temporarily used land. Dredging works will cause sludge disposal and involve temporary land acquisition of about 9,831 mu (655 ha) in 34 sites along the River. In addition to identifying and applying existing borrow sites through consultation with local land authorities and villages, the RP includes a special land restoration plan, in addition to timely and adequate compensation for land use. This plan will change 1,607 mu (107.1 ha) wasteland to farmland, and improve 3,080 mu (205.3 ha) farmland, which will benefit more than 12,500 farmers in 34 villages along the Project. The plan covers the current land type, the size and quality of the disposal sites, restoration design, surface soil restoration measures, budget and institutional arrangements. 27. Land acquisition and social security assurance for resettlers. All required land has been investigated and will be compensated to the affected villages according to the provincial land regulations. Seven villages will lose more than 20 percent farmland and will be more adversely impacted. Those who are affected by the land acquisition will be eligible to enroll in the social security program. The RP further documents a detailed scheme on social security assurance for villagers through consultation with the affected county-level governments. 28. House restoration. 346 urban households in Taihe County and Jieshou City will be compensated in cash in line with commercial evaluation, with agreement from the affected households who could then purchase apartments. 18 rural households in three villages will be collectively provided with residential land for restoration, based on local residential planning, and public facilities for the new housing by the local government. All relocated households will also receive transition fees and movement allowance, as well as additional assistance from the local governments during house restoration. 29. Bridge reconstruction. Resettlement actions related to bridge reconstruction are included in the RP. APMO/APPSCIG and the local governments will work in close cooperation to ensure that the design of bridges fit into the local transport development plan. The RP includes detailed recommendations on how to get agreement on bridge reconstruction with the local governments and how to ensure that funds are available. 30. Women’s participation. Women have participated in resettlement activities, including resettlement impact investigation, village meetings, and focus group discussions. Women will have the same rights as men in receiving compensation, employment and training. In addition, the following measures will be taken to ensure women‟s rights and interests:

52 • During project construction, women (at least 20% of unskilled labor) will obtain unskilled job opportunities. • Technical training will be provided to affected female laborers to ensure that their economic status will not be lowered. • Affected women will receive relevant information during resettlement and participate in public consultations. The compensation agreement with affected households must be signed by couples. 31. Vulnerable people. The RP identifies some vulnerable people and determines additional financial assistance to these people. In the affected population, 21 households (with 80 people) were identified vulnerable (0.6% of the affected population) in eight villages, in which 16 households (with 74 people) receive minimum living security; five households (with six people) are Wubaohu (households who are provided food, clothes, house, health care, education for orphans). Besides normal measures, APMO/APPSCIG will grant a subsidy of RMB5,000 to each such household to protect the interests of the affected vulnerable people. 32. Resettlement budget and financing. The resettlement cost is about RMB169 million and it is already integrated into the project budget, which will be fully financed from counterpart funds. Resettlement costs for the four bridges will be jointly financed by APTD and Fuyang City. APTD has signed a framework agreement with the government of Fuyang City to stipulate the respective roles and responsibilities for the land acquisition and resettlement, as well as the counterpart funding contributions for and the implementation of reconstruction of the bridges. 33. Information disclosure. The main contents of the RP were initially disclosed in the relevant villages and the final RP, with the RPF, was re-disclosed locally. Feedback on the disclosure has been integrated into the RP. A resettlement information booklet will be distributed to the affected persons prior to commencement of the construction. 34. Consultation and grievance handling. The RP includes a special chapter on participation, consultation and grievance handling to record the relevant actions already taken during the resettlement planning, and the new actions and procedures in this regard. Stakeholders were identified during the early stages of resettlement planning, and were fully consulted on such aspects as project objectives, project locations and impacts, resettlement policies and measures, etc. Information disclosure was carried out during RP preparation. A detailed grievance handling procedure is part of the RP. 35. Linkage issues. The on-going reconstruction of Fuyang ship lock is being implemented concurrently with the Project. This activity is an upgrading action on the original site without land acquisition or resettlement, and no resettlement action is required.

53 Annex 11: Project Preparation and Supervision CHINA: Anhui Shaying River Channel Improvement Project

Planned Actual PCN review 01/20/2010 01/19/2010 Initial PID to PIC 03/05/2010 03/02/2010 Initial ISDS to PIC 03/05/2010 03/15/2010 Appraisal 08/24/2010 08/24/2010 Negotiations 02/15/2011 03/09/2011 Board/RVP approval 04/12/2011 Planned date of effectiveness 08/01/2011 Planned date of mid-term review 04/01/2013 Planned closing date 12/31/2016

Key institutions responsible for preparation of the project:

• Anhui Provincial Transport Department, Hefei, Anhui Province, P.R. of China • Anhui Provincial Port & Shipping Construction Investment Group Co. Ltd • Anhui Provincial Port & Shipping Management Bureau • Anhui Provincial Transport Survey and Design Institute

Bank staff and consultants who worked on the project included: Name Title Unit Wenlai Zhang Task Team Leader (TTL)/Sr. Transport Specialist EASCS Jian Xie Co-TTL/Sr. Environmental Specialist EASER Kishor Uprety Senior Counsel LEGES Robert O‟Leary Senior Finance Officer CTRFC Songling Yao Social Development Specialist EASCS Ning Yang Environmental Specialist EASCS Yi Geng Financial Management Specialist EAPFM Jianjun Guo Procurement Specialist EAPPR Xuan Peng Program Assistant EACCF Yunqing Tian Project Assistant EACCF Teresita Ortega Program Assistant EASIN Paul Amos Transport Advisor, Consultant EASCS Jianming Zhao Geotechnical Specialist, Consultant EASCS Peishen Wang Environmental Specialist, Consultant EASIN Wanli Fang Economics Analyst, Consultant EASCS Simon David Ellis Peer Reviewer/Sr. Transport Economist SASDT Reynaldo Bench Peer Reviewer/Sr. Port Specialist ETWTR Baher El-Hefnawy Peer Reviewer/Sr. Transport Economist EASIN

