Anhui Hefei Urban Environment Improvement Project

Major Change in Scope and Implementation Arrangements

Project Number: 36595 Loan Number: 2328-PRC May 2009

People's Republic of China: Anhui Hefei Urban Environment Improvement Project

CURRENCY EQUIVALENTS (as of 12 May 2009)

Currency Unit - yuan (CNY) CNY1.00 = $0.1466 $1.00 = CNY6.8230

ABBREVIATIONS

ADB – Asian Development Bank EA – executing agency HMG – Hefei municipal government HUCIC – Hefei Urban Construction Investment Company HXSAOC – Hefei Xincheng State Assets Operating Company Limited IA – implementing agency km – kilometer m3 – cubic meter PMO – project management office WWTP – wastewater treatment plant

NOTE

In this report, "$" refers to US dollars

Vice-President C. Lawrence Greenwood, Jr., Operations Group 2 Director General K. Gerhaeusser, East Asia Department (EARD) Director A. Leung, Urban and Social Sectors Division, EARD

Team leader R. Mamatkulov, Urban Development Specialist, EARD Team member C. Navarro, Project Officer (Portfolio Management), EARD

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

CONTENTS

Page MAPS I. INTRODUCTION 1 II. BACKGROUND 1 A. Scope of the Project 2 B. Original Cost Estimates and Financing Plan 3 C. Status of Project Implementation 4 III. THE PROPOSED CHANGES 5 A. Change in Project Scope 5 B. Change in Implementation Arrangements 6 C. Reallocation of Loan Proceeds 6 IV. ASSESSMENT 6 V. RECOMMENDATION 7

APPENDIXES 1. Original Design and Monitoring Framework 8 2. Summary Cost Estimates and Financing Plan 12 3. Status of Contract Awards and Disbursements 15 4. Revised Design and Monitoring Framework 17 5. Updated Project Cost Estimates 21 6. Proposed Reallocation of Loan Proceeds 24 7. Allocation and Withdrawal of Loan Proceeds 26 Map 1

o 116o 00'E 119 00'E

ANHUI HEFEI URBAN ENVIRONMENT IMPROVEMENT PROJECT IN THE PEOPLE'S REPUBLIC OF CHINA

S H A N D O N G

Provincial Capital City/Town Main Road Secondary Road Railway River Provincial Boundary 34 o 00'N 34 o 00'N Huaibei Boundaries are not necessarily authoritative.

Suzhou

H E N A N J I A N G S U

Bengbu Fuyang

Huainan

Dingyuan

A N H U I

HEFEI

Feixi Maanshan Lu'an Chao Xian

Shucheng Chao Lake Wuhu

Lujiang .) tze R Xuancheng Tongcheng (Yang Yuexi g Tongling gjian Chan Ningguo Qianshan H U B E I Anqing Taihu

Wangjiang o 30 o 00'N 30 00'N Qimen Z H E J I A N G Huangshan

N J I A N G X I

0 20 40 60 80

Kilometers

116o 00'E 119o 00'E

09-0987a HR ANHUI HEFEI URBAN ENVIRONMENT IMPROVEMENT PROJECT IN THE PEOPLE'S REPUBLIC OF CHINA

Subcomponent 2.3 Sili River Rehabilitation and CHANGFENG Flood Control Improvement Dafangyin Reservoir

LUYANG Dongpu Reservoir Subcomponent 2.2 Banqiao River Rehabilitation S i l i YAOHAI and Flood Control Improve-

R . ment

E r sh ib u Subcomponent 1.4 R Improvement of closed . Subcomponent 2.1 N Qinxi Road Landfill Site an Ershibu River Rehabilitation fe and Flood Control Improve- SHUSHAN i R . ment

Subcomponent 1.2 Construction of Wangtang Wastewater Treatment Subcomponent 2.4 Plant Phase 2 + Associated Improvement of Chao Lake Sewers BAOHE Flood Control Works FEIXI

Subcomponent 1.3 Shiwuli R. FAIDONG Improvement of Municipal Sewers throughout Hefei City (indicative only)

Wastewater Treatment Plant River District Boundary N County Boundary Subcomponent 1.1 Boundaries are not necessarily authoritative. Contruction of Shiwuli River

0 0 100 200 300 Wastewater Treatment Plant 9 M

- Chao Lake 0 9 a 8

7 Meters p b

H 2 R

I. INTRODUCTION

1. On 24 April 2007, the Asian Development Bank (ADB) approved the loan for the Anhui Hefei Urban Environment Improvement Project1 from its ordinary capital resources for $150.0 million. The loan and project agreements were signed on 28 August 2007 and became effective on 8 January 2008. The expected loan closing date is 31 March 2013.

2. The total project cost is $372.36 million, of which $150 million is to be financed by ADB, with the remaining $222.36 million to be financed by the People's Republic of China (PRC) through a combination of Hefei municipal government (HMG) and district government budget sources ($82.94 million and $71.4 million, respectively), domestic loans from PRC banks ($55.7 million), and enterprise bonds ($12.32 million).

3. This Board paper describes the change in scope and implementation arrangements arising from the cancellation of the Xinzhan Zone road infrastructure and traffic management component of the Project (component 3). The component sought to improve road infrastructure and traffic management in the Xinzhan Zone and would require permanent acquisition of approximately 344 hectares of land (69% of which is cultivated). The component cannot be implemented as planned because of restrictions placed on the use of agricultural land for infrastructure by the Government. In view of this, HMG, the project executing agency (EA), has proposed canceling this component and reallocating the allocated loan proceeds to component 1 (wastewater and waste management) and component 2 (river rehabilitation and flood control improvement), and increasing the percentage of ADB financing of a subcomponent in component 2.

4. The cancellation as proposed by HMG will change the overall purpose of the Project in terms of the benefits that would result from improvement of transport services. The change qualifies as a major change in scope under para. 6 of Project Administration Instructions 5.04.2

II. BACKGROUND

5. The Project is a key environmental improvement and management initiative undertaken by HMG to meet national environmental guidelines and ensure Hefei’s sustainable growth. As designed, the Project aims to bring tangible benefits to the environment of Hefei, the capital of Anhui province, by (i) enhancing the quality of its water resources; (ii) strengthening wastewater treatment facilities and sewer networks; (iii) reducing the incidence and damage of flooding in three rivers and Chao Lake; and (iv) improving urban air quality, and reducing road accidents and vehicular emissions through a more efficient city road network and integrated transport management operations in a model development zone. The Project provides institutional capacity-building in support of urban environmental management and policy reforms to ensure sustainability of the Project and related facilities.

6. The impact of the Project as designed is to improve the urban environment, public health, and quality of life in Hefei by (i) reducing waterborne and airborne diseases, road accidents, and vehicular emissions; and (ii) increasing employment, investment, and business

1 ADB. 2007. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the People's Republic of China for the Anhui Hefei Urban Environment Improvement Project. Manila 2 ADB. 2008. Project Administration Instructions. PAI No. 5.04: Change in Project Scope or Implementation Arrangements. Manila 2 opportunities. The outcome of the Project as designed will be improved public wastewater management, flood control, and transport services in Hefei by

(i) increasing the wastewater treatment rate from 50% to 80% by 2012; (ii) upgrading water quality from worse than class V to at least class V in Banqiao, Ershibu, and Sili rivers by 2012, with longer-term potential for upgrading to between class IV and class V by 2015 and eventually to class III; (iii) reducing the probability of floods in the Banqiao, Ershibu, and Sili rivers from an average of every 3–5 years to 50–100 years by 2011–2012; (iv) reducing the probability of floods in Chao Lake from an average of every 10–20 years to at least every 20 years, and reducing erosion of the lake bank and improving the ecological environment of the lake by 2012; and (v) creating a sustainable road transport system that is safe, economically viable, and environmentally friendly in the Xinzhan Zone by 2012, resulting in increased industrial development, more jobs, and better health and safety.

