Completion Report
Project Number: 43332-013 MFF Number: 0040 Loan Numbers: 2605, 2724, 2765, 3082, and 3109 April 2021
People’s Republic of China: Railway Energy Efficiency and Safety Enhancement Investment Program (Multitranche Financing Facility and the Tranches)
This document is being disclosed to the public in accordance with ADB’s Access to Information Policy.
CURRENCY EQUIVALENTS
Currency unit – yuan (CNY)
At Appraisal At Program Completion (16 November 2009) (30 December 2019) CNY1.00 = $0.1465 $0.1429 $1.00 = CNY6.8263 CNY6.9959
ABBREVIATIONS
ADB – Asian Development Bank CO2 – carbon dioxide CR – China State Railway Group Co., Ltd. CRC – China Railway Corporation EIRR – economic internal rate of return FIRR – financial internal rate of return km – kilometer MFF – multitranche financing facility MOR – Ministry of Railways O&M – operation and maintenance PFR – periodic financing request PRC – People’s Republic of China SO2 – sulfur dioxide TA – technical assistance
NOTE
In this report, “$” refers to United States dollars.
Vice-President Ahmed M. Saeed, Operations 2 Director General James P. Lynch, East Asia Department (EARD) Director Yolanda Fernandez Lommen, People’s Republic of China Resident Mission (PRCM), EARD
Team leader Chenglong Chu, Senior Portfolio Management Officer, PRCM, EARD Team members Yanli Gao, Associate Project Management Officer, PRCM, EARD Jie Li, Project Analyst, PRCM, EARD Ning Li, Senior Environment Officer, PRCM, EARD Xiaoyan Qin, Senior Procurement Officer, PRCM, EARD Jing Zhang, Operations Assistant, PRCM, 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 BASIC DATA i I. PROGRAM DESCRIPTION 1 II. DESIGN AND IMPLEMENTATION 2 A. Program Design and Formulation 2 B. Program Outputs 3 C. Program Costs and Financing 5 D. Disbursements 5 E. Program Schedule 6 F. Implementation Arrangements 7 G. Technical Assistance 8 H. Consultant Recruitment and Procurement 8 I. Safeguards 9 J. Monitoring and Reporting 9 III. EVALUATION OF PERFORMANCE 10 A. Relevance 10 B. Effectiveness 11 C. Efficiency 12 D. Sustainability 12 E. Development Impact 13 F. Performance of the Borrower and the Executing Agency 14 G. Performance of the Asian Development Bank 14 H. Overall Assessment 15 IV. ISSUES, LESSONS, AND RECOMMENDATIONS 15 A. Issues and Lessons 15 B. Recommendations 16
APPENDIXES 1. Design and Monitoring Framework 18 2. Chronology of Major Events – Tranches 1, 2, 3, 4, and 5 21 3. Railways Lines Built in Southwestern Region of the PRC from 2009 to 2016 23 4. Contract Packages Financed by the Asian Development Bank 25 5. Program Cost at Appraisal and Actual 30 6. Program and Project Cost by Financier 33 7. Disbursement of ADB Loan Proceeds 39 8. Implementation Schedule of the Investment Program 44 9. Organization Chart for Railway Operation in the PRC 45 10. Contract Awards of ADB Loan Proceeds 46 11. Status of Compliance with Major Facility Undertakings and Loan Covenants 51 12. Economic Reevaluation 75 13. Contribution to Strategy 2030 Operational Priorities 83
BASIC DATA
A. Facility Identification 1. Country People’s Republic of China 2. Facility number and financing source 0040-PRC, ordinary capital resources 3. Program title Railway Energy Efficiency and Safety Enhancement Investment Program 4. Borrower People’s Republic of China 5. Executing agency China State Railway Group Co., Ltd.1 6. Amount of loan $1 billion 7. Financing modality Multitranche financing facility
B. Facility Data 1. Appraisal – Date started 23 September 2009 – Date completed 27 September 2009 2. Framework financing agreement negotiations – Date started 9 November 2009 – Date completed 10 November 2009 3. Date of Board approval 8 December 2009
4. Date of framework financing agreement 10 November 2009
5. Multitranche financing availability period – In framework financing agreement 30 June 2017 – Actual 30 June 2019 – Number of extensions 1 6. Terms of loans – Interest rate The terms and conditions determined – Maturity (number of years) in the context of individual loans as – Grace period (number of years) documented in the legal agreement 7. Disbursements a. Dates Tranches Initial Disbursement Final Disbursement Time Interval Tranche 1, Loan 2605 20 June 2011 29 January 2018 79 months Tranche 2, Loan 2724 6 February 2012 13 December 2017 70 months Tranche 3, Loan 2765 28 September 2012 29 January 2018 64 months Tranche 4, Loan 3082 20 July 2015 18 September 2019 50 months Tranche 5, Loan 3109 8 September 2015 28 October 2019 50 months Tranches Effective Date Actual Closing Date Time Interval Tranche 1, Loan 2605 26 October 2010 9 May 2018 90 months Tranche 2, Loan 2724 10 June 2011 4 June 2019 96 months Tranche 3, Loan 2765 15 February 2012 30 December 2019 95 months Tranche 4, Loan 3082 10 September 2014 24 December 2019 63 months Tranche 5, Loan 3109 10 September 2014 24 December 2019 63 months
1 It was the Ministry of Railways at appraisal, changed to China Railway Corporation in 2013, and then China State Railway Group Co., Ltd. (CR) in June 2019 following reform of the railway sector in the People’s Republic of China.
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b. Amount ($ million) Increased Canceled Last Original during during Revised Amount Undisbursed Allocation Implementation Implementation Allocation Disbursed Balancea Tranches (1) (2) (3) (4=1+2–3) (5) (6 = 4–5) Tranche 1, Loan 2605 300.00 0.00 0.00 300.00 294.62 5.38 Tranche 2, Loan 2724 100.00 0.00 0.41 99.59 99.59 0.00 Tranche 3, Loan 2765 250.00 0.00 10.00 240.00 238.48 1.52 Tranche 4, Loan 3082 180.00 0.00 0.00 180.00 177.74 2.26 Tranche 5, Loan 3109 170.00 0.00 15.00 155.00 152.32 2.68 Total 1,000.00 0.00 25.41 974.59 962.75 11.84 Notes: Category is in all cases Goods. Numbers may not sum precisely because of rounding. a Cancelled at loan closing.
C. Program Data 1. Program cost ($ million) Cost Appraisal Estimate Actual Foreign exchange cost 1,428.39 962.75 Local currency cost 1,810.10 2,188.76 Total 3,238.50 3,151.51 Note: Numbers may not sum precisely because of rounding.
2. Multitranche facility financing plan ($ million) Cost Appraisal Estimate Actual Implementation cost Borrower financed 2,174.94 2,141.27 ADB financed 1,000.00 962.75 Total implementation cost 3,174.94 3,104.02 Interest during construction costs Borrower financed 63.56 47.49 ADB financed 0.00 0.00 Total interest during construction cost 63.56 47.49 Note: Numbers may not sum precisely because of rounding.
3. Cost breakdown by program component ($ million) Component Appraisal Estimate Actual A. Base Cost 1. Equipment a. Energy efficiency 1,361.58 814.59 b. Safety enhancement 1,468.08 2,062.21 c. Environment 170.34 135.00 2. Taxes and duties 66.36 92.24 Subtotal (A) 3,066.36 3,104.04 B. Contingencies Subtotal (B) 104.86 0.00 C. Financing charges during implementation Subtotal (C) 67.28 47.49 Total 3,238.50 3,151.51 Note: Numbers may not sum precisely because of rounding.
4. Program schedule Item Appraisal Estimate Actual Bid preparation and procurement Q1 2010–Q4 2014 Q3 2010–Q3 2017 Equipment or system installation Q1 2011–Q1 2016 Q2 2011–Q4 2017 Training and capacity development Q3 2011–Q1 2016 Q3 2012–Q2 2019 Final acceptance Q1 2014–Q4 2016 Q3 2014–Q3 2018
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5. Project performance report ratings
Loan 2605 Ratings Implementation Period Development Objectives Implementation Progress From 15 December 2009 to 31 December 2010 Satisfactory Satisfactory Single Project Rating From 1 April 2011 to 31 March 2012a On track From 1 April 2012 to 30 June 2012 Potential problem From 1 July 2012 to 9 May 2018 On track a Rating for 1 January 2011 to 31 March 2011 is not available.
Loan 2724 Implementation Period Development Objectives Implementation Progress 14 December 2010 to 31 December 2010 Satisfactory Satisfactory Single Project Rating From 10 June 2011 to 31 March 2012 On track From 1 April 2012 to 30 September 2012 Potential problem From 1 October 2012 to 4 June 2019 On track
Loan 2765 Implementation Period Single Project Rating From 15 February 2012 to 31 December 2019 On track
Loan 3082 Implementation Period Single Project Rating From 10 September 2014 to 31 March 2015 On track From 1 April 2015 to 30 June 2015 Potential problem From 1 July 2015 to 24 December 2019 On track
Loan 3109 Implementation Period Single Project Rating From 10 September 2014 to 31 March 2015 On track From 1 April 2015 to 30 September 2015 Actual problem From 1 October 2015 to 31 December 2015 Potential problem From 1 January 2016 to 31 March 2016 On track From 1 April 2016 to 30 June 2016 Actual problem From 1 July 2016 to 30 September 2016 Potential problem From 1 October 2016 to 24 December 2019 On track
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D. Data on Asian Development Bank Missions No. of No. of Specialization Name of Mission MFF/Loan No. Date Persons Person-Days of Members Appraisal 0040 23–27 September 2009 3 12 a, i, j Inception 1 Loan 2605 23–25 August 2010 2 6 a, b Consultation 1 Loan 2724 9–12 November 2010 1 3 a Review 1 Loan 2605 16–20 May 2011 2 10 a, b Inception 2 Loan 2724 16–20 May 2011 2 10 a, b Review 2 Loan 2605 24–27 October 2011 2 6 a, g Loan 2724 Inception 3 Loan 2765 24–27 October 2011 2 6 a, g Review 3 Loan 2605 11–18 June 2012 1 7 a Loan 2724 Loan 2765 Special review Loan 2605 29–31 January 2013 5 10 k, l, m, d, g Loan 2724 Loan 2765 Consultation 2 Loan 3082 11–18 September 2013 3 17 c, k, o Reconnaissance Loan 3109 11–18 September 2013 3 17 c, k, o Review 4 Loan 2605 11–15 November 2013 1 4 c Loan 2724 Loan 2765 Inception 4 Loan 3082 24–26 November 2014 2 4 c, d Loan 3109 Midterm review 1 Loan 2605 9–12 December 2014 2 6 c, d Loan 2724 Loan 2765 Review 5 Loan 2605 29–30 October 2015 2 4 e, d Loan 2724 Loan 2765 Loan 3082 Loan 3109 Review 6 Loan 2605 11–15 July 2016 2 8 e, f Review 7 Loan 2724 3 November 2016 2 2 e, f Loan 2765 Loan 3082 Loan 3109 Review 8 Loan 2724 17–18 July 2017 2 4 e, f Loan 2765 Midterm review 2 Loan 3082 19–20 July 2017 2 4 e, f Loan 3109 Review 9 Loan 2605 12–15 November 2018 2 6 e, f Loan 2724 Loan 2765 Loan 3082 Loan 3109 Project completion Loan 2605 4–10 November 2019 3 18 e, f, h review Program Loan 2605 8–11 December 2020 4 10 e, f, h, n completion review Loan 2724 Loan 2765 Loan 3082 Loan 3109 a = transport specialist, b = assistant project analyst, c = senior project officer, d = project analyst, e = senior portfolio management officer, f = associate project analyst, g = senior operations assistant, h = senior environment officer, i = principal transport specialist, j = regional cooperation officer, k = senior transport specialist, l = senior project officer (financial management), m = senior safeguards officer, n = associate project management officer, o = programs officer.
I. PROGRAM DESCRIPTION
1. In 2008, the former Ministry of Railways (MOR) 1 of the People’s Republic of China (PRC) prepared a railway development plan (2009–2016) for expanding capacity in the southwestern region of the PRC. It was included as a priority in the government’s Eleventh Five- Year Plan and the economic stimulus package announced in October 2008. The planned activities included new construction, double tracking, electrification, and rehabilitation with the aim to develop railway network in southwestern PRC, an impoverished and underserved area consisting of Guangxi, Guizhou, Sichuan, and Yunnan provinces, as well as Chongqing Municipality. Under the development plan, about 6,500 kilometers (km) of railways in the southwestern region were to be developed in the planning period. The government requested Asian Development Bank (ADB) to provide support in implementing the railway development plan. In a change from previous intervention supporting railway construction or capacity expansion, ADB’s intervention was to promote energy efficiency, environmental sustainability, and railway transport safety in the region.
2. On 8 December 2009, ADB approved a multitranche financing facility (MFF) in the amount of $1.0 billion from ADB’s ordinary capital resources for the Railway Energy Efficiency and Safety Enhancement Investment Program in the PRC’s southwestern region. In addition, a piggybacked capacity building technical assistance (TA) was provided to support institutional and capacity development of the MOR and railway administrations in areas of energy efficiency, environmental sustainability, and safety management. 2 The MFF was essentially to finance equipment and materials (i) for railway investment in the southwestern region; (ii) with technologies to enhance energy efficiency, improve the environment, and enhance railway safety; and (iii) involving no land acquisition or involuntary resettlement for its installation. The selection criteria were set forth accordingly for the individual tranches.
3. The impact of the investment program was an improved transport system in the region supporting sustainable socioeconomic development and the western region development strategy. It was expected to raise living standards in the project area by providing railway transportation in underserved, less-developed, and poor areas, thereby creating conditions for developing local resources, employment opportunities, and higher incomes. The program’s outcome was an energy-efficient, safe, reliable, affordable, and environment-friendly railway transport system developed in the region.
4. The program outputs comprised (i) introduction of energy-efficient technologies, environment-friendly equipment, and safety equipment; (ii) review of the existing institutional arrangements for integrating energy efficiency and environmental issues in railway management; (iii) conducting safety and energy audits of a nominated railway administration; and (iv) providing capacity building support.3 The design and monitoring framework for the MFF is in Appendix 1.
1 Along with railway reform in the PRC, the former MOR was abolished and in March 2013 its responsibilities were shifted to the National Railway Administration under the Ministry of Transport and China Railway Corporation. 2 ADB. 2009. Technical Assistance to the People’s Republic of China for the Railway Institutional and Capacity Development. Manila. 3 Within this scope, outputs (ii), (iii), and (iv) were produced under TA 7403-PRC: Railway Institutional and Capacity Development.
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II. DESIGN AND IMPLEMENTATION
A. Program Design and Formulation
5. The PRC’s railway development plan for the period up to 2020 approved by the State Council was updated in 2008. The plan was to expand the railway network to 120,000 km by 2020 and to increase train speed as a major goal. Priority was given to unserved areas and regions that lacked transport and had remained less developed. It was planned to increase the route network length in the PRC’s western region by 16,000 km to 40,000 km by 2020. To improve operating efficiency, MOR also planned to separate passenger and freight trains on key railway corridors.
6. Expectations under the Eleventh Five-Year Plan, 2006–2010 were to (i) build a dedicated passenger railway network through constructing 7,000 km of passenger-dedicated lines by 2010, (ii) develop coal transport corridors by increasing capacity of the existing lines, (iii) expand the railway network in the poor western region (to 34,000 km), (iv) build international corridors at the southwest and northwest borders, and (v) develop a nationwide intermodal container network. The plan intended total investment of CNY1.5 trillion (about $200 billion).
7. In 2008, to counter the downturn in the international economy, the government launched a stimulus package to boost internal demand and consumption. The package emphasized railway development in the PRC’s poor and unserved areas. Against this background, the government formulated a railway development plan (2009–2016) for capacity expansion over the southwestern region and requested that ADB provide the program to support railway development in the less-developed southwestern region. Rather than traditional intervention supporting railway construction, ADB supported the program in the areas of promoting energy efficiency, railway safety, environmental sustainability, and capacity building of MOR staff and railway administrators in undertaking the activities in such areas. To provide long-term programmatic support to the railway development plan, the MFF modality was used to support its implementation. It was the first use of an MFF in the PRC’s transport sector.
8. The program’s formulation was supported by project preparation TA.4 A reconnaissance mission for the program, conducted in May 2009, confirmed use of the MFF modality to finance the program and discussed with the government the rationale, objectives, components, safeguard frameworks, implementation arrangements, cost estimates, and processing schedule. Criteria for selecting equipment and materials to be financed under periodic financing requests (PFRs) were agreed during the mission. The criteria required that (i) the investment support be located in the southwestern region of the PRC and be part of the railway program; (ii) the equipment and materials encompass technologies to enhance energy efficiency, improve the environment, and enhance railway safety; and (iii) installation of such equipment not involve land acquisition or resettlement, have adverse impact on ethnic minorities, or have negative environmental impact. The investment of the MFF’s first tranche was discussed in accordance with the criteria. The project concept paper meeting was in July 2009 and the management review meeting for the program in September 2009. An appraisal mission was fielded in September 2009 and finalized the program and tranche 1. The framework financing agreement was signed on 10 November 2009 and the loan was approved on 8 December 2009.
4 ADB. 2007. Technical Assistance to the People’s Republic of China for Preparing Nanning–Kunming Railway Capacity Enhancement Project. Manila.
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9. Pursuant to the framework financing agreement for the MFF, the government submitted the first PFR for tranche 1 (Loan 2605) in the amount of $300 million. It was approved 15 December 2009 and declared effective on 26 October 2010. The first tranche was to finance (i) procurement of more energy-efficient equipment and materials; (ii) procurement of modern environmental equipment; (iii) procurement of equipment to enhance maintenance and safety and respond quickly to emergencies; and (iv) capacity building, including staff training.
10. The MFF was implemented using a time-slice approach. Along with implementation of the railway development plan, the government submitted PFRs for tranches 2 to 5 from 2010 to 2014. ADB approved tranche 2 (Loan 2724) in the amount of $100 million on 14 December 2010, tranche 3 (Loan 2765) of $250 million on 20 July 2011, tranche 4 (Loan 3082) of $180 million on 4 December 2013, and tranche 5 (Loan 3109) of $170 million on 7 February 2014. Like the first tranche, the subsequent four tranches were designed to finance equipment and materials for enhancing energy efficiency, railway safety, and environment sustainability. The chronology of major events is in Appendix 2.
11. To enhance capacity building of MOR staff and railway administrations in the areas of energy efficiency, environmental sustainability, and safety management, a TA financing of $600,000 was provided. It was approved on 8 December 2009. Activities under the TA were to (i) review the existing institutional arrangement for integrating energy efficiency and environmental matters in railway management and operation, (ii) undertake safety and energy audit of a nominated railway administration, and (iii) provide capacity building support to staff of MOR and railway administrations.
B. Program Outputs
12. At appraisal, the MFF’s envisaged outputs included (i) introduction of energy-efficient technologies, environment-friendly equipment, and safety equipment; (ii) review of the existing institutional arrangements for integrating energy efficiency and environmental issues in railway management; (iii) conducting safety and energy audits of a nominated railway administration; and (iv) providing capacity building support to staff of MOR and railway administrations. At completion, the MFF fully delivered the four intended outputs through implementing the five individual tranches and the piggybacked TA. These contributed to the successful implementation of the railway development plan in the southwestern region. During 2009–2016, 47 railway lines with total length of 9,672 km were built in the region. Details of the railway lines are shown in Appendix 3.
13. Output 1: Introduction of energy-efficient technologies, environment-friendly equipment, and safety equipment. Under tranche 1, 52 equipment packages were procured. The energy-efficiency equipment procured included (i) overhead catenary systems, and (ii) a traction substation system. For environmental protection, more than 52,480 square meters (m2) of noise barriers were procured. The railway safety enhancement equipment procured covered (i) bridge bearings,5 (ii) rail fasteners,6 (iii) telecommunications system equipment, (iv) signaling equipment, and (v) operation maintenance equipment consisting of an operating vehicle and flat car for the overhead catenary system and a rail trolley.
5 A bridge bearing is a component providing a resting surface between bridge piers and the bridge deck. Its purpose is to allow controlled movement and thereby reduce stresses on the bridge structure. 6 A rail fastening system is a means of fixing rails securely to the railroad ties while keeping the gauge and preventing the rails from moving in a longitudinal and transverse direction relative to the ties.
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14. Six equipment packages were procured under tranche 2. The equipment and materials mainly comprised equipment for enhancing railway safety (anti-seismic bridge bearings, enhanced railway fasteners, and heavy-duty switches). Under tranche 3, 44 equipment packages were procured. The equipment and materials included (i) energy-efficiency equipment (railway electrification equipment and electric power supply system), (ii) environmental- protection equipment (noise barriers), and (iii) railway safety enhancement equipment (enhanced railway fasteners and switches, railway telecommunications system, railway signaling system, advanced railway inspection equipment, and emergency rescue equipment).
15. Under tranche 4, 10 equipment packages were procured. The equipment and materials procured mainly comprised railway safety enhancement equipment (enhanced railway fasteners, turnouts, turnout switch system, bridge bearings, copper cable for signaling, and track safety operation and maintenance equipment). Under tranche 5, 30 equipment packages were procured. The equipment and materials included (i) energy-efficiency equipment (electrification system and electric power supply equipment), (ii) environmental-protection equipment (noise barriers), and (iii) railway safety enhancement equipment (enhanced railway fasteners and anti- seismic bridge bearings, railway signaling system, and telecommunications system). Appendix 4 lists the equipment and materials procured under individual tranches.
16. Output 2: Review of the existing institutional arrangements for integrating energy efficiency and environmental issues in railway management. Under the TA, a team of consultants comprising both international experts and national professionals conducted a review of the PRC railway policy, regulations, and practices on energy, safety, and environmental management and organization arrangement from October 2011 to December 2012. Based on the review, issues in energy efficiency and environment protection were identified. The team analyzed best practices in developed countries and made recommendations to MOR to strengthen energy saving and environment protection. The government has strengthened the institutional arrangement on energy saving and environment protection at each level of administration in the PRC’s railway sector.
17. Output 3: Conducting safety and energy audits of a nominated railway administration. The consultants engaged under the TA conducted safety and energy audits for a representative railway line under jurisdiction of the Kunming Railway Administration and made recommendations to enhance safety and energy audits in railway administrations based on the audit results, including the methodologies, procedures, and details in carrying out the audits. The recommendations were well received by the government and are being adopted in the PRC, and particularly those concerning tunnel disaster relief, energy efficiency management measures (such as application of safety risk model, safety reporting, and train accident risk management), further strengthening internal audit management in railways administrations, and periodic training for staff. In recent years, safety audits were conducted for all railways in the PRC and obstacles within the boundary lines of railways have been demolished, thereby eradicating potential operating safety risks.
18. Output 4: Providing capacity building support to staff of MOR and railway administrations. Under the TA, an international railway safety seminar was organized to disseminate risk management techniques used successfully in Europe, including railway safe technology principles and designs for tunnel safety enhancement and tunnel safe stations. An overseas study group comprising eight senior staff from the MOR and railway administrations visited the Los Angeles railway container corridor and four railway companies and government organizations in the United States in September 2012 and studied intermodal container shipments, equipment management, safety management, and performance management.
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Under the TA, 165 railway staff received training in the forms of overseas study visit, seminars, and workshops. The participants appreciated the opportunities to be exposed to better approaches and more advanced thinking on issues of railway energy efficiency, safety management, and environmental sustainability. The knowledge and experience they acquired are being applied in their daily work. In addition, in the past 10 years, the three railway administrations (Chengdu, Kunming, and Nanning) directed dozens of training and awareness campaigns to their staff covering the topics of energy efficiency, safety, and environmental sustainability in the railway sector.
C. Program Costs and Financing
19. At appraisal, it was estimated the railway development plan (2009–2016) for capacity expansion over the southwestern region of the PRC would cost $25 billion, and $3.24 billion in spending was identified in support of energy efficiency, environmental sustainability, and railway safety. In fact, during 2009–2016, 47 railway lines with total length of 9,672 km were built in the southwestern region of the PRC. The investment totaled about $165.7 billion and the equipment procured under the identified three categories costed about $11.5 billion.
20. Tranche 1 was estimated at $967.34 million, tranche 2 at $323.73 million, tranche 3 at $819.70 million, tranche 4 at $547.60 million, and tranche 5 at $580.15 million. The costs were to finance equipment and materials meeting the selection criteria for ADB’s intervention.
21. At appraisal, the government requested financing of up to $1 billion from ADB’s ordinary capital resources to support implementation of the program. The MFF was designed to extend multiple loans to finance tranches under the program, subject to the government’s submitting a related PFR and execution of the related loan agreements. ADB’s financing approved was $300 million for tranche 1, $100 million for tranche 2, $250 million for tranche 3, $180 million for tranche 4, and $170 million for tranche 5.