54 Annex 12: Documents in the Project File CHINA: Anhui Shaying River Channel Improvement Project

Language No. Name Date (Chinese/English) Project Management 1 Anhui Local Maritime Development Master Plan August 2006 C 2 Fuyang Port Master Plan December 2008 C Anhui Inland Waterway Navigation Development Plan 3 May 2006 C/E (2005-2020) 4 Anhui Port Regulation June 2009 C/E 5 Anhui Maritime Monitoring & Supervision Measure August 2009 C Anhui Safety Management Procedure for Waterway Gas 6 March 2008 C Station Anhui Maritime Monitoring & Supervision Reporting 7 June 2009 C Measure 8 Anhui Waterway Emergency Plan May 2007 Development Agreement on Shaying River between Anhui 9 December 2009 C PCD and Henan PCD Development Agreement on Shaying River between Anhui 10 March 2010 C PCD and Fuyang Government 11 Anhui Ports Investment Strategy Report June 2009 C 12 Shaying-Taihe Bridges Rebuild Coordination Minutes June 2010 C Shaying-Jieshou Bridges Rebuild Coordination Minutes- 13 June 2010 C 26aug10-CN 14 Shaying-Taihe Jieshou Bridges Rebuild Coordination Brief July 2010 C Technical Geological Investigation Report of Anhui Shaying River 15 March 2010 C Channel Improvement Project Feasibility Study Report of Anhui Shaying River Channel 16 October 2010 C Improvement Project (final) Preliminary Design of Anhui Shaying River Channel 17 October 2010 C Improvement Project (final) Procurement 18 Procurement Plan December 2010 C/E Safeguards 19 Resettlement Action Plan August 2010 C/E 20 Environment Management Plan September 2010 E 21 Environment Impact Assessment September 2010 E Others 22 Project Training Plan July 2010 C

55 Annex 13: Statement of Loans and Credits CHINA: Anhui Shaying River Channel Improvement Project

Difference between expected and actual Original Amount in US$ Millions disbursements

Project ID FY Purpose IBRD IDA SF GEF Cancel. Undisb. Orig. Frm. Rev‟d P098078 2011 CN-Huai River Basin Flood Management 200.00 0.00 0.00 0.00 0.00 199.50 0.00 0.00 and Drainage Improvement P105872 2011 CN-Integrated Forestry Development 100.00 0.00 0.00 0.00 0.00 99.75 0.00 0.00 P116656 2011 CN-Zhejiang Basin Small 100.00 0.00 0.00 0.00 0.00 100.00 0.00 0.00 Town Environment Project P100455 2010 CN-Henan Ecological Livestock Project 80.00 0.00 0.00 0.00 0.00 79.80 0.00 0.00 P099751 2010 CN-Sustainable Dev. in Poor Rural Areas 100.00 0.00 0.00 0.00 0.00 99.75 0.00 0.00 P101716 2010 CN-Jilin Food Safety 100.00 0.00 0.00 0.00 0.00 91.75 -7.33 0.00 P081615 2010 CN-Taiyuan Urban Transport Project 150.00 0.00 0.00 0.00 0.00 149.63 0.00 0.00 P096920 2010 CN-Ningxia Highway 250.00 0.00 0.00 0.00 0.00 224.38 -25.00 0.00 P117107 2010 CN-Tech Vocational Ed 40.00 0.00 0.00 0.00 0.00 36.90 -3.00 0.00 P106956 2010 CN - Ningbo New Countryside 50.00 0.00 0.00 0.00 0.00 48.38 0.67 0.00 Development P108627 2010 CN - Nanning Urban Environment 100.00 0.00 0.00 0.00 0.00 99.75 0.00 0.00 P111163 2010 CN-Xinjiang Water Conservation Project 100.00 0.00 0.00 0.00 0.00 99.75 0.00 0.00 P111421 2010 CN-Anhui Medium Cities Urban 100.00 0.00 0.00 0.00 0.00 99.75 0.00 0.00 Transport P112759 2010 Shandong Ecological Afforestation 60.00 0.00 0.00 0.00 0.00 53.85 -6.00 0.00 P112838 2010 CN-Wuhan Second Urban Transport 100.00 0.00 0.00 0.00 0.00 99.75 0.00 0.00 P113766 2010 CN-Energy Efficiency Financing II 100.00 0.00 0.00 0.00 0.00 99.75 0.00 0.00 P086446 2010 CN-Chongqing Urban-Rural Integration 84.00 0.00 0.00 0.00 0.00 75.79 -4.67 0.00 Project P096926 2009 CN-Jiangsu Water and Wastewater Project 130.00 0.00 0.00 0.00 0.00 92.40 -6.61 0.00 P096923 2009 CN-Shanghai APL III 200.00 0.00 0.00 0.00 0.00 199.50 15.77 0.00 P096812 2009 CN-Yunnan Urban Env 150.00 0.00 0.00 0.00 0.00 128.04 -2.08 0.00 P096707 2009 CN - GD Tech&Vocational ED and 20.00 0.00 0.00 0.00 0.00 17.25 3.05 0.00 Training P096556 2009 CN-Eco-Farming 120.00 0.00 0.00 0.00 0.00 92.43 -2.27 0.00 P091950 2009 CN-Guizhou Cultural and Natural 60.00 0.00 0.00 0.00 0.00 59.70 7.68 0.00 Heritage P114107 2009 CN-Wenchuan Earthquake Recovery 710.00 0.00 0.00 0.00 0.00 613.33 272.50 0.00 Project P112359 2009 CN-NanGuang Railway 300.00 0.00 0.00 0.00 0.00 299.25 0.04 0.00 P107559 2009 CN-Guizhou-Guangzhou Railway 300.00 0.00 0.00 0.00 0.00 299.25 16.67 0.00 P101988 2009 CN-Jiangxi Shihutang Navi & 100.00 0.00 0.00 0.00 0.00 65.36 43.48 0.00 Hydropower P101829 2009 CN Xining Flood and Watershed Mgmt 100.00 0.00 0.00 0.00 0.00 74.30 0.22 0.00 P101258 2009 CN-Hubei Yiba Highway 150.00 0.00 0.00 0.00 0.00 148.63 39.02 0.00 P100968 2009 CN-Shanxi Coal Bed Methane 80.00 0.00 0.00 0.00 0.00 79.80 23.20 0.00 Development P096925 2008 CN- Integrated Environment 100.00 0.00 0.00 0.00 0.00 87.94 20.86 0.00 Improvement Project P099224 2008 CN-Liaoning Med. Cities (LMC) III 191.00 0.00 0.00 0.00 0.00 154.92 62.96 0.00 P099112 2008 CN-Anhui Highway Rehab & 200.00 0.00 0.00 0.00 0.00 42.96 -70.04 0.00 Improvement