7. The design and monitoring framework contained in the report and recommendation to the President is in Appendix 1.

8. HMG is the EA for the Project. The project implementing agencies (IAs) are (i) Hefei Urban Construction Investment Company (HUCIC), (ii) Hefei Chao Lake Ecological and Environmental Improvement Construction and Administrative Bureau, and (iii) Hefei Xincheng State Assets Operating Co. Ltd. There are seven subcomponents under HUCIC being carried out through the following arrangements: (i) HUCIC manages the Qingxi Road Landfill Rehabilitation subcomponent; (ii) the Hefei Municipal Drainage Office manages three subcomponents (Ershibu River, Banqiao River, and Sili River flood control); and (iii) the Hefei Wastewater Treatment Administrative Department manages three subcomponents, (Shiwuli River wastewater treatment plant [WWTP], Wangtang WWTP phase II, and Hefei sewerage improvement). The Hefei Chao Lake Ecological and Environmental Improvement Construction and Administrative Bureau is directly in charge of the Chao Lake subcomponent. Hefei Xincheng State Assets Operating Co. Ltd. (HXSAOC) implements the Xinzhan Zone component. Institutional capacity building is being implemented through the project management office (PMO).

A. Scope of the Project

9. As designed, the Project has three components: (i) wastewater and waste management, (ii) river rehabilitation and flood control improvement, and (iii) improved road infrastructure and traffic management in the Xinzhan zone. These components comprise 10 infrastructure investment subcomponents, with institutional capacity building undertaken through the project management and operation component.

1. Wastewater and Waste Management

10. The component has four subcomponents, the first of which is the construction of the Shiwuli River WWTP, with a capacity of 50,000 cubic meters per day (m3/day) and a network of 73.7 kilometers (km). The second subcomponent is the construction of Wangtang phase II WWTP with a treatment capacity of 100,000 m3/day, a recycled water pump station with a capacity of 35,000 m3/day, and about 33.4 km of sewer network. The third subcomponent is the construction of sewers for four WWTPs throughout Hefei City, which will include installation of 3

206 km of sewer network of varying diameters and construction of one sewage pumping station. The fourth subcomponent is improvement to the closed Qingxi Road Landfill site, including installation of (i) a capping system and surface water drainage system to prevent rainwater infiltration; (ii) a leachate collection and piping system to Wangtang WWTP; (iii) a gas collection and gas flare-off system; (iv) a vertical subsurface membrane wall to prevent groundwater intrusion and leakage of leachate into the Nanfei River; and (v) extensive landscaping and planting of an urban park.

2. River Rehabilitation and Flood Control Improvement

11. The river rehabilitation and flood control improvement component in Hefei has four subcomponents. The first three subcomponents comprise rehabilitation and flood control improvement for the Banqiao, Ershibu, and Sili rivers. Work includes river dredging, widening and reinforcement of banks, sediment disposal from dredging, and construction of storm water discharge pipelines. Storm water pumping stations, sewer mains, and sewerage pump stations will also be constructed to enable transfer to WWTPs. Ancillary works include construction of access roads and bridges, and necessary landscaping. The fourth subcomponent involves improvements to Chao Lake flood control works to enhance the ecological environment, strengthen water and soil conservation, and increase flood control capacity. Work includes extension of up to 35.7 km of banks, construction of 20.7 km of erosion control structures, construction of a 56.3 km wave break forest belt, construction of wave breaks (walls), and road construction around the lake banks.

3. Improved Road Rehabilitation and Flood Control Improvement

12. The component on improved road infrastructure and traffic management in the Xinzhan Zone was intended to focus on improving road infrastructure and traffic management in the Xinzhan Zone, including by building nine roads (three main trunk roads and six secondary trunk roads). As designed, work was to include construction of 26.4 km of roads and complete ancillary works, including necessary storm water network associated with the construction; and completion and testing of a pilot traffic management, surveillance, and control system to ensure sustainable, integrated, and safe operation after project completion.

4. Institutional Capacity Building

13. The Project also provides for institutional capacity building for project management to ensure that the stakeholders are able to implement the Project effectively and to manage project facilities. Capacity building will include project management consulting services and training during loan implementation. This is intended to help the IAs (i) become operationally efficient and financially sustainable entities; (ii) comply with relevant national policies for cost recovery, tariff, and enterprise reforms of the wastewater sector; (iii) develop sound operation and maintenance plans for future service provision and commercial growth; (iv) develop a public awareness training program on environmental protection and social impact monitoring; and (v) improve the efficiency of traffic management in the Xinzhan zone.

B. Original Cost Estimates and Financing Plan

14. The total cost of the Project was estimated at $372.36 million, financed through (i) the ADB loan to finance 40.3% of the project cost (equivalent to $150 million) to cover civil works, equipment and supplies, project management consulting services, and training and financial 4 charges on the loan during construction; and (ii) the Government, which agreed to finance the remaining $222.36 million through a combination of HMG ($82.94 million) and district government budget sources ($71.4 million), domestic loans from PRC banks ($55.7 million), and enterprise bonds ($12.32 million). The original cost estimates and financing plan are in Appendix 2.

C. Status of Project Implementation

1. Wastewater and Waste Management

15. Shiwuli River WWTP has nine civil works and four equipment contracts, of which five civil works and three equipment contracts have been awarded. The following have been achieved: (i) about 82% of phase 1 and phase 2 civil works have been completed, (ii) 24.3 km of sewerage pipelines have been constructed and 6.9 km pipelines are under construction, and (iii) the civil works for Feilong Road Pump Station has already started. It is expected that the WWTP will be completed during the first half of 2009; the remaining sewage pipelines will be undertaken together with the city road construction.

16. Wangtang WWTP has seven civil works and six equipment contracts, of which three civil works and two equipment contracts have been awarded. About 72% of the WWTP civil works have been finished or are expected to be completed by mid-2009. The remaining eight contracts are expected to be awarded during the first half of 2009.

17. Improvement of Hefei municipal sewers has eight civil works, one geographic information system and one equipment contracts, of which four civil works contracts have been awarded. About 29.6 km of pipelines have been constructed and about 11 km of pipelines are currently under construction. Of the remaining four civil works contracts, two will be awarded in 2009.

18. Improvement of the closed Qingxi Road Landfill site has two civil works contracts and one miscellaneous equipment contract. Construction has been completed and the equipment contract has been awarded.

2. River Rehabilitation and Flood Control Improvement

19. Ershibu River rehabilitation and flood control improvement has six civil works and two equipment contracts. Contract awards for three civil works have been approved in December 2008. The remaining contracts are to be awarded in 2009 and completion of this component is expected in mid-2010.

20. Banqiao River rehabilitation and flood control improvement has six civil works and two equipment contracts. Three civil works and one equipment contracts have been awarded. Construction is ongoing for the three civil works contracts, with 7.8 km of sewage pipeline and 16% of the river channel dredging completed.

21. Sili River rehabilitation and flood control improvement has six civil works and three equipment contracts. Three civil works contracts have been awarded and the award of three more contracts was approved by ADB in December 2008. One civil works contract has been completed.