22. At completion, the actual cost for the equipment and materials financed by ADB was $294.62 million under tranche 1, $99.59 million under tranche 2, $238.48 million under tranche 3, $177.74 million under tranche 4, and $152.32 million under tranche 5. In total, ADB’s financing for the program was $962.75 million, or 96.28% of the approved loan amount for the MFF. All equipment and materials in the procurement plans of the five tranches were procured and delivered timely to the project sites. The $37.25 million in loan savings were the accumulated differences between the cost estimates for each contract package and the actual expenditures of each contract. Appendix 5 summarizes in detail the program costs at appraisal and at completion. The costs are broken out by financier in Appendix 6.
23. The government provided adequate counterpart funds in a timely manner to implement the railway development plan in the PRC’s southwestern region, thereby ensuring more than 9,672 km of railway lines were built during the planning period.
D. Disbursements
24. ADB loan proceeds were disbursed in accordance with ADB’s Loan Disbursement Handbook (2007, as amended from time to time). Because most payments were made for large equipment contracts, direct payment and advance fund procedures were generally used. To
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facilitate disbursements, MOR set up an advance account for each tranche.7 The initial amount of advance account was $5 million for each tranche. Full supporting documentation was used for most withdrawal applications; one withdrawal application under Tranche 1 used statement of expenditures (for final liquidation of the advance account). The finance department of the former MOR and its successor China Railway Corporation (CRC) oversaw financial management and disbursement for the MFF. An adequate financial management system was in place and disbursement of loan proceeds was processed smoothly. Although the disbursement projection was reasonable, the actual achievements were behind schedule for about 1 to 2 years for different tranches. Appendix 7 provides a comparison of projected and actual disbursements for each tranche.
E. Program Schedule
25. At appraisal, the program was planned to be implemented over 7 years from 2010 to the end of 2016. The number of PFRs was expected to be from three to six. The last date for any disbursement under any tranche was set for 30 June 2017. In July 2011, however, a serious accident occurred, as a collision of two high-speed trains caused several casualties. The government ordered a safety checkup and slowed implementation of high-speed rail programs. As a result, the program’s implementation was interrupted in 2011 and 2012. Per request of the government, the MFF implementation period was extended for 2 years to 30 June 2019. The last of the five tranches was financially closed on 24 December 2019. The implementation plan at appraisal and actual implementation timing are shown in Appendix 8.
26. Pursuant to the framework financing agreement for the MFF, the government submitted the first PFR for tranche 1 in the amount of $300 million on 10 November 2009. The loan was approved on 15 December 2010 and became effective on 26 October 2010. Procurement of equipment started in September 2010 and was completed in November 2016. The loan was financially closed on 9 May 2018 with an 18-month extension. The equipment financed under tranche 1 was mainly installed in the railway line from Nanning railway station in Guangxi Province to Kunming railway station in Yunnan Province. The final acceptance of the equipment was completed by June 2017.
27. Tranche 2 of $100 million was approved on 14 December 2010 and became effective on 10 June 2011. The loan was financially closed on 4 June 2019, after a 2-year extension. Tranche 2 was to finance railway safety enhancement equipment. Procurement of the equipment started from March 2011 and was completed in December 2013. The equipment procured was mainly installed in the railway line from Chengdu East station in Sichuan Province to Chongqing station in Chongqing Municipality.
28. Tranche 3 of $250 million was approved on 20 July 2011 and became effective on 15 February 2012. The loan was financially closed on 30 December 2019, after a 2-year extension. Procurement of the equipment started from January 2012 and was completed in September 2016. The equipment procured under the tranche covered energy efficiency, environmental protection, and railway safety enhancement. The same as tranche 2, the equipment financed under tranche 3 was mainly installed in the railway line from Chengdu East station in Sichuan Province to Chongqing station in Chongqing Municipality.
7 All references to advance fund and advance account refer to what formerly were termed imprest fund and imprest account.
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29. Tranche 4 of $180 million was approved on 4 December 2013 and became effective on 10 September 2014. The loan was financially closed on 24 December 2019, as planned. Procurement of the equipment started from June 2014 and was completed in September 2016. The equipment procured under tranche 4 covered environmental protection, railway safety enhancement, and railway maintenance. The environmental protection and railway safety enhancement equipment was mainly installed in the railway line from Chongqing West station in Chongqing Municipality to Guiyang North station in Guizhou Province. The maintenance equipment consisting of a full section ballast cleaning machine and a dynamic continuous action leveling, lifting, lining, and tamping machine has been used for maintaining all railway lines in the southwestern region.
30. Tranche 5 of $170 million was approved on 7 February 2014 and became effective on 10 September 2014. The loan was financially closed on 24 December 2019, as planned. Procurement of equipment started in August 2015 and was completed in December 2017. The equipment procured under tranche 5 covered energy efficiency and railway safety enhancement. It was also installed in the line from Chongqing West station in Chongqing Municipality to Guiyang North station in Guizhou Province.
31. The piggybacked TA was implemented from December 2009 to May 2013. Consultants were mobilized in October 2011 and completed their assignments by December 2012.
F. Implementation Arrangements
32. At appraisal, the former MOR was the executing agency responsible for overall program implementation. The Foreign Capital and Technical Import Center, under MOR, was to coordinate the project management office’s tasks and be responsible for procurement, withdrawals, and reporting in relation to ADB. A steering committee headed by the center’s director general was responsible for selection of the projects for subsequent financing and their implementation. The center’s staff was experienced in technical, financial, procurement, and implementation aspects of projects financed by international financial institutions.
33. Following reform of the railway sector in the PRC to separate government administration duties and corporate responsibilities of the sector, MOR’s functions were assigned to two new entities, the CRC and the National Railway Administration. The CRC was established on 14 March 2013 and bore the corporate responsibilities of the former MOR. Thereafter, the Material Management Department of CRC was responsible for procurement and coordination of the MFF implementation and the Finance Department of CRC was responsible for withdrawals, loan account management, and audit coordination. Transition of implementation arrangements for the MFF was conducted smoothly and its impact on implementation was managed effectively, but it did create coordination workload for the ADB project team inasmuch as the multiple functions in managing the MFF implementation were split among several CRC departments.
34. On 18 June 2019, following restructuring of CRC, China State Railway Group Co., Ltd. (CR)8 was established to undertake the country’s railway passenger and cargo transportation services and it took over all of CRC’s responsibilities. Implementation arrangements for the MFF were the same as in CRC. Owing to the continuity in responsibilities and organization structure between CRC and CR, there was no further impact on the MFF implementation. The updated organization chart of railway operation in the PRC is shown in Appendix 9.
8 China State Railway Group Co., Ltd. is officially referred to as China Railway (CR) in English.
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G. Technical Assistance
35. Project preparatory TA supported the MFF formulation (footnote 4). The TA was to help prepare the proposed Nanning–Kunming railway capacity enhancement project. Aside from usual support for railway construction or capacity expansion, an option to support targeted areas including energy efficiency, environmental sustainability, and railway safety emerged when the government initiated the railway development plan in southwestern PRC. ADB was able to add more value in those areas and can scale up the assistance to the entire region. During the TA review mission in May 2009, the railway efficiency and safety enhancement program was proposed and discussed in detail, including the use of an MFF financing modality. Criteria for selecting equipment and materials to be financed under the program were also agreed during the mission. Investment of the first tranche of the MFF was discussed in accordance with the criteria. After the mission, a project concept paper for the MFF program was developed and the management review meeting for the MFF program was held in September 2009. An appraisal mission was fielded in October 2009 and the MFF program and tranche 1 were finalized at appraisal.
36. In addition, a piggybacked TA grant of $600,000 from the TA Special Fund (Other) was provided to support institutional development and enhance staff capacity of the MOR and railway administrations in areas of energy efficiency, environmental sustainability, and safety management. It supported implementation of three MFF outputs (footnote 3): (i) review of PRC railway policy, regulations, and practices on energy, safety, and environmental management, as well as organizational arrangement; (ii) conduct of safety and energy audits for a sample of railway lines under jurisdiction of the nominated Kunming Railway Administration; and (iii) identification of issues and making recommendations on railway safety management and energy audit methodology. An international railway safety seminar was organized to disseminate the risk management techniques, including railway safe technology principles and designs for tunnel safety enhancement and tunnel safe stations. About 165 staff of the former MOR and railway administrations benefited from training and overseas studies in the areas of railway energy efficiency and safety enhancement. The TA was completed in May 2013 and was rated successful.9
H. Consultant Recruitment and Procurement
37. Consultants were recruited in accordance with ADB’s Guidelines on the Use of Consultants (2007, as amended from time to time). Following quality- and cost-based selection procedure, an international consulting firm was engaged to undertake the piggybacked TA. The recruitment proceeded smoothly, and the actual inputs of consulting services were as planned. The consultant performed satisfactorily and carried out the activities as scheduled. The final report was well structured and presented useful knowledge in the fields of railway safety, energy efficiency, and environmental sustainability for railway practitioners in the PRC.
38. Procurement of ADB-financed equipment contracts followed ADB’s Procurement Guidelines (2007, as amended from time to time). For five tranches, there were 142 contract packages in total. All equipment packages were procured through international competitive bidding since the contracts’ values were greater than $1 million, as stipulated in the procurement plans for the five tranches. The contract awards totaled $962.75 million. The first
9 ADB. 2014. Technical Assistance Completion Report for TA 7403-PRC: Institutional and Capacity Development. Manila.
9 contract was awarded in March 2011 under tranche 1 and the last contract in August 2017 under tranche 5. Although the contract award projection for the MFF was realistic, there were delays of about 1 year for tranches 1, 2, and 5. A comparison of projected contract awards and actual achievements is shown in Appendix 10.
39. All procurement under the five tranches was undertaken satisfactorily and no major procurement issues arose. To tackle specific technical requirements on the railway equipment, a standard Section III: Evaluation and Qualification Criteria was developed in consultation with the Procurement, Portfolio, and Financial Management Department in 2013. Based upon technical experience, it was specified that goods offered with the same or advanced technical specifications had been in production for a certain number of years and a minimum number of certain units’ goods offered with the same or advanced technical specifications had been sold and had been satisfactorily in operation. The standardization improved clearance on the technical experience for the suppliers and the bid evaluation committees and ensured the quality of the equipment procured.
I. Safeguards
40. At appraisal, a safeguard framework was prepared to guide the executing agency in safeguard assessment of tranches under the MFF to ensure compliance with ADB’s Safeguard Policy Statement (2009). The selection criteria required that installation of equipment and materials financed under the tranches not involve land acquisition or involuntary resettlement, have adverse impacts on ethnic minorities, or have negative environmental impacts. The selection of equipment for all tranches strictly followed the criteria, and all tranches of the MFF were classified category C for all safeguard aspects (environment, involuntary resettlement, and indigenous people). Because the program procured energy-efficient, environment-friendly, and safety equipment, no potential safeguard impacts were envisaged. Installation of the equipment and materials in fact had significant positive environmental impacts, including to reduce oil use and emissions.
41. This project was categorized as “no gender elements”. No gender action plan was prepared, and no gender indicators were included in the DMF. No action was required for social dimensions considering that (i) it is a national-level project benefiting all railway users, (ii) there was no impact on labor, and (iii) railways are more economical and affordable than aviation and road transport.
J. Monitoring and Reporting
42. As detailed in Appendix 11, the loan covenants for all five tranches were complied with. Railway sector reform in the PRC has systematically taken place. The administrative duties of the former MOR were merged into the Ministry of Transport through formation of the National Railway Administration and the corporate responsibilities were undertaken by CRC and the subsequent China Railway (CR). Implementation arrangements for the MFF were updated in a timely manner following the railway sector’s reform. Adequate counterpart funds were provided in procuring the energy-efficient, environment-friendly, and safety equipment while developing the railway system in the PRC’s southwestern region. Trial and testing of the equipment installed was carried out within an adequate period prior to operation of the railway lines.
43. At appraisal, a set of indicators for evaluating performance in relation to the program’s impact, outcome, and outputs was selected and included into the design and monitoring framework for the facility. The indicators covered socioeconomic development, transport
10
capacity, transport costs, energy efficiency, emissions, and railway safety. The Foreign Capital and Technical Import Center under the former MOR was responsible for monitoring the indicators and reporting the baseline and periodic achievements to ADB. The information and data were included in the progress reports. Later, the material management department at CRC took over the monitoring and reporting responsibilities.
44. A separate account for the MFF was set up in the finance department of the former MOR and was well maintained by the subsequent CRC and CR. The auditor’s reports and audited project financial statements for each tranche were submitted each year to ADB in a timely manner. No issue was reported in the auditor’s reports for the loan proceeds.
III. EVALUATION OF PERFORMANCE
A. Relevance
45. The program is rated highly relevant. At appraisal, the program was in line with the government’s Eleventh Five-Year Plan, 2006–2010, which included expansion of railway network in the poor western region and a specific energy-saving and emission-reduction plan for the railway sector. The program was particularly formulated to support implementation of the railway development plan (2009–2016) in the PRC’s southwestern region, which was part of the government stimulus package to tackle the economic downturn in 2008. The program was also consistent with ADB’s country partnership strategy for the PRC in the areas of inclusive growth and balanced development, and resource efficiency and environmental sustainability.
46. Initially, the government had requested ADB to finance railway construction and capacity expansion in the southwestern region of the PRC, thereby following previous practice of ADB intervention in the PRC’s railway sector. During processing of the proposed Nanning–Kunming railway capacity enhancement project, when the government launched the railway development plan in the southwestern region in 2008, the processing team chose an option to support the development plan by focusing on the areas of energy efficiency, environmental sustainability, and railway safety, where ADB could add more value. In addition, new and modern technologies were introduced, such as single-phase transformers, vacuum circuit breakers, an infrared hot box detection system, and intelligent electronic devices. The new technologies improved energy efficiency, reduced emissions, and enhanced rail safety. Moreover, the MFF modality was introduced to the government, thereby allowing ADB to provide long-term programmatic support to railway development in the region. ADB’s intervention into the railway development plan benefited the entire southwestern region through developing the railway network in the region and catalyzing PRC railway sector efforts in railway reform while improving energy efficiency and railway safety. Adoption of the MFF modality improved the efficiency of ADB financing by lowering borrowing costs and increasing operational flexibility.
47. At completion, the program was aligned with the government’s Thirteenth Five-Year Plan, 2016–2020 in the areas of promoting electrification and upgrading of trunk railways in the southwestern region; enhancing railway safety management; reducing emissions through electrification and application of new technologies; and enhancing protection of acoustic, water, and atmospheric environments in the railway sector by means of route selection, technical design, electrification, and application of new materials and technologies. The program was consistent with ADB’s strategic priorities for the PRC: (i) managing climate change and the environment, (ii) supporting inclusive economic growth (reducing poverty and inequality), and (iii) supporting institutional and government reform. The program fostered construction of 47 railway lines in the southwestern region from 2009 to 2016, all of which were electrified. Operation of
11 the railway lines has promoted the region’s socioeconomic development, lowered travel costs, reduced fuel consumption, and decreased carbon dioxide (CO2) and sulfur dioxide (SO2) emissions in the region.
48. The design and monitoring framework for the MFF was formulated satisfactorily, but that for each tranche could have been improved to reflect the intended contribution to output 1 of the MFF. In addition, no framework was provided for the piggybacked TA that contributed to outputs 2, 3, and 4 of the program. The framework for tranche 1 was the same as that for the MFF, with both including outputs of the piggybacked TA: (i) integrated and institutionalized energy efficiency and environmental issues in railway management, (ii) safety and energy audits of a nominated railway administration, and (iii) capacity building support provided. In design and monitoring frameworks for tranches 2, 3, 4, and 5, the outputs only contributed to output 1 of the program: investment program implemented by installing energy-efficient technologies, environment-friendly equipment, and safety equipment. The impact and outcome statements of each tranche and the indicators and targets for the impact and outcome were the same as those of the MFF. In addition, the MFF was to finance the three categories of equipment under the railway development plan from 2009–2016 in the southwestern region of the PRC, which totaled about $11.5 billion at completion. Only $3.24 billion of the equipment costs were considered at appraisal. That is for about 1,389 km railways, rather than the planned 6,500 km of railways.
B. Effectiveness
49. The program outcome, development of an energy-efficient, safe, reliable, affordable, and environment-friendly railway transport system in the PRC’s southwestern region, was fully achieved. With the investment’s contribution, 47 railway lines totaling 9,672 km in length were constructed with energy-efficient, safe, and environment-friendly equipment and materials in the region from 2009 to 2016. In addition, six more railway lines of total length 1,216 km were constructed from 2017 to 2019. The railway transport system has been well developed in the southwestern region and the quality of railway services has significantly improved, including comfort, reliability, and safety. Meanwhile, fares remain low and affordable to the passengers.
50. Rail transport capacity in the region expanded dramatically with construction of railway lines in the past 10 years. The actual passenger traffic in the region increased from 75.0 billion to 166.7 billion passenger-km from 2009 to 2019. The actual freight traffic remained stable since 2009, rather than growing as projected at appraisal. The slow growth in freight traffic was mainly because the energy consumption structure in the southwestern region has changed in the past 10 years. Coal consumption was reduced by more than 60% and hydroelectricity usage increased correspondingly, as the region has abundant hydroelectric power. Due to electrification of the railway lines and application of new technologies, fuel savings increased to CNY2.67 billion in 2019, significantly exceeding the target set at appraisal. CO2 emission in the region was reduced by 29,669 tons in 2016, 34.2% greater than targeted. The SO2 emission was reduced by 29.9% from 2009 to 2015. The change of energy consumption in the region is favorable, as it has contributed to emissions reduction and environmental sustainability.
51. All the program’s intended outputs were completed. Under output 1 (energy-efficient technologies, environment-friendly equipment, and safety equipment), 65 contract packages of energy-efficient equipment, 4 contract packages of environment-protection equipment, and 73 contract packages of safety equipment were procured under the five tranches and installed on the railway lines in the southwestern region. ADB’s intervention ensured that high-quality equipment was procured in the most cost-effective way. The technical specifications and procurement practice cascaded to procurement for the equipment financed by the government
12
under the railway development plan. Under output 2 (energy efficiency and environmental issues in railway management integrated and institutionalized), the existing policies, regulations, and institutional arrangement in the former MOR and railway administrations on energy efficiency and environmental sustainability were examined and recommendations to enhance the energy audit and environmental management were made with reference to international practices. These were adopted in the reform of the railway sector. Under output 3 (safety and energy audits of a nominated railway administration), safety and energy audits for Kunming Railway Administration were conducted and methodologies, procedures, and details in carrying out railway safety and railway energy audits were formulated. Under output 4 (capacity building support), 165 railway staff from the former MOR and railway administrations received training on the related areas, an international railway safety risk management seminar was conducted in 2012 under the piggypacked TA, national safety work meetings were held every year, and energy efficiency and railway environment awareness campaigns were carried out periodically in the concerned railway administrations.
52. The MFF’s intended outcome and outputs were fully achieved and the program is rated effective.
C. Efficiency
53. The program is rated efficient. Following the methodology applied at appraisal, the entire railway network in the southwestern region was counted in the reassessment in terms of traffic forecast and economic analysis. Economic internal rate of return (EIRR) for the program was recalculated using the updated traffic forecasts, economic costs, and economic benefits. The recalculated EIRR for the program is 20.4%, higher than the cutoff rate of 12%, indicating that the program is economically viable. Sensitivity analysis was conducted to test impacts of increase in operation and maintenance (O&M) costs, decrease in benefits, and combination of the two. The results show that the program would maintain its economic viability even under the worst scenario. The detailed reassessment is presented in Appendix 12.
54. The EIRR is lower than the 26.8% estimated at appraisal. This is mainly because of (i) increased capital cost to finance 9,672 km of railways in the region from 2009 to 2016 as opposed to the 6,500 km in the initial railway development plan; (ii) lower freight traffic in the region inasmuch as coal consumption was significantly reduced there since 2011; and (iii) benefits from electrification in the longer term being overestimated at appraisal as railway electrification was sped up since 2011. The proportion of electrified railways in the region reached 81% in 2015, and the updated energy efficiency benefits from 2015 onwards are therefore lower than estimated at appraisal.
55. Although implementation of the program was extended for about 2 years due to nationwide suspension of railway construction in the PRC in 2011 and 2012, the extension did not affect implementation of the railway development plan in the southwestern region and the length of the railway lines built exceeded the original plan by the end of the planning period.
D. Sustainability
56. ADB’s intervention included (i) providing financial support to procuring a portion of energy-efficiency, environment-friendly, and safety equipment for railway development in the southwestern region; (ii) creating awareness about energy efficiency, environmental sustainability, and railway safety in the PRC railway sector; and (iii) introducing safe and reliable technologies. Key factors for sustainability of the equipment and materials are (i) availability of
13 funds for O&M, (ii) availability of spare parts and consumables, and (iii) required skills of the staff that will operate this equipment.
57. The railway lines in the southwestern region of the PRC are administered by China Railway Kunming Bureau Group Co., Ltd., China Railway Chengdu Bureau Group Co., Ltd., and China Railway Nanning Bureau Group Co., Ltd., which are directly affiliated companies of CR. CR is a wholly state-owned enterprise, undertakes the railway services of the PRC, and is responsible for all financial obligations. A financial sustainability analysis for CR was conducted in 2019 by ADB and confirmed its financial health.10 The arrangement ensured that O&M for the railway lines is reliable and sustainable. Under the MFF, equipment procured included spare parts and consumables for the first 2 years’ O&M. The government and CR have committed to the availability of funds for O&M of the equipment. Staff in CR and the affiliated companies named above have been adequately trained in operating and maintaining railway equipment, conducting safety audit, and administration in railway services.
58. No financial internal rate of return (FIRR) was calculated for the program at appraisal, and one cannot be computed at completion because it is not feasible to calculate FIRRs for each of the 47 railway lines built under the railway development plan for the southwestern region. FIRRs were computed, however, for a sample of three railway lines that cross the PRC’s entire southwestern region.11 The results show that each railway line is financially viable. The program is rated likely sustainable.
E. Development Impact
59. The development impact of the program is assessed satisfactory. The southwestern region of the PRC was geographically remote and isolated, with limited road access. As a result, the region lacked access to markets and social and health care facilities. Transport costs were high and travelling was inconvenient and time-consuming. The region was a less-developed area within the PRC having highly adverse environmental and weather conditions and limited farmland. The transport system improved through the railway development plan has contributed significantly to socioeconomic development of the region. The per capita gross domestic product in the southwestern region increased from CNY7,715 in 2009 to CNY17,394 in 2015 and CNY25,511 in 2019. That is a 9.6% average annual increase. The per capita rural income in the southwestern region increased from CNY3,300 in 2007 to CNY8,990 in 2015 and CNY13,227 in 2019, a 10.5% annual average increase.
60. Provision of the energy-efficient, environment-friendly, and safe railway system enabled efficient flow of people and goods, protected the environment from pollution, and reduced energy consumption and emissions, eventually contributing to a high quality of life and prosperous economy in the region. Energy consumption on railways per unit of revenue was reduced by 40.6% from 2009 to 2015 in the southwestern region. Total discharge of major pollutants by PRC railways was reduced by 23.5% from 2009 to 2015.
10 ADB. 2019. Report and Recommendation of the President to the Board of Directors: Proposed Loan to the People’s Republic of China for the Multimodal Passenger Hub and Railway Maintenance Project. Manila. 11 The FIRR after tax for the railway line from Kunming to Nanning is about 1.69%, and the weighted average cost of capital (WACC) is about 0.27%. The FIRR after tax for the line from Chengdu to Chongqing is about 5.19%, and its WACC is about 0.45%. The FIRR after tax for the line from Chongqing to Guiyang is about 2.22%, and its WACC is 0.39%. Key assumptions include (i) a passenger growth rate of 6%–9% per year from 2020 to 2035 and freight growth remaining stable, (ii) a passenger tariff of CNY0.29 per passenger-km in 2019 prices throughout the life of the project, and (iii) operating cost of CNY0.14 per passenger-km in 2019 prices throughout the project life.
14
61. During implementation of the program and operation of the railway lines, more than 10 million person-months of job opportunities were provided to the local people in the region. Of these, more than 50% were for the poor and about 20% were for women. The job opportunities created new sources of income for the local people. The developed transport network increased opportunities for females to participate in the labor and tourism markets and raised women’s net income and savings. Expansion of secondary and tertiary industries in the region generated additional employment opportunities for both men and women, close to their homes.
F. Performance of the Borrower and the Executing Agency
62. The government provided sufficient support to the MFF’s processing and implementation. It steadily implemented the railway development plan in the southwestern region during the planning period and provided adequate counterpart funds. The loan proceeds were withdrawn in a timely manner and the financial management arrangement for the MFF implementation was sound and effective. Loan convents were complied with for all five tranches. The railway sector reform in the PRC was systematically conducted. The railway administration and corporate responsibilities were separated, and the efficiency of railway operations has been improved.