56 P099062 2008 CN-ShiZheng Railway 300.00 0.00 0.00 0.00 0.00 227.91 5.33 0.00 P093963 2008 CN-Guiyang Transport 100.00 0.00 0.00 0.00 0.00 32.77 13.50 0.00 P093882 2008 CN-Shandong Flue Gas Desulfurization 50.00 0.00 0.00 0.00 0.00 33.95 29.14 0.00 P092631 2008 CN-Xi'an Sustainable Urban Transport 150.00 0.00 0.00 0.00 0.00 130.24 12.98 15.23 P091949 2008 CN-Gansu Cultural & Natural Heritage 38.40 0.00 0.00 0.00 0.00 20.68 -2.42 0.00 P084437 2008 CN-Rural Health 50.00 0.00 0.00 0.00 0.00 36.35 -9.86 0.00 P084874 2008 CN- Energy Efficiency Financing 200.00 0.00 0.00 0.00 0.00 123.35 54.41 0.00 P085376 2008 CN-Migrant Skills Dev. and Employment 50.00 0.00 0.00 0.00 0.00 47.45 11.91 0.00 P087224 2008 CN- Urban Environment 84.00 0.00 0.00 0.00 0.00 70.14 40.75 0.00 P077752 2007 CN-SHANDONG ENVMT 2 147.00 0.00 0.00 0.00 0.00 60.11 -14.39 0.00 P081776 2007 CN-GUANGDONG/PRD2 96.00 0.00 0.00 0.00 0.00 64.06 23.23 0.00 P083322 2007 CN-SICHUAN URBAN DEV 180.00 0.00 0.00 0.00 0.00 79.86 74.69 0.00 P086515 2007 CN-3rd National Railway 200.00 0.00 0.00 0.00 0.00 35.91 -2.49 0.00 P088964 2007 CN-Guangxi Integrated Forestry Dev 100.00 0.00 0.00 0.00 0.00 5.70 -42.46 0.00 P092618 2007 CN-LIAONING MED CITIES INFRAS 2 173.00 0.00 0.00 0.00 0.00 133.92 46.71 0.00 P095315 2007 CN-W. Region Rural Water & Sanitation 25.00 0.00 0.00 0.00 0.00 9.65 0.55 0.00 P091020 2007 CN-Fujian Highway Sector Investment 320.00 0.00 0.00 0.00 0.00 16.62 -50.25 0.00 P096285 2007 CN-MSE Finance 100.00 0.00 0.00 0.00 0.00 5.00 5.00 0.00 P081348 2006 CN-HENAN TOWNS WATER 150.00 0.00 0.00 0.00 0.00 100.30 65.30 0.00 P081255 2006 CN-Changjiang/ Watershed 100.00 0.00 0.00 0.00 0.00 49.44 31.11 -0.04 Rehabilitation Project P070519 2006 CN-Fuzhou Nantai Island Peri-Urban Dev 100.00 0.00 0.00 0.00 0.00 24.69 14.27 -8.81 P075732 2006 CN-SHANGHAI URBAN APL2 180.00 0.00 0.00 0.00 0.00 61.55 49.05 0.00 P096158 2006 CN-Renewable Energy II (CRESP II) 86.33 0.00 0.00 0.00 1.65 8.86 10.51 0.00 P099992 2006 CN-Liaoning Medium Cities 218.00 0.00 0.00 0.00 0.00 97.11 49.11 0.00 Infrastructure P085124 2006 CN-Ecnomic Reform Implementation 20.00 0.00 0.00 0.00 0.00 12.85 21.51 0.00 P086629 2006 CN-Heilongjiang Dairy 100.00 0.00 0.00 0.00 30.00 15.62 45.12 0.00 P069862 2005 CN - Agricultural Technology Transfer 100.00 0.00 0.00 0.00 0.00 9.44 9.44 0.00 P071094 2005 CN - Poor Rural Communities 100.00 0.00 0.00 0.00 0.00 1.22 1.22 0.00 Development P075730 2005 CN-HUNAN URBAN DEV 172.00 0.00 0.00 0.00 0.00 87.44 87.10 14.44 P081161 2005 CN-CHONGQING SMALL CITIES 180.00 0.00 0.00 0.00 0.00 31.60 21.07 0.00 P081346 2005 CN-LIUZHOU ENVIRONMENT MGMT 100.00 0.00 0.00 0.00 0.00 12.55 10.38 0.00 P075728 2004 CN-GUANGDONG/PRD UR ENVMT 128.00 0.00 0.00 0.00 0.92 49.44 50.37 47.12 P077137 2004 CN-4th Inland Waterways 91.00 0.00 0.00 0.00 0.46 0.87 1.33 0.87 P066955 2004 CN-ZHEJIANG URBAN ENVMT 133.00 0.00 0.00 0.00 0.00 14.09 14.09 4.77 P040599 2003 CN-TIANJIN URB DEV II 150.00 0.00 0.00 0.00 0.00 51.11 51.11 39.02 Total: 9,196.73 0.00 0.00 0.00 33.03 5,975.14 1,107.54 112.60

