Document of The World Bank

FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No: 25590-CHA

Public Disclosure Authorized PROJECT APPRAISAL DOCUMENT

ON A

PROPOSED LOAN

IN THE AMOUNT OF US$200 MILLION

TO THE

PEOPLE'S REPUBLIC OF CHINA

FOR A Public Disclosure Authorized

WUHAN URBAN TRANSPORT PROJECT

February 12,2004

Transport Sector Unit East Asia and Pacific Region I This document has a restricted distribution and may be used by recipients only in the performance of their 1 official duties. Its contents may not otherwise be disclosed without World Bank authorization. Public Disclosure Authorized CURRENCY EQUIVALENTS

(Exchange Rate Effective January 2004)

Currency Unit = RMB Yuan RMB1.00 = US$0.12 US$l.OO = RMB8.28

FISCAL YEAR January 1 -- December 31

ABBREVIATIONS AND ACRONYMS

ATC Area Traffic Control VA Vehicle-actuated BRT Bus Rapid Transit VMS Variable Message Signs CITC China International Tendering Company WBCC Wuhan Bridge Construction Company CMIS Computerized Management Information System WBOB Bank's Beijing Office CNAO China National Audit Office WCC Wuhan Construction Commission HPAB Hubei Provincial Audit Bureau WCCTPDI Wuhan Comprehensive Transport Planning HPFB Hubei Provincial Finance Bureau And Design Institute I/M Inspection and Maintenance WGPTC Wuhan Group Public Transport Corporation MOF Ministry of Finance WMAB Wuhan Municipal Audit Bureau MPLG Municipal Project Leading Group WMCIMO Wuhan Municipal Capital Investment MVECS Motor Vehicle Emission Control Strategy Management Office NMT Non-motorized Transport WMEDRIC Wuhan Municipal Engineering Design & NMV Non Motor Vehicle Research Institute Company Ltd. OPO One Person Operation WMFB Wuhan Municipal Finance Bureau PMR Project Management Report WMG Wuhan Municipal Government PPLG Provincial Project Leading Group WPO Wuhan Project Office PSO Public Service Obligation WPTGC Wuhan Public Transport Group Company RM Road Maintenance WPTMO Wuhan PT Monitoring Office RMMS Road Maintenance Management System WTC Wuhan Transport Commission RMMIS Road Maintenance Management Information WUCFMO Wuhan Urban Construction Fund System Management Office RUE Road User Education WUCUFU Wuhan Urban Construction Utilization of SEA Strategic Environmental Assessment PMO Foreign Investment Project SEPA State Environmental Protection Administration Management Office TA Technical Assistance WUTP Wuhan Urban Transport Project TDM Travel Demand Management WUTPLG Wuhan Urban Transport Project Leading Group TM Traffic Management WUTPO Wuhan Urban Transport Project Office UTP Urban Transport Planning WUTS Wuhan Urban Transport Strategy

Vice President: Jemal-ud-din Kassum, EAPVP Country ManagedDirector: Yukon Huang, EACCF Sector ManagedDirector: Jitendra N. Bajpai, EASTR Task Team Leader/Task Manager: Edward Dotson, Senior Urban Transport Specialist, EASTR FOR OFFICLAL USE ONLY

CHINA WUHAN URBAN TRANSPORT PROJECT

CONTENTS

A. Project Development Objective Page

1. Project development objective 2 2. Key performance indicators 2

B. Strategic Context

1, Sector-related Country Assistance Strategy (CAS) goal supported by the project 3 2. Main sector issues and Government strategy 3 3. Sector issues to be addressed by the project and strategic choices 7

C. Project Description Summary

1. Project components 9 2. Key policy and institutional reforms supported by the project 10 3. Benefits and target population 11 4. Institutional and implementation arrangements 11

D. Project Rationale

1. Project alternatives considered and reasons for rejection 13 2. Major related projects financed by the Bank andor other development agencies 14 3. Lessons learned and reflected in the project design 15 4. Indications of borrower commitment and ownership 16 5. Value added of Bank support in this project 16

E. Summary Project Analysis

1. Economic 17 2. Financial 17 3. Technical 19 4. Institutional 20 5. Environmental 21 6. Social 23 7. Safeguard Policies 25

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

1. Sustainability 26 2. Critical risks 26 3. Possible controversial aspects 28

G. Main Conditions

1. Effectiveness Condition 28 2. Other 29

H. Readiness for Implementation 30

1. Compliance with Bank Policies 31

Annexes

Annex 1: Project Design Summary 32 Annex 2: Detailed Project Description 41 Annex 3: Estimated Project Costs 58 Annex 4: Cost Benefit Analysis Summary, or Cost-Effectiveness Analysis Summary 59 Annex 5: Financial Summary for Revenue-Earning Project Entities, or Financial Summary 63 Annex 6: (A) Procurement Arrangements 65 (B) Financial Management and Disbursement Arrangements 74 Annex 7: Project Processing Schedule 80 Annex 8: Documents in the Project File 81 Annex 9: Statement ofLoans and Credits 82 Annex 10: Country at a Glance 86 Annex 11 : Environmental Assessment 88 Annex 12: Resettlement 95 Annex 13: Wuhan Urban Transport Strategy 100 Annex 14: Reform of Public Transport 109

MAP(S) 1. IBRD No. 32429 2. IBRD No. 32430 3. IBRD No. 32431 CHINA Wuhan Urban Transport Project Project Appraisal Document East Asia and Pacific Region EASTR

30RROWER 381.80 1 16.40 [ 398.20 [BRD 71.00 I 129.00 I 200.00 rotal: 452.80 145.40__. 598.20.. - -. I -I-I Borrower: PEOPLE'S REPUBLIC OF CHINA Responsible agency: MUNICIPALITY OF WUHAN Project Office Address: No. 130 Yanjiang Ave. Hankou Wuhan China Contact Person: Hui Shu Zhi, Vice Director Tel: 86-27-85886173 Fax: 86-27-8281 1498 Email: Whj txmb@Public .Wh .Hb .Cn Estimated Disbursements ( Bank FYlUS$m):

Project implementation period: December 2003 - December 2008 Expected effectiveness date: 06/0 112004 Expected closing date: * 06/30/2009 A. Project Development Objective

1. Project development objective: (see Annex 1) The Wuhan Urban Transport Project will promote the development ofan integrated, efficient, and sustainable transport system for the movement ofpeople (especially the poorer sections of society) and goods in Wuhan. More specifically, the project aims to support:

(i) Investments in transport infrastructure and services that address the needs ofthe existing system - in particular, the issues related to capacity, safety and sustainability, and mobility of users, (particularly the most vulnerable sections ofsociety) within a long-term framework provided by the approved Master Plan (ii) Formulation of a transport strategy to guide investment decisions (iii) Reforms to improve performance ofbus service delivery.

2. Key performance indicators: (see Annex 1) The key performance indicators to measure the progress on each ofthe three project development objectives are listed below (see Annex 1):

(i) Investments in transport infrastructure and services 0 Capacity and EfJiciency: to evaluate improvements in - Travel times on key external/cross town, cross river and central area routes - Average daily ridership on the bus system

0 Mobility: reduction in travel times for users of most heavily used modes oftransport

0 Sustainability: - Implementation ofannual road maintenance plans based on the Road Maintenance Management System (RMMS) - Formulation and adoption ofan effective motor vehicle emission control strategy

(ii) Support for the Wuhan Urban Transport Strategy (WUTS) through the following measures: 0 Further detailed studies as proposed in the WUTS Study Report 0 Preparation of a transport policy “White Paper” 0 Identification of Five year investment programs

(iii) Bus system reform through 0 Completion ofbus route tendering on a competitive basis across the bus system

The Wuhan Municipal Government (WMG) agreed with these performance indicators at negotiations. For the road safety interventions in the project, as it is technically not possible to forecast the expected reduction in the incidence and severity ofaccidents, particularly among pedestrians and non-motorized transport (NMT) users, no indicator could be agreed. However the interventions will be monitored and evaluated.

-2- B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex 1) Document number: R2002-02 18 [IFC/R2002-02241 Date of latest CAS discussion: 12/19/02 The CAS supports China’s transition from a rural, agricultural society to an urban, industrial society, and from a centrally planned to a more globally integrated market-based economy. The CAS also notes the growing concerns about the social consequences and sustainability ofChina’s economic growth. These economic trends, at the core of China’s Tenth Five-year Plan, also form the basis for the three themes ofBank’s operation strategy in China, namely to: (1) Improve the business environment and help accelerate China’s transition to a market economy (2) Address the needs of the poorer and disadvantaged people and regions (3) Facilitate a more environmentally sustainable development process

The Wuhan Urban Transport Project (WUTP) would enhance the urban efficiency and mobility within an important medium sized city situated in the center of China, and encourage a market-based delivery ofurban transport services, particularly public transport.

The physical and institutional elements ofthe project address the three CAS themes. Development of a sustainable and balanced urban transport system would improve the business environment and labor mobility in Wuhan. Reform ofstate owned bus companies and introduction of competition in the supply ofbus services would accelerate China’s transition to a market economy. The project also supports improvement in safety oftransport facilities and mobility of the economically disadvantaged through investments in traffic management measures, and improved facilities for pedestrians, NMT and public transit. Finally, the development of a comprehensive emission mitigation program would promote an environmentally sustainable development process.

2. Main sector issues and Government strategy: 2.1 Main Sector Issues.

2.1.1 Rapid growth in urbanization and motorization. Both trends are actively encouraged by the central government and expected to grow further in the foreseeable future. The urban population in China is projected to increase from 30.2 percent (3 19 million) in 1995 to 49.1 percent of the total population (71 1.7 million) in 2020. Car ownership, which has increased rapidly in the last decade, is projected to increase tenfold from a current average of 10 to 100 per 1000 residents in 2020. Both trends are also true ofWuhan: the city’s Master Plan projects an increase in the city’s population from 3.9 million in 1998 to 4.5 million in 2020. Similarly, auto-ownership rates in the urban districts ofWuhan increased from 56 motor vehicles per 1,000 residents in 1998 to 99 per 1,000 in 2001 and are projected to increase to 1 16 in 2010 and 167 in 2020. Per-capita travel is expected to increase accordingly: from 1.98 tripdday in 1998 to 2.41 in 2010 and 2.65 in 2020. Economic opportunities in growing Chinese cities like Wuhan are extensive, and if ‘hukou ’ related restrictions to urban migration are relaxed it is likely that growth in the city could be even greater.

-3- 2.1.2 Accelerated investment in road capacity without adequate planning. Rapid increase in population and number ofvehicles is overwhelming the urban transport infrastructure in Wuhan, which typifies the general experience of most Chinese cities. Its transport infrastructure is overburdened, and the last decade saw a decline in mobility for most classes ofurban trips. City authorities in Wuhan are addressing these issues primarily with an ambitious road construction program. Significant local financing is available from domestic banks for investments in road expansion.

However, this ‘solution’ creates as many problems as it solves. First and foremost, mobility on non-motorized modes is further degraded. Secondly, the planning process is not systematic and comprehensive, and does not assure that a well thought out, properly prioritized road-building program emerges from what starts (as is the case elsewhere in the world) as a list ofperceived priorities. Perhaps the most important challenge in Wuhan (and in other similar Chinese cities) is to ensure that the sign8cant investments that will be made in urban infiastructure in the coming two decades, will eficiently enhance the mobility and safety of residents in a sustainable manner.

While the description that follows is particular to Wuhan, it is equally true ofmany other Chinese cities.

2.2 About Wuhan

Wuhan, the capital of Hubei Province, is one ofthe foremost centers of economic growth outside the coastal regions ofChina. The Yangtze and Han rivers divide the city of Wuhan into the three towns of Wuchang, Hankou and Hanyang. In 1998, the GDP ofthis industrial, commercial and trade center was FWB 101.5 billion. The average GDP growth from 1990 to 1998 was 15.3 percent higher than the national average. The city’s economy is expected to grow at 7 percent to 9 percent annually in the near future.

2.3 Trends in mobility

2.3.1 Declining pedestrian and cyclist mobility. Though still significant (37 percent pedestrian and 29 percent bicycle trips together accounted for two-thirds of all trips in Wuhan in a 1998 survey), the mobility ofpedestrians and cyclists is declining, as motor vehicles progressively dominate the roads. NMT, traditionally the mainstay ofurban transport in Chinese cities and still the mainstay of the poorer sections ofthe society, currently suffers from inadequate attention from city transport planners. This is particularly true from a safety perspective: pedestrian crossings are limited, traffic management for cyclists is based mainly on control and prohibition, there are no NMT networks, and cyclists are often forced to operate in dangerous mixed traffic. The construction ofnew roads, built essentially to accommodate automobiles, is aggravating these problems.

2.3.2 Traffic congestion resulting from inadequate capacity and poor management. The road network remains inadequate and overburdened by the increase in the number ofmotor vehicles. Though increasing in numbers, motor vehicles accounted for only 12 percent of all trips in 1998. The functional road hierarchy is incomplete and ill-defined resulting in most traffic being loaded onto a few major arterials, key lmks in the network are missing, and traffic management (signals, channelization) is limited and often inadequate (long cycle times, no red aspects at 20 percent ofthe signaled junctions). Encroachment from businesses and parking further exacerbates this shortage. In

-4- Wuhan, three specific forms oftraffic significantly increase congestion: traffic associated with the Hankou town centre, cross-river traffic in the city core that principally uses two Yangtse river crossings, and some ofthe through and intemal traffic that comes through the city center.

2.3.3 Inadequately maintained roads. Maintenance budgets typically provide only 40 percent of what is, in fact, required. Much ofthis provision goes towards staff salaries, leaving little for road maintenance. There is no systematic maintenance or asset management system in place. Organizationally, government and operator functions are combined in public maintenance units and a number of different government organizations are responsible for road maintenance and reconstruction.

2.3.4 Public transport requires much-needed attention. Though public transport is important and growing (buses accounted for a 22 percent share oftrips in 1998 and this is forecast to grow significantly, both in share and volumes), the sector is beset by the following problems/concems/issues: 0 Limited network coverage - Despite a substantial number ofbus services (in 2001 there were seven bus companies, operating 5500 buses on 244 routes over 4300 kms), the overall coverage is limited. The route network needs revision: most bus routes are in the city center while the extensive new developments on the urban fringe are poorly served. Routes run primarily along arterial roads and access often requires long walks. 0 Poor on-street management - Bus volumes are unusually high on primary routes (approaching 500 per hour on main corridors and the Yangtse river bridges), stops are congested, and on-street management ofbuses is poor. 0 Shortage of depot and terminal facilities - More than other cities, Wuhan suffers from a shortage ofpublic transport depot and terminal facilities. Buses often have to be parked on the streets and poorly planned terminals impede efficient transfers. 0 Unclear institutional roles - Institutional problems are similar to other Chinese cities. Though plans for reform are being finalized, the roles and responsibilities between the municipality and the bus companies need clarification. Buses do not operate within a competitive/market-based environment. 0 Low fares - Fares are low, though they cover more than 90 percent ofthe operating cost (excluding capital costs), in the six state-owned bus companies (the seventh is a joint venture with a Hong Kong company). Lack of integrated networkplanning - The municipality has an ambitious plan for the construction of a rail network of six metro lines. The initial elevated line is currently under construction. However there appears to have been little integration ofrail and bus service planning.

2.4 Institutional structure and Policymaking

2.4.1 Urban transport is largely the responsibility of the municipal government - the provincial and state governments have a relatively minor role. The municipal government is responsible for planning, financing, and implementing all infrastructure, and also for operations and policy.

2.4.2 Investments in transport infrastructure are directed by a 20-year Urban Transport Master Plan developed by the municipal government. The Master Plan is a legal document that needs to be approved by the State Council (in the case ofcities with a population of over 1 million). In theory, this structure is meant to ensure continuity in the planning process and bolster technical integrity over political expediency. In practice, the task team’s experience indicates that it is in fact short-term political expediency that prevails. The Twenty-year Master Plan is a non-fiscally constrained

-5- investment plan without any systematic processes for the planning, programming and budgeting of investments. There are no requirements or incentives in the plan to formulate or implement integrated and modally balanced transport policy. Further, once a plan is approved, local authorities retain significant latitude to set priorities and timings for individual projects.

2.4.3 Most transport planning and policymaking occurs in an unsystematic ad-hoc manner. There is a multiplicity ofuncoordinated agencies, with little day-to-day contact, involved in aspects ofurban transport planning and operations. They include, the Urban Planning Bureau, the Municipal Construction Bureau, (responsible for road construction and maintenance), the Wuhan Transport Commission (responsible for public transport provision and regulation), the Traffic Police (responsible for traffic management and enforcement) and the Environmental Protection Bureau (responsible for vehicle emission controls).

These (and other) agencies are bound by few controls or requirements that would, otherwise, ensure coordinated formulation and implementation oftransport planning and policy. For example: 0 A dearth of stablefinancing sources, particularly for maintenance of existing infrastructure. When funds for construction are needed, the city has considerable leeway to institute new special purpose taxes but maintenance is often ignored. 0 Land-use planning and transport planning processes operate completely independently ofeach other and are not integrated in any manner. 0 Tools exist but are not used optimally. Wuhan has relatively good data: Origin Destination household survey data (1998), motor vehicle OD data (1999), bicycle and taxi use data (2001) and data from surveys ofmajor bus terminals. A travel demand model has been built to forecast travel demand for 20 10 and 2020, and assignments made to the Master Plan road network. A separate study was undertaken to define the rail network. However these studies were not used to test the Master Plan transport proposals or to define the investment plans for 2005 or 20 10.

2.5 Road Safety

Modal shift towards a larger use ofmotor vehicles has heightened the road safety concerns in Wuhan. The incidence and severity ofaccidents are high, even when compared with other cities of similar population and motorization within China. Road accidents appear to be largely due to increased speeds and volumes ofvehicles, poor driver behavior and poor road sense ofpedestrians. In 2001, the total number ofroad accidents was 11,595 with 631 persons killed and 7,517 persons seriously injured. Economic losses (excluding the costs ofpain, grief and suffering and projected contribution to society) were RMB 26 million. Since 1999, the number ofroad accidents has declined slightly while the number offatalities and casualties have remained stable. In Wuhan Municipality, 80 percent ofaccidents occur in urban areas with 50 percent considered fatal. The fatality rate/million population in 2000 was 90, compared to 55 in Shanghai (1999).

-6- 2.6 Air and Noise Quality

Vehicular emissions are not a serious issue, except in areas close to main roads, where particulates are a problem despite lead-free fuel used since 1998. The city government has a basic emissions control strategy in place. National vehicle emission standards are enforced through an annual testing and inspection system complemented (since 2000) with spot random checks. The city government has started planning a modeling effort to quantify the contribution of different sources to air pollution. Noise is also considered a severe problem in the urban center and the government is working on strategies to lessen the noise impact of.motor vehicles.

2.7 Government Strategy

Urban transport issues are largely the domain ofthe local Wuhan Municipal Government (WMG), which is currently focusing on accelerating expansion of the road network. In the past, it was the political leadership that made the decisions regarding new road construction, with technical analysis playing a subservient role (if any). Though a new generation ofplanners equipped with adequate analytical tools exists in Wuhan, they lack the experience and influence to be effective.

Apart from new road construction, the most significant urban transport initiative undertaken by WMG is the construction ofa light-rail line. In terms ofbus transport, WGhas been working on reorganizing the bus transport sector since 1999. In October 2001 the overall responsibility for system planning was moved to the newly created Wuhan Transport Commission (WTC). The WTC has outlined a program for reform, which was recently approved by WMG. A summary is presented in Annex 13.

The Government has also implemented a series ofpolicy measures related to urban transport. New motorcycle registrations have been banned since mid-2002. In early 2003, the city banned ‘mamus ’ (motorized three-wheeled jitneys).

The reason behind the government ban on motorcycles is unclear. Before the ban, motorcycles were a popular mode oftransport (registrations grew at 27 percent over the 199 1-200 1 decade and by 200 1 accounted for over half ofthe 447,505 registered motor vehicles in the municipality). Though there are valid safety issues related to their use, motorcycles present a relatively cheap and efficient (in terms of energy and use ofroad space) altemative to autos that fulfills many ofthe same aspirations for personal mobility. Though no systematic analysis is available, it is unlikely that banning motorcycles outright without accompanying automobile related restraints would offer a sustainable solution to congestion problems.

3. Sector issues to be addressed by the project and strategic choices: 3.1 Sector Issues to be addressed The most important sector issue that this project addresses is the institutional coordination across agencies and modal policies.

-7- The aim of the project is to develop WTSinto aphased andfinancially constrainedprogram of investments and policies based on systematic analysis and inputs from all concemed stakeholders (details in Annex 14). In addition, this project will support institutional reform in the provision of public transport services in Wuhan, based onthe proposals outlined by WTC. The physical investments, proposed in the project, address the key issues identified in WUTS, in particular: 0 Enhancingpedestrian and NMT safety by constructing new road infrastructure and missing road links, and implementing traffic management and road safety programs 0 EnhancingpedestriadNMT mobility by financing a network ofpedestrianiNMT routes including new footways and pedestrian crossing facilities 0 Developing a road network with a rationale structure and clear functional hierarchy that supports sustainable development 0 Reducing traffic congestion and enhancing mobility and safety for vehicle users by increasing road capacity and implementing integrated traffic management measures Improving road maintenance by procuring road maintenance equipment and financing maintenance on part ofthe existing Wuhan road network 0 Improving the quality ofpublic transport service by financing investments in physical infrastructure (termini, bus-stops) as well as computer management systems 0 Improving air quality by facilitating implementation of a motor vehicle emissions control strategy

3.2 Strategic Choices The organization ofthe project, and the selection ofits components and appropriate funding levels reflect three strategic decisions.

3.2. I Encouraging an integrated multi-sectoral approach. As in previous Bank financed urban transport projects in China, it was necessary to encourage an integrated multi-modal approach in the Wuhan project, essentially to ensure that the funding program for the project reflects the immediate needs ofall modes, and addresses the key negative impacts of transport. Developing a complex multi-faceted project was the only credible way to bring all the various agencies, which provide urban transport services in the city, to work together towards an integrated transport vision that reflects the needs of all of Wuhan.

3.2.2 Focusing on the strategy as the centralprocess innovation. The team considers this to be the most useful and innovative support that the Bank can give to WMG, since it will provide the basis for long term rational decision making on transport investments, and improved service delivery. It will also leave behind a legacy of tools and empowered professionals who understand the value of systematic analysis in supporting, advocating or opposing ideas as appropriate.

3.2.3 Selectivity: focusing on public transport reform. An integrated multi-modal project, such as this, needs to choose issues carefully. There were many policy, investment and process issues where the Bank could have added value - such as the proposed rail system, integrating land-use and transport planning, pricing-based demand management measures, or sustainable user-charged financing mechanisms. However, the project focuses on two primary reforms: the development of an integrated approach to transport planning based on a systematic transport strategy, and public transport reform.

-8- C. Project Description Summary 1. Project components (see Annex 2 for a detailed description and Annex 3 for a detailed cost breakdown): The proposed project has six components as described below:

Component 1: Road network development. This component addresses the immediate need to improve the road network operations within the city, and to expand the bicycle and pedestrian networks. The five programs, within the component, are designed to: 0 provide suitable routes for through or cross-town traffic 0 improve utilization of existing cross-river bridges 0 relieve congestion in central down-town areas 0 provide adequate road networks in development areas 0 provide safe conditions for pedestrians The civil works for these five programs include the construction ofnew primary, arterial and local roads, upgrading/widening ofexisting roads, construction of interchanges and construction ofpedestrian overbridges or underpasses.

Component 2: Traffic management and road safety. The aim ofthis component is to build upon the strengths ofthe existing transport network management to better utilize existing assets and resources. The detailed content includes 0 pedestrian and bicycle measures 0 bus priority measures 0 channelization ofjunctions 0 provision oftraffic signals at junctions and an urban area traffic control (ATC) system 0 a road safety and accident analysis program 0 a road user education program 0 road marking equipment

Component 3: Public transport. The objective of this component is to facilitate an increase in the efficiency and effectiveness ofbus services in the city. A key element ofthe effort related to public transport is support for the ongoing reform ofpublic transport operations. The physical investments related to this component include: 0 a Computerized Management Information System (CMIS) to increase the efficiency ofoperators in routine administrative and technical tasks, and a GPS based bus location system to improve the on-street management ofbus operations 0 construction ofpassenger facilities, including bus interchange stations, bus terminals and bus stop bays The component also includes studies ofbus priority and bus rapid transit measures on selected corridors. Provision is made for the implementation ofa pilot Bus Rapid Transit (BRT) scheme, if considered viable.

Component 4: Road maintenance. This component aims to: 0 assist the government's intent to reform and improve the current road maintenance management through training and study for Road Maintenance Management Information System (RMMIS) 0 improve the current road maintenance facilities by purchasing advanced road maintenance equipment reconstruct the most damaged road sections in Wuhan.

-9- Component 5: Environmental management. The aim ofthis component is to mitigate the adverse impacts of road construction, minimize vehicle emission, and increase the positive environmental impacts ofthe project. The detailed content includes: 0 constructing noise barriers and other facilities to mitigate noise from the new roads 0 planting along new roads 0 expanding the vehicle emission and traffic noise monitoring system 0 facilitating implementation of a motor vehicle emission control strategy 0 upgrading the vehicle inspection and maintenance (I/M) system.

Component 6: Capacity Building and Technical Assistance (TA). This component will strengthen the technical and management skills ofthe municipal staff, and includes: 0 domestic and intemational training for officials from project implementing agencies 0 funding for consultant studies on issues and topics related to the other five components ofthe project 0 office equipment to enhance the productivity of the implementing agencies

4. Road maintenance 5. Environmental management 6. Capacity building and TA 7.90 1.3 7.20 3.6 Total Project Costs 579.80 96.9 198.00 99.0 Interest during construction 16.40 2.7 0.00 0.0 Front-end fee 2.00 0.3 2.00 1.o Total Financing Required 598.20 100.0 200.00 100.0

2. Key policy and institutional reforms supported by the project: The project will seek to promote policy and institutional reforms in two major areas.

2.1 The development of an integrated approach to transport planning based on a systematic transport strategy. The project will seek to assist WMG in 0 establishing a policy and institutional framework for integrated urban transport investment and management 0 improving the procedures for funding allocation to different modes 0 developing opportunities that will allow different planning agencies to work together. Assistance will also be given to develop an initial investment strategy and procedures for subsequent updates ofthe plan. Details ofthe strategy are available in Annex 14.

-10- 2.2 The regulatory and planning framework for public transport. The project will aim to support WMG’s reform efforts to: 0 separate the responsibilities of govemment from those ofthe operators 0 establish a new operational and managerial system that encourages competition and provides higher quality transport services 0 use market mechanisms to attract funding from sources other than the municipal government 0 improve the PT regulatory framework, especially to establish a bus route franchising policy 0 promote integration ofrail and bus services and promote bus rapid transit services in the city

Details ofWMG plans are available in Annex 13.

3. Benefits and target population: The project is expected to benefit all users of the urban transport system, in all income groups. Major benefits will include: 0 saving ofpersonal travel time and freight time for all road users as a result ofreduced traffic delays and improvements in road maintenance 0 improved travel comfort and convenience for bus users 0 improved travel comfort and safety for pedestrians and non-motorized vehicle users 0 increased road maintenance finding and reduced maintenance costs which will reduce operating costs for all vehicle owners 0 reduced vehicle emissions

To ensure that the project is indeed designed to maximize the benefits to the economically and socially disadvantaged, the team has conducted a survey ofthe travel pattems and needs ofthe vulnerable groups (the economically disadvantaged, women, and recent migrants) in Wuhan. Results from this study will be used in the detailed design of project components during implementation.

In addition, WMG transport planning and operating staff are expected to benefit from the extensive capacity building components ofthe project.

4. Institutional and implementation arrangements: 4.1 Executing Agency. The project will be executed by the Wuhan Municipal Government (WMG). WMG has established a project team, comprising of technical staff from the concemed government agencies, to oversee the preparation and implementation ofthe project. The Wuhan Municipal Capital Investment Management Office (WMCIMO) will have overall responsibility for the preparation and implementation of the project. The Wuhan Urban Transport Project Office (WUTPO), under WMCIMO, will be responsible for managing and coordinating the implementation of the project by the various implementing agencies. 4.2 Project Guidance. At the municipal level the Wuhan Urban Transport Project Leading Group (WUTPLG) has been established to provide overall guidance to WUTPO in project preparation and implementation.

- 11 - 4.3 Implementing Agencies. Responsibility for implementation ofthe individual components will be as follows:

Component Responsible Agency Road Infrastructure Wuhan Bridge Construction Company (WBCC) - a Unit ofWMCIMO. Public Transport Wuhan Transport Commission (with the participation of Wuhan Group Public Transport Corporation (WGPTC) for the CMIS Traffic Management Public Security Bureau Road Maintenance WBCC for civil work Wuhan Urban Management Bureau for RM Reform, RM Management Information System, and Equipment Procurement Environmental Management Municipal Environment Bureau Institutional Development & TA Individual implementing agencies will each manage their own TA. The Project Office (WUTPO) will have responsibility for procurement. Subproject offices have been established in each ofthe implementing agencies.

4.4 Funds Flow. The Ministry ofFinance (MOF) will on-lend World Bank loan funds to the Hubei Province Government (through the Provincial Financial Bureau). The Provincial Financial Bureau will in tum on-lend funds to WMG (through the Municipal Financial Bureau), which will in turn on-lend funds to WMCIMO. WMCIMO will act as the representative of the municipal government to manage the loan and ensure future repayment. The sources of counterpart funds and repayment are the municipal budget and extra budget sources, which have been analyzed in section E and Annex 5. Loan type will be LIBOR-based Variable-spread loan and use US dollar as single currency.

5. Project Management Activities

5.1 Procurement, The project office will be responsible for oversight and coordination of procurement activities during the implementation ofthe project. A division has been established and the Bank team has provided some basic training to the staff. The subproject offices for each component have also allocated staff to assist in the procurement activities. The Bank will provide further training to staff in these offices. A procurement plan has been developed as part ofthe Project Implementation Plan (PIP).

5.2 Financial management. The project office will be responsible for all activities offinancial management,

5.3 Environment. Responsibilities for all environmental management activities are included in the Environmental Management Plan (EMP).

-12- 5.4 Resettlement. Responsibilities for implementation ofresettlement are documented in the Resettlement Action Plan (RAP).

5.5 Construction supervision. The project will use Bank funds to hire civil work supervision teams to undertake construction supervision and quality control of civil works. Since the Wuhan Bridge Company (WBC) will be the implementing agency for civil works under the road network improvement and road maintenance components, WBC will also have overall responsibility for construction supervision for all components. WBC will act as the owner ofthe civil works during construction. WBC will select a construction supervision consultant team to act as the chief engineer, responsible for quality and contract management and hiring ofsite engineers. WBC will also hire a small intemational consultant team to act as advisors to WBC, to provide training in FIDICBank construction supervision responsibilities and procedures, and to set up a client/engineer/contractor management procedure in the first year. A small team oflocal consultants will supervise the initial civil works contracts during the first year ofthe project. Construction supervision consultant services for all future years will be open to intemational and local consultant companies.