63. Following the railway sector reform, the implementation arrangement for the MFF evolved accordingly. The former MOR was the executing agency for the MFF, responsible for overall program implementation. Under MOR, the Foreign Capital and Technical Import Center was to coordinate the project management office’s tasks and be responsible for procurement, withdrawals, and reporting in relation to ADB. Since March 2013, the CRC had taken over the corporate responsibilities of the former MOR. The Material Management Department of CRC was responsible for procurement and coordination of the MFF implementation and the Finance Department of CRC was responsible for withdrawals, loan account management, and audit coordination. Staff at the Foreign Capital and Technical Import Center was experienced in technical, financial, procurement and implementation aspects for projects financed by international financial institutions. The transition of implementation arrangement for the MFF did create coordination workload for the ADB project team as the multiple functions in managing the MFF implementation were split into different CRC departments. The transition was nevertheless smooth, and the ADB project team received sufficient support from CRC in managing the MFF’s implementation. The performance of the Borrower and executing agency is rated satisfactory.
G. Performance of the Asian Development Bank
64. The overall performance of ADB from project preparation to its completion is rated satisfactory. The MFF was processed in a very efficient way. It took about 5 months from the project concept paper to Board approval for the MFF. The ADB processing team quickly decided to finance the program when the government’s railway development plan in the southwestern region of the PRC was formulated. It enabled ADB to add more value to implementation of the development plan through financing the energy-efficient, environment- friendly, and safety equipment. The MFF modality was appropriately adopted, allowing ADB to provide long-term programmatic support to the railway development plan in the region.
65. Administration of the tranches was gradually delegated to the PRC resident mission, while the transport division of East Asia Department processed approval of the tranches. ADB provided adequate guidance and supervision for implementing the MFF. To deal with challenges in procuring equipment with advanced technologies, ADB worked closely with the
15 executing agency and standardized the technical requirements to ensure smooth and efficient procurement for the MFF. ADB conducted 18 various missions to support the MFF’s implementation and provided daily guidance to the executing agency. Payments for withdrawal applications were prompt. The executing agency particularly appreciated the efficiency of procurement review and ADB’s timely disbursements.
H. Overall Assessment
66. Overall, the MFF is assessed successful. The program is rated highly relevant, as it closely aligned at both appraisal and completion with the government’s national development plans and the railway development plan, as well as with ADB’s priorities in improving energy efficiency and in managing climate change and the environment. The MFF’s intended outcome and outputs were fully achieved, and the program is rated effective. The EIRR for the program was about 20.4% at completion, indicating it to be economically viable. The program is therefore rated efficient. The sustainability rating is likely sustainable based on the strong government commitment and support and the solid O&M arrangement. In addition, FIRRs for three typical railway lines financed under the MFF confirmed the program to be financially viable.
Table 1: Overall Ratings Criteria Rating Relevance Highly relevant Effectiveness Effective Efficiency Efficient Sustainability Likely sustainable Overall Assessment Successful Development impact Satisfactory Borrower and executing agency Satisfactory Performance of Asian Development Bank Satisfactory Source: Asian Development Bank.
67. The MFF was implemented using a time-slice financing approach. The energy-efficient, environment-friendly, and safety equipment financed under the MFF was procured by tranche and was delivered to the project area along with implementation of the railway development plan for the southwestern region in the PRC. Therefore, it is not feasible to conduct an evaluation for each tranche.
IV. ISSUES, LESSONS, AND RECOMMENDATIONS
A. Issues and Lessons
68. There are no pending issues on the MFF’s implementation. The following lessons could be incorporated into ongoing and future MFF and/or railway projects:
(i) Cost estimates. The MFF was to finance energy-efficient, environment-friendly, and safety equipment under the railway development plan from 2009–2016 in the southwestern region of the PRC, consisting of 6,500 km of railways to be built in the region during the planning period. Logically, the total cost of the program shall be the total cost of the three categories of equipment for the planned railways, which was about $11.5 billion according to the actual expenditures. However, $3.24 billion was counted as the total cost of the program at appraisal, which only took account of three railway lines with total length of 1,389 km where the ADB-financed equipment was generally installed. As a result, less counterpart financing was calculated at
16
appraisal. Fortunately, the government was responsible and provided adequate counterpart funds for the equipment procured for all railway lines built in the southwestern region of the PRC from 2009 to 2016. It is critical to get the investment cost for a program right so that the government knows what the counterpart funds are and can plan accordingly.
(ii) MFF administration. Although the program supported implementation of the railway development plan in the southwestern region of the PRC and the MFF was implemented using a time-slice approach, the equipment and materials procured under the five tranches were mainly installed in three railway lines across the region, instead of in all 47 railway lines built from 2009 to 2016. This arrangement made implementation of the MFF manageable, including procurement, equipment delivery and installation, quality control, and funds management. In addition, the three selected railway lines crossed the entire region, which ensured all key stakeholders were involved in the MFF implementation, including the three railway administration bureaus responsible for O&M of all railway lines in the region. It is not feasible to distribute the equipment and materials procured under the tranches to all 47 railway lines. Delivering them to the selected typical railway lines ensured implementation efficiency of the MFF and ensured the quality of the MFF implementation as well.
(iii) Procurement for high technical equipment. To tackle the specific technical requirements on the railway equipment, a standard Section III: Evaluation and Qualification Criteria for bidding documents for procurement of goods was developed in consultation with ADB’s Procurement, Portfolio, and Financial Management Department, which facilitated procurement processes and ensured the quality of equipment procured under the MFF. Based upon technical experience, it was specified that goods offered with the same or advanced technical specifications had been in production for a certain number of years and a certain minimum number of units’ goods offered with the same or advanced technical specifications had been sold and had been satisfactorily in operation. The standardization on technical experience requirements improved clarity on requirements for the suppliers and the bid evaluation committees and ensured the quality of the equipment procured.
B. Recommendations
69. Piggybacked TA to support an MFF. Normally, it takes up to 10 years to implement an MFF program providing long-term programmatic support to a sector within a country. Meanwhile, a piggybacked TA implementation will last for about 2 years and usually is designed to support a sector reform or capacity building activities under an MFF. The TA implementation period is comparably short, and it may not be able to support an MFF implementation as intended since a sector reform or capacity building activities needs continued efforts over a longer period. To ensure that a piggybacked TA will achieve its intended objectives, it is recommended to allow a longer implementation period for a piggybacked TA to match the MFF’s implementation period, as needed, or provide a series of piggybacked TA projects of smaller amounts across the MFF implementation period similar to the tranches of an MFF. An alternative option to consider would be to use loan funds to finance the capacity building and institutional strengthening activities otherwise covered by a piggybacked TA.
70. Further action or follow-up. The railway development plan from 2009 to 2016 in the southwestern region of the PCR was effectively implemented. O&M arrangements for the railways built under the program have been adequate and efficient. The government is
17 continuously expanding the railway network in the region to meet increasing demand, which is beyond the program of ADB’s intervention. Therefore, no further action related to the MFF is needed.
71. Timing of the project performance evaluation report. The project performance evaluation may be carried out after 1 year from the end of the coronavirus disease (COVID-19) pandemic. The pandemic has significantly affected both passenger and freight traffic volumes in the region. It is recommended to conduct the project performance evaluation for the MFF when the economic activities in the region are back to normal.
18 Appendix 1
DESIGN AND MONITORING FRAMEWORK
Design Summary Performance Targets and /or Indicators Program Achievements Impact
Improved transport system in the GDP is forecast to increase during 2015–2020 at 5%–6% per • Exceeded the target region that supports sustainable annum for the southwestern region Per capita GDP in the southwestern region of PRC socioeconomic development and increased 9.6% on average from 2015 to 2019, ranging the western region development from 7.8% in 2015 to 11.8% in 2019. strategy Per capita rural income in the southwestern region increases • Exceeded the target from CNY3,300 in 2007 to CNY4,400 in 2015 and CNY4,700 Per capita rural income in the southwestern region in 2020 increased from CNY3,300 in 2007 to CNY8,990 in 2015 and CNY13,227 in 2019. Energy consumption on PRC railways per unit of revenue is • Exceeded the target reduced by 20% from 2009 to 2015 Energy consumption on PRC railways per unit of revenue reduced by 39.2% from 2009 to 2015 and in the southwestern region reduced by 40.6% from 2009 to 2015. Total discharge of major pollutants by PRC railways is • Exceeded the target reduced by 10% from 2009 to 2015 Total discharge of major pollutants by PRC railways reduced by 23.5% from 2009 to 2015. Outcome
An energy-efficient, safe, reliable, Transport capacity expanded in the southwestern PRC to • Achieved affordable, and environment- 470 billion ton-km for freight and 140 billion passenger-km Railway transport capacity in the southwestern PRC friendly railway transport system is for passengers, in 2016 expanded from 75.0 billion passenger-km for passengers developed in the region in 2009 to 107.8 billion in 2015 and to 166.7 billion in 2019; but for freight it remained stable from 281.0 billion ton-km in 2009 to 236.7 billion in 2015, and back to 287.6 billion in 2019.a Cost of travel reduced from 35 fen/km in 2008 to 15 fen/km • Achieved in 2015 Differentiated railway fares for passenger adopted: 51 fen/km for 300 km/h above lines; 29 fen/km for 200-250 km/h lines; and 11 fen/km for below 200 km/h lines in 2015 and remained same in 2019. Fuel savings increased from CNY936 million in 2016 to • Likely to be achieved (not due) CNY3.2 billion in 2035 Fuel savings in the southwestern region increased to CNY2.67 billion in 2019 and likely to be increased to CNY4.2 billion in 2035
Appendix 1 19
Design Summary Performance Targets and /or Indicators Program Achievements CO2 emissions reduced by 22,106 tons in 2016 and 1.82 • Likely to be achieved (not due) million tons in 2035 CO2 emissions in the southwestern region reduced by 29,669 tons in 2016 and likely to reach 32,027 tons in 2035.b
SO2 emissions reduced by 10% from 2009 to 2015 • Exceeded the target SO2 emissions in the southwestern region reduced by 29.9% from 2009 to 2015 (3,819 tons to 2,679 tons). Recommendations of energy and safety audits adopted by • Achieved 2013 The recommendations were well received and are being adopted in the PRC, particularly those concerning tunnel disaster relief, energy efficiency management measures, further strengthening internal audit management in railways administrations, and periodic trainings for staff. Output 1. Investment program Energy-efficient, environment-friendly, and safety equipment • Achieved implemented by installing procured and installed by 2015 Energy efficient, environment friendly, and safety energy-efficient technologies, equipment were procured under five tranches and installed environment-friendly in the railway lines or to maintain the railway lines in the equipment, and safety southwestern region by 2018.c equipment
2. Energy efficiency and Recommendations for integrating energy efficiency, and • Achieved environmental issues in environmental sustainability into railway management and Energy efficiency audit with details was introduced to MOR railway management are operations made by 2012 and the railway administrations; development of integrated and environmental management program was recommended institutionalized to railway administrations who are responsible for operation of the railway lines. 3. Safety and energy audits of a Safety and energy audits completed and recommendations • Achieved nominated railway made by 2012 Safety and energy audits for Kunming Railway administration Administration were conducted and recommendations to enhance safety and energy audits in railway administrations were formulated based on the audit results. 4. Capacity building support About 200 staff trained and 10 awareness programs • Achieved provided organized by 2015 165 railway staff received training in the concerned areas under the piggy-backed TA; National safety work meeting conducted annually; Energy efficiency and railway environment management awareness campaigns conducted periodically in the three railway administrations in the southwestern region.d
20 Appendix 1
GDP = gross domestic product, CO2 = carbon dioxide, MOR = Ministry of Railways, PRC = People’s Republic of China, SO2 = sulfur dioxide, TA = technical assistance. a The railway freight transport has not increased because coal consumption reduced by 60% and bulk cargo transport remained stable due to slowdown of infrastructure construction. b The electrification rate of railways in the southwestern region already reached 94% in 2019 and the projection of further reduction of CO2 emission was too high at appraisal. c The procured equipment including 65 contract packages of energy efficient equipment; 4 contract packages of environment protection equipment; 73 contract packages of safety equipment procured under the five tranches. d Railway lines in the southwestern region are operated and managed by Kunming Railway Administration, Chengdu Railway Administration, and Nanning Railway Administration (Since June 2019, they are called China Railway Kunming Bureau Group Co., Ltd., China Railway Chengdu Bureau Group Co., Ltd., and China Railway Nanning Bureau Group Co., Ltd.) Source: Asian Development Bank.
Appendix 2 21
CHRONOLOGY OF MAJOR EVENTS – TRANCHES 1, 2, 3, 4, AND 5
Date Milestone Event 2009 9 July 2009 Concept paper meeting 30 July 2009 Approval of concept paper 9 September 2009 Management review meeting 23-27 September 2009 Appraisal mission fielded 9-10 November 2009 Loan negotiations for Tranche 1 conducted 10 November 2009 Framework financial agreement for the investment program (IP) signed 8 December 2009 Approval of the Multitranche Financing Facility (MFF) 15 December 2009 Loan approval for Tranche 1 2010 8 June 2010 Loan agreement for Tranche 1 signed 23-25 August 2010 Loan inception mission fielded for Tranche 1 26 October 2010 Loan effectiveness of Tranche 1 9-12 November 2010 Loan consultation mission fielded for Tranche 2 14 December 2010 Loan approval for Tranche 2 2011 11 March 2011 Loan agreement for Tranche 2 signed 16-20 May 2011 Loan review mission for Tranche 1 and inception mission for Tranche 2 fielded 10 June 2011 Loan effectiveness of Tranche 2 20 Jun 2011 First disbursement under Tranche 1 23 June 2011 Loan negotiations of the Periodic Financing Request for Tranche 3 concluded 20 July 2011 Loan approval for Tranche 3 25 October 2011 Loan agreement for Tranche 3 signed 24-27 October 2011 Loan review mission for Tranche 1 and 2 and inception mission for Tranche 3 fielded 2012 15 February 2012 Loan effectiveness of Tranche 3 11-18 June 2012 Loan Review Mission fielded for Tranche 1, 2 and 3 14 December 2012 Project administration of Tranche 1, 2 and 3 transferred to PRCM 2013 29-31 January 2013 Special loan review and handover mission fielded for Tranche 1, 2 and 3 14 March 2013 The EA, Ministry of Railways was dissolved and its duty on railway operation was taken up by China Railway Corporation (CRC) 14-16 May 2013 Joint meeting with CRC and agreed Section III for railway projects in the PRC financed by ADB 10 July 2013 Approval of extension of MFF availability period to 30 June 2019 Approval of extension of the application date of the last tranche to 30 June 2015 Approval on change of name of the executing agency from Ministry of Railways to China Railway Corporation 11-18 September 2013 Loan consultation mission for Tranche 4 and Loan Reconnaissance mission for Tranche 5 fielded 11-15 November 2013 Loan review mission fielded for Tranche 1, 2, and 3 14-15 November 2013 Loan negotiations of the Periodic Financing Request for Tranche 4 conducted 04 December 2013 Loan approval for Tranche 4 9-10 December 2013 Loan negotiations of the Periodic Financing Request for Tranche 5 conducted 11 December 2013 Project administration of Tranche 4 transferred to PRCM 2014 07 February 2014 Loan approval for Tranche 5 11 February 2014 Project administration of Tranche 5 transferred to PRCM 30 May 2014 Loan agreement for Tranche 4 and 5 signed 10 September 2014 Loan effectiveness of Tranche 4 and Tranche 5 24-26 November 2014 Loan inception mission fielded for Tranche 4 and 5
22 Appendix 2
Date Milestone Event 9-12 December 2014 Midterm review mission fielded for Tranche 1, 2 and 3 2015 29-30 October 2015 Loan review mission fielded for Tranche 1, 2 3, 4, and 5 2016 22 January 2016 Approval of extension of loan closing date to 31 December 2017 for Tranche 1 11-15 July 2016 Loan review mission fielded for Tranche 1 3 November 2016 Loan review mission fielded for Tranche 2, 3, 4 and 5 2017 19 June 2017 Approval of extension of loan closing date to 30 June 2019 for Tranche 2 and 3 17-18 July 2017 Loan review mission fielded for Tranche 2 and 3 19-20 July 2017 Midterm review mission fielded for Tranche 4 and 5 2018 9 May 2018 Actual loan closing for Tranche 1 12-15 November 2018 Loan review mission fielded for Tranche 1, 2, 3, 4 and 5 28 December 2018 Partial cancellation of loan proceeds for Tranche 2, 3 and 5 2019 04 June 2019 Actual loan closing for Tranche 2 18 June 2019 China Railway Corporation renamed to China State Railway Group Co., Ltd. 4-11 November 2019 Project completion review mission fielded for Tranche 1 24 December 2019 Actual loan closing for Tranche 4 and 5 30 December 2019 Actual loan closing for Tranche 3 2020 8-11 December 2020 Virtual program completion review mission fielded Sources: Asian Development Bank and China State Railway Group Co., Ltd.
Appendix 3 23
RAILWAYS LINES BUILT IN SOUTHWESTERN REGION OF THE PRC FROM 2009 TO 2016
No. Name of the Railway Lines Length Designed Speed Time to Start Time in （km） (km/h) Construction Operation 1 Xi'an-Chengdu Passenger Dedicated Railway 152.7 250 2009.07 2014.12 Line Jiangyou-Chengdu Section 2 Chengdu-Guiyang Passenger Dedicated 135.2 250 2009.07 2014.12 Railway Line Chengdu to Leshan Section 3 Chengdu-Guiyang Passenger Dedicated 27.2 250 2009.07 2014.12 Railway Line Emeishan branch Section 4 Nanning-Beihai Railway Line 197.5 250 2009.09 2013.12 5 Suining-Chongqing Railway Line 131.2 200 2009.1 2012.12 6 Liuzhou-Nanning Intercity Railway Line 222.9 250 2009.12 2013.12 7 GuangYuan-BaZhong-DaZhou Railway Line 239.0 120 2009.12 2016.12 8 Xuyong-Dacun Railway Line 85.5 80 2009.12 2018.7 9 Nanning-Litang Railway Line 94.0 250 2009.6 2014.1 10 Qinzhou-Fangchenggang Railway Line 62.4 250 2010.05 2013.12 11 Kunming-Baise Section of Nanning-Kunming 452.5 250 2010.06 2016.12 Passenger Dedicated Railway Line 12 Xinhuang West-Kunming Section of Shanghai- 678.6 350 2010.10 2015.06 Kunming High-speed Railway Line 13 Guiyang Hub Baiyun to Longli Railway Line 53.4 250 2010.10 2015.9 14 Chongqing-Guiyang Railway Line 380.0 200 2010.10 2018.01 15 Nanning-Baise Section of Nanning-Kunming 256.9 250 2010.11 2015.12 Passenger Dedicated Railway Line 16 Chengdu-Chongqing Passenger Dedicated 299.8 250 2010.11 2015.12 Railway Line 17 Sanjiang-Wansheng-Nanchuan Railway Line 70.2 120 2010.12 2016.12 18 Guiyang-Kunming Section of Shanghai- 462.7 350 2010.3 2016.12 Kunming High-speed Railway Line 19 Kunming to Yuxi Railway Line 85.7 200 2010.5 2016.12 20 Guiyang-Kaiyang Intercity Railway Line 62.6 160 2010.9 2015.5 21 Yulin to Tieshan Port Railway Line 131.7 160 2010.9 2016.4 22 Chengdu to Jiuzhaigou Railway Line 378.0 200 2011.2 2020.12 23 Xi'an to Jiangyou Section of Xi'an-Chengdu 166.0 250 2012.10 2017.12 Passenger Dedicated Railway Line 24 Chongqing-Wanzhou Section of Zhengzhou- 245.8 250 2012.12 2016.11 Wanzhou Railway Line 25 Chuxiong-Dali Railway Line 174.8 200 2013.10 2018.07 26 Chengdu Emeishan Section of Chengdu- 100.0 160 2013.12 2018.1 Kunming Railway Line 27 Tongren-Yuping Section of Jishou-Yuping 46.1 200 2013.12 2018.12 Railway Line 28 Panzhihua to Guangtong Section of Chengdu- 220.0 160 2013.12 2019.1 Kunming Railway Line 29 Leshan Guiyang Section of the Passenger 517.3 250 2013.12 2019.12 Dedicated Line from Chengdu to Guiyang 30 Chengdu-Kunming Railway Expansion and 93.9 160 2013.12 2020.6 Transformation of Miyi-Panzhihua Section 31 Bijie to Zhijin Railway Line 80.0 120 2013.7 2015.12 32 Chengdu to Ya'an Railway Line 99.5 200 2013.8 2018.12 33 Guiyang Hub Xiaobi to Qingzhen East to 81.1 160 2013.8 2021.6 Baiyun Link 34 Lijiang-Shangri-La Railway Line 139.7 120 2014.10 2020.12 35 Qianjiang-Zhangjiajie-Changde Railway Line 23.1 200 2014.12 2019.12 36 Construction of a second line in the Fuling- 311.5 120 2015.10 2020.12 Meijiang section of the Chongqing-Huaihua railway line 37 Chengdu-Kunming Railway Expansion and 386.2 160 2015.10 2023.10 Reconstruction of Emei-Miyi Section
24 Appendix 3
No. Name of the Railway Lines Length Designed Speed Time to Start Time in （km） (km/h) Construction Operation 38 Leshan-Lianjie Railway Line 120.5 120 2015.10 2020.12 39 Anshun to Liupanshui Intercity Railway Line 117.8 250 2015.11 2020.10 40 Mile-Mengzi Railway Line 107.0 250 2015.12 2021.12 41 Chongqing Hub East Ring Railway Line 207.6 160 2015.12 2021.6 42 Dali to Lincang Railway Line 202.1 160 2015.12 2021.6 43 Southern Sichuan Intercity Railway Line 212.0 250 2015.5 2021.6 44 Longchang to Huangtong Railway from Xuyong 189.2 120 2016.10 2022.6 to Bijie Section 45 Guizhou-Nanning High-speed Railway line 482.0 350 2016.12 2023.12 46 Zhengzhou-Wanzhou Railway Line 181.6 350 2016.2 2021.6 47 Yuxi-Mohan Railway Line 507.4 160 2016.4 2022.6 Total 9,671.9 km = kilometer, km/h = kilometer per hour Source: China State Railway Group Co., Ltd.