CHINA STATEMENT OF IFC‟s Held and Disbursed Portfolio In Millions of US Dollars

Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic.

57 2002 ASIMCO 0.00 10.00 0.00 0.00 0.00 10.00 0.00 0.00 2006 ASIMCO 0.00 0.00 4.12 0.00 0.00 0.00 3.61 0.00 2005 BCCB 0.00 59.21 0.00 0.00 0.00 59.03 0.00 0.00 2003 BCIB 0.00 0.00 12.04 0.00 0.00 0.00 0.00 0.00 2006 BUFH 8.14 0.00 0.00 0.00 8.14 0.00 0.00 0.00 2005 Babei 0.00 5.00 0.00 0.00 0.00 5.00 0.00 0.00 Babei Necktie 11.00 0.00 0.00 6.00 8.94 0.00 0.00 4.88 1999 Bank of Shanghai 0.00 21.76 0.00 0.00 0.00 21.76 0.00 0.00 2000 Bank of Shanghai 0.00 3.84 0.00 0.00 0.00 3.84 0.00 0.00 2002 Bank of Shanghai 0.00 24.67 0.00 0.00 0.00 24.67 0.00 0.00 2005 BioChina 0.00 3.70 0.00 0.00 0.00 3.13 0.00 0.00 2002 CDH China Fund 0.00 2.02 0.00 0.00 0.00 0.00 0.00 0.00 2005 CDH China II 0.00 17.99 0.00 0.00 0.00 11.38 0.00 0.00 2006 CDH Venture 0.00 20.00 0.00 0.00 0.00 0.51 0.00 0.00 2005 CT Holdings 0.00 0.00 40.00 0.00 0.00 0.00 0.00 0.00 2004 CUNA Mutual 0.00 10.53 0.00 0.00 0.00 0.00 0.00 0.00 2006 Capital Today 0.00 25.00 0.00 0.00 0.00 0.32 0.00 0.00 2005 Changyu Group 0.00 18.07 0.00 0.00 0.00 18.07 0.00 0.00 1998 Huarong 3.36 3.20 0.00 3.13 3.36 3.20 0.00 3.13 2004 China Green Ener 20.00 0.00 0.00 0.00 15.00 0.00 0.00 0.00 2004 China Re Life 0.00 0.27 0.00 0.00 0.00 0.27 0.00 0.00 1994 China Walden Mgt 0.00 0.01 0.00 0.00 0.00 0.01 0.00 0.00 2006 Chinasoft 0.00 0.00 15.00 0.00 0.00 0.00 10.00 0.00 2004 Colony China 0.00 15.31 0.00 0.00 0.00 9.29 0.00 0.00 2004 Colony China GP 0.00 0.84 0.00 0.00 0.00 0.49 0.00 0.00 2006 Conch 81.50 40.93 0.00 0.00 81.50 0.00 0.00 0.00 2006 Dagang NewSpring 25.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2002 Darong 10.00 0.24 0.00 8.00 6.67 0.24 0.00 5.33 2006 Deqingyuan 0.00 2.85 0.00 0.00 0.00 2.85 0.00 0.00 1994 Dynamic Fund 0.00 2.21 0.00 0.00 0.00 2.01 0.00 0.00 2007 Epure 0.00 10.00 0.00 0.00 0.00 0.00 0.00 0.00 2004 Fenglin 17.64 0.00 6.00 13.47 13.64 0.00 6.00 12.53 2006 Fenglin HJ MDF 0.23 0.00 0.00 3.27 0.00 0.00 0.00 0.00 2005 Five Star 0.00 0.00 7.00 0.00 0.00 0.00 0.00 0.00 2006 GDIH 50.85 0.00 0.00 0.00 50.85 0.00 0.00 0.00 2003 Great Infotech 0.00 1.73 0.00 0.00 0.00 1.03 0.00 0.00 2006 Hangzhou RCB 0.00 10.85 0.00 0.00 0.00 0.00 0.00 0.00 2005 HiSoft Tech 0.00 4.00 0.00 0.00 0.00 3.00 0.00 0.00 2006 HiSoft Tech 0.00 4.34 0.00 0.00 0.00 1.74 0.00 0.00 2004 IB 0.00 52.18 0.00 0.00 0.00 52.18 0.00 0.00 2004 Jiangxi Chenming 40.00 12.90 0.00 18.76 40.00 12.90 0.00 18.76 2006 Launch Tech 0.00 8.35 0.00 0.00 0.00 8.33 0.00 0.00 2001 Maanshan Carbon 5.25 2.00 0.00 0.00 5.25 2.00 0.00 0.00 2005 Maanshan Carbon 11.00 1.00 0.00 0.00 5.00 1.00 0.00 0.00 2005 Minsheng 15.75 0.00 0.00 0.00 7.00 0.00 0.00 0.00 2006 Minsheng & IB 25.09 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2001 Minsheng Bank 0.00 23.50 0.00 0.00 0.00 23.50 0.00 0.00 2005 Minsheng Bank 0.00 2.80 0.00 0.00 0.00 2.79 0.00 0.00 2001 NCCB 0.00 8.94 0.00 0.00 0.00 8.82 0.00 0.00

