Document of The World Bank
Public Disclosure Authorized Report No: ICR00003943
IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-80520)
ON A
Public Disclosure Authorized LOAN
IN THE AMOUNT OF US$200 MILLION
TO THE
PEOPLE’S REPUBLIC OF CHINA
FOR A
JITUHUN RAILWAY PROJECT Public Disclosure Authorized
June 2, 2017
Transport and ICT Global Practice East Asia and Pacific Region
Public Disclosure Authorized
CURRENCY EQUIVALENTS
(Exchange Rate Effective December 2016)
Currency Unit = Renminbi (RMB) RMB1.00 = US$0.14 US$1.00 = RMB6.93
FISCAL YEAR January 1 – December 31
ABBREVIATIONS AND ACRONYMS
CR China Railways CRC China Railway Corporation EIA Environmental Impact Assessment EIRR Economic Internal Rate of Return EMP Environmental Management Plan EMU Electric Multiple Unit FCTIC Foreign Capital and Technical Import Center FIRR Financial Internal Rate of Return FM Financial Management GHG Greenhouse Gas HSR High-speed Railway ICR Implementation Completion and Results Report IFR Interim Unaudited Financial Report IPP Indigenous Peoples Plan ISR Implementation Status Report JRC JiTuHun Railway Company M&E Monitoring and Evaluation MLTRDP Mid- and Long-term Railway Development Plan MOR Ministry of Railways NPV Net Present Value PAD Project Appraisal Document PDO Project Development Objective RA Shenyang Railway Authority RAP Resettlement Action Plan RF Results Framework SA Social Assessment
Senior Global Practice Director: Jose Luis Irigoyen, GTIDR Sector Manager: Binyam Reja, GTIDR Project Team Leaders: Martha B. Lawrence, Gerald Paul Ollivier, GTIDR ICR Team Leader: Anita Shrestha, GTIDR
PEOPLE’S REPUBLIC OF CHINA JITUHUN RAILWAY PROJECT
CONTENTS
A. Basic Information ...... i B. Key Dates ...... i C. Ratings Summary ...... i D. Sector and Theme Codes ...... ii E. Bank Staff ...... ii F. Results Framework Analysis ...... iii G. Ratings of Project Performance in ISRs ...... iv H. Restructuring (if any) ...... v I. Disbursement Profile ...... v
1. Project Context, Development Objectives and Design ...... 1 2. Key Factors Affecting Implementation and Outcomes ...... 4 3. Assessment of Outcomes ...... 10 4. Assessment of Risk to Development Outcome ...... 15 5. Assessment of Bank and Borrower Performance ...... 16 6. Lessons Learned ...... 19 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners ...... 21
Annex 1. Project Costs and Financing ...... 22 Annex 2. Outputs by Component ...... 24 Annex 3. Economic, Financial and GHG Analysis ...... 26 Annex 4. Bank Lending and Implementation Support/Supervision Processes ...... 41 Annex 5. Beneficiary Survey Results ...... 43 Annex 6. Stakeholder Workshop Report and Results ...... 46 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR ...... 47 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders ...... 49 Annex 9. List of Papers published by the Bank on China Railways ...... 50 Annex 10. List of Supporting Documents ...... 51
MAP ...... 52
Data Sheet
A. Basic Information
Country: China Project Name: JiTuHun Railway Project ID: P122321 L/C/TF Number(s): IBRD-80520 ICR Date: 12/21/2016 ICR Type: Core ICR MINISTRY OF Lending Instrument: SIL Borrower: FINANCE Original Total USD 200.00M Disbursed Amount: USD 198.67M Commitment: Revised Amount: USD 200.00M Environmental Category: A Implementing Agencies: China Railway Corporation (CRC) Cofinanciers and Other External Partners: NA
B. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 10/14/2010 Effectiveness: 10/03/2011 08/30/2011 Appraisal: 03/09/2011 Restructuring(s): Approval: 05/24/2011 Mid-term Review: 06/23/2015 06/23/2015 Closing: 12/31/2016 12/31/2016
C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Highly Satisfactory Risk to Development Outcome: Low or Negligible Bank Performance: Satisfactory Borrower Performance: Highly Satisfactory
C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Satisfactory Government: Highly Satisfactory Implementing Quality of Supervision: Highly Satisfactory Highly Satisfactory Agency/Agencies: Overall Bank Overall Borrower Satisfactory Highly Satisfactory Performance: Performance:
i C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Indicators Rating Performance (if any) Potential Problem Quality at Entry Project at any time No None (QEA): (Yes/No): Problem Project at any Quality of No None time (Yes/No): Supervision (QSA): DO rating before Satisfactory Closing/Inactive status:
D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Railways 100 100
Theme Code (as % of total Bank financing) Other environment and natural resources management 25 25 Other social development 25 25 Regional integration 25 25 Trade facilitation and market access 25 25
E. Bank Staff Positions At ICR At Approval Vice President: Victoria Kwakwa James W. Adams Country Director: Bert Hofman Klaus Rohland Practice Ede Jorge Ijjasz-Vasquez, Binyam Reja Manager/Manager: N. Vijay Jagannathan Martha B. Lawrence, Gerald Paul Project Team Leaders: John Carter Scales Ollivier ICR Team Leader: Anita Shrestha ICR Primary Author: Anita Shrestha1
1 Based on substantial analysis from Nanyan Zhou, Richard G. Bullock, Jitendra Sondhi and Jin Wang
ii F. Results Framework Analysis
Project Development Objectives (from Project Appraisal Document) The development objective of the proposed project is to respond to existing and anticipated transport demand along the Jilin-Hunchun corridor by providing increased capacity for freight and passengers, and faster travel time and increased frequency of services for passengers.
Revised Project Development Objectives (as approved by original approving authority) The development objective and key indicators were not revised.
(a) PDO Indicator(s)
Original Target Formally Actual Value Values (from Revised Achieved at Indicator Baseline Value approval Target Completion or documents) Values Target Years Number of train pairs operating per day on the JiTuHun line. Indicator 1 :
Value 8 13 - 26 quantitative or
Qualitative) Date achieved 12/31/2010 12/31/2016 - 11/20/2016 Comments Number of high speed passenger trains are twice the original target (incl. % value. achievement) Number of passengers travelling on the JiTuHun line (in millions) Indicator 2 :
Value 6.00 8.00 - 8.2 quantitative or
Qualitative) Date achieved 12/31/2010 12/31/2016 - 12/31/2016 Number of passengers travelling on the JiTuHun line met its target.
The number of High-speed Railway (HSR) trains now operating is about twice Comments the number forecast at appraisal, while the number of passengers is about the (incl. % same. At appraisal, it was assumed that the service would be predominantly achievement) operated by 16-car trains travelling the full length of the route. Instead many services are now operated by 8-car trains, several of which only travel to intermediate stations, thus significantly increasing the service frequency. Reduced transit time for passengers travelling between Tumen and Jilin Indicator 3 : (minutes)
Value 460 145 - 113 quantitative or
Qualitative) Date achieved 12/31/2010 12/31/2016 - 11/20/2016
iii Comments Travel time has been reduced by 75 percent compared to before the (incl. % project and is 22 percent shorter than original target value. achievement)
(b) Intermediate Outcome Indicator(s)
Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years Completion rate of civil works Indicator 1 :
Value 0 100% - 100% (quantitative or Qualitative) Date achieved 12/31/2010 12/31/2016 - 11/30/2015 Comments Target achieved over a year in advance of project closing. (incl. % achievement) Delivery of Bank financed goods Indicator 2 :
Value 0 100% - 100% (quantitative or Qualitative) Date achieved 12/31/2010 12/31/2016 - 11/30/2015 Comments Target achieved a year in advance of project closing. (incl. % achievement)
G. Ratings of Project Performance in ISRs
Actual Date ISR No. DO IP Disbursements Archived (USD millions) 1 09/22/2011 Satisfactory Satisfactory 0.00 2 10/27/2012 Satisfactory Satisfactory 3.41 3 06/24/2013 Satisfactory Satisfactory 14.65 4 12/24/2013 Satisfactory Satisfactory 36.55 5 05/17/2014 Satisfactory Satisfactory 36.55 6 11/25/2014 Satisfactory Satisfactory 96.26 7 06/18/2015 Satisfactory Satisfactory 166.70 8 12/18/2015 Satisfactory Highly Satisfactory 180.05 9 06/27/2016 Satisfactory Highly Satisfactory 182.63 10 12/23/2016 Satisfactory Highly Satisfactory 198.11
iv H. Restructuring (if any) Not Applicable
I. Disbursement Profile
v
1. Project Context, Development Objectives and Design
1.1 Context at Appraisal
1. The railway sector was considered vital to China’s economic and social development and its international trade, continued economic growth, and ability to extend the benefits of development to people living in the northeastern province of the country. China is a vast country where people and goods move over long distances. Railways provide the most economic means of transport over the distance range. Railways are also more energy-efficient, are environment-friendly, and require less land than highways of comparable capacity.
2. Between 2000 and 2008, traffic on the China Railways (CR) network grew rapidly. Passenger traffic (measured in passenger-km) grew by 70 percent and freight (in ton-km) grew by 82 percent. Even the economic downturn in 2009 had comparatively little impact, with passenger traffic up by only 1.3 percent and freight traffic by 0.5 percent compared with the year before. The network had been expanded by 11 percent since 2000, but had been unable to keep pace with traffic demand. As a result, much of the system, already intensively used a decade earlier, operated close to, or at, capacity. Some traffic on these routes was diverted to transport modes with higher economic and social costs. To avoid railway congestion slowing sustainable economic growth in China, the railway network and services needed to be both expanded and improved.