22. Chao Lake flood control has four civil works and one equipment contracts. Contracts for wave prevention and bank protection have been awarded and works will be completed by the second quarter of 2009.

3. Improved Road Rehabilitation and Flood Control Improvement

23. This component has not started because of problems associated with land acquisition (para. 3). The EA has proposed cancellation of this component.

4. Institutional Capacity Building

24. The Project provides institutional capacity-building measures in urban environmental management and policy reforms to ensure sustainability of the Project and related facilities. A project management consultant has been engaged to assist the EA in implementing institutional capacity building. The services are ongoing and the consultants have provided training to the PMO and IAs on procurement, construction and financial management, and operation of the WWTP, pumping station, and sewerage pipeline system.

25. Loan Covenants. Compliance with the covenants in the Loan Agreement is satisfactory.

26. Contract Awards and Disbursements. Project implementation is progressing well, with 49.8% of the loan amount contracted and 25.9% of the loan amount disbursed as of 23 April 2009. A total of 33 contracts have been awarded. The status of contract awards and disbursements by component is in Appendix 3.

III. THE PROPOSED CHANGES

A. Change in Project Scope

27. At the end of 2007, the EA, IA, and PMO reported to the loan inception mission that the Xinzhan Zone road infrastructure and traffic management component did not start as planned due to the delay in obtaining approval from the Government for agricultural land acquisition. According to PRC legislation, the use of agricultural land for construction requires approval of the State Council. As a result of the latest economic developments, including a shortfall in agricultural production due to reduced output from agricultural land and the economic recession, the Government has restricted allocation of agricultural land for infrastructure construction, making approval highly unlikely. To avoid project implementation delays, the EA proposed canceling this component and replacing it with a similar component commensurate with the current project component in terms of objectives, scope, and cost. The proposed replacement was submitted in April 2008 and reviewed by ADB for compliance with ADB safeguard policies. The review revealed that the proposal does not meet ADB safeguard requirements, and substantial time and resources would be required to complete the environment and social impact assessment. It was agreed that the proposal would be discussed in detail during the loan review mission in November 2008.

28. In November 2008, the ADB loan review mission was informed that the previously proposed replacement component would no longer be pursued because the IA was financially over-leveraged and therefore unable to provide counterpart funding during the first 2 years of proposed component implementation. Consequently, it was proposed that the road infrastructure and traffic management component be cancelled. 6

29. The component was intended to address traffic management and to help minimize air pollution generated from traffic volumes associated with urban development. The Xinzhan Zone was to be used as pilot area, with the approach expanded across Hefei and potentially to other cities in the PRC, if successful. With the proposed cancellation, the Project's anticipated impact will not be fully realized, in terms of benefits such as: (i) improved road networks and road conditions; (ii) increased mobility; (iii) reduced traffic congestion and vehicle operation costs; (iv) improved road safety and reduced traffic accidents; (v) reduced travel time; and (vi) better and quicker access to markets, employment, and income-generation opportunities. The revised design and monitoring framework is in Appendix 4.

B. Change in Implementation Arrangements

30. The responsibility of HXSAOC as IA would cease following cancellation of the Xinzhan Zone road infrastructure and traffic management component, necessitating changes in the loan and project agreements.

C. Reallocation of Loan Proceeds and Increase in ADB Financing of Subcomponent 2.1 (Ershibu River Rehabilitation and Flood Control Improvement)

31. The total project cost is currently estimated at $429.70 million, against the appraisal estimate of $372.36 million (Appendix 5). The increase in total project cost is due to the actual cost of contracts being higher than estimated during appraisal as a result of unusual increases in labor costs and construction materials in the recent years. The EA requested that the total savings of $36.3 million realized from (i) cancellation of $30.8 million from Component 3 (Xinzhan Zone Road), (ii) identified savings of $2.184 million from Qingxi Road Landfill, and (iii) $3.325 million from Sili River Rehabilitation be reallocated to the remaining subcomponents. The proposed reallocation of loan proceeds and the distribution of $36.3 million is presented in Appendix 6.

32. In order to maximize utilization of loan proceeds, the EA also proposed increasing the financing of subcomponent 2.1 (Ershibu River rehabilitation and flood control improvement) from 48% to 70%, to be in line with the financing percentage of other subcomponents. Schedule 3 of the Loan Agreement would be revised to reflect the increased ADB financing of Ershibu River Rehabilitation and Flood Control Improvement (category 1.5). The revised Schedule 3 of the Loan Agreement is in Appendix 7.

IV. ASSESSMENT

33. The change in project scope and implementation arrangements will not materially affect the overall impact of the Project, which is to improve the environment, public health, and quality of life in Hefei City. There are no incremental impacts on the environment and persons affected by involuntary resettlement and land acquisition. The financing plan of the Project as approved by the Board will not change; i.e., the ADB loan will remain at $150.0 million and the remaining cost is to be financed by the Government. The change in project management structure resulting from the cancellation of component 3 will not materially affect the implementation arrangements of the remaining Project components. The approval of the change in scope and implementation arrangements will facilitate project implementation and will address the expected cost overrun.

V. RECOMMENDATION

34. The Management recommends that the Board approve on a no-objection basis the major change in scope, change in implementation arrangements, and reallocation of loan proceeds arising from the cancellation of Xinzhan Zone road infrastructure and traffic management component of the Project.

8 Appendix 1

ORIGINAL DESIGN AND MONITORING FRAMEWORK

Design Performance Data Sources/Reporting Assumptions Summary Targets/Indicators Mechanisms and Risks Impact Assumptions Improved environment, Incidence of waterborne Monitoring reports of the • Timely implementation of public health, and quality and airborne diseases Hefei Environmental Hefei’s 11th Five-Year of life in Hefei City reduced by 10% from the Protection and Water Program and other medium- 2005 levels by 2015 Resources Conservancy to long-term development Bureau plans Water quality of the rivers in Hefei City to reach Health Bureau data on • Priorities for improving the between class IV and V by drinking water quality and environment of Hefei do not 2015 with a longer-term incidence of infectious change goal of class III diseases • Government support for Air quality improved in the Statistical yearbooks of the reform processes project area by 2015 with Hefei Statistics Bureau targets to be identified by • Continued support from the PPMS Monitoring reports of Hefei Hefei government to improve Communications Bureau water and air quality Increased investment and business opportunities Air quality indicators to be Risks with gross domestic collected as part of PPMS • Urban growth, including product rising annually by influx of migrants, in Hefei 15% from CNY85 billion in Annual socioeconomic exceeds forecasts and exerts 2005 surveys undertaken as part of more pressure on improved PPMS urban infrastructure

ADB post-project evaluation • Weak enforcement of report environmental laws and regulations Outcome Assumptions Improved public Wastewater treatment rate Wastewater effluent quality • Continued growth in demand wastewater management, is increased from the and quantity monitoring data for water supply and flood control, and current 50% to 80% by wastewater services to transport services in Hefei 2012 Flood control data, river flow, achieve full capacity City water quality data utilization Water quality of the Ershibu, Banqiao, and Sili Traffic monitoring data from • Government support for tariff rivers is improved to at Communication Bureau increase least class V by 2012, with longer-term goal of class Air pollution data • Customers are willing to pay IV and class III increased tariffs Government’s project The probability of flooding completion report • Environmental Protection incidence from the Sili, Bureau enforces Banqiao, and Ershibu ADB review missions environmental monitoring rivers is reduced from an standards average of 3–5 years to ADB project completion 50–100 years by 2012 report