58 1996 Nanjing Kumho 0.00 3.81 0.00 0.00 0.00 3.81 0.00 0.00 2004 Nanjing Kumho 31.38 2.23 0.00 0.00 31.38 2.23 0.00 0.00 2006 Neophotonics 0.00 0.00 10.00 0.00 0.00 0.00 10.00 0.00 2001 New China Life 0.00 5.83 0.00 0.00 0.00 5.83 0.00 0.00 2005 New Hope 0.00 0.00 45.00 0.00 0.00 0.00 0.00 0.00 1995 Newbridge Inv. 0.00 0.22 0.00 0.00 0.00 0.22 0.00 0.00 2005 North Andre 8.00 6.74 0.00 0.00 0.00 4.25 0.00 0.00 2003 PSAM 0.00 2.01 0.00 0.00 0.00 0.00 0.00 0.00 RAK China 13.00 0.00 0.00 0.00 13.00 0.00 0.00 0.00 2006 Renaissance Sec 0.00 0.00 20.04 0.00 0.00 0.00 0.00 0.00 2006 Rongde 0.00 35.00 0.00 0.00 0.00 31.38 0.00 0.00 SAC HK Holding 0.00 1.60 0.00 0.00 0.00 1.00 0.00 0.00 2003 SAIC 12.00 0.00 0.00 0.00 12.00 0.00 0.00 0.00 2006 SBCVC 0.00 20.00 0.00 0.00 0.00 2.00 0.00 0.00 2000 SEAF SSIF 0.00 3.74 0.00 0.00 0.00 3.37 0.00 0.00 SH Keji IT 3.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2004 SHCT 38.18 0.00 0.00 28.64 29.04 0.00 0.00 21.78 2004 SIBFI 0.14 0.07 0.00 0.00 0.00 0.07 0.00 0.00 1998 Shanghai Krupp 19.25 0.00 0.00 36.75 19.25 0.00 0.00 36.75 2006 Shanshui Group 50.00 5.50 2.20 0.00 50.00 5.50 0.00 0.00 1999 Shanxi 12.61 0.00 0.00 0.00 12.61 0.00 0.00 0.00 SinoSpring 0.00 0.00 20.00 0.00 0.00 0.00 0.00 0.00 Stora Enso 20.83 0.00 0.00 4.17 11.00 0.00 0.00 0.00 2005 Stora Enso 29.17 0.00 0.00 20.83 0.00 0.00 0.00 0.00 2006 Stora Enso 50.00 0.00 0.00 175.00 0.00 0.00 0.00 0.00 2006 TBK 4.00 0.00 0.00 0.00 2.00 0.00 0.00 0.00 2006 VeriSilicon 0.00 1.00 0.00 0.00 0.00 1.00 0.00 0.00 Wanjie High-Tech 9.89 0.00 0.00 0.00 9.89 0.00 0.00 0.00 2004 Wumart 0.00 1.62 0.00 0.00 0.00 1.62 0.00 0.00 2003 XACB 0.00 17.95 0.00 0.00 0.00 0.64 0.00 0.00 2004 Xinao Gas 25.00 10.00 0.00 0.00 25.00 10.00 0.00 0.00 2006 Zhejiang Glass 50.00 24.96 0.00 18.00 0.00 0.00 0.00 0.00 2003 Zhengye-ADC 10.43 0.00 0.00 4.87 10.43 0.00 0.00 4.87 2002 Zhong Chen 0.00 4.78 0.00 0.00 0.00 4.78 0.00 0.00 2006 Zhongda_Yanjin 21.89 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Total portfolio: 733.58 577.30 181.40 340.89 470.95 371.06 29.61 108.03

Approvals Pending Commitment

FY Approval Company Loan Equity Quasi Partic. 2002 SML 0.00 0.00 0.00 0.00 2004 NCFL 0.00 0.00 0.02 0.00 2007 Xinao CTC 0.04 0.01 0.00 0.14 2004 China Green 0.00 0.00 0.01 0.00 2006 Launch Tech 0.01 0.00 0.00 0.00 2005 MS Shipping 0.00 0.01 0.00 0.00 2003 Peak Pacific 2 0.00 0.01 0.00 0.00 Total pending commitment: 0.05 0.03 0.03 0.14

59 Annex 14: Country at a Glance CHINA: Anhui Shaying River Channel Improvement Project

60 61 Annex 15: Maps CHINA: Anhui Shaying River Channel Improvement Project

62 100° 110° RUSSIAN FEDERATION

CHINA ANHUI SHAYING RIVER CHANNEL GulianGulian HEILONGJIANG MONGOLIA IMPROVEMENT PROJECT ManguiMangui JILIN