3. To tackle the increase in demand, in 2008 the State Council updated the Mid- and Long-term Railway Development Plan (MLTRDP, originally approved in 2004), which set out the investment required at the rate of about US$12-15 billion per year through 2020. The planned investments in railways have since been further augmented. An element of the World Bank’s strategy for China was to support this government initiative to bring the various parts of the country closer with regard to personal mobility and the movement of goods through railway development. While many of the projects brought forward are naturally in the more prosperous areas, some are more regionally focused, reflecting the Government’s desire to spread the benefits of development to the more remote parts of the country. The JiTuHun Railway Project, designed to support the ongoing economic development of the Tumen River area in Jilin Province, is one such project.
4. The Bank’s involvement in this project, and more broadly in the railway sector, contributes to both pillars of the sector strategy and to setting up one of the most important features of the Chinese economy of tomorrow. The high-speed railway program is expected to lead to a new model of spatial economic integration in China by shrinking economic distances and creating agglomeration benefits. The Bank’s value added comes from the long-term partnership between China and the Bank, spreading over twenty years in the sector, and combining continuous support to the physical development of the Chinese railway system with a wide range of demand driven analytical and advisory activities that contribute to the railway system’s transformation. This partnership provides CR with timely access to technical advice on the application of appropriate safeguard policies, as
1 well as international good practice in project preparation, procurement and implementation, which can be applied across its broader MLTRDP.
5. At the time of appraisal, the Bank had initiated engagement for the construction of 2,660 km of rail lines through a program of six railway projects. The choice of a multi- project engagement enabled the Bank to provide holistic support to the sector. In addition, and in parallel to the program support, the Bank also fostered a railway sector-based policy dialogue and institutional support nurtured by multiple railway policy notes (list provided in Annex 9), which eventually facilitated and enriched the railway sector in China.
1.2 Original Project Development Objectives (PDO) and Key Indicators (as approved)
6. The PDO, as indicated in the Project Appraisal Document (PAD) and the Loan Agreement, was to respond to existing and anticipated transport demand along the Jilin- Hunchun corridor by providing increased capacity for freight and passengers, and faster travel time and increased frequency of services for passengers.
7. The key PDO indicators as indicated in the PAD were:
a. Number of train pairs operating per day on the JiTuHun line b. Number of passengers travelling on the JiTuHun line c. Reduced transit time for passengers travelling between Tumen and Jilin
1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification
8. The development objective and key indicators were not revised.
1.4 Main Beneficiaries
9. The project was expected to benefit both current and potential passengers who traveled along the catchment area of the new railway line, as well as freight shippers, as the capacity and the level of service for both were anticipated to improve significantly. The people of the eastern cities of Jilin province were expected to be a core beneficiary by becoming connected to the high-speed rail network through the railway hub in Changchun. The project was expected to not only benefit the railways as a business but also the country overall, by encouraging the use of the more economically and environmentally efficient railways, to meet their mobility needs while also reducing air pollution and traffic accidents in winter.
1.5 Original Components
10. At appraisal, the project consisted of the following activities under a single component:
a. Construction of a double-track, electrified, passenger-dedicated high-speed rail line, capable of a maximum speed of 250 km/h, of about 360 km between the cities of Jilin and Hunchun in Jilin province (JiTuHun line). This included the construction
2 of sub-grades, tunnels, bridges, and buildings; acquisition and installation of goods (including communications, signaling, mechanical and electrification equipment, maintenance equipment and rolling stock), and provision of related technical assistance.
b. Construction of eight new railway stations along the rail line.
c. Upgrading of a double line track between Jilin station and the South Terminal of Longtanshan station.
d. Resettlement and rehabilitation of displaced persons.
11. The estimated project cost was US$6.303 billion, including a Bank loan of US$200 million. The Bank loan financed the procurement of goods, including electrification equipment, signaling, communication systems and maintenance equipment. In addition, there was an allocation for potential technical assistance as warranted during project implementation.
1.6 Revised Components
12. Project components were not revised.
1.7 Other significant changes
13. The Changji Company Ltd. (formed in April 2011) succeeded the Preparation Group of JiTuHun Railway Company as the project implementation entity and took over implementation responsibilities of the Preparation Group as defined in Schedule 2 of the Loan Agreement. The Loan Agreement included a provision for future changes in implementation arrangements and hence the project did not need to be restructured.
14. The Ministry of Railways (MOR) was dissolved in 2013 and its duties were taken up by the Ministry of Transport (safety and regulation), State Railways Administration (inspection) and China Railway Corporation (construction and management) 2. Following this change, the Ministry of Finance, the borrower of the JiTuHun Railway Project, implemented the project through the China Railway Corporation. As indicated above, this change too did not require the project to be restructured.
15. The following changes were made in project design: (i) change from a ballast-less track structure for the entire railway to ballasted track except in tunnels, as the savings in capital costs were considerably greater (about RMB3.1 billion) than the increase in maintenance costs; (ii) excluding the construction of the Jilin hub loop from the project,
2 http://www.railjournal.com/index.php/policy/china-implements-radical-railway- reform.html?channel=000
3 which resulted in a saving of RMB2.4 billion; and (iii) adjusting the routing near Jilin Station to avoid the demolition of some public buildings.
2. Key Factors Affecting Implementation and Outcomes
2.1 Project Preparation, Design and Quality at Entry
16. The project quality at entry is Satisfactory based on the analysis detailed below.
Soundness of Background Analysis (Satisfactory)
17. In the period from 1995 to 2010, CR had been pursuing two key objectives: to reform the industry to become more responsive to the market economy; and to achieve an order-of-magnitude change in the capacity and quality of infrastructure and services in a network that was already the busiest railway system in the world by a wide margin and was still facing rapidly growing demand. The JiTuHun Railway Project documentation clearly described the sector background and challenges, including the step-by-step approach chosen by the Government towards reform, concentrating on reforms within the existing framework.
Soundness of Project Design (Satisfactory)
18. The selection of the final route was based on a diligent multi-criteria selection, including economic, environmental, social, and technical factors. Several alternatives were considered, particularly around the urban areas, with the final choice based on multiple criteria that included: connections with the existing rail network and an extension of the high speed Intercity Changchun-Jilin Railway that was under construction; minimizing cost and land acquisition/resettlement; and connecting potential areas of economic development. Further efforts were made to avoid congested areas, soft soil, unfavorable geology, and sites that were environmentally sensitive and of cultural and historic importance. The design institutes consulted officials responsible for urban development planning in the various cities and counties in selecting sites for proposed railway stations and railway facilities.
19. Environmental and social aspects were diligently considered during feasibility engineering and environmental assessment preparation. Feasibility engineering included, as required by Chinese practice, an alternative analysis. A single Environmental Impact Assessment (EIA) consultant was responsible for overall EIA/Environmental Management Plan (EMP) preparation.
20. Financial viability. At appraisal, the Bank reviewed the estimated patronage figures in the Design Institute’s Feasibility Study Report and forecast that the project may experience difficulty in meeting interest payments in the early years and may need to restructure debt before beginning to repay the principal.
4 21. A project company was planned to be created for project implementation, based on lessons learned from Bank railway projects in China. This project followed the implementation arrangement model that had already been successfully used for the ShiZheng, NanGuang and GuiGuang railway projects. A project company was to be created and MOR was to transfer assets created by the project to the project company. This arrangement was considered appropriate to strengthen ownership of the project for both implementation and future operations.
Assessment of Risks (Satisfactory)
22. Risks were assessed diligently, taking into account the Bank’s previous engagement in the railway sector in China. The following risks were identified and risk management measures were taken:
a. Size of the project. Delay related to the large size of the project was identified as one of the major risks. However, with the MOR’s long and extensive experience of supervising complex and large railway projects and the tendering company improving the quality of the procurement documents sent to the Bank for reviews, large contracts financed by the Bank were awarded as planned, and construction was satisfactorily completed well within schedule.
b. Social. The risks included the failure to satisfactorily implement the Resettlement Action Plan (RAP) and mitigate the identified adverse impacts on ethnic minorities. The Preparatory Group (PG) and later JRC, as a joint venture between MOR and the project province, were established to provide incentives for addressing the impacts of resettlement and land acquisition. Detailed planning and rehabilitation measures were developed in the RAP to address these matters.
c. Environmental. Environmental risks included adverse impacts on nature reserves and land acquisition. Environmental safeguards and land acquisition were implemented satisfactorily, in compliance with EIA/EMP requirements.
d. Traffic estimates and financial sustainability. There was a risk that traffic might be below the feasibility study forecast, as part of the traffic forecast was based on improved cooperation between China, North Korea and Russia. The Bank’s estimates were substantially lower. The first year’s operation saw passenger volumes slightly higher than the Bank’s forecast and this is likely to be maintained in the future. The current financial situation of Changji Railway Company is not positive but the company is taking measures, including restructuring its debt, to achieve sustainability.
e. Design. There was a risk that the low temperature environment may create maintenance problems and safety risks during the winter operation of high speed trains. MOR paid special attention to the potential engineering problems during construction and maintenance of track, as well as the operation of EMU trains in low temperature environment. The Design Institute developed engineering
5 solutions to the potential problems due to low ambient temperature. The line was completed with ballasted tracks and has operated satisfactorily under low temperature conditions (minus 25C) during the winter months.
2.2 Implementation
23. The performance of the Shenyang Railway Authority (RA) and Changji Railway Company during the implementation of the project was highly satisfactory. This large project involved the construction of a number of complex elements in a harsh climate that limited the construction period to seven months in a year. Nevertheless, project implementation proceeded in line with expectations and with high administrative efficiency. The Changji Railway Company ensured the smooth implementation of land acquisition, fully compensated the affected people and completed resettlement successfully.
24. By the mid-term review of the project, the construction of the railway line had been completed, implementation progress was satisfactory, and the project was on track to meet its objectives.