5.6 Project Implementation Plan (PIP). Each implementing agency has prepared a PIP for its respective component, based on which WUTPO has prepared a comprehensive PIP. The PIP will guide the implementation of the project and will be updated as required by WUTPO with the help ofeach sub-project office.

5.7 Progress Reporting and Planning. WUTPO will be responsible for preparing quarterly and annual progress reports and annual implementation programs, based on inputs from the subproject offices. The quarterly reports will focus on physical and financial progress, outline implementation problems for all components, and suggest corrective actions. The Annual Progress Report will be used to review the progress achieved in the preceding year, update the PIP, and set out the implementation program for the following year. Half way through the implementation period (around May 2006), there will be a mid-term review, which will consider if any major changes are required in the project structure.

D. Project Rationale 1. Project alternatives considered and reasons for rejection: Various alternatives were considered and explored for the scope and size ofthe project, and also for the financing levels ofindividual components. Different alternatives were also assessed for the selection of schemes within each component, particularly the road network development component. 1.1 Project scope, size, and component financing levels Project Scope. The initial investment proposal presented by Wuhan municipality focused mainly on road infrastructure. The Bank, however, expressed its concern over the limited scope ofthe project. Subsequently, a more comprehensive urban transport improvement program was developed by WMG.

Allocation between components. The allocation presented in section C was a result of (i)feasibility studies conducted by individual implementing agencies to define the minimum and desirable levels of investment for each component; and (ii)discussions with WMG to determine the level of investment to components 2 through 6 (all components except road network development).

- 13- 1.2 Selection of schemes

Road component. The road development schemes were selected from a list generated by WMG. The schemes were tested extensively, prior to their selection, using the network analysis modeling tool, developed as part ofthe transport strategy development effort. As a result ofthis analysis WMG dropped some schemes that it was initially committed to, including the eastern leg ofthe middle ring road in Wuchang. Almost all ofthe infrastructure investment has been finalized. Additional analysis oftraffic demand, costs, benefits and desirable construction dates ofthe remaining schemes will be undertaken in the initial implementation period ofthe project to select and prioritize the most appropriate schemes for assistance.

The public transport component. Extensive bus priority measures, including a busway, were considered. Initial analysis suggested that bus priority measures could not be technically justified at this stage. On major corridors flows ofup to 500 buseshour dominate the available road space and there is no evidence (to support bus priority) ofbuses being unduly delayed by other traffic. However, provision has been made for further analysis and for the detailed design and implementation of any resulting limited priority measures that may be needed. Further studies are proposed to include one ofBRT alternatives, which takes account ofLRT/Metro lines.

2. Major related projects financed by the Bank and/or other development agencies (completed, ongoing and planned). Latest Supervision Sector Issue Project (PSR) Ratings [Bank-financed projects only) Implementation Development 3an k-financed Progress (IP) Objective (DO) Sector issues in all projects are Shanghai Metropolitan S S generally those listed in section B2. Transport Project I(completed) 1992

Shanghai Metropolitan S S Transport Project I1 (completed) 1993

Guangzhou City Center S. S Transport Project (ongoing) 1998

Liaoning Urban Transport S S Project (ongoing) 1999

Urumqi Urban Transport S S Project (ongoing) 2000

Shijiazhuang Urban Transport S S Project (ongoing) 200 1 )ther development agencies '/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), I- (Highly Unsatis ctory)

-14- 3. Lessons learned and reflected in the project design: Useful lessons can be drawn from the experiences oftwo completed urban transport projects financed by the Bank in Shanghai, and four ongoing projects in China - Guangzhou, Liaoning, Urumqi and Shijiazhuang.

3.1 The need for an integrated multi-modal approach Typically there was an over-reliance on roads with little systematic planning and appreciation for integrated solutions consisting of traffic management, facilities for pedestrians and cyclists, public transport, improved road maintenance and financing, and supporting institutional structure. The key challenge for the Bank team was to work with municipal authorities to broaden the scope of client-identified investments to include other dimensions that can address the traffic congestion problem that the Bank would consider sustainable.

During the preparation phase the initial request for a set ofroad schemes has been transformed into a truly integrated project with two process innovations for China: the development of strategy and the public transport reform.

3.2 Participation of decision makers The mayor and the directors ofthe major government agencies concerned have a very important decision making role in any urban transport project. Therefore one ofthe main tasks for the Bank has been to gain the support ofmunicipal government, especially the key decision makers. In Wuhan, the Bank was able to persuade WMG to appoint a Vice-Mayor to lead the transport strategy development effort. This has been crucial in getting buy-in from the city on the planning process and its outputs.

3.3 Participation of agencies with a stake in urban transport The key to developing a balanced and sustainable project is the active participation of all institutions responsible for urban transport. The level ofinstitutional participation in Wuhan was exemplary throughout the project preparation phase. In fact, the degree ofinstitutional involvement and commitment was higher in Wuhan than in projects elsewhere.

3.4 Managerial and technical capacity building of municipal staff There was a need to complement the high level of technical knowledge demonstrated by the local team in Wuhan with practical experience. The Bank team facilitated the provision ofhands-on advice and support from seasoned professionals in the preparation stage to empower the local professionals. This effort has been very successful and has resulted in the development and gradual acceptance ofthe transport strategy.

3.5 Focus on key process innovation outcomes An integrated project with multi-components (in the case ofWUTP components such as road development, public transport, traffic management, road safety, road maintenance, environment, and institution building) runs the risk ofrunning into management difficulties during its implementation. The proposed project would therefore focus on key issues ofdeveloping a viable transport strategy and promoting reforms in the delivery ofpublic transport in Wuhan.

3.6 Traffic management The traffic police, responsible for traffic operations and enforcement, often have limited experience and appreciation ofcomprehensive traffic management. The Bank’s past experience with transport projects indicates the need to integrate traffic management with project sponsored investments in Area Traffic

-15- Control (ATC) systems in order to obtain the interest and buy-in ofthe traffic police. In this project, the traffic police have demonstrated a good level of knowledge of traffic management, and hence the project focuses more on building ownership and coordination during implementation. The project component supporting ATC systems has the most substantive and detailed traffic management plans of any Bank-funded urban transport project in China.

3.7 Unprecedented motorization rate The current motorization rates in Chinese cities are higher than rates elsewhere in the world. Previous projects have found their forecasts to be overly conservative. Similarly, earlier projects found that they underestimated bicycle traffic volumes. Experience indicates that NMT increases with a city's growth. The forecasts oftraffic used for this project, reflect the overall trend in China.

3.8 Appreciation for rail over bus transport solutions An interest in public transport often takes the form of investments in rail. The Bank, however, helps to focus attention on bus system improvements, bus priority measures and busways. This project would aim to demonstrate the benefit ofconsidering both rail-based and bus-based mass transit solutions.

3.9 Ownership of reform agenda Reform of municipal services remains an important issue on the government agenda. But the pace of reform is govemed by local agencies and national political conditions. The Bank can only encourage reform measures that have worked elsewhere, while the client should be willing to seek Bank assistance for its implementation. The Bank is encouraging the reform ofpublic transport in Wuhan.

4. Indications of borrower commitment and ownership: There is little doubt that the borrower is committed to the success of the Bank project in general. At both the provincial and city levels, groups comprising of senior government officials have been established to facilitate coordination for this project. There is also a clear indication ofborrower commitment to, and ownership of, both the physical and institutional elements ofthe project. All the major physical investment components have been proposed by the WMG. As stated earlier, the level ofengagemenu initiative shown by the counterpart in the design ofthe traffic management component has been exemplary. In the case of the institutional components, the borrower has proposed the public transport reform component and the Bank's role has been one ofadviser and facilitator. In the case of the integrated transport strategy, WMG has shown a high level ofcommitment and ownership by creating a project office with staff from all concemed agencies. The project office has undertaken a considerable amount of analytical and design work for the project with limited help from local consultants. The best indicator ofWMG's ownership of the transport strategy development process has been their decision to drop plans to construct an eastern leg ofthe middle ring road, which was at one time a major part ofthe road component, based on the results from the network analysis.

5. Value added of Bank support in this project: In general, the Bank's value-added support in any urban transport project is that ofpromoting a comprehensive approach to finding solutions based on the best practice experience in China and elsewhere. This advice also reflects the Bank's recently completed review of Urban Transport. Moreover, the Bank will demonstrate the benefits ofparticipatory planning and budgeting processes, and the use of methodologies for prioritization ofpolicies, programs and investments. The project provided all concemed agencies the opportunity to jointly find solutions to any issues. Bank involvement will improve the

-16- institutional capacity, managerial and technical abilities in all concerned agencies, and further their practical experience. This directly strengthens municipal management and improves service delivery. Bank involvement also provides access to low-cost finance. It helps the government to provide more support to lower income groups by developing surveys, which provide data on their needs. It also assists the sectoral reform process, including the introduction ofprivate sector participation in service delivery.

E. Summary Project Analysis (Detailed assessments are in the project file, see Annex 8) 1. Economic (see Annex 4): 0 Cost benefit NPV=US$706 million; ERR = 23 % (see Annex 4) 0 Cost effectiveness 0 Other (specify) Economic analysis was carried out first for the evaluation ofaltemative transport development programs, and then for the evaluation of the proposed project. During the transport strategic planning process, four altemative development programs up to year 2007 were tested using a travel demand model calibrated with local data. These alternatives included (i)do-minimum; (ii)traffic management oriented program; (iii) public transit oriented program including mass rail transit; and (iv) road transport oriented program. By comparing alternative terms of traffic performance, investment costs, and economic rate ofreturn, a preferred program was subsequently formulated. A budget-constrained investment program for the period 2003-07 was identified. The Bank funded project was defined from this program. A cost-benefit analysis was undertaken to evaluate the components ofthe proposed Bank project. The quantified network benefits included savings in personal travel time and vehicle operating costs, and overall reductions in traffic accidents. These benefits represent the majority of the total project benefits, and were estimated using the travel demand model developed for Wuhan. The ERR was calculated based on savings in personal travel time and vehicle operating costs against the total project costs. The ERR, under the most likely traffic growth scenario, is 19 percent. Sensitivity tests were performed using altemative traffic growth rates, likely cost overruns, likely benefit reductions, or a combination ofall these. The test results suggest that the project economic viability is robust. Moreover, the review ofbenefit distribution among different income groups shows that all modes will benefit from the project. Pedestrians and bicyclists will be the prime recipients ofthe safety benefits realized from the traffic management component ofthe project.

2. Financial (see Annex 4 and Annex 5): NPV=US$ million; FRR = % (see Annex 4)

Fiscal Impact: Municipal Finance. The analysis has focused on two aspects: (a) the municipal financial capacity to provide funds for the Wuhan Urban Transport Strategy (WUTS), and (b) the counterpart funds for the project.

2.1 Municipalfinancial capacity. The task team has conducted a detailed assessment ofmunicipal financial capacity. The scope of the assessment included the current and projected fiscal income and expenditure, urban infrastructure revenue and expenditure, and the capacity remaining for capital investment outside the Bank project. The municipal financial ability ofWuhan is ranked in the middle of the range when compared with similar size cities in China. The revenue available to Wuhan municipality was RMB 10 billion in 2002 (see details in Annex 5). Like other Chinese cities, the municipality has

- 17- adopted an approach ofbalancing expenditure on urban infrastructure with revenue from in-budget and extra-budget sources. The municipality first uses the overall infrastructure revenues to pay for routine urban infrastructure expenditures, and then allocates the remaining funds for major capital investment. The capital investment funding for the municipality is FZMB 1.24 billion in 2003.

2.2 Municipal capital investment capacity. During the early stages of the Wuhan Urban Transport Strategy Study, the municipality proposed a very ambitious investment plan to improve the urban transport system in Wuhan. However, this plan far exceeded the municipal financial capacity. The local planning team, with the help ofthe Bank team, prioritized the list ofproposals in the urban transport infrastructure investment plan, keeping in mind the given municipal financial constraints and the needs ofdifferent road users, especially the lower income groups. More importantly, the joint team explained the financially constrained situation to the municipal decision makers, and obtained their agreement to use the limited funds to provide services to solve the major urban transport problems identified in the WUTS. Other than the Bank urban transport project, the municipal government is proposing a Metro Line 1 (phases Iand II), a cross river tunnel, and a waste water plant project (financed by ADB) as the major capital investments for the next five years (see details in Annex 5).

2.3 Counterpart funding arrangement. The project counterpart funds will absorb more than two thirds of the city's capital investment capacity in the first two years. In order to increase their financial capability, the municipality has decided to use domestic bank loans for the counterpart funding. Two third ofthe counterpart funds will come from domestic bank loans and the rest from normal municipal capital investment funds. (The municipal government has provided the Bank with all signed lending agreements and a repayment plan for the domestic Bank loans.) The municipal counterpart funds will come from four extra -budgetary sources: (i)land reservation surcharge, (ii)annual vehicle testing fees, (iii)transport construction surcharge (which will be collected from hotel guests), and (iv) parking fees. The task team has reviewed the details of each source and determined that the sources and the projected future volumes of funds are reasonable and that the funds will be collected. The task team has received the copies ofthe government confirmation letters to these four revenue sources. Therefore, the counterpart funding requirements, including interest during construction and commitment fee and the interest for the domestic bank loan, are well within the generally accepted limits of affordability for the municipality.

2.4 Public Transport Financial Review. This review was undertaken to determine the financial sustainability of the current system and financial issues to be monitored in connection with the institutional reform ofpublic transport. Although, the public transport companies have been running some losses, the government intention was to provide no subsidy to bus companies in 2003. The government proposes to address the issue ofoperational losses during the reform ofthis sector. This is one ofthe topics that will be discussed during the course ofthe PT sector reform. Using data provided by the companies, a 5-year baseline financial projection shows (using reasonable assumptions on patronage growth, fare increases and staff reductions), that the companies can achieve full cost recovery within the life ofthe project. This analysis has improved the understanding ofthe financial situation for the public transport sector in Wuhan, and the need for further reform. Further details are provided in Annex 5.

- 18- 3. Technical: The Bank team conducted a thorough technical assessment of the proposals for each component ofthe project as summarized below by component:

3.1 Strategy and Policy Urban transport strategy Development of a network analysis tool, which integrated data from several existing databases (census, OD household survey, motor vehicle OD data, bicycle and taxi-use data, bus passenger data) and facilitated extensive analysis feeding into the urban transport strategy. Ongoing development of an integrated urban transport strategy that reflects extensive analysis ofdifferent infrastructure investments (such as road investments, investments in bus priority lanes and other passenger transport investments) in a comprehensive benefit-cost framework. Ongoing analysis to integrate the schemes funded under the Bank project with other investments made by WMG both during the project period (through 2007) and later. Introducing the concept of continuous planning and the possibility of (and benefits from) revisiting the 2020 Master Plan in light of changed situations, priorities and actual demand. Further refinement ofthe urban transport strategy, including coordination of traffic management strategy with overall strategy, formulation ofparking policy, and formulation ofpublic transport priority. Maximizing the benej?ts to the poor An ongoing study ofthe travel needs of low income groups and the vulnerable in Wuhan will (i)determine potential impact ofthe project on vulnerable groups(the poor, women and recent migrants), and (ii)identify measures that would maximize net benefits for the vulnerable groups.

3.2 Road Network (i) Development ofa functional road hierarchy. (ii) Selection, justification, design and timing ofnew road construction schemes based on project objectives and traffic demand. Analysis ofall suggested road schemes proposed for the Bank project using the WUTS planning process (see Annex 14). (iii) Integration of land acquisition, resettlement and service diversions into costs and implementation schedules.

3.3 Traffic Management (i) Physical junction channelization design. (ii) Specification and design of the Area Traffic Control System. (iii) Design and management offacilities for pedestrians and cyclists. (iv) Requirements for appropriate parking standards, regulations and measures to implement parking policy. (v) Justification, location and design ofpublic transport priority measures.

3.4 Public Transport (i) Ongoing analysis ofreform proposals for public transport including the separation of govemment functions (for strategic planning, pricing and subsidies, regulation and modal integration) from enterprise functions (for operations and business planning), restructuring

- 19- of current PT enterprises, introduction of competitive tendering for service delivery and introduction ofmore private sector or joint venture operators. (ii) Operational analysis of bus operators, leading to proposals for development of Comprehensive Five Year Plans focusing on route development programs, new bus requirements, depot and terminus requirements, passenger and revenue forecasts, capital and operating cost forecasts and assessments ofthe overall financial position. (iii) Analysis ofproposals for interchanges, termini and busbays. (iv) Analysis ofthe potential for bus priority measures and busways. '

4. Institutional:

4.1 Executing agencies: Wuhan Municipal Government is the executing agency for the project. Through most ofits preparation, the project was managed by the Wuhan Construction Commission on behalf ofWMG. For the completion ofpreparation and for implementation, the project will be managed, on behalf ofWMG, by the Wuhan Municipal Capital Investment Management Office (WMCIMO). The project office (WUTPO) will be retained. As its name implies, WMCIMO would be expected to focus on the investment aspects ofthe project. Based on experience with other projects, it will be particularly important to ensure that the project management arrangements facilitate the dialogue on WUTS and UT policy between the Bank and Wuhan Planning Bureau and on PT reform between the Bank and WTC. These details were discussed at appraisal, are to be included in the PIP and monitored during the project implementation. 4.2 Project management: WUTPO, which has successfully managed project preparation to date, needs to be expanded to ensure smooth implementation ofthis large project more efficiently. The coordination ability of WUTPO will also need to be strengthened. The same agencies, which successfully prepared the various components, will be managing their implementation. The implementation capabilities ofthese implementing agencies will also need to be strengthened. 4.3 Procurement issues: A procurement assessment has been carried out, which is summarized in Annex 6. This assessment concluded that the procurement risk is average. The assessment found that although the proposed arrangements for managing the procurement function are appropriate, the procurement staff needed more training, especially those in the implementation agencies for the various components. Therefore, a training program was provided prior to the start ofproject implementation to ensure that all relevant staff are fully conversant with the Bank's guidelines and procedures. Further training can be provided as necessary during implementation. 4.4 Financial management issues: A financial management assessment was carried out which is summarized in Annex 6. The project will produce project financial statements on a semi-annual basis, including Balance Sheet, Summary of Sources and Uses ofFunds by Project Component, Statement of Implementation of Loan Agreement, and Statement of Special Account. The project will use reports of the standard format agreed between the Bank and MOF. Retroactive financing in an aggregate amount not exceeding $15,000,000 will be provided to finance some civil works, consultants and equipment undertaken after June 16, 2003. Audit arrangements will follow the new Bank procedures.

- 20 - 5. Environmental: Environmental Category: A (Full Assessment) 5.1 Summarize the steps undertaken for environmental assessment and EMP preparation (including consultation and disclosure) and the significant issues and their treatment emerging from this analysis. The project complies with the requirements ofO.P.4.01. The project is classified as EA Category ‘A’ since it involves involuntary resettlement, major road construction (partly on new alignments) and increased air pollution and noise, particularly adjacent to new roads.

A comprehensive environmental assessment has been carried out jointly by Number Four Survey & Design Institute of China Railways Ministry and Wuhan Research Academy ofEnvironmental Sciences in accordance with the policies and procedures of China and the Bank (see Annex 11).

The Bank reviewed and commented on the EA report and the EMP at various stages of preparation. The revised reports meet the Bank’s requirements.

The projected increase in vehicles and motorized travel (with or without the project) will tend to increase local and global air pollution unless appropriate mitigation measures (not directly associated with the project) are introduced. Air pollution, noise, traffic management and safety, will be of concern during both the construction and operational phases. Construction ofnew roads in the project will also produce environmental impacts including dust, waste management and disposal, water pollution and erosion during the construction phase, which will need to be mitigated. Road construction will also cause resettlement.

However, the proposed road network and traffic management components are also expected to have positive environmental impacts as they are designed to reduce traffic accidents, reduce personal time spent traveling, vehicle idling time and overall traffic congestion, though air pollution may increase in some localized areas. The public transport component will also have a positive effect on the environment by slowing the growth ofmotorized private vehicle use. Environmental institutions will be strengthened through environmental monitoring equipment upgrading, staff training, and formulation ofa vehicle emission control strategy. 5.2 What are the main features of the EMP and are they adequate? As part ofthe EA process, a separate EMP has been prepared. The EMP includes: mitigation measures, an environmental monitoring plan, environmental monitoring supervision plan, institutional arrangements, a training plan and estimated costs for all environment related activities. It provides for the inclusion of environmental protection in the design, construction and operational phases.

Design phase. Mitigation measures included in the project design include additional facilities for noise barriers, double-glazing and air conditioners to mitigate noise impacts at sensitive sites, and planting along the proposed project roads. Project designs have been reviewed to ensure the careful positioning of facilities with appropriate landscaping and buffer zones to control noise and to mitigate the impact of increased vehicle emissions adjacent to the new roads and to reduce severance.

Construction phase. During construction, measures will be introduced to limit noise, dust and other impacts ofconstruction. Full time environmental management staff will be assigned at each construction site. Training will be provided to them. If construction at night is unavoidable, then the contractors will be required to give advance notice to all affected residents, and to undertake additional monitoring and mitigation measures.

-21 - Operational phase. The project also includes a component for the setting up automatic monitoring sub-stations for air quality and noise and development ofa vehicle emission control program.

5.3 For Category A and B projects, timeline and status ofEA: Date ofreceipt of final draft: June 2003 (Draft dated May 2003)

The Bank has received and reviewed several drafts ofthe EA, EA Summary and EMP reports. The State Environmental Protection Administration (SEPA) reviewed and cleared the final draft EA (dated May 2003) in late July 2003. The final draft EMP was updated and received in August 2003. The final draft EA Summary (dated September 2003) was received on October 15,2003. Copies of drafts ofall documents have been successively disclosed in Wuhan in Chinese and in English in the Bank's Public Information Center in Washington, starting with the first draft EA in February 2003. The English versions ofthe documents have been disclosed in Bank's Beijing Office since June 12,2003.

5.4 How have stakeholders been consulted at the stage of(a) environniental screening and (b) draft EA report on the environmental impacts and proposed environment management plan'? Describe mechanisms ofconsultation that were used and which groups were consulted? Key stakeholders include the Wuhan Construction Commission, Wuhan Environmental Protection Bureau, local communities and governments, project affected peopleh-esidents along the proposed new roads, bus passengers, and local NGOs. The public consultation on the EA has involved these groups.

Public and stakeholder consultations were carried out in three stages:

Thefirst stage consultation was conducted between September 4th and 7th, 2002 when the TOR for the EA was prepared. There was a notice on September 5th, 2002 in two local newspapers (the Wuhan Evening News and the Changjiang Daily) detailing the locations and agendas for the public meetings related to this consultation. Participants were representatives ofproject affected people who live in the areas around the proposed project roads. A summary ofthe project and key EA information was announced on September 9th on Wuhan communications radio. The second stage consultation was carried out between December 26th and 29th 2002, in different locations through means of meetings and interviews with project-affected people and interested groups, when the first EA report was compiled. The public was notified of the location and agenda for this second round of consultations by way ofannouncements on December 28th on Wuhan's TV stations and in the December 29th edition ofthe Wuhan Evening News. The third stage consultation was conducted from March 26th to April 10th ,2003, at the review stage ofthe draft EA report. As with the other two stages, consultation was carried out in different locations and a variety of techniques have been used including site visits, public surveys and interviews with project-affected persons and groups. During the consultations, the consulted groups were advised of the EA revisions and were given feedback on the solutions to their concerns. The public was notified ofthe third round ofconsultations through an announcement in the Feb 19,2003 edition ofthe Wuhan Evening News.

In all stages, local communities were consulted through (i) meetings with representatives ofproject-affected people from areas ofproject roads; (ii) meetings with neighborhood committee, representatives of local district government and deputies of the local People's Congress; and (iii) public opinion questionnaires supplemented by interviews. In all, over 3,500 people participated in the consultation process.

- 22 - The first draft of the EA report and the EMP were placed in the Wuhan public library, the offices of the Wuhan Academy of Environmental Sciences and the offices ofthe Fourth Railway Design Institute on February 18th 2003. Subsequent drafts ofthese documents were placed at the same locations. Drafts of the EA and EMP documents were initially disclosed in the Bank's Infoshop in Washington on February 18th 2003.

5.5 What mechanisms have been established to monitor and evaluate the impact of the project on the environment? Do the indicators reflect the objectives and results ofthe EMP'? A contract will be signed with a qualified firm or institute to monitor the environmental impacts ofthe project both during construction and after the project is operational. Appropriate monitoring indicators have been chosen to measure air quality and noise impacts during construction and operation.

6. Social: 6.1 Summarize key social issues relevant to the project objectives, and specify the project's social development outcomes. Improvements to transport services for low-income residents are implicit in the project development objectives. This will be achieved mainly through the improvements to pedestrian facilities (footways, pedestrian crossings etc), creation of NMV routes and bus service improvements. The road safety program aims to reduce accidents and casualties, which tend to involve poorer residents. As stated earlier, the Bank team has also conducted a survey ofthe travel needs ofvulnerable people in Wuhan to help refine elements ofthe project investments such that the benefit for the poor is maximized.

OP. 4.12 on Involuntary Resettlement applies to this project. The project complies with the requirements ofOP 4.12. The road network and public transport components ofthe project are expected to require land acquisition. The road network schemes in the project were chosen after comparing several alternatives with a view to minimizing resettlement and adverse impacts. The Project Office undertook baseline social analyses and resettlement planning studies to show how incomes and living standards will be improved, or at least restored, for all persons adversely affected by the project. A Resettlement Action Plan (RAP) has been prepared by the borrower. Final designs for schemes to be undertaken in the public transport component will not be available until the project is under implementation. Civil works associated with the public transport component are scheduled to occur in the third year of implementation. Because it is impossible to prepare a fully-specified RAP for this component prior to appraisal, the Project Office will prepare a separate resettlement implementation plan consistent with RAP principles and standards for Bank review and acceptance prior to the third year of implementation. Annex 12 reviews adverse impacts related to land acquisition or changes in land use for the project, and summarizes the measures included in the RAP for mitigating them. Related public consultation and disclosure activities are also summarized in the same Annex. The road network component involves works scattered throughout the city, with 62 urban residential community committees and 48 suburban villages affected in varying degrees by land acquisition and structural demolition. In all, 176 hectares of collective-owned land will be acquired in village areas. Housing demolition will require relocation of 1 164 urban households and 1064 suburban households. Other significant impacts include relocation ofshops, enterprises and public institutions. Of the collective land to be acquired, about 124 hectares is cultivated with the remainder used for house plots or other purposes. Most suburban villagers, however, derive relatively little or no income from agricultural production. Land compensation will be based on the highest average annual output value per mu among the same land in the affected municipal districts. In each case, compensation rates meet or exceed legal requirements and meet or exceed replacement cost valuation. Villagers themselves decide on appropriate rehabilitation measures for collective members, which typically includes redistribution ofremaining land

- 23 - and collective investment ofland compensation. In some cases, those affected opt to receive a cash resettlement subsidy and relinquish collective membership in favor ofurban residency.

Compensation rates for demolished structures are based on replacement cost for the structure itself and a supplemental zonal valuation. Compensation rates for illegal structures are based onreplacement cost for the structure, but do not include the supplemental zone valuation.

The RAP includes several features that go well beyond minimum resettlement requirements. Among them: special arrangements for poor and vulnerable households to obtain subsidized rental apartments or to obtain discounts and subsidies on purchase ofreplacement housing, and a scheme to provide households losing very small residential units with additional compensation so they may purchase replacement housing meeting community minimum size standards.

Based on preliminary estimates, the public transport component is likely to include acquisition of about nine hectares of collective-owned land and to require relocation of about twenty households, scattered among four suburban villages. The Bank policy relative to indigenous people (OD 4.20) does not apply and an IPDP is not required. The social assessment and socio-economic survey found that there are no ethnic minority communities in the project area.

6.2 Participatory Approach: How are key stakeholders participating in the project? All affected households and villages were identified through a socio-economic census. Additional details regarding sources of income and local living standards were obtained through a baseline survey and through the social assessment process. Project information was provided to the affected households and villages, and municipal district governments through newspaper, posters and public meetings. The draft version ofthe RAP was advertised on Feb. 17,2003 in the Wuhan Daily, and placed in the Hubei Provincial Library and the Wuhan Municipal Library. Subsequent drafts ofthe RAP were placed at the same locations

An extensive public consultation process, including focus group discussions and key informant interviews, was designed as part of a two-stage consultation strategy (concurrently with public consultations related to the environmental assessment) to disseminate project information, collect people's concerns, needs and recommendations, and consult the affected people about the resettlement and rehabilitation strategy. Particular attention was devoted to the low-income residents and vulnerable group ofpeople during the consultation process to ensure that the information dissemination methods were appropriate and adequate. Information dissemination and consultations are designed to continue during the project implementation.

A resettlement information booklet, including detailed entitlements ofeach household, compensation and entitlement policies and grievance procedures will be prepared and distributed to the displaced people prior to the resettlement implementation. Displaced communities will play a key role in finalizing and implementing their livelihood restoration programs.

6.3 How does the project involve consultations or collaboration with NGOs or other civil society organizations'? The Population Research Institute of Wuhan University was contracted to head the social assessment exercise. This has contributed significantly to the preparation ofthe RAP. Residential committees and village committees have also been consulted with and participated in the resettlement planning process and the preparation ofthe project.

- 24 - 6.4 What institutional arrangements have been provided to ensure the project achieves its social development outcomes'? The institutional arrangements for resettlement implementation are detailed in the RAP. The Population Research Institute of Wuhan University, independent from the provincial and municipal government and the project management office, will be contracted to serve as the independent monitoring agency ofthe resettlement program. The project will be monitored and the living standards ofthe PAPSwill be evaluated over the course ofthe project implementation. The monitoring results will be regularly reported and, if needed, remedial actions will be designed, 6.5 How will the project monitor performance in terms of social development outcomes? Both internal and independent external monitoring of the resettlement program will be conducted regularly during project implementation. The Population Research Institute in Wuhan University will carry out independent monitoring every six months. Apart from physical progress, this review will evaluate livelihood restoration efforts and their effectiveness. The RAP describes in detail the purpose of monitoring, responsibilities, indicators, methodology, procedures and reporting requirements.

7. Safeguard Policies:

7.2 Describe provisions made by the project to ensure compliance with applicable safeguard policies. Sections E5 & E 6 describe provisions made to ensure compliance with OP 4.01 and OP 4.12. The draft EA and RAP were first disclosed in the Infoshop in Washington on February 18,2003.

- 25 - F. Sustainability and Risks 1. Sustainability: Sustainability has environmental, social, financial and economic dimensions. Socially sustainable development ofthe transport system in Wuhan requires a policy and institutional framework for effective handling ofresettlement. The project aims to leave behind the institutional capacity, and an efficient delivery mechanism to address the adverse social impacts associated with urban infrastructure projects. It also requires that policies be designed to benefit all transport users, particularly the socially disadvantaged and not just those with access to motor vehicles. The surveys ofthe disadvantaged groups undertaken during project preparation are being used in the design and refinement of service delivery. The project places emphasis on providing for the continuation of these surveys as a means ofdetermining the needs of the disadvantaged. The environmental sustainability of the project is dependent on the extent to which the overall level oflocal and global emissions due to increasing travel demand is monitored, contained or reduced. A Motor Vehicle Emission Control Strategy is designed to do this.