The probability of flooding incidence in Chao Lake is reduced from an average of 10–20 years to at least every 20 years, and the ecological environment of the Lake is improved through reduction in soil erosion by 2012 Appendix 1 9

Design Performance Data Sources/Reporting Assumptions Summary Targets/Indicators Mechanisms and Risks Improved traffic flow by 30% from 2005 figures (8,600–12,000 vehicles per hour) by 2012

Reduced traffic accidents by 20% from 2005 figure (1,399 accidents per year) by 2012

Vehicle emission testing center near Xinzhan is operational in the project area by 2010 Outputs Assumptions Component 1 • Effective stakeholder Wastewater and waste Wastewater collected and Wastewater system data (rate participation and ownership management in Hefei City treated at the 50,000 of capacity utilization, influent developed m3/day Shiwuli River and effluent flow volumes). 1.1 Shiwuli River WWTP WWTP by 2012 Water supply data, (rate of • Strong support from the is operational utilization and flow volumes) Anhui and Hefei governments 1.2. Wangtang WWTP Wastewater collection River flow records of Hefei phase II and associated increased and treatment Hydrological and Water • EA supports capacity sewers are operational upgraded at the 100,000 Resources Management building of IAs 3 m /day Wangtang II Bureau WWTP by 2012 • Timely approval of land Site inspection and project acquisition at the national 1.3 Municipal sewers Increased wastewater implementation reports. level and implementation of throughout Hefei City are collection in the 206 km resettlement activities improved sewer pipelines to be Water quality monitoring connected to the existing program data Risks Wangxiaoying WWTP, • Resistance by some Wangtang I WWTP, ADB review missions stakeholders on resettlement Zhuzhuanjing WWTP, and and tariff increases Caitianpu WWTP by 2012 Monitoring wells around Qingxi Road Landfill and • Local geological conditions 1.4 The closed Qingxi Membrane wall to prevent Nanfei River affect construction activities Road Landfill site is leaks into the Nanfei River improved constructed, with a cap, Environment monitoring • Trained staff leave their leachate, and gas reports position before 1 year after collection systems, as well operation startup as landscaping, by 2009 Updated resettlement plans

Component 2 Semiannual progress reports River rehabilitation and River widening and flood control improvement dredging, installation of Resettlement completion of Hefei pump stations, and bank reports strengthening, including 2.1 Ershibu River slope protection, diverting rehabilitation and flood wastewater to a WWTP, control is improved and constructing access roads with landscaping on the river banks completed by 2012

2.2 Banqiao River River widening and rehabilitation and flood dredging, and bank control is improved strengthening, including slope protection, diverting 10 Appendix 1

Design Performance Data Sources/Reporting Assumptions Summary Targets/Indicators Mechanisms and Risks wastewater to a WWTP, and constructing access roads with landscaping on the river banks completed by 2011

2.3 Sili River rehabilitation River widening and and flood control is dredging, and bank improved strengthening, including slope protection, diverting wastewater to a WWTP, constructing bridges and a pump station, and constructing access roads with landscaping on the river banks completed by 2010

2.4 Chao Lake flood Embankment control works are strengthening, improved constructing erosion control structures, planting a wave-break forest belt, and constructing wave- breaks (walls) and access roads with landscaping on the flood embankments completed by 2011

Component 3 Road infrastructure and Construction of 26.4 km traffic management in the urban roads: Xinfei, Xinzhan Zone Huainan, Huanyuan, Xinfeng, and Dianchang 3.1 Road infrastructure roads completed by 2012 and traffic management in the Xinzhan Zone is Pilot traffic system improved completed and tested for replication in Hefei City by 2012

Project management Efficiency of the HMG and capacity is improved PMO is improved and skills of IA staff is upgraded by 2012

Activities with Milestones Inputs 1.3 Improvement of Municipal Sewers Throughout Hefei City secure other consulting Activity (7) Install 206 km of sewers of varying diameters connecting to the existing services WWTPs of Wangtang I, Zhuzhuanjin, Caitianpu, and Wangxiaoying by 2012 − Contract tendering, select Activity (8) Construct one sewage pumping station and install a geographic information contractors according to system by 2012 new ADB procurement 1.4 Improvement of the Closed Qingxi Road Landfill Site guidelines for NCB and Activity (9) Construct 1.6 km membrane wall, cap, leachate and gas collection systems, ICB surface water drainage systems, and landscape the site by 2009 − Provide planning and resources for public Component 2: River Rehabilitation and Flood Control Improvement of Hefei disclosure and 2.1 Ershibu River Rehabilitation and Flood Control Improvement consultation activities Activity (10) Complete river dredging, widening, and reinforcement of banks by 2012 Activity (11) Construct 12 km of storm water discharge pipeline (400–1,200 mm) and two rainwater pump stations by 2012 Activity (12) Construct 16 km of sewer mains (300–800 mm) and two sewer pump stations by 2012 Activity (13) Construct necessary ancillary works by 2012 2.2 Banqiao River Rehabilitation and Flood Control Improvement Activity (14) Complete river dredging, bank widening, and reinforcement works by 2011 Activity (15) Construct necessary ancillary works such as roads along both banks by 2011 Activity (16) Install a wastewater interceptor network and necessary greening by 2011 2.3 Sili River Rehabilitation and Flood Control Improvement Activity (17) Widen and dredge 3.18 km of the river, including bank enhancement, by 2010 Activity (18) Install storm water discharge pipeline (400–1,800 mm diameter), sewer mains (300–800 mm), and one rainwater pump station by 2010 Activity (19) Construct necessary ancillary works by 2010 2.4 Improvement of Chao Lake Flood Control Works Activity (20) Reinforce 35.7 km of collapsed banks and construct an additional 20.65 km of soil erosion structures by 2011 Activity (21) Complete a wave-break forest belt with a length of 56.3 km by 2011 Activity (22) Construct wave-breaks (walls) and necessary road construction around the banks by 2011

Component 3: Road Infrastructure and Traffic Management in the Xinzhan Zone Activity (23) Construct 26.4 km of urban roads (Xinfei, Huannan, Huanyuan, Xinfeng, and Dianchang) by 2012 Activity (24) Complete ancillary works, including necessary storm water network associated with the construction by 2012 Activity (25) Complete and test a pilot traffic management system by 2012

Institutional Capacity Building for Project Management Activity (26) Complete organizational arrangements for the Hefei PMO to be able to implement the Project by 2007 Activity (27) Complete necessary organizational arrangements for IAs (hiring staff; setting up accounting systems; and improving financial, administrative, and human resource policies and procedures) by 2007 Activity (28) Develop plans, budgets, and procedures for loan implementation and project control in the PMO Activity (29) Complete HMG, PMO, and IA staff training by 2012 (training in ADB procedures, procurement, pollution control, flood control and prevention, solid waste treatment, environmental monitoring, and financial management) Activity (30) PMO and IAs have refined the PPMS and established targets and procedures no later than 6 months after loan effectiveness ADB = Asian Development Bank, EA = executing agency, ICB = international competitive bidding, HMG = Hefei municipal government, IA = implementing agency, km = kilometer, m3 = cubic meter, mm = millimeter, NCB = national competitive bidding, PMO = project management office, PPMS = project performance monitoring system, WWTP = wastewater treatment plant.