25. The project experienced an accident when a part of Xiaopanling #1 Tunnel collapsed during construction: 12 workmen were trapped, but were subsequently rescued and there were no fatalities. Investigations identified the main factors causing the collapse as: (i) clay stone rock, which softens when in contact with water; (ii) a creek bed above the section that collapsed froze during winter and exposed the rock to water during the spring thaw and heavy rain; and (iii) suspension of activity for about a month during the Spring Festival, during which rock deformation continued, as no concrete lining was installed. After the tunnel collapse, the contractor increased the frequency of measuring rock deformation to prevent such issues in the future. The Bank team worked closely with CRC to understand the reasons for the collapse and recommended the following measures: (i) install concrete as close as possible to the working face; (ii) seal and reinforce the working face; and (iii) ensure that a professional geologist monitors tunnel deformation and inspects the tunnel support daily.
26. The JiTuHun railway and opened for service on September 20, 2015, i.e., a year before the loan closing date and a month ahead of schedule, with costs below the original estimates, and with strong initial traffic. The quality of construction was good and suitable measures were taken to ensure safety, environmental preservation, and specified quality standards. The railway operated satisfactorily under low temperature conditions (minus 25C) during the winter months. No significant technical problems have been reported in the months after commercial operation commenced. The Bank team travelled by train from Jilin to Hunchun and found the ride smooth and comfortable.
27. Electric Multiple Unit (EMU) trains operating on JiTuHun Railway line are owned by Shenyang Railway Authority (RA) not by the project as planned originally (at appraisal). Of the eight stations built (seven new stations and the rehabilitation of another
6 station) under the project, two small stations, DashitouNan and Weihuling, have not yet been opened.
28. Trains are currently operated at a maximum speed of 200 km/h to save energy, although the design speed of the railway is 250 km/h. Since the distance travelled by the majority of passengers is relatively short (150-250 km) the increase in travel time due to the lower operating speed is not significant. The fastest train from Jilin to Hunchun (one end of the project to the other) takes 2 hours and 11 minutes, at an average speed of 165 km/h, including station stops.
29. The section of the HSR line between Tumen and Hunchun was built with a heavier axle load than standard for passenger HSR (23 tons rather than 17 tons per axle), so that it could also carry freight trains. However, currently this section is only carrying passengers as the existing conventional line (which serves both passengers and freight on a single- track and operates for the most part at a maximum speed of about 100 km/h) has adequate capacity for freight.
2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization
30. Overall M&E quality is rated Substantial. The M&E system, despite minor shortcomings in design and implementation, was generally sufficient to assess the achievement of the PDO and to test the links in the results chain.
31. M&E design. The M&E framework had clear and simple-to-use definition of indicators to measure the achievement of the PDO: three PDO indicators and two intermediate indicators. The framework was built on the basis of China railways’ existing M&E system which is large and robust. Thus, a concise and focused Results Framework (RF) proved to be sufficient for this project. These indicators are based on easy to gather data and are specific, measureable, attributable, realistic and targeted.
32. The RF does not include a separate PDO indicator for freight. However, the number of trains and traffic volume on both HSR and the existing line have been used to measure the capacity for freight and passengers. The operation of the HSR has released capacity on the existing line to accommodate either freight or passengers. Another minor weakness in the RF is the failure to define clearly the detailed methodology how the baselines were established and how PDO indicators and intermediate indicators “Completion rate of civil works” and “Delivery of Bank financed goods” would be measured. Civil works were measured as a percentage of total km of infrastructure works completed and goods were measured as a percentage of total investment of equipment installed.
33. M&E implementation and utilization. MOR, through the Foreign Capital and Technical Import Center (FCTIC) and the JiTuHun Railway Company (and its successor, the Changji Railway Company) reported on project progress, including achievement of performance monitoring indicators, on a six-monthly basis. Following the creation of CRC, this role was transferred to the Planning and Statistics Department and Material Department of CRC, who continued to provide data on baseline, target values and
7 intermediate values. Overall progress was reviewed as part of annual audit reports, with progress compared to targets. The Bank team reviewed the reports, discussed progress and issues with the implementing agency during missions, and comments provided by the Bank were considered by the implementing agencies to resolve issues.
2.4 Safeguard and Fiduciary Compliance
34. Procurement under the project complied with Bank policies. Procurement was mostly carried out by the Department of Materials Management of China Railway Corporation (before institutional reform, procurement was carried out by FCTIC), with the assistance of a tendering company. The Bank’s assessment of FCTIC’s capacity to implement procurement actions for the project during project preparation had confirmed that FCTIC would be able to manage project procurement in compliance with Bank Procurement Guidelines. This assessment proved valid and the project did not face any procurement issues or delays, despite its large size. The Bank financed procurement of 36 International Competitive Bidding (ICB) goods contracts. All civil works and consultancy services contracts were procured through non-Bank financing in accordance with China’s Tender and Bidding Law.
35. Financial Management (FM) of the project complied with Bank policies. The project FM system provided, with reasonable assurance, accurate and timely information that Bank loan proceeds were used for intended purposes. Counterpart funds were provided as planned. Bank loan proceeds were outside the budgetary and accounting system, but were included as a separate line item reported to the National Peoples’ Congress. Public accounts were consistently audited by China National Audit Office with results generally publicly available, except for national security or commercial secrecy items. The auditors issued unmodified/clean opinions on project financial statements and the interim unaudited financial reports (IFRs) were submitted timely, and any minor issues (associated with counterpart funds) identified were addressed by the implementing agency. Project financial management was been rated as Satisfactory during the entire implementation period.
36. The project complied with the Environmental Safeguards Policies triggered: Environmental Assessment (OP/BP 4.01); Natural Habitats (OP/BP 4.04); and Physical Cultural Resources (OP/BP 4.11). The project was classified as Category A due to the large scale civil works and the complex environmental and social impacts envisaged. A three-fold approach was adopted to address the potential impacts, namely, avoidance, sound engineering and comprehensive mitigation plans. The railway alignment avoided sensitive areas to the maximum extent possible, including natural reserves, forest parks, cultural relics and water resources protection areas. Adverse impacts after avoidance were assessed in the EIA and measures to mitigate and minimize these impacts were developed in the EMP. During project implementation, Changji Railway Company paid close attention to environmental protection, and set up comprehensive environmental management structures. An independent external environmental monitoring consultant was in place during the entire implementation period. The Bank task team conducted regular supervision missions to ensure environmental compliance. The final environmental monitoring report confirms that environmental protection and pollution control measures were implemented as per the EIA requirements, i.e., all temporarily disturbed land have
8 been restored or reclaimed, and handed over to local communities/land owners; noise barriers were installed as per design requirements; sanitary and environmental facilities are installed at all stations; slope protection for all embankment and tunnel portals is in place; and the railway line is adequately fenced for safety, with leaving appropriate passages for community connectivity. The project also supported the construction and improvement of hatchery buildings and equipment for the salmon fish protection program in the Mijiang river. In the past three years, the station released 600,000 salmon fish fry and over five million dybowski fish fry (another migratory fish species), and the breeding and release program is expected to continue under local government funding. Implementation of environmental safeguards is rated satisfactory.
37. The project complied with the two social safeguards policies triggered: Indigenous People Policy (OP/BP 4.10); and Involuntary Resettlement Policy (OP/BP 4.12). A RAP and an Ethnic Minority Development Plan (EMDP) were prepared, reviewed, and disclosed during the project preparation. Changji Railway Company paid close attention to resettlement throughout project implementation; the company and local governments established relevant institutions to implement resettlement. Active public consultations took place with affected villages and households on the railway alignment and the locations of railway stations, compensation rates, relocation arrangements and livelihood restoration approaches and measures; these helped optimize project design and reduce project impacts. At project closure, Changji Railway Company had completed land acquisition (18,495 mu compared to about 17,000 mu estimated at appraisal) and had paid the appropriate compensation. A total of 5,508 households were relocated, compared to the 4,221 households estimated at appraisal. The resettlement cost at project completion is estimated to be RMB5.24 billion, 22 percent higher than the approved project resettlement budget. Changji Railway Company engaged an independent external resettlement monitoring and evaluation team for the duration of project implementation. The Bank conducted regular supervisions during project implementation and provided training to the external monitoring agency. The external monitoring reports confirmed that the resettlement program was implemented in a satisfactory manner, in compliance with the project’s safeguards documents.
2.5 Post-completion Operation/Next Phase
38. Operations and maintenance. CRC, which is responsible for implementing high speed railways, has contracted the operation and maintenance of JiTuHun line to the Shenyang RA. The RA is required to follow the robust and effective maintenance systems that China Railway has developed and operationalized for infrastructure and rolling stock. Under the project, an appropriate number of technicians have been trained to carry out the maintenance of infrastructure and rolling stock. The institutional setting as well as maintenance infrastructure are considered adequate for the near future. At loan closure, the line has been open for just over a year and maintenance to date has largely consisted of inspections, but this will be expanded to comply with the system-wide maintenance procedures that have now been applied for several years on other lines in the network. Although the sophisticated high speed railway system could suffer a setback if adequate funding is not allocated to support proper maintenance of these assets, this is unlikely to
9 happen in the case of Changji as it has sufficient revenues to finance the required maintenance of both rolling stock and infrastructure.
39. Financial sustainability. Changji Railway Company owns both the Changuchun- Jilin Railway (111 km) and Jilin-Hunchun Railway (360 km). After the Jilin-Hunchun line was opened the entire line was named as Changuchun-Hunchun Railway. Since Changji Company does not able to separate the revenues and expenses of the two lines (Changji and JiTuHun) as the Company does not segregate passengers travelling between the two lines, the combined financial positions of both lines has been considered.
40. The Government considers public transport to be a social good and the affordability of rail transport (including by the poor, migrant workers and students) to be important, as the railway system plays a vital role in regional connectivity and cohesion. Therefore, rail passenger fares are regulated and set below cost recovery levels. HSR prices are about RMB0.35 for the 250 kph high speed trains and about RMB0.55 for the 350 kph trains, while for conventional trains prices are in the range of RMB 0.14 to RMB 0.21 per passenger-km. This pricing has proven very competitive with bus, air and even private automobiles. However, passenger rail services need financial support, which usually comes from freight cross subsidy, the national government’s implicit backing of railway financing, and provincial governments chipping in land cost.
