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World Bank Document Document of The World Bank Public Disclosure Authorized Report No: 23909-CHA PROJECT APPRAISAL DOCUMENT Public Disclosure Authorized ONA PROPOSED LOAN IN THE AMOUNT OF US$250 MILLION TO THE PEOPLE'S REPUBLIC OF CH1NA FOR HUBEI XIAOGAN-XIANGFAN HIGHWAY PROJECT Public Disclosure Authorized August 19, 2002 Transport Sector Unit East Asia and Pacific Region Public Disclosure Authorized CURRENCY EQUIVALENTS (Exchange Rate Effective April 2002) Currency Unit = RMB RMB 1.00 = US$0.12 US$1.00 = RMB 8.28 FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS AAS Accident Analysis System NTHS National Trunk Highway System BMS Bridge Management System OED Operations Evaluation Depatnent BOT Build-Operate-Transfer PAP Project Affected Persons CAS Country Assistance Stragety PCD Provincial Communication Department CFAA Country Financial Accountability Assessment PIP Project Implementation Plan CNAO China National Audit Office PLG Project Leading Group EA Environmental Assessment PMO Project Management Office EIA Environmental Impact Assesment PMR Project Management Report EIRR Economic Internal Rate of Retun PPCA Project Procurement Capacity Assessment EMP Environmental Management Plan PRA Participation Rural Assessment ES Executive Summary PRC People's Republic of China FIRR Financial Internal Rate of Return QCBS Quality- and Cost-Based Selection FYP Five Year Plan RAP Resettlement Action Plan GPN General Procurement Notice RRIP Rural Road Improvement Program GOC Government of China RTC Road Training Center HHAB Hubei Highway Administration Bureau SA Social Assessment HPAB Hubei Provincial Audit Bureau SA Special Account HPCD Hubei Provincial Communications Department SDPC State Development and Planning Commission HPFB Hubei Provincial Finance Bureau SOE State-Owned Enterprise ICB International Competitive Bidding SPN Specific Procurement Notice MBD Model Bidding Document TOR Terms of Reference MOC Ministry of Communications VOC Vehicle Operating Cost MOF Ministry of Finance WBFO World Bank Financed Project Office NCB National Competitive Bidding XXE Xiaogan - Xiangfan Expressway NH3 Third National Highway Project XXEC Hubei Provincial Xiao Xiang Expressway NH4 Fourth National Highway Project Company Limited NMDP National Minority Development Plan XXEH Hubei Provincial Xiao Xiang Expressway NPV Net Present Value Construction Headquarters Vice President: Jemal-ud-din Kassurn, EAPVP Country Manager/Director: Yukon Huang, EACCF Sector Manager/Director: Jitendra N. Bajpai, EASTR Task Team Leader/Task Manager: Michel Bellier, EASTR CHINA HUBEI XIAOGAN-XIANGFAN HIGHWAY 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 8 C. Project Description Summary 1. Project components 9 2. Key policy and institutional reforms supported by the project 11 3. Benefits and target population 12 4. Institutional and implementation arrangements 12 D. Project Rationale 1. Project alternatives considered and reasons for rejection 14 2. Major related projects financed by the Bank and other development agencies 16 3. Lessons learned and reflected in the project design 17 4. Indications of borrower commitment and ownership 18 5. Value added of Bank support in this project 19 E. Summary Project Analysis 1. Economic 19 2. Financial 20 3. Technical 20 4. Institutional 21 5. Environmental 22 6. Social 25 7. Safeguard Policies 27 F. Sustainability and Risks 1. Sustainability 27 2. Critical risks 28 3. Possible controversial aspects 29 G. Main Loan Conditions 1. Effectiveness Condition 29 2. Other 29 H. Readiness for Implementation 32 I. Compliance with Bank Policies 32 Annexes Annex 1: Project Design Surnmary 33 Annex 2: Detailed Project Description 38 Annex 3: Estimated Project Costs 52 Annex 4: Cost Benefit Analysis Summary 53 Annex 5: Financial Summary 65 Annex 6: Procurement and Disbursement Arrangements 76 Annex 7: Project Processing Schedule 85 Annex 8: Documents in the Project File 86 Annex 9: Statement of Loans and Credits 87 Annex 10: Country at a Glance 91 Annex 11: Environmental Assessment and Action Plan Summary 93 Annex 12: Resettlement Action Plan Summary 103 Annex 13: Financial Management Assessment 109 Annex 14: Summary of Social Assessment of Rural Roads 117 MAP(S) IBRD 31822 MBRD 31823 CHINA Hubei Xiaogan-Xiangfan Highway Project Project Appraisal Document East Asia and Pacific Region EASTR Date: August 19, 2002 Team Leader: Michel Bellier Sector Manager/Director: Jitendra N. Bajpai Sector(s): Sub-national government admninistration (20%), Country Manager/Director: Yukon Huang Roads & highways (80%) Project ID: P070441 Theme(s): Other public sector