The sustainability ofthe physical assets is feasible. However, adequate resources for operating the system, for maintenance and replacement of assets, and for increasing capacity in response to user demands remain the most important consideration. For the bus system, reform measures discussed to date are designed to reduce costs, eliminate subsidies and introduce competition. If successful, they will ensure the long-term sustainability ofthe system. If during the project these reform measures are found to be inadequate, other regulatory and competition possibilities will be suggested. For the maintenance ofroads and traffic management, measures are required to improve management of existing funds, ensuring provisioning in the budgets and possibly increases in user charges. These aspects will be reviewed in the continuing work on the transport strategy.

The institutions responsible for construction ofroads, and traffic management are already experienced and fully effective. The staff ofthe agencies responsible for planning and programming oftransport investments, and bus service delivery are capable but need more hands-on experience, while the institutions themselves in which they work require strengthening. These aspects will be addressed during the implementation ofthe project.

There is a risk that some ofthe policy prescriptions underpinning sustainability will not be followed in the medium to long term. The risks are being mitigated by very close cooperation and extensive discussions between the Bank and the Municipality during preparation. This cooperation is coupled with the extensive use oflocal staff and consultants, with a thorough knowledge ofChinese conditions, working in partnership and adapting policy solutions that have been well tested around the world for the Chinese environment.

2. Critical Risks (reflecting the failure ofcritical assumptions found in the fourth column ofAnnex 1): Risk I Risk Rating I Risk Mitigation Measure From Outputs to Objective The Municipality does not continue to S This is a real risk given the greater emphasis in maintain or manage the new road space to China on construction. Further development of make most efficient use ofit WUTS throughout the project to mainstream road maintenance and traffic management policies, programs and budgets, coupled with an annual review ofmaintenance budgets should help change this emphasis.

- 26 - nitial adverse public reaction to the M Wunicipality and the traffic police are aware of mplementation oftraffic management :he importance ofpublic consultation and have a TM) measures. zood record, which is expected to continue, :specially with continued Bank support and idvice during project implementation.

'he traffic police do not enforce traffic M The measures are designed to the extent possible nanagement measures. :o be self enforcing, and the police are :ommitted to them. Continued Bank support md advice should sustain that commitment.

3us operators take no steps to address M rhere are a number ofmeasures in the project to ither operational inefficiencies such as wist operators address these issues (including lunching at bus-stops, to maximize the CMIS, reconstruction of stops and TA from iotential of bus lanes. local and international experts). There is also pressure from the Municipality to reduce costs and improve services.

NMG fails to give adequate policy M Further development of WUTS throughout the upport to bus priority. project to reinforce the need for such policies, coupled with study tours to help WMG decision makers understand how the policies can be implemented, and TA support for the careful preparation of good quality schemes.

:he bus operators do not take advantage M Staff reduction has been limited to date in bus if IT to reduce staff, retrain staff improve operators in China. Bank agreement to nanagement, and operational procurement ofthe Stage 1 IT equipment will be n-oductivity linked to a time based action plan for training and efficiency measures, and for Stage 2 equipment to progress in implementing the action plan. TA support is also provided for the formulation ofbusiness plans. The Municipality wishes to reduce subsidy, which puts pressure on operators to reduce costs. lata generated by expanded M Bank agreement to investments in MVECS to be :nvironmental monitoring system is not linked to use ofthis data and regular reporting. ised by municipal leaders to make more nformed decisions on mitigation measures

?rained staff do not stay in respective S Use of appropriate criteria in the selection of nits for at least the life ofthe project appropriate staff for training.

Zonsultant services do not transfer M Discussion with implementing agencies to agree nowledge and technology, and facilitate on the technical areas where such transfer is he adoption of intemational best practice most useful, coupled with rigorous application

- 27 - )fconsultant selection and monitoring of :onsultant performance From Components to Outputs Prior to commencing civil works, required S ipproval of civil works contracts only given land acquisition, resettlement and service vhen these activities are completed diversions are not planned, budgeted and implemented causing project delays.

Additional schemes are not selected by WMG using WUTS

WPSB leadership and cooperation S zreation of a formal coordination group headed between the various stakeholders ofthe )y senior WMG leaders. project on TM does not continue

The municipality does not implement the M bualreview of the project and linkage of emission control strategy nvestments in the environment component to rogress in MVECS. The Government of China s putting great emphasis on improving air iuality in cities.

Cooperation between the various S :reation of a formal coordination group headed stakeholders of the project on the MVECS iy senior WMG leader does not continue and leadership by WEPB abates

Project Office has inadequate staff, skills M 4greements to be reached at negotiations. Loan and authority to manage the overall :ovenant. Monitoring and remedial action by project 3ank supervision missions

Overall Risk Rating M Risk Rating - H (High Risk), S (Substantial Ri: , M (Modest Risk), F Negligible or Low Risk) M

3. Possible Controversial Aspects: None identified

G. Main Loan Conditions 1. Effectiveness Condition Standard conditions of effectiveness

- 28 - 2. Other [classify according to covenant types used in the Legal Agreements.] 2.1 AccountsIAudit

2.1.1 Wuhan shall have the records, accounts and financial statements for each fiscal year audited, in accordance with consistently applied auditing standards acceptable to the Bank, by independent auditors acceptable to the Bank. 2.1.2 Wuhan shall hmish to the Bank not later than six months after the end of each such year (A) certified copies of the audited financial statements and (B) an opinion on such statements by said auditors, in scope and detail satisfactory to the Bank.

2.2 Monitoring, Review, and Reporting

2.2.1 Wuhan shall prepare reports each calendar semester, on the physical progress of implementation and the status of procurement and hmish them to the Bank within 30 days of the end ofeach semester, starting July 3 1, 2004.

2.2.2 Wuhan shall prepare annual reports by February 15 each year, starting on February 15,2005 on the progress achieved in the preceding year and the proposals for the next year.

2.2.3 The mid term review for the Project shall be not later than May 3 1, 2006.

2.3 Implementation.

2.3.1 Overall (i) Wuhan shall maintain until completion of the Project the Municipal Project Leading Group, with terms of reference acceptable to the Bank, and responsible for the coordination among all municipal entities in regard to the implementation of the Project. (ii) Wuhan shall maintain throughout the life of the project, a Project Office with units responsible for land acquisition and resettlement, environmental management, procurement, financial management, construction management, project management and monitoring and reporting, to be adequately resourced with suitably qualified staff. (iii) Wuhan shall, not later than November 30 in each year, commencing November 30,2004, and until completion of the Project, prepare and hmish to the Bank for comments, a proposed annual work program and budget for the Project for the next Fiscal Year, and thereafter implement such work program as shall have been agreed with the Bank. (iv) The Construction Supervision team employed to assist in the supervision of the civil works construction shall remain in place during the entire implementation period.

2.3.2 Road Network Development Component (i) Wuhan shall not make any changes to the agreed program except if such change is compatible with the Wuhan Urban Transport Strategy and a full feasibility study, acceptable to the Bank, is carried out. (ii) Wuhan shall carry out the EMPs, RAPSand the RPF, in a manner satisfactory to the Bank, in particular: (a) Prior to commencing any work not included in the RAP, prepare a RAP in accordance with the RPF.

- 29 - (b) Prior to commencing any work not included in the EMP, prepare an EMP satisfactory to the Bank.

2.3.3 Road Maintenance Component Wuhan shall (i) implement the road maintenance management system by December 3 1,2006. (ii) review with the Bank the progress on the reform ofthe road maintenance functions, by March 3 1 in each year, commencing March 3 1,2005, and until completion ofthe Project. (iii) review with the Bank the maintenance performance and expenditures against the budget for the previous year and the previsions for the forthcoming year, by March 3 1 in each year, commencing March 3 1,2005, and until the completion ofthe Project.

2.3.4 Public Transport Component (i) Wuhan shall review with the Bank the progress ofthe Wuhan public transport reform by March 3 1 in each year, commencing March 3 1,2005, and until completion ofthe Project. (ii) PT companies to fumish through the Wuhan Public Transport General Company, for review a rolling five-year development plan by March 3 1 in each year, commencing March 3 1,2005, and until completion of the Project, and then to implement such plan.

2.3.5 Technical Assistance Component Wuhan shall review with the Bank at least once a year, and until completion ofthe Project, any developments in the Wuhan Urban Transport Strategy. carry out the training in accordance with a training program acceptable to the Bank; and review the training program with the Bank by March 3 1 in each year, commencing March 3 1,2005, and until completion ofthe Project. carry out the studies agreed with the Bank in accordance with terms ofreference and a timetable acceptable to the Bank, fumish to the Bank the recommendations ofeach ofthe studies promptly upon completion ofthe relevant study, prepare an action plan for each of the studies to implement the recommendations, taking into account the comments ofthe Bank, if any; and thereafter promptly implement such action plan. review with the Bank by March 3 1 in each year, commencing March 3 1,2006, and until completion ofthe Project, the progress in the implementation ofthe recommendations of the motor vehicle emission control strategy study.

H. Readiness for Implementation 1. a) The engineering design documents for the first year's activities are complete and ready for the start of project implementation. 0 1. b) Not applicable.

IxI 2. The procurement documents for the first year's activities are complete and ready for the start of project implementation. IxI 3. The Project Implementation Plan has been appraised and found to be realistic and of satisfactory quality. 0 4. The following items are lacking and are discussed under loan conditions (Section G):

- 30 - I. Compliance with Bank Policies 1. This project complies with all applicable Bank policies. 0 2. The following exceptions to Bank policies are recommended for approval. The project complies with all other applicable Bank policies.

Edward Dotson Team Leader Sector Dlrector

- 31 - Annex 1 : Project Design Summary CHINA: Wuhan Urban Transport Project

Sector Indicators: Sector/ country reports: from Goal to Bank Mission) To support China's transition Measures of Municipal Urban 3overnment and municipality in urbanized industrialized from Transport Services .eports iarket-oriented economy will (i)a rural, agricultural pur more economic growth. society to an urban, industrial he benefits of growth will society, and :ach the poor both directly (ii)a centrally planned in terms ofmore economy to a more globally pportunities that improve integrated market-based ieir quality oflife) and economy idirectly (in terms ofmore :sources to provide a social afety net).

Project Development Outcome I Impact 'roject reports: from Objective to Goal) Objective: Indicators: To promote development of an integrated, efficient, and sustainable transport system for the rapid, safe and convenient movement of people and goods in Wuhan

1. Support Investments in 1. Capacity and efficiency 4nnual progress reports .1 There are no significant transport infrastructure and 1.1 Reduction oftravel time Mid-term review hanges in forecast rates of services that address for motorized vehicle users on [mplementation Completion nigration or motorization. current system efficiency, the key external/cross town Report capacity, safety and route from Automobile Town 4nnual municipal and State sustainability issues, and to Jianghan Road from 49 -eports address the mobility needs minutes in 2002 (baseline) to 4ccident Analysis Study of users. 43 minutes in 2008. Reports

1.2 Reduction oftravel time for motorized vehicle users on the key cross river route from Hankou Railway Station to Hongshan Square from 37 minutes in 2002 (baseline) to 32 minutes in 2008.

1.3 Reduction oftravel time For motorized vehicle users on :he key central area route From Houhu to Wuhan Plaza From 26 minutes in 2002 'baseline) to 22 minutes in -008

- 32 - 1.4 Improvement in bus service productivity, with an increase in average daily ridership from 259 million in 2002 (baseline) to 3 10 million at end ofproject (2008)

2. Mobility 2.1 Reduction of travel times for pedestrians on key routes (i)Hong Kong Road to Xan Li Men from 68 minutes in 2002 (baseline) to 59 minutes in 2008: (ii)Wulidun to Zhongdian Dun from 30 minutes in 2002 (baseline) to 26 minutes in 2008

2.2 Reduction oftravel times on for cyclists on key NMT routes: (i)Tiangjiadun to Riverside at Sanyang Road from 30 minutes in 2002 (baseline) to 22 minutes in 2008: (ii)Yunlin Street to Macao Road from 20 minutes in 2002 (baseline) to 15 minutes in 2008 (iii) Riverside at Sanyang Road to Wuhan Guan from 20 minutes in 2002 (baseline) to 18 minutes in 2008.

2.3 Reduction oftravel times for bus users on key routes (i) Cross river from Hankou Railway Station to Hongshan Square from 48 minutes in 2002 (baseline) to 42 minutes in 2008. (ii)In central area from Houhu to Wuhan Plaza from 34 minutes in 2002 (baseline) to 29 minutes in 2008

3. Sustainability 3.1 Production and i.1 The Municipality bases implementation of Annual naintenance budgets on road maintenance plans, ieeds identified by RMMS based on application of RMMS, by 2008.

- 33 - 3.2 Formulation and adoption 3.2 The Municipality ofan effective motor vehicle :ontinues to regard reduction emissions control strategy to If emissions as a priority. reduce pollution due to motor vehicles, including a new I/M system by 2008.

!. Support formulation of a 2.1 Further detailed studies The Municipality continues to ransport strategy to guide recommended in the WUTS use the transport strategy as a nvestment decisions Report to be completed by mid basis for decision making on term review in 2005. transport policies and 2.2 Transport Policy “White investments. Paper” to be prepared by 2008. 2.3 Investment program for five year period starting in 2008 finalized by 2008.

L. Support for reforms to Bus route tendering on a The Municipality continues to mprove performance of bus competitive basis completed support reform of the public iervice delivery. across the bus system by 2008, transport system.

Iutput from each Output Indicators: Project reports: (from Outputs to Objective) 2omponent: \. Road Network. All components :arty-seven road schemes to All civil works contracts 1. Before and after The Municipality continues to a) provide alternatives for delivered at acceptable quality performance indicator surveys maintain and manage the new :xtemal or cross-town traffic within time, budget, cost and as work proceeds. road space to make most b) relieve cross river safety constraints. 2. Annual progress reports efficient use of it. :ongestion 3. Mid-term review; c) relieve congestion in Implementation Completion :entral down-town areas Report d) provide for orderly :xpansion ofnew growth ireas md e) 17 footbridges and iubways to provide safer :onditions for pedestrians and VMV

TM. Traffic Management

TM1. Pedestrian program TM1 i) Sixty-three mid-block (i)Mid-block signals ;he Municipality continues to iignalized pedestrian installed and functioning implement measures in face o xossings (ii)Cycle times at all signals any initial adverse public ii) Pedestrian phases in at the 99 junctions revised reaction. raffic signals at 99 junctions. such that pedestrian phases iii) One pedestrian street installed and functioning The traffic police enforce the (iii)Street pedestrianized measures, particularly in the period after initial

- 34 - implementation.

TM2. NMV program TM2 50 km of NMV routes with VMV routes created with :ither MVINMV segregation Jartial or full segregation on 3r MV restrictions 111 60km of roadway

Bus Operators take steps TM3. Bus priority I'M3 TM3 to prevent operational issues measures Priority measures [i) 35km of bus lanes on nine implemented and functioning such as bunching at bus stops routes 3n designated 35 km network which reduce effectiveness of bus lanes.

WMG Policy continues to give priority in the allocation of road space to buses.

TM4. Junction TM4 channelization and traffic (i) All civil works contracts facilities program delivered at acceptable quality (i)274 junction within time, budget, cost and channelizations safety constraints. -46 physical; (ii)No widening ofjunctions -228 with traffic facilities

TM5. Area Traffic Control TM5. (ATC) and traffic signal (i)ATC systems and traffic upgrading program signals installed and (i)ATC systems installed in functional Hanyang, East Lake Hi-Tech (ii)Signals in I zone, WuchanglQingshan communication with central (ii)Traffic signals installed ATC and signal timing plans and upgraded integrated with existing (iii)Thirty-five CCTV signals real-time monitoring cameras (iii)CCTV installed and functioning in appropriate sites. (iv) VMS installed and functional. Systems installed to provide VMS with appropriate updated information.

TM6 accident analysis program (ii)All civil works contracts (i)Enhancement of traffic executed on time, within management information budget and at acceptable system quality (ii)Accident blackspot (iii)Accident investigation improvements: engineering equipment procured and traffic facilities at sixteen (iv) Systems established to blackspots and on thirty-two inform and collect fines from arterials

- 35 - .ed-light offenders in legally :iii)Traffic accident qalid and acceptable manner. investigation equipment :iv) Thirty red-light violation :ameras rM7. Road user education rM7. [RUE) program :i)All civil works contracts [i) Children's traffic Safety ielivered at acceptable quality Playground; nine associated within time, budget, cost and district education bases safety constraints. [ii) Public education :ii)All publications and billboards 3erformances designed, (iii) RUE Columns in local zxecuted and disseminated on newspapers schedule and in budget (iv) RUE Helpline and website (v) Traffic TV program (vi) Traffic radio program (vii) Traffic safety pamphlets (viii) TM Information Map

TM8. Road marking TM8. equipment All equipment procured Four motorized and seven competitively: installed and hand-pulled vehicles. functional Selected TDM measures implemented after the TDM Study

PT. Public Transport:

PT1. Information PT1. Computer systems 'Tl. Management System procured competitively, :he bus operators take Computerizing basic tasks installed and functional. .dvantage of IT to reduce currently done manually. Staff trained to use computer taff, retrain staff retained, systems. nanage more effectively and ncrease productivity

PT2, PT3, PT4. Investments PT2, PT3, PT4 in physical infrastructure All civil works contracts (i)Four long-distance and delivered at acceptable quality seven city centre within time, budget, cost and interchanges. safety constraints. (ii)Reconstruction oftwelve termini (iii)Fourteen bus-bays

- 36 - RM. Road Maintenance:

RM1. Reconstruction of ten RM1. All civil works existing roads contracts delivered at acceptable quality within time, budget, cost and safety constraints.

RM2. Road maintenance equipment RM2. All equipment procured competitively, installed and functional. Staff trained to use. RM3. Road maintenance management information RM3. All computer systems system procured competitively: installed and functional. Staff trained to use. Data on road conditions collected and entered into system.

EN. Environment.

EN1. Vehicle emission and EN1. All computer systems 2N1. traffic noise monitoring and equipment procured lata generated is used by systems competitively: installed and nunicipal leaders to make (i) air quality monitoring functional. Staff trained to nore informed decisions on systems increased from five use. nitigation measures. to fifteen; (ii) two vehicle emission monitoring sub-stations, automatic computerization; monitoring equipment (iii) 7 noise monitoring sub-stations; and (iv) IT equipment

EN2. Motor vehicle EN2. Motor vehicle emission emission control strategy control strategy (MVECS) (MVECS) developed and adopted for implementation.

EN3. Noise mitigation EN3. Noise mitigation measures implemented

EN4. Environmental eng EN4. EMP implemented. design and management Construction supervision and designs judged environmentally sustainable

EN5 Environmental monitoring

- 37 - rA. Capacity building

TAl, TA2. International TA1, TA 2. Study tours TA1, TA2 Trained staff stay and domestic training planned and executed on in respective units for at least schedule and in-budget the life of the project. rA3. Consultant services. TA3. All studies tendered TA3 Consultant services 3.1 Civil works supervision competitively and complete transfer knowledge and 3.2 High strength bituminous on time and within budget, technology, and facilitate the 2oncrete pavement study accomplishing scope ofwork adoption of intemational best 3.3 Road safety audit practice 3.4 Support for public transport reform 3.5 Other public transport related studies 3.6 Traffic management related studies 3.7 Studies related to environmental management 3.8 Road bridge and drainage management system 3.9 Wuhan Urban Transport Strategy (WUTS) 3.10 Financial management system analysis 3.1 1 Travel needs ofthe low income and vulnerable groups

TA4. Office equipment

- 38 - Droject Components I nputs: (budget for each 'roject reports: [from Components to Sub-components: :omponent) Outputs) iN. Road Network 161.3 ?orall components: Required land acquisition, Legular project management resettlement and service eports, including: diversions are planned, i) quarterly and annual budgeted and implemented. lrogress reports ii) audit report Additional schemes, if any, iii)mid term review reports xe selected using WUTS iv) study reports v) Bank supervision mission eports

TM. Traffic Management 13.4 Continued effective cooperation between the various stakeholders of the project and continued program leadership by WPSB.

IT. Public Transport 14.2 The municipality provides continued support for improvements to public transport. iM. Road Maintenance 17.5 The municipality continues with announced reform of road maintenance management and operations.

3N. Environmental i.5 The municipality implements aanagement the emission control strategy, once the study is completed. Continued effective cooperation between the various stakeholders ofthe project and continued leadership by WEPB.

TA. Capacity Building and '.9 Continued WMG ownership rechnical Assistance

- 39 - ill components 579.8 Project Office has adequate staff, skills and authority to manage the overall project effectively. Project Office produces good quality timely reports. Project design is adjusted in response to changing circumstances as required to meet the project objective.

- 40 - Annex 2: Detailed Project Description CHINA: Wuhan Urban Transport Project

The implementation of this project includes components for road network development, public transport, traffic management, road maintenance, environment protection and technical assistance. The costs for land acquisition and resettlement and recurrent costs such as preparation, design and administration are indicated in each component.

By Component:

Project Component 1 - US$461.30 million Road Network Development The key problems and deficiencies in the existing road network within Wuhan were identified in the Wuhan Urban Transport Strategy (WUTS). These may be summarized as:

0 lack of suitable routes for external or cross-town traffic 0 insufficient capacity for cross-river traffic and poor distribution oftraffic between existing crossings 0 congestion in the central areas ofthe three towns, especially Hankou 0 inadequate road networks for the orderly expansion ofthe city into new growth areas 0 poor conditions for pedestrians with resultant safety concerns.

This component addresses the two immediate needs ofimproving the operation ofthe road network within the city, and expanding the bicycle and pedestrian networks. The proposed road network investment strategy is also derived from the WUTS. It is the result ofextensive testing of altemative road and public transport networks, and altemative investment options to address the key problems noted above. A total of forty-seven schemes, covered in five programs, are proposed for implementation over a five-year period. The primary objective and number ofprojects in each program is shown in the table below. Many projects serve a secondary objective as well. Where appropriate these secondary objectives have been identified.

Primary Secondary Objective Objective (a) Provide suitable routes for through or cross-town traf$c 14 3 (b) Improve utilization of existing cross-river bridges 3 6 (c) Relieve congestion in central down-town areas 8 2 (d) Provide adequate road networks in development areas 10 3 (e) Provide safe conditions for pedestrians 17 1

I Total I 52 I l5 I The civil works for these five programs include the construction of new roads, upgradinglwidening of existing roads, construction of interchanges and construction of pedestrian overbridges or underpasses. The works are spread across the primary road network (middle and inner ring roads, and selected radial roads), the arterial road network and local roads.

-41 - RN1 Provide suitable routes for external or cross-town traffic

A number of schemes are situated on the primary road network, including the construction of 18.6 km of the Middle Ring Road (North), 7.2 km ofthe Middle Ring Road (South), and seven associated interchanges. Sections oftwo radial roads will also be upgraded and one new radial road (13km) will be constructed. Three key junctions on radial routes will be improved. Additionally, sections of seven urban arterial and local roads will be constructed or upgraded.

Middle Ring Road (MRR) & Interchanges: Three sections ofthe MRR are proposed for inclusion in the Bank project: a 15 km section in the north (including four interchanges) will be constructed between 2003 and 2005 and the remaining section in the north (3.6km), plus a 7.2 km section in the south, (including three interchanges) are scheduled for 2006-2007.

RDl.I Middle Ring Road (North) (Etouwan-Sanjintan) 15.0km: This component is designed to provide relief to the central areas of Hankou and to provide a through route for traffic wishing to by-pass the urban area in an east-west direction. The road will be constructed as an urban expressway (dual 3-lanes) and will be located adjacent to an existing flood protection bund, following a natural break in the urban development. The road will connect in the west with the existing westem section ofthe MRR and National Highway 107, and in the east with the Dai Huang Highway (Huangpu Lu). Grade-separated interchanges will be provided at the crossing points with the existing four radial routes to the north. Traffic volumes in excess of 80,000 vpd are forecast in 2007, increasing to above 100,000 vpd by 2020.

RD1.2 Middle Ring Road (North) (Sanjintan-Hun Shi) 3.6km: This section connects from the Sanjintan Interchange (above) to the existing Han Shi Highway on a temporary (Le. non-Master Plan) alignment. The final alignment connects directly to the approach to the proposed Yangtse No. 4 Road-and-Rail Bridge.

RD1.3 Middle Ring Road (South) (Qingling-Luoshi Nan Lu) 7.2km: This section ofthe MRR would complete the southem section ofthe route and provide a connection (via an 8km section ofroute presently under construction and funded by WMG) between the existing expressway eastwards to Huang Shi (70km) and the completed Yangtse No. 3 Bridge and the westem section of the MRR. The component could thus provide a by-pass for traffic from the east (which would otherwise pass through the center ofWuchang and use the No. 1 Bridge) and enhance the usage ofthe Yangtse No. 3 Bridge. It is also claimed that this section of road would assist in the development ofthe adjacent areas, proposed for both hi-tech industrial and education uses. However, the traffic projected on this section of the road was low and the degree to which this project substantively contributes to the overall objectives of the Bank project, is not clear. It was agreed that though the project would be included in the road network component, it would not be included for funding unless a substantially stronger case for its construction were made.

Radial Roads & Key Junctions:.

RD1.4 Qinghua Lu (Phase I, 4.48km; Phase 11, 8.52km): This is a new radial route providing access to a proposed new development area in the east ofthe city, on land adjacent to the Wugang Iron & Steel Works. ' It will additionally provide a new route for extemal and truck traffic from the industrial area avoiding the center of Qingshan. The alignment proposed initially for the middle section ofthis road would have had severe environmental impacts in and around the East Lake, and has therefore been dropped. This road has been included in the overall pool for the project with the understanding that an altemative northem alignment for the middle section will be examined. Ifno suitable alignment is found, then the entire Qinghau Road project will be dropped and an altemative road further north (Luo Jia Zui to Dang Hu Gang), which fulfills the same traffic function, will be examined.

- 42 - RD1.5 Huangpu Lu: Improvement of 4.61 km of the section of the Dai Huang Highway between the central area and the MRR(N). The existing road is congested and its widening will provide additional capacity to serve the newly expanding residential areas in the north-east of the city.

RDI.6 Old Hansha Highway: The project involves the removal of a bottleneck (1.25 km) on the existing highway to provide a consistent 22m roadway (plus NMT lanes).

RD2.3 Qiaokou Lu Interchange: It is proposed to improve the junction between Jiefang Dadao and the northem approach to the Han River No. 4 Bridge. The improvement (a simple east-west flyover is proposed, with an alternative 3-level solution also considered) will ease traffic circulation on the main road network and improve access to the (presently under-utilized) Han River No. 4 Bridge.

RD2.4 Shanlankou Interchange (cost includes Jinshui Lu Improvement (RD1.23)): This is an improvement to a key junction in the inner area of Wuchang at the intersection of Hubei Lu and WuXian Highway. The improvement involves the construction of an underpass and a looped ramp to connect the highway to Hubei Lu, which is already at a low level where it passes beneath the main N-S rail line. The scheme also includes the construction of a short (320m) section of Jinshui Lu. The interchange will improve traffic access and circulation in the area.

In addition RD2.5 Guocikou Interchange (see below) will improve operation of the road network, whilst providing better access to the Han River No. 2 Bridge.

Urban Arterial & Local Roads::

RD1.13 Nanniwan Flyover (1.37km): The project involves the construction of a 4-lane flyover across two main rail lines and will provide improved access between the central business areas of Hankou and the Qiaokou Economic Development Zone, and adjoining residential areas. Pedestrians and NMT will be provided with a subway.

RD1.16 JiangXiEr Lu (2.66km): A section of new arterial road to provide improved access to and within the Qiaokou Economic Development Zone.

RDI.17 YanHe Dadai (4.74km): Constructiodupgrading of route along north bank of Han River to provide improved access and radial movement.

RD1.23 JinShui Lu (330m):-Short length of connecting road, to be constructed in conjunction with the Shanlankou Interchange (RD2.4).

RD1.30 Maying Lu (1.96km): A local link to improve network connectivity and local access.

RD1.32 Hanxi Lu: A short (430m) local missing connection.

Additionally, RD1.28 Meizi Lu (see below) will provide a significant new cross rail linkage.

- 43 - RN 2 Improve utilization of existing cross-river bridges

Three projects are specifically designed to improve the utilization ofthe existing bridges across the Yangtse and Han Rivers.

RD2.1 Ramps to Yangtse No. 2 Bridge: The provision of two new looped ramps is proposed linking the No. 2 Bridge directly with the northern riverside road. These ramps will allow a greater use of the bridge and provide better distribution of traffic onto the local road network.

RD2.5 Guocikou Interchange: The improvement involves the construction of a looped link road beneath the southern approach to the Han River No. 2 Bridge to connect with, and provide access to, a new route built along the south side of the river. The interchange will provide improved access to the bridge and will relieve other roads and junction in the area.

RD1.28 Meizi Lu (640m): The construction ofa short link passing beneath the main through rail line and providing improved access to the presently under-utilized Han River No. 4 Bridge.

Additional six projects will provide some degree of improved access to the existing bridges: the Middle Ring Road (North-East section (RD1.2) and Southern Section (RD1,3)), Qiaokou Lu Interchange (RD2.3), and YouYi Lu (RD1.12). Xianggang Lu (RD1.8) and Xianggang Lu Interchange (RD2.7) will improve access to the proposed Qingdao Tunnel beneath the Yangtse.

RN 3 Relief of congestion in central areas

A total of eight projects are designed to relieve congestion, mostly in the Hankou area. These projects include the construction of three interchanges at key locations to ease traffic flow and enhance usage of the inner ring road. The construction ofthe MRR(N), which provides an altemative high-capacity route for east-west traffic, will greatly ease traffic congestion in the center of Hankou.

Inner Ring Road: Three junction improvements are proposed on the Inner Ring Road (IRR). Redesign and reconstruction of the Jiefang Dadao section (5.7 km) is proposed under the road maintenance component.

RD2.6Xunlimen Underpass: A 4-lane vehicular underpass is proposed along Jiefang Dadao. The objectives ofthe scheme are to allow improved access for pedestrians across the IRR at ground level (the route to the south provides a direct connection to the pedestrianised walking street), and to make improved provision for public transport.

RD2.7 Xianggang Lu Interchange (Hong Kong Lu Interchange): This location will become a key intersection between the IRR and the main northern approach route to the proposed Qingdao Tunnel beneath the Yangtse River linking the center of Hankou with Wuchang. The first phase of the improvement, involving a flyover along Jiefang Dadao, will be financed under the project. The scheme will allow for the improved operation of the IRR and will permit local traffic and pedestrians to remain at ground level. Subsequent phases of the interchange (not funded under the project) will add a second flyover (at level +2) and provide access to the proposed cross-river tunnel, and support development ofthe long term central area network.