41. As envisaged at appraisal, patronage was well short of the Chinese feasibility study report forecast. Although the 2016 revenue (RMB1.2 billion) was about double cash operating expenses, the surplus was not enough to cover the interest charge of RMB0.95 billion and would have left a large financing gap, when principal repayments begin in the future.
42. JiTuHun line is not alone in this. Almost all HSR lines around the world have been unable to earn enough to pay for their financing costs at first. Only a few mature HSR lines, such as Tokyo – Osaka, Paris – Lyon and a few lines in China, are able to cover their full costs including capital costs. CRC has restructured the debt of many HSR lines to make the principal repayments mirror the growth in traffic revenues. The long-term outlook for the company indicates that it will have adequate cash flows to cover interest charges, although in the short-term it will continue to require support from the Shenyang Regional Administration (which is a major shareholder of the Changji Company) to absorb the infrastructure maintenance cost.
3. Assessment of Outcomes
3.1 Relevance of Objectives, Design and Implementation
43. Relevance of objectives - High. Project objectives were and remain highly relevant to the development priorities of China. The project directly contributed to the World Bank Group’s China Country Partnership Strategy (CPS) 2006–2010, especially on the dimensions of integrating China into the world economy; reducing poverty, inequality, and social exclusion with affordable transport; and improving public and market institutions.
10 The project also contributed to the China’s 13th Five-Year Plan (2016-2020) that aims to develop smart, integrated, and eco-friendly transportation networks through building a comprehensive transportation system that connects domestic and international transportation routes, extensively covering both urban and rural areas across regions, incorporating hubs with optimized functions, and providing integrated and efficient services. The railway sector is vital to China, especially to its continued economic growth and development and to international trade. Railways also enhance China’s ability to extend the benefits of development more widely in society and to people living in remote regions. The project has improved connectivity beyond the project areas and created an opportunity to facilitate rail services and reduce travel times between China and Russia. This project remains a key response to China’s current transport challenges, as greener development through railway transport has the potential to address China's environmental degradation and resource depletion and also to become a new driver for growth. The project continues to be aligned with the Bank Group’s China CPS 2013–2016, as well as the new CPS under preparation; the new CPS is informed by the China’s 13th FYP, especially on the dimensions of greener growth through low-carbon transport and improvement of transport connectivity for more balanced regional development.
44. Relevance of design and implementation – Substantial. The project components were appropriate to achieve the PDO, and project design and implementation were and remain highly relevant in achieving the PDO. Project components and expected outputs are consistent with the stated objectives, as outputs and outcomes are a direct result of the causal chain of the project. The results framework, however had minor shortcomings as detailed in paragraph 32.
45. Bank financing covered only 3.3 percent of total project costs, which is relatively low compared to most Bank projects in China. Such an approach had two main merits: (i) it enabled the Bank to support a much wider program of railway projects (2,660 km of rail lines over six projects during the period) within the overall Bank lending volume to China; and (ii) it leveraged Bank resources effectively by extending the application of Bank requirements, especially safeguards, over a much larger project. In addition, earlier Bank highway and railway projects in China introduced FIDIC contracts and helped develop procurement capacities, which proved useful in the non-Bank financed procurement of civil works for this project. The project was implemented satisfactorily, consistent with the design.
3.2 Achievement of Project Development Objectives
46. Achievement of the PDO is based on the assessment of the achievement of each of the elements of the PDO, as described below.
47. Increased capacity for freight and passengers (High). Overall, additional rail capacity (defined as a combination of the new high speed rail line and the existing conventional rail line) has been provided as planned and capacity utilization in number of pairs of trains along the corridor exceeded its targets. Two PDO indicators, number of high speed train pairs and traffic volume, contribute to measuring the increase in capacity
11 element of the PDO. At appraisal, the corridor was forecast to carry 33 pairs of trains by December 2016, including 13 high speed pairs, nine conventional passenger train pairs, and 11 freight train pairs. By loan closure, the corridor carried 46 pairs daily, including 26 high speed pairs, 11 conventional passenger train pairs and nine freight train pairs. The HSR provided new capacity for passengers, so conventional lines have the potential to carry up to 20 pairs of freight trains. The current (project enhanced) capacity is more than enough to meet current traffic demand; the HSR line between Tumen and Hunchun could also carry freight, as it is built for a heavier axle load than standard for passenger HSR. Eventually the line could need capacity improvements, if freight traffic to and from Russia via Hunchun grows significantly.
48. The PDO indicator for traffic volume has been achieved. At appraisal, the high speed rail line was forecast to carry an average density of eight million passengers. After only 15 months of operation, at loan closure the line carried 8.2 million passengers across the project screenline 3 , and totaled 10.05 million passengers (including 1.85 million passengers on existing line). Freight traffic density in 2016 averaged 5.6 million tonnes compared to a base density in 2010 of 7.2 million tonnes, a reduction of 22 percent. During this time, there was a reduction of about 14 percent in the system-wide freight traffic, largely as a result of less coal being transported due to a change in the government policy that was introduced during project implementation. The decline in coal transportation is not unique to China railways; railways in other countries, including US and India, are facing a similar situation as consumption of coal is being discouraged due to environmental concerns and the lower cost of alternate fuel. Cross-border freight traffic with Russia and Hunchun has also reduced sharply due to exogenous reasons.
49. The number of HSR trains now operating is about twice the number forecast at appraisal, while the number of passengers is about the same. This is because the operating plan has been updated to respond to current traffic demand. At appraisal, it was assumed that the service would be predominantly operated by 16-car trains travelling the full length of the route. Instead many services are now operated by 8-car trains, several of which only travel to intermediate stations, thus significantly increasing the service frequency compared to the estimates at appraisal.
50. Faster travel time (High). The PDO indicator for time savings has been exceeded. The HSR takes 113 minutes between Jilin City and Tumen (compared to the appraisal target of 145 minutes, and is much faster than the seven hours on the conventional rail line). The fastest train from Jilin to Hunchun (one end to the other) only takes 131 minutes.
51. Increased frequency of services for passengers (High). The frequency of high speed trains has grown substantially from the targeted 13 train pairs when the line opened
3 A screenline between Jilin and JiaoHe stations, as defined in Annex 1 of the project PAD. The actual volume was rather greater as many passengers only travelled short distances and did not cross the screenline
12 to 26 train pairs in 2016. The high speed rail line also brought increased convenience, safety and comfort for passengers.
52. The conventional wisdom that HSR is for rich people is no longer applicable in China, as people from all income levels use HSR due to its affordability, reduced travel times, and better service. This has contributed to reducing inequality and social exclusion in the region.
3.3 Efficiency
Rating: Substantial
53. Ex-post economic analysis. The ex-post economic analysis indicates that the infrastructure investment was economically viable, with an overall Economic Internal Rate of Return (EIRR) of 8.4 percent, compared with an estimated EIRR of 6.2 percent at appraisal. The three principal contributors to the improved economic returns are: (i) reduction in construction cost in real RMB; (ii) increased savings in vehicle operating costs, because of the different origins of passengers compared to appraisal; and (iii) increase in passenger-related benefits associated with the increased demand and higher real value of time. No freight benefits are included as the existing line would have sufficient capacity for some years, even if the project was not built. More details are provided in Annex 3.
54. Agglomeration effects. The impacts included in the economic analysis consist of three elements: (i) cost-benefit analysis of passenger and freight traffic (for example, through travel time savings); (ii) externalities (reduction in distance and travel times); and (iii) agglomeration effects. Cost-benefit analysis captures the benefits of direct cost and time savings. Agglomeration benefits reflect the closer connections between companies generated by the improved service which in turn generate agglomeration economies; these benefits normally take two to three years to begin to emerge. Other projects have shown that service companies, in particular, are able to expand their catchment areas and this leads to a faster dissemination of improved professional services. The agglomeration economies bring benefits to all companies in the cluster and as such were included in the overall economic analysis.
55. Cost effectiveness. The latest completion cost estimate (excluding rolling stock) is RMB36.5 billion, representing about 86 percent of appraisal based on preliminary design in RMB terms (total cost at appraisal was estimated at RMB43.7 billion, inclusive of rolling cost RMB1.3 billion; the revised cost estimate during preliminary design was RMB37.8 billion), which is highly satisfactory for a rail project of this scale. The lower cost at completion is due to the change in track design from ballast-less to ballasted (saving about RMB3.1 billion, equivalent of US$0.45 billion) and the exclusion of the Jilin hub loop from the project (saving about RMB2.4 billion, equivalent of US$0.34 billion). A full cost comparison is provided in Annex 1. The estimated unit costs of three railway projects in China with a maximum speed of 250 km/h that are partly funded by the Bank range between RMB110 million to RMB121 million per km, whereas the completion cost of this project is only RMB101 million per km.
13 56. Administrative efficiency. The administrative efficiency of the project is high, as project activities were completed ahead of time and at lower costs. The line was opened in September 2015, a month earlier than the original schedule and a year ahead of loan closing. At completion 99 percent of loan funds were utilized.
3.4 Justification of Overall Outcome Rating
Rating: Highly Satisfactory
57. As discussed above, the project has been rated well on all parameters: relevance of objectives is rated high, while relevance of design is rated substantial; achievement of the three elements of the PDO is respectively rated high, high, and high; and efficiency is rated substantial. Overall outcome rating of the project is therefore rated Highly Satisfactory.
3.5 Overarching Themes, Other Outcomes and Impacts
(a) Poverty Impacts, Gender Aspects, and Social Development 58. Impacts are best assessed about five years after the high-speed line is operational; nevertheless, it already appears that the JiTuHun Rail Project has contributed to the economic transformation of the region. JiTuHun line has already had a deep impact on the accessibility of cities along the corridor, in particular Jilin and Hunchun, as well as on the intermediate cities of Dunhua, Yanji, and Tumen. Cities along the JiTuHun line have developed a series of strategies associated with the HSR service. Local officials believe that HSR can spur economic development that will help all citizens, including the bottom 40 percent of the population. These strategies aim to eliminate extreme poverty in one to two years, and include plans for new development districts, access roads/highways, and promotion of eco-tourism in remote villages.