Appendix 4 25
CONTRACT PACKAGES FINANCED BY THE ASIAN DEVELOPMENT BANK - TRANCHES 1, 2, 3, 4, AND 5 PCSS No. Description Contract Amount Contract Date $ Equivalent Tranche 1 (Loan 2605) a. Energy Efficiency 0010 Auto-Transformer $5,846,201.76 05 December 2014 0011 220kv Sf6 Breaker $404,709.46 05 December 2014 0012 220kv Current & Voltage Transformers $509,894.61 05 December 2014 0013 AC & DC System $326,214.42 05 December 2014 0014 10kv Single-Core Power Cable 3x (Dk21+500 $2,992,800.01 05 December 2014 (Jiangxi Village) - Dk108+350 (Pingguo county)) 0015 10kv Single-Core Power Cable 3x (Dk108+350 $7,072,229.15 05 December 2014 (Pingguo county) - D2k291+427 (Provincial Border)) 0016 10kv Gas Insulated HY Switchgear (GIS) $2,798,038.80 05 December 2014 0017 Signal Power Supply System (Including UPS) $608,567.54 31 December 2014 0018 Computer-Based Interlocking Device $2,498,772.35 31 December 2014 0020 Traction Transformer $11,376,055.23 31 December 2014 0021 Contact Cable-Guangxi $6,655,925.62 20 January 2015 0022 Messenger Cable-Guangxi $5,592,819.49 20 January 2015 0023 Porcelain Insulator-Guangxi $1,149,440.74 20 January 2015 0024 Composite Insulator-Guangxi $1,499,160.74 20 January 2015 0025 Additive Wire-Guangxi $2,813,408.87 20 January 2015 0026 Optical Cable for Communications $889,476.57 29 May 2015 0028 Package 5-Overhead Catenary System Lot Ocs7- $9,070,164.45 29 December 2015 Contact Cable-Yunnan 0029 Package 5-Overhead Catenary System Lot Ocs08- $6,864,558.81 29 December 2015 Messenger Cable-Yunnan 0030 Package 5-Overhead Catenary System Lot Ocs09- $8,092,736.93 29 December 2015 Components of OCS-Yunnan 0031 Package 5-Overhead Catenary System Lot Ocs10- $1,170,720.27 29 December 2015 Porcelain Insulator-Yunnan 0032 Package 5-Overhead Catenary System Lot Ocs11- $4,338,215.19 29 December 2015 Composite Insulator-Yunnan 0033 Package5-Overhead Catenary System Lot Ocs12 $3,795,870.32 29 December 2015 0034 Package 6-Traction Substation System Lot Tss06: $5,503,088.85 19 February 2016 Traction Transformer 0035 6-Traction Substation System Tss07: Auto $5,416,933.83 05 February 2016 Transformer 0036 Package: Traction Substation System Tss08:220kv $794,877.02 19 February 2016 Sf6 Circuit Breaker 0037 Package6-Traction Substation System Lots09: $391,528.58 19 February 2016 Current and Voltage Transformer 0038 Package6-Traction Substation System Lots10: Ac-Dc $387,795.51 19 February 2016 System 0039 Package 6-Traction Substation System Lot $6,001,777.76 19 February 2016 Ep04:10kv Single-Core Power Cable 3x Dk291+427 0040 Package 6-Traction Substation System Lot $5,869,447.77 19 February 2016 Tss05:10kv Single-Core Power Cable 3x Dk514+28 0041 Package6-Traction Substation System Lot $2,164,975.73 19 February 2016 Ep06:35kv, 10kv Gas Insulated HY Switchgear 0047 Lot TSS 11:220kv GIS Switch Cabinet, Package 6 $437,600.18 30 April 2016 0048 Lot Tss12:2x27.5kv Ac Metal-Enclosed Cabinet, $205,251.61 30 April 2016 Package 6 0049 Procurement of Lot1: Switch and Switch Spare Parts $2,719,773.19 18 November 2016 (Guangxi Province), Under Package 2a 0050 Procurement of Lot2: Switch and Switch Spare Parts $8,248,174.31 18 November 2016 (Yunnan Province), Under Package 2a Subtotal $124,507,205.67
26 Appendix 4
PCSS No. Description Contract Amount Contract Date $ Equivalent b. Safety Enhancement 0001 Pot Type Rubber Bearing-Yunnan Section Lot B02 $7,716,262.13 04 March 2011 0002 Cylindrical Surface Steel Bearing and Damping and $6,106,601.29 04 March 2011 Isolation Steel Bearing 0003 Spherical Steel Bearings Lot B04 $6,436,228.48 04 March 2011 0004 Pot Type Rubber Bearing - Section in Guangxi Lot $9,175,169.41 21 April 2011 Bo1 0005 Fastener (Lot F01) $4,773,421.09 31 May 2011 0006 Rail Fastening Systems (High Speed) For Guangxi $27,995,232.54 02 September 2014 0007 Rail Fastening Systems (High Speed) For Yunnan 1 $29,454,241.34 04 September 2014 0008 Rail Fastening Systems (High Speed) For Yunnan 2 $36,711,524.93 04 September 2014 0009 Rail Fastening Systems (Normal Speed) For Yunnan $1,685,707.03 04 September 2014 0019 Railway Signal Cable $9,436,810.85 31 December 2014 0042 Package4-Signaling & Communication System $694,313.03 27 January 2016 Lots04: Signal Power Supply System 0043 Package 4-Signaling & Communication System Lot $3,105,423.05 27 January 2016 S05: Computer-Based Interlocking Device 0044 Package 4-Signaling & Communication System Lot $2,666,242.28 27 January 2016 S06 0045 Package 4-Signaling & Communication System Lot $4,945,391.36 27 January 2016 S07: Railway Signal Cable 0046 Package4-Signaling & Communication System Lot $1,659,073.65 27 January 2016 T02: Optical Cable for Communications 0051 Procurement of OCS Operating Vehicle (With $7,368,295.16 18 November 2016 Detection Device) And OCS Flat Car (Yunnan Province) 0052 Procurement of Rail Trolley (Yunnan Province), $3,810,494.81 18 November 2016 Lotoms01, Package 9. Subtotal $163,740,432.43 c. Environment 0027 Environmentally-friendly Soundproof Materials $6,375,163.56 20 April 2015 Subtotal $6,375,163.56 Total for Tranche 1 $294,622,801.66 Tranche 2 (Loan 2724) Safety Enhancement 0001 B01 Steel Bearings $1,527,864.12 15 September 2011 0002 Lot B02 Simply Supported Beam Steel Bearing $34,342,166.20 23 August 2012 0003 Lot B01: Continuous Beam Steel Bearing $4,311,556.24 23 August 2012 0004 WJ-8b Fastener $14,891,905.00 09 May 2013 0005 Turnout (Including 8 Sets of Rail Telescopic Adjusting $42,212,363.72 06 June 2013 Devices) 0006 Turnout $2,307,363.89 06 June 2013 Total for Tranche 2 $99,593,219.17 Tranche 3 (Loan 2765) a. Energy Efficiency 0009 Composite Insulator $445,216.09 14 May 2014 0010 Porcelain Insulator $2,597,511.58 14 May 2014 0017 Power Supply and Environment Monitoring $219,353.52 11 September 2014 Equipment 0019 Intelligent Power Source System $679,782.04 11 September 2014 0023 Aluminum Sheathed Steel-Cored Aluminum Stranded $3,595,238.71 25 September 2014 Wire 0024 Isolating Switch $663,788.28 25 September 2014 0025 Section Insulator and Cantilever Assembly $7,828,267.64 25 September 2014 0026 Traction Transformer $3,734,412.97 25 September 2014 0027 Traction Transformer $2,842,726.48 25 September 2014 0028 Auto-Transformer and Power Transformer $4,575,451.75 25 September 2014 0029 220kv Sf6 Circuit-Breaker $381,146.84 25 September 2014
Appendix 4 27
PCSS No. Description Contract Amount 25 September 2014 $ Equivalent 0030 Circuit-Breaker GIS $3,794,646.20 25 September 2014 0031 10kv Gas Insulated Switchgear (GIS) $3,187,942.31 25 September 2014 0032 10kv High Voltage Ring Main Unit $1,050,192.16 25 September 2014 0033 Box-Type Substation $2,476,461.93 25 September 2014 0034 Box-Type Substation $1,546,091.19 14 October 2014 0040 Arrester, Transformer and Voltage Regulator $1,483,807.50 14 May 2014 Subtotal $41,102,037.19 b. Safety Enhancement 0001 Lot 1 Continuous Earthing Cable for the Integrated $3,436,851.66 06 July 2012 grounding System & Type C Crimp Contact 0002 Elastic Rod Type-II Fastener &WJ-8B Fastener $33,284,745.33 09 May 2013 0003 WJ-8B Fastener $26,731,054.82 09 May 2013 0004 Package 0708-1220070TJ001-Lot B2 (Pantograph $586,214.52 30 May 2013 Dynamic Inspecting System) 0005 Package 0708-1220070TJ001-Lot B3 (Driving $2,561,465.39 30 May 2013 Simulator of Emu) 0006 Package 0708-1220070tj001-Lot B1 (Advanced $1,699,229.14 18 November 2013 Railway Inspection & Maintenance Equipment) 0007 Supplementary Bearings) $1,697,655.78 03 December 2013 0008 H Steel Column (Chengdu South-Longchang North) $8,833,885.14 17 January 2014 0011 Integrated Dropper and Tension Assembly Wheel $8,768,700.71 14 May 2014 0012 Overhead Contact System Maintenance Car $1,738,187.48 14 May 2014 0013 Catenary Cable $8,378,122.34 11 July 2014 0014 Contact Cable $9,711,253.70 11 September 2014 0015 Radio Communication Equipment 1 $3,992,621.94 11 September 2014 0016 Radio Communication Equipment 2 $2,385,705.06 11 September 2014 0018 Optical Cable $975,079.17 11 September 2014 0020 H Steel Columns (Lot H2) $4,898,034.28 25 September 2014 0021 Through Cable -10kv $7,987,399.04 25 September 2014 0022 Through Cable -10kv $4,949,294.12 25 September 2014 0035 Rail Car, High Altitude Work Car, Railway Truck Car $3,646,823.56 25 September 2014 and Pressure Cable Car 0036 Measuring Equipment for Accurate Positioning $1,049,751.06 25 September 2014 0037 Radio Communication Equipment $3,251,153.87 14 October 2014 0038 Radio Block Center $10,374,740.23 14 October 2014 0039 Zpw-2000c System Device $15,634,757.59 14 October 2014 0043 Overhead Contact System Maintenance Car $1,649,976.83 21 December 2015 0044 Procurement of Turnout (Spare Parts), Lot 11 $2,483,946.37 15 June 2016 Subtotal $170,706,649.13 c. Environment 0041 Environmental Protection Equipment (Metal Lot) $20,920,836.90 15 May 2015 0042 Environmental Protection Equipment (None-Metal) $5,746,990.14 15 May 2015 Subtotal $26,667,827.04 Total for Tranche 3 $238,476,513.36 Tranche 4 (Loan 3082) Safety Enhancement 0001 Fastener $2,615,576.94 18 March 2015 0002 Bearings (Simply Supported T Beam Steel Bearing) $9,520,460.50 18 March 2015 0003 Bearings (Simply Supported T Beam Steel Bearing) $2,580,059.67 18 March 2015 0004 Railway Underground Copper Cable for The Whole $3,149,944.34 18 March 2015 Line 0005 Fastener $22,841,314.36 17 April 2015 0006 Common Speed Turnout $10,163,560.83 17 April 2015 0007 High Speed Turnout $21,491,456.65 17 April 2015 0008 Turnout Switch Device $13,174,797.49 17 April 2015 0009 1200m3 Full Section Ballast Cleaning Machine $44,935,689.02 18 September 2015 0010 Dynamic Continuous Action Leveling, Lifting, Linin $47,269,982.66 18 September 2015 Total for Tranche 4 $177,742,842.46
28 Appendix 4
PCSS No. Description Contract Amount Contract Date $ Equivalent Tranche 5 (Loan 3109) a. Energy Efficiency 0002 Package 7-Traction Transformer Station, Lot 101: $8,359,697.10 25 May 2016 Traction Transformer 0003 Package 7-Traction Transformer Station, Lot102: $4,239,351.44 25 May 2016 Transformer, Lightning Arrester 0004 Procurement of Package 7-Traction Transformer $1,079,918.85 25 May 2016 Station, Lot104:AC/DC Systems, Integrated Automation 0005 Package 6-Contact Line Equipment, Lot 101: Steel $6,944,042.09 25 May 2016 Pole, Portal Beam and Drop Post 0006 Package 6-Contact Line Equipment, Lot 102: $2,270,888.09 25 May 2016 Concrete Pole 0007 Package 6-Contact Line Equipment, Lot 103: Contact $6,536,455.91 25 May 2016 Cable 0008 Package 6-Contact Line Equipment, Lot 104: $4,608,285.83 25 May 2016 Catenary Cable 0009 Package 6-Contact Line Equipment, Lot 105: $5,729,825.97 25 May 2016 Additional Cable 0010 Package 6-Contact Line Equipment, Lot 107: $2,204,361.49 25 May 2016 Porcelain Insulator 0011 Package 6-Contact Line Equipment, Lot 108: $737,186.51 25 May 2016 Compound Insulator 0012 Package 6: Contact Line Equipment, Lot 106: $9,005,831.53 25 May 2016 Components For Contact System 0014 Package 8: Power Equipment, Lot 802:10kv Switch $838,844.09 12 October 2016 Cabinet 0015 Package 8: Power Equipment, Lot 803:Box-Type $5,777,864.36 12 October 2016 Substation 0021 Package 8-Power Equipment, Lot 801:10kv Power $16,353,357.88 15 November 2016 Cable Subtotal $74,685,911.14 b. Safety Enhancement 0001 Bearings (Simply Supported T Beam Steel Bearing) $9,936,851.77 18 March 2015 0016 Package 3-Signal Equipment, Lot 301: Intelligent $754,756.25 12 October 2016 Power Supply Panel for Signal 0017 Package 3-Signal Equipment, Lot 302: Computer- $3,989,676.45 12 October 2016 Based Interlocking Equipment 0018 Package 3-Signal Equipment, Lot 303: Train Control $6,149,779.49 12 October 2016 Center and Leu 0019 Package 3-Signal Equipment, Lot 304: Spot $1,796,573.15 12 October 2016 Transponder 0020 Package 3 - Signal Equipment, Lot 305: Signal Cable $4,829,042.40 12 October 2016 0022 Package 2-Telecommunication Equipment, Lot 301: $754,380.65 12 October 2016 Wireless Telecommunication Equipment 0023 Package 2-Telecommunication Equipment, Lot 302: $513,000.89 12 October 2016 Radio Communication Equipment 0024 OCS Working Car, Lot 501 Under Package 9 $4,302,293.99 08 February 2017 0025 Catenary Platform Car, Lot 502 Under Package 9 $226,869.81 08 February 2017 0026 Railway Motor Trolley, Lot 503 Under Package 9 $3,201,502.49 08 February 2017 0027 Lot1: High Speed Turnout (Including Components) $5,010,096.94 23 May 2017 Under Package 9: Rail Switching Device 0028 Lot 2: Common Speed Turnout (Including $10,067,324.13 23 May 2017 Components), Under Package9: Rail Switching Device 0029 Common Speed Turnout $7,274,900.60 21 August 2017 0030 High Speed Turnout $13,444,222.88 20 August 2017 Subtotal $72,251,271.89
Appendix 4 29
PCSS No. Description Contract Amount Contract Date $ Equivalent c. Environment 0013 Procurement of Package 5: Environmental Protection $5,384,168.90 12 July 2016 Equipment Subtotal $5,384,168.90 Total for Tranche 5 $152,321,351.93
30 Appendix 5
PROGRAM COST AT APPRAISAL AND ACTUAL ($ million) Appraisal Estimate Actual Foreign Local Foreign Local Item Exchange Currency Total Cost Exchange Currency Total Cost A. Base Costa 1. Equipment b a. Energy Efficiency n/a n/a 1,361.58 240.30 574.29 814.59 b. Safety Enhancement n/a n/a 1,468.08 684.03 1,378.18 2062.21 c. Environment n/a n/a 170.34 38.44 96.56 135.00 2. Taxes and Duties n/a n/a 66.36 0 92.24 92.24 Subtotal (A) n/a n/a 3,066.36 962.75 2,141.27 3,104.02 B. Price Contingencyc Subtotal (B) n/a n/a 104.86 0 0 0 C. Financing Charges During Implementationd Subtotal (C) n/a n/a 67.28 0 47.49 47.49 Total (A+B+C) 1,428.39 1,810.10 3,238.50 962.75 2,188.76 3,151.51 Notes: Numbers may not sum precisely because of rounding. a Appraisal estimates for the program used 2009 prices. b The breakdown cost of appraisal estimate by each equipment category cannot be summed for the investment program as those of date were not available in the appraisal documents of tranche 3, 4 and 5. c Price contingencies at appraisal computed at 1.0% for 2010, 0.0% for 2011, 0.3% for 2012, and 0.5% thereafter on foreign exchange costs and 1.0% for 2010, 1.5% for 2011, and 2.0% thereafter on local currency costs. d Includes interest and commitment charges. Sources: Asian Development Bank and China State Railway Group Co., Ltd.
Appendix 5 31
PROJECT COST AT APPRAISAL AND ACTUAL – TRANCHES 1, 2, 3, 4 AND 5 ($ million) Appraisal Estimate Actual Foreign Local Foreign Local Item Exchange Currency Total Cost Exchange Currency Total Cost Tranche 1 A. Base Cost 1. Equipment a. Energy Efficiency 157.45 235.17 392.62 124.51 272.71 397.21 b. Safety Enhancement 191.26 233.76 425.02 163.74 363.28 527.02 c. Environment 49.42 32.94 82.36 6.38 13.92 20.30 2. Taxes and Duties 0 19.91 19.91 0 12.20 12.20 Subtotal (A) 398.13 521.78 919.91 294.62 662.11 956.72 B. Price Contingency Subtotal (B) 5.41 21.83 27.25 0.00 0.00 0.00 C. Financing Charges During Implementation Subtotal (C) 20.18 0.00 20.18 0.00 15.41 15.41 Total (A+B+C) 423.72 543.61 967.34 294.62 677.52 972.13 Tranche 2 A. Base Cost 1. Equipment a. Energy Efficiency 134.61 164.58 299.19 99.59 227.75 327.34 2. Taxes and Duties 0.00 9.35 9.35 0.00 13.66 13.66 Subtotal (A) 134.61 173.93 308.54 99.59 241.41 341 B. Price Contingency Subtotal (B) 1.81 7.33 9.14 0.00 0.00 0.00 C. Financing Charges During Implementation Subtotal (C) 6.05 0.00 6.05 0.00 4.18 4.18 Total (A+B+C) 142.47 181.26 323.73 99.59 245.59 345.18 Tranche 3 A. Base Cost 1. Equipmenta a. Energy Efficiency n/a n/a n/a 41.1 125.52 166.62 b. Safety Enhancement n/a n/a n/a 170.71 335.64 506.35 c. Environment n/a n/a n/a 26.67 64.81 91.48 2. Taxes and Duties 0.00 23.68 23.68 0.00 35.26 35.26 Subtotal (A) 340.84 440.41 781.25 238.48 561.23 799.71 B. Price Contingency Subtotal (B) 4.58 18.56 23.14 0.00 0.00 0.00 C. Financing Charges During Implementation Subtotal (C) 15.32 0.00 15.32 0.00 9.40 9.40 Total (A+B+C) 360.74 458.97 819.71 238.48 570.63 809.11
32 Appendix 5
Appraisal Estimate Actual Foreign Local Foreign Local Item Exchange Currency Total Cost Exchange Currency Total Cost Tranche 4 A. Base Cost 1. Equipmenta a. Safety Enhancement n/a n/a n/a 177.74 283.72 461.46 b. Environment n/a n/a n/a 0.00 0.00 0.00 2. Taxes and Duties 0.00 15.23 15.23 0.00 15.62 15.62 Subtotal (A) 227.74 293.68 521.42 177.74 299.34 477.08 B. Price Contingency Subtotal (B) 3.12 12.62 15.73 0.00 0.00 0.00 C. Financing Charges During Implementation Subtotal (C) 10.42 0.00 10.42 0.00 8.70 8.70 Total (A+B+C) 241.28 306.30 547.57 177.74 308.04 485.78 Tranche 5 A. Base Cost 1. Equipmenta a. Energy Efficiency n/a n/a n/a 74.69 176.06 250.75 b. Safety Enhancement n/a n/a n/a 72.25 167.79 240.04 c. Environment - - - 5.39 17.83 23.22 2. Taxes and Duties 0.00 16.99 16.99 0.00 15.5 15.5 Subtotal (A) 240.24 310.72 550.96 152.32 377.18 529.50 B. Price Contingency Subtotal (B) 3.48 14.08 17.56 0.00 0.00 0.00 C. Financing Charges During Implementation Subtotal (C) 11.63 0.00 11.63 0.00 9.80 9.80 Total (A+B+C) 255.35 324.8 580.15 152.32 386.98 539.30 Notes: Numbers may not sum precisely because of rounding. a The breakdown cost of appraisal estimate by each equipment category were not available in the appraisal documents of tranche 3, 4 and 5. Sources: Asian Development Bank and China State Railway Group Co., Ltd.
Appendix 6 33
PROGRAM AND PROJECT COST BY FINANCIER
Table 6.1: Program Cost at Appraisal by Financier ($ million) ADB MOR Item Total Cost % of Cost % of Cost Amount Amount Category Category A. Base Costsa 1. Equipmentb a. Energy Efficiency 1,361.58 n/a n/a n/a n/a b. Safety Enhancement 1,468.08 n/a n/a n/a n/a c. Environment 170.34 n/a n/a n/a n/a 2. Taxes and Duties 66.36 n/a n/a n/a n/a Total Base Cost 3,066.36 n/a n/a n/a n/a B. Price Contingency c 104.86 0 0 104.86 100 C. Financing Charges During Implementation d 67.28 0 0 67.28 100 Total Project Cost (A+B+C) 3,238.50 1,000.00 30.88 2,238.50 69.12 ADB=Asian Development Bank, MOR= Ministry of Railways Notes: Numbers may not sum precisely because of rounding. a In 2009 prices. b The breakdown cost of appraisal estimate by each equipment category cannot be summed for the investment program as those of date were not available in the appraisal documents of tranche 3, 4 and 5. c Price contingencies at appraisal computed at 1.0% for 2010, 0.0% for 2011, 0.3% for 2012, and 0.5% thereafter on foreign exchange costs and 1.0% for 2010, 1.5% for 2011, and 2.0% thereafter on local currency costs. d Includes interest and commitment charges. Source: Asian Development Bank estimates.
34 Appendix 6
Table 6.2: Program Cost at Completion by Financier ($ million) ADB CR Item Total Cost % of Cost % of Cost Amount Amount Category Category A. Base Costs 1. Equipment a. Energy Efficiency 814.59 240.30 29.50 574.29 70.50 b. Safety Enhancement 2,062.21 684.03 33.17 1,378.18 66.83 c. Environment 135.00 38.44 28.47 96.56 71.53 2. Taxes and Duties 92.24 0.00 0.00 92.24 100.00 Total Base Cost 3,104.03 962.77 31.02 2,141.27 68.98 B. Price Contingency 0 0.00 0.00 0.00 0.00 C. Financing Charges During Implementation 47.49 0.00 0.00 47.49 100.00 Total Project Cost (A+B+C) 3,151.51 962.76 30.55 2,188.76 69.45 ADB=Asian Development Bank, CR= China State Railway Group Co., Ltd. Note: Numbers may not sum precisely because of rounding. Sources: Asian Development Bank and China State Railway Group Co., Ltd.
Appendix 6 35
Table 6.3: Project Cost at Appraisal by Financier– Tranches 1, 2, 3, 4 and 5 ($ million) ADB MOR Item Total Cost % of Cost % of Cost Amount Amount Category Category Tranche 1 A. Base Costs 1. Equipment a. Energy Efficiency 392.62 120.80 30.8 271.82 69.2 b. Safety Enhancement 425.02 129.78 30.5 295.24 69.5 c. Environment 82.36 49.42 60.0 32.94 40.0 2. Taxes and Duties 19.91 0.00 0.0 19.91 100.0 Total Base Cost 919.91 300.00 32.6 619.91 67.4 B. Price Contingency 27.25 0.00 0.0 27.25 100.0 C. Financing Charges During Implementation 20.18 0.00 0.0 20.18 100.0 Total Project Cost (A+B+C) 967.34 300.00 31.0 667.34 69.0 Tranche 2 A. Base Costs 1. Equipment a. Safety Enhancement 299.19 100.00 33.4 199.19 66.6 2. Taxes and Duties 9.35 0.00 0.0 9.35 100.0 Total Base Cost 308.54 100.00 32.4 208.54 67.6 B. Price Contingency 9.14 0.00 0.00 9.14 100.0 C. Financing Charges During Implementation 6.05 0.00 0.00 6.05 100.0 Total Project Cost (A+B+C) 323.73 100.00 30.9 223.73 69.1 Tranche 3 A. Base Costs 1. Equipment a. Energy Efficiency n/a n/a n/a n/a n/a b. Safety Enhancement n/a n/a n/a n/a n/a c. Environment n/a n/a n/a n/a n/a 2. Taxes and Duties 23.7 0.00 0.0 23.70 100.0 Total Base Cost 781.30 250.00 32.0 531.30 68.0 B. Price Contingency 23.10 0.00 0.0 23.10 100.0 C. Financing Charges During Implementation 15.30 0.00 0.0 15.30 100.0 Total Project Cost (A+B+C) 819.70 250.00 30.5 569.70 69.50
36 Appendix 6
ADB MOR Item Total Cost % of Cost % of Cost Amount Amount Category Category Tranche 4 A. Base Costs 1. Equipment a. Safety Enhancement n/a n/a n/a n/a n/a b. Environment n/a n/a n/a n/a n/a 2. Taxes and Duties 15.23 0.00 0.0 15.23 100.0 Total Base Cost 521.42 180.00 34.5 341.42 65.5 B. Price Contingency 15.73 0.00 0.0 15.73 100.0 C. Financing Charges During Implementation 10.45 0.00 0.0 10.45 100.0 Total Project Cost (A+B+C) 547.60 180.00 32.9 367.60 67.1 Tranche 5 A. Base Costs 1. Equipment a. Energy Efficiency n/a n/a n/a n/a n/a b. Safety Enhancement n/a n/a n/a n/a n/a 2. Taxes and Duties 16.99 0.00 0.0 16.99 100.0 Total Base Cost 550.99 170.00 30.9 380.99 69.1 B. Price Contingency 17.56 0.00 0.0 17.56 100.0 C. Financing Charges During Implementation 11.63 0.00 0.0 11.63 100.0 Total Project Cost (A+B+C) 580.18 170.00 29.3 410.18 70.7 ADB=Asian Development Bank, MOR= Ministry of Railways Note: Numbers may not sum precisely because of rounding. Sources: Asian Development Bank and China State Railway Group Co., Ltd.