RD2.1 Ramps to Yangtse No. 2 Bridge, which form part of the IRR, are described under the river crossing section above.

- 44 - Urban Arterial Roads:

RDl.8 Xianggang Lu (Jianshe Dadao-Xinhuaxia Lu, 1.98km): Widening of north-south route within Hankou will provide access to the proposed Yangtse River Tunnel. The project will improve traffic circulation within the down-town area ofHankou and ease access to the proposed tunnel: it is complementary to the proposed Xianggang Lu Interchange (RD2.7) at the junction with the IRR.

RD1.12 YouYi Lu (1.06km): Widening of a section of an urban arterial within the central area ofHankou will remove a bottleneck and provide a consistent cross-section. It will also improve access to the under-utilized Han River No. 3 Bridge.

RD1.15 Zhongshan Dadao (495m): Improvement of a short link between the IRR (Jiefang Dadao) and the Riverside Road will ease access to the proposed bus interchange at the LRT terminal station.

RD1.20/21 Zhongshan BeiLu (2.30km): Construction andor upgrading oftwo sections of an urban arterial in the central area of Wuchang will improve circulation and access to new development sites.

Local Roads: Two schemes are proposed for the improvement of local roads in the inner areas ofHankou District.

RD1.31 TaibeiYi Lu (1.50km): Completion of missing sections of a local road serving residential areas in central Hankou.

RD1.33 Luguoqiao Lu (825m): Widening of a local route providing access to a proposed bus terminal at LRT station.

FW 4 Provide adequate road networks to support growth in development areas

RDl.10 & RDl.11: Jianshe Dadao (3.15km): A two-phase extension ofJianshe Dadao into the proposed development area in the north-east ofthe city, including the construction of a new link across the main rail line. Two 12m wide subway boxes have already been built beneath the railway. The scheme will improve cross-rail capacity and provide access to the development area in the north-east.

RD1.14 HouHu Lu (5.1Oh): The road is proposed as the major development spine to the expanding residential areas in the north-east ofthe city. The scheme connects to Jianshe Dadao (RD1.11) and Huangpu Lu improvement (RD1.5).

RD1.18 GongYe DaDao (2.63km): A development road in the eastern area ofWuchang, connecting with Qinghua Lu (RD 1.4) will provide a core network ofstrategic roads. Since this road links with Qinghua Road, its inclusion for funding would depend on the outcome ofthe planned supplementary analysis for Qinghua Road (RD 1.4).

RD1.19 LuoShiNan Lu (2.48km): Comprises a southerly extension ofLuoShiBei Lu, which is developing as a major link serving the South Lake residential development area. The proposed road will connect with the proposed Southern Section ofthe MRR (RD1.3).

RD1.22 Qinyuan Lu (3.01km): Anew link within the IRR in Wuchang will provide access to an area close to the central area with significant potential for redevelopment.

- 45 - RD1.25, RD1.26 & RD1.27 Shipailing Lu/Jisan Lu (4.93km): Two schemes that will provide improved and rationalized access to a recently developing residential area on the no longer used civil airport in Wuchang .

RD1.29 Sixin Dadao (5.41km): A major new avenuehoulevard proposed to stimulate residential development in Hanyang in the area south of MoShui Lake.

Additionally, three other projects, notably MRR(S) and Qinghua Lu, will significantly support the growth and expansion ofthe proposed development areas.

RN 5 Provide safe conditions for pedestrians A total of seventeen pedestrian footbridges or underpasses are proposed - nine in Hankou, six in Wuchang and two in Hanyang at a total cost ofUS $1 1 million. The proposed vehicular underpass at Xunlimen on the IRR will provide improved facilities for pedestrians (and buses) at ground level.

Capacity Building and Technical Assistance (TA). The following Technical Assistance related to road network development will be provided as part of the capacity building component 6: (i) Construction supervision (ii) High strength bituminous concrete pavement study (iii) Road Safety Audit ofNew Roads

Project Component 2 - US$33.40 million Traffic Management and Road Safety Component

This component addresses the WUTS problems of congestion in the central area, inadequate cross-river capacity and pedestrian safety. It also aims to increase the safety and productivity of the road network by utilizing modern traffic management techniques. Coordinated programs of comprehensive traffic management measures will be implemented to complement the works in the road network and public transport components.

TM 1 Pedestrian Program. Investments made under this component in Hankou, Hanyang, Wuchang, Hongshan and Qingshan are complemented by investments in pedestrian facilities made as part ofthe road infrastructure component. i) Mid-block signalizedpedestrian crossings at sixty-three locations. The design and location of these crossings would maximize pedestrian safety and convenience. All new crossings would be signalized with central safety islands for protection and storage; existing non-signalized zebra crossings would be replaced with signalized crossings in the ATC system. (The costs ofthe signal works are included in TM5-ATC and the cost ofthe central safety islands in TM4). ii) Traffic signals at ninety-nine junctions in the ATC system would include pedestrian phases to cross all arms ofthe junction wherever possible. The pedestrian phase should not conflict with any vehicle tuming movements, especially right-tum-on red. (The costs of the signal works are included in TM 5-ATC. The cost of central safety islands is included in TM4). iii) One pedestrian street

TM 2. Non-Motorized Vehicle Program Non Motor Vehicle (nMV) Routes - 60 km ofNMV priority routes with either MViNMV segregation or MV restrictions in Hankou, Hanyang, Wuchang, and Qingshan.

- 46 - TM3 Bus Priority Measures Program Provision is made for traffic facilities to implement 35km of bus lanes on nine routes. These compliment facilities to be provided in the public transport component. (Technical Assistance to assist with the further development and design ofbus priority measures and to assist with identification of the potential for a bus rapid transit corridor is discussed under Component 6).

TM4 Junction Channelization and Traffic Facilities Program Junction channelization and traffic facilities (signs, lines and barriers) will be implemented at the 274 traffic signalized sites (including mid-block pedestrian crossings) in the ATC system to be provided under the project. Junction channelization will focus on tightening up junctions, channelizing vehicles in direct and clear paths and bringing stoplines forward to minimize clearance times and increase efficiency. Junction channelization does not mean junction widening. This program consists of:

0 46 channelization schemes involving physical civil works 0 228 channelization schemes using hatched markings, road lining, signs and barriers

Road marking equipment (to paint and remove thermoplastic lines) directly concerned with these traffic facilities is included in TM8.

TM 5 Area Traffic Control (ATC) and Traffic Signal Upgrading Program. ATC systems will be implemented in Hanyang, WuchangIQingshan and East Lake Hi-Tech Zone. Traffic signals operating under isolated control will be implemented in outlying areas. This program includes a total of 274 locations, 18 of which are isolated vehicle-actuated (VA) junctions, and 63 ofwhich are mid-block signalized pedestrian crossings. There will be 185 new signals and 91 upgraded signals, communication equipment, and equipment for two control sub-centers, one in Wuchang and one in Hanyang. Details are given in the Table below:

District Existing New signals Total Of which are mid-block Area signals to be to be installed pedestrian crossings upgraded WuchanglQingshan 66 104 170 (33) 125k m2 Hanyang 11 45 56 (14) 20km2 East Lake Hi-Tech 14 34 48 (16) 12km2 Zone TOTAL 91 183 274 63

This component includes the installation (at the same time as the ATC) ofthirty-five CCTV real-time monitoring traffic cameras, and six Variable Message Signs (VMS) to facilitate better distribution of traffic between the existing river crossings.

Technical Assistance will be provided in the design ofthe ATC system and junction channelization covering the construction phase, including detailed design and implementation management and testing. This is included in Component 6.

- 47 - TM 6 Road Safety and Accident Analysis Program This program will improve road safety and accident analysis procedures and consists of: (i) Enhancement ofthe Trafic Management and Comprehensive Information System, including upgrading ofthe satellite based positioning system. (ii) Accident Blackspot Improvements - Physical traffic engineering works or markings, road lining, signs and barriers to improve sixteen accident blackspot sites and thirty-two arterial roads with accident problems (mainly in suburban areas) (iii) Trafic Accident Investigation Equipment - equipment and special vehicles to improve accident response and on-site investigation. (iv) Electronic Police Camera Enforcement - red-light violation cameras at thirty junctions

In addition, an Accident Analysis Study using Technical Assistance is included in Component 6.

TM 7 Road User Education (RUE) Program The RUE program, using a more pro-active approach, will focus on children. The program consists of:

Children Trafic Safety Playground and associated district education bases at nine sites Public Education Billboards - large and small public advertisement billboards RUE Columns in Local Newspapers - equipment to improve the RUE columns in local newspapers, and to improve images and electronic communication between the Traffic Police and the media RUE Helpline and Website - development ofa website and associated telephone helpline for all road users Trafic TVProgram - equipment to make a TV program to be broadcast daily Trafic Radio Program - development of a traffic information radio broadcast station Trafic Safety Knowledge - designing and printing ofpamphlets for free distribution to children TMInformation Map - development ofthe Wuhan Traffic Management Map and funding ofthe inaugural edition

TM 8 Road marking equipment. Four motorized and seven hand-pulled road-marking vehicles to paint and remove thermoplastic lines, directly concerned with traffic facilities in TM4.

TM 9 Design/Administration. The cost offeasibility study, traffic engineering design, its implementation, and administration will be financed by the municipality.

Capacity Building and Technical Assistance (TA). The following Technical Assistance related to traffic management and road safety will be provided as part of the capacity building component 6: i) Bus priority planning and design ii) Design of the ATC System and associated junction channelization. iii) Accident analysis study iv) Parking study v) Travel Demand Management (TDM) Study to develop potential measures such as a route guidance system using Variable Messaging Systems (VMS), managing vehicles by category and by time, and congestion charging. After the study, selected TDM measures could be implemented under the project, subject to availability offunding at the time.

- 48 - Project Component 3 - US$ 34.20 million Public Transport The objective ofthis component is to increase the efficiency, effectiveness and attractiveness ofbus services in the city. The content ofthis component includes (i)introduction of a computerized management information system to increase the efficiency of operators in routine administrative and technical tasks, and on street management ofbus operations (ii)improvement ofpassenger facilities and service through construction or upgrading of interchanges, termini and bus stops, and (iii)provision for a pilot BRT scheme, should studies (to be financed under the project) indicate its viability. Technical assistance to support reform, for the design of the CMIS, and for BRT studies is included in component 6.

PT1 Computerized Management Information System (CMIS)

Currently, most of the administrative and technical tasks in the bus companies are carried out manually with very little use being made of computers. Many repetitive tasks, which are ideally suited to computerization, are done by teams of workers and as a result staffing ratios are high. In an attempt to improve efficiency and quality of work, it was decided that the project should encourage computerization for all organizations involved with public transport in Wuhan.

In this subcomponent, a number ofmanually performed tasks will be computerized. Initial proposals in the computerization phase include management of company records, staff records, salary calculations, passenger and revenue reporting, bus maintenance system, spare parts inventory, vehicle scheduling and driver rostering.

PT 2 Introduction of computerized satellite based vehicle location and control system

A computerized satellite based vehicle location system, with an operations center to control up to 600 buses on twenty routes, will be developed as a demonstration project. The objective ofthis system is to achieve more regular dispatching ofbuses, to improve schedule reliability (reduce bunching of buses) on the road (thereby reducing bus requirements) and eventually to provide waiting passengers with real time information on bus amvals. The data gathered from the system can be used to improve vehicle scheduling. When competitive franchising of routes becomes operational under reform, the system can also be used by WTC to monitor the performance of the operators.

PT 3 Interchanges

A total ofeleven interchanges are proposed. Of these, four (Wujiashan, Yongantang, Guanshanyi Road, Qingling) are associated with the removal of long distance bus stations from the town center to outlying areas and which will also serve as termini for local routes. Of the remaining seven interchanges (Zhonghua Road, Taipingyang, Lijibei Road, Sanyang Road, Yongqingjie, Guqintai and Yuejiazui), four will be situated at LRT stations and are intended, in part, to serve passengers interchanging between bus and rail. The remaining three are intended to act as major bus to bus interchanges for intra-Wuhan bus passengers.

The aim ofthese facilities is to shorten long routes that have loading imbalances, and to reduce the number ofduplicating routes on major roads. The interchanges will also allow better facilities for passengers and should greatly reduce the walking distances required for transferring passengers.

- 49 - PT 4 Termini

Most ofthe twelve proposed termini are located in the outer areas of Wuhan and are intended to help the bus operators remove terminus points from their present on-street locations, and to improve operational control of the services. They will also provide additional overnight and off peak parking capacity, and routine maintenance facilities in appropriate locations. The proposed sites for the termini are Qilixincu, Baibuting, Erqiaoxicu, Nanhuhuayang, Chenjiadun, Jianganxizhan, Gusaoshu, Houhu, Xiangyangcun, Xudong Road, Guanshan, and Tiejicun.

The above facilities (interchanges and termini) will require a total land area of 160,700-sq. m.

PT 5 Bus Bays and Stops

Excessive channelization at bus stops together with overloaded stops, high bus volumes and poor on-street discipline results in long delays to buses. Under this sub-component, a total of fourteen bus stops will be reconstructed, which will not only increase the number of individual stops but will also remove the restrictive channelization. In some cases this involves lengthening the bus bays, in others it involves providing two parallel bays, while in some cases it simply involves lengthening the kerb distance available for bus stops. Some guidelines were developed to help in the design process, the key parameter being that the individual stops should not be forecast to operate at more than 85 percent oftheoretical capacity. Under this scheme the fourteen existing stops to be reconstructed are: Wusheng Road, Baofeng Road, Zhongshangongyuan, Xunlimen, Xinhua road, Qiouchangjie, Yongqingjie, Zhingnan Road, Dingziqiao, Fujiapo, Yuemachang, Hongshan, Guqintai and Wuqingsan Primary Road.

PT6 Implementation of Bus Rapid Transit Provision is made for the implementation ofa pilot BRT scheme, should the studies of PT Networks to be undertaken as part of further work on the Wuhan urban transport strategy, (TA 3.7.1) and the associated BRT Study (TA 3.3.4) demonstrate a need. Design work would be undertaken under TA 3.3.5.

PT 7 DesigdAdministration - The cost of engineering survey and design, implementation, and administration will be financed by the municipality.

Capacity Building and Technical Assistance (These are included in the capacity building component 6) include: 0 PT Management Information System Studies for user specification and definition ofthe subsystems to be implemented in the sub-component PT 1 CMIS 0 PT Business development plan (like a 5-Year Plan) - support to operators to prepare these plans including a route network development plan 0 Support for Reform 0 Bus priority and Bus Rapid Transit (BRT) study 0 BRT Design Studies

- 50 - Project Component 4 - US$37.50 million Road Maintenance (RM) This component aims to assist the government's intention to reform the current road maintenance management system so as to increase the efficiency and effectiveness of maintenance works, and the amount ofroad maintained in good condition. WMG intends to introduce competitive tendering for routine works, but to retain in-house capability for emergency needs. The project provides for (i)the design (in component 6) and implementation of a road maintenance management information system (in this component), (ii)the purchase ofadvanced road maintenance equipment to improve the efficiency and effectiveness ofin-house emergency maintenance, and (iii)reconstruction often ofthe most damaged road sections in Wuhan.

RM1 Road Maintenance Civil Work. This sub-component involves the reconstruction ofthe existing road pavement along ten ofthe most heavily damaged roads in the city. The road cross-section will remain unchanged. The reconstruction will include the main carriageway, footpaths and NMV lanes. Traffic management or public transport improvement, if any, on these roads is described in the respective component.

RM 1.1, 1.2 and 1.3 Jiefang Avenue (Gutiansi to Hangkong to Huangpu to Chama - 15.1 km). This road was constructed in 1955. Other than some portions that were repaved in 1992, the road section has not been repaired so far. RM 1.4 Wusheng Road (1.9km). This road was constructed in 1956. The flyover was repaved in 1992. The remaining road sections of the road have not been repaired so far. RM 1.5 Jianghanyiqiao road (32.2km). This road was constructed in 1956. The bridge was the first bridge constructed cross the Yangtze river. No major maintenance has taken place since. RM 1.6 Jiefangnan road (1.lkm). This road was constructed in 1980. No routine maintenance has taken place since. RM 1.7 Wangqinggong Road (13.1 km). RM 1.8 Hanyang Avenue (5.5km). This road was constructed in 1956. It was reconstructed in 1986 and some re-paving was done in 1992. RM 1.9 Heping Avenue (1.3km). This road was constructed in 1956. No major reconstruction has taken place since. RM1.10 Gutianzheng Road (1.735km). One carriageway was constructed in 1989 to provide access to a World Bank financed wastewater treatment plant. The project will complete this road. RMl.11Zhongshan Avenue (2.4km). This road was constructed before 1949. Although there has been some repaving, the condition ofthe road condition remains very poor.

RM2 Road Maintenance Works Equipment. While it is the intention of the Government to introduce competitive bidding for maintenance works contracts, some emergency works will continue to remain in-house. The equipment purchase includes routine road maintenance equipment, including: a pavement mill, concrete breaker, bituminous seam repairer, and a pipe layer.

RM3 Comprehensive Maintenance Management System. . The comprehensive system includes road pavement, bridge and drainage maintenance management sub-systems. The main objective of developing a comprehensive management system is to provide municipal decision makers with a tool for the analysis of maintenance requirements, for the planning, programming, and budgeting ofmaintenance works, and the management ofthe city road network database.

- 51 - There are four activities in this subcomponent: (i) System design study - described in the technical assistance component (TA 3.6) (ii) IT system purchase (iii) Initial data collection and system implementation (iv) Data collection equipment, including road pavement test telecamera, conflict coefficient test vehicle, falling weight deflectometer, light road surface instrument, and bridge state test instrument.

The IT based management system will be procured after the completion ofthe project-financed system study.

RM4 Road Maintenance recurrent cost including preparation, survey and design, implementation, and administration. This will be financed by the Wuhan Municipal Government.

Project Component 5 - US$5.50 million Environmental Protection This component includes measures to mitigate the short and long term environmental impacts ofincreased travel, and the construction ofroads. It includes (i)noise barriers, landscaping and other mitigation measures along new and widened roads, (ii)provision for expansion ofthe existing air quality and noise monitoring system, and (iii)provision for upgrading of the vehicle inspection and maintenance (YM) system. Design ofa Motor Vehicle Emission Control Strategy (MVECS) is included in TA component 6.

EN 1 Vehicle emission and traffic noise monitoring systems. Wuhan Environmental Monitoring Center, an institute under Wuhan Environmental Protection Bureau (EPB), is responsible for all environmental monitoring activities and environmental information management in the city. Consolidated and analyzed data from the Center to Wuhan EPB and the municipal government supports the decision making process for environmental policies, regulations, local environmental quality and discharge standards

The subcomponent will help Wuhan Environmental Monitoring Center to substantially expand its existing air quality environmental monitoring system from five sub-stations to fifteen, and from limited parameters for general air quality to more precise information for vehicle emission and traffic noise. This subcomponent includes procurement and installation ofequipment for automatic computerized monitoring for two vehicle emission monitoring sub-stations and seven traffic noise monitoring sub-stations, IT hardware and software and associated automatic data collection and analyses. It will also include a vehicle for remote and mobile air quality monitoring, and a vehicle for motor vehicle emission monitoring.

EN 2 Motor Vehicle Emission Control Strategy (MVECS) The project will finance, under the Technical Assistance Component, a study to identify the most appropriate measures for the implementation ofa vehicle emission control strategy in Wuhan, within the framework of the National Strategy. The study will include analysis of characteristics of vehicle emission in Wuhan, environmental impact from vehicle development, and measures for vehicle emission control, including an upgraded inspection and maintenance (I/M) system.

EN 3 Noise Mitigation. The project will provide facilities for noise mitigation, including noise barriers for use on interchanges, air conditioners, double-glazed windows and ventilation facilities for residential buildings, and protection for noise sensitive sites, e.g., hospitals and schools.

- 52 - EN 4 Environmental Engineering Design and Management. This component includes the costs of environmental engineering design, local construction supervision, and the EMP implementation and administration financed by Wuhan Municipal Government.

EN 5 Environmental Monitoring. This is a locally financed component to conduct environmental monitoring and supervision during the project construction and operation phases, and to ensure implementation and realization ofthe Environmental Management Plan (EMP) endorsed by Wuhan Municipality.

EN6 Greeninfload Landscaping. The project will provide greening along the right-of-way ofthe roads to be built under the project, which are included in the road network component.

EN7 Upgrading of Inspection and Maintenance (I/M) system. This will include funding for nine sets ofASM testing equipment and two sets ofactual driving mode testing equipment.

Capacity Building and Technical assistance In addition to the planned investment, the following analyses and studies related to environmental protection and management are proposed as part ofthe capacity building component 6: i) Training for environmental management staff ii) Preparation ofa Strategic Environmental Assessment (SEA) as a capacity building exercise for the Wuhan environmental agencies. The SEA process could then be used to assist decision making in future updates ofthe Wuhan Transport Strategy.

Project Component 6 - US$7.90 million Capacity Building and Technical Assistance (TA)

This component will provide 0 domestic and intemational training for officials from project implementing agencies, to strengthen their technical and management skills 0 consultant services to assist in project implementation, and to undertake studies for further investigation and policy development ofissues and topics discussed during project preparation 0 office equipment to enhance the productivity ofthe implementing agencies

TA1 International Training This subcomponent will include a number ofintemational training tours and courses for staff from the concemed agencies. The proposed destinations for the tours include North America, Europe, Brazil, Japan, Singapore and Hong Kong.. Final details of each study tour will be decided over the course ofthe project.

TA2 Domestic Training This subcomponent will include a number ofdomestic training tours and courses for staff from the concemed agencies. The proposed destinations for the tours include Shanghai, Beijing, Guangzhou, Kunming, Shenzhen, Dalian, Urumqi, Hangzhou and Shijiazhuang. Final details ofeach study tour will be decided over the course ofthe project.

TA3 International and Domestic Consultant Services These services are listed under the component to which they relate.

- 53 - TA3.1 Construction Supervision TA3.1.1 Civil Work Supervision. These consultant services are to assist the implementating agency for the road network development component in the supervision of the civil works construction during the entire implementation period.

TA3.2 Road Infrastructure

TA3.2.1 High Strength Bituminous Concrete Pavement Study. This study will be managed by the Road Network Development Component Agency in order to find the most suitable pavement material for the city ofWuhan.

TA3.2.2 Road Safety Audit of New Roads. This will introduce the concept ofRoad Safety Audits, describe and illustrate the principles and procedures ofRoad Safety Audits, carry out a Road Safety Audit ofthe roads proposed under the Road Infrastructure Component at three stages: preliminary design, detailed design and pre-opening.

TA3.3 Traffic Management and Safety.

TA3.3.1 Parking Study - will provide assistance to the WPSB and other agencies to develop appropriate parking policies and strategies for both motor vehicles and non-motor vehicles. TA3.3.2 Design of the ATC System and associated junction channelization. Consultant services covering the construction phase, including detailed design, implementation, management and testing ofthe goods and works in subcomponents TM 4 & 5. TA3.3.3 Accident Analysis Study. Assistance to enhance the capacity of WPSB Traffic Police Detachment in accident analysis, and to establish an accident analysis system in Wuhan to complement the existing national TAIS. TA3.3.4 Travel Demand Management (TDM) Study. Assistance to WPSB to develop specific TDM measures appropriate for Wuhan in the context of the WUTS, and taking account of ATC and the results ofthe parking study. TA3.3.1 Bus Priority Assistance to Wuhan Public Security Bureau and other local design institutes with the further development, design, implementation and operation ofbus priority measures to be implemented in subcomponent TM 3 ofthe project. Includes advice on international experience.

TA3.4 Public Transport

TA 3.4.1 Design ofPTManagement Information System. The objective of this TA is to design the CMIS to be procured under subcomponent PT1. The key tasks will include: (i) Identification ofthe key activities to be computerized (ii) User specification of the requirements ofthe applications (iii) Assessment ofexisting software that would be suitable to meet user requirements, with customization The client for the Computerization ofBasic Tasks would be the Wuhan Group Public Transport Corporation (WGPTC).

- 54 - TA 3.4.2 Design of a satellite based Automatic Bus Location System. The objective of this TA is to design the satellite based Automatic Bus Location system to be procured under subcomponent PT 2. WTC and WGPTC will be joint clients. WGPTC and individual operators will need the system for operation of the services, while WTC will need the system for monitoring of service delivery. WTC and WGPTC would be joint clients for design of this AVL System. WGPTC and individual operators will need the system for operation of the services, while WTC will need the system for monitoring of service delivery.

TA 3.4.3 PT Business Development Planning. The objective of this subcomponent is to improve the planning process for bus services in Wuhan by providing advice and on-the-job training to those involved in preparation of the Five-Year Business Plans at each of the operating companies and other involved agencies. WGPTC will therefore be the primary client. The Plan(s) will be prepared by operators and the role of the consultant will be to guide, assist and provide on-the-job training as required to those responsible for plan preparation. Assistance will also be given in setting up statistical information systems to provide the informationrequired monthly by the Wuhan Transport Commission on PT usage and performance.

Preparation of a Five-Year Plan The Plan will consist of the following elements:

(i) Planning overview including populationprojections, new development areas and any new transport infrastructure (ii) Standards and guidelines to be adopted in planning for bus services (iii) Five-year bus route network development program (iv) Estimate of new bus purchase and bus scrapping (v) Estimate of depot and parking requirements (vi) Ridership and revenue projections (vii) Capital investment program (viii) Operating cost forecasts (ix) Overall financial position including all financial support required from WMG and any fares increase requirement

Training in Survey Techniques. In addition to advice on the preparation of Five-Year Business Development Plans, training will also be given in conducting bus passenger surveys, public transport trip demand surveys, and bus priority studies. Operators will be assisted to identify locations throughout Wuhan where buses are excessively delayed, either currently or likely to be in the coming five years. Data would then be passed on to the WPSB to plan, design and operate bus priority measures (see TA 3.4.6 & 3.4.7).

TA 3.4.4 PT Institutional Reform. The objective of this TA would be to support the implementation (started in February 2003) of the reform program of WMG through the provision of advisory services to Wuhan Transport Commission (WTC). Specific support is expected to include the following:

(i) Assisting WTC in developing workable and effective tendering and franchising procedures by ensuring that all regulations necessary for the reformed structure are prepared; determining statistics to be reported monthly on public transport performance; and establishing procedures and penalties to ensure timely and accurate reporting (ii) Undertaking a fare setting and profit determination study, and to help establish a process for regular review and adjustment of bus fares.

- 55 - (iii) Advising on the steps in moving operators from SOE towards the creation of shareholder owned companies, with particular regard to minimizing the impact on staff. (iiv) Assisting WMG to formulate more rational PT policy and regulation, and to refine the revised organization structure so as to achieve increased efficiency of service (v) Periodic assessment ofthe effectiveness of the reforms in terms ofachieving their stated objectives

TA 3.4.5 PT Route Network Planning. These studies would be designed to assist in

(i) Undertaking ofon bus passenger surveys and residents public transport trip demand surveys, (ii) Restructuring of the bus route network, including routes and schedules (iii) Identification ofpossible additional locations for bus priority (iv) Identification ofpossible corridors for busways

TA3.4.6 Bus priority and Bus Rapid Transit (BRT) Study. This is a major study to be undertaken for the Wuhan Planning Bureau in conjunction with further work on the Wuhan Urban Transport Strategy (see TA 3.7) by the Wuhan Planning Bureau. The timing and content of this study should coordinate with studies carried out on strategy and general bus priority. The main objectives ofthis study are to: (i) Further review the need for bus priority in the bus network, taking into account delays to buses, corridor bus and passenger flows, and potential network redesign (ii) Assess the potential for BRT in the PT network (including normal bus, BRT, and metro), taking account of corridor flows, availability ofroad space to insert BRT, or the ability to widen roads to insert BRT (iii) Develop and evaluate BRT proposals on a line by line and network basis (iv) Identify main system design parameters, including bus types, stations, and ticketing system for the implementation of BRT and bus priority

(v) Prepare initial concept cost estimates and implementation schedules

TA 3.4.7 BRT Design Provision ofconsultant services for the preliminary design ofBRT schemes resulting from the study under TA 3.4.5 above. The work would be undertaken for the Wuhan Transport Commission.

TA 3.5 Road, Bridge and Drainage Maintenance Management System. Assistance in the design and implementation ofa comprehensive system for the analysis ofmaintenance requirements, and the planning, programming, and budgeting ofmaintenance works.

TA 3.6 Environmental management. The subcomponents of this TA are :

TA3.5.1. MVECS Planning and implementation. Assistance with the planning, design and implementation ofmeasures proposed in the Wuhan MVECS, including the upgrading ofthe I/M program in sub-component EN 7. TA3.5.2. Capacity Building for Strategic Environmental Assessment (SEA). Training for WEPB and local design institutes in the techniques of SEA, and assistance to undertake an initial SEA for Wuhan related to further work on the WUTS.

- 56 - TA 3.7. Wuhan Urban Transport Strategy (WUTS)

This will include (i) Capacity building ofthe Wuhan Planning Institute and Wuhan Planning Bureau, particularly in transport planning, policy formulation and investment programming. (ii) International and local training for staff (iii) Consultant services for the enhancement ofthe transport model (iv) Assistance with further studies, including, more in depth analysis of (a) cross river travel demand (b) PT modes and networks (including the potential for BRT) (c) management of central city travel demand (d) 2007 - 2012 investment needs and (e) financial capacity (v) Integration ofWUTS with the overall transport strategy for the entire municipality (vi) Support for production of a “White Paper” urban transport policy statement and a 2007-2012 investment program based on the results of further studies. (vii) Development of a Wuhan transport planning database.

TA 3.8 Travel needs of the disadvantaged and vulnerable. Follow up to the survey undertaken during project preparation.

TA 3.9 Financial Management System. The objective ofthis TA is to strengthen financial and operational management, and computer based FM systems, including systematic training. The key tasks are the establishment and improvement of a computer based financial management system, developing a financial model to assist the municipality to rationalize infrastructure capital investment, operations and maintenance, and a training program. This is a large TA with a very broad TOR, which includes aspects that relate to WUTS.

TA 4. Office Equipment This subcomponent will fund purchase of office equipment to enhance productivity at the offices ofthe implementing agencies.

- 57 - Annex 3: Estimated Project Costs CHINA: Wuhan Urban Transport Project

Traffic Management and Road Safety 13.20 18.60 31.80 Public Transport 23.70 7.70 3 1.40 Road Maintenance 24.10 12.10 36.20 Environment Management 2.60 2.70 5.30 Technical Assistance 1.50 6.00 7.50 Total Baseline Cost 442.70 120.70 563.40 Physical Contingencies 9.20 3.60 12.80 Price Contingencies 0.90 2.70 3.60 1 Total Project Costs I 452.80 127.00 579.80 Interest during construction 1 16.40 16.40 Front-end fee 2.00 2.00 Total Financing Required 452.80 145.40 598.20

Goods 6.40 26.20 32.60 Works 217.00 94.80 311.80 Services 1.50 6.00 7.50 None Bank Finance 227.90 0.00 227.90 Total Project Cost: 452.80 127.00 579.80 Interest during construction 16.40 16.40 Front-end fee 2.00 2.00 Total Financing Required 452.80 145.40 598.20

1 Identifiable taxes and duties are 0 (USh) and the total project cost, net of taxes, is 598.2 (US$m). Therefore, the project cost sharing ratio is 33.43%) of total project cost net of taxes.