59. The JiTuHun Rail Project has dramatically improved regional accessibility for local people. This is especially true for Hunchun, which did not have passenger railway service in the past. A local official in Hunchun said that the HSR connection “realizes the dream of one hundred years”. The low level of service offered by the existing line has for many years been a constraint to accessibility in the eastern region of Jilin province. The JiTuHun railway line also aims to significantly improve accessibility between the Tumen River region and the main centers of Jilin province and beyond, and thus will increase the competitiveness of the regional economy and stimulate economic growth. The project is estimated to directly benefit about 12 million passengers from the sharp improvement in transport services between cities located on the line by 2020.
60. The JiTuHun line has already had positive impacts on tourism. Governments in Jilin, Hunchun and Yanji are using the JiTuHun line as a key element in their development plans by: (i) emphasizing the greatly improved ease of access for firms wishing to establish in the region; (ii) promoting specific land developments adjacent to the HSR stations; and (iii) developing their tourism capacity in response to increased tourism. The region has rich tourism resources that were not easily accessible to visitors
14 before the opening of HSR. To help the HSR tourist, the cities are building tourism centers next to the HSR stations.
61. The construction of this megaproject had a positive impact on women’s inclusion, including access to jobs and services. According to the survey results, female passengers tend to have lower income than male passengers. The railway increases women’s accessibility to jobs and has resulted in affordable transportation to support the reduction of the gender gap in income.
(b) Institutional Change/Strengthening 62. Through the program of six projects the Bank has engaged in policy dialogue and has supported institutional change by preparing and issuing multiple railway policy notes. These have contributed to sector reforms, including corporatization of China Railway, financing options, optimization of testing and commissioning, and understanding of wider economic impact of high speed rail.
(c) Other Unintended Outcomes and Impacts (positive or negative) 63. Not applicable.
3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops
64. On May 10, 2016 and during November 2 to 24, 2016, the Bank organized beneficiary surveys. The survey results indicate about 17 percent of passengers on the JiTuHun line represent generated traffic (travelers who would not have traveled without the HSR) and 83 percent of passengers would have taken another mode if the HSR had not been available. About 6 percent of trips were long-distance (>800 km), 44 percent were medium distance (300~800 km) and 49 percent were short-distance (<300 km). Business trips accounted for 48 percent during the weekdays and 67 percent of passengers were travelling for tourism or visiting friends and relatives over the weekend. Residents had increased their travel frequency for both business and personal trips. Annex 5 provides more details of the beneficiary surveys.
4. Assessment of Risk to Development Outcome Rating: Low or Negligible
65. The financial risk to the PDO is Low. Results of the initial period of operation show strong growth in HSR demand. The appraisal estimate of the total volume of passengers is similar to what has been achieved and the current fares are clearly affordable. Cash revenues already exceed cash operating costs. Changji Company has restructured its RMB22 billion debt so that it is repayable over a much longer time period, with principal repayments gradually increasing over time to reflect anticipated growth in traffic and revenue. The long-term outlook for the company indicates that it will have adequate cash flows to cover interest charges. In the short-term, the Shenyang Regional Administration (which is a major shareholder of the Changji Company) is committed to absorb the infrastructure maintenance cost. It should be noted that JiTuHun line is not alone in this.
15 Almost all of the HSR lines, except Tokyo – Osaka, Paris – Lyon and a few lines in China, which have been financially viable, are in the same situation.
66. The technical risk is Low. Similar train systems have been operated and maintained at very high levels of reliability and safety in China since 2008. They are also in operation in Japan, Germany, Italy, UK and France for many years.
67. The social risk is Low. Detailed passenger surveys show that passengers with a broad range of income levels use the new services. Even with the higher per km fares on the new services, the cost to most passengers is lower because of the substantial distance savings. The price of a train ticket on the project line is comparable to the cost of a bus ticket between many locations along the line. The overall impact of the project will be to encourage more passengers to travel by rail, since it offers a much higher level of comfort and shorter travel times, compared to bus travel.
68. The risk of reduced government ownership and institutional support risk is Low or Negligible. The railway sector benefits from strong government commitment and institutional support. Railways remain a priority in the 13th Five Year Plan and on to 2030. The government sees the high-speed network as a key instrument in rebalancing regional growth in less developed regions such as Tumen, as well as an important contributor to a low-carbon economy.
5. Assessment of Bank and Borrower Performance
5.1 Bank Performance
(a) Bank Performance in Ensuring Quality at Entry Rating: Satisfactory
69. The project was developed based on lessons from prior Bank-financed railway projects in China. The Bank ensured quality at entry through an alignment of the project objectives with the CPS, as well as national and Bank transport strategies, combined with components designed to achieve the PDO, as well as appropriate implementation arrangements. Project preparation included a screening for indigenous peoples at an early stage, and consultations with the affected population and project stakeholders. Risks were identified at appraisal (including risks associated with the magnitude of resettlement) and appropriate risk mitigation measures were incorporated at the design stage (including detailed internal and external monitoring arrangements for the implementation of resettlement) and the overall project risk was carefully assessed and rated as low likelihood, high impact. The comprehensive risk assessment proved robust during the implementation of a very large and complex project. Bank inputs and processes prior to Board approval were appropriate. The project was efficiently prepared, with an elapse time from the concept stage to Board of about seven months. The Bank provided guidance and support to ensure that technical and environmental specifications and feasibility studies were prepared to meet high quality standards. The results framework was well focused and
16 straightforward, despite minor shortcomings. The Bank assessed agglomeration effects as part of the economic analysis, which was a significant innovation. The Section 2.1 above provides more information on Bank performance in ensuring quality at entry.
70. Financial analysis conducted by the Bank at appraisal highlighted that the FIRR was very low and the project would require significant financial support in the early years of operation. The analysis further noted that if the debt were structured with equal payments over a period of 25 years, the project would be financially viable from around 2030, leaving a relatively small shortfall in the prior years. These consultations were conveyed to the (then) Ministry of Railways and were subsequently followed up during project implementation.
(b) Quality of Supervision Rating: Highly Satisfactory
71. The Bank worked closely with the government and the implementing agencies to ensure that this large railway project was completed on time and to high quality standards, in compliance with Bank policies (including safeguards and fiduciary policies), despite financing only 3 percent of an almost US$6.3 billion project. The Bank provided substantial technical support, especially on the specifications of goods financed by the loan. The Bank also contributed to reaching agreement with the Government on debt restructuring to ensure financial sustainability.
72. The Bank supervised the project diligently with the required expertise. The Bank followed up with China railway every six weeks or so on the implementation of the railway program and maintained a very intense supervision schedule. Implementation Status Reports (ISRs) were prepared on a six-monthly basis and the ratings were candid and appropriate. Bank management commended the Task Team for putting the project on track following the tunnel accident. The Task Team was also able to ensure that project ratings were maintained as either “Satisfactory” or “Highly Satisfactory” throughout the project.
73. Following the Xiaopanling #1 tunnel collapse, the Bank team (which included a together with tunneling expert) worked closely with CRC to determine the reason for collapse and helped prepare an action plan to address the issue and prevent such accidents in future.
74. The Bank also drew extensively on lessons learned from this project to document the experience of China in developing its high speed rail network, including notes (listed in Annex 9) on traffic, costs, success factors in project implementation, good practice in environmental management, and wider economic impact evaluation 4. In parallel with project activities, the Bank engaged in policy dialogue with MOR and CRC on sector reforms and analytical work in railway financing, including the need to restructure the debt of many of the lower-volume high-speed railways.
4 Regional Economic Impact Analysis of High Speed Rail in China (P143907) (http://operationsportal2.worldbank.org/wb/opsportal/ttw/about?projId=P143907)
17
(c) Justification of Rating for Overall Bank Performance Rating: Satisfactory
75. The rating of overall Bank performance is based on the ratings for Bank performance in ensuring quality at entry and the quality of supervision. Bank performance overall is therefore rated Satisfactory.
5.2 Borrower Performance
(a) Government Performance Rating: Highly Satisfactory
76. The Government ensured that the project was prepared and implemented in record time with good quality, and also complied with loan covenants, including fiduciary and safeguards aspects. MOR delegated responsibility and provided the needed resources to ensure timely project implementation. MOR demonstrated strong ownership of the project and actively participated in Bank supervision missions and wrap up meetings and ensured that the implementing agency executed the project in accordance with the agreements reached with the Bank. MOR engaged in a dialogue with the Bank on railway sector reform and took Bank inputs into account while finalizing policy decisions.
(b) Implementing Agency or Agencies Performance Rating: Highly Satisfactory
77. Project implementing agencies deserve major credit for successfully implementing this massive infrastructure project. FCTIC, CRC as well as the two Railway Companies responded efficiently on all project issues, adhered to project implementation requirements, engaged with Bank missions, and contributed to the timely completion of the project. They furnished progress and other reports on time, monitored environmental and social aspects, and suggested good practices for environmental methodologies. The Department of Materials of China Railway Corporation (and FCTIC) managed procurement activities efficiently. CRC ensured that testing and commissioning went well, promptly addressed issues relating to the tunnel accident and got project implementation back on track. Throughout the implementation period the railway companies paid close attention to environmental protection, monitored resettlement, and ensured timely payment of compensation to project affected persons. They coordinated closely with local governments to review options to improve connectivity between urban areas and the new stations, and regularly provided data on performance indicators once the service was operational.
(c) Justification of Rating for Overall Borrower Performance Rating: Highly Satisfactory
78. The overall Borrower performance is rated Highly Satisfactory based on the Highly Satisfactory ratings for government performance and implementing agencies’ performance.