Appendix 6 37
Table 6.4: Project Cost at Completion by Financier– Tranche 1, 2, 3, 4 and 5 ($ million) ADB CR Item Total Cost % of Cost % of Cost Amount Amount Category Category Tranche 1 A. Base Costs 1. Equipment a. Energy Efficiency 397.21 124.51 31.3 272.71 68.7 b. Safety Enhancement 527.02 163.74 31.1 363.28 68.9 c. Environment 20.30 6.38 31.4 13.92 68.6 2. Taxes and Duties 12.20 0.00 0.0 12.20 100.0 Total Base Cost 956.73 294.63 30.8 662.11 69.2 B. Price Contingency 0.00 0.00 0.0 0.00 0.0 C. Financing Charges During Implementation 15.41 0.00 0.0 15.41 100.0 Total Project Cost (A+B+C) 972.13 294.63 30.3 677.51 69.7 Tranche 2 A. Base Costs 1. Equipment a. Safety Enhancement 327.34 99.59 30.4 227.75 69.6 2. Taxes and Duties 13.66 0 0.0 13.66 100.0 Total Base Cost 341.00 99.59 29.2 241.41 70.8 B. Price Contingency 0.00 0.00 0.0 0.00 0.0 C. Financing Charges During Implementation 4.18 0.00 0.0 4.18 100.0 Total Project Cost (A+B+C) 345.18 99.59 28.9 245.59 71.1 Tranche 3 A. Base Costs 1. Equipment a. Energy Efficiency 166.62 41.1 24.7 125.52 75.3 b. Safety Enhancement 506.35 170.71 33.7 335.64 66.3 c. Environment 91.48 26.67 29.2 64.81 70.8 2. Taxes and Duties 35.26 0.00 0.0 35.26 100.0 Total Base Cost 799.71 238.48 29.8 561.23 70.2 B. Price Contingency 0.00 0.00 0.0 0.00 0.0 C. Financing Charges During Implementation 9.40 0.00 0.0 9.40 100.0 Total Project Cost (A+B+C) 809.11 238.48 29.5 570.63 70.5
38 Appendix 6
ADB CR Item Total Cost % of Cost % of Cost Amount Amount Category Category Tranche 4 A. Base Costs 1. Equipment a. Safety Enhancement 461.46 177.74 38.5 283.72 61.5 b. Environment 0 0 0.0 0 0 2. Taxes and Duties 15.62 0 0.0 15.62 100.0 Total Base Cost 477.08 177.74 37.3 299.34 62.7 B. Price Contingency 0.00 0.00 0.0 0.00 0.0 C. Financing Charges During Implementation 8.70 0.00 0.0 8.70 100.0 Total Project Cost (A+B+C) 485.78 177.74 36.6 308.04 63.4 Tranche 5 A. Base Costs 1. Equipment a. Energy Efficiency 250.75 74.69 29.8 176.06 70.2 b. Safety Enhancement 240.04 72.25 30.1 167.79 69.9 c. Environment 23.22 5.39 23.2 17.83 76.8 2. Taxes and Duties 15.5 0 0.0 15.5 100.0 Total Base Cost 529.5 152.32 28.8 377.18 71.2 B. Price Contingency 0.00 0.00 0.0 0.00 0.0 C. Financing Charges During Implementation 9.80 0.00 0.0 9.80 100.0 Total Project Cost (A+B+C) 539.3 152.32 28.2 386.98 71.8 ADB=Asian Development Bank, CR= China State Railway Group Co., Ltd. Note: Numbers may not sum precisely because of rounding. Sources: Asian Development Bank and China State Railway Group Co., Ltd.
Appendix 7 39
DISBURSEMENT OF ADB LOAN PROCEEDS
Table 7.1: Annual and Cumulative Disbursement of ADB Loan Proceeds-Tranche 1 ($ million) Annual Disbursement Cumulative Disbursement Amount Amount Year ($ million) % of Total ($ million) % of Total 2011 5.47 1.9% 5.47 1.9% 2012 6.12 2.1% 11.59 3.9% 2013 0.00 0.0% 11.59 3.9% 2014 19.91 6.8% 31.49 10.7% 2015 71.40 24.2% 102.89 34.9% 2016 123.38 41.9% 226.27 76.8% 2017 67.79 23.0% 294.06 99.8% 2018 0.56 0.2% 294.62 100.0% Total 294.62 100.0% 294.62 100.0% ADB = Asian Development Bank. Source: Asian Development Bank e-Operations.
Figure 7.1: Projection and Cumulative Disbursement of ADB Loan Proceeds-Tranche 1 ($ million)
300
250
200
150 $ million $
100
50
0 2011 2012 2013 2014 2015 2016 2017 2018
Projection Actual
40 Appendix 7
Table 7.2: Annual and Cumulative Disbursement of ADB Loan Proceeds-Tranche 2 ($ million) Annual Disbursement Cumulative Disbursement Amount Amount Year ($ million) % of Total ($ million) % of Total
2012 5.07 5.09 5.07 5.09 2013 27.81 27.92 32.88 33.01 2014 49.31 49.51 82.18 82.52 2015 9.41 9.45 91.59 91.97 2016 0.00 0.00 91.59 91.97 2017 8.00 8.03 99.59 100.00 Total 99.59 100.00 99.59 100.00 ADB = Asian Development Bank. Source: Asian Development Bank e-Operations.
Figure 7.2: Projection and Cumulative Disbursement of ADB Loan Proceeds-Tranche 2 ($ million)
100 90 80 70 60 50 $ million $ 40 30 20 10 0 2011 2012 2013 2014 2015 2016 2017
Projection Actual
Appendix 7 41
Table 7.3: Annual and Cumulative Disbursement of ADB Loan Proceeds-Tranche 3 ($ million) Annual Disbursement Cumulative Disbursement Amount Amount Year ($ million) % of Total ($ million) % of Total 2012 0.35 0.15 0.35 0.15 2013 11.07 4.64 11.42 4.79 2014 112.90 47.34 124.32 52.13 2015 73.14 30.67 197.46 82.80 2016 26.86 11.26 224.32 94.06 2017 15.31 6.42 239.64 100.49 2018 0.36 0.15 239.99 100.64 2019 -1.52 -0.64 238.48 100.00 Total 238.48 100.00 238.48 100.00 ADB = Asian Development Bank. Source: Asian Development Bank e-Operations.
Figure 7.3: Projection and Cumulative Disbursement of ADB Loan Proceeds-Tranche 3 ($ million)
250
200
150
100 million $ 50
0 2012 2013 2014 2015 2016 2017 2018 2019
Projection Actual
42 Appendix 7
Table 7.4: Annual and Cumulative Disbursement of ADB Loan Proceeds-Tranche 4 ($ million) Annual Disbursement Cumulative Disbursement Amount Amount Year ($ million) % of Total ($ million) % of Total 2015 23.92 13.46 23.92 13.46 2016 61.57 34.64 85.49 48.10 2017 76.85 43.24 162.34 91.34 2018 9.56 5.38 171.90 96.72 2019 5.84 3.28 177.74 100.00 Total 177.74 100.00 177.74 100.00 ADB = Asian Development Bank. Source: Asian Development Bank e-Operations.
Figure 7.4: Projection and Cumulative Disbursement of ADB Loan Proceeds-Tranche 4 ($ million)
180 160 140
120
100
million $ 80 60 40
20 0 2014 2015 2016 2017 2018 2019 Projection Actual
Appendix 7 43
Table 7.5: Annual and Cumulative Disbursement of ADB Loan Proceeds-Tranche 5 ($ million) Annual Disbursement Cumulative Disbursement Amount Amount Year ($ million) % of Total ($ million) % of Total 2015 7.34 4.82 7.34 4.82 2016 27.86 18.29 35.21 23.11 2017 82.35 54.07 117.56 77.18 2018 23.28 15.28 140.84 92.46 2019 11.48 7.54 152.32 100.00 Total 152.32 100.00 152.32 100.00 ADB = Asian Development Bank. Source: Asian Development Bank e-Operations.
Figure 7.5: Projection and Cumulative Disbursement of ADB Loan Proceeds-Tranche 5 ($ million)
180 160 140 120 100
$ million $ 80 60 40 20 0 2015 2016 2017 2018 2019
Projection Actual
44 Appendix 8
IMPLEMENTATION SCHEDULE OF THE INVESTMENT PROGRAM
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Item I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV 1. Bid Preparation and
Procurement a 2. Equipment or System Installation 3. Training and Capacity b Development 4. Final Acceptance
Appraisal estimate: Actual: Notes: a The schedule for item 1 covers the procurement of spare parts, rail trolley, and operating vehicles which do not require installation. b The schedule for item 3 covers the training and capacity development activities conducted under the piggy-backed TA as well as the continued training and awareness enhancing activities on safety conducted by the local government and local railway bureaus.
Appendix 9 45
ORGANIZATION CHART FOR RAILWAY OPERATION IN THE PRC
Ministry of Transport China State
National Railway Railway Group Co., Administration Ltd. (CR)
Safety Material Finance Audit and Other 22 Supervision Manage- Depart-ment Assessment In-house Authority ment Dept. Bureau units
China Railway Kunming Bureau Group Co., Ltd. Remaining 15 railway China Railway Nanning Bureau Group Co., Ltd. administration China Railway Chengdu Bureau Group Co., Ltd. companies (in the Southwestern Region) (have similar setup)
Railway Administration Safety Supervision Offices
Safety Supervision Branch Offices for each railway line
Safety Sections at every station and depot
Sources: Ministry of Transport and China National Railways Group Co., Ltd.
46 Appendix 10
CONTRACT AWARDS OF ADB LOAN PROCEEDS
Table 10.1: Annual and Cumulative Contract Awards of ADB Loan Proceeds-Tranche 1 ($ million) Annual Contract Awards Cumulative Contract Awards Amount Amount Year ($ million) % of Total ($ million) % of Total
2011 34.21 11.6% 34.21 11.6% 2012 0.00 0.0% 34.21 11.6% 2013 0.00 0.0% 34.21 11.6% 2014 95.85 32.5% 130.05 44.1% 2015 68.91 23.4% 198.97 67.5% 2016 73.63 25.0% 272.59 92.5% 2017 22.03 7.5% 294.62 100.0% Total 294.62 100.0% 294.62 100.0% ADB = Asian Development Bank. Source: Asian Development Bank e-Operations.
Figure 10.1: Projection and Cumulative Contract Awards of ADB Loan Proceeds -Tranche 1 ($ million)
300
250
200
150 $ million $
100
50
0 2010 2011 2012 2013 2014 2015 2016 2017
Projection Actual
Appendix 10 47
Table 10.2: Annual and Cumulative Contract Awards of ADB Loan Proceeds-Tranche 2 ($ million) Annual Contract Awards Cumulative Contract Awards Amount Amount Year ($ million) % of Total ($ million) % of Total 2011 1.53 1.53 1.53 1.53 2012 38.65 38.81 40.18 40.35 2013 59.41 59.65 99.59 100.00 Total 99.59 100.00 99.59 100.00 ADB = Asian Development Bank. Source: Asian Development Bank e-Operations.
Figure 10.2: Projection and Cumulative Contract Awards of ADB Loan Proceeds -Tranche 2 ($ million)
100 90 80 70 60 50
million $ 40 30 20 10 0 2011 2012 2013 2014
Projection Actual
48 Appendix 10
Table 10.3: Annual and Cumulative Contract Awards of ADB Loan Proceeds-Tranche 3 ($ million) Annual Contract Awards Cumulative Contract Awards Amount Amount Year ($ million) % of Total ($ million) % of Total 2012 3.44 1.44 3.44 1.44 2013 64.86 27.20 68.30 28.64 2014 139.38 58.44 207.67 87.08 2015 28.32 11.87 235.99 98.96 2016 2.48 1.04 238.48 100.00 Total 238.48 100.00 238.48 100.00 ADB = Asian Development Bank. Source: Asian Development Bank e-Operations.
Figure 10.3: Projection and Cumulative Contract Awards of ADB Loan Proceeds -Tranche 3 ($ million)
250
200
150
$ million $ 100
50
0 2012 2013 2014 2015 2016
Projection Actual
Appendix 10 49
Table 10.4: Annual and Cumulative Contract Awards of ADB Loan Proceeds-Tranche 4 ($ million) Annual Contract Awards Cumulative Contract Awards Amount Amount Year ($ million) % of Total ($ million) % of Total 2015 177.74 100.00 177.74 100.00 Total 177.74 100.00 177.74 100.00 ADB = Asian Development Bank. Source: Asian Development Bank e-Operations.
Figure 10.4: Projection and Cumulative Contract Awards of ADB Loan Proceeds -Tranche 4 ($ million)
180
160
140
120
100
80
million $ 60
40
20
0 2014 2015
Projection Actual
50 Appendix 10
Table 10.5: Annual and Cumulative Contract Awards of ADB Loan Proceeds-Tranche 5 ($ million) Annual Contract Awards Cumulative Contract Awards Amount Amount Year ($ million) % of Total ($ million) % of Total 2015 9.94 6.52 9.94 6.52 2016 98.92 64.94 108.85 71.46 2017 43.47 28.54 152.32 100.00 Total 152.32 100.00 152.32 100.00 ADB = Asian Development Bank. Source: Asian Development Bank e-Operations.
Figure 10.5: Projection and Cumulative Contract Awards of ADB Loan Proceeds -Tranche 5 ($ million)
180 160 140 120 100 80 $ million $ 60 40 20 0 2014 2015 2016 2017
Projection Actual
Appendix 11 51
STATUS OF COMPLIANCE WITH MAJOR FACILITY UNDERTAKINGS AND LOAN COVENANTS
Table 11.1: Status of Compliance with Undertakings in Framework Financing Agreement
Undertakings Reference in FFA Status of Compliance The Facility funds are used effectively and FFA, Schedule 6, Complied with. efficiently to implement the Investment Program para. 1 Facility funds are used effectively and and achieve the objectives. efficiently The Government will cause the Ministry of FFA, Schedule 6, Complied with. Railways (MOR) to submit to ADB audited para. 2 The audit reports were submitted on accounts and financial statements within 6 time and each report was issued with months of the end of each relevant fiscal year. an unqualified opinion. Sufficient counterpart funds are available from the FFA, Schedule 6, Complied with. MOR budget for each fiscal year, in a timely para. 3 Counterpart funds were provided on manner, for the efficient implementation of the time. subprojects under the Facility. All tranches are selected and processed for FFA, Schedule 6, Complied with. approval according to the criteria and procedures para. 4 The five tranches were selected and included under Schedule 4 to this framework processed in accordance with the financing agreement. criteria and procedures set forth in the FFA. The Government will take necessary measures to FFA, Schedule 6, Complied with. continue implementation of the Railway para. 5 Development Plan (2004 and updated in 2008). The Government will cause MOR to ensure that FFA, Schedule 6, Complied with. the equipment is procured and used in para. 6 The equipment was procured and accordance with the Government’s national used in accordance with the technical standards, and that supervision, quality Government’s national technical control, and contract management are carried out standards. in a periodic and satisfactory manner.
Table 11.2: Status of Compliance with Loan Covenants-Tranche 1 (Loan 2605)
Covenant Reference in Status of Compliance Legal Agreement 1. (a) The Borrower shall cause the Project to be LA, Section Complied with. carried out with due diligence and efficiency and 4.01 The project was carried out with due in conformity with sound administrative, financial, diligence and efficiency and in engineering, environmental and railway conformity with sound construction, maintenance and operations administrative, financial, practices. engineering, environmental and (b) In carrying out of the Project and operation of railway construction, maintenance, the Project equipment, the Borrower shall perform and operations practices. all obligations set forth in Schedule 5 to the Loan Agreement. 2. The Borrower shall make available, promptly as LA, Section Complied with. needed, funds, facilities, services, and other 4.02 Counterpart funds and operation resources which are required, in addition to the and maintenance staff were proceeds of the Loan, for the carrying out of the provided on time. Project and for the operation and maintenance of the Project equipment. 3. (a) In the carrying out of the Project, the Borrower LA, Section Complied with. shall cause competent and qualified consultants 4.03 Qualified consultants for design and to be employed. supervision and contractors were engaged by the borrower. (b) The Borrower shall cause the Project to be LA, Section Project was carried out in carried out in accordance with plans, design 4.03 accordance with plans, design standards, specifications and installation and standards, specifications and
52 Appendix 11
Covenant Reference in Status of Compliance Legal Agreement commissioning schedules acceptable to ADB. The installation, and commissioning Borrower shall furnish, or cause to be furnished, schedules acceptable to ADB. to ADB, promptly after their preparation, such plans, design standards, specifications and installation and commissioning schedules, and any material modifications subsequently made therein, in such detail as ADB shall reasonably request. 4. The Borrower shall ensure that the activities of its LA, Section Complied with. department and agencies with respect to the 4.04 Operation of the project equipment carrying out of the Project and operation of the were conducted and coordinated in Project equipment are conducted and coordinated accordance with sound in accordance with sound administrative policies administrative policies and and procedures. procedures. 5. (a) The Borrower shall (i) maintain, or cause to be LA, Section Complied with. maintained, separate accounts for the Project; (ii) 4.05 CRC maintained separate accounts have such accounts and related financial for the projects. The audit reports statements audited annually, in accordance with were submitted on time and each appropriate auditing standards consistently report was issued with an applied, by independent auditors whose unqualified opinion. qualifications, experience and terms of reference are acceptable to ADB; (iii) furnish to ADB, as soon as available but in any event not later than 6 months after end of each related fiscal year, certified copies of such audited accounts and financial statements and the report of the auditors relating thereto (including the auditors' opinion on the use of the Loan proceeds and compliance with the financial covenants of this Loan Agreement as well as on the use of the procedures for imprest account/statement of expenditures), all in the English language; and (iv) furnish to ADB such other information concerning such accounts and financial statements and the audit thereof as ADB shall from time to time reasonably request.
(b) The Borrower shall enable ADB, upon ADB's request, to discuss the Borrower's financial statements for the Project and its financial affairs related to the Project from time to time with the auditors appointed by the Borrower pursuant to Section 4.05(a), and shall authorize and require any representative of such auditors to participate in any such discussions requested by ADB, provided that any such discussion shall be conducted only in the presence of an authorized officer of the Borrower unless the Borrower shall otherwise agree. 6. The Borrower shall enable ADB's representatives LA, Section Complied with. to inspect the Project, the Goods financed out of 4.06 Conducted through regular review the proceeds of the Loan, and any relevant missions, mid-term review mission records and documents. and completion review mission.
7. The Borrower shall ensure that the Project LA, Section Complied with. equipment be operated, maintained, and repaired 4.07 Project equipment was operated, in accordance with sound administrative, financial, maintained, and repaired as engineering, environmental, railway construction required. and maintenance and operational practices.
Appendix 11 53
Covenant Reference in Status of Compliance Legal Agreement 8. Implementation Arrangements Complied with. MOR shall be the EA responsible for overall LA, Schedule 5, At appraisal, the former MOR was program implementation. The Foreign Capital and para. 1 the executing agency responsible for Technical Import Center under MOR shall overall program implementation. The coordinate the Project management office's tasks FCTIC, under MOR, was to and be responsible for procurement, withdrawals, coordinate the project management and reporting vis-à-vis ADB. A steering committee office’s tasks and be responsible for headed by Director General of Foreign Capital procurement, withdrawals. and Technical Import Center, shall be responsible Following the reform of the railway for the implementation of the Project. The sector in the PRC, the CRC was Borrower shall ensure through MOR that the staff established on 14 March 2013 and employed will be experienced in technical, bore the corporate responsibilities of financial, and administrative matters; and the former MOR. implementing Projects financed by international Following restructuring of CRC, CR financial institutions. was established to undertake the railway passenger and cargo transportation services of the PRC and it took whole responsibilities of CRC. 9. Reform Measures LA, Schedule 5, Complied with. The Borrower shall cause MOR to take necessary para. 2 The CRC (currently known as China measures to continue implementation of the State Railway Group Co., Ltd.) was Railway Development Plan. established in 2013 to continue to implement railway sector reform. 10. Equipment Quality LA, Schedule 5, Complied with. The Borrower shall cause MOR to ensure that the para. 3 Regular quality check and technical equipment is procured and used in accordance inspection were conducted. After the with the Government's national technical installation, inspection companies standards, and that supervision, quality control, which were selected by bids and contract management are carried out in a checked the quality of equipment periodic and satisfactory manner. installation. 11. Capacity Expansion LA, Schedule 5, Complied with. The Borrower shall cause MOR to ensure that all para. 4 capacity expansion activities in southwestern region in the territory of the Borrower are completed with due consideration of their environmental and social safeguards in a timely manner. 12. Sustainability LA, Schedule 5, Complied with. The Borrower shall cause MOR to ensure that (a) para. 5 Counterpart funds and staffing were adequate counterpart funding, staffing, and provided to ensure smooth operation institutional support be provided for of the project equipment. implementation of the Project; (b) necessary measures be taken promptly to resolve any issues identified during operation of the project equipment; and (c) appropriate budgetary allocations be made for the continued operation and maintenance of the project equipment. 13. Anticorruption LA, Schedule 5, Complied with. The Borrower shall cause MOR to comply with para. 6 ADB’s anti-corruption requirements ADB’s Anticorruption Policy (1998, as amended). were complied with and incorporated The Borrower agrees (a) that ADB reserves the in the bidding documents and right to investigate any alleged corrupt, fraudulent, contracts. collusive, or coercive practices relating to the Project; and (b) to cooperate fully with, and to cause MOR to cooperate fully with, any such investigation and to extend all necessary assistance, including providing access to all relevant books and records, as may be necessary
54 Appendix 11
Covenant Reference in Status of Compliance Legal Agreement for the satisfactory completion of any such investigation.
In addition to ensuring compliance with ADB’s LA, Schedule 5, Prevailing domestic anti-corruption Anticorruption Policy, the Borrower shall ensure, para. 7 measures were adopted during and cause MOR to ensure, that (a) a supervisory project implementation. body be established for prevention of undue interference in business practices, and adequate resources are made available for its effective operation; (b) a leading group of officials from the supervision division of MOR be located in offices involved in operational activities under the Project; and (c) periodic inspections on the contractor’s activities related to fund withdrawals and settlements be carried out. The Borrower shall also cause MOR to initiate liaison meetings with the prosecutor’s office, on a needs basis, where any warnings about, or information on, alleged corrupt, fraudulent, collusive, or coercive practices relating to the Project can be discussed. 14. Supply of Rolling Stock LA, Schedule 5, Complied with. The Borrower shall ensure that MOR provides para. 8 Sufficient rolling stock were provided sufficient rolling stock, at all times, for effective for effective operation of the operation of the equipment. equipment. 15. Safety LA, Schedule 5, Complied with. The Borrower shall cause MOR to ensure the para. 9 Local governments proactively made safety of the equipment in accordance with the general public aware of safety relevant Government laws and regulations. issues during construction and operation. After the installation, external inspectors checked the safety of equipment installation. 16. Monitoring and Evaluation LA, Schedule 5, Complied with. The Borrower shall cause MOR to monitor and para. 10 Progress reports were generally evaluate impact through a performance submitted to ADB on time. monitoring system, as agreed to by the Borrower The borrower’s project completion and ADB, to ensure that Project equipment and reports were submitted to ADB in materials are managed efficiently, benefits are April 2019. maximized, and impacts are monitored. The Borrower shall also cause MOR to collect the necessary information and data on project performance, as agreed to by the Borrower and ADB, before project implementation, and at completion of the Project. 17. Safeguard Policy LA, Schedule 5, Complied with. Notwithstanding that the Investment Program para. 11 EA reported the results of the does not have impact on environment, compliance review in the progress resettlement and ethnic minorities, the Borrower reports which were submitted to shall cause the MOR to ensure that all the ADB during project implementation. requirements prescribed in the attached safeguard framework in Schedule 5 to FFA be complied with during the implementation of the Project.
Appendix 11 55
Table 11.3: Status of Compliance with Loan Covenants-Tranche 2 (Loan 2724)
Covenant Reference in Status of Compliance Legal Agreement 1. (a) The Borrower shall cause the Project to be LA, Section Complied with. carried out with due diligence and efficiency and in 4.01 The project was carried out with due conformity with sound administrative, financial, diligence and efficiency and in engineering, environmental and railway conformity with sound construction, maintenance and operations administrative, financial, practices. engineering, environmental and railway construction, maintenance, (b) In carrying out of the Project and operation of and operations practices. the Project equipment, the Borrower shall perform all obligations set forth in Schedule 5 to the Loan Agreement. 2. The Borrower shall make available, or cause to be LA, Section Complied with. made available promptly as needed, funds, 4.02 Counterpart funds and operation facilities, services, and other resources which are and maintenance staff were required, in addition to the proceeds of the Loan, provided on time. for the carrying out of the Project and for the operation and maintenance of the Project equipment. 3. (a) In the carrying out of the Project, the Borrower LA, Section Complied with. shall cause competent and qualified consultants to 4.03 Qualified consultants for design and be employed. supervision and contractors were engaged by the borrower.