PROJECT RIVER XINJIANG MordagaMordaga JAPAN LIAONING Sea of D.P.R. OF Japan BANK-FUNDED INLAND WATERWAY (IWW) PROJECTS NEI MONGOLHeiheHeihe BEIJING KOREA BEIJING BANK-FUNDED SEA PORTS TIANJIN HEBEI REP. OF MAJOR NAVIGABLE WATERWAYS WuyilingWuyiling KOREA 50° 50° SHANXI RIVER PORTS SHANDONG Yellow ManzhouliManzhouli TongjiangTongjiang QINGHAI NINGXIA Bei’anBei’an Sea SEA PORTS HailarHailar HegangHegang GANSU HENAN JIANGSU MAJOR ROADS SHAANXI ShuangyashanShuangyashan ANHUIANHUI JiamusiJiamusi SonglingSongling QiqiharQiqihar EXISTING RAILWAYS . SHANGHAI SuihuaSuihua R n HulinHulin HUBEI a East MAIN CITIES XIZANG AndaAnda H HEILONGJIANGHEILONGJIANG YirshiYirshSICHUANi China ZHEJIANG JixiJixi PROVINCE CAPITALS Sea CHONGQING HarbinHaJIANGXIrbin NATIONAL CAPITAL HUNAN PROVINCE BOUNDARIES GUIZHOU FUJIANMudanjiangMudanjiang National BaichengBaicheng SuifenheSuifenhe Capital INTERNATIONAL BOUNDARIES TAIWAN PACIFIC YUNNAN Province GUANGXI GUANGDONG JilinJilin ChangchunChangchun Boundaries HONG KONG OCEAN MYANMAR International MACAO TumenTumen TongliaoTonVIETNAMgliao JILINJILIN Boundaries LAO SongjiangheSongjianghe MONGOLIAM O N G O L I A P.D.R. HAINANSipingSiping PHILIPPINES ErenhotErenhot

120° 130° YuanbaoshanYuanbaoshan FuxinFuxin FushunFushun HuadeHuade ShenyangShenyang LIAONINGLIAONING 40° LiaoyangLiaoyang BenxiBenxi JinzhouJinzhou AnshanAnshan Sea YingkouYingkou NEINEI MMONGOLONGOL DandongDandong of JiningJining ZhangjiakouZhangjiakou HohhotHohhot DEM.DEM. PEOPLE’SPEOPLE’S BEIJINGBEIJING Japan To Urumqi QinhuangdaoQinhuangdao REP.REP. OFOF KOREAKOREA BaotouBaotou DatongDatong BEIJINGBEIJING

YumenYumen TIANJINTIANJIN DalianDalian

l TianjinTianjin l TanguTangu Bo Hai

ShizuishanShizuishan l

ShenmuShenmu l

HEBEIHEBEI l YantaiYantai REP.REP. OOFF

YinchuanYinchuan ShijiazhuangShijiazhuangl

l ShengliShengli KOREAKOREA WuweiWuwei HengshuiHengshui l DezhouDezhou

ZhongweiZhongwei TaiyuanTaiyuan l ZiboZibo

NINGXIANINGXIA l

(Yellow River) JinanJinan Huang He l Yan’anYan’an SHANXISHANXI QingdaoQingdao XiningXining HezeHeze l HandanHandan SHANDONGSHANDONG Yellow ChangzhiChangzhi l

YanzhouYanzhoul ShijiusuoShijiusuo QINGHAIQINGHAI LanzhouLanzhou ll JiaozuoJiaozuo Sea HoumaHouma Xeitai No.2 l ZaozhuangZaozhuang (IWW2) Grand LianyungangLianyungang YueshanYueshan KaifengKaifeng l TongchuanTongchuan ShangqiuShangqiu l CanalPixianPixian GANSUGANSU XuzhouXuzhou l SHAANXISHAANXI LuoyangLuoyang ZhengzhouZhengzhou l Suqian No.3 (IWW2) TianshuiTianshui l HuaibeiHuaibei l Huanyin No.3 (IWW2) BaojiBaoji Shaying l JAPANJAPAN Xi’anXi’an PingdingshanPingdingshan Huanian No.3 (IWW2)

River l MengmiaoMengmiao JIANGSUJIANGSU Jianbi No.2 (IWW2) HENANHENAN BengbuBengbu l FuyangFuyang HuainanHuainan ZhenjiangZhenjiang l NantongNantong YangpingguanYangpingguan AnkangAnkang NanjingNanjing ZhangjiagangZhangjiagang XiangfanXiangfan WuxiWuxi HefeiHefei WuhuWuhu ShanghaiShanghai 30°

Cuijiaying H Dama (IWW5) n ANHUIANHUI JiaxingJiaxing Channel HUBEIHUBEI R HuzhouHuzhou . TonglingTongling Improvements G (IWW1) N Chang Jiang (Yangtze River) A WuhanWuhan AnqingAnqing HangzhouHangzhou East Z I ChengduChengdu NingboNingbo XIZANG X HuangshiHuangshi BailutangBailutang ZhichengZhicheng SICHUANSICHUAN DaDa XianXian For Detail, See 30° JiujiangJiujiang ZHEJIANGZHEJIANG China JingdezhenJingdezIBRDhen 37400 ShimunShimun ChongqingChongqing ChenglingjiChenglingji ZigongZigong XingtanbianXingtanbian Sea XiaonanhaiXiaonanhai NanchangNanchang Zhuzhou Dam/ WenzhouWenzhou Shiplock (IWW3) LuohuangLuohuang Yingtan YibinYibin ChangshaChangsha YingtanYingtan XiangtanXiangtan ZhuzhouZhuzhou JIANGXIJIANGXI XichangXichang HuaihuaHuaihua HUNANHUNAN PingziangPingziang ShaowuShaowu ZhijiangZhijiang Channel JiuchangJiuchang Channel Imp.(IWW3) Improvements LaizhouLaizhou R Dayuandu Dam Shihutang

A (IWW1) (IWW1) Dam M HengyangHengyang

N FuzhouFuzhou GuiyangGuiyang LeLe AnAn Yong’anYong’an A

Y PanzhihuaPanzhihua FUJIANFUJIAN MYANMAR M GUIZHOUGUIZHOU ZhangpingZhangping DongchuanDongchuan Hongshui