- 58 - Annex 4: Cost Benefit Analysis Summary CHINA: Wuhan Urban Transport Project

Background

Economic analysis for the project was conducted as part ofthe urban transport development strategic planning exercise. Prior to the preparation of this project, Wuhan did not have adequate capacity in the areas of strategic transport planning, traffic modeling, and project economic analysis. Through the preparation ofthis project, Wuhan now has a comprehensive transport development strategy and an investment program up to 2007, which have provided a foundation for the definition ofthe current project. Moreover, a network-based urban transport planning (UTP) model has been developed for Wuhan. This is an important planning tool for strategic planning and evaluation ofinvestment programs. The model was built using a software package, EMMEl2, and was calibrated with data from household and citywide vehicle travel origin-destination surveys, and traffic counts at various locations. The model was then used to simulate network traffic performance under different scenarios -with and without the project. The simulation results, mainly in the form of travel distance, time, and speeds for each personal or vehicular trip, were used to estimate the transport user benefits, Le. savings in personal travel time and vehicle operating costs.

The Formulation of Development Strategy and Investment Program

The strategic planning exercise included a detailed evaluation ofaltemative strategies. Four altemative transport networks for year 2007 were tested using the newly calibrated UTP model. These alternatives included: (i)do-minimum; (ii)traffic management strategy; (iii)maximum transit; and (iv) maximum highways. On the basis of a comparison in terms of traffic performance and investment costs, a year 2007 preferred network was formulated, on which a budget-constrained investment program for the period 2003-07 was identified. The World Bank funded project was then defined from the investment program.

- 59 - [For projects with benefits that are measured in monetary terms]

maintenance costs Net Benefits: $706 m

IRR: 23 Yo

1 If the difference between the present value offinancial and economic flows is large and cannot be explained by taxes and subsidies, a brief explanation ofthe difference is warranted, e.g. "The value of financial benefits is less than that of economic benefits because of controls on electricity tariffs."

Summary of Benefits and Costs: The components designed to improve traffic performance include the following: (a) road network development; (b) traffic management and road safety; (c) public transport service improvement; and (d) road maintenance. The transport network traffic benefits were computed for normal traffic and generated traffic, and the benefits for diverted traffic (redistribution of traffic resulting from traffic diverted from alternate routes and modes because ofchanges in relative trip costs) were implicitly accounted for through the network model. The quantified benefits include both savings in personal travel time costs and vehicle operating costs, which represent the major share ofthe total project benefits. Other project benefits, such as improved traffic safety, reduced auto emission, and intra-city freight transport time savings were considered, but not in monetary terms due to lack ofreliable data. The ERR and NPV were estimated on the basis of savings in personal travel time and vehicle operating costs against the total project costs including investment, operations and maintenance costs. As other benefits were not included in the calculation, the ERR and NPV presented in this Annex can be considered to be conservative estimates. The cost ofeach component included costs for physical works, detailed engineering design, and implementation supervision, and physical contingencies. Annualized operations and maintenance costs were also included in the evaluation.

- 60 - Bicvcles 16% Passenger cars 26% Taxicabs 26% Buses 19% Goods vehicles 11% Total 100%

Main Assumptions: Traffic growth rates were based on future population and income growth projected in Wuhan's economic planning (see Table below). Total person trips are expected to grow with population. Motor vehicle ownership is expected to grow at the similar rate as GDP growth, and this forecast is consistent with Wuhan's historical data for the last 20 years. 2000 2005 2010 2020 PoDulation (million) I 7.49 7.97 8.45 9.70 GDP (billion Yuan) 120.7 220.0 338.5 666.0 GDP growth rate 12% 12% 9% 7yo Per capita GDP $2,014 $3,450 $5,007 $8,582 kUS$) I I I I I

The discount rate or economic cost ofcapital used in the analysis was 12%. A standard conversion factor of0.9, which is the latest World Bank estimate for China, was used to convert financial costs to economic costs. For physical components, annual operations and maintenance cost was assumed to be 2.2 percent ofcapital cost. The assumed project life for the purpose of economic analysis was 20 years with 50 percent assumed salvage value for capital investments. Unit vehicle operating costs (VOC) by vehicle type and passenger travel time costs by mode were based on locally provided basic cost data. VOC for mode iwas calculated using the following formula: VOCi = Ai + Bi (Us) [l+ 0.2 (V/C)] [l+ 0.2 (V/C)], where Ai and Bi are empirical parameters for mode i,s is vehicle travel speed on the link, V is link vehicle volume, and C is link capacity. Following the guidelines suggested in the World Bank Infrastructure Note No. OT-5, "The Value ofTime in Economic Evaluation of Transport Projects," the following values oftravel time were assumed. Trip Purpose Value Commuting trips 30 percent ofhousehold hourly wage, based on international empirical evidence 1 Business trips 130 percent ofhousehold hourly wage, considering cost to emdovers I Other non-commuting and school trim 11 5 Dercent ofhousehold hourlv income I

-61 - Sensitivity analysis I Switching values of critical items: The sensitivity analysis tested the project viability under a number of scenarios. The major sources of down-side risks were identified to be: (i)traffic growth lower than what was expected; (ii)VOC savings lower than expected; (iii)value oftravel time lower than expected; (iv) project cost overrun; and (v) a combination ofcost overrun and benefit reduction. The results of the analysis, shown in Table below, suggested that the project was robust to traffic, cost, and benefit variations. I Scenario I ERR I NPV at 12% discount rate I (a) Base case 23.0% $706 million (b) Traffic growth rate reduced by 22.0% $630 million 20% I (c’l Benefit reduction bv 20% I 19.8% I $4 15 million I I (d) Cost overrun bv 20% I 20.4% I $541 million I

A detailed technical document on the economic analysis, prepared by Wuhan City Comprehensive Transport Planning and Research Institute, is included in the project file.

- 62 - Annex 5: Financial Summary CHINA: Wuhan Urban Transport Project Years Ending

I IMPLEMENTATION PERIOD I Year1 I Year2 I Year3 I Year4 I Year5 I Year6 I Year 7 Total Financing Required Project Costs Investment Costs 78.4 227.1 144.1 81.4 34.8 5.7 0.0 Recurrent Costs 3.7 1.8 1.1 0.9 0.8 0.0 0.0 Total Project Costs 82.1 228.9 145.2 82.3 35.6 5.7 0.0 Interest during 2.2 1.8 2.6 3.2 3.2 3.5 0.0 construction Front-end fee 2.0 0.0 0.0 0.0 0.0 0.0 0.0 ]Total Financing 86.3 230.7 147.8 85.5 38.8 9.2 0.0 1 Financing IBRDIIDA 0.0 106.6 58.6 23.4 5.7 5.7 0.0 Government 71.7 138.7 89.2 62.0 33.1 3.5 0.0 Central 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Provincial 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Co-financiers 0.0 0.0 0.0 0.0 0.0 0.0 0.0 User FeeslBeneficiaries 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Total Project Financing 71.7 245.3 147.8 85.4 38.8 9.2 0.0

Total Financing Required Project Costs Investment Costs 78.4 227.1 144.1 81.4 34.8 5.7 0.0 Recurrent Costs 3.7 1.8 1.1 0.9 0.8 0.0 0.0 Total Project Costs 82.1 228.9 145.2 82.3 35.6 5.7 0.0 Interest during 2.2 1.8 2.6 3.1 3.2 3.5 0.0 construction Front-end fee 2.0 0.0 0.0 0.0 0.0 0.0 0.0 Total Financing 86.3 230.7 147.8 85.4 38.8 9.2 0.0

Financing IBRDIIDA 0.0 106.6 58.6 23.4 5.7 5.7 0.0 Government 71.7 138.7 89.2 62.0 33.1 3.5 0.0 Central 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Provincial 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Co-financiers 0.0 0.0 0.0 0.0 0.0 0.0 0.0 User FeeslBeneficiaries 0.0 0.0 0.0 0.0 0.0 0.0 0.0

- 63 - Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Total Project Financing 71.7 245.3 147.8 85.4 38.8 9.2 0.0

Main assumptions:

Table 1 Wuhan Municipal Finance @MB billion, current terms)

Table 2 Wuhan Public Transport Basic Data

- 64 - Annex 6(A): Procurement Arrangements CHINA: Wuhan Urban Transport Project

Procurement Procurement Capacity Assessment Report - Summary of Findings

1. Wuhan Municipal Govemment (WMG) is responsible for all project-related procurement activities. WMG has established a Project Office (WUTPO) under the Wuhan Urban Construction Fund Management Office (WUCFMO) to conduct the day-to-day management ofthe proposed project, and to coordinate with four sub-project offices: a sub-WUTPO in Wuhan Bridge Construction Company for the civil work ofthe road network development and road maintenance components; a sub-WUTPO in the traffic management bureau ofthe Wuhan Public Security Bureau for the traffic management component; a sub-WTPO in the Wuhan Transport Commission for the public transport component; a sub-component in the Wuhan Urban Management Bureau for road maintenance institutional strengthening part ofroad maintenance component, and a sub-WUTPO in the environment monitoring station for the environment monitoring component. Most procurement activities before contract award will be carried out by WUTPO and the activities after contract award will be implemented by the four sub-WUTPOs.

2. As govemment institutions, WUTPO and the four sub-WUTPOs have been fully authorized and staffed to implement the project. WUTPO has accumulated experience on Bank procurement policies and procedures through project preparation and procurement for PHRD contracts. A training course on the Bank guidelines was conducted during project preparation. WUTPO is able to fulfill its procurement function with the support ofthe municipal govemment, consultants and a procurement agent.

3. WUTPO has selected the China Intemational Tendering Company (CITC) as procurement agent for the project. Wuhan Municipal Engineering Design & Research Institution Company Ltd. (WMEDRIC) is the designer ofthe project responsible for preparation of the specifications and drawings ofthe bidding documents. CITC was the procurement agent for other Bank financed urban transport projects. They are competent and experienced in Bank-financed procurement.

4. The Bank team assessment identified some shortcomings in the general procurement framework in China, including some aspects ofthe Bidding Law for construction projects that became effective January 1,2000 and Government Procurement Law that became effective January 1,2003. The shortcomings include:

0 requirement for the purchaser to confirm in the bidding documents that he possess or secure sources offunding for procurement before bidding. 0 a broader range ofchannels to announce the bid invitation including newspapers, information networks, etc. 0 minimum time for bid preparation and submission of 20 days. 0 requirement for re-bidding if fewer than three bids are received. 0 requirement to reject bids lower than cost, but without stipulating the method to determine the cost. 0 evaluation by scoring allowed.

5. One of the concems identified during the assessment is the length of GOC intemal review process for ICB goods procurement, both before the draft bidding documents are submitted to the Bank and

- 65 - before the bid evaluation reports are submitted to the Bank for review. The Mechanical and Electrical Product Import and Export Department (MEPIED) ofthe Ministry ofForeign Trade and Economic Cooperation (MOFTEC, which becomes Ministry of Commerce after March 2003 by merging with State Economy and Trade Commission) is authorized to conduct such reviews. The review period can be lengthy when disagreements arise among the government agencies involved in the review process. To mitigate this risk, procurement planning will need to incorporate additional time for the review processes.

6. These are country-wide issues which were addressed in the OPR for China. Provisions will be incorporated into the Procurement Schedule ofthe Loan Agreement to confirm exemptions for Bank financed procurement from the Bidding Law and Government Procurement Law of China in case of discrepancies between the Bank Guidelines and the Laws. Wuhan Municipal Government and WUTPO are committed to following the Bank's guidelines. Wuhan Municipal Government will sign a supplementary letter (See Appendix 5 ofthe assessment report for details) to the loan agreement, to this effect or incorporate it directly into the legal documents.

7. WUTPO has agreed to implement the recommendations in the action plan ofthe procurement assessment (discussed during project preparation) to strengthen the capacity ofimplementing agencies, including the preparation and distribution of a procurement manual to all procurement staff, on-the-job training, and occasional procurement seminars and workshops. The Bank will monitor procurement closely through its prior review procedures, seminars/workshops, supervision missions, and procurement post-review missions.

8. The risks in the procurement process are considered to be average relative to other operations. An action plan to further strengthen procurement management capacity was prepared by WUTPO and discussed during pre-appraisal mission. Following action plan was incorporated into the PIP.

Pronosed Action Plan I Due Date Procurement staff shall be on board in all Droiect imdementation agencies I March. 2003 Bidding documents for retroactive contracts shall be submitted to the bank for review I March-October, ASAP 2003 The procurement manual describing all the procurement procedures to be followed April , 2003 in Bank-financed procurement and responsibility ofeach organization handling procurement shall be distributed to all procurement staff including staff for the easy reference. The procurement manual will be a part of overall quality control system The WMCC, WUTPO would organize periodically, ,or send staff out, for From time to procurement training seminars, study tours and workshops for procurement staff and time other staff in implementing agencies, particularly for staff in sub-WUTPO. On the job training shall be conducted for all staff from time to time to strengthen the agency's capacity to implement the procurement for the project.

Procurement Arrangements

9. Procurement Plan. A procurement plan has been prepared using Microsoft Project and is included in the Project Implementation Plan (PIP). The procurement packaging plan has been prepared taking into consideration the prospective capabilities ofthe contractors and suppliers (both Chinese and intemational), as well as capabilities ofthe employers project management. The procurement plan will be adjusted and updated annually to reflect the latest changes in the project implementation schedule.

- 66 - 10. Procurement procedures. The following Bank guidelines will govem all Bank-financed procurement under the project:

0 For goods and works. Procurement under IBRD Loans and IDA Credits (dated January 1995 and revised in January and August 1996, September 1997 and January 1999).

0 For the selection of consultants. Selection and Employment of Consultants by World Bank Borrowers (dated January 1997 and revised September 1997, January 1999 and May 2002).

Format of the Documentation. The following formats will apply:

11. Evaluation reports. The Bank's Standard Bid Evaluation Form, Procurement of Goods or Works (dated April 1996, translated into Chinese by MOF May 1997), and Sample Form of Evaluation Report for Selection of Consultants (dated October 1999).

12. Model Bidding Documents. The Bank-approved Chinese Model Bidding Documents (MBD) (dated May 1997), prepared by MOF based on the Bank's Standard Bidding Documents (SBDs) will be adopted for all ICB and NCB activities for goods and works.

13. Revisions to Model Bidding Documents. The amendments included in the Bank's updated Standard Bidding Documents (SBD) for Procurement of Goods (dated January 1995 and revised March 2000 and January 2001, March 2003) and Works (dated May 2000 and revised March 2002, March 2003), which have not yet been included in the MBD, dated May 1997, will be incorporated into the bidding documents used for ICB goods and works contracts. When Bank's new SBD for ICB Goods and Works based on Master Procurement Documents prepared by Multilateral Development Bank and Intemational Financing Institutions are issued, Chinese MBD (except NCB Goods and Works) will no longer to be used.

14. SBD for Supply and Installation of Plant and Equipment, November 1997, revised January 1999, March 2003 will be used for procurement ofthe area traffic control system.

15. Prequalification Documents for Procurement of Works and User's Guide dated November 2002 based on Master Procurement Documents prepared by Multilateral Development Bank and Intemational Financing Institutions, Standard Request for Proposals, etc. will be used for large civil works ICB contracts above US$ 15 million.

16. Domestic Preference. For goods contracts, qualified domestic bidders will be eligible for a preference equal to 15 percent of the cost, insurance and freight (CIF) price, or the sum of the customs duties and import tax payable by a nonexempt importer, whichever is less. For works, there will be no preference for domestic contractors as China GDI has exceeded the Bank determined threshold.

17. Advertisement. The General Procurement Notice (GPN) was published in the United Nations Development Business (UNDB), Issue No. 596 of December 16,2002. Specific Procurement Notices (SPNs) for all ICB and NCB procurement activities will be published in at least one newspaper with a national circulation in addition to UNDB and dgmarket.com for all ICB contracts. The ICB bidders will be allowed at least 6 weeks for bid preparation (8 weeks for contracts above US$15 million). Similarly,

- 67 - invitations for expressions of interest for consulting contracts expected to cost more than US$200,000 equivalent will also be advertised in the UNDB at least 14 days before the preparation ofthe short list.

18. The specific procurement notice for NCB civil works above US$2 million, NCB goods above US$200,000 and all consulting services under QCBS/QBS procedures shall be published in a national newspaper. The specific procurement notice for NCB civil works below US$2 million, and NCB goods below US$200,000 may be published in a provincial or municipal newspaper.

Procurement Methods (Table A)

19. A total ofUS$334.5 million ofworks and goods is expected to be financed under the project, using the following procedures:

Works : (US314 million, including contingencies)

20. ICB. About US$54.1 million ofworks will be procured using ICB procedures. This represents 17 percent oftotal works procurement. The bidders for these larger works contracts will be prequalified.

21. NCB. About US259.8 million ofother civil works estimated to cost below US$15 million will be procured using NCB procedures. Such contracts will not be ofinterest to foreign contractors and bidders will be post qualified.

22. The contract packaging was determined taking into consideration construction time, availability of detailed designs and counterpart funds, the need to accommodate existing heavy traffic and traffic management during the construction period, resettlement, and relocation ofunderground utilities. The contracts will be bid on a slice-and-package basis; qualified fmswill be allowed to bid for more than one contract. Each ICB contract for works will provide for a dispute review board or dispute review expert in the standard bidding documents (referred to in paragraph 2.42 of Guidelines: Procurement under IBRD Loans and IDA Credits)

23. It was agreed that special attention would be paid to the design of specialist works such as railway flyovers or underpasses, traffic signs, road markings, power supply and street lighting, noise barriers, landscaping and greening, and relocation ofunder street services lines (for power, telecommunication, gas, CCTV, water, or wastewater). These works will be included in the civil work contracts to the extent possible. However, if the prime contractor does not have the experience or the necessary qualifications, the works shall be carried out by specialist sub-contractors and experience and qualification of specialist sub-contractors shall be stated in the bids submitted by prime contractors.

Goods:(US$30.5 million, including contingencies)

24. ICB. About US$27 million worth ofequipment estimated to cost US$500,000 or more per contract will be procured using ICB procedures. This represents about 88 percent oftotal procurement of goods, some ofwhich will be combined with installation services.

25. NCB. About US2.9 million worth ofequipment estimated to cost US$lOO,OOO or more but less than US$500,000 per contract will be procured using NCB procedures. These contracts will not be of interest to foreign suppliers.

- 68 - 26. Shopping. Other minor items (US$600,000) which are readily available off-the-shelf and estimated to cost less than $100,000 per contract, will be procured following Shopping procedures on the basis of a comparison ofat least three quotations at competitive prices and may be used where the desired goods are ordinarily available from mor6 than one source, as stated in Articles 3.5 and 3.6 of the guidelines.

Consultants (US $7.5 million, including traininghtudy toudseminars):

27. This component includes consultant services and overseas traininghtudy tours for an estimated US$7.1 million. (There are 2 type overseas traininghtudy tours in the Procurement Plan: one is the overseas traininghtudy tours as a part of consultant services contracts for research and management etc; the other is the stand along overseas traininghtudy tours organized by agents through selection procedures ofQCBS. So the cost of all overseas traininghtudy tours is included in the consultant contracts. However, the overseas trainindstudy tours may be conducted in the same way as for domestic traininghtudy tour during the implementation.) As for the domestic seminars, training and study tours, there will be no contracts signed. The cost of domestic trainindstudy toursheminars will be reimbursed against receipts for an estimated US$400,000. Consultants financed by the Bank and required for research, construction supervision, overseas training and study tours will be selected and employed under QCBS/QBSLCS/CQ/SSS/IC (Individual Consultants) procedures.

28. QCBS/QBS/LCS: Consulting services from fmswith an estimated contract value of US$lOO,OOO or more to a total value ofUS$6.1 million will be procured through Quality- and Cost-Based Selection (QCBS - about US$ 5.3 million) or Quality-Based Selection (QBS-about US$ 400,000) or Least Cost Selection (LCS-about US$400,000 for contracts less than $200,000 each).

29. CQ/SSS/IC: Consultant services from firms with an estimated contract ofless than US$lOO,OOO to a total value of US$600,000 will be selected through Consultant's Qualification selection (CQ). Some services with an estimated contract ofless than US$lOO,OOO up to a total value ofUS$200,000 in amount may, with the Bank's prior agreement, be procured by Single-Source Selection (SSS) in accordance with the provisions ofparagraphs 3.8 through 3.1 1 ofthe Consultant Guidelines. Services of individual Consultants (IC) with an estimated contract of about US$200,000, will be procured in accordance with the provisions ofparagraphs 5.1 through 5.4 ofthe Consultant Guidelines.

30. Local Training and Study Tours: About US$400,000 will be spent on local training and study tours.

3 1. Local consultants from various independent universities and institutes will be used to the extent possible ensuring that eligibility requirements stated in the Guidelines are met and their participation is consistent with Bank requirements on hiring universities and institutes. The threshold for shortlist of only national consultants will be $300,000 or less.

Advance Contracting

32. WUTPO has requested advance contracting and retroactive financing for the first year construction after June 16,2003. Expenses to be incurred in advance by the implementing agency are estimated at less than US$15 million. These expenses include eleven NCB works contracts, one NCB goods contract, and seven Shopping contracts, and consultant services and traininghtudy tours ofnine contracts. All ' these contracts are eligible for retroactive financing by the Bank. Bank procurement guidelines have been strictly followed as in normal operations for all advance contracting activities.

- 69 - Procurement methods (Table A)

33. Table 1 lists major contracts, their estimated value, scheduled start, and procurement method; Table A lists costs and financing by procurement method; Table A1 list consultant selection arrangements.

Table A: Project Costs by Procurement Arrangements (US$ million equivalent)

(0.00) (0.00) (0.00) (0.00) (0.00) 6. Interest during 0.00 0.00 0.00 16.40 16.40 construction (0.00) (0.00) (0.00) .(O.OO) (0.00) 7. Front-end fee 0.00 0.00 2.00 0.00 2.00 (0.00) (0.00) (2.00) (0.00) (2.00) Total 81.10 262.70 10.10 244.30 598.20 (52.10) (138.50) (9.30) (0.00) (199.90)

li Figures in parenthcses are thc amounts to be financcd by the Bank Loan. All costs includc contingencies Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff ofthe project management office, training, technical assistance services, and incremental operating costs related to (i)managing the project, and (ii)re-lending project funds to local government units.

- 70 - Table AI : Consultant Selection Arrangements (optional) (US$ million equivalent)

I Including contingencies

Note: QCBS = Quality- and Cost-Based Selection QBS = Quality-based Selection SFB = Selection under a Fixed Budget LCS = Least-Cost Selection CQ = Selection Based on Consultants' Qualifications Other = Selection of individual consultants (per Section V of Consultants Guidelines), Commercial Practices, Single Source Selection, Domestic Training and Study Tours etc. N.B.F. = Not Bank-financed Figures in parentheses are the amounts to be financed by the Bank Loan.

-71 - Prior review thresholds (Table B) Prior Reviews required by the Bank:

1. Prior review procedures will be used for civil works contracts with an estimated cost ofUS$4 million or more, goods contracts with an estimated cost of US$400,000 or more and consulting services with an estimated contract cost ofUS$200,000 or more for firms and US$50,000 or more for individuals. This will apply to 82 percent of the total contract values ofworks, 90 percent of the total contract values of goods and 72 percent ofthe total contract values ofservices financed by the Bank. Single-source selections, regardless ofthe value of the contract, will be subject to the Bank's prior review. The first contract ofany type including the first contract for NCB, Shopping, QCBS/QBS/LCS, CQ/SSS and individual consultants will also be submitted to the Bank for prior review.

All other contracts for works, goods and services will be subject to ex post review. About 33% of such contracts will be sampled for ex post review.

- 72 - Ifthe procurement under the project follows the Bank's procurement policy during the 18 months implementation period (Jan. 1,2004 to June 30,2005), and subject to the Bank's review and final agreement, the prior review thresholds could be increased to $5 million for works, $500K for goods, $350K for consultant firm and $100K for individual consultants after July 1, 2005.

Table B: Thresholds for Procurement Methods and Prior Review'

1. Works >15,000 ICB All contracts ($54 million), Prior review threshold < 15,000 NCB All contracts above $4 >US$4 million million. ($208) 2. Goods L 500 ICB All contracts ($27 million) Prior review threshold < 500 NCB All contracts above >US$400 thousands $400,000 100 QCBS/QB S/LC S All contracts above threshold: $200,000 >US$200 thousands for CQ ($4.6 million ) firm < 100 Single source All contracts ($0.2 million) >US$50 thousands for Individual Consultants All contracts above individual consultant $50,000 ($0.2 million )

Total value of contracts subject to prior review: US$282 million Overall Procurement Risk Assessment: Average Frequency of procurement supervision missions proposed: One every 6 months (includes special procurement supervision for post-review/audits) Most of the procurement prior review will be handled by procurement specialists of the Bank's Beijing office (WBOB), while post review may be out sourced to independent consultants by WBOB. 1\ Thresholds generally differ by country and project. Consult 'Rssessment ofAgency's Capacity to Implement Procurement" and contact the Regional Procurement Adviser for guidance.

-73- Annex 6(B): Financial Management and Disbursement Arrangements CHINA: Wuhan Urban Transport Project

Financial ManaPement 1. Summary of the Financial Management Assessment The task team conducted an assessment ofthe adequacy of the project financial management system of the Wuhan Urban Transport Project (WUTP) (complete FM assessment report is available in project file). The assessment, based on guidelines issued by the Financial Management Sector Board on June 30, 2001, concluded that the project meets minimum Bank financial management requirements, as stipulated in BP/OP 10.02. In the team opinion, the project will have in place an adequate project financial management system that can provide, with reasonable assurance, accurate and timely information on the status ofthe project in the reporting format agreed with the project and as required by the Bank.

Funding sources for the project include the Bank loan and counterpart funds. The Bank loan agreement will be signed between the Bank and the People's Republic ofChina through its Ministry of Finance (MOF), and on-lend agreement will be entered between MOF and the Government of Hubei province through its Hubei Provincial Finance Bureau (HPFB), HPFB and Wuhan Municipal Finance Bureau (WMFB) and Wuhan Urban Construction Utilization of Foreign Investment Project Management Office (WUCUFIPMO). The Bank loan proceeds will flow from the Bank to HPFB (where the special account for the project will be set up), to WMFB, to WUCUFIPMO and/or to contractors or suppliers via bank accounts with major commercial banks acceptable to the Bank. Disbursement will be based on the traditional disbursement techniques and will not be using PMR-based disbursements, in accordance with the agreement between the Bank and MOF. The counterpart funds will be contributed directly to WUTP, mainly by the government ofWuhan Municipality.

No outstanding audits or audit issues exist with any ofthe implementing agencies involved in the proposed project. The task team however will continue to be attentive to financial management matters and audit covenants during project supervisions.

Country Issues To date, no CFAA has been performed for China, though dialogue with the Government of China in respect to the CFAA exercise has been initiated and is underway. The planned approach to CFAA is to build on the Asian Development Bank study of Financial Management and Governance Issues in China in 2000, analyze areas that have changed significantly in the past few years or that deserve further scrutiny, and over time cover all major areas usually assessed as part ofa full CFAA exercise. Currently, for reference purpose, the Bank relies on the study conducted by the Asian Development Bank.

Nevertheless, based on observations ofdevelopments in the areas ofpublic expenditures, accounting and auditing, and Bank experience with China projects for the past few years, we note that substantial achievement in the aforementioned areas has been made and further improvement is expected in the next few years. As the economic reform program further unfolds, the Government ofChina has come to realize the importance ofestablishing and maintaining an efficient and effective market mechanism to ensure transparency and accountability, and minimize potential fraud or corruption.

- 74 - Due to a rather unique arrangement by the Government ofChina, funding (in particular Bank loans) of Bank projects is controlled and monitored by MOF and its extensions, i.e. finance bureaus at provincial, municipaVprefecture and county level. However, project activities are usually carried out by implementing agencies ofa specific industry or sector due to the nature of the technical expertise involved. The above arrangement usually requires closer coordination on the project, otherwise, the multi-level management ofthe funding and implementation mechanism sometimes work to the detriment of smooth project implementation. As such, this assessment focuses on Hubei Provincial Finance Bureau, which will handle Special Account activity for the project, and the Wuhan Project Management Office, which will be responsible for implementing various components of the project.

Strengths HPFB and WMFB have had prior Bank project experience and are expected to play a major role in the project financial management aspect, and are familiar with Bank policies, procedures and requirements. Weaknesses: (1) WUCUFIPMO has no prior management experience with Bank projects; close monitoring and training will be provided by WBOB, HPFB and WMFB (2) Change ofcurrent project organization structure is expected; the WUCUFIPMO agrees to inform the Bank of such change by appraisal.

Implementing Entity Provincial Project Leading Group (PPLG). The PPLG is chaired by the Vice Govemor of Hubei province. The purpose ofthe PPLG is to coordinate between different provincial governmental agencies, including Hubei Provincial Development and Planning Commission, Hubei Provincial Construction Commission, HPFB and Hubei Provincial Environment Protection Bureau.

Municipal Project Leading group (MPLG). The MPLG is chaired by the Mayor ofWuhan municipality. Purpose ofMPLG is to coordinate between different municipal governmental agencies, including Wuhan Municipal Development and Planning Commission, Wuhan Provincial Construction Commission, WMFB and Wuhan Provincial Environment Protection Bureau.

Project Manugement Ofice. WUCUFIPMO will work as the Project Management Office (PMO) for the project, assuming direct implementation and coordination responsibility. Though WUCUFIPMO is expected to be merged into another organization in the near future. However, it is expected that it will remain as the executing agency for the entire project implementation.

HPFB is expected to play a major role in project implementation, including overall monitoring, financing arrangement, procurement, and financial management. HPFB will also be responsible for maintaining, monitoring and reconciling project special account, which will be set up in and kept by HPFB. HPFB and WMFB will be responsible for reviewing, verifying and approving withdrawal applications prepared by WUCUFIPMO before HPFB submits them to the Bank for disbursement processing. HPFB and WMFB have had prior experience with the Bank projects and are familiar with Bank disbursement procedures.

Funds Flow a) Bank funds will flow from the Bank to the special accounts to be set up for the project, and/or contractors or suppliers. The special account will be set up in and managed by HPFB. On-lending agreements will be signed between MOF and HPFB, between HPFB and WMFB, and between WMFB and WUCUFIPMO.

- 75 - Thc 1IPFB WMFB World + Bank

b) Counterpart funds will be contributed by WMFB directly to WUCUFIPMO.