(b) The Borrower shall cause the Project to be LA, Section Project was carried out in carried out in accordance with plans, design 4.03 accordance with plans, design standards, specifications and installation and standards, specifications and commissioning schedules acceptable to ADB. The installation, and commissioning Borrower shall furnish, or cause to be furnished, to schedules acceptable to ADB. ADB, promptly after their preparation, such plans, design standards, specifications and installation and commissioning schedules, and any material modifications subsequently made therein, in such detail as ADB shall reasonably request. 4. The Borrower shall ensure that the activities of its LA, Section Complied with. department and agencies with respect to the 4.04 Operation of the project equipment carrying out of the Project and operation of the were conducted and coordinated in Project equipment are conducted and coordinated accordance with sound in accordance with sound administrative policies administrative policies and and procedures. procedures. 5. (a) The Borrower shall (i) maintain, or cause to be LA, Section Complied with. maintained, separate accounts for the Project; (ii) 4.05 CRC maintained separate accounts have such accounts and related financial for the projects. The audit reports statements audited annually, in accordance with were submitted on time and each appropriate auditing standards consistently report was issued with an applied, by independent auditors whose unqualified opinion. qualifications, experience and terms of reference are acceptable to ADB; (iii) furnish to ADB, as soon as available but in any event not later than 6 months after end of each related fiscal year, certified copies of such audited accounts and financial statements and the report of the auditors relating thereto (including the auditors' opinion on the use of the Loan proceeds and compliance with the financial covenants of this Loan Agreement as well as on the use of the procedures for imprest account/statement of expenditures), all in the English language; and (iv) furnish to ADB such
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Covenant Reference in Status of Compliance Legal Agreement other information concerning such accounts and financial statements and the audit thereof as ADB shall from time to time reasonably request.
(b) The Borrower shall enable ADB, upon ADB's request, to discuss the Borrower's financial statements for the Project and its financial affairs related to the Project from time to time with the auditors appointed by the Borrower pursuant to Section 4.05(a), and shall authorize and require any representative of such auditors to participate in any such discussions requested by ADB, provided that any such discussion shall be conducted only in the presence of an authorized officer of the Borrower unless the Borrower shall otherwise agree. 6. The Borrower shall enable ADB's representatives LA, Section Complied with. to inspect the Project, the Goods financed out of 4.06 Conducted through regular review the proceeds of the Loan, and any relevant missions, mid-term review mission records and documents. and completion review mission.
7. The Borrower shall ensure that the Project LA, Section Complied with. equipment be operated, maintained, and repaired 4.07 Project equipment was operated, in accordance with sound administrative, financial, maintained, and repaired as engineering, environmental, railway construction required. and maintenance and operational practices. 8. Implementation Arrangements Complied with. MOR shall be the EA responsible for overall LA, Schedule 5, At appraisal, the former MOR was program implementation. The Foreign Capital and para. 1 the executing agency responsible for Technical Import Center under MOR shall overall program implementation. The coordinate the Project management office's tasks FCTIC, under MOR, was to and be responsible for procurement, withdrawals, coordinate the project management and reporting vis-à-vis ADB. A steering committee office’s tasks and be responsible for headed by Director General of Foreign Capital and procurement, withdrawals. Technical Import Center, shall be responsible for Following the reform of the railway the implementation of the Project. The Borrower sector in the PRC, the CRC was shall ensure through MOR that the staff employed established on 14 March 2013 and will be experienced in technical, financial, and bore the corporate responsibilities of administrative matters; and implementing Projects the former MOR. financed by international financial institutions. Following restructuring of CRC, CR was established to undertake the railway passenger and cargo transportation services of the PRC and it took whole responsibilities of CRC. 9. Reform Measures LA, Schedule 5, Complied with. The Borrower shall cause MOR to take necessary para. 2 The CRC (currently known as China measures to continue implementation of the State Railway Group Co., Ltd.) was Railway Development Plan. established in 2013 to continue to implement railway sector reform. 10. Equipment Quality LA, Schedule 5, Complied with. The Borrower shall cause MOR to ensure that the para. 3 Regular quality check and technical equipment is procured and used in accordance inspection were conducted. After the with the Government's national technical installation, inspection companies standards, and that supervision, quality control, which were selected by bids check and contract management are carried out in a the quality of equipment installation. periodic and satisfactory manner. 11. Capacity Expansion LA, Schedule 5, Complied with. The Borrower shall cause MOR to ensure that all para. 4
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Covenant Reference in Status of Compliance Legal Agreement capacity expansion activities in southwestern region in the territory of the Borrower are completed with due consideration of their environmental and social safeguards in a timely manner. 12. Sustainability LA, Schedule 5, Complied with. The Borrower shall cause MOR to ensure that (a) para. 5 Counterpart funds and staffing were adequate counterpart funding, staffing, and provided to ensure smooth operation institutional support be provided for of the project equipment implementation of the Project; (b) necessary measures be taken promptly to resolve any issues identified during operation of the project equipment; and (c) appropriate budgetary allocations be made for the continued operation and maintenance of the project equipment. 13. Anticorruption LA, Schedule 5, Complied with. The Borrower shall cause MOR to comply with para. 6 ADB’s anti-corruption requirements ADB’s Anticorruption Policy (1998, as amended). were complied with and incorporated The Borrower agrees (a) that ADB reserves the in the bidding documents and right to investigate any alleged corrupt, fraudulent, contracts. collusive, or coercive practices relating to the Project; and (b) to cooperate fully with, and to cause MOR to cooperate fully with, any such investigation and to extend all necessary assistance, including providing access to all relevant books and records, as may be necessary for the satisfactory completion of any such investigation.
In addition to ensuring compliance with ADB’s LA, Schedule 5, Prevailing domestic anti-corruption Anticorruption Policy, the Borrower shall ensure, para. 7 measures were adopted during and cause MOR to ensure, that (a) a supervisory project implementation. body be established for prevention of undue interference in business practices, and adequate resources are made available for its effective operation; (b) a leading group of officials from the supervision division of MOR be located in offices involved in operational activities under the Project; and (c) periodic inspections on the contractor’s activities related to fund withdrawals and settlements be carried out. The Borrower shall also cause MOR to initiate liaison meetings with the prosecutor’s office, on a needs basis, where any warnings about, or information on, alleged corrupt, fraudulent, collusive, or coercive practices relating to the Project can be discussed. 14. Supply of Rolling Stock LA, Schedule 5, Complied with. The Borrower shall ensure that MOR provides para. 8 Sufficient rolling stock were provided sufficient rolling stock, at all times, for effective for effective operation of the operation of the equipment. equipment. 15. Safety LA, Schedule 5, Complied with. The Borrower shall cause MOR to ensure the para. 9 Local governments proactively made safety in installation and operation of the Project the general public aware of safety equipment in accordance with relevant issues during construction and Government laws and regulations. operation. After the installation, external inspectors checked the safety of equipment installation. 16. Monitoring and Evaluation LA, Schedule 5, Complied with. The Borrower shall cause MOR to monitor and para. 10 Progress reports were generally
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Covenant Reference in Status of Compliance Legal Agreement evaluate impact through a performance monitoring submitted to ADB on time. system, as agreed to by MOR and ADB, to ensure The borrower’s project completion that Project equipment and materials are reports were submitted to ADB in managed efficiently, benefits are maximized, and April 2019. impacts are monitored. The Borrower shall also cause MOR to collect the necessary information and data on project performance, as agreed to by MOR and ADB, before project implementation, and at completion of the Project. 17. Safeguard Policy LA, Schedule 5, Complied with. Notwithstanding that the Investment Program para. 11 EA reported the results of the does not have impact on environment, compliance review in the progress resettlement and ethnic minorities, the Borrower reports which were submitted to shall cause the MOR to ensure that all the ADB during the project requirements prescribed in the attached safeguard implementation. framework in Schedule 5 to FFA be complied with during the implementation of the Project.
Table 11.4: Status of Compliance with Loan Covenants-Tranche 3 (Loan 2765)
Covenant Reference in Status of Compliance Legal Agreement 1. (a) The Borrower shall cause the Project to be LA, Section 4.01 Complied with. carried out with due diligence and efficiency and The project was carried out with in conformity with sound administrative, financial, due diligence and efficiency and in engineering, environmental and railway conformity with sound construction, maintenance and operations administrative, financial, practices. engineering, environmental and railway construction, maintenance, (b) In carrying out of the Project and operation of and operations practices. the Project equipment, the Borrower shall perform all obligations set forth in Schedule 5 to the Loan Agreement. 2. The Borrower shall make available, or cause to be LA, Section 4.02 Complied with. made available, promptly as needed, funds, Counterpart funds and operation facilities, services, and other resources which are and maintenance staff were required, in addition to the proceeds of the Loan, provided on time. for the carrying out of the Project and for the operation and maintenance of the Goods. 3. (a) Whenever applicable, in the carrying out of the LA, Section 4.03 Complied with. Project, the Borrower shall cause competent and qualified consultants and contractors, acceptable to ADB to be employed to an extent and upon Qualified consultants for design terms and conditions acceptable to the Borrower and supervision and contractors and ADB. were engaged by the borrower.
(b) The Borrower shall cause the Project to be LA, Section 4.03 Project was carried out in carried out in accordance with plans, design accordance with plans, design standards, specifications and installation and standards, specifications and commissioning schedules and construction installation, and commissioning methods acceptable to the Borrower and ADB, as schedules acceptable to ADB. applicable. The Borrower shall furnish, or cause to be furnished, to ADB, promptly after their preparation, such plans, design standards, specifications and installation and commissioning schedules, and any material modifications subsequently made therein, in such detail as ADB
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Covenant Reference in Status of Compliance Legal Agreement shall reasonably request. 4. The Borrower shall ensure that the activities of its LA, Section 4.04 Complied with. department and agencies with respect to the Operation of the project equipment carrying out of the Project and operation of the were conducted and coordinated in Goods are conducted and coordinated in accordance with sound accordance with sound administrative policies and administrative policies and procedures. procedures. 5. (a) The Borrower shall (i) maintain, or cause to be LA, Section 4.05 Complied with. maintained, separate accounts for the Project; (ii) CRC maintained separate have such accounts and related financial accounts for the projects. The audit statements audited annually, in accordance with reports were submitted on time and appropriate auditing standards consistently each report was issued with an applied, by independent auditors whose unqualified opinion. qualifications, experience and terms of reference are acceptable to ADB; (iii) furnish to ADB, as soon as available but in any event not later than 6 months after end of each related fiscal year, certified copies of such audited accounts and financial statements and the report of the auditors relating thereto (including the auditors' opinion on the use of the Loan proceeds and compliance with the financial covenants of this Loan Agreement as well as on the use of the procedures for imprest account/statement of expenditures), all in the English language; and (iv) furnish to ADB such other information concerning such accounts and financial statements and the audit thereof as ADB shall from time to time reasonably request.
(b) The Borrower shall enable ADB, upon ADB's request, to discuss the Borrower's financial statements for the Project and its financial affairs related to the Project from time to time with the auditors appointed by the Borrower pursuant to subsection (a) hereinabove, and shall authorize and require any representative of such auditors to participate in any such discussions requested by ADB, provided that any such discussion shall be conducted only in the presence of an authorized officer of the Borrower unless the Borrower shall otherwise agree. 6. The Borrower shall enable ADB's representatives LA, Section 4.06 Complied with. to inspect the Project, the Goods financed out of Conducted through regular review the proceeds of the Loan, and any relevant missions, mid-term review mission records and documents. and completion review mission. 7. The Borrower shall ensure that the Goods be LA, Section 4.07 Complied with. operated, maintained, and repaired in accordance Project equipment was operated, with sound administrative, financial, engineering, maintained, and repaired as environmental, railway construction and required. maintenance and operational practices. 8. Implementation Arrangements LA, Schedule 5, Complied with. MOR shall ensure that the Project is implemented para. 1 in accordance with the detailed arrangements set Project was implemented in forth in the FFA and the FAM. Any subsequent accordance with the arrangements change to the FAM shall become effective only set forth in the FFA and the FAM. after the approval of such change by MOR and ADB. In the event of any discrepancy between the FAM and the Loan, the provision of the Loan Agreement shall prevail.
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Covenant Reference in Status of Compliance Legal Agreement MOR shall be the EA responsible for overall para. 2 At appraisal, the former MOR was program implementation. The Foreign Capital and the executing agency responsible Technical Import Center under MOR shall for overall program implementation. coordinate the Project management office's tasks The FCTIC, under MOR, was to and be responsible for procurement, withdrawals, coordinate the project management and reporting vis-à-vis ADB. A steering committee office’s tasks and be responsible headed by Director General of Foreign Capital for procurement, withdrawals. and Technical Import Center, shall be responsible Following the reform of the railway for the implementation of the Project. The sector in the PRC, the CRC was Borrower shall ensure through MOR that the staff established on 14 March 2013 and employed will be experienced in technical, bore the corporate responsibilities financial, and administrative matters; and of the former MOR. implementing Projects financed by international Following restructuring of CRC, CR financial institutions. was established to undertake the railway passenger and cargo transportation services of the PRC and it took whole responsibilities of CRC. 9. Reform Measures LA, Schedule 5, Complied with. The Borrower shall cause MOR to ensure the para. 3 The CRC (currently known as implementation of the Railway Development Plan. China State Railway Group Co., Ltd.) was established in 2013 to continue to implement railway sector reform. 10. Equipment Quality LA, Schedule 5, Complied with. The Borrower shall cause MOR to ensure that the para. 4 Regular quality check and technical Goods is procured and used in accordance with inspection were conducted. After the Government's national technical standards, the installation, inspection and that supervision, quality control, and contract companies which were selected by management are carried out in a periodic and bids checked the quality of satisfactory manner. equipment installation. 11. Capacity Expansion LA, Schedule 5, Complied with. The Borrower shall cause MOR to ensure that all Para. 5 capacity expansion activities in southwestern region in the territory of the Borrower are completed with due consideration of their environmental and social safeguards in a timely manner. 12. Sustainability LA, Schedule 5, Complied with. The Borrower shall cause MOR to ensure that (a) para. 6 Counterpart funds and staffing adequate counterpart funding, staffing, and were provided to ensure smooth institutional support be provided for operation of the project equipment implementation of the Project and maintenance of the Goods; (b) necessary measures be taken promptly to resolve any issues identified during operation of the Goods; and (c) appropriate budgetary allocations be made for the continued operation and maintenance of the Goods. 13. Anticorruption LA, Schedule 5, Complied with. The Borrower shall cause MOR to: (a) comply para. 7 ADB’s anti-corruption requirements with ADB’s Anticorruption Policy (1998, as were complied with and amended to data) and acknowledge that ADB incorporated in the bidding reserves the right to investigate directly, or documents and contracts. through its agents, any alleged corrupt, fraudulent, collusive or coercive practices relating to the Project; and (b) cooperate with any such investigation and extend all necessary assistance for the satisfactory completion of any such investigation.
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Covenant Reference in Status of Compliance Legal Agreement In addition to ensuring compliance with ADB’s LA, Schedule 5, Prevailing domestic anti-corruption Anticorruption Policy (1998, as amended to data), para. 8 measures were adopted during the Borrower shall ensure, and cause MOR to project implementation. ensure, that (a) a supervisory body be established for prevention of undue interference in business practices, and adequate resources are made available for its effective operation; (b) a leading group of officials from the supervision division of MOR be located in offices involved in operational activities under the Project; and (c) periodic inspections on the contractor’s activities related to fund withdrawals and settlements be carried out. The Borrower shall also cause MOR to initiate liaison meetings with the prosecutor’s office, on a needs basis, where any warnings about, or information on, alleged corrupt, fraudulent, collusive, or coercive practices relating to the Project can be discussed. 14. Supply of Rolling Stock LA, Schedule 5, Complied with. The Borrower shall ensure that MOR provides para. 9 Sufficient rolling stock were sufficient rolling stock, at all times, for effective provided for effective operation of operation of the Goods. the equipment. 15. Safety LA, Schedule 5, Complied with. The Borrower shall cause MOR to ensure the para. 10 Local governments proactively safety in installation and operation of the Goods in made the general public aware of accordance with relevant Government laws and safety issues during construction regulations of the Borrower. and operation. After the installation, external inspectors checked the safety of equipment installation. 16. Monitoring and Evaluation LA, Schedule 5, Complied with. The Borrower shall cause MOR to monitor and para. 11 Progress reports were generally evaluate impact through a performance submitted to ADB on time. monitoring system, as agreed to by MOR and The borrower’s project completion ADB, to ensure that Goods and materials are reports were submitted to ADB in managed efficiently, benefits are maximized, and April 2019. impacts are monitored. The Borrower shall also cause MOR to collect the necessary information and data on project performance, as agreed to by MOR and ADB, before project implementation, and at completion of the Project. 17. Safeguard Policy Complied with. Notwithstanding that the Investment Program LA, Schedule 5, EA reported the results of the does not have impact on environment, para. 12 compliance review in the progress resettlement and ethnic minorities, the Borrower reports which were submitted to shall cause the MOR to ensure that all the ADB during the project requirements prescribed in the attached implementation. safeguard framework in Schedule 5 to FFA be complied with during the implementation of the Project.
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Table 11.5: Status of Compliance with Loan Covenants-Tranche 4 (Loan 3082)
Covenant Reference in Status of Compliance Legal Agreement 1. (a) The Borrower shall cause CRC to carry out LA, Section 4.01 Complied with. the Project with due diligence and efficiency and in PA, Art. II, The project was carried out with conformity with sound administrative, financial, Section 2.01 due diligence and efficiency and in engineering, environmental and railway conformity with sound construction, maintenance and operations administrative, financial, practices. engineering, environmental and (b) In the carrying out of the Project and operation railway construction, maintenance, of the Project facilities, the Borrower shall perform, and operations practices. or cause to be performed, all obligations set forth in Schedule 5 to this Loan Agreement and the Project Agreement. 2. The Borrower shall make available, or cause to be LA, Section 4.02 Complied with. made available, promptly as needed, funds, PA, Art. II, Counterpart funds and operation facilities, services, and other resources which are Section 2.02 and maintenance staff were required, in addition to the proceeds of the Loan, provided on time. for the carrying out of the Project and for the operation and maintenance of the Goods. 3. The Borrower shall ensure that the activities of its LA, Complied with. department and agencies with respect to the Section 4.03 Operation of the project equipment carrying out of the Project and operation of the were conducted and coordinated in Goods are conducted and coordinated in accordance with sound accordance with sound administrative policies and administrative policies and procedures. procedures. 4. The Borrower shall cause CRC to enable ADB's LA, Section 4.04 Complied with. representatives to inspect the Project, the Goods, PA, Art. II, Conducted through regular review and any records and documents relating to the Section 2.10 missions, mid-term review mission Project. and completion review mission. 5. The Borrower shall take all actions which shall be LA, Section 4.05 Complied with. necessary on its part to enable CRC to perform its obligations under the Project Agreement, and shall not take or permit any action which would interfere with the performance of such obligations. 6. (a) The Borrower shall exercise its rights under the LA, Section 4.06 Complied with. Onlending Agreement in such a manner as to protect the interests of the Borrower and ADB and to accomplish the purposes of the Loan.
(b) No rights or obligations under the Onlending Agreement shall be assigned, amended, abrogated or waived without the prior concurrence of ADB. 7. (a) In the carrying out of the Project, CRC shall PA, Art. II, Complied with. employ competent and qualified consultants and Section 2.03 Competent and qualified contractors, acceptable to ADB, to an extent and consultants and contractors for the upon terms and conditions satisfactory to ADB. project were engaged. (b) Except as ADB may otherwise agree, CRC ADB-financed contracts were shall procure all items of expenditure to be procured in accordance with ADB’s financed out of the proceeds of the Loan in Procurement Guidelines, as accordance with the provisions of Schedule 4 to amended from time to time. the Loan Agreement. ADB may refuse to finance a contract where any such item has not been procured under procedures substantially in accordance with those agreed between the Borrower and ADB or where the terms and conditions of the contract are not acceptable to ADB.
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Covenant Reference in Status of Compliance Legal Agreement 8. CRC shall carry out the Project in accordance with PA, Art. II, Project was carried out in plans, design standards, specifications and Section 2.04 accordance with plans, design installation and commissioning schedules standards, specifications and acceptable to ADB. CRC shall furnish, or cause to installation, and commissioning be furnished, to ADB, promptly after their schedules acceptable to ADB. preparation, such plans, design standards, specifications and installation and commissioning schedules, and any material modifications subsequently made therein, in such detail as ADB shall reasonably request. 9. (a) CRC shall take out and maintain with PA, Art. II, Complied with. responsible insurers, or make other arrangements Section 2.05 The clauses on insurance are satisfactory to ADB for, insurance of Project included under the contracts for facilities to such extent and against such risks and supply of Goods. in such amounts as shall be consistent with sound practice. (b) Without limiting the generality of the foregoing, CRC shall insure, or cause to be insured, the Goods to be imported for the Project against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable to replace or repair such Goods. 10. CRC shall maintain, or cause to be maintained, PA, Art. II, Complied with. records and accounts adequate to identify the Section 2.06 items of expenditure financed out of the proceeds of the Loan, to disclose the use thereof in the Project, to record the progress of the Project (including the cost thereof) and to reflect, in accordance with consistently maintained sound accounting principles, its operations and financial condition. 11. (a) ADB and CRC shall cooperate fully to ensure PA, Art. II, Complied with. that the purposes of the Loan will be Section 2.07 accomplished.
(b) CRC shall promptly inform ADB of any condition which interferes with, or threatens to interfere with, the progress of the Project, the performance of its obligations under this Project Agreement, or the accomplishment of the purposes of the Loan.
(c) ADB and CRC shall from time to time, at the request of either party, exchange views through their representatives with regard to any matters relating to the Project, CRC and the Loan. 12. (a) CRC shall furnish to ADB all such reports and PA, Art. II, Complied with. information as ADB shall reasonably request Section 2.08 Progress reports were submitted concerning (i) the Loan and the expenditure of the generally on time. proceeds thereof; (ii) the items of expenditure financed out of such proceeds; (iii) the Project; (iv) Project completion reports were the administration, operations and financial submitted by the EA. condition of CRC; and (v) any other matters relating to the purposes of the Loan.
(b) Without limiting the generality of the foregoing, CRC [and any of its subsidiaries involved in
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Covenant Reference in Status of Compliance Legal Agreement Project-related activities] shall furnish to ADB periodic reports on the execution of the Project and on the operation and management of the Project facilities. Such reports shall be submitted in such form and in such detail and within such a period as ADB shall reasonably request, and shall indicate, among other things, progress made and problems encountered during the period under review, steps taken or proposed to be taken to remedy these problems, and proposed program of activities and expected progress during the following period.
(c) Promptly after physical completion of the Project, but in any event not later than 3 months thereafter or such later date as ADB may agree for this purpose, CRC shall prepare and furnish to ADB a report, in such form and in such detail as ADB shall reasonably request, on the execution and initial operation of the Project, including its cost, the performance by CRC of its obligations under this Project Agreement and the accomplishment of the purposes of the Loan. 13. (a) CRC shall (i) maintain separate accounts and PA, Art. II, Complied with. records for the Project; (ii) prepare annual Section 2.09 CRC maintained separate financial statements for the Project in accordance accounts for each tranche. The with accounting principles acceptable to ADB; (iii) audit reports were submitted on have such financial statements for the Project time and each report was issued audited annually by independent auditors whose with an unqualified opinion. qualifications, experience and terms of reference are acceptable to ADB, in accordance with The annual APFSs have been international standards for auditing or the national disclosed on ADB website as equivalent acceptable to ADB; (iv) as part of each required for Tranche 4. such audit, have the auditors prepare a report (which includes the auditors’ opinion on the financial statements, use of the Loan proceeds and compliance with the financial covenants of the Loan Agreement as well as on the use of the procedures for imprest fund(s) and statement of expenditures) and a Management Letter and (v) furnish to ADB, no later than 6 months after end of each related fiscal year to which they relate, copies of such audited financial statements, audit report and Management Letter, all in the English language, and such other information concerning these documents and the audit thereof as ADB shall from time to time reasonably request. (b) ADB shall disclose on its website the annual audited financial statements for the Project and the opinion of the auditors on the financial statements within 30 days of the date of their receipt.
(c) CRC shall enable ADB, upon ADB's request, to discuss the financial statements for the Project and its, and its subsidiaries’, financial affairs where they relate to the Project with the auditors appointed by CRC pursuant to subsections (a)(iii) hereinabove, and shall authorize and require any
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Covenant Reference in Status of Compliance Legal Agreement representative of such auditors to participate in any such discussions requested by ADB. This is provided that such discussions shall be conducted only in the presence of an authorized officer of CRC, unless CRC shall otherwise agree. 14. (a) CRC shall, and shall cause all relevant PA, Art. II, Complied with. subsidiaries to promptly as required, take all Section 2.11 action within its respective powers to maintain its Sound administrative, financial, corporate existence, to carry on its operations, engineering, environmental and and to acquire, maintain and renew all rights, railway construction, maintenance, properties, powers, privileges and franchises and operations practices were which are necessary in carrying out the Project or followed for equipment operation in the conduct of its operations. and maintenance.