18 6. Lessons Learned
79. Based on the issues discussed in the earlier sections, the main lessons that could be applied in similar operations are the following:
a. The role of Government is critical for putting an eco-system in place for the creation, galvanization and implementation of the railway program. China Railway Corporation has single point responsibility for planning, financing and implementation of individual projects, for the creation of delivery mechanisms (such as the joint venture companies with provincial governments), and for administration of China’s national railway services. This, combined with legal and institutional power, strong technical capacity, access to the operating cash flows of railways and the ability to borrow, gave CRC the agility to plan and deliver projects very quickly. Cooperation between national and local authorities, with timely availability of counterpart funds, made the project a success. This unified control over the project, as well as the overall commitment of the Government and the implementing agencies, enabled the project to be a technical and environmental success, despite the relatively marginal financial contribution of the Bank.
b. The development of a large scale HSR network, rather than the construction of an isolated line, can lead to lower costs. China has built a network of about 10,000 route-km of high-speed railways rapidly and at a relatively low unit cost, compared with similar projects in other countries5. China HSR, with a maximum speed of 350 km/h and a high ratio of viaducts and tunnels, has a typical infrastructure unit cost of about US$17-21 million (RMB100-125 million) per km. The cost of HSR construction in Europe, with a design speed of 300 km/h or above, is estimated to be of the order of US$25-39 million per km, and the HSR construction cost is estimated to be as high as US$52 million per km in California. Several factors influence the cost of HSR. Some of the key factors contributing to China achieving lower costs without compromising quality, include: (i) lower labor costs; (ii) support for the medium term plan for the construction of a large HSR network encouraged the development of innovative and competitive capacity for equipment manufacturing and the amortization of the capital cost of construction equipment over a number of projects. It has also resulted in the standardization of designs for embankments, track, viaducts, electrification, signaling and communication systems, which enabled contractors to spread the costs of specialized equipment over multiple projects.
5 China Transport Topics No. 9, High-Speed Railways in China: A Look at Construction Costs, July 2014 by Gerald Ollivier, Jitendra Sondhi and Nanyan Zhou
19 c. Quantification of agglomeration benefits is important in evaluating the benefits of passenger railway projects. Such agglomeration brought benefits to all companies in the cluster, and the agglomeration benefit model could be applied to other corridors in China and in other countries. As this rail project made companies locate or expand in a given area, the CBA captured the benefits to companies from direct cost and time savings. In China, agglomeration effects have been recognized at a theoretical level, although to date there are only a few quantitative studies on the topic. A Bank study in 2006 found that firms in more populated cities and city regions tend to be more productive, and this was tentatively attributed to greater competition and agglomeration benefits. The results of this project’s economic analysis confirm the earlier results on the benefits of agglomeration. The ICR recommends undertaking an ex-post analysis in five to ten years to confirm the long-term agglomeration effects. d. Large and linear infrastructure investment projects call for: (i) good preliminary designs; (ii) strict control over compliance with standards and specifications; (iii) reliable and responsible contractors; (iv) meticulous planning of activities; and (v) timely land acquisition. An early and good preliminary project design was the basis of the Feasibility Report and initial cost estimates. The subsequent detailed design did not deviate significantly from the preliminary design. In addition, applicable standards and technical specifications for railway construction and material inputs were formulated and strictly adhered to. An effective quality control system was functional with contractors as well project management, and as a result no significant problems were noted during testing and commissioning of the railway. A project of this dimension and complexity requires linking and control of thousands of activities that are carried out by diverse agencies. All construction and supply activities were identified and their inter-dependence was established. Meticulous planning and control of critical activities prevented hold ups during construction. Red flags on lagging activities were acted on quickly. Qualifications and experience of contractors were defined carefully, so that only those with credible past performance and with adequate resources were able to bid for contracts. On time availability of materials for construction progress was ensured by efficient procurement. Timely land acquisition was another critical factor, since for a linear project any break in land availability is very disruptive. e. Proactive engagement on land acquisition and resettlement smooths its implementation. The JiTuHun Railway project design reflects lessons learned from previous railway projects minimizing land acquisition and resettlement costs. This includes selecting an alignment that minimized utilizing farmland through more bridges and tunnels, and including the cost of land acquisition and resettlement in the equity investment. Changji Railway Company focused on resettlement throughout the project implementation, and established institutional
20 networks for resettlement in all city and county governments. The external monitoring and local government resettlement reports, as well as interviews with Changji company officials and affected people, confirmed that the affected people were fully compensated, and relocation and rehabilitation were successfully completed.
f. The choice of a multi-project World Bank engagement enabled the Bank to engage in a broader policy dialogue and to support effective institutional change. Limited Bank financing for the project allowed the Bank to support a much wider and unified program of railway projects and enabled the Bank to provide holistic support through policy dialogue with the MOR and CRC on sector reforms and cutting-edge analytical work documented through policy notes on railway network management and financing (Annex 9). The papers on Governance and Structure and Railway Price Regulation informed Chinese officials’ thinking in the reform of corporatization of CRC and pricing liberalization. Prospective Bank support to the Chinese railway sector will likely focus on multi-modal and comprehensive projects that promote synergies with rural roads, logistics and trade to facilitate comprehensive solutions.
7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners
(a) Borrower/implementing agencies
80. Both the borrower and the implementing agency consider that the project can be evaluated as successful. This project is, according to their completion report, meeting the development objectives and priorities of the government for the economic growth of China, for passengers, and in the future, for freight as well. They emphasize that results are showing the effectiveness and relevance of the project and that the Bank, the borrower, and partners have showed a satisfactory performance in managing the JiTuHun Railway Project with regard to efficiency, effectiveness, quality of inputs, quality of supervision, and M&E. The project also conformed to social and environmental requirements. A summary of the ICR of the borrower is provided in Annex 7.
(b) Cofinanciers Not applicable.
(c) Other partners and stakeholders Not applicable.
21 Annex 1. Project Costs and Financing
(a) Project Cost by Component (in US$ Million equivalent) Appraisal Actual/Latest Percentage of Components Estimate6 Estimate Appraisal7 High-speed Railway Component - Civil works 3,439.70 3,581.50 104 - Goods and equipment 748.30 291.87 39 - Land acquisition and resettlement 779.00 596.80 77 - Rolling stock 193.90 - - - Consulting services 87.90 112.30 128 - Other 188.10 185.58 99 Total Baseline Cost 5,436.90 4,768.05 91 Physical contingencies 523.60 242.10 46 Total Project Cost 5,960.50 5,010.15 87 Interest during construction 342.00 261.80 77 Front-end fee 0.50 0.50 100 Total Financing Required 6,303.00 5,272.458 86
(b) Project Cost by Component (in RMB Billion equivalent) Appraisal Actual/Latest Percentage of Components Estimate Estimate Appraisal High-speed Railway Component - Civil works 23.84 24.82 104 - Goods and equipment 5.19 2.02 39 - Land acquisition and resettlement 5.40 4.14 77 - Rolling stock 1.34 - - - Consulting services 0.61 0.78 128 - Other 1.30 1.29 99 Total Baseline Cost 37.68 33.04 91 Physical contingencies 3.63 1.68 46 Total Project Cost 41.31 34.72 87 Interest during construction 2.37 1.81 77 Front-end fee 0.00 0.00 100 Total Financing Required 43.68 36.54 86
6 The exchange rate at appraisal was US$1=RMB6.60, and at completion it was US$1=RMB6.93
7 To calculate the ratio at the same level, the cost of rolling stock has been excluded from the appraisal estimate.
8 The cost of rolling stock is not included in the actual project cost.
22 (c) Financing Appraisal Actual/Latest Percentage Type of Source of Funds Estimate Estimate of Cofinancing (US$ millions) (US$ millions) Appraisal Borrower 6,103.0 5,257.4 86 International Bank for Reconstruction 200.0 198.7 99 and Development
23 Annex 2. Outputs by Component
1. The project delivered the following outputs under its single component:
a. A 360 km double-track electrified, passenger-dedicated high-speed rail line of between the cities of Jilin and Hunchun in Jilin province, capable of a maximum speed of 250km/h, has been built, including the construction of sub-grades, tunnels, bridges, culverts, and buildings, and acquisition and installation of goods (including communications, signaling and electrification equipment, and maintenance vehicles), as well as the construction of seven new and reconstruction of one (Dunhua) railway stations along the rail line.
b. Upgrading of a double line track between Jilin station and South Terminal of Longtanshan station.
2. Loan funds were not utilized for technical assistance. However, during project implementation the Bank provided high quality technical assistance on selected areas (for example: Governance and structure of the railway industry: three pillars, 2011, by Paul Amos and Richard Bullock; Attracting Capital for Railway Development in China, 2015, by Martha B. Lawrence, Gerald Ollivier). A comprehensive list is provided in Annex 9. There were financed either by Bank budget and/or trust funds.
3. In achieving the above outputs, the following changes were made in project design:
a. Change from ballast-less track for the entire line to ballasted track except in tunnels. This change resulted in a cost saving of about RMB3.1 billion.
b. Jilin hub loop was removed from the project (and was constructed by another entity) which resulted in a saving of RMB2.4 billion.
c. Routing near Jilin Station was adjusted to avoid demolition of some public buildings.
d. Other design refinements included: (i) a change in the alignment near Jilin Station to reduce land acquisition and resettlement, (ii) conversion of long tunnels to several shorter tunnels for easier construction, thus increasing the number of tunnels from 77 to 85 and reducing the cumulative length from 159.4 km to 155.7 km, and (iii) increasing the number of bridges/viaducts from 102 to 115, with a cumulative increase in length from 77.6 to 90.96 km.
4. At the western end, the new line connects with the existing Intercity Changchun - Jilin Railway line. The project provides a direct high-speed link from Tumen and Hunchun in eastern Jilin province to Jilin City and onwards to China’s high-speed rail network through the railway hub in Changchun.
5. The Bank loan financed the procurement of goods associated with the construction of the line and its electrification, signaling, communication systems, power supply equipment, and traction equipment, as well as pre-stressed concrete sleepers and spherical
24 steel bridge bearings. A total of 36 goods contracts were procured through ICB; there was no NCB contract. All civil works and consultancy contracts were procured through non- Bank financing, in accordance with China’s Tender and Bidding Law.