Staffing Adequate project financial and accounting staff with educational background and work experience commensurate with the work they are expected to perform is one ofthe factors critical to successful implementation ofproject financial management. Based on discussions, observation and review of educational background and work experience of the staff identified for financial and accounting positions, the task team noted that they are appropriate for the work they are expected to assume. However, considering that most financial staff do not have the accounting related education background, more training and guidance will be required. The task team has advised WUCUFIPMO that adequate and qualified project financial and accounting staff should be identified prior to Board presentation and in place before effectiveness.

Accounting staff in WUCUFIPMO has no prior experience with projects financed by the Bank. To strengthen financial management capacity and achieve consistent quality of accounting work, the task term has suggested that a well defined and focused training in project financial management should be provided by WUCUFIPMO, HPFB and WMFB prior to effectiveness to all key financial and accounting staff to ensure good understanding of the Bank policies and procedures.

In addition, in order to provide easy and readily available reference, WUCUFIPMO has submitted to the task team a draft project financial management manual (FM Manual), which provides detailed guidelines on financial management, intemal controls, accounting procedures, fund and asset management and withdrawal application procedures. After review, the manual has been accepted by the Bank. The task team recommended that the manual be distributed to all the financial staff as soon as possible.

Accounting Policies and Procedures The administration, accounting and reporting ofthe project will be set up in accordance with the following regulationdcirculars issued by MOF: a) In line with other Bank financed projects in China, the project will use the "Temporary Regulations on Financial and Accounting Management for Projects Financed by the World Bank" (Circular #127 issued in 1993) by MOF as a basis for bookkeeping and preparation ofproject financial statements and management reports. Accrual accounting and double entry bookkeeping basis will be adopted by the Project.

- 76 - b) Circular 12: "Regulation for the Submission ofWithdrawal Applications" issued in December 1996 by MOF - includes detailed procedures for preparing and submitting withdrawal applications and retention of supporting documentation. c) Circular #13: "Accounting Regulations for World Bank Financed Projects" issued in January 2000 by MOF. The circular provides in-depth instructions of accounting treatment ofproject activities and covers the following: (i)Chart of account; (ii)Detailed accounting instructions for each project account; (iii)Standard set ofproject financial statements; and (iv) Instructions on the preparation of project financial statements.

The standard set ofproject financial statements mentioned above has been agreed to between the Bank and MOF and applies to all Bank projects appraised after July 1, 1998 and includes the following: (i) Balance sheet; (ii)Statement ofsource and use of fund; (iii)Statement ofimplementation of loan agreement; and (iv) Statement ofspecial account.

Both circular #127 and #13 are simplified versions ofthe Accounting Standards for State-owned, Infrastructure Oriented Projects (the "Standards"), taking into consideration unique characteristics of Bank projects. The Standards are modeled after the principles of Intemational Accounting Standards and provides detailed guidelines appropriate to accounting for activities ofBank projects.

WUCUFIPMO will be managing, monitoring and maintaining project accounting records. Original supporting documents for project activities will also be retained by WUCUFIPMO. In addition, WUCUFIPMO will prepare its financial statements, including statements ofthe special account to be prepared by HPFB, and send them to the Bank for review and comment on a regular basis. internal Audit There will be no intemal audit department or arrangement in the WUCUFIPMO. However, HPFB and WMFB will serve a similar function through regular checking. The Bank task team will also conduct regular supervision missions throughout the life ofthe project.

Reporting and Monitoring and Format of Financial Statements The format and content of the following project financial statements represent the standard project reporting package agreed to between the Bank and MOF. They have been discussed and agreed with all parties concemed. The project consolidated financial statements will be submitted as part ofthe Financial Monitoring Report to the Bank on a semi-annual basis (prior to August 15 and February 15 ofthe subsequent year) and include the following four statements: (i)Balance Sheet; (ii)Summary of Sources and Uses ofFunds by Project Component; (iii)Statement of Implementation ofLoan Agreement; and (iv) Statement of Special Account. information Systems The accounting sohare "Yongyoull, the most popular accounting software in China, has been selected by WUCUFIPMO for project financial management. This choice is acceptable to the Bank.

Supervision Plan During the initial implementation phase, frequent FM supervision missions (twice a year) should be carried out to have better coverage and to ensure that procurement guidelines are followed and expenditures incurred are eligible and well supported. More detailed reviews at the initial implementation phase can also help ensure that financial management system is properly set up and financial statements are prepared in line with stipulated format and content. The FM mission

- 77 - frequency can subsequently be reduced from mid point to the normal level (once a year). In order to maximize effectiveness and efficiency, procurement and FMDisbursement specialists should jointly participate in supervision missions for procurement and SOEs reviews.

2. 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 the Government Auditing Standards of the People's Republic of China (1997 edition). The Hubei Provincial Audit Bureau (HPAB) has been identified as the auditor for the project. Audit fieldwork will be carried out by Wuhan Municipal Audit Bureau (WMAB), further reviewed by HPAB, and the final audit report issued in the name ofHPAB under the guidance and supervision of the China National Audit Office (CNAO). The Bank currently accepts audit reports issued by CNAO (or its local counterpart) for which CNAO is ultimately responsible.

Audit reports on annual project consolidated financial statements will be due to the Bank within 6 months of the end ofeach calendar year, with a separate opinion on Statement ofExpenditures and Special Account. 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 the Government Auditing Standards ofthe People's Republic ofChina (1997 edition). The Hubei Provincial Audit Bureau (HPAB) has been identified as the auditor for the project. Audit fieldwork will be carried out by Wuhan Municipal Audit Bureau (WMAB), hrther reviewed by HPAB, and the final audit report issued in the name ofHPAB under the guidance and supervision of the China National Audit Office (CNAO). The Bank currently accepts audit reports issued by CNAO (or its local counterpart) for which CNAO is ultimately responsible.

Audit reports on annual project consolidated financial statements will be due to the Bank within 6 months ofthe end ofeach calendar year, with a separate opinion on Statement ofExpenditures and Special Account.

3. Disbursement Arrangements The project disbursement will be based on the traditional disbursement techniques and will not use Project Management Report (PMR) based disbursements, in accordance with the agreement between the Bank and MOF. The planned disbursement categories are expected to be as follows: (i)Civil Works; (ii)Goods; (iii)Consultancy Services and Training; and (iv) Unallocated. However, the amount and disbursement percentages are not decided yet. WUCUFIPMO is expected to provide detailed information on these aspects before appraisal.

- 78 - Allocation of loan proceeds (Table C)

Table C: Allocation of Loan Proceeds

Expenditure Category Amount in US$million Financing Percentage Civil Works 157.40 52% Goods 28.20 100% of foreign expenditures, 100% of local expenditures (ex-factory cost) and 75% of local expenditures for other items procured locally Consultants' Services and Training 6.60 91% Unallocated I 5.80 I

Total Project Costs with Bank 198.00 Financing I I Interest during construction 0.00 Front-end fee 2.00 Total I 200.00 I

Use of statements of expenditures (SOEs): Disbursement methods, such as replenishment, direct payment and special commitment, will be available for the project. The SOE limits will be set up in line with procurement post-review threshold as follows: (i)all contract for goods estimated to cost less than the equivalent of $400,000; (ii)all contract for civil works estimated to cost less than the equivalent of $4,000,000 (iii)consultant contract estimated to cost less than $200,000 for firms and less than $50,000 for individuals.

Special account: One Special Account (SA) will be set up in and managed by HPFB for the project. HPFB will be directly responsible for the management, monitoring, maintenance and reconciliation of the SA activities of the project. Supporting documents required for Bank disbursements will be prepared and submitted by WUCUFIPMO to WMFB and onto LPFB for verification, consolidation and approval. HPFB will be responsible for sending withdrawal applications to the Bank for disbursement processing. The SA authorized allocation is set at $12,000,000, corresponding (on average) to about four months expenditures of the project. The flow of withdrawal application is as follows:

WUCUFIPMO WMFB HPBF World Bank

- 79 - Annex 7: Project Processing Schedule CHINA: Wuhan Urban Transport Project

ITime taken to prepare the project (months) 1 I I IFirst Bank mission (identification) I 0711 0/2000 I 07/10/2000 I IAppraisal mission departure 03/24/2003 ~~~~ ~ I I I Negotiations 05/12/2003 Planned Date of Effectiveness

Prepared by: Wuhan Municipal Government Project Executive Office

Preparation assistance: Japanese PHRD Grant

Bank staff who worked on the proiect.. included: Name Speciality Edward Dotson, EASTR Task Team Leadermrban Transport ZongYan, WBOB Urban Transport Shomik Mehndiratta, EASTR Urban Transport Richard Scurfield, TUDTR Former Task Leader, Sector Leader, Transport Maria Luisa Juico, EASTR Program Assistant Dong Wenyan, WBOB Program Assistant Daniel Gibson, WBOB Social Scientist Ani1 Somani, EASES Environment Yang Dawei, WBOB Procurement Sun Chongwu, WBOB Environment Liu Zhefu, WBOB Social Development Li Ninghui, WBOB Financial Management Liu Zhi, SASE1 Transport Economics Karin Noordlander Lawyer Gladys Frame Traffic Management Gordon Neilson Public Transport Rod Stickland Transport Planning

- 80 - Annex 8: Documents in the Project File* CHINA: Wuhan Urban Transport Project

A. Project Implementation Plan Project Implementation Plan: The first Chinese version was drafted in December, 2002. The final English and Chinese versions will be completed by the Appraisal (End of March, 2003)

B. Bank Staff Assessments Aide-Memoires from the following Bank missions: March 2001, July 2001 Identification Mission, October 2001, January 2002, March 2002, June 2002, September 2002, October 2002, December 2002 Pre-Appraisal Mission, February 2003, March 2003 Appraisal Mission.

C. Other

1. Documents for assessment:

Environmental Impact Assessment Report * February 2003 Resettlement Action Plan * November 2002 Procurement Assessment Report March 2003 Financial Management Report March 2003

2. Project Preparation Documents in both Chinese and English:

Wuhan transport forecasting model (2001.7, 2002.6,2002.11) Wuhan Urban Transport Strategy Study (2001.7,2002.6, 2002.1 1) Feasibility study for road infrastructure component (2001.7,2002.6, 2002.11) Feasibility study for traffic management development (2001.7,2002.6,2002.11) Feasibility study for public transport project component (2001.7) Feasibility study for road maintenance component (2001.7,2002.6,2002.11) Wuhan urban transport project preparation plan (2001.7) Wuhan municipal finance and counterpart funding in Chinese only (2002.3,2002.11) First year civil work preliminary design under the infrastructure component (2002.6) Project preparation plan - in Chinese only (2002.1 1)

*Including electronic files

- 81 - Annex 9: Statement of Loans and Credits CHINA: Wuhan Urban Transport Project 03-Feb-2004 Difference between expected and actual Original Amount in US$ Millions disbursements' Project ID FY Purpose IBRD IDA GEF Cancel. Undisb. Orig Frm Rev'd PO65463 2004 CN - Jiangxi Integrated Agric. Modern. 100.00 0.00 0.00 0.00 100.00 0.75 0.00 PO65035 2004 CN-Gansu 8 Xinjiang Pastoral Development 66.27 0.00 0.00 0.00 65.61 3.88 0.00 PO66955 2004 CN-Zhejiang Urban Envmt 133.00 0.00 0.00 0.00 133.00 0.00 0.00 PO73002 2004 CN-Basic Education in Western Areas 100.00 0.00 0.00 0.00 100.00 0.00 0.00 PO77615 2004 CN-GEF-Gansu 8 Xinjiang Pastoral Develop 0.00 0.00 10.50 0.00 10.50 0.70 0.00 PO67337 2003 CN-2nd GEF Energy Conservation 0.00 0.00 26.00 0.00 15.00 15.98 0.00 PO40599 2003 CN-TIANJIN URB DEV II 150.00 0.00 0.00 0.00 150.00 0.00 0.00 PO58847 2003 CN-3rd Xinjiang Hwy Project 150.00 0.00 0.00 0.00 106.13 6.55 0.00 PO68058 2003 CN-Yixing Pumped Storage Project 145.00 0.00 0.00 0.00 140.95 1.47 0.00 PO76714 2003 CN-Anhui Hwy 2 250.00 0.00 0.00 0.00 250.00 13.42 0.00 PO70441 2003 CN-Hubei Xiaogan Xiangfan Hwy 250.00 0.00 0.00 0.00 178.66 -3.01 0.00 PO70191 2003 CN-SHANGHAI URB ENVMT APLI 200.00 0.00 0.00 0.00 200.00 0.00 0.00 PO64729 2002 CN-SUSTAINABLE FORESTRY DEV. PROJECT 93.90 0.00 0.00 0.00 80.48 3.65 0.00 PO58846 2002 CN-Natl Railway Project 160.00 0.00 0.00 0.00 37.23 -2.35 0.00 PO71147 2002 CN-Tuberculosis Control Project 104.00 0.00 0.00 0.00 92.67 .11.33 0.00 P0 6 00 2 9 2002 CN-Sustain. Forestry Dev(Natura1Forest) 0.00 0.00 16.00 0.00 17.68 2.60 0.00 PO70459 2002 CN-Inner Mongolia Hwy Project 100.00 0.00 0.00 0.00 88.82 5.15 0.00 P0 6 8 0 4 9 2002 CN-Hubei Hydropower Dev in Poor Areas 105.00 0.00 0.00 0.00 87.89 10.72 0.00 P0 5 8 8 4 5 2001 Jiangxi II Hwy 200.00 0.00 0.00 0.00 133.42 5.08 0.00 PO56199 2001 CN-3rd Inland Waterways 100.00 0.00 0.00 0.00 84.12 7.62 0.00

PO56516 2001 CN ~ WATER CONSERVATION 74.00 0.00 0.00 0.00 41.42 8.46 0.00 PO56596 2001 CN-Shijiazhuang Urban Transport 100.00 0.00 0.00 0.00 88.58 53.81 0.00 PO47345 2001 CN-HUAi RIVER POLLUTION CONTROL 105.50 0.00 0.00 0.00 90.68 -14.82 0.00 PO51859 2001 CN-LIAO RIVER BASIN 100.00 0.00 0.00 0.00 80.23 35.23 0.00 PO45915 2001 CN-Urumqi Urban Transport 100.00 0.00 0.00 0.00 52.54 46.04 0.00 PO45910 2000 CN-HEBEI URBAN ENVIRONMENT 150.00 0.00 0.00 0.00 123.53 48.03 0.00 PO49436 2000 CN-CHONGQING URBAN ENVMT 200.00 0.00 0.00 3.70 161.67 64.70 0.00 PO56424 2000 TONGBAI PUMPED STORA 320.00 0.00 0.00 100.00 164.64 97.81 0.00 PO45264 2000 CN-SMALLHLDR CATTLE DEV 93.50 0.00 0.00 0.00 14.62 8.34 0.00 PO42109 2000 CN-BEIJING ENVIRONMENT iI 349.00 0.00 25.00 0.00 294.22 183.70 0.00 PO58844 2000 3rd Henan Prov Hwy 150.00 0.00 0.00 0.00 67.17 29.51 0.00 PO58843 2000 Guangxi Highway 200.00 0.00 0.00 0.00 105.76 46.76 0.00 PO64924 2000 CH-GEF-BEIJING ENVMT iI 0.00 0.00 25.00 0.00 26.26 18.43 2.20 PO64730 2000 CN - Yangtze Dike Strengthening Project 210.00 0.00 0.00 0.00 114.03 94.03 0.00 PO50036 1999 Anhui Provincial Hwy 200.00 0.00 0.00 9.60 43.79 40.39 0.00 PO51705 1999 Fujian Ii Highway 200.00 0.00 0.00 0.00 65.86 62.53 0.00 PO51856 1999 ACCOUNTING REFORM 8 DEVELOPMENT 27.40 5.60 0.00 0.00 19.24 19.16 0.00 PO41268 1999 CN-Nat HwyUHubei-Hunan 350.00 0.00 0.00 0.00 59.72 34.72 0.00 PO57352 1999 CN-RURAL WATER IV 16.00 30.00 0.00 0.00 21.84 15.42 7.68 PO58308 1999 CN-PENSION REFORM PJT 0.00 5.00 0.00 0.00 1.77 1.75 0.00 PO56216 1999 CN - LOESS PLATEAU II 100.00 50.00 0.00 0.00 29.24 31.38 0.00 PO60270 1999 CN-ENTERPRISE REFORM LN 0.00 5.00 0.00 0.00 2.71 4.29 4.07 PO38121 1999 CN-GEF-RENEWABLE ENERGY DEVELOPMENT 0.00 0.00 35.00 0.00 28.58 26.50 7.57 PO51888 1999 CN - GUANZHONG IRRiGATiON 80.00 20.00 0.00 0.00 38.1 1 30.52 0.00 PO49665 1999 CN-ANNING VALLEY AG.DEV 90.00 30.00 0.00 0.00 21.33 11.52 0.00 PO46051 1999 CN-HIGHER EDUC. REFORM 20.00 50.00 0.00 0.00 5.70 7.31 0.00 PO43933 1999 CN-SICHUAN URBAN ENVMT 150.00 2.00 0.00 0.00 93.14 77.33 23.93 P 04 2 2 9 9 1999 TEC COOP CREDIT IV 10.00 35.00 0.00 0.00 36.14 -10.18 0.00 PO41890 1999 CN-Liaoning Urban Transport 150.00 0.00 0.00 0.00 36.96 36.96 0.00 P0 3 6 95 3 1999 CN-HEALTH IX 10.00 50.00 0.00 0.00 37.49 22.26 0.00 PO03653 1999 CN-Container Transport 71 .OO 0.00 0.00 18.61 3.62 22.19 0.66 PO46829 1999 RENEWABLE ENERGY DEVELOPMENT 100.00 0.00 0.00 0.00 12.87 99.87 6.07 PO46564 1999 CN - Gansu 8 Inner Mongolia Poverty Red. 60.00 100.00 0.00 13.30 49.81 38.19 -3.54

- 82 Difference between expected and actual Original Amount in US$ Millions disbursements' Project ID FY Purpose IBRD IDA GEF Cancel. Undisb. Orig Frm Rev'd PO03614 1998 CN-Guangzhou City Transport 200.00 0.00 0.00 20.00 100.31 120.31 100.31 PO03606 1998 ENERGY CONSERVATION 63.00 0.00 22.00 0.00 36.22 18.22 0.00 PO35698 1998 HUNAN POWER DEVELOP. 300.00 0.00 0.00 145.00 31.45 172.70 -22.46 P0 4 97 0 0 1998 CN- IAIL-2 300.00 0.00 0.00 0.00 4.52 4.52 0.60 PO37859 1998 CN-GEF Energy Conservation 0.00 0.00 22.00 0.00 0.44 22.06 0.00 PO03619 1998 CN-2nd Inland Waterways 123.00 0.00 0.00 17.00 39.18 54.12 4.29 PO40185 1998 CN-SHANDONG ENVIRONMENT 95.00 0.00 0.00 1.40 20.07 21.47 -0.79 PO03566 1998 CN-BASIC HEALTH (HLTH8) 0.00 85.00 0.00 0.00 39.66 23.29 0.00 P 04 6 5 6 3 1998 CN - TARIM BASIN II 90.00 60.00 0.00 2.67 14.78 16.58 0.00 P0 4 57 88 1998 Tri-Provincial Hwy 230.00 0.00 0.00 0.00 19.81 15.98 0.00 PO03539 1998 CN .SUSTAINABLE COASTAL RESOURCES DE 100.00 0.00 0.00 2.06 47.54 45.44 33.72 PO51736 1998 E. CHINNJIANGSU PWR 250.00 0.00 0.00 86.00 51.14 137.14 11.55 PO46952 1998 CN .FOREST. DEV. POOR AR 100.00 100.00 0.00 0.00 40.02 -61.48 17.91 P0 3 6 94 9 1998 CN-Nat Hwy3-Hubei 250.00 0.00 0.00 0.00 21.15 21.15 0.00 PO36414 1998 CN-GUANGXI URBAN ENVMT 72.00 20.00 0.00 0.00 71.56 65.25 23.72 PO03637 1997 CN-NATL RURAL WATER 3 0.00 70.00 0.00 0.00 0.00 3.20 2.78 PO03590 1997 CN - QlNBA MOUNTAINS POVERTY REDUCTIO 30.00 150.00 0.00 0.00 13.16 16.34 -3.28 PO35693 1997 FUEL EFFICIENT IND. 0.00 0.00 32.80 0.00 7.62 32.81 0.00 PO03654 1997 Nat HwyZiHunan-Guangdong 400.00 0.00 0.00 0.00 48.52 48.52 16.70 PO03650 1997 TUOKETUO POWERilNNER 400.00 0.00 0.00 102.50 37.37 139.87 25.18 PO38988 1997 CN - HEILONGJIANG ADP 120.00 0.00 0.00 0.00 7.85 7.85 3.84 PO44485 1997 SHANGHAI WAIGAOQIAO 400.00 0.00 0.00 0.00 85.1 1 55.33 39.65

PO36405 1997 CN ~ WANJlAZHAl WATER TRA 400.00 0.00 0.00 75.00 22.58 97.58 5.00 PO03602 1996 CN-HUBEI URBAN ENVIRONMENT 125.00 25.00 0.00 28.32 39.72 70.08 29.74 PO03599 1996 CN-YUNNAN ENVMT 125.00 25.00 0.00 19.48 40.68 61.92 8.06 PO40513 1996 2nd Henan Prov Hwy 210.00 0.00 0.00 19.00 16.69 35.69 22.69 PO03594 1996 CN .GANSU HEXI CORRIDOR 60.00 90.00 0.00 0.00 73.92 58.83 0.00 PO03589 1996 CN-DISEASE PREVENTION (HLTH7) 0.00 100.00 0.00 0.00 3.08 12.18 0.00 PO34618 1996 CN-LABOR MARKET DEV. 10.00 20.00 0.00 0.00 5.60 7.77 0.00 P0 0 3 6 48 1996 CN-SHANGHAI SEWERAGE II 250.00 0.00 0.00 0.00 39.94 39.94 -0.19 PO03571 1995 CN-7th Railways 400.00 0.00 0.00 119.00 13.10 132.10 23.10 PO03639 1995 CN-SOUTHWEST POVERTY REDUCTION PROJE 47.50 200.00 0.00 0.01 1.21 25.36 25.36 PO03647 1995 China Economic Law Reform -LEGEA 0.00 10.00 0.00 0.00 0.61 0.93 0.00 PO03603 1995 CN-ENT HOUSING 8 SSR 275.00 75.00 0.00 57.46 38.95 94.26 1.23 P0 0 3 5 9 6 1995 CN-Yangtze Basin Water Resources Project 100.00 110.00 0.00 1.92 0.34 4.75 4.75 PO03540 1994 CN-LOESS PLATEAU 0.00 150.00 0.00 0.00 1.12 0.50 0.00 PO03632 1993 CN-ENVIRONMENT TECH ASS 0.00 50.00 0.00 0.00 1.11 1.73 1.41

Total: 11719 07 1722 60 21430 842.02 5141 55 2977.32 42352

- 83 - CHINA STATEMENT OF IFC's Held and Disbursed Portfolio June 30 - 2003 In Millions US Dollars

Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic 2001 Peak Pacific 0.00 0.00 25.00 0.00 0.00 0.00 0.00 0.00 0 Rabobank SHFC 0.45 0.00 0.00 0.45 0.45 0.00 0.00 0.45 2000 SSIF 0.00 6.00 0.00 0.00 0.00 0.89 0.00 0.00 1998 Shanghai Krupp 28.92 0.00 0.00 65.63 28.92 0.00 0.00 65.63 1999 Shanghai Midway 0.00 16.02 0.00 0.00 0.00 16.02 0.00 0.00 1999 Shanxi 16.75 0.00 0.00 0.00 14.20 0.00 0.00 0.00 1993 Shenzhen PCCP 3.76 0.00 0.00 0.00 3.76 0.00 0.00 0.00 Sino Gold 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2002 Sino-Forest 25.00 0.00 0.00 0.00 20.00 0.00 0.00 0.00 2001 Suzhou PVC 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1995197 WIT 5.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1998 Wanjie Hospital 15.00 0.00 0.00 0.00 15.00 0.00 0.00 0.00 2000 Weihai Weidongri 1.03 0.00 0.00 0.00 1.03 0.00 0.00 0.00 1996 XACB 0.00 19.93 0.00 0.00 0.00 0.00 0.00 0.00 2003 Yantai Cement 6.33 1.95 0.00 0.00 6.33 1.95 0.00 0.00 1993 Zhen Jing 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0 Zhengye-ADC 15.00 0.00 0.00 0.00 2.00 0.00 0.00 0.00 2003 Advantage 0.00 0.50 0.00 0.00 0.00 0.50 0.00 0.00 2002103 BCIB 0.00 0.00 11.60 0.00 0.00 0.00 0.00 0.00 2003 Bank of Shanghai 0.00 24.67 0.00 0.00 0.00 24.67 0.00 0.00 1999100102 CDH China Fund 0.00 16.36 0.00 0.00 0.00 2.38 0.00 0.00 2002 CIG Holdings PLC 0.00 3.00 0.00 0.00 0.00 3.00 0.00 0.00 1998100 CSMC 0.00 12.00 0.00 0.00 0.00 7.20 0.00 0.00 2003 Chengdu Huarong 6.73 3.20 0.00 7.82 6.73 3.20 0.00 7.82 1998 Chengxin-IBCA 0.00 0.36 0.00 0.00 0.00 0.36 0.00 0.00 1998 China Bicycles 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1987192194 China Walden Mgt 0.00 0.01 0.00 0.00 0.00 0.01 0.00 0.00 1994 China Walden Ven 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1994 Dalian Glass 0.00 2.40 0.00 0.00 0.00 2.40 0.00 0.00 1994 Dupont Suzhou 9.35 4.15 0.00 0.00 9.35 4.15 0.00 0.00 1995 Dynamic Fund 0.00 8.76 0.00 0.00 0.00 7.10 0.00 0.00 1994 Great Infotech 0.00 3.50 0.00 0.00 0.00 2.10 0.00 0.00 2003 Hansom 0.00 0.08 0.00 0.00 0.00 0.08 0.00 0.00 1999 Huarong AMC 23.74 3.00 0.00 0.00 14.74 0.01 0.00 0.00 2002 IEC 20.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2002 Leshan Scana 5.36 1.35 0.00 0.00 3.76 1.35 0.00 0.00 1998 Maanshan Carbon 9.00 2.00 0.00 0.00 9.00 2.00 0.00 0.00 2001 Minsheng Bank 0.00 23.50 0.00 0.00 0.00 23.50 0.00 0.00 2001 NCCB 0.00 26.58 0.00 0.00 0.00 26.46 0.00 0.00 2001 Nanjing Kumho 3.89 3.81 0.00 11.07 3.89 3.81 0.00 11.07 1996 New China Life 0.00 30.70 0.00 0.00 0.00 23.32 0.00 0.00 2001 Newbridge Inv. 0.00 1.95 0.00 0.00 0.00 1.95 0.00 0.00 1995 Orient Finance 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1997198 PSAM 0.00 1.93 0.00 0.00 0.00 0.00 0.00 0.00 2003 Total Portfolio: 195.31 217.74 36.60 84.97 139.16 158.44 0.00 84.97

- 84 - Approvals Pending Commitment ' FY Approval Company Loan Equity Quasi Partic 2002 ASIMCO 0.00 0.01 0.00 0.00 2003 Anjia 0.00 0.00 0.01 0.00 2004 CCB-MS NPL 0.03 0.00 0.00 0.00 2004 CUNA RCCI 0.00 0.00 0.01 0.00 2003 Cellon 0.00 0.00 0.01 0.00 2002 Darong 0.01 0.00 0.00 0.01 2002 Huarong AMC 0.02 0.00 0.00 0.00 2002 IEC 0.00 0.01 0.00 0.00 2002 KHIT 0.00 0.00 0.00 0.00 2003 Peak Pacific 2 0.00 0.00 0.01 0.00 2003 SAIC 0.01 0.00 0.00 0.00 2002 SML 0.00 0.00 0.00 0.00 2002 Sino Mining 0.01 0.00 0.00 0.01 2002 Zhong Chen 0.03 0.00 0.00 0.03

Total Pending Commitment: 0.10 0.02 0.05 0.05

- 85 - Annex IO: Country at a Glance CHINA: Wuhan Urban Transport Project

East Lower- POVERTY and SOCIAL Asia B middle- China Pacific income Development diamond* 2002 Population, mid-year (millions) 1,281 .O 1,838 2,411 Life expectancy GNi per capita (Atlas method, US$) 950 950 1,390 GNi (Atias method, US$ billions) 1,219.1 1,740 3,352 T Average annual growth, 1996-02 Population (%) 0.8 1.o 1.0 Labor force I%) 0.9 1.2 1.2 GNI Gross per primary Most recent estimate (latest year available, 1996-02) capita enrollment Poverty (% of population below nationalpoverty line) 5 Urban population (% of total population) 38 38 49 Life expectancy at birth (years) 71 69 69 .L Infant mortality (per 1,000 live births) 30 33 30 Child malnutrition (% ofchildren under 5) 10 15 11 Access to improved water source Access to an improved water source (% ofpopulation) 75 76 81 Illiteracy (% ofpopulation age 15+) 14 13 13 Gross primary enrollment (% of school-age population) 106 106 111 A 3r**i China Male 105 105 111 Lower-middle-incomegroup Female 108 106 110

KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1982 1992 2001 2002 Economic ratios" GDP (US$ billions) 221.5 454.6 1,167.1 1,232.7 Gross domestic investmentiGDP 33.2 36.2 38.5 41 .O Trade Exports of goods and serviceslGDP 8.9 19.5 25.5 29.5 Gross domestic savingslGDP 34.8 37.7 40.9 44.0 Gross national savingslGDP 35.1 38.0 40.0 43.8 T

Current account baiancelGDP 2.4 1.9 1.5 2.9 Domestic ~~ ?? I investment interest paymentslGDP 0.2 0.6 0.5 0.5 savings Total debffGDP 3.8 15.9 14.6 12.6 Total debt servicelexports 8.0 8.6 7.7 6.1 1. Present value of debffGDP 14.1 Present value of debtiexports 51.8 indebtedness 1982.92 1992-02 2001 2002 2002-06 (average annual growth) * *--China GDP 9.7 9.0 7.5 8.0 7.5 _____ Lower-middlemcomegroup GDP Der caDita 8.1 8.0 6.7 7.2 6.6 I STRUCTURE of the ECONOMY

(% of GDP) 2o Agriculture 333 21.8 158 145 l5 Industry 450 439 50.1 51 7 Manufacturing 373 33 1 342 445 lo Services 21 7 343 341 337 Private consumption 50.7 49.2 45.7 42.5 1 " 97 98 i9 00 a1 d2 General government consumption 145 13.1 134 13.5 I I*** n..jl& GDI +GDP Imports of goods and services

1982.92 1992-02 2o01 (average annual growfhj Agriculture 46 3.7 28 Industry 11 6 11.3 84 Manufacturing 112 104 90 81 Services 117 84 84 73 Private consumption 11 4 81 28 19 General government consumption 99 84 10.5

Gross domestic investment 9.5 9.7 13.9 14.9 e* *LXExports +Imports imports of goods and services 9.7 128 10.8 27 5 I

- 86 - China

PRICES and GOVERNMENT FINANCE 1982 1992 2001 2002 Inflation (“A) Domestic prices c (% change) Consumer prices 6.0 6.4 0.7 -0.8 ’OK Implicit GDP deflator -0.2 7.9 1.2 -2.6 5t Government finance 104- (% of GDP, includes current grants) Current revenue 22.9 14.7 17.1 17.9 I Current budget balance .I 2.0 1.1 0.0 1 y*- 1 GDP deflator -0ICPI I Overall surplusldeficit -0.3 -1.0 -4.7 -3.0

TRADE 1982 1992 2001 2002 Export and import levels (US$ mill.) (US$ millions) Total exports (fob) 22,321 84,940 266,155 325,565 I Food 2,908 8,309 12,780 14,623 400’000 T Fuel 5,314 4,693 8,420 8,372 300 000 Manufactures 12,271 67,936 239,802 297,085 Total imports (cif) 19,285 80,585 243,610 295,203 200 000 Food 4,201 3,146 4,980 5,237 100 000 Fuel and energy 183 3,570 17,495 19,285 Capital goods 3,204 31,312 107,040 137,030 0 96 97 98 99 00 01 Export price index (1995-100) 41 85 83 78 Import price index (1995=100) 71 95 91 86 0 Exports Imports Terms of trade (1995=100) 58 89 91 90 i

BALANCE of PAYMENTS 1982 1992 2001 2002 Current account balance to GDP (X) (US$ millions) Exports of goods and services 24,906 94,198 299,409 365,395 5T imports of goods and services 20,555 86,752 271,325 328,013 Resource balance 4,350 7,446 28,084 37,383 Net income 376 249 -19,174 -14,945 Net current transfers 486 1,155 8,492 12,984 Current account balance 5,212 8,850 17,401 35,422 Financing items (net) -995 -10,952 30,046 40,085 Changes in net reserves -4,217 2,102 -47.447 -75,507 I 96 97 98 99 00 01 02 Memo: Reserves including gold (US$ millions) .. 24,842 220,051 297,721 Conversion rate (DEC, iocal/US$) 2.4 5.9 8.3 8.3

EXTERNAL DEBT and RESOURCE FLOWS 1982 1992 2001 2002 (US$ millions) Composition of 2002 debt (US$ mill.) Total debt outstanding and disbursed 8,358 72,428 170,110 155,678 IBRD 0 3,752 11,550 12,051 A 12,051 IDA 1 4,287 8,654 8,729 G 43, 729 Total debt service 2,125 8,618 24,297 23,688 IBRD 0 460 1,550 1,631 6,987 iDA 0 30 151 175 Composition of net resource flows E 21,888 Official grants 47 327 240 Official creditors 657 2,343 2,156 -839 Private creditors -122 8,949 4,017 -13,593 \ / Foreign direct investment 430 11,156 44,241 49,308 Portfoiio equity 0 1,243 3,015 2,286 u F: 62.103 World Bank program Commitments 330 1,865 782 563 4 - IBRD E - Bilateral Disbursements 1 1,331 1,791 1,733 B .IDA D - Other multilateral F - Private Principal repayments 0 197 904 1,157 Z - IMF G - Short-term Net flows 1 1,134 887 576 Interest payments 0 293 797 649 Net transfers 1 841 90 -73 vevelopmenr--trlzvlvj

- 87 - Additional Annex 11 : Environmental Assessment and Environmental Management Plan Summary CHINA: Wuhan Urban Transport Project

1. Background

The Environmental Assessment (EA) report was conducted for the project based on relevant regulations and guidelines ofthe Chinese government and the World Bank. The objective was to identify at an early stage the potential environmental consequences ofthe project, propose measures to avoid, mitigate or otherwise compensate negative environmental impacts during construction and operation, and allow incorporation ofappropriate measures in the design to reduce negative impacts to a minimum and acceptable level.