GuilinGuilin XiamenXiamen He KunmingKunming Xiniu Right Dam MeixianMeixian TAIWANTAIWAN YUNNANYUNNAN LiuzhouLiuzhou River Naji Dam GUANGXIG U A N G X I GUANGDONGGUANGDONG ShantouShantou (Yujiang) WuzhouWuzhou GuipingGuiping GuangzhouGuangzhou LongchuanLongchuan GuigangGuigang Xijiang ShenzhenShenzhen

Yujiang iver HongHong KKongong Left R NanningNanning Channel HONGHONG KKONGONG MacaoMacao Channel Improvements (IWW4) Improvements (Zuojiang) MACAOMACAO 20° (IWW4) MaomingMaoming Channel Improvements (IWW2) Guigang Dam (IWW1) VIETNAMVIETNAM BeihaiBeihai ShanjiangShanjiang MYANMARMYANMAR 0 100 200 300 400 500 MILES Channel Improvements (IWW1) 0 200 400 600 800 KILOMETERS 20° LAOLAO PEOPLE’SPEOPLE’S HaikouHaikou

DEM.DEM. REP.REP. 37399 IBRD MARCH 2011 HAINANHAINAN This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information THAILANDTHAILAND shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any PHILIPPINESPHILIPPINES endorsement or acceptance of such boundaries. 100° 110° 120° RUSSIAN FEDERATION

WeishanWeishan

SHANDONGS H A N D O N G LakeLake HEILONGJIANG

l MONGOLIA

l l

l JILIN l

l l l l l l JAPAN l XINJIANG l LIAONING Sea of l MONGOL l D.P.R. OF Japan l NEI BEIJING l l KOREA l l BEIJING l TIANJIN l l l l HEBEI l l l REP. OF l l l l l l l l l l l l l l l l l l l l l KOREA

l l l SHANXI l l SHANDONG Yellow l l

l l

l QINGHAI NINGXIA Sea l

l l l l l GANSU l l l l l l l l l l JIANGSU l l l l HENAN l l SHAANXI l l l l l l l l l l ANHUIANHUI l l l l l l l . l l SHANGHAI l R l l l l l l l l l l l l l l n l l l l l l a East l l NG HUBEI H l XIZANG SICHUAN l China l ZHEJIANG ONGQI Sea CH JIANGXI HUNAN National GUIZHOU FUJIAN

Capital TAIWAN PACIFIC YUNNAN Province GUANGXI GUANGDONG HONG KONG OCEAN JIANGSUJ IMYANMARABoundariesN G S U International MACAO HuaibeiHuaibei Boundaries LAO VIETNAM

BozhouBozhou P.D.R. HAINAN PHILIPPINES l

l

l l l l l l l l l l l l l SuzhouSuzhou l l l S l l l h l l l l l l l l l l l l l l a l y l i l n LingbiLingbi l g l l l l R l l l l l SiSi XXianian i l l l v GuoyangGuoyl lang l e l l l r l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l GuzhenGuzhen HongzeHongze l l l l MengchengMengcheng l l JieshouJieshou LakeLake l l l l l l l HENANH E N A N l l l LixinLixin l l r l ve l i l

lll lll l

l l llll l l l l l lll llllllll l l l l R l lll l l l ll i l l l l l l l l a l l l l l l l l l l u l l l l l l l l l l l l HuaiyuanHuaiyuan BengbuBengbu l Cih l l l l l l l H u l l l aix l l l lll l in Can l al l FuyangFuyang S l ha l ying l Riv GaoyouGaoyou l er l FengyangFengyang l LakeLake l MingguangMingguang l l

l

l

l

l FengtaiFengtai l TianchangTianchang l l

l YingshangYingshang l FunanFunan l l r l e HuainanHuainan l iv l R ShouShou XianXian ai Hu

l

MohekouMohekou DingyuanDingyuan l

l

l

l l

l l

l

l

l l l l

l l

l

l l l l l l l HuoqiuHuoqiu l

l l

l WabuWabu l

l l ChuzhouChuzhou

l l

l l

l l

l

l l

LakeLake l

l l l

l l

l

l l l

l l

l

l l l l

l l

l

l l

l l

l

l l l

l l l l l

l l l

l l

l

l l l

l l

l

l C.

l i

l l a

l h l

l

l g QuanjiaoQuanjiao l

l l n l

l l l l

a l l NANJINGNANJING l

l l l l

i

i l l l l l

l l l l l l

l l l l

l l l J

J l l l l l

l l l

l l

l

l l l l l

l l g

l l l l

l l l l l l l l

l l l n l l l

l l l l l l l a

l l l i

l l l J l l l l l l l l l l l

l l

l l FeidongFeidong l l l g l l l l l l n l l l

l l l l l l l l l l a

l l l l

l l l h

l l l l

YejiYeji l HEFEIHEFl EI l l l C JIANGSUJ I A N G S U

l yu l R l l e . l H l l Ma'anshanMa'anshan l l l LuanLuan FeixiFeixi

JinzhaiJinzhai l

l l

l l l l l l l ChaohuChaohu H ey ChaoChao u

C BoshiBoshi ShuchengShucheng LakeLake h LakeLake a HuoshanHuoshan nnel WuhuWuhu Wushen Canal

LujiangLujiang ng a i NanyiNanyi 0255075 J

TongchengTongcheng g LakeLake

n a

KILOMETERS a XuanzhouXuanzhou

h h C HUBEIH U B E I C NanlingNanling TonglingTongling GuangdeGuangde CaiziCaizi This map was produced by the Map Design Unit of The World Bank. YuexiYuexi LakeLake The boundaries, colors, denominations and any other information GaoheGaohe shown on this map do not imply, on the part of The World Bank JingJing XianXian Group, any judgment on the legal status of any territory, or any HualiangtingHualiangting GuichiGuichi QingyangQingyang endorsement or acceptance of such boundaries. ReservoirReservoir NingguoNingguo