SUMMARY COST ESTIMATES AND FINANCING PLAN 12

Table A2.1: Summary Cost Estimates 2 Appendix CNY Million $ Million Equivalent Foreign Local Foreign Local Exchange Currency Exchange Currency Item Costs Costs Total Costs Costs Costs Total Costs A. Base Cost Civil Works 414.61 967.42 1,382.03 52.48 122.46 174.94 Capital Goods 117.98 0.00 117.98 14.93 0.00 14.93 Equipment, Vehicles, and Furniture 1.62 0.00 1.62 0.21 0.00 0.21 Land Acquisition and Resettlement 0.00 537.61 537.61 0.00 68.05 68.05

Environmental Protection 33.97 0.00 33.97 4.30 0.00 4.30 Environmental Monitoring 0.49 0.00 0.49 0.06 0.00 0.06 Taxes and Duties 39.70 151.05 190.76 5.03 19.12 24.15 Subtotal (A) 608.37 1,656.08 2,264.46 77.01 209.63 286.64 B. Implementation and Capacity Building Support Survey, Investigation, Design and Mapping 14.25 56.99 71.24 1.80 7.21 9.02 Institutional Development and Strengthening 1.00 0.00 1.00 0.13 0.00 0.13 Consulting Services and Training 9.60 2.40 12.00 1.22 0.30 1.52 Implementation Assistance 27.70 27.70 55.40 3.51 3.51 7.01 Subtotal (B) 52.55 87.09 139.64 6.66 11.02 17.68 Subtotal (A+B) 660.92 1,743.17 2,404.10 83.67 220.65 304.32 C. Other Costs Research and Development 0.20 0.00 0.20 0.03 0.00 0.03 Initial Working Capital 1.28 0.00 1.28 0.16 0.00 0.16 Subtotal (C) 1.48 0.00 1.48 0.19 0.00 0.19 Total Base Cost (A+B+C) 662.40 1,743.17 2,405.58 83.86 220.65 304.51 D. Contingencies Physical 49.95 127.98 177.93 6.32 16.20 22.52 Price 22.45 68.43 90.88 2.84 8.66 11.50 Subtotal (D) 72.40 196.41 268.81 9.16 24.86 34.02

CNY Million $ Million Equivalent Foreign Local Foreign Local Exchange Currency Exchange Currency Item Costs Costs Total Costs Costs Costs Total Costs E. Financing Charges During Implementation Financial Charges During Implementation-Interest During Construction 185.12 80.54 265.67 23.43 10.20 33.63 Financial Charges During Implementation-Other 1.62 0.00 1.62 0.21 0.00 0.21 Subtotal (E) 186.74 80.54 267.29 23.64 10.20 33.84 Total Project Cost 921.54 2,020.12 2,941.68 116.66 255.71 372.37 Source: Asian Development Bank estimates. Appendix 2 2 Appendix 13

Table A2.2: Summary Costs by Financier 14

Hefei ADB Local Enterprise District Municipal 2 Appendix Item Total Cost Loan Bank Loan Bond Government Government A. Base Cost

Construction Civil Works 174.94 109.91 15.22 8.11 14.76 26.94 Capital Goods 14.93 14.93 0.00 0.00 0.00 0.00 Equipment, Vehicles, and Furniture 0.21 0.00 0.00 0.00 0.00 0.21 Land Acquisition and Resettlement 68.05 0.00 13.61 1.63 34.95 17.86 Environmental Protection 4.30 0.00 1.48 0.12 0.05 2.65 Environmental Monitoring 0.06 0.00 0.01 0.00 0.01 0.04 Taxes and Duties 24.15 0.00 6.40 0.85 8.11 8.79 Subtotal (A) 286.64 124.84 36.72 10.71 57.88 56.48 B. Implementation and Capacity Building Support Survey, Investigation, Design and Mapping 9.02 0.00 0.00 0.00 2.28 6.74 Institutional Development and Strengthening 0.13 0.00 0.00 0.00 0.00 0.13 Consulting Services and Training 1.52 1.52 0.00 0.00 0.00 0.00 Implementation Assistance 7.01 0.00 0.00 0.00 0.78 6.24 Subtotal (B) 17.68 1.52 0.00 0.00 3.06 13.11 Subtotal (A+B) 304.32 126.36 36.72 10.71 60.94 69.59 C. Other Costs Research and Development 0.03 0.00 0.00 0.00 0.00 0.03 Initial Working Capital 0.16 0.00 0.13 0.00 0.00 0.03 Subtotal (C) 0.19 0.00 0.13 0.00 0.00 0.06 Total Base Cost (A+B+C) 304.51 126.36 36.85 10.71 60.94 69.65 D. Contingencies 34.03 0.00 8.65 1.61 10.47 13.30 E. Financing Charges During Implementation 33.83 23.64 10.20 0.00 0.00 0.00 Total Project Cost 372.37 150.00 55.70 12.32 71.41 82.95 Source: Asian Development Bank estimates.

STATUS OF CONTRACT AWARDS AND DISBURSEMENTS ($)

Undisbursed Undisbursed Cat. Uncontracted Contract Loan No. Category Description Allocation Contracts Loan Balance Disbursed Balance Balance Civil Works-Shiwuli River WWTP and 01a 10,379,000 14,210,725 (3,831,725) 5,179,925 5,199,075 9,030,801 Associated Sewers Civil Works-Wangtang II WWTP and 01b 11,515,000 5,196,595 6,318,405 3,136,487 8,378,513 2,060,108 Associated Sewers Civil Works-Expansion of Sewer 01c 9,461,000 5,061,675 4,399,325 647,664 8,813,336 4,414,011 Network for Four WWTPs Civil Works-Improve Qingxi Road 01d 5,077,000 2,156,985 2,920,015 1,706,142 3,370,858 450,842 Landfill Site Civil Works-Ershibu River 01e Rehabilitation and Flood Control 11,263,000 3,787,040 7,475,960 0 11,263,000 3,787,040 Improvement Civil Works-Banqiao River 01f Rehabilitation and Flood Control 8,926,000 9,933,344 (1,007,344) 3,395,973 5,530,027 6,537,371 Improvement Civil Works-Sili River Rehabilitation 01g 10,630,000 3,160,582 7,469,418 2,011,865 8,618,135 1,148,716 and Flood Control Improvement Civil Works-Chao Lake Bank 01h Rehabilitation and Flood Control 13,890,000 16,825,785 (2,935,785) 3,016,164 10,873,836 13,809,621 Improvement Civil Works-Xinzhan Zone Road 01i Infrastructure and Traffic 28,769,000 0 28,769,000 0 28,769,000 0 Management Appendix 3 3 Appendix 15

16 Undisbursed Undisbursed Cat. Uncontracted Contract Loan

No. Category Description Allocation Contracts Loan Balance Disbursed Balance 3 Appendix Balance Capital Goods-Shiwuli River WWTP 02a 3,471,000 4,536,971 (1,065,971) 3,198,819 272,181 1,338,153 and Associated Sewers

Capital Goods-Wangtang II WWTP 02b 5,774,000 7,108,933 (1,334,933) 0 5,774,000 7,108,933 and Associated Sewers Capital Goods-Expansion of Sewer 02c 316,000 0 316,000 0 316,000 0 Network for Four WWTPs Capital Goods-Ershibu River 02d Rehabilitation and Flood Control 2,693,000 0 2,693,000 0 2,693,000 0 Improvement Capital Goods-Banqiao River 02e Rehabilitation and Flood Control 152,000 0 152,000 0 152,000 0 Improvement Capital Goods-Sili River 02f Rehabilitation and Flood Control 190,000 424,677 (234,677) 0 190,000 424,677 Improvement Capital Goods-Chao Lake Bank 02g Rehabilitation and Flood Control 284,000 735,599 (451,599) 112,507 171,493 623,092 Improvement Capital Goods-Xinzhan Zone Road 02h Infrastructure and Traffic 2,053,000 0 2,053,000 0 2,053,000 0 Management Project Management and Consulting 03 1,519,000 1,519,000 0 503,348 1,015,652 1,015,652 Services 04 Interest and Commitment Charge 23,638,000 0 23,638,000 933,052 22,704,948 0 99 Imprest Account 0 0 0 15,000,000 (15,000,000) 5,000,000) Total 150,000,000 74,657,911 75,342,089 38,841,947 111,158,053 36,749,017 WWTP = wastewater treatment plant. Source: Loan Financial Information System, status as of 23 April 2009.