The EA was prepared by No. Four Survey & Design Institute ofChina Railways Ministry and Wuhan Research Academy of Environmental Sciences in accordance with Bank’s OP 4.01. The project is classified Category A since it involves involuntary resettlement, major road construction, partly on new alignments, and increased air and noise pollution. The Environmental Management Plan (EMP) was prepared by No. Four Survey & Design Institute of China Railways Ministry. The Wuhan Project Office (PO) provided detail budget estimation of EMP implementation and on behalf ofWuhan Government, Wuhan PO endorses full implementation ofthe EMP.

2. Project Components

The proposed Wuhan Urban Transport Project consists of six components: (1) road network development. This component aims to address the most immediate needs of improving the operation ofthe road network within the city, and expanding the bicycle and pedestrian networks. (2) traffic management and road safety. The aim ofthis component is to build upon the strengths of the existing transport network management to better utilize existing assets and resources. (3) public transport. The objective ofthis component is to facilitate an increase in the efficiency and effectiveness ofbus services in the city. (4) road maintenance. The component aims to increase the adequacy ofroad maintenance through increased funding and improvements to the institutional and procurement arrangements for road maintenance. (5) environmental management. The component aims to mitigate the impacts caused by road construction, minimize the vehicle emission, and to increase the positive environmental impacts of the project. The detailed content includes: establishing a vehicle emission and traffic noise monitoring system, and facilitating implementation of a motor vehicle emission control strategy. (6) capacity building. This component will strengthen the technical and management skills ofthe municipal staff,

3. Baseline Environmental Description

Wuhan is located in the middle and lower alluvial plains ofthe Changjiang (Yangtze) River. As the capital city ofHubei Province, Wuhan is the economic, political, financial and cultural center of the Province. It has eleven urban and two suburban districts with an urban population of4.5 million. Wuhan is rich in water resources, and has a network ofrivers and lakes. Changjiang River and Hanjing River flow through

- 88 - the city proper. There are lakes around the middle ring road, in the area where the proposed roads are located.

Wuhan gets an annual average sunshine of 2058 hours, with 46 percent sunshine. Summer heat can be stifling.

The proposed project is spread over eight urban districts. A detailed survey ofthe area revealed that a total of 126 environment sensitive receptors would be affected by the roads included in the project. These receptors include schools, hospitals, kindergartens and residential buildings along both sides of the proposed project roads.

3.1 Air quality. Based on the results provided by Wuhan Environmental Monitoring Station, the existing air quality in Wuhan meets the requirement ofNational Class I1 standards in the levels of Sulphur Dioxide (S02), Nitric Oxide compounds (NOx), and Carbon Monoxide (CO). However, the Total Suspended Particulates (TSP) exceeded the standards, mainly due to coal combustion, construction activities and increase in traffic.

3.2 Noise. Continuous noise monitoring was conducted 2-5 meters away from the existing road shoulders and 1 meter in front ofthe sensitive sites to determine the existing noise level along the proposed project roads. The results along typical road sections showed a 100 percent increase in the level ofnoise, exceeding the noise standards for day as well as night.

3.3 Vibration. Road vibration caused by traffic is irregular. The vibration level was observed to increase with traffic volume and speed, assuming road condition and fleet composition remain the same.

3.4 Sunshine to buildings located near the proposed interchanges could be blocked once the multi-layer structures are completed. Of the eleven elevated interchanges, five have no sensitive receptors located within the shaded areas ofthe finished structures. There are residential buildings, schools and a kindergarten surrounding the remaining six interchange sites. The baseline sunshine investigation shows that on the winter solstice day, which is the shortest day ofthe year, all buildings on the north side will receive 10 hours of sunshine at the first floor window level.

3.5 Drainage System and Surface Water. Wuhan’s urban areas are divided into twenty-two drainage systems with a total catchment area of 198 km2. The sewer system in the old city area is primarily a combined storm and sanitary sewer system, while in the newly developed areas, there are separate sewer systems for storm water and sewage. Project components are proposed in both old and newly developed areas.

The latest annual report on environmental quality in Wuhan (2002), indicates that the surface water in virtually all water bodies in the city has been contaminated, as shown by the standard compliance status. The main pollutants are organic substances, coliform, nitrogen and phosphorus, indicating that domestic sewage is the main source ofwater contamination.

3.6 Ecosystem. East Lake is listed in the 1998 Asian Wetland Directory. It is also a national level scenic site, urban recreation area, popular resort and health rehabilitation area. Based on a 1986 site ecological study, the latest available report of its kind, there were 76 species ofphytoplankton, 203 species of zooplankton, and 67 species offish found in the lake at the time. The climate and the abundant food sources in the shallow water bodies attract many species ofmigrating birds to Wuhan during winter.

- 89 - However, water pollution and extensive human activities in and around the East Lake, are bringing changes in the biomass, species and aquatic ecosystem ofthe area. The level ofbiodiversity has decreased in recent years. But the East Lake continues to be an important natural habitat in the Changjiang River area and a rare natural wetland within a large city.

Other components in the urban ecosystem consist mainly ofplanted trees, woodland, and green areas throughout the city area including all project sites. There are about 106 species of trees in Wuhan.

3.7 Cultural property and religion. A survey of all project roads and other project facilities such as bus terminals on both recommended and altemative sites, was conducted during EA preparation. Two provincial level historic sites were identified within the project impacted area: (1) Wuhan Office ofthe New Fourth Army, which is located at the Lugouqiao Road in the Hankou section; and (2) Xinhai Revolution Gate, located about 150 m from a project road - Jinshui Road. The New Fourth Army was one of the most influential army groups in the modem Chinese revolutionary history and their former headquarter currently serves as a memorial and revolutionary museum. Xinhai revolution is a significant milestone in the Chinese modem history and its success ended the five thousand years ofthe feudal society in China and marked the beginning ofthe modem Chinese history. The present revolutionary gate was rebuilt in 198 1.

4. Potential Impact & Mitigation Measures

The major potential environmental impacts associated with the proposed project and the mitigation measures are outlined in both the EA Report and in the EMP. The EA Report concluded that the proposed project would address emerging and projected traffic congestion in the city center, improve the quality of urban life and stimulate economic development, resulting in both social and economic benefits. The report also indicated that there would be both positive and negative impacts on the environment. The EMP simulates how the environmental protection measures identified in the EA Report will be incorporated into the design, and implemented during the design, construction and operation phases ofthe project and what institutional arrangements have been made to ensure their effective implementation. The key elements ofthe EMP are summarized below:

4.1 Design phase. Currently Wuhan has a limited motor vehicle inspection program, which carries out roadside inspections ofabout 10-15 percent ofcity's motor vehicle fleets each year. The city government also plans to introduce and enforce Euro3 by 2010 and Euro4 by 2020 in the city. This EA proposes to include the development ofa motor vehicle inspection and maintenance (I/M) program as a major mitigation measure. More specifically, this component may include (1) an assessment of the legislative and policy framework , emissions monitoring and vehicle emissions program (Wuhan already has its shortcomings); (2) policy suggestions to improve aggregate motor vehicle emissions, and measures to ensure more efficient functioning of various agencies involved with motor vehicle emission control; (3) a study for development and implementation plan of an I/M system; (4) procurement ofI/M equipment to upgrade the current inspection capability in accordance with the I/M implementation plan; and (5) other necessary facilities such as buildings for inspection stations and/or laboratoryhest center facilities. In addition, as part ofthe overall transport strategy for Wuhan, the project road design will be given full consideration to optimize the transport network.

The analysis of alternatives was conducted during the EA process in the following aspects: different road alignments, different design configurations, and with and without project. For instance, comparison of alignments was undertaken for four roads in two districts by the project and the EA teams. A number of criteria were considered in the evaluation ofeach section including length, road condition, planning width,

- 90 - as well as technical, socioeconomic, resettlement, implementation and environmental factors and engineering costs. During this process a variety ofpotential environmental effects were avoided or minimized.

A number offeatures to minimize noise effects have been incorporated into the design. These measures include limiting construction ofelevated viaduct to locations where road widening is not possible. Construction materials for road surface structure with effective sound absorption will be applied in certain areas to reduce traffic noise. Some residential buildings and sensitive receptors adjacent to the road will be protected with the use ofsound barriers. Double-glazed windows and air conditioners will be utilized at special sensitive receptors, e.g., schools, hospitals, seniors’ homes and kindergartens, affected by the traffic noise. Comprehensive sound insulation will be installed for the housing of the first row ofresidential buildings affected by traffic noise, e.g., double-glazed windows in combination with cooling systems.

Structure and materials effective for vibration mitigation will be put into joints between pre-fabricated structures and bridge piers. Application offlexible supports, such as rubbers and bowl shaped supports for viaduct and interchanges will buffer vibration ofstructure and reduce noise. Road surface quality also has a direct impact on vibration. The use of high quality materials for surface smoothness and regular maintenance and repairs will be required.

East Lake, a national level scenic site and an important part ofJianghan lake wetland area, will be exposed to the construction and operation of Qinghua Road. Given the limited time and available information at present, it is likely that the adverse impacts and consequences to the local ecosystem, particularly to the migrating birds and their habitats, have not been evaluated, although the road itself legally complies with relevant city plans and regulations. As Qinghua Road is not scheduled for construction in year 2006 in the current project implementation plan, the EA recommends further study and impact assessment ofthe proposed construction. A further study will allow the Wuhan PO, design team, as well as EA team more time to explore the feasibility ofa different alignment or other options, which do not traverse the scenic area and the lake. There would be the alternative ofnot building Qinghua Road if the network capacity is proven sufficient to serve this area without Qinghua Road.

A total number of2351 trees along roadsides will be affected in different degrees by the proposed project. In addition to the implementation of “planting two trees for every one cut” policy and measures for protection ofexisting green areas and transplanting trees, trees will be planted as part of the Environmental Improvement Component ofthe project.

4.2 Construction phase. Dust will be generated as a result of demolition and large-scale excavation. Full-time environmental management staff in the construction team and the contractors will inspect sites and implement dust control measures such as the use ofwater or the enclosure of construction sites. Asphalt plants and concrete-mixing stations will be located in designated areas only to minimize impacts. Vehicles transporting building materials (e.g. cement, earth and stone) will be covered with tarpaulin. At construction sites where dust is easily created by mixing, loading and unloading ofbuilding materials, effective measures such as watering will be taken to prevent or mitigate dust. The rubbish and trash accumulated by workers will be stored in a closed site and disposed offregularly.

The use ofnoisy machinery, such as percussion hammers, pneumatic drills and rock drills during the night (1O:OO pm - 6:OO am) will be strictly prohibited. Machinery with low noise and noise shielding andor sound absorption materials will be used as much as possible, e.g. on-site generator with mufflers or silencer. Contractors will rationalize work timetable, keep noisy operations away from sensitive points, carry out regular maintenance and repairs, and enforce strict implementation ofoperation procedures.

- 91 - Where sites are seriously affected during construction, temporary enclosure with noise shielding andfor sound absorption will be set up. Stream and diesel pile drivers are prohibited for use in areas where sensitive receptors are within 50 m ofconstruction sites. The construction components for viaducts and interchanges will be prefabricated and transported to the construction sites. If on-site monitoring results exceed standards, environmental inspectors or local environmental monitoring unit will report this to the project management office, which will stop the construction for rectification. Contractors must abide by the provisions for construction noise (vibration) prevention and control in Wuhan. It is prohibited to use steam and diesel pile drivers as well as monkey driver at the project site. Low-level vibration machinery will be used as much as possible, a system ofregular maintenance and repairs is to be employed.

Feasible measures for traffic management will be determined prior to construction in consultation with the traffic police. Project supervisors will cooperate to avoid traffic congestion due to construction. The public will be notified in advance. When carrying out construction in front of schools, the contractor will appoint specific persons to guide the pupils safely through the construction site. Overhead safety shelters will be installed when the construction is in residential andfor commercial areas. Separate roadside construction will be adopted for road widening in order to provide safety to both pedestrians and vehicles.

4.3 Operational phase. The proposed project will cause degradation of air quality within 200-300 m of the alignments, but will make a positive contribution to the overall air quality in the urban area, particularly in the city center. An auto monitoring station network for air quality and noise, and a Motor Vehicle Emission Control Strategy have been incorporated into the project. The objective is to build on existing initiatives, policies and programs being undertaken in Wuhan, and to develop strategies and provide a strong foundation for a program to address the problem ofincreasing air pollution from mobile sources. The program will integrate a number ofinitiatives including the ban on leaded fuel; an enhancement of existing vehicle inspection and maintenance (UM) system; increased use of alternate fuels; improvement of laws and regulations related to vehicle emissions and their more rigorous enforcement; accelerated retirement of older vehicles; further development ofpublic transit and traffic management and the expansion of automated monitoring network to monitor air pollution and quality.

5. Environmental monitoring

The EMP identifies requirements related to the environmental inspection and monitoring program. Environmental management staff will be assigned by each contractor to respond to unanticipated environmental concems and will ensure the implementation ofthe mitigation measures and compliance with established standards (e.g., noise and dust). Environmental monitoring will be contracted with Wuhan Environmental Monitoring Center (needs to be confirmed) during both the construction and operational phases to ensure the effectiveness ofmitigation measures and to determine the accuracy ofimpact predictions. Parameters to be monitored include air quality, dust, noise and vibration.

The project includes an environmental training component for contractors and inspectors. The staffing and training is presented in the EMP.

6. Public Consultation and participation

Three rounds ofpublic consultation have been conducted during the EA process: the first round at the preparation ofEA terms ofreference (TOR) between September 4-7,2002; the second round at draft EA report between December 26-29,2002, and the third round at review stage ofdraft EA reports between March 26 and April 10,2003. A variety oftechniques were utilized in public consultation including: site visits; public opinion surveys (e.g., distribution ofquestionnaires, letters, interviews); experts consultation;

- 92 - public meetings at neighborhood committees in the project areas; stakeholders meetings and interviews with project affected groups, organizations and individuals. The distribution ofpamphlets gave an overview of the project and indicated the availability ofthe draft EA Outline & Summary, for review; and the announcement ofthe second public meeting. Advertisements were also provided in local newspapers.

In Round three ofpublic consultation, over 500 people attended public and stakeholders meetings. A total of4200 copies ofthe public questionnaire were distributed in the three rounds ofpublic consultation and 4059 copies of completed questionnaires returned. The public expressed their support to the project in general and also their concerns and suggestions on specific environmental issues including noise (construction and traffic), air borne dust, air emission from motor vehicle, traffic planning, landscaping, etc.

The EA team has responded to the public concerns and suggestions by incorporating the following: a series ofdust control measures during construction; noise insulation and double-glazed windows at sensitive receptors, which are expected to experience significant incremental increase in noise levels after the project; and a large scale landscaping program with more new trees planted than those cut during the project, etc.

Public consultation activities and information disclosure for this project is summarized in following tables:

Stage Form By whom and for Time Location WB Policy whom By PMO & EA Sept 4,2002 Conference OP 4.01 round meeting team for local room, Wuhan people's Municipal representative Design Institute and Youth Volunteers Public meeting By PMO & EA Sept 6-7,2003 Changqing, OP 4.01 team for project I Qingshan Park, iffected residents and Beibuting Public opinion By PMO & EA Sept 13-20,200: Project road OP 4.01 survey team for areas randomly selected individuals in the project area Draft EA report Public meeting By PMO & EA Dec 28,2002 xuping OP 4.01 team for project Department iffected residents Store; Xibeihu I Plaza By PMO & EA Dec 26,2002 to Project road OP 4.01 survey team for Jan 3,2003 areas randomly selected individuals By PMO & EA March 17,2003 East Lake OP 4.01 review meeting eam for agencies Scenery Site

- 93 - md organizations Management related to East Commission Lake Office management Public opinion By PMO & EA March 28 to Project road OP 4.01 survey team for April 6,2003 areas randomly selected individual of proiect areas

Information Date LocatiodMedia WE3 policy Notice to the public about Sept 5,2002 Wuhan Evening News, OP 4.01; the public meetings, Sept 5,2002 Changjiang Daily Policy on Disclosure of locations, and contents Information Project summary and key Sept 9,2002 Wuhan Communications I1 EA information Radio Notice to the public on Dec 28,2002 Wuhan TV stations I1 second round of public Dec 29,2002 Wuhan Evening News consultation including locations and contents Advertisement on draft Feb 19,2003 Wuhan Evening News I1 ,EA report Draft EA report and EMP Since Feb 18,2003 Wuhan public library I1 No. 4 Railway Design Institute Wuhan Academy of Environmental Sciences

Final EA report and EMP From March 30, 2003 Wuhan public library I1 No. 4 Railway Design Institute Wuhan Academy of Environmental Sciences

- 94 - Additional Annex 12: Resettlement Impacts and Resettlement Action Plan Summary CHINA: Wuhan Urban Transport Project

Introduction

This annex reviews the adverse impacts ofland acquisition and structural demolition engendered by the Wuhan Urban Transport Project, and the arrangements proposed in the Resettlement Action Plan (RAP) to mitigate them. Consistent with World Bank Policy OP 4.12 on Involuntary Resettlement, the objectives of resettlement planning are to avoid or minimize adverse impacts, and to ensure that incomes and living standards are improved (or at least restored) for all persons displaced by the project. Special care has been taken in resettlement planning to ensure that relocation or rehabilitation measures are sufficient in areas where low-income families are particularly prevalent.

Both the road network improvement component and the public transport component of the project are likely to involve land acquisition and resettlement. The RAP includes detailed coverage regarding the road network improvement component, based on census and survey data collected specifically for project purposes. Because the precise nature ofimpacts associated with the public transport component will not be known until the final designs are prepared during the implementation phase ofthe project, the RAP includes only preliminary estimates of expected adverse impacts, which are expected to be relatively minor. The Wuhan Municipal Government will prepare a separate resettlement implementation plan, consistent with the principles and standards established in the project RAP, for Bank review and acceptance at least six months before the commencement ofcivil works in the transport component.

Structure Demolition and Resettlement-Related Impacts

Based on project designs, a total of28,756 persons would be affected, to varying degrees, by land acquisition or structural demolition. The road network improvement component includes activities scattered throughout both urban and suburban areas ofWuhan. In urban areas, resettlement activities will involve 62 residential neighborhood committees; in suburban areas, 48 villages will be affected by loss of land or structural demolition. Additionally, 273 shops, enterprises, or public institutions would be affected. The total number ofpersons required to relocate their residence would be 9,072 (2,478 households). A total of 19,693 employees may be temporarily affected by transitional closing of shops or enterprises. No one will lose employment permanently because of the project.

The road network improvement component will require permanent acquisition of 176 hectares of collectively owned land in suburban areas. Of this amount, about 125 hectares are under some form of cultivation (including approximately 97 hectares of fishponds). The remainder is used for rural house plots or other local purposes, or is unutilized wasteland.

Relatively minor design changes are likely to continue until implementation begins. Typically, final designs result in marginal decreases in land acquisition and structural demolition, as well as changes in proportion among categories ofaffected land and structures.

- 95 - Legal and Policy Framework

The legal basis for structural demolition, land acquisition and resettlement planning includes national, provincial and local laws and regulations. Relevant national laws or regulations include the Urban Structure Demolition Management Regulation (2001) and the Land Administration Law (1999).

In China, all land officially designated as urban land is owned by the State while village collectives own all cultivated rural land. Hence there are two types of land acquisition involved in this project. One is to acquire State-owned land without payment and the second is to acquire collectively owned rural land with replacement compensation and other forms of assistance provided to the collectives that stand to lose the land permanently.

When collectively owned farmland is acquired, the future land user pays compensation for land, loss of crops and attached properties, and a resettlement subsidy for the rehabilitation of affected persons. According to the Land Administration Law (as revised in 1999), the land compensation will be 6 to 10 times the average annual output value per mu for the three years before land acquisition. The resettlement subsidy, determined according to the number of agricultural population to be resettled, is up to 15 times the average annual output per mu.

Crop compensation and compensation for affected structures or other fixed assets are paid directly to individuals. The land compensation and resettlement subsidy is to be paid directly to the village-based collectives losing the land. This compensation is to be used for .production development, non-farm employment and income-generating activities for the displaced people. With the prior approval ofvillage members and the county resettlement office, the compensation can also be used for improving community facilities or services. By law, separate accounts on resettlement compensation are to be kept at each affected village, with financial reports provided annually to the next higher level of government.

The State Urban Structure Demolition Management Regulation is more detailed and comprehensive than the land law. Please refer to RAP for detailed information.

Compensation Standards and Rehabilitation Measures

Compensation rates are based on replacement cost for various categories ofaffected assets, such as the actual structure and the zonal valuations reflecting the varying value of urban land. Land compensation is based on the highest average annual output value per mu among the same land in the affected municipal districts. In each case, compensation rates meet or exceed legal requirements, and meet or exceed replacement cost valuation.

The land compensation rates vary in the seven affected municipal districts. The average land compensation rate including resettlement subsidy is 1,077,780 RMB (about US$7 1,852) per hectare. The average paddy land rate excluding resettlement subsidy is Yuan 718,520 (about US$87,624) per hectare, which is ten times the average agricultural output. The amount ofresettlement subsidy for loss ofpaddy land is Yuan 1,077,780 (about US$13 1,436) per hectare, which is fifteen times the average agricultural output. Compensation rates for each locality are listed in Chapter 7 ofthe RAP.

- 96 - Nominal compensation rates for residential structures ranges fiom Yuan 290 (about US$35) to Yuan 800 (US$lOO) per square meter. Illegal structures requiring demolition will be compensated at full replacement cost for the structure itself, but without supplemental payment for zonal valuation. In many cases, local authorities may increase compensation rates for demolished structures in response to local variations in property valuation or to meet other local contingencies. In all cases, however, compensation will meet or exceed standards established in the RAP.

The project will also affect public infrastructure. Compensation at replacement cost will be paid to the relevant government agencies or local governments to restore affected infrastructure and services. The replacement cost will be reported to the municipal government for review.

The proposed road improvements will pass primarily through suburban areas. The population densities are comparatively high, with an average of 0.5 mu (or about .03 hectares) ofland per person. Resettlement planning has included review of impacts on incomes in villages that will be affected. Typically, villages contract farmland to farmers yearly and agricultural income generally constitutes less than 10% ofvillage residents’ income. Crop compensation will be allocated to each individual by cash and villages will take the responsibility of livelihood restoration.

According to the state land law, the calculation ofnumber of displaced surplus laborers caused by land acquisition is based on the registered rural laborers, regardless of whether they rely on agricultural income or are employed in enterprises or private business. Therefore, the level of actual displacement is less than the statistical level of surplus laborers. The RAP sampled four villages’ rehabilitation plans to review the potential effectiveness ofalternatives for livelihood restoration. Most, but not all, villages are expected to redistribute remaining collective land after land acquisition so that all villagers retain a share of land. In such cases, the land compensation and resettlement subsidy will be used to invest in productive activities or to improve local living standards.

In some villages, land will not be redistributed if the remaining shares become too small for practical use, or if villagers do not rely on agricultural income. In such cases, village consultation meetings will identify the villagers to be considered displaced surplus laborers. Rehabilitation arrangements in each village also are subject to village consultation (requiring a two-thirds approval). In some cases, individuals may choose to receive a cash resettlement subsidy (at minimum, an amount equal to the total resettlement subsidy received by the village divided by the number ofdisplaced surplus laborers). These individuals can then engage in self-employment or find their own employment opportunities. In other cases, those identified as displaced surplus laborers will be offered employment in village or township enterprises, with a minimum salary of500 RMB per month. Those to be provided employment will receive 500 RMB per month in transitional support until they are actually employed.

The rehabilitation plan for house replacement is divided into two phases based on the two designed schemes - Year 1, and Year 2-to-5 schemes. In the Year 1 scheme, 60 percent ofhouseholds will be offered cash compensation, 20 percent oflow income households will be allocated highly subsidized apartments, and 20% ofthe households will have the option to purchase second-hand houses in an urban area. In the Year 2-to-5 scheme, most of the affected households will be offered apartments for purchase at a discounted price. Rural residents have been offered two options. They can either get a fully prepared replacement plot to reconstruct housing in their village, or they can elect to receive 150 percent ofreplacement cost in compensation for their demolished structure to purchase replacement housing outside oftheir village. As in urban areas, rural low-income households will be eligible for other forms ofassistance, including eligibility for subsidized rental apartments or discounted apartments for purchase.

- 97 - The loss ofbenefits to enterprises and private businesses during the construction period will be negotiated through extensive consultation. Shops and enterprises will receive payment for loss ofprofits and wages, and affected employees will receive support for the transitional period until normal operations can resume. The enterprises involved are owned by the municipal government and local district collectives. Impact surveys indicate that, in most cases, the enterprises will be affected partially by the extension ofthe road improvement and that the main structures or workshops will not be demolished. Therefore, production will not be affected seriously and the enterprises do not need to be relocated to other places. If the enterprises prefer to restore production by themselves, the project implementing agency will provide them with cash compensation and negotiated transitional cash assistance. For private businesses, the project implementing agency will pay compensation at replacement cost for lost structures and improvements required therein, will provide assistance to offset temporary business losses and to provide temporary wage support for employees, and will pay for moving expenses. Additionally, the project will provide information relating to available alternative business locations and rental costs, and in some cases will assist businesses in relocating into specialized markets or into newly constructed housing areas.

The project management office has conducted a detailed household survey. Low-income families, single-mother families, and vulnerable groups ofpeople have been identified. Municipal government will offer preferential policies, during implementation ofthe project, to 20 percent ofthe economically and socially disadvantaged families affected by the project components.

Institutional Arrangements

In China, the project management office has no authority to acquire land in rural area through regulatory means, or to directly implement any resettlement-related measures. Land acquisition authority, and resettlement-related responsibilities, lie instead with the municipal districts involved. Under such circumstances, close coordination between the project management office and the relevant land administration bureaus is essential for effective resettlement. For State owned land in urban area, the land to be used will be transferred from land administration bureaus to the project management office.

Building on past Bank experience with projects in Hubei Province and in Wuhan, the municipal government and municipal districts have established a "leading group" to address any issues that may arise during implementation. The project management office has also established an intemal resettlement rehabilitation office and relevant divisions to work with district-level authorities on routine matters.

Moreover, the project management office will reduce the process ofresettlement fund cash flow in order to avoid the fund deduction, which may incur during the disbursement ofthe fund. The project management office will also strengthen the capacity ofdistrict-level and resettlement fund management. A computer software-based resettlement management network will be set up for all affected districts. A Resettlement monitoring institute will establish monitoring stations in all involved districts for dynamic and systematic monitoring. The monitoring stations will invite resettlement representatives to participate in monitoring resettlement work.

Community Participation and Public Disclosure

Potentially affected communities were consulted during both project design and preparation ofthe RAP. Additional formal and informal consultations were undertaken at both the district level and the residential committee level.

- 98 - For RAP preparation, the consultation process was initiated during the process ofconducting a census and socioeconomic surveys, which began in March 200 1. Potentially displaced persons were involved in identifying project-related impacts and in measuring potential losses of land, structures and other assets. Residential committees and village-level consultations also took place in early 2002 to review proposed compensation rates and other aspects ofthe RAP. The consultation process will continue throughout the implementation phase, in conjunction with resettlement monitoring activities.