6. This 360 km railway has 90.96 km of track on bridges and viaducts (25 percent) and 155.7 km of track in tunnels (43 percent). The project includes a 3.3 km four track bridge over the highway and Songhua River in the outskirts of Jilin. This bridge was a critical activity due to its long construction period and the seven-month window available for the construction each year. The longest tunnel (Lafashan Tunnel) is 10 km long.
7. The technical parameters of the railway meet international standards in respect of track, power supply (25 kV single phase AC), overhead electric system, signaling, communications (including a telephone exchange network, dispatching communication system for railways, data communication network, video conference network, and an emergency communication system), train control and dispatching system (centralized train control) and energy conservation. A real time safety monitoring system has been set up in the train dispatch center. The safety systems include fencing the railway right of way, infrared hot box detectors, automatic train protection system (ATP), cab signaling, radio communications on trains and systems to monitor wind, rainfall, snow depth, and obstructions on track. Suitable protection has also been provided against electromagnetic interference to communications.
8. This railway passes through a frigid zone with a frozen depth of soil of about 1.7 to 1.9 meters and heavy snow in winter. The railway design parameters address frost prevention and ease of snow removal from the roadbed. Measures taken include limiting the minimum height of the embankment, improving roadbed filling, setting a water resistant layer, adapting the sub-grade design, and effective drainage of surface and underground water.
25 Annex 3. Economic, Financial and GHG Analysis
Introduction
1. This annex documents the economic re-evaluation of the JiTuHun HSR, constructed between Jilin and Hunchun and fully opened to traffic in September 2015. It is based on data collected during a mission in November 2016, supplemented by data obtained from a survey of passengers conducted at around the same time. The estimated economic return at appraisal was 6.2 percent, including the benefits from agglomeration. The reevaluation estimates an EIRR of 8.4 percent. The three principal contributors to the improved economic returns are: (i) reduction in construction costs; (ii) increased savings in vehicle operating costs; and (iii) higher passenger values of time, because of higher incomes compared to appraisal forecasts.
Project Summary
2. The objectives, at appraisal, were to construct a new medium-speed (250 km/h) corridor and operate EMU services by 2015. This would reduce the average travel time for passengers between Tumen (the terminus at that time for passenger services) and Jilin from seven hours to around two hours. This saving in travel time has been realized in practice. It was assumed all freight traffic would remain on the existing line. The Tumen – Hunchun section of the new line was constructed to allow freight trains to use it if desired. However, this is likely to happen only when until international traffic between Russia and China becomes much more significant in the future. This re-evaluation does not include any benefits due to freight traffic using this section.
Traffic
3. Two sets of forecasts were prepared – one by the design institute and the other by the Bank team. The design institute started from a base passenger density9 in 2007 of 4 million and forecast a density of 24 million in 2020, increasing to 36 million in 2030. Freight traffic on the conventional line was forecast to increase from a base density of 8 million tonnes in 2007 to 15 million tonnes in 2020, and 18 million tonnes in 2030. The Bank forecast an average passenger density of 7 million in 2015, increasing to 11 million in 2020, and 13 million in 2030. Freight density was forecast at 12 million tonnes in 2020 and 17 million tonnes in 2030.
4. Based on the first three months of operation in 2016, the line had an annualized average traffic density of over four million passengers. During that period the line carried two million passengers an average distance of nearly 200 km; about half these passengers travelled to and from stations beyond Jilin, principally Changchun but also to centers such as Shenyang, Harbin and Beijing. Strong growth continued during the remainder of 2016.
9 Passenger-km/route-km
26 Firm patronage figures are not yet available, but it is estimated that the passenger traffic density for 2016 was about 5.6 million and that 11.7 million passengers were carried on the line10.
5. Table 3.1 compares the sources of the 2016 traffic, based on on-board surveys in November 2016, with the forecasts at appraisal. Traffic density for 2016 is 24 percent lower than at appraisal. However, passenger volumes on HSR lines in China typically increase by about 25 percent in their second year of operation and the likely passenger density in 2017 is will be 7.0 million, compared to the appraisal estimate of 7.3 million for the second year of operation (which was 2016). For the period from 2015, an average growth rate of 3.7 percent was used at appraisal; following the assumed ramp-up in demand in 2017, the same long-term growth rate is used as at appraisal.
Table 3.1 Forecast and Estimated Average Traffic Density in 2016 (million per year) Appraisal Actual (estimated) Source Million % million % Conventional rail 6.1 84 2.2 39 Air 0.6 8 0.6 10 Bus 0.2 3 1.1 19 Car 0.2 3 0.8 15 Generated 0.2 2 0.9 17 Total 7.3 100 5.6 100
6. Conventional rail passengers transferring are about 40 percent of those forecast. At the time of the appraisal, it was assumed that the only services remaining on the existing line would be local trains, serving intermediate stations not served by HSR. In practice, CRC found it difficult to withdraw conventional services and these have largely been retained, although generally at lower frequencies than previously. Most of the long- distance services, which carried about 35 percent of the passengers on the line, have remained and relatively few HSR services going beyond Changchun have been introduced so far. About 35 percent of the passengers on the existing services have so far transferred, similar to other corridors where services have been retained. As more through HSR services are introduced, this proportion is likely to increase to around 50-60 percent.
7. By contrast, HSR has captured many more passengers from bus than forecast. One of the main reasons is the current HSR fare, which is lower than the bus fare. At appraisal, unit revenues for the high-speed services were assumed to be RMB 0.30 (2009) per passenger-km in 2020, compared to the 2009 average level of RMB 0.1411 (1.7 US cents) per passenger-km and this was adopted in the appraisal. HSR services currently charge around RMB 0.30 (RMB 2016) per passenger-km on the JiTuHun line, equivalent to about
10 Of these, an estimated 8.02 million passed the screen line at Jilin used in the PDO indicator 2. 11 Although tariffs can be double this rate for the higher-standard accommodation.
27 RMB 0.25 per passenger-km (RMB 2010)12. The current tariff initially undercut bus tariffs by about 15 percent and is typically under half the cost of competing air services. The bus fare has since reduced to be comparable with the HSR fare but about half of bus passengers have transferred (as opposed to about 10 percent forecast at appraisal) to HSR. Many of these remaining bus passengers will be travelling to intermediate locations not well served by the service.
8. Transfers from car have also been greater than forecast and are similar to the experience of lines that have opened since appraisal. Transfers from air are about the same as forecast even though a large proportion of these were to and from regional centers (Shenyang, Harbin), for which a full set of HSR services has yet to be fully introduced. Flights between Yanji and Changchun have been reduced to one afternoon return flight daily.
9. Finally, generated traffic is much greater than forecast and is comparable to other HSR lines.
Project Investment
10. The estimated cost of the project infrastructure at appraisal was RMB34.2 billion (US$5.0 billion) at 2009 Q3 prices (including contingencies but excluding rolling stock and interest during construction). The final cost of the project is estimated at RMB33.2 billion (RMB1.0 billion less than at appraisal in current prices). Taking into account the estimated time profile of disbursement, this is equivalent to a cost of RMB29.3 billion at 2009 Q3.
11. The initial cost of the train-sets (taken as seven 8-car sets at appraisal) and other rolling stock was an additional RMB1.3 billion (US$190 million). This is not explicitly included in the evaluation but is instead incorporated in the above rail train operating cost as an equivalent annual cost.
Project Benefits
12. Three main groups of potential benefits were considered at appraisal:
a. a major reduction in travel time and distance for the traffic diverted to the new line, thereby generating significant operating cost savings to the railway and time savings for passengers and freight. Service frequency would also be greatly improved, with services at least hourly as opposed to the existing services which effectively left twice each day.
12 For example, it was estimated at appraisal that the HSR fare between Jilin and Yanji would be RMB112 but currently it is only RMB83 and lower than the bus fare.
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b. freeing up capacity on the existing lines would allow them to handle the projected increase in freight traffic, which would otherwise travel by road or not at all.
c. wider economic, social and environmental benefits. Although some of these benefits are included as part of the cost-benefit analysis (CBA), a significant component is not. For example, the JiTuHun line would provide a quantum improvement in accessibility between the Tumen River region and the main centers of Jilin province and beyond, and thus increase the competitiveness of the regional economy, accelerate the adoption of innovative practices and stimulate its economic growth, all of which fall outside the conventional benefits directly linked to transport operations.
13. The evaluation includes benefits and costs incurred by passengers travelling beyond Jilin who have changed from their previous modes. Thus, for passengers to and from Beijing who previously flew, the evaluation considers their benefits for the complete trip as well as the difference in marginal operating costs between travelling by air and by HSR.
Time Savings 14. At appraisal, the new line was expected to save rail passengers between Tumen and Jilin more than five hours compared to the existing timetable. The equivalent of a further 75 minutes was included in the evaluation to represent benefits due to the much improved service frequency. This time saving was valued at appraisal using a weighted average income per head of forecast passengers of RMB1,920/month or RMB12/hour (2009 prices), based on 2002 on-board surveys of rail services in the region, adjusted for subsequent income growth. Business and non-business travelers were valued at 100 percent and 35 percent of this average income and the business/non-business mix was taken at 25:75, again based on the on-board surveys, adjusted for expected commuting to and from Jilin13. This gave an average value of time savings in 2008 of RMB8.13 per hour (US$1.19), which was forecast to increase in line with the expected growth in average income per head.
15. The improved level of service was expected to attract passengers from other modes, especially from Hunchun (which did not have a rail service) to Jilin as well as generating additional trips by providing greater opportunities for potential passengers to travel (for example, it would be easily possible to make a day return trip between Jilin and Yanji, something which was impossible to achieve at appraisal). This trip transfer would create user benefits as well as reducing both operating costs and externalities in most cases.