Appendix 4 17

REVISED DESIGN AND MONITORING FRAMEWORK

Design Performance Targets Data Sources and/or Assumptions Summary and/or Indicators Reporting Mechanisms and Risks Impact Assumptions Improved environment, Incidence of waterborne Monitoring reports of the • Timely implementation of public health, and quality and airborne diseases Hefei Environmental Hefei’s 11th Five-Year of life in Hefei City reduced by 10% from the Protection and Water Program and other medium- 2005 levels by 2015 Resources Conservancy to long-term development Bureau plans Water quality of the rivers in Hefei City to reach Health Bureau data on • Priorities for improving the between class IV and V by drinking water quality and environment of Hefei do not 2015, with a longer-term incidence of infectious change goal of class III diseases • Government support for Increased investment and Statistical yearbooks of the reform processes business opportunities Hefei Statistics Bureau with gross domestic • Continued support from the product rising annually by Annual socioeconomic Hefei government to improve 15% from CNY85 billion in surveys undertaken as part of water and air quality 2005 PPMS Risks ADB post-project evaluation • Urban growth in Hefei, report including influx of migrants, exceeds forecasts and exerts more pressure on improved urban infrastructure

• Weak enforcement of environmental laws and regulations Outcome Assumptions Improved public Wastewater treatment rate Wastewater effluent quality • Continued growth in demand wastewater management is increased from the and quantity monitoring data for water supply and and flood control in Hefei current 50% to 80% by wastewater services to City 2012 Flood control data, river flow, achieve full capacity water quality data utilization Water quality of the Ershibu, Banqiao, and Sili Government’s project • Government support for tariff rivers is improved to at completion report increase least class V by 2012, with a longer-term goal of class ADB review missions • Customers are willing to pay IV and class III increased tariffs ADB project completion The probability of flooding report • Environmental Protection incidence from the Sili, Bureau enforces Banqiao, and Ershibu environmental monitoring rivers is reduced from an standards average of 3–5 years to

50–100 years by 2012

The probability of flooding incidence in Chao Lake is reduced from an average of 10–20 years to at least every 20 years, and the ecological environment of the lake is improved through reduction in soil erosion by 2012

18 Appendix 4

Design Performance Targets Data Sources and/or Assumptions Summary and/or Indicators Reporting Mechanisms and Risks Outputs Assumptions Component 1 • Effective stakeholder Wastewater and waste Wastewater collected and Wastewater system data (rate participation and ownership management in Hefei City treated at the 50,000 of capacity utilization, influent developed m3/day Shiwuli River and effluent flow volumes); 1.1 Shiwuli River WWTP WWTP by 2012 water supply data (rate of • Strong support from the is operational utilization and flow volumes) Anhui and Hefei governments 1.2. Wangtang WWTP Wastewater collection River flow records of Hefei phase II and associated increased and treatment Hydrological and Water • EA supports capacity sewers are operational upgraded at the 100,000 Resources Management building of IAs 3 m /day Wangtang II Bureau WWTP by 2012 • Timely approval of land Site inspection and project acquisition at the national 1.3 Municipal sewers Increased wastewater implementation reports. level and implementation of throughout Hefei City are collection in the 206 km resettlement activities improved sewer pipelines to be Water quality monitoring connected to the existing program data Risks Wangxiaoying WWTP, Wangtang I WWTP, ADB review missions • Resistance by some Zhuzhuanjing WWTP, and stakeholders on resettlement Caitianpu WWTP by 2012 Monitoring wells around and tariff increases Qingxi Road Landfill and 1.4 The closed Qingxi Membrane wall to prevent Nanfei River • Local geological conditions Road Landfill site is leaks into the Nanfei River affect construction activities improved constructed, with a cap, Environment monitoring leachate, and gas reports • Trained staff leave their collection systems, as well positions before 1 year after as landscaping by 2009 Updated resettlement plans startup of operations

Component 2 Semiannual progress reports River rehabilitation and River widening and flood control improvement dredging; installation of Resettlement completion of Hefei pump stations; bank reports strengthening, including 2.1 Ershibu River slope protection; diversion rehabilitation and flood of wastewater to a control is improved WWTP; and construction of access roads with landscaping on the river banks completed by 2012

2.2 Banqiao River River widening and rehabilitation and flood dredging; bank control is improved strengthening, including slope protection; diversion of wastewater to a WWTP; and construction of access roads with landscaping on the river banks completed by 2011

2.3 Sili River rehabilitation River widening and and flood control is dredging; bank improved strengthening, including slope protection; diversion of wastewater to a WWTP; construction of bridges and a pump station; and construction

Appendix 4 19

Design Performance Targets Data Sources and/or Assumptions Summary and/or Indicators Reporting Mechanisms and Risks of access roads with landscaping on the river banks completed by 2010

2.4 Chao Lake flood Embankment control works are strengthening; improved construction of erosion control structures; planting of a wave-break forest belt; and construction of wave-breaks (walls) and access roads with landscaping on the flood embankments completed by 2011

Project management Efficiency of the HMG and capacity is improved PMO improved and skills of IA staff upgraded by 2012

Activities with Milestones Inputs Component 1: Wastewater and Waste Management in Hefei City ADB 1.1 Construction of Shiwuli River WWTP − $150 million Activity (1) Design the facilities, allocate land, procure equipment and vehicles, and − Undertake regular review recruit 38 permanent staff missions 3 Activity (2) Provide wastewater treatment capacity of 50,000 m /day by 2012 − Provide training in ADB Activity (3) Construct 68.63 km of sewer mains (300–1,600 mm) and one pumping procedures, including station in the river basin by 2012 procurement 1.2 Construction of Wangtang II WWTP and Associated Sewers Activity (4) Design the facilities, allocate land, procure equipment and vehicles, and HMG and IAs recruit permanent staff − About $200 million Activity (5) Provide wastewater treatment capacity of 100,000 m3/day by 2012 3 equivalent in counterpart Activity (6) Construct 33.43 km of sewer mains (1,000–1,400 mm), a 35,000 m /day funding recycled water pump station and three sewage pumping station by 2012 − Hire design institutes and 1.3 Improvement of Municipal Sewers Throughout Hefei City secure other consulting Activity (7) Install 206 km of sewers of varying diameters connecting to the existing services WWTPs of Wangtang I, Zhuzhuanjin, Caitianpu, and Wangxiaoying by 2012 − Contract tendering, select Activity (8) Construct one sewage pumping station and install a geographic information contractors according to system by 2012 new ADB procurement 1.4 Improvement of the Closed Qingxi Road Landfill Site guidelines for NCB and Activity (9) Construct a 1.6 km membrane wall, cap, leachate and gas collection ICB systems, surface water drainage systems, and landscape the site by 2009. − Provide planning and resources for public Component 2: River Rehabilitation and Flood Control Improvement of Hefei disclosure and 2.1 Ershibu River Rehabilitation and Flood Control Improvement consultation activities Activity (10) Complete river dredging, widening and reinforcement of banks by 2012 Activity (11) Construct 12 km of storm water discharge pipeline (400–1,200 mm) and two rainwater pump stations by 2012 Activity (12) Construct 16 km of sewer mains (300–800 mm) and two sewer pump stations by 2012 Activity (13) Construct necessary ancillary works by 2012 2.2 Banqiao River Rehabilitation and Flood Control Improvement Activity (14) Complete river dredging, bank widening, and reinforcement works by 2011 Activity (15) Construct necessary ancillary works such as roads along both banks by 2011 Activity (16) Install a wastewater interceptor network and necessary greening by 2011 2.3 Sili River Rehabilitation and Flood Control Improvement Activity (17) Widen and dredge 3.18 km of the river, including bank enhancement, by 2010