Information regarding the project and the resettlement program has been publicly disclosed as required by Bank policy. The draft RAP is available for public review at the provincial and municipal libraries, with notification published in Wuhan Daily on February 19,2003. Additionally, the draft RAP was placed in the Bank Information shop in February 2003. In addition to formal RAP disclosure, separate campaigns have been, or will be, undertaken to ensure that affected persons are informed about resettlement aspects of direct relevance to them. This information, published in booklets for distribution to households or in posters for residential committee or village display, includes the projected timetable, compensation standards, rehabilitation measures, and information regarding whom to contact and procedures to be followed for those with complaints.

Resettlement Cost and Implementation Schedule

The cost ofimplementing resettlement measures is estimated at RMB 1,585.63 million (about US$193.4 million), including payment of associated fees, monitoring costs and contingency allowances. Estimated resettlement costs are included in the project budget.

Monitoring of Resettlement Implementation

Resettlement implementation will be subject to external project monitoring, to be conducted by a team functioning independently ofthe project owner and provincial resettlement implementing agencies. The monitoring institute is requested to set up monitoring stations in all involved municipal districts and to supervise resettlement implementation dynamically and systematically. Independent monitoring reports will be submitted to the project management office and the Bank twice a year. The reports will review whether implementation is in compliance with RAP terms and will evaluate the effectiveness of resettlement measures in improving or restoring incomes and living standards.

- 99 - Additional Annex 13: Wuhan Public Transport System: Current Situation, Improvements and Reform CHINA: Wuhan Urban Transport Project

Introduction and Background

1. This Annex summarizes Wuhan Municipal Government’s current plans for improvements to public transport services and the reform of Wuhan’s public transport sector. It also outlines the possible role that the Bank project could play in supporting this reform. Past Bank experience (since SMTP Iin 1991) suggests that the Bank cannot lead reform but only support measures being proposed by municipalities and encourage decision makers. The Bank’s role thus far has been limited to providing ‘knowledge’ input when requested.

2. Wuhan municipality has been formulating and implementing proposals for public transport reform since August 2001. A Wuhan team including senior staff from several agencies visited six other Chinese cities that have undertaken PT reform, and analyzed their experiences. A draft Wuhan Public Transport (PT) Reform program-wasprepared, reviewed by a wide range of staff, and submitted to the government for approval. The government has agreed to the proposal in principle. Implementation ofthe reform program began in February 2003.

3. The core ofthe reform is to gradually strengthen the institutions, management and operations of the Wuhan PT sector by (i) separating the government and enterprise functions ofthe PT sector, (ii) providing clearly defined regulatory arrangements, (iii) rationalizing the bus route management and competition, (iv) gradually increasing the financial independence ofthe operating and maintenance companies, (v) attracting other (non government) resources into the sector, and (vi) transforming gradually the operating companies into limited liability companies.

Wuhan is working intensively on the agenda and its implementation.

Current Situation

4. Organizational Arrangements. Before August 200 1, PT sector management and operations were the responsibility ofthe Wuhan Public Facilities Management Bureau. PT sector management is now the responsibility offour government departments: Wuhan State-Owned Property Management Commission, Wuhan Transport Commission (WTC), Wuhan Property Price Management Bureau, and Wuhan Finance Bureau. The roles and responsibilities ofthese departments are outlined below.

4.1 Wuhan State-Owned Property Management Commission - representing the Wuhan Municipal Government, the Commission authorizes the state-owned PT enterprises to function as investors in state-owned property. It also cooperates with the concemed government departments to appoint and monitor the performance ofmanagers ofthe state-owned PT enterprises. In addition the Commission is responsible for 0 checking and approving changes in property rights’ or major asset transactions ofthe state-owned PT enterprises. 0 checking and evaluating the operational achievements ofthe state-owned PT enterprises, and giving performance related awards or penalties.

- 100- 0 supervising the state-owned PT enterprises financial and capital activities.

4.2 Wuhan Transport Commission is responsible for 0 checking the qualifications ofPT enterprises in Wuhan as well as the supervision and overall management ofthe operations of these enterprises, 0 working out the PT development plan for Wuhan as well as specifying the PT level of service, PT routes and the location ofPT stops and interchanges, 0 management ofthe operating rights ofPT routes, and 0 collecting urban PT statistics The commission also cooperates with the Property Price Management Bureau to monitor PT fares, assists the relevant departments ofthe govemment to work out the prices for PT tickets and the monthly-pass, and then implements fare revisions once approved.

4.3 Wuhan Property Price Management Bureau is responsible for 0 supervising and checking the implementation ofthe price regulated for the PT tickets and the monthly-pass, and 0 checking and approving the price adjustment to PT ticket and monthly-pass according to the change in price indices and PT development.

4.4 Wuhan Finance Bureau is responsible for carrying out an annual review ofthe financial position of PT enterprises, and based on this review, for working out the financial subsidy policy and the related subsidy plan for the following year.

5. Public Transport Companies. Wuhan currently has two public transport enterprises -the Wuhan Public Transport General Company (WPTGC) and the Wuhan Tongheng Corporation Limited. WPTGC consists ofeight operating companies: seven branch companies (six bus companies and the trolleybus company), and a sub company - the ferry company which is an independent legal entity. The Tonghen Corporation is a joint venture between the General Bus Company and a Hong Kong Company.

5.1 Employees. The enterprises collectively employ 27,868 active employees (of the total employees about 10 percent are employed in maintenance, 37 percent are drivers, and 7 percent are conductors) and are also responsible for 5,296 retirees (a total of 34,164 employees). Overall, the enterprises have five employees per bus, which by international standards is acceptable for buses operated with conductors.

5.2 PT enterprises’fmed assets. The initial value (in November, 2003), of the original asset of WPTGC was 1492.36 million yuan, and the net value (after allowing for depreciation) was 896.02 million yuan. The original fixed assets ofthe enterprises that are not independent legal entities was 1167.45 million yuan, and the corresponding net value is 665.99 million yuan. The original fixed assets ofthe independent legal entity subsidiary companies was 196.14 million yuan, and the corresponding net value was 101.26 million yuan. The value of the land assigned to PTGC was 128.77 million yuan. The fixed asset are categorized as: a) operational Buses, b) other Vehicles, c) buildings (depots, parking areas, etc.), d) equipment (for maintenance, re-fueling, etc.), and e) other assets (office equipment, living quarters, etc.). The value ofthese assets is shown in the table below.

- 101 - Other vehicles 706 375 33 1 Buildings 5,132 2,866 2,266 Equipment 2,226 1,246 980 Other 3,436 1,266 2,170 Sub-total 19,614 9,488 10,126 Land 12,877 12,877 I Total I 149.236 I 59.634 I 89.602 I

6. Public Transport Operations

6.1 PTRoute Distribution. Wuhan PT system comprises 248 routes, among which there are 89 monthly-pass bus routes (including 7 trolleybus routes) and 159 non monthly-pass bus routes. The total route length is 4391.1KM, and the route network length is 735.5KM. The route network density is 2.98KMKM2. The network also consists of 8 passenger ferry lines, 2 vehicle ferry lines and 21 mini-bus routes.

6.2 PT Buses and Boats. Wuhan PT system altogether comprises 5640 buses and trolleybuses, among which 1277 are assigned to monthly-pass routes, 4363 to non monthly-pass routes (including 843 air-condition buses, 236 trolleybuses, 120 double-deck buses). The system also consists of 15 passenger ferry boats, 7 vehicle ferry boats (with a total capacity of 127 vehicles)., and 464 mini-buses. There are 16.3 buses/10,000 people. In addition, 1,290 taxis operate in Wuhan.

6.3 PT Passenger Volumes. The total PT daily passenger volume is 2.75 million person trips (non-including taxi ridership). The mode share of urban PT is 21.74% (of all trips including walking and cycling).

6.4 PT Facilities There are 68 sites designated for PT use in Wuhan (including public land). The total area is 810,000M2, and the built up area is 230,982M2. Wuhan PT system consists of 1,200 stops, and 11 1 other facilities, including 4 interchanges, and 37 termini. There are eleven depots with a parking capacity of 3950 standard buses, and an annual maintenance capacity for 3560 standard buses.

6.5 Financial Situation. In 2002, overall operating costs were 108 1 million yuan, and revenues 1042 million yuan, a cost recovery of 96 percent, requiring an operating subsidy ofjust 39 million yuan. The average fare was 1.1 yuan.

- 102- 7. PT fare setting procedure. The current procedure for fare setting and adjustment is as follows. (i) PT enterprises submit an application for fare adjustment to the Wuhan Property Price Management Bureau and the Wuhan Transport Commission. (ii) Wuhan Property Price Management Bureau reviews PT enterprises’ operating costs. (iii) Based on the results of this review, Wuhan Property Price Management Bureau decide whether to institute the fare adjustment procedure,. (iv) After approval is given to institute the adjustment procedure, the PT enterprises submit an application to an information gathering meeting. (v) After the information gathering meeting,, Wuhan Property Price Management Bureau submits the application to the Wuhan Municipal Government and the Provincial Property Price Management Bureaux. (vi) The Provincial Property Price Management Bureau makes a decision, based on the information supplied, whether to grant a fare increase. In October, 2003, in order to maintain PT fares at a reasonable level, which is beneficial to the enterprises’ development and also acceptable to the public, Wuhan PTGC has submitted an application for fare adjustment to Wuhan Transport Commission and Wuhan Property Price Management Bureau. A fare adjustment is anticipated in the first half of2004.

8. PT routes - Management of Operating Rights. In order to standardize the management ofPT- operating rights and to improve service quality, Wuhan Transport Commission issued and has gradually implemented, starting in July,2003, the “Wuhan Bus and Trolleybus Operational Management Regulation”. The main contents of the Regulation are as follows: (i) Authorization ofroute operating rights. The regulation clearly specifies the procedures, conditions and time limits for the authorization of these rights. The time limit is 2 to 6 years. The operators will be authorized for 2 years, 4 years or 6 years’ based on the opinions of the public. (ii) Management ofroute operating rights. The regulation clearly specifies the procedure of route operating rights’ adjustment, change and cancellation. It especially regulates the service assessment standard, assessment method and penalties. The service assessment standard includes the service level, safety of operations, bus condition, settlement of complaints, and the publics’ assessment. The assessment will be undertaken once a year. It will take the opinions ofthe managing departments, social agencies and the public into consideration. The result of the assessment will determine whether the operator retains the operating rights or in penalized for poor performance.

In July,2003, Wuhan Transport Commission chose 43 PT routes, which had good service quality and management for the initial award of operating rights. Through this award, the management and monitoring procedures have been strengthened, and service quality has improved. There was a favorable response from the public. Based on this experience, Wuhan Transport Commission will increase in 2004 the number of routes awarded. It is planned to strengthen this process extensively over the next 2 years.

9. PT route network optimization In terms ofPT fleet size, route length and distribution, operational efficiency and service quality, Wuhan’s PT service occupies a leading place in China, especially in the aspect ofconvenience and accessibility. However, with the development ofWuhan’s economy and in order to achieve the innovative, customer orientated and practical service goals proposed by the government, Wuhan PT must develop to a higher level. Consequently, the Wuhan Transport Commission and PTGC will use the opportunity provided by the World Bank loan to undertake the

- 103- construction ofPT interchanges and termini, and to push forward the customer responsive optimization of the route network.

9.1 WTC and WPTGC Objectivesfor PT route network optimization. Optimize the route network to provide a more reasonable distribution of interchanges; make full use ofPT resources to realize more regional and professional operations; moderately reduce the operation capacity in central town; relocate some congested stops to reduce delay time as well as passengers’ trip time; reduce route duplication as well as route length; increase PT mode share.

9.2 Scope of PT route network optimization. (i) Reduction of route duplication. PTGC has begun to combine the routes where 80% ofthe route length is duplicated (ii) Distance based fares. PTGC has implemented a distance-based fare on 45 routes which are not easily adjusted. (iii) “Express Bus Routes”. Introduction of “Express Bus Route” between locations which have large passenger volumes. It is proposed to establish a network of “Three Layers and One central point” through all these adjustments. The first layer connects with the long-distance transport services at the middle-ring road and also serves the new residential areas. The second layer consists ofthe PT termini and interchanges between the middle-ring road and the inner-ring road, which not only benefit the passengers but also connect with the railways. The third layer consists of several large interchanges on the inner-ring road, which connect with the light rail transit.

9.3 Achievements of PT route network optimization (i) Route duplication has been reduced and route network coverage has been expanded. The route network is expanding to the middle-ring road and the boundary between the urban and rural area. (ii) Route network density has been increased. The transport demand ofthe urban area is now being met to a greater extent. (iii) PT’ level of service has been strengthened. (iv) PT route length has reached a reasonable level. (v) PT stops are now more evenly distributed, which has solved the problem ofbuses queuing at stops and made trips faster and more convenient for passengers

Future Developments

10. Establishment of rapid PT corridors. Based on the existing situation, and the requirements for future development, the current ideas about establishing urban PT rapid transit corridors are set out below.

10.1 Simultaneously plan the BRT system network and implement PTpriority measures. (i) Implement PT priority measures that are customer oriented. Extend the existing bus only lane from Wu Luo road to Luo Yu road. (ii) Implement PT priority measures on the inner-ring road. It is planned to establish a high standard rapid PT system between intersections along Zhongnan road, Zhongbei road, Xudong road and Jiefang road.

10.2 Rapid PT system study. The Objectives of this study are (i)to formulate the Wuhan rapid PT system development strategy and (ii)to specify the related implementation procedures. The scope ofthe study will include: a) rapid PT corridor study (PT only lanehoad), b) technical specifications and choice of

- 104- bus type, c) fare management methods, d) PT terminus and interchange study, e) PT priority and ITS, and f) passenger information and bus management systems

10.3 Rapid PT system design Based on Wuhan rapid PT system study as well as domestic and international experience, it is planned to work out a practical rapid PT system design program. The objective is to design an advanced system that is feasible in terms offinance and operations. The scope of the design program will include: a) PT only lane or road design, b) Technical specifications and choice of bus type, c) fare management methods, d) PT terminus and interchange design, e) PT priority and ITS techniques, f) passenger information and bus management systems, and g) operational management systems .

PT Reform

11. Wuhan Ideas about the Next Steps

11.1 PT management institutional reform In order to strengthen the institutional reform ofPT management, to realize the goals of (i)separating government and enterprise functions; and (ii)separating govemment and state-owned property, and to establish modem state-owned property management and PT operating systems, Wuhan Communist Party Commission and Wuhan Municipal Government carried out the PT management institutional reform program in April, 2003. The original General Bus Company, Trolleybus Company, Ferry Company, Taxi Company, Vehicle Ferry Institute and Bus Manufacturer were re-organized to form the new Wuhan PTGC. After its foundation, PTGC adjusted the PT operational structure and PT resource allocation, which improved the efficiency ofusage of state-owned property. These measures increased the value of state-owned property and laid a good basis for the future development of urban PT

11.2 Sellpart of the state-ownedproperty and change the staffs employer Method of institutional change: PTGC will sell its operating buses and part ofthe production equipment. The income will be used to change the PT companies and to assist staff to change their employer. PTGC will also invest part ofits property to form joint-ventures with third parties. The new joint-ventures will run the existing PT routes. Scope of institutional change: All seven operating companies belonging to WPTGC, and the ancillary companies (the property company, station managing company, PT checking-line company, education center, information center, advertisement company and IC card company) will be included in this institutional change. Staffaffected by the institutional change: The total number ofregistered staff affected by the institutional change is 24,000, among whom 23,000 are employed by WPTGC, and another 1,000 by the ancillary companies. After the institutional change, 86% ofthe total staff will have changed their employer. Assets concerned in the institutional change: The assets covered include: operating buses, productive equipment and intangible assets (PT route goodwill)

11.3 Establish joint-ventures. Investors will be invited to purchase part of state-owned assets from PTGC. The investor then uses these assets and his working capital as their investment in the joint-venture. Wuhan, PTGC invests part ofits remaining tangible and intangible assets in the joint-venture.

11.4 Undertakings Required of Investors. Investors must be in good financial condition and have sufficient resources to cover operating costs. They must have sufficient operational and management staff, and technicians, and use scientific management methods. They must also be prepared to accept regulation and supervision by government and the responsible govemment departments. The investors must also

- 105- accept to (a) hired employees according to the ratio offour staff per bus, (b) sign a new contract with the employees according to the national labor laws, (c) take responsibility for public welfare programs, such as free tickets for the aged, and persons with disabilities, and the issuing ofmonthly-passes, (d) implement the fare and monthly-pass prices, as regulated by Wuhan Property Price Management Bureau, and (e) implement the route adjustment or route network optimization program, as regulated by Wuhan Transport Commission.

11.5 Proposals for Current StafJ The total number of PTGC and ancillary companies staff is 24,000. The new joint-ventures are expected to hire an estimated 20,000 employees ofthe PTGC. Generally speaking, all staff ofPTGC and its ancillary companies will be expected to apply for jobs in the new joint ventures.

12. Government policy support. For many years, Wulian Communist Party Commission and Wuhan Municipal Government have shown great interest in the development of PT. Many policies supporting PT have been implemented, which have assisted in the continuous rapid development of PT and significant improvements is service quality. The these can be

12.1 Policies giving priority to the PT system (i) Give priority to efpcient operations. Give priority to buses on street so as to avoid the interference from other traffic, and to create a good environment for bus operations. (ii) Givepriority to land use for PT. Give priority to land use for PT in the planning stage, and include PT land use plan into overall City Development Plan. (iii) Assure capital investment for PT construction. Give priority to capital allocation for construction of PT depots and stops, which should assure the sustained development of urban PT. (iv) Assure convenient transfers for passengers. Fully consider the connection between urban PT and airlines, long-distance transport, railways, boats and light-rail.

12.2 On street PTpriority measures (i) Provide bus only lanes. Provide bus only lanes on some main roads, with more than six lanes. Provide bus only lanes on some roads, which have only four lanes but have many PT routes. The latter bus only lanes should be used at particular time periods.

, (ii) Permit PT buses to do left-tums at some intersections, where such tums are not permitted for other traffic. (iii) Permit PT buses run both directions in some one way roads. (iv3 Move the stop line in the bus only lane closer to the intersection, and give PT buses signal priority to go first through the intersection. (v) Use some secondary roads as bus only roads. (vi) Provide temporary stopping places for taxis.

12.3 Welfare Subsidies. Wuhan Municipal Government gives PT enterprises subsidies every year for their welfare activities, such as the monthly-pass, free fares for the old, the blind, persons with disabilities, and the disabled soldiers, which assures the healthy development ofurban PT.

Bank Comments on Reform Proposals

13. Current Status of Reform. Much ofthe focus thus far has been on clarifying roles and responsibilities in PT with an emphasis on addressing the first two objectives i.e. separation of government

- 106- from operations and development ofa clear regulatory structure. Some progress has been made on the third objective - bus route management. The Wuhan Public Transport Group Company (WPTGC) has already been founded, but the six bus branch companies and one trolley-bus Branch Company ofWPTGC are not independent legal entities at this stage. Wuhan Transport Commission is responsible for the PT studies and the PT plan, authorized by the municipal government. Experts (including experts from Urban Planning Department) will review the finished plan. After its approval, the plan will be implemented by WTC and be introduced into the Urban Master Plan.

14. Need for a systematic and comprehensive fare policy. The process described in paragraph 6 should permit the operators to recover costs. However this needs to be accompanied by systematic analyses by WTC on the need to increase bus fares. Much remains to be done in developing an appropriate fare policy, as the current proposals for route network optimization and PT priority appear to leave much ofthe decision making to WPTGC. 15. PT Network optimization. The proposals for route network optimization described in paragraph 8 need to be accompanied by a review ofroute networks and service levels is required to address the observed low operational productivity. The operating companies are spread too thin, and routes and schedules need to be revised. WMG agencies have expressed concem at what they describe as the overlap of routes - different routes operated by different companies running along a number ofmain roads in the city center. If the passenger demand exists for the capacity provided by all the routes the Task Team does not see this as a particular problem. There are many examples from cities outside China of multiple routes sharing long sections ofroad.

16. Need for an operational review. Other aspects ofbus operations also merit review. The current staffbus ratio of about five staff per bus could be reduced to around 3.5 per bus or below, given the recent introduction of one person operation (OPO). Passenger and driver behavior at bus stops also has the potential for improvement. Problems were observed at barriered, single lane bus stops with the bus at the head ofthe queue holding up the buses behind Since buses do not stop exactly at the bus stops, proper passenger queues do not form and as a result boarding at busy stops is somewhat disorganized. The introduction ofOPO will require passengers to board at the front door and this will encourage queuing and will require drivers to better observe the stops. The schedule adherence is also reported to be poor. An operational review will examine scheduling ofbuses and the dispatching and monitoring ofbuses in service. The current practice of allocating spare buses on a route-by- route basis is inefficient and an operational review would help the operators switch their operations to pool spare buses and become more depot or district based rather than route based. The reform proposals may also affect day to day operations. The full implications ofreform would be considered in an operational review.

17. Labor reform. It is envisioned that WPTGC will carry out the labor and wage reform in the sub-companies and branch operating companies. While details ofthe staffing reform are still being finalized, As a guiding principle it has been established that 0 Appropriate assistance will be provided to employees made redundant, such as early retirement, retraining, or assistance to start their own businesses. 0 Wage reform will focus on incentive policies that would link wage increases to increases in employee productivity and efficiency.

The Bank’s assistance toward the Wuhan PT reform

18. The Bank’s role thus far has been to serve as a knowledge bank, providing input to the Wuhan team (when asked) on issues related to:

- 107- (i) developing a more comprehensive understanding ofthe current issues (ii) developing clear objectives for reform and understanding local constraints to change (iii) providing an overview of the broader experience with public transport reform in China and elsewhere (iv) developing a phased approach to reform.

19. It is currently envisioned that during Project implementation, the Bank will continue to have further dialogue with Wuhan PT reform team on all aspects ofthe Wuhan PT reform. In addition, it is envisaged that the Bank project could finance: Specific TA on competitive bidding ofroutes, types ofcontract and on the job training of WTC staff managing the bidding process On-the-job training for other aspects ofWTC responsibilities (overall planning, service monitoring etc) Advice and on-the-job training to WTC on fare setting, different types offares and fare media, revenue sharing Advice and on-the-job training to the operating companies on network development, patronage and revenue forecasting, cost forecasting and general business planning Advice on setting reasonable profit levels with associated fare determination mechanisms to help operating companies achieve these profit levels Advice on developing five-year financial plans for the companies Consultant services to study Wuhan PT planning and improvements to the PT bus route network Consultant services on Bus Rapid Transit Network development, design and implementation

- 108- Additional Annex 14: [Development of Wuhan Transport Strategy] CHINA: Wuhan Urban Transport Project

Introduction

A key element in the preparation ofthe Project has been the formulation ofthe Wuhan Urban Transport Strategy. The strategy is important equally in terms of the inclusive process that is generating it, and the introduction offinancial constraints, as is the analytical framework it is producing. The process involved many WMG agencies working together to create within the overall vision for the development ofthe city, a coordinated and integrated strategy for the development ofthe transport system under a number of development scenarios and identified funding constraints.

Following the initial discussions with the Bank regarding the content of the overall project, WMG constituted a number of Working Groups with high level representation. The Working Groups jointly identified a series ofoverall goals for the transport sector. These goals were defined in response to the key sector issues that had been identified. A comprehensive transport study was then carried out by the Wuhan Comprehensive Transport Planning and Design Institute (WCCTPDI), with technical assistance from domestic and international consultants.

This process helped to fill the planning vacuum that previously existed. Although the city had an approved Master Plan for 2020, there was little indication of the phasing or priority ofindividual components. Infrastructure investments were being implemented on an ad-hoc basis with little coordination, and no consideration for the overall vision for city development, or availability of finance.

Vision The transport strategy was formulated within this vision for Wuhan city, which can be characterized as:

0 A city to reinforce its position as an important industrial and trade center, as well as a transport and communication hub in the country 0 A "people-oriented" transport system providing high quality transport system and living environment to both residents and visitors

Goals The specific transport development goals established by WMG may be summarized as:

0 To provide convenient, speedy and comfortable public transport services 0 To encourage the use ofpublic transport 0 To minimize the adverse effects of external and through traffic 0 To strengthen the linkages between the various districts in the city 0 To develop the individual areas in the city with balanced land uses and adequate local street system 0 To improve the efficiency ofthe transport system through traffic and demand management techniques

- 109- Key Transport Sector Issues

The key issues identified by WMG may be summarized as follows:

. cross-river trafic has increased significantly in recent years: the original bridges are over-loaded and demand is unevenly spread on the newer crossings. Cross-river travel is a major concem in Wuhan as it affects the integration ofthe three towns within the city.

* central area trafic congestion is increasing rapidly as major inner area developments are taking place, in particular in the central areas of Hankou. The traffic in the area, in particular at intersections, has become very congested.

external trafic is a perennial transport issue in Wuhan as it is a major transport hub in central China. Several major national highways pass through the study area and two major intercity rail lines intersect in Wuhan.

9 the road network is inadequate to support the growth ofvehicle traffic and urban development in the outlying areas. The functional road hierarchy ofthe network is incomplete and ill-defined, resulting in most traffic being confined onto a limited number of major arterials: some key links in the network are missing.

public transport services are currently fairly good overall (compared with other cities in China): however, the route network is not well structured or responsive to changing demands. A substantial growth in patronage, targeted in the coming years, will need a significant expansion in the services.

The Planning Process

At the outset, WMG produced a long list ofpotential schemes (the initial list consisted largely ofroad infrastructure schemes) for inclusion in the Bank project or for implementation using local funding in the same period. This list represented the priorities ofthe government, in accordance with the established Master Plan.

It was determined that the total cost ofthe WMG proposals significantly exceeded the likely available funding at least over the initial five years to 2007. Whilst all the schemes conformed to the adopted and approved Master Plan, there was little or no indication as to the relative needs or merits of each individual scheme to resolve the identified issues.

A detailed analysis of WMG financial resources and commitments was undertaken and a realistic assessment made ofthe capacity of the city to take on additional projects in the transport sector over and above those proposed for WB funding. (The summary is presented in Annex 5). It was evident from this analysis that the World Bank loan would constitute the major funding source for the transport sector over the next five years. Local funding would be restricted to expenditure on minor schemes and the completion ofcurrent major commitments (4th Yangtse Bridge and the extension ofLRT Line 1).

An objective ofthe strategy analysis was thus to prioritize the schemes identified and to select those schemes which most closely responded to the key issues and problems. WMG, in conjunction with the Bank, reviewed and screened each ofthe proposed projects in terms of traffic demand; resettlement; environmental impact; conformity to the overall plan and strategy; and overall value for money. A shorter

- 110- core list of schemes for possible Bank funding was thus defined. These were then subjected to more rigorous alternatives analysis and evaluation using the traffic model. Two alternative strategies were developed. One focused on improvements to the highway network, the other on the public transport system. The conclusions drawn from the model analysis were that:

0 road network improvement, focusing on strengthening the road hierarchy will be crucial to relieve traffic congestion as well as to improve the efficiency ofbus operation. 0 bus priority schemes, in the near future, would be a more cost effective means to improve the transit system than building the rail system. 0 an additional cross-river link in the core area (Qing Dao Lu Tunnel) is essential to relieve the traffic on the No. 1 and No. 2 Yantze Bridges. 0 traffic condition in the central area of Hankou will deteriorate greatly in the near future due to the expected growth in that area and the lack ofwell functioning local streets. 0 the transport strategy, in the near term (up to 2007), should focus on perfecting the road network hierarchy and enhancing system efficiency through bus priority and traffic management measures. 0 the core list ofschemes in the World Bank project package would support the achievement of the road network development goal in 2007 given the transport investment constraint. There is strong traffic demand for the World Bank projects, except for southern part of the Middle Ring Road, which may need further study.

Strategy for 2007 In addition to the road investments, traffic management and bus priority schemes in the World Bank project, the 2007 Strategy resulting from the analysis includes the No. 4 Yantze Bridge and the 2nd phase ofthe No. 1 Rail Line (which are considered as committed projects) and the following govemment funded schemes:

0 A north-south minor arterial in the old airport to relieve traffic on parallel arterials 0 Extension (upgrade) of QinYuan Lu from Wuqing Gan Dao to Heping Lu (Le., to extend the Qin YuanLu WB project) 0 A missing link segment on Ziyang Dong Lu (from Zhong Shan Lu to Saihu Lu, in Wuchang) to primarily serve local traffic, bicycles and pedestrians.

Due to financial constraints, the Qing Dao Lu Tunnel, the additional river-crossing link in the center city area, was not considered in the 2007 preferred development scheme. However, the analysis indicates that the tunnel is crucial and should be built once the necessary construction funding is secured.

Strategy for 2012 Based on the analysis, the mid-term transport strategy should focus on the following:

0 Construction of the Qing Dao Lu Tunnel 0 Minor and local streets in central area to relieve the traffic burden on major arterials. 0 Local streets in the new development areas. 0 Implementation ofthe first phase ofthe Metro Line No. 2 line to relieve traffic on the radial corridor in Hankou area.

- 111 - Long Term Strategy In the long term, the study suggested that the transport development strategy should cover the following: 0 Implementation of additional cross-river links to deal with the increasing congestion on the No. 1, No. 2 and No. 3 Yantze Bridges, and the Qing Dao Lu Tunnel. 0 Completion of the roadway network with a balanced functional hierarchy, in particular the enhancement ofthe local streets system in the center city area and new development area 0 Implementation of high capacity transit system (BRT, LRT or subway) progressively on major transit corridors to relieve the traffic congestion on arterials, and to improve the mobility of people from and to new development areas.

Next Steps

The formulation ofthe Strategy has led to the development of a continuous planning process that is inclusive (of different interests and agencies) as well as responsive (not rigid but flexible in response to changing circumstances). This process helps WMG in assessing the value ofany transport policy or investment, and not just those included in the Bank project.

In parallel with the major investments identified over the next five years, WMG has hired a team of local and intemational consultants to prepare a long-term transport strategy for the entire municipal area covering all modes.

The city is also to improve the overall efficiency and effectiveness ofthe transport system through capacity building ofrelevant agencies, further refinement ofthe strategy, and greater use of planning and management techniques. Within the project, the Bank is to provide technical assistance to assist WMG with these improvements, and specifically to support the following activities:

1. Drafting ofa transport development white paper which outlines transport development policies and provides the guideline for transport development within the built up area.

2. Drafting and updating annually offive-year transport strategy documents covering investments and policies.

3. Strengthening ofthe transport planning function in the city, through: i. institutional strengthening ofrelevant planning agencies ii. enhancing the technical capability ofthe planning agencies iii. strengthening the working relationship with the planning institute - the agency responsible for developing the Master Plan

4. Conducting more detailed studies to address various specific issues, including: i. cross-river travel demand ii. transit system development strategy iii. center city traffic demand management

5. Enhancement ofthe Transport Strategy, through: i. refinement ofthe mid and long-term transport strategies ii. development ofroad network functional hierarchy iii. greater integration of land use and transport development

- 112- MAP SECTION