AnqingAnqing TaipingTaiping LakeLake TaihuTaihu LingyangLingyang WuchangWuchang CHINA LakeLake JingdeJingde LonggunLonggun ShitaiShitai ANHUI WATERWAY DEVELOPMENT PLAN LakeLake (TWO-TRUNK AND THREE-BRANCH) DongzhiDongzhi TangkouTangkou JixiJixi ZHEJIANGZHEJIANG BRANCH RIVERS RAILROADS YiYi XXianian ang Ji TRUNK RIVERS MAIN CITIES ng Cha llll CANALS PREFECTURE CAPITALS HuangshanHuangshan MARCH 2011 EXPRESSWAYS PROVINCE CAPITAL IBRD 37400 PoyangPoyang NATIONAL ROADS PROVINCE BOUNDARIES LakeLake JIANGXIJ I A N G X I IBRD 37401 MARCH 2011 15 20 25 CHINA KILOMETERS PROJECT RIVER SECTION TRANSVERSAL RIVERS CANALS PROJECT BRIDGES PROJECT SERVICE AREAS PROJECT ANCHORAGE AREAS UNDER CONSTRUCTION LOCK EXISTING LOCKS EXISTING EXPRESSWAYS ROADS NATIONAL RAILROADS PREFECTURE CAPITAL CAPITALS COUNTY-LEVEL PROVINCE BOUNDARIES PROJECT A A SA SA 0510 llllll This map was produced by the Map Design Unit of The World Bank. This map was produced by the Map Design Unit of The World The boundaries, colors, denominations and any other information Bank on the part of The World shown on this map do not imply, or any Group, any judgment on the legal status of territory, endorsement or acceptance of such boundaries. ANHUI SHAYING RIVER ANHUI SHAYING CHANNEL IMPROVEMENT

l

l

l

l

l To of Sea

l Japan

JAPAN l To Huainan To To Bengbu To l o

l n a OCEAN

l PACIFIC i a

l i q Sea

East l X China g

l KOREA To Lu’an To REP. OF REP. n KOREA u

l D.P.R. OF D.P.R. a

l o i h

l h SHANGHAI a Shangqiao S Shangqiao l JILIN Shou Xian S PHILIPPINES t TAIWAN

l g

l I HEILONGJIANG n ZHEJIANG

l U e

JIANGSU r e l LIAONING H FUJIAN Fengtai iv Fengtai F

a l

N r

e R IANGXI

J r HONG KONG l e ANHUI A ANHUI

A o TIANJIN

u l v p i SHANDONG

a l

MACAO G

Map Area M l R

i

GUANGDONG l BEIJING

HEBEI

a

l u SHANXI l u o To Suzhou To HUBEI

HENAN l

k

HUNAN Huai River River Huai H Huai

BEIJING l e

l h HAINAN

l

o MONGOL l To Lu’an To

GUANGXI

I I g l

Mohekou M

NINGXIA SHAANXI CHONGQING n l NE

e l VIETNAM GUIZHOU

l h

c l

l g

GANSU l n LAO

P.D.R. l e

SICHUAN l Mengcheng Mengcheng M l YUNNAN

MONGOLIA l

l RUSSIAN

l

To Guoyang To l FEDERATION

l

l QINGHAI l r e l v g i l

n R l i

o l e if l d X l g A A

l n

l a

XIZANG l u l h Bay of l Bengal XINJIANG

l Zhuangdong Z Zhuangdong g

l I g n n i n a A A x a National Capital Province Boundaries International Boundaries h i s h Lixin Lixin L U s g g l n i n a i Yingshang Y Yingshang REP. n H Yingshang Yingshang Y a KAZAKHSTAN KYRGYZ C

lllllllllll l To Guoyang To

n

l l i

N l l x

i l l

a l l

u l l

ANHUI ANHUI A

h l

l

i l

l

Cihuaixin Canal C l

l To Guoyang To

To Guoyang To l

l l

l l

l l

l l

l l

l l l l r

l l e l SA SA

l v

l i

l l

l R l

l

a g l

l

u n

l i

l l h y Lu’an To

l l

a a

l l h

h l l S

Chahua C

l l

l g

l l

n

l l

l a l

l

y l

l

u l u

l

Fuyang F Fuyang l

p

l l i

l l a

l l u

l l h

l l g

a

l l n

Cahuaipu C Cahuaipul Chahua l

a

SA SA l l To To

y

l l

l l u l l

Fuyang F

l l l

l

l

l

l

l

l

l l

e

A A l

h

l i

r

l

a e

l n Taihe Taihe T v

i

l

a

A A

River R River l

n l

u l

Funan F Funan

l

l l A A

u l o

l ll

g l

l n l e

l i Genglou G

l a

l u

l HuaiH

l

l

l

l l

A A l

l

l

l

l l l l l l

n

l l i l b i a u u o h Huaibin H Huaibin s e i Jieshou Jieshou J g n To

Lyui r e e h iv c R n u a G Dancheng Dancheng D To Huangehuan To u i q n e h Shenqiu Shenqiu S u i q n N i e a h c Shenqiu S Shenqiu n A i Xincai X Xincai N E To Taikang To Huangehuan To g HENAN HENAN H u n o e h k g c u

n r g

e N b a v n

i g y i a

R n i a g e Xiangcheng Xiangcheng X A u

n h i Huaiyang Huaiyang H Zhengbukou Z y Zhengbukou a h N S E u o k HENAN H u i u o u y h h s g Zhoukou Zhoukou Z g n i n Pingyu Pingyu P a h Shangshui Shangshui S To To Runan To To Xuchang Luhoe