20 Appendix 4

Activities with Milestones Inputs Activity (18) Install storm water discharge pipeline (400–1,800 mm diameter), sewer mains (300–800 mm) and one rainwater pump station by 2010 Activity (19) Construct necessary ancillary works by 2010 2.4 Improvement of Chao Lake Flood Control Works Activity (20) Reinforce 35.7 km of collapsed banks and construct an additional 20.65 km of soil erosion structures by 2011 Activity (21) Complete a wave-break forest belt with a length of 56.3 km by 2011 Activity (22) Construct wave-breaks (walls) and necessary road construction around the banks by 2011

Institutional Capacity Building for Project Management Activity (23) Complete organizational arrangements for the Hefei PMO to be able to implement the Project by 2007 Activity (24) Complete necessary organizational arrangements for IAs (hiring staff; setting up accounting systems; and improving financial, administrative, and human resource policies and procedures) by 2007 Activity (25) Develop plans, budgets, and procedures for loan implementation and project control in the PMO Activity (26) Complete HMG, PMO, and IA staff training by 2012 (training in ADB procedures, procurement, pollution control, flood control and prevention, solid waste treatment, environmental monitoring, and financial management) Activity (27) PMO and the IAs have refined the PPMS and established targets and procedures no later than 6 months after loan effectiveness. ADB = Asian Development Bank, EA = executing agency, ICB = international competitive bidding, HMG = Hefei municipal government, IA = implementing agency, km = kilometer, m3 = cubic meter, mm = millimeter, NCB = national competitive bidding, PMO = project management office, PPMS = project performance monitoring system, WWTP = wastewater treatment plant.

UPDATED PROJECT COST ESTIMATES

Estimate at Appraisal Updated Estimate as of November 2008 $1 = CNY7.9 $1 = CNY6.83 Total Cost Total Cost Item CNY1,000 Equivalent $1,000 CNY1,000 Equivalent $1,000 A. Base Cost 2,405,569.80 304,502.60 2,558,296.70 354,915.10

1. Wastewater and Waste Management 550,713.40 69,710.80 641,961.20 87,616.10 a. Shiwuli River WWTP 155,221.10 19,648.30 199,758.70 29,247.30 Civil Works 109,436.20 13,852.70 148,030.00 21,673.50 Equipment and Materials 27,617.10 3,495.80 33,560.00 4,913.60 Land and Resettlement 6,922.80 876.30 6,922.80 1,013.60 Environmental Protection Monitoring 1,370.00 173.40 1,370.00 200.60 Taxes and Duties 9,875.00 1,250.10 9,875.90 1,446.00 b. Wangtang II WWTP and Associated Sewers 177,520.00 22,470.90 222,003.10 32,504.20 Civil Works 115,937.70 14,675.70 140,960.00 20,638.40 Equipment and Materials 46,049.20 5,829.00 65,510.00 9,591.50 Land and Resettlement 0 0 0 0 Environmental Protection Monitoring 1,370.00 173.40 1,370.00 200.60 Taxes and Duties 14,163.10 1,792.80 14,163.10 2,073.70 c. Municipal Sewers for Four WWTPs 132,509.50 16,773.40 166,585.60 18,014.80 Civil Works 123,810.10 15,672.20 110,480.00 16,175.70 Equipment and Materials 2,498.80 316.30 6,360.00 931.20 Land and Resettlement 302.30 38.30 302.30 44.30 Environmental Protection Monitoring 1,060.00 134.20 1,060.00 155.20 Taxes and Duties 4,838.30 612.40 48,383.30 708.40 5 Appendix d. Qingxi Road Landfill Site 85,462.80 10,818.20 53,613.80 7,849.80 Civil Works 61,529.00 7,788.50 28,780.00 4,213.80 Equipment and Materials 300.00 38.00 1,200.00 175.70 Land and Resettlement 11,596.30 1,467.90 11,596.30 1,697.80

Environmental Protection Monitoring 480.00 60.80 480.00 70.30 21 Taxes and Duties 11,557.50 1,463.00 11,557.50 1,692.20

22 Estimate at Appraisal Updated Estimate as of November 2008 $1 = CNY7.9 $1 = CNY6.83

Total Cost Total Cost 5 Appendix Item CNY1,000 Equivalent $1,000 CNY1,000 Equivalent $1,000 2. River Rehabilitation and Flood Control 1,044,239.00 132,182.10 1,107,341.30 162,128.90

a. Ershibu River 436,766.30 55,286.80 483,184.30 70,744.30 Civil Works 186,707.00 23,633.80 235,000.00 34,407.00 Equipment and Materials 21,275.00 2,693.00 19,400.00 2,840.40 Land and Resettlement 165,559.80 20,956.90 165,559.80 24,240.10 Environmental Protection Monitoring 15,376.00 1,946.30 15,376.00 2,251.20 Taxes and Duties 47,848.50 6,056.80 47,848.50 7,005.60 b. Banqiao River 210,281.60 26,618.00 285,086.60 41,740.40 Civil Works 112,545.00 14,246.20 182,050.00 26,654.50 Equipment and Materials 1,200.00 151.90 6,500.00 951.70 Land and Resettlement 62,728.90 7,940.40 62,728.90 9,184.30 Environmental Protection Monitoring 6,823.00 863.70 6,823.00 999.00 Taxes and Duties 26,984.70 3,415.80 26,984.70 3,950.90 c. Sili River 211,684.30 26,795.50 144,008.30 21,084.60 Civil Works 168,696.00 21,353.90 96,500.00 14,128.80 Equipment and Materials 1,850.00 234.20 6,370.00 932.70 Land and Resettlement 25,745.20 3,258.90 25,745.20 3,769.40 Environmental Protection Monitoring 1,500.00 189.90 1,500.00 219.60 Taxes and Duties 13,893.10 1,758.60 13,893.10 2,034.10 d. Chao Lake 185,506.80 23,481.80 195,062.10 28,559.60 Civil Works 159,483.70 20,187.80 166,600.00 24,392.40 Equipment and Materials 2,591.00 328.00 5,030.00 736.50 Land and Resettlement 12,604.80 1,595.50 12,604.80 1,845.50 Environmental Protection Monitoring 6,048.20 765.60 6,048.20 885.50 Taxes and Duties 4,779.10 604.90 4,779.10 699.70 3. Road Infrastructure and Traffic Management 669,505.00 84,747.40 669,505.00 84,747.40 a. Xinzhan Zone Road 669,505.00 84,747.40 669,505.00 84,747.40 Civil Works 343,889.50 43,530.30 343,889.50 43,530.30