(b) CRC shall and shall cause all relevant subsidiaries to at all times conduct its operations in accordance with sound administrative, financial, engineering, environmental and railway construction, maintenance and operations practices, and under the supervision of competent and experienced management and personnel.
(c) CRC shall and shall cause all relevant subsidiaries to at all times operate and maintain its plants, equipment and other property, and from time to time, promptly as needed, make all necessary repairs and renewals thereof, all in accordance with sound administrative, financial, engineering, environmental and railway construction, maintenance and operations practices. 15. Except as ADB may otherwise agree, CRC shall PA, Art. II, Complied with. not and shall cause all relevant subsidiaries not to Section 2.12 sell, lease or otherwise dispose of any of its assets which shall be necessary for the efficient carrying on of its operations or the disposal of which may prejudice its ability to perform satisfactorily any of its obligations under this Project Agreement or related to the Project. 16. Except as ADB may otherwise agree, CRC shall PA, Art. II, Complied with. apply the proceeds of the Loan to the financing of Section 2.13 expenditures on the Project in accordance with the provisions of the Loan Agreement and this Project Agreement, and shall ensure that all items of expenditures financed out of such proceeds are used exclusively in the carrying out of the Project. 17. CRC shall promptly notify ADB of any proposal to PA, Art. II, Complied with. amend, suspend or repeal any provision of its Section 2.14 constitutional documents, or those of its subsidiaries which, if implemented, could adversely affect the carrying out of the Project or the operation of the Project facilities. CRC shall afford ADB an adequate opportunity to comment on such proposal prior to taking any affirmative action thereon or permitting any such subsidiary to take any action on its constitutional documents.
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Covenant Reference in Status of Compliance Legal Agreement 18. Implementation Arrangements LA, Schedule 5, Complied with. The Borrower shall cause CRC to ensure that the para. 1 Project is implemented in accordance with the Project was implemented in detailed arrangements set forth in the FFA and the PA, Schedule, accordance with the arrangements FAM. Any subsequent change to the FAM shall para.1 set forth in the FFA and the FAM. become effective only after the approval of such change by MOR and ADB. In the event of any discrepancy between the FAM and the Loan, the provision of the Loan Agreement shall prevail. 19. Counterpart Funds LA, Schedule 5, Complied with. The Borrower shall cause CRC to ensure that para. 2 Counterpart funds were provided counterpart funds and domestic commercial loan timely to support project proceeds are provided in a timely manner, implementation. including any additional counterpart funds, as and when required, to meet any Project shortfall or cost overruns. The Borrower shall cause CRC to maintain adequate annual funding for the operation and maintenance of the Project facilities. 20. Reform Measures PA, Schedule, Complied with. CRC shall implement the Railway Development para.2 The CRC (currently known as Plan. China State Railway Group Co., Ltd.) was established in 2013 to continue to implement railway sector reform. 21. Equipment Quality PA, Schedule, Complied with. CRC shall ensure that the Goods are procured para.3 Regular quality check and and used in accordance with the Government's technical inspection were national technical standards, and that supervision, conducted. After the installation, quality control, and contract management are inspection companies which were carried out in a periodic and satisfactory manner. selected by bids checked the quality of equipment installation. 22. Capacity Expansion PA, Schedule, Complied with. CRC shall ensure that all capacity expansion para.4 activities in southwestern region in the territory of the Borrower are completed with due consideration of their environmental and social safeguards in a timely manner. 23. Sustainability PA, Schedule, Complied with. The Borrower shall cause MOR to ensure that (a) para.5 Counterpart funds and staffing adequate counterpart funding, staffing, and were provided to ensure smooth institutional support be provided for operation of the project equipment implementation of the Project and maintenance of the Goods; (b) necessary measures be taken promptly to resolve any issues identified during operation of the Goods; and (c) appropriate budgetary allocations be made for the continued operation and maintenance of the Goods. 24. Governance and Anticorruption PA, Schedule, Complied with. CRC shall comply with ADB’s Anticorruption para.6 ADB’s anti-corruption requirements Policy (1998, as amended to date). CRC were complied with and acknowledges that ADB reserves the right to incorporated in the bidding investigate directly, or through its agents any documents and contracts. alleged corrupt, fraudulent, collusive, or coercive practices relating to the Project; and CRC undertake to cooperate with any such investigation and to extend all necessary assistance for the satisfactory completion of any such investigation.
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Covenant Reference in Status of Compliance Legal Agreement CRC shall ensure that anticorruption provisions PA, Schedule, acceptable to ADB are included in all bidding para.7 documents and contracts, including provisions specifying the right of ADB to audit and examine the records and accounts of CRC, its subsidiaries involved in the Project, the project management office and all contractors, suppliers, consultants, and other service providers as they relate to the Project. CRC shall, by means of a publicly accessible PA, Schedule, website, disclose information about various project para.8 matters, including general project information, procurement information, project progress, and contact details, in the English and Chinese languages. The website will also provide a link to ADB’s Integrity Unit (http://www.adb.org/site/integrity/main) for reporting to ADB any grievances or allegations of corrupt practices arising out of the Project and Project activities. With regard to procurement, the website will include, at minimum, information on the list of participating bidders, name of the winning bidder, basic details on bidding procedures adopted, amount of contract awarded and the list of Goods and Works procured. 25. Supply of Rolling Stock PA, Schedule, Complied with. CRC shall provide sufficient rolling stock and other para.9 Sufficient rolling stock were equipment, at all times, for effective operation of provided for effective operation of the Goods. the equipment. 26. Safety PA, Schedule, Complied with. CRC shall ensure the safety of the equipment in para.10 Local governments proactively accordance with relevant Government laws and made the general public aware of regulations of the Borrower. safety issues during construction and operation. After the installation, external inspectors checked the safety of equipment installation. 27. Monitoring and Evaluation PA, Schedule, Complied with. CRC shall monitor and evaluate impact through para.11 Progress reports were generally the performance monitoring system agreed to by submitted to ADB on time. CRC and ADB to ensure that Goods and materials The borrower’s project completion are managed efficiently, benefits are maximized, reports were submitted to ADB in and impacts are monitored. CRC shall collect the April 2019. necessary information and data on project performance, as agreed to by CRC and ADB, before project implementation, and at completion of the Project. 28. Safeguard Policy PA, Schedule, Complied with. CRC shall ensure that the Project does not have para.12 EA reported the results of the any environmental, indigenous peoples or compliance review in the progress involuntary resettlement impacts, all within the reports which were submitted to meaning of ADB’s Safeguard Policy Statement ADB during project (2009). In the event that the Project does have implementation. any such impact, CRC shall take all steps required to ensure that the Project complies with the applicable laws and regulations of the People’s Republic of China and with ADB’s Safeguard Policy Statement (2009).
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Covenant Reference in Status of Compliance Legal Agreement 29. Change in Ownership PA, Schedule, Complied with. In the event either of the following is anticipated: para.13 Ownership remains unchanged. (a) any change in ownership or control of any of the Project facilities; or (b) any sale, transfer or assignment of shares or other ownership interests or other change of control in CRC or in any CRC subsidiaries involved in the Project, in each case including, without limitation, by way of any corporate restructuring of CRC, CRC shall consult with ADB commencing from the later to occur of (i) at least 6 months prior to the implementation of such change and (ii) the date that CRC first becomes aware of a proposed change; and CRC shall carry out all such changes in a lawful and transparent manner.
Table 11.6: Status of Compliance with Loan Covenants-Tranche 5 (Loan 3109)
Covenant Reference in Status of Compliance Legal Agreement 1. (a) The Borrower shall cause CRC to carry out LA, Section 4.01 Complied with. the Project with due diligence and efficiency and PA, Art. II, The project was carried out with in conformity with sound administrative, financial, Section 2.01 due diligence and efficiency and in engineering, environmental and railway conformity with sound construction, maintenance and operations administrative, financial, practices. engineering, environmental and railway construction, maintenance, and operations practices. (b) In the carrying out of the Project and operation of the Project facilities, the Borrower shall perform, or cause to be performed, all obligations set forth in Schedule 5 to this Loan Agreement and the Project Agreement. 2. The Borrower shall make available, or cause to be LA, Section 4.02 Complied with. made available, promptly as needed, funds, PA, Art. II, Counterpart funds and operation facilities, services, and other resources which are Section 2.02 and maintenance staff were required, in addition to the proceeds of the Loan, provided on time. for the carrying out of the Project and for the operation and maintenance of the Goods. 3. The Borrower shall ensure that the activities of its LA, Section 4.03 Complied with. department and agencies with respect to the Operation of the project equipment carrying out of the Project and operation of the were conducted and coordinated in Goods are conducted and coordinated in accordance with sound accordance with sound administrative policies and administrative policies and procedures. procedures. 4. The Borrower shall cause CRC to enable ADB's LA, Section 4.04 Complied with. representatives to inspect the Project, the Goods, PA, Art. II, Conducted through regular review and any records and documents relating to the Section 2.10 missions, mid-term review mission Project. and completion review mission. 5. The Borrower shall take all actions which shall be LA, Section 4.05 Complied with. necessary on its part to enable CRC to perform its obligations under the Project Agreement, and shall not take or permit any action which would interfere with the performance of such obligations. 6. (a) The Borrower shall exercise its rights under LA, Section 4.06 Complied with. the Onlending Agreement in such a manner as to
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Covenant Reference in Status of Compliance Legal Agreement protect the interests of the Borrower and ADB and to accomplish the purposes of the Loan.
(b) No rights or obligations under the Onlending Agreement shall be assigned, amended, abrogated or waived without the prior concurrence of ADB. 7. (a) In the carrying out of the Project, CRC shall PA, Art. II, Complied with. employ competent and qualified consultants and Section 2.03 Qualified and competent contractors, acceptable to ADB, to an extent and consultants and contractors for upon terms and conditions satisfactory to ADB. project were engaged. (b) Except as ADB may otherwise agree, CRC ADB financed contracts were shall procure all items of expenditure to be procured in accordance with ADB’s financed out of the proceeds of the Loan in Procurement Guidelines, as accordance with the provisions of Schedule 4 to amended from time to time. the Loan Agreement. ADB may refuse to finance a contract where any such item has not been procured under procedures substantially in accordance with those agreed between the Borrower and ADB or where the terms and conditions of the contract are not acceptable to ADB. 8. CRC shall carry out the Project in accordance with PA, Art. II, Project was carried out in plans, design standards, specifications and Section 2.04 accordance with plans, design installation and commissioning schedules standards, specifications and acceptable to ADB. CRC shall furnish, or cause to installation, and commissioning be furnished, to ADB, promptly after their schedules acceptable to ADB. preparation, such plans, design standards, specifications and installation and commissioning schedules, and any material modifications subsequently made therein, in such detail as ADB shall reasonably request. 9. (a) CRC shall take out and maintain with PA, Art. II, Complied with. responsible insurers, or make other arrangements Section 2.05 The clauses on insurance are satisfactory to ADB for, insurance of Project included under the contracts for facilities to such extent and against such risks and supply of Goods. in such amounts as shall be consistent with sound practice. (b) Without limiting the generality of the foregoing, CRC shall insure, or cause to be insured, the Goods to be imported for the Project against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable to replace or repair such Goods. 10. CRC shall maintain, or cause to be maintained, PA, Art. II, Complied with. records and accounts adequate to identify the Section 2.06 items of expenditure financed out of the proceeds of the Loan, to disclose the use thereof in the Project, to record the progress of the Project (including the cost thereof) and to reflect, in accordance with consistently maintained sound accounting principles, its operations and financial condition. 11. (a) ADB and CRC shall cooperate fully to ensure PA, Art. II, Complied with. that the purposes of the Loan will be Section 2.07 accomplished.
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Covenant Reference in Status of Compliance Legal Agreement (b) CRC shall promptly inform ADB of any condition which interferes with, or threatens to interfere with, the progress of the Project, the performance of its obligations under this Project Agreement, or the accomplishment of the purposes of the Loan. (c) ADB and CRC shall from time to time, at the request of either party, exchange views through their representatives with regard to any matters relating to the Project, CRC and the Loan. 12. (a) CRC shall furnish to ADB all such reports and PA, Art. II, Complied with. information as ADB shall reasonably request Section 2.08 Progress reports were submitted concerning (i) the Loan and the expenditure of the generally on time. proceeds thereof; (ii) the items of expenditure financed out of such proceeds; (iii) the Project; (iv) Project completion reports the administration, operations and financial submitted by the EA. condition of CRC; and (v) any other matters relating to the purposes of the Loan.
(b) Without limiting the generality of the foregoing, CRC [and any of its subsidiaries involved in Project-related activities] shall furnish to ADB periodic reports on the execution of the Project and on the operation and management of the Project facilities. Such reports shall be submitted in such form and in such detail and within such a period as ADB shall reasonably request, and shall indicate, among other things, progress made and problems encountered during the period under review, steps taken or proposed to be taken to remedy these problems, and proposed program of activities and expected progress during the following period.
(c) Promptly after physical completion of the Project, but in any event not later than 3 months thereafter or such later date as ADB may agree for this purpose, CRC shall prepare and furnish to ADB a report, in such form and in such detail as ADB shall reasonably request, on the execution and initial operation of the Project, including its cost, the performance by CRC of its obligations under this Project Agreement and the accomplishment of the purposes of the Loan. 13. (a) CRC shall (i) maintain separate accounts and PA, Art. II, Complied with. records for the Project; (ii) prepare annual Section 2.09. CRC maintained separate accounts financial statements for the Project in accordance for each tranche. The audit reports with accounting principles acceptable to ADB; (iii) were submitted on time and each have such financial statements for the Project report was issued with an audited annually by independent auditors whose unqualified opinion. qualifications, experience and terms of reference are acceptable to ADB, in accordance with The annual APFSs have been international standards for auditing or the national disclosed on ADB website as equivalent acceptable to ADB; (iv) as part of each required for Tranche 5. such audit, have the auditors prepare a report (which includes the auditors’ opinion on the financial statements, use of the Loan proceeds and compliance with the financial covenants of the Loan Agreement as well as on the use of the
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Covenant Reference in Status of Compliance Legal Agreement procedures for imprest fund(s) and statement of expenditures) and a Management Letter and (v) furnish to ADB, no later than 6 months after end of each related fiscal year to which they relate, copies of such audited financial statements, audit report and Management Letter, all in the English language, and such other information concerning these documents and the audit thereof as ADB shall from time to time reasonably request.
(b) ADB shall disclose on its website the annual audited financial statements for the Project and the opinion of the auditors on the financial statements within 30 days of the date of their receipt.
(c) CRC shall enable ADB, upon ADB's request, to discuss the financial statements for the Project and its, and its subsidiaries’, financial affairs where they relate to the Project with the auditors appointed by CRC pursuant to subsections (a)(iii) hereinabove, and shall authorize and require any representative of such auditors to participate in any such discussions requested by ADB. This is provided that such discussions shall be conducted only in the presence of an authorized officer of CRC, unless CRC shall otherwise agree. 14. (a) CRC shall, and shall cause all relevant PA, Art. II, Complied with. subsidiaries to promptly as required, take all Section 2.11 action within its respective powers to maintain its Sound administrative, financial, corporate existence, to carry on its operations, engineering, environmental and and to acquire, maintain and renew all rights, railway construction, maintenance, properties, powers, privileges and franchises and operations practices were which are necessary in carrying out the Project or followed for equipment operation in the conduct of its operations. and maintenance.
(b) CRC shall and shall cause all relevant subsidiaries to at all times conduct its operations in accordance with sound administrative, financial, engineering, environmental and railway construction, maintenance and operations practices, and under the supervision of competent and experienced management and personnel.
(c) CRC shall and shall cause all relevant subsidiaries to at all times operate and maintain its plants, equipment and other property, and from time to time, promptly as needed, make all necessary repairs and renewals thereof, all in accordance with sound administrative, financial, engineering, environmental and railway construction, maintenance and operations practices. 15. Except as ADB may otherwise agree, CRC shall PA, Art. II, Complied with. not and shall cause all relevant subsidiaries not to Section 2.12 sell, lease or otherwise dispose of any of its assets which shall be necessary for the efficient carrying on of its operations or the disposal of which may prejudice its ability to perform
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Covenant Reference in Status of Compliance Legal Agreement satisfactorily any of its obligations under this Project Agreement or related to the Project. 16. Except as ADB may otherwise agree, CRC shall PA, Art. II, Complied with. apply the proceeds of the Loan to the financing of Section 2.13 expenditures on the Project in accordance with the provisions of the Loan Agreement and this Project Agreement, and shall ensure that all items of expenditures financed out of such proceeds are used exclusively in the carrying out of the Project. 17. CRC shall promptly notify ADB of any proposal to PA, Art. II, Complied with. amend, suspend or repeal any provision of its Section 2.14 constitutional documents, or those of its subsidiaries which, if implemented, could adversely affect the carrying out of the Project or the operation of the Project facilities. CRC shall afford ADB an adequate opportunity to comment on such proposal prior to taking any affirmative action thereon or permitting any such subsidiary to take any action on its constitutional documents. 18. Implementation Arrangements LA, Schedule 5, Complied with. The Borrower shall cause CRC to ensure that the para. 1 Project is implemented in accordance with the Project was implemented in detailed arrangements set forth in the FFA and PA, Schedule, accordance with the arrangements the FAM. Any subsequent change to the FAM para.1 set forth in the FFA and the FAM. shall become effective only after the approval of such change by MOR and ADB. In the event of any discrepancy between the FAM and the Loan, the provision of the Loan Agreement shall prevail. 19. Counterpart Funds LA, Schedule 5, Complied with. The Borrower shall cause CRC to ensure that para. 2 Counterpart funds were provided counterpart funds and domestic commercial loan timely to support project proceeds are provided in a timely manner, implementation. including any additional counterpart funds, as and when required, to meet any Project shortfall or cost overruns. The Borrower shall cause CRC to maintain adequate annual funding for the operation and maintenance of the Project facilities. 20. Reform Measures PA, Schedule, Complied with. CRC shall implement the Railway Development para.2 The CRC (currently known as Plan. China State Railway Group Co., Ltd.) was established in 2013 to continue to implement railway sector reform. 21. Equipment Quality PA, Schedule, Complied with. CRC shall ensure that the Goods are procured para.3 Regular quality check and technical and used in accordance with the Government's inspection were conducted. After national technical standards, and that supervision, the installation, inspection quality control, and contract management are companies which were selected by carried out in a periodic and satisfactory manner. bids checked the quality of equipment installation. 22. Capacity Expansion PA, Schedule, Complied with. CRC shall ensure that all capacity expansion para.4 activities in southwestern region in the territory of the Borrower are completed with due consideration of their environmental and social safeguards in a timely manner.
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Covenant Reference in Status of Compliance Legal Agreement 23. Sustainability Complied with. The Borrower shall cause MOR to ensure that (a) PA, Schedule, Counterpart funds and staffing adequate counterpart funding, staffing, and para.5 were provided to ensure smooth institutional support be provided for operation of the project equipment. implementation of the Project and maintenance of the Goods; (b) necessary measures be taken promptly to resolve any issues identified during operation of the Goods; and (c) appropriate budgetary allocations be made for the continued operation and maintenance of the Goods. 24. Governance and Anticorruption Complied with. CRC shall comply with ADB’s Anticorruption PA, Schedule, ADB’s anti-corruption requirements Policy (1998, as amended to date). CRC para.6 were complied with and acknowledges that ADB reserves the right to incorporated in the bidding investigate directly, or through its agents any documents and contracts. alleged corrupt, fraudulent, collusive, or coercive practices relating to the Project; and CRC undertake to cooperate with any such investigation and to extend all necessary assistance for the satisfactory completion of any such investigation.
CRC shall ensure that anticorruption provisions PA, Schedule, acceptable to ADB are included in all bidding para.7 documents and contracts, including provisions specifying the right of ADB to audit and examine the records and accounts of CRC, its subsidiaries involved in the Project, the project management office and all contractors, suppliers, consultants, and other service providers as they relate to the Project.
CRC shall, by means of a publicly accessible PA, Schedule, website, disclose information about various para.8 project matters, including general project information, procurement information, project progress, and contact details, in the English and Chinese languages. The website will also provide a link to ADB’s Integrity Unit (http://www.adb.org/site/integrity/main) for reporting to ADB any grievances or allegations of corrupt practices arising out of the Project and Project activities. With regard to procurement, the website will include, at minimum, information on the list of participating bidders, name of the winning bidder, basic details on bidding procedures adopted, amount of contract awarded and the list of Goods and Works procured. 25. Supply of Rolling Stock PA, Schedule, Complied with. CRC shall provide sufficient rolling stock and para.9 Sufficient rolling stock were other equipment, at all times, for effective provided for effective operation of operation of the Goods. the equipment. 26. Safety PA, Schedule, Complied with. CRC shall ensure the safety of the equipment in para.10 Local governments proactively accordance with relevant Government laws and made the general public aware of regulations of the Borrower. safety issues during construction and operation. After the installation, external inspectors checked the safety of equipment installation.
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Covenant Reference in Status of Compliance Legal Agreement 27. Monitoring and Evaluation PA, Schedule, Complied with. CRC shall monitor and evaluate impact through para.11 Progress reports were generally the performance monitoring system agreed to by submitted to ADB on time. CRC and ADB to ensure that Goods and The borrower’s project completion materials are managed efficiently, benefits are reports were submitted to ADB in maximized, and impacts are monitored. CRC shall April 2019. collect the necessary information and data on project performance, as agreed to by CRC and ADB, before project implementation, and at completion of the Project. 28. Safeguard Policy PA, Schedule, Complied with. CRC shall ensure that the Project does not have para.12 EA reported the results of the any environmental, indigenous peoples or compliance review in the progress involuntary resettlement impacts, all within the reports which were submitted to meaning of ADB’s Safeguard Policy Statement ADB during project implementation. (2009). In the event that the Project does have any such impact, CRC shall take all steps required to ensure that the Project complies with the applicable laws and regulations of the People’s Republic of China and with ADB’s Safeguard Policy Statement (2009). 29. Change in Ownership PA, Schedule, Complied with. In the event either of the following is anticipated: para.13 Ownership remains unchanged. (a) any change in ownership or control of any of the Project facilities; or (b) any sale, transfer or assignment of shares or other ownership interests or other change of control in CRC or in any CRC subsidiaries involved in the Project, in each case including, without limitation, by way of any corporate restructuring of CRC, CRC shall consult with ADB commencing from the later to occur of (i) at least 6 months prior to the implementation of such change and (ii) the date that CRC first becomes aware of a proposed change; and CRC shall carry out all such changes in a lawful and transparent manner. ADB = Asian Development Bank, APFS = audited project financial statements, Art – Article, CRC = China Railway Corporation, EA = executing agency, FAM = facility administration manual, FCTIC = Foreign Capital and Technical Import Center, FFA = framework financing agreement, IA = implementing agency, LA = loan agreement, MOR = Ministry of Railways, PA = project agreement, PRC = People’s Republic of China. Source: Asian Development Bank.
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ECONOMIC REEVALUATION
A. Introduction
1. The outcome of the Railway Energy Efficiency and Safety Enhancement Investment Program was to develop an energy-efficient, safe, reliable, affordable, and environment-friendly railway transport system in the southwestern region, which comprised four provinces and one municipality, namely Guangxi, Guizhou, Sichuan, Yunnan, and Chongqing. The key output of the five tranches was to introduce energy-efficient technologies and environment-friendly and safety equipment. To be consistent with the approach adopted at appraisal, the economic reevaluation was conducted for the system-wide traffic for passengers and freight. The economic reevaluation was carried out following Asian Development Bank’s (ADB) Guidelines for the Economic Analysis of Projects (2017).
B. Assumptions and Methodologies used for Economic Reevaluation
2. The investment program provided by ADB was to support the government’s railway development plan from 2009 to 2016 for capacity expansion over the southwestern region of the PRC. During this period, 47 railway lines with total length of 9,671.8 km were constructed in the region. The total investment amounted to CNY1,093.6 billion. The equipment procured to enhance energy efficiency, safety and environment sustainability costed CNY75.8 billion, equivalent to 6.93% of the total investment. These equipment were installed in the last two years before the operation of the railways.
3. Benefit estimates were based on the actual situation during implementation of the investment program. With and without-project scenarios were identified for the program to quantify the incremental output volume. The quantifiable parameters are base and diverted passenger kilometers (passenger-km) and freight ton kilometers (ton-km). The program generated economic benefits accruing from (i) user cost savings for diverted freight and passenger traffic, (ii) time savings for freight and passenger traffic, (iii) avoided road infrastructure and maintenance costs, (iv) avoided road accidents, (v) energy savings, and (vi) pollution reduction benefits. These benefits were quantified in the reevaluation of the economic benefits.
