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Anhui Hefei Urban Environment Improvement Project

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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.
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