governance (P), Regional Lending Instrument: Specific Investmnent Loan (SIL) integration (P), Rural services and infrastructure (P) Project'Financing. Data [X] Loan 1 Credit [ ] Grant [ Guarantee [ ] Other: For Loans/Credits/Others: Loan Currency: United States Dollar Amount (US$m): $250 Borrower Rationale for Choice of Loan Terms Available on File: 1 Yes Proposed Terms (IBRD): Variable-Spread Currency Loan (VSL) Front end fee (FEF) on Bank loan: 1.00% Financing Plan (US$m): Source Local Foreign Total BORROWER 440.88 0.00 440.88 1BRD 0.00 250.00 250.00 Total: 440.88 250.00 690.88 Borrower: PEOPLE'S REPUBLIC OF CHINA Responsible agency: HUBEI PROVINCIAL COMMUNICATIONS DEPARTMENT (HPCD) Address: No. 428, JianShe Ave. Hankou, Wuhan, Hubei, 430030 China Contact Person: ir.Ren Binian, Director Tel: (027) 8383-2933 Fax: (027) 8386-9260 Email: Estimated Disbursements ( Bank FYf/US$m): ; FY 2003 2004 2005 2006 2007 Annual 38.00 52.00 l 60.00 80.00 20.00 Cumulative 38.00 90.00 | 150.00 230.00 250.00 ProJect implementation period: July 2002 to June 20 07 . Expected effectiveness date: 12/31/2002 Expected closing date: 12/31/2007 osPAF- R. M.1,2U= A. Project Development Objective 1. Project development objective: (see Annex 1) The Hubei Xiaogan-Xiangfan Highway Project aims to provide a more effective, safe and efficiently managed transport infrastructure to sustain and support socio-economic development, trade, and regional integration in Hubei province and improve transport links to lagging western region. The project, when completed, will offer the following socio-economic benefits to Hubei province and other areas influenced by the project: * increased transportation capacity and the consequent decrease in traffic congestion in the Xiaogan - Xiangfan corridor and regional and economic integration with the less developed western areas of Hubei province through the construction of Xiaogan - Xiangfan Expressway; * improved accessibility in low income areas in Hubei province through a program of rehabilitation and upgrading of rural roads in poor counties; and * improved management and maintenance of roads and better road safety conditions through the provision of training, technical assistance and equipment to Hubei Provincial Communication Department (HPCD) and related provincial road agencies. 2. Key performance indicators: (see Annex 1) The principal outputs and impact indicators selected for monitoring progress towards the above development objectives are as follows: Output Indicators Reduction of traffic congestion and travel time and Average daily traffic and accident rate on new lower accident rates in Xiaogan - Xiangfan corridor. expressway and existing roads. Improved accessibility in the low-income areas served Average daily traffic on upgraded roads. by the Rural Road Irnprovement Program in Poor Number of days the roads are closed to traffic. Counties. Benefits to population in served areas (incorne, enrollment in high schools). Strengthened role of HPCD and its related agencies Number of staff trained. and improved efficiency of highway management. Percentage of pavement maintenance works procured by contract with independent companies. Test of performance-based maintenance of road pavement. Improved traffic safety. Number of treated black spots. -2- B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex 1) Document number: 16321-CHA dated 1997/02/25 and Progress Report (R-98-107 dated 05/06/98) Date of latest CAS discussion: 05/28/98 A new CAS, under preparation, is to be presented to the Board in November 2002. The objectives of the strategy proposed by the Bank are to: * improve the investment climate; * accelerate the transition to a market economy; * address the needs of disadvantaged groups and underdeveloped regions; and * facilitate a more sustainable development process. Within the transportation sector, the key areas of this agenda to be supported by the Bank include: * financing economic infrastructure through projects in key traffic corridors, aimed at (i) the development of western provinces, and (ii) the reduction of interregional and intraregional disparities; * financing infrastructure to serve the poorer communities, thereby improving productivity in rural areas; and * facilitating the development of institutions necessary to manage the infrastructure network in an emerging market economy. Accordingly, the sector specific goals supported by the Hubei Xiaogan-Xiangfan Highway project are as follows: * promoting economic growth, improving regional and market integration, and facilitating trade; * reducing poverty in low income western
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