Estimate at Appraisal Updated Estimate as of November 2008 $1 = CNY7.9 $1 = CNY6.83 Total Cost Total Cost Item CNY1,000 Equivalent $1,000 CNY1,000 Equivalent $1,000 Equipment and Materials 16,219.00 2,053.00 16,219.00 2,053.00 Land and Resettlement 252,147.20 31,917.40 252,147.20 31,917.40 Environmental Protection Monitoring 431.50 54.60 431.50 54.60 Taxes and Duties 56,817.80 7,192.10 56,817.80 7,192.10 B. Implementation and Capacity Building 139,636.40 17,675.50 138,011.20 20,206.60 Survey, Investigation, Design, and Mapping 71,239.90 9,017.70 71,239.90 10,430.40 Institutional Development and Strengthening 1,000.00 126.60 1,000.00 146.40 Consulting Services and Training 12,000.00 1,519.00 10,374.80 1,519.00 Implementation Assistance 55,396.50 7,012.20 55,396.50 8,110.80 C. Other Costs 1,476.00 186.80 1,478.00 216.10 Research and Development 200.00 25.30 200.00 29.30 Initial Working Capital 1,276.00 161.50 1,278.00 186.80 D. Contingencies 268,804.90 34,025.90 268,804.90 39,355.90 Physical 177,927.90 22,522.50 177,927.90 26,050.90 Price 90,877.00 11,503.40 90,877.00 13,305.00 E. Financial Charges 267,284.90 33,833.50 241,992.00 35,430.70 Interest Charges - Local Loans 80,543.00 10,195.30 80,543.00 11,792.50 Interest Charges - ADB Loan 185,122.10 23,433.20 160,048.60 23,433.20 Commitment Fees - ADB Loan 1,619.80 205.00 1,400.40 205.00 Total Cost 2,941,659.60 372,362.00 3,069,093.60 429,701.70 ADB = Asian Development Bank, WWTP = wastewater treatment plant. Source: Hefei municipal government.

5 Appendix

PROPOSED REALLOCATION OF LOAN PROCEEDS 24 ($)

Cancellation Distribution 6 Appendix Original Loan Allocation and Distribution of Savings Revised Loan Allocation Category Distribution of Savings from Qingxi Description/No. Civil Capital of Xinzhan from Sili Road Civil Capital Works Goods Total Road River Landfill Works Goods Total

Shiwuli River 10,379,000 3,471,000 13,850,000 6,851,000 15,943,000 4,758,000 20,701,000 WWTP (Cat. 01 & 02a)

Wangtang II 11,515,000 5,774,000 17,289,000 5,234,000 2,184,000 15,531,000 9,176,000 24,707,000 WWTP (Cat. 01b & 02b)

Sewer Network for 9,461,000 316,000 9,777,000 552,000 9,461,000 868,000 10,329,000 Four WWTPs (Cat. 01c & 02c)

Qingxi Road 5,077,000 5,077,000 (2,184,000) 2,893,000 2,893,000 Landfill Site (Cat. 01d)

Ershibu River 11,263,000 2,693,000 13,956,000 10,371,000 21,680,000 2,647,000 24,327,000 Rehabilitation and Flood Control Improvement (Cat. 01e & 02d)

Banqiao River 8,926,000 152,000 9,078,000 7,738,000 15,929,000 887,000 16,816,000 Rehabilitation and Flood Control Improvement (Cat. 01f & 02e)

Sili River 10,630,000 190,000 10,820,000 (3,325,000) 6,626,000 869,000 7,495,000 Rehabilitation and Flood Control Improvement (Cat. 01g & 02f)

Cancellation Distribution Original Loan Allocation and Distribution of Savings Revised Loan Allocation Category Distribution of Savings from Qingxi Description/No. Civil Capital of Xinzhan from Sili Road Civil Capital Works Goods Total Road River Landfill Works Goods Total Chao Lake Bank 13,890,000 284,000 14,174,000 76,000 3,325,000 16,839,000 736,000 17,575,000 Rehabilitation and Flood Control Improvement (Cat. 01h & 02g)

Xinzhan Zone 28,769,000 2,053,000 30,822,000 (30,822,000) Road Infrastructure and Traffic Management (Cat. 01i & 02h

Project 1,519,000 1,519,000 Management and Consulting Services (Cat. 03)

Interest and 23,638,000 23,638,000 Commitment Charge (Cat. 04)

Total 150,000,000 0 0 0 150,000,000 — = not available, WWTP = wastewater treatment plant. Sources: Hefei municipal government (as of November 2008) and Loan Financial Information System (as of 23 April 2009).

6 Appendix 25

26 Appendix 7

Attachment to Schedule 3

ALLOCATION AND WITHDRAWAL OF LOAN PROCEEDS (Anhui Hefei Urban Environment Improvement Project)

Category ADB Financing Basis Amount Allocated $ Percentage of Number Item ADB Financing from Category Subcategory the Loan Account 1 Civil Works 104,902,000 1.1 Shiwuli River WWTP and Associated 15,943,000 75% of expenditure Sewers claimed 1.2 Wangtang II WWTP and Associated 15,531,000 78% of expenditure Sewers claimed 1.3 Expansion of Sewer Network for Four 9,461,000 60.4% of expenditure WTPs claimed 1.4 Improve Qingxi Road Landfill Site 2,893,000 65% of expenditure claimed 1.5 Ershibu River Rehabilitation and Flood 21,680,000 70% of expenditure Control Improvement claimed 1.6 Banqiao River Rehabilitation and Flood 15,929,000 63% of expenditure Control Improvement claimed 1.7 Sili River Rehabilitation and Flood Control 6,626,000 50% of expenditure Improvement claimed 1.8 Chao Lake Bank Rehabilitation and Flood 16,839,000 69% of expenditure Control Improvement claimed 1.9 Xinzhan Zone Road Infrastructure and 0 Traffic Management 2 Capital Goods 19,941,000 2.1 Shiwuli River WWTP and Associated 4,758,000 100% of expenditure Sewers claimeda 2.2 Wangtang II WWTP and Associated 9,176,000 100% of expenditure Sewers claimeda 2.3 Expansion of Sewer Network for Four 868,000 100% of expenditure WWTPs claimeda 2.4 Ershibu River Rehabilitation and Flood 2,647,000 100% of expenditure Control Improvement claimeda 2.5 Banqiao River Rehabilitation and Flood 887,000 100% of expenditure Control Improvement claimeda 2.6 Sili River Rehabilitation and Flood Control 869,000 100% of expenditure Improvement claimeda 2.7 Chao Lake Bank Rehabilitation and Flood 736,000 100% of expenditure Control Improvement claimeda 2.8 Xinzhan Zone Road Infrastructure and 0 Traffic Management

Appendix 7 27

Category ADB Financing Basis Amount Allocated $ Percentage of Number Item ADB Financing from Category Subcategory the Loan Account 03 Project Management and Consulting 1,519,000 100% of expenditure Services claimeda 04 Interest and Commitment Charge 23,638,000 100% of amount due

Total 150,000,000 a Exclusive of taxes and duties imposed within the territory of the Borrower. ADB = Asian Development Bank, WWTP = wastewater treatment plant. Source: Loan Agreement for Loan 2328-PRC: Anhui Hefei Urban Environment Improvement Project.