4. The main assumptions used in the economic reevaluation are the following:
(i) The lifespan of the reevaluation is 25 years from 2011 to 2035.
(ii) The economic costs and benefits were valued using the domestic numeraire and expressed in constant 2019 prices.
(iii) The project costs consist of capital costs, operation and maintenance costs, and the costs for equipment replacement during the evaluation period. The monitoring equipment was replaced every 10 years and the other equipment was replaced every 15 years. Financial costs were converted to economic costs by applying relevant conversion factors and by deducting taxes, interest, and price contingencies. Sources of capital included ADB loan proceeds and government financing.
(iv) The value added tax (VAT) on equipment is 6.3%.
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(v) A shadow exchange rate factor of 1.01 is applied in the reevaluation and a shadow wage rate factor of 0.67 is applied to the price of unskilled labor. Subsidies, tax, and other transfer payments were deleted in the economic analysis.
(vi) The real opportunity cost of capital is assumed to be 12% per year.
C. Freight and Passenger Traffic
5. The railway network length in the region was increased from 12,721 km in 2009 (14.6% of the national railway network) to 18,838 km (15.2% of the national railway network) in 2016 at an average annual growth rate of 8.2%, higher than the national railway network growth of 7.3% per year during the same 2009–2016 period (Table 12.1). Up to 2019, the railway network length in the southwestern region reached 20,621 km (14.8% of the national railway network) at annual growth of 3.1%, comparing to the national railway network growth of 4.1% during the same period of 2016-2019. After 2020, due to the population size in the southwestern region and the constrains of local fiscal revenues, it is envisaged that the railway development progress in the region will slow down and the railway network length will achieve 27,368 km (12.7% of the national railway network) in 2035, representing an annual growth of 1.8% from 2019 to 2035, lower than the national railway network length growth of 2.7% per year during the same period.
Table 12.1: Freight and Passenger Traffic
Description Unit 2010 2016 2019 2020 2025 2030 2035 Length of Raiwalys PRC railway km 92,015 123,992 139,819 146,000 170,000 200,000 215,000 SW region km 13,471 18,838 20,621 21,121 22,964 26,250 27,395 Annual growth % 5.90% 9.38% 3.68% 2.42% 1.69% 2.71% 0.86% Share of SW region in PRC % 14.64% 15.19% 14.75% 14.47% 13.51% 13.13% 12.74% SW Region Railway Traffic Passengers million 188.0 348.9 527.3 560.9 785.1 1,013.5 1,218.9 Passenger-km billion 76.9 115.0 166.7 174.0 222.5 262.8 298.8 Passenger average length of haul km 408.9 329.7 316.2 310.3 283.4 259.3 245.2 Freight tons million 306.8 235.4 263.3 391.3 499.8 534.8 570.0 Freight ton-km billion 277.9 237.4 287.6 310.3 383.1 433.5 468.0 Freigth average length of haul km 905.6 1,008.6 1,092.4 792.9 766.5 810.7 821.1 Share of SW region in PRC Railway Freight tons % 8.4% 7.1% 6.1% 8.7% 9.1% 9.3% 9.5% Freight ton-km % 10.1% 10.0% 9.6% 9.9% 10.0% 10.2% 10.4% Passsengers % 11.2% 12.4% 14.4% 14.4% 14.8% 15.7% 16.3% Passenger-km % 8.8% 9.1% 11.3% 11.3% 11.4% 11.7% 12.0% SW Region Traction Electric traction % 34.9% 83.8% 93.6% 95.8% 98.5% 99.5% 100.0% Diesel traction % 65.1% 16.2% 6.4% 4.2% 1.5% 0.5% 0.0% Passenger-km with electric traction billion 28.7 79.2 70.9 64.0 30.0 12.0 5.0 Passenger-km with diesel traction billion 53.6 11.3 2.4 0.8 - - - Freight ton-km with electric traction billion 102.7 305.8 385.3 405.7 507.5 609.0 710.3 Freight ton-km with diesel traction billion 191.9 63.2 28.9 19.5 8.0 3.0 0.1 High-speed Train Passenger-km billion 137.2 216.1 249.1 330.7 436.6 542.3 SW Region Total of Locomotives: Diesel no. 936 901 798 762 579 396 214 Electric no. 267 1,866 1,885 1,900 1,971 2,042 2,112 PRC = People’s Republic of China, SW = southwestern, km = kilometer Source: Asian Development Bank estimates
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6. The freight traffic in the southwestern region decreased slightly from 315.2 million tons in 2009 to 235.4 million tons in 2016 and then increased to 263.3 million tons in 2019. The share of the region in national railway freight traffic was 10.4% in 2009, 7.1% in 2016 and 6.1% in 2019 in terms of tons and from 11.1% to 9.6% in terms of ton-km. By 2035, the freight traffic in the southwestern region is estimated to achieve 570.0 million tons, 9.5% of the national railway freight traffic in terms of tons and 10.4% in terms of ton-km. Since the energy consumption structure in the southwestern region has been changed in the past ten years, the transportation demand for bulk cargos such as energy goods was reduced, which caused the slowdown of the growth of freight traffic in the region (Table 12.2).
Table 12.2: Volume of Freight Traffic by Bulk Cargo Type (million tons)
2009 2011 2013 2015 2017 2019 Coal 81.2 85.9 76.6 70.6 50.8 54.9 Metallic Ores 40.6 48.5 50.6 28.9 46.0 52.4 Steel 30.0 30.8 31.2 48.2 23.5 28.1 Mineral Building Materials 14.2 10.7 11.5 11.0 10.7 9.9 Rock Phosphate 9.8 15.2 13.4 14.6 12.0 12.9 Nonmetal Ores 7.7 9.8 13.4 8.4 6.3 8.9 Gas 6.3 8.8 9.2 10.7 11.3 12.6 Coke 5.7 5.3 5.3 4.3 3.8 3.9 Cement 3.7 2.7 2.7 2.3 1.7 1.3 Total Freigt Tons of Bulk Cargo 199.19 217.62 213.95 198.96 166.16 184.84 Total Freight Tons of SW Region 315.22 289.42 279.93 240.33 234.59 263.25 Railway Traffic % 63% 75% 76% 83% 71% 70% SW = southwestern Sources: China Transportation Yearbook and China Railway Yearbook.
7. Different from the slow growth of the freight traffic, the regional passenger traffic grew rapidly from 188.0 million passengers in 2009 to 348.9 million in 2016 and then to 527.3 million in 2019 at annual growth rate of 10.9%. It is envisaged that the passenger traffic will reach 1,218.9 million passengers in 2035. The share of passengers in the national railway traffic increased from 11.5% in 2009 to 14.4% in 2019 and will be up to 16.3% in 2035. In terms of passenger-km, the corresponding values were 9.3% in 2009, 9.1% in 2016, 11.3% in 2019 and is expected to be 12.0% in 2035. These growth trends were consistent with the government’s western region development strategy and the Chengdu-Chongqing regional economic cooperation strategy.
8. Under the government’s railway development plan 2009–2016, ADB’s investment on materials and equipment to enhance railway energy efficiency and safety started from 2011. The diverted freight traffic was 1.3 billion ton-km in 2011, increasing to 8.6 billion ton-km in 2016 and 10.8 billion ton-km in 2019 and is estimated to achieve 20.8 billion ton-km in 2035. Around 80% of the diverted freight traffic was from roads and 20% from waterway. As a result of the well-established intercity railway networks in the southwestern region, the diverted passenger traffic from road and airlines increased sharply from 1.2 billion passenger-km in 2011 to 13.0 billion passenger-km in 2016 and 20.5 billion passenger-km in 2019 and is expected to achieve 46.5 billion passenger-km in 2035.
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9. In terms of traction power, 33% of traction was by electric locomotives and 67% by diesel in 2009. The railway electrification was sped up since 2011 and the share of electric locomotives increased rapidly to 84% in 2016 and 94% in 2019. It is preferred because: (i) higher traction power is generated by electric locomotive in the largely mountainous terrain; (ii) the water resource is rich is the southwestern region and 71% of electricity generation in the region is through hydroelectric power; (iii) electric locomotive is more environment-friendly, especially in the southwestern region where 50% of the mainline is in tunnels with diesel locomotives causing serious emission problems and ventilation challenges. It is envisaged that by 2035 the share of traction by electric locomotives will achieve 100%. The number of diesel freight and passenger locomotives increased from 309 in 2009 to 1,044 in 2014, and then decreased gradually to 798 in 2019. By 2035, it is estimated that only 214 diesel locomotives will be maintained to be used for internal operation within major hubs. In comparison, the number of electric freight and passenger locomotives increased fast from 83 in 2009 to 1,866 in 2016 and will be up to 2,112 in 2035.
D. Economic Benefits and Costs
10. Under the government’s railway development plan 2009–2016, there were 47 railway lines constructed in the southwestern region. The first one commenced construction in January 2009 and was opened to traffic in December 2012. Its capital investment on energy efficiency, safety and environmental sustainability equipment was occurred in 2011 and 2012, respectively. This equipment supported the entire railway network of the southwestern region and the economic benefits were generated from 2011. The last railway line commenced construction in December 2016 and will be opened to traffic in 2023.
11. The economic benefits included: (i) user cost savings for diverted freight and passenger traffic; (ii) time savings for freight and passenger traffic; (iii) avoided road infrastructure and maintenance costs; (iv) avoided road accidents; (v) energy savings; and (vi) pollution reduction benefits. They were quantified in the reevaluation of the economic benefits.
12. User Cost Savings for Diverted Freight and Passenger Traffic. The user cost savings of passenger traffic were the difference in the passenger economic fare between road/airlines and rail transport. The passenger traffic diverted from road was 1.0 billion passenger-km in 2011, increasing to 10.4 billion passenger-km in 2016 and 16.4 billion passenger-km in 2019. The passenger traffic diverted from airlines increased from 0.3 billion passenger-km in 2011 to 2.6 billion passenger-km in 2016 and to 4.1 billion passenger-km in 2019. The road fare was CNY0.35 per passenger-km and the airlines fare was CNY0.94 per passenger-km. The railway transport fares were CNY0.51 per passenger-km for train speed between 300-350 kilometers per hour (kph), CNY0.29 per passenger-km for train speed between 200-250 kph, and CNY0.16 per passenger-km for train speed below 200 kph1. Since the regional passenger traffic grew rapidly during the past ten years, the total economic benefits for user cost savings increased fast from CNY245.5 million in 2011 to CNY4,060.3 million in 2019 and is expected to achieve CNY9,225.5 million in 2035.
13. The user cost savings of freight traffic were the difference in shipper economic costs between truck/inland waterway and rail transport. The freight traffic diverted from road was 1.0 billion ton-km in 2011, increasing to 6.8 billion ton-km in 2016 and 8.6 billion ton-km in 2019. The freight traffic diverted from the inland waterway was 0.3 billion ton-km in 2011, increasing to
1 Provided by China State Railway Group Co., Ltd for economic evaluation of railway projects.
Appendix 12 79
1.7 billion ton-km in 2016 and 2.2 billion ton-km in 2019. The unit costs of truck and inland water were CNY0.30 and CNY0.12 per ton-km, comparing to the rail transport cost of CNY0.16 per ton-km. The economic benefits for freight traffic diverted from trucks increased from CNY139.1 million in 2011 to CNY1,164.9 in 2019 and to CNY2,250.0 million in 2035. The economic benefits for freight traffic diverted from inland waterway ranged from CNY-10.3 million in 2011 to CNY-86.3 in 2019 and CNY-166.7 in 2035.
14. Time Savings for Freight and Passenger Traffic. The time savings for passenger traffic were generated from (i) shortened travel time; and (ii) shortened response time to accidents with application of the new safety equipment. Time savings of base passengers and passengers diverted from roads and airlines were based on the time value estimated following the average per capita income in the region. The response time to accidents and the time to clear the track under the project was shortened by 3.5 hours, and the average economic cost per accident was CNY0.704 million2. The economic benefits on passenger time savings were computed, increasing from CNY737.5 million in 2011 to CNY1,298.0 in 2019 and to CNY2,669.6 in 2035.
15. For freight time savings benefits, due to the operational improvements with the project, the transportation time saved was 17.2 hours comparing to the conditions of without-project. Adjusted economic values of CNY2,610.0 per ton for non-containerized bulk cargo and CNY16,063.0 per ton for containerized cargo were added, which brought the economic benefits stream from CNY365.3 million in 2011 to CNY527.1 million in 2019 and to CNY1,019.1 million in 2035.
16. Avoided Road Infrastructure and Maintenance Costs. With the project, the diversion of traffic from road helped avoid costs of highway construction/expansion and highway routine and periodic maintenance costs. The road transportation capacity was around 700,000 freight ton-km/passenger-km per kilometer per day in the region. Based on the diverted freight ton-km and passenger-km, it was estimated that around 3.2 kilometers of highway were avoided to construct in 2011, 28.5 km in 2016, 42.2 km in 2019 and 92.4 km in 2035. Given that the average construction cost of highway in the southwestern region was CNY80.0 million per kilometer and the average maintenance cost was CNY4.0 million per kilometer, the economic costs of CNY264.5 million was saved in 2011, CNY2,389.5 million in 2016, CNY3,544.5 million in 2019 and CNY7,763.8 million in 2035.
17. Avoided Road Accidents. With the project, partial freight and passenger traffics were diverted from road to rail and the road accidents for the diverted traffic were avoided. Based on the average economic cost per road accident of CNY960 per million passenger-km/ton-km, the economic benefits of avoided road accidents were calculated which were CNY1.9 million in 2011, CNY16.6 million in 2016, CNY24.1 million in 2019 and is expected to be CNY51.9 million in 2035.
18. Energy Savings. The project included investment in machinery and new technology that were more energy efficient than the original rail transport technology. For the base traffic, the energy savings representing the difference between the existing and new rail technology were comparatively small and not counted in the reevaluation. With respect to diverted traffic from road to rail, the energy savings representing the difference of energy efficiency between road transport and improved rail transport with the project were calculated. The gas
2 Provided by regional railway bureaus.
80 Appendix 12
consumption saved per billion passenger-km/ton-km was 2.6 liters in 2010, 8.7 liters in 2016, 12.3 liters in 2019 and is estimated to be 13.8 liters in 2035. The economic benefits of energy savings were computed based on the economic cost of CNY3.08 per liter, increasing from CNY8.1 million in 2011 to CNY26.7 million in 2016, CNY37.8 million in 2019 and to CNY42.5 million in 2035.
19. Pollution Reduction Benefits. With the diversion of freight and passengers from road to rail, the benefits from reduced pollution from trucks, buses and cars were generated. The savings for rail compared with road were 21.7 tons of carbon dioxide (CO2) per million traffic units in 2009, 22.6 tons in 2020 and 23.5 tons in 2035 (Table 12.3). The actual CO2 emission reduced in the southwestern region with the project were 0.2 million tons in 2011, 0.5 million tons in 2016, 0.7 million tons in 2019 and will reach 1.6 million tons in 2035. Applying the CO2 market price of CNY68.0 per ton, 3 the pollution reduction benefit stream was ranging from CNY10.0 million in 2011, CNY33.3 million in 2016, CNY47.2 million in 2019 and will be CNY107.8 million in 2035.
Table 12.3: Air Pollutions (tons per million freight ton-km/passenger-km)
Electric Electric Locomotives in Southwestern Region Air Truck/Bus Locomotive in Pollution 2009 2020 2025 2030 2035 PRC Railway CO 0.158 0.001 0.0004 0.0003 0.00021 0.00015 0.0001 NOx 0.427 0.009 0.0040 0.0030 0.00210 0.00147 0.0010 SO2 0.150 0.001 0.0010 0.0005 0.00035 0.00025 0.0002 CO2 24.000 4.620 2.2870 1.3860 0.97000 0.67900 0.4750 CO = carbon monoxide, CO2 = carbon dioxide, NOx = nitrogen oxide, SO2 = sulfur dioxide Source: Asian Development Bank estimates
20. Operation and Maintenance Costs. The operation and maintenance cost included expenditures for labor cost, energy sources and other costs. The average operation and maintenance cost per million passenger-km in the southwestern region was CNY0.18 million for train speed over 300 kph, CNY0.14 million for train speed between 200-250 kph and CNY0.10 million for train speed below 200 kph. The average operation and maintenance cost per million ton-km in the region was CNY0.06 million. Applying the conversion factors of 1.0 to skilled labor (80% of total labor) and 0.67 to unskilled labor (20% of total labor), the economic operation and maintenance costs for diverted passenger-km/ton-km was CNY229.7 million in 2011, CNY2,129.9 million in 2016, CNY3,192.9 million in 2019 and will be CNY7,043.0 million in 2035.
E. Economic Internal Rate of Return and Sensitivity Analysis
21. The economic reevaluation yields EIRR of 20.4% for the project, higher than the threshold rate of 12% applied at appraisal and the discount rate of 9.0% adopted by ADB in the Guidelines for the Economic Analysis (2017). It indicates that the investment program is economically viable (Table 12.4).
22. The EIRR is lower than the estimated 26.8% at appraisal. Although the project is benefited from the speedy development of electrification of railway lines, which brought more economic benefits on fuel consumption savings and pollution reductions, two factors have
3 CO2 market price is available on China Carbon Emission Trading website (http://www.tanpaifang.com/tanhangqing/).
Appendix 12 81 significant effects on the reevaluation result: (i) the increased capital cost; and (ii) the lower- than-appraisal freight and passenger traffic. At appraisal, it was reported that the government would invest $25 billion or CNY170 billion for the railway development plan 2009–2016 to expand the capacity in the southwestern region, under which the energy efficiency and safety enhancement would be costed CNY21.7 billion in financial terms or CNY18.9 billion in economic terms. At completion, around CNY1,093.6 million was costed for the adjusted railway development plan 2009–2016. The investment on energy efficiency and safety enhancement was CNY75.8 billion in financial terms or CNY72.0 billion in economic terms, 381% higher than the appraisal estimate. For the freight traffic, it was envisaged at appraisal that the freight ton- km would be 473.1 billion in 2015, 694.3 billion in 2020 and 1,591.1 billion in 2035. Due to the adjusted energy consumption structure in the southwestern region in the past ten years and the slowdown of real estate construction, the transportation demands for bulk cargos such as energy goods and construction materials were reduced. The actual freight ton-km was 236.7 billion in 2015 and 287.6 billion in 2019, almost 60% lower than the appraisal estimates. The freight traffic is expected to reach 468 billion ton-km in 2035, which was only 29% of the estimate at appraisal. With respect to passenger traffic, based on the actual development during the past ten years, it was verified that the passenger-km was over-estimated at appraisal. At appraisal, it was envisaged that the passenger-km would be 141.5 billion in 2015, 206.6 billion in 2020 and 589.3 in 2035, while the actual passenger-km was 107.8 billion in 2015 and 166.7 billion in 2019, only 80% of the estimates. The passenger-km is expected to be 298.8 billion in 2035, only 51% of the appraisal estimate. With these significant effects, the reevaluated EIRR was 20.4%, lower than the appraisal estimate.
Table 12.4: Economic Internal Rate of Return Costs Economic Benefits User Cost Savings Time Savings Avoided Road Diverted For Infrastructure Avoided Passenger Diverted Passenger Freight & Maintenance Road Pollution Energy Total Capital Replacement O&M Traffic Freight Traffic Traffic Cost Accidents Reduction Efficiency Benefits Net Benefits
2011 190.3 - 229.7 245.5 128.8 737.5 365.3 264.5 1.9 10.0 8.1 1,761.6 1,341.6 2012 1,801.6 - 319.1 345.9 173.5 762.4 381.6 366.4 2.7 14.6 11.8 2,058.8 (61.8) 2013 3,261.6 - 408.4 446.3 218.2 819.5 398.8 468.2 3.4 19.3 15.5 2,389.3 (1,280.7) 2014 8,417.2 - 810.4 917.4 398.0 866.8 417.1 922.6 6.6 23.9 19.3 3,571.6 (5,655.9) 2015 11,662.1 - 1,418.0 1,696.0 596.7 933.8 436.5 1,595.9 11.2 28.6 23.0 5,321.8 (7,758.3) 2016 5,483.2 - 2,129.8 2,584.9 855.1 962.7 457.2 2,389.4 16.6 33.2 26.7 7,325.9 (287.1) 2017 4,360.8 - 2,436.6 3,005.1 925.6 1,066.9 479.1 2,723.9 18.8 37.9 30.4 8,287.7 1,490.2 2018 6,123.7 - 2,883.1 3,652.2 989.4 1,164.4 502.3 3,203.4 21.8 42.5 34.1 9,610.3 603.4 2019 6,869.3 - 3,192.9 4,060.3 1,078.6 1,298.0 527.1 3,544.5 24.1 47.2 37.8 10,617.5 555.3 2020 8,195.9 - 3,432.2 4,346.8 1,179.0 1,482.9 553.4 3,813.8 25.9 51.8 41.5 11,495.1 (133.0) 2021 6,041.8 19.0 3,675.0 4,664.3 1,251.3 1,594.4 581.4 4,081.5 27.7 55.7 42.2 12,298.5 2,562.6 2022 6,447.1 180.2 3,917.8 4,981.9 1,323.6 1,666.6 611.2 4,349.3 29.5 59.5 42.8 13,064.4 2,519.3 2023 3,155.5 326.2 4,160.6 5,299.5 1,396.0 1,756.2 642.9 4,617.0 31.3 63.3 43.4 13,849.7 6,207.3 2024 841.7 4,403.4 5,617.1 1,468.3 1,845.9 676.7 4,884.8 33.1 67.2 44.1 14,637.0 9,391.9 2025 1,166.2 4,646.2 5,934.6 1,540.6 1,935.5 712.7 5,152.5 34.9 71.0 44.7 15,426.6 9,614.1 2026 719.6 4,876.8 6,243.0 1,601.9 2,021.5 736.5 5,405.3 36.6 74.6 44.6 16,163.9 10,567.5 2027 2,057.5 5,107.3 6,551.3 1,663.1 2,107.5 761.6 5,658.2 38.2 78.2 44.5 16,902.5 9,737.7 2028 3,547.8 5,337.8 6,859.6 1,724.3 2,181.4 788.0 5,911.0 39.9 81.9 44.5 17,630.5 8,744.9 2029 8,262.4 5,568.3 7,167.9 1,785.5 2,255.4 816.0 6,163.8 41.6 85.5 44.4 18,360.0 4,529.2 2030 11,315.5 5,798.9 7,476.2 1,846.7 2,329.4 845.4 6,416.6 43.2 89.1 44.3 19,091.0 1,976.7 2031 5,558.1 6,047.7 7,826.1 1,894.0 2,401.5 876.5 6,686.1 45.0 92.8 43.9 19,865.9 8,260.2 2032 4,749.6 6,296.5 8,175.9 1,941.4 2,473.6 909.4 6,955.5 46.7 96.6 43.6 20,642.5 9,596.4 2033 6,153.0 6,545.3 8,525.8 1,988.7 2,538.9 944.0 7,224.9 48.4 100.3 43.2 21,414.2 8,715.8 2034 7,024.1 6,794.1 8,875.6 2,036.0 2,604.3 980.6 7,494.3 50.1 104.0 42.9 22,187.8 8,369.5 2035 (30,369.2) 7,043.0 9,225.5 2,083.3 2,669.6 1,019.1 7,763.8 51.8 107.8 42.5 22,963.4 46,289.7 20.4% NPV 12% 10,139.2 O&M = operation and maintenance, NPV = net present value Source: Asian Development Bank estimates
23. Sensitivity analysis was carried out for the project to test the impacts of (i) increased operation and maintenance costs, (ii) decreased benefits, and (iii) a combination of the first two
82 Appendix 12 scenarios. According to the analysis, the project will remain economically viable in all scenarios. The results of the sensitivity analysis are provided in Table 12.5.
Table 12.5: Sensitivity Analysis Parameter EIRR NPV at 12% Reevaluated value 20.4 10,139.2 O&M +10% 18.8 8,304.8 Benefits -10% 14.8 3,700.0 Combined 13.4 1,865.7 EIRR = economic internal rate of return, NPV = net present value, O&M = operation and maintenance Source: Asian Development Bank estimates
Appendix 13 83
CONTRIBUTION TO STRATEGY 2030 OPERATIONAL PRIORITIES
No. Results Framework Indicators Expected Achieved
OP1.2 Job generated (number) n/a Over 83,000
OP3.1 Total annual greenhouse gas emissions reduction n/a 840,000 (tCO2e/year) OP5.1 People benefit from increased rural investment (number) n/a 116,370,000 OP5.1.1 Rural infrastructure assets established or improved (km) 6,500 9,672 OP6.1 Entities with improved management functions and financial 4 4 stability (number) OP = operational priority, n/a = not available, km = kilometer. Source: Asian Development Bank estimates.