16. Diverted and generated traffic, calculated as part of the demand forecast, was allowed benefits calculated at 50 percent of the increase in user surplus to base traffic, as
13 On-board surveys in 2002 gave a mix of 44:56; this was assumed to reduce by 2015 to 35:65 in the absence of commuting.
29 provided by the ‘rule-of-a-half’. The associated operating cost savings for traffic diverted from other modes was calculated using average operating costs derived from user surveys and highway cost studies (for road) and from the assumed operating cost component of air fares of 85 percent.
17. The forecast time saving has been borne out in practice, with the all-EMU services saving about five hours for the trip between Tumen and Jilin. Frequency benefits are estimated as equivalent to a further one hour of travel time. The average income of passengers, based on the November 2016 on-board survey is RMB6,090 per month or RMB38.08 per hour. The business/non-business mix from the survey was 50:50 (compared with 25:75 at appraisal), giving an average value of time savings of RMB25.70 per hour (US$3.72).
Distance savings 18. The value of the distance savings at appraisal was based on the estimated resources (loco-km, carriage-km) saved, combined with 2009 unit costs. Savings for passengers transferring from air and road were based on the estimated operating costs of buses and air. For HSR trips to and from locations beyond Jilin, the project was credited with the costs and benefits of the journey beyond Jilin, as these were assumed to not have occurred by HSR in the absence of the project.
19. The re-evaluation has adopted the same approach, using estimated 2015 unit costs. Table 3.2 compares these with the 2009 unit costs adjusted for inflation. The two rail costs cover above-rail costs only, i.e., rolling stock maintenance and capital, train and on-train crew and fuel and energy. Rail infrastructure-related costs are considered separately.
Table 3.2 Estimated unit costs – Appraisal and Current in 2016 (RMB/passenger-km) Mode Appraisal Current Conventional rail (above-rail) 0.10 0.20 EMU (above-rail) 0.11 0.20 Air 1.04 0.70 Bus 0.30 0.25 Car 0.50
20. The large increase in estimated rail operating costs reflects the general increase of costs in the sector; between 2008 and 2014 the cost per traffic unit 14 increased from RMB0.095 to RMB0.178, an increase of 90 per cent over a period in which inflation was 17 percent. Aviation costs have reduced with the growth of budget airlines while bus and car costs have increased slightly (the appraisal road cost was heavily weighted towards bus).
14 The sum of passenger-kilometers and net tonne-kilometers
30 Freeing-up capacity 21. At appraisal, transferring passenger operations to the new line from the existing network was expected to provide additional capacity for freight (which would otherwise have slower transit times or, if a route is saturated, be forced to travel by road or not travel at all). By project closing, 11 pairs of passenger trains and 9 pairs of freight trains operate daily on this line. However, as the available capacity for freight trains is currently 20 pairs daily, there would still have been ample capacity if the project had not gone ahead. It is possible that the line will become congested if freight traffic to and from Russia via Hunchun grows sharply, but it may take some years to realize it.
22. Since it may take some years before realizing any benefits from the freed-up capacity, they have been excluded from the re-evaluation.
External and environmental benefits 23. The external benefits included at appraisal include the reduction in road construction cost, accidents and congestion, vehicle emissions (net of the change in rail emissions) and changes in greenhouse gases (GHG). These were all valued using standard unit costs adjusted to Chinese conditions. GHG emissions were valued at US$100 per tonne of carbon (equivalent to US$27 per tonne of CO2).
24. The reevaluation adopted the same values for these benefits, updated to 2015 prices, except for GHG benefits. The economic value of CO2 avoided is taken as $30 per tonne, increasing over time to $80 per tonne, consistent with values in current World Bank project evaluations. The re-evaluation estimates a saving of 36,000 tonnes of CO2 in 2016, rising to 221,000 tonnes p.a. in 2045. Based on the diversion of passengers from road transport to HSR, an estimated 400 road deaths will be avoided over the life of the project.
Wider economic benefits 25. A transport project that makes a step change in travel costs and times between regional economic centers (such as the JiTuHun Railway) is expected to yield significant impacts through bringing companies closer together in travel time and distance. Broadly speaking, the impacts can be classified as the following:
a. Direct impacts on companies as they make their individual decisions based on considerations of profits and costs. These are already largely accounted for in the cost benefit analysis of passenger and freight traffic (for example, via travel time savings).
b. Externalities. The reductions in distances and travel times enable the companies to share input and output markets and enjoy knowledge spillovers; this produces positive externalities in the form of agglomeration. However, infrastructure building and traffic produces negative environmental effects. The cost-benefit analysis usually includes the environmental effects but excludes agglomeration effects.
31 26. Agglomeration effects are excluded from conventional cost-benefit analysis as most companies decide where to locate or expand on the basis of their own profits and costs rather than the impact of their location upon profits or costs of others. However, in areas with improved transport, an increasing number of companies become more closely connected and this is known to generate agglomeration economies. Such agglomeration brings benefits to all companies in the cluster. Therefore, if a transport project makes a company locate or expand in a given area, the cost-benefit analysis will capture the benefits to the company through direct cost and time savings but will not include potential efficiency gains which arise from that decision but which accrue to other companies in the cluster.
27. Interviews with planners and businesses at appraisal showed that many local businesses along the JiTuHun corridor had already formulated their commercial plans to exploit the improved access provided by the new line and significant investments were being made, bringing expertise as well as financial support for expanding and new business activities. The gains and losses of each region to a significant extent depend on local circumstances, such as industry clustering, local resources, labor supply, entrepreneurship, and governance, but the field work indicated significant potential benefits arising from the agglomeration effects.
28. Although these benefits are intrinsically difficult to quantify, at appraisal they were estimated using an approach developed by United Kingdom Department for Transport for use in a number of road and rail projects in the UK, based on the concept of economic mass. This was applied to the JiTuHun project to demonstrate the potential magnitudes of the effects. At the time, there were no specific Chinese parameters which could be used and the analysis instead used parameter values imported from the UK studies. Subsequent work, however, on the impact of expressways on regional development in Guangdong has confirmed the general reasonableness of these values.
29. The estimated agglomeration effects considered four geographic areas within the line catchment (Dunhua, Yanji, Tumen and Hunchun) and the regional centers of Jilin, Changchun, Shenyang and Beijing. Huchun is furthest from the regional centers, and thus has the greatest benefit from the larger reductions in travel time, including the benefit of now having a passenger service. Yanji has an existing air services and thus the reduction in cost across all modes is not as great as it would otherwise have been. Tumen is helped by being relatively close to the airport but Dunhua relies on its rail and road services and thus has received a quantum improvement in its accessibility which flows through to the agglomeration benefits.
30. Interviews conducted with local authorities along the line following the project completion indicated a strong belief that the improved service had strengthened economic linkages, especially in tourism, and in the case of Hunchun, links with Russia, which were having significant flow-on effects throughout the local economy. However, as the new services have only been operating for 16 months, these benefits cannot be quantified at present and it will take three to four years before their impact becomes fully apparent. The reevaluation therefore does not re-estimate these wider benefits.
32
Economic Rate of Return
31. At appraisal, the project was expected to yield a net present value (NPV), during 30 years of operation of RMB10 billion (2010 prices discounted at 5 percent to the first full year of operation in 2015) and to achieve an EIRR of 6.2 percent including wider economic benefits and 4.1 percent if wider economic benefits are excluded. The reevaluation estimates a NPV of RMB37 billion (2016 prices discounted at 5 percent to 2015) and an EIRR of 8.4 percent. If wider economic benefits are excluded, the estimated EIRR is 6.8 percent with a NPV on the same basis of RMB 17 billion. Table 3.3 compares the distribution of costs and benefits in the appraisal evaluation and ICR reevaluation.
Table 3.3 Comparison of costs and benefits at appraisal and at ICR (RMB billion 2016) (discounted to 2015 at 5 percent per year) Appraisal ICR Difference Construction cost -39.7 -35.5 4.2 Infrastructure maintenance cost -5.3 -4.3 1.0 User benefits 21.2 38.9 17.7 Operator benefits Air -0.2 -0.6 -0.4 Bus -0.3 -1.1 -0.8 Car 2.2 8.4 6.2 Conv rail -3.0 1.8 4.8 HSR 14.3 8.5 -5.8 Freight 2.4 -2.4 Road construction 0.0 0.2 0.2 Road accidents 0.4 0.4 0.0 GHG 0.6 0.6 0.0 Wider economic benefits 19.7 19.7 0.0 Total 12.4 36.9 24.5
32. The three principal contributors to the improved economic result are the reduction in construction cost (RMB4.2 billion), the passenger-related benefits associated with the increased demand and higher value of time (RMB17.7 billion), and the reduction in operating costs for cars (RMB6.2 billion) and conventional rail (RMB4.8 billion). These are offset to some extent by the lack of any freight-related benefits (RMB2.4 billion) and a lower HSR operating surplus (RMB4.2 billion).
33. The reduction in construction cost is due to the absolute savings in real terms of about RMB3.9 billion.
34. The passenger-related benefits are due to time savings and the value of time. The November 2016 on-board survey showed a value of time nearly double than assumed at appraisal. No freight benefits are included, as the existing line will have sufficient capacity for some years if the project was not built.
33 35. The on-board survey showed much greater diversion from car and bus than had been estimated at appraisal partly because of the lower HSR fare. As a result, there are much larger savings in car operating costs. Since appraisal, the cost of operating conventional rail services has been revised and marginal revenue is now less than marginal cost for many of these services. Accordingly, a reduction in usage of such services generates a benefit for the operator instead of, as previously estimated, a loss. Finally, operator benefits of the HSR services have reduced compared to appraisal as the average tariff is rather less than was previously assumed.
Financial Analysis
36. The line is owned by a project company, although the former MOR (now CRC) was formally responsible for implementing the project, mobilizing the financing and repaying all borrowed funds. The project was financed using 50 percent of equity obtained from the project company partners, and 50 percent loans, including, from domestic banks, US$ 200 million from the World Bank, and bonds raised in China.
37. At appraisal, one option was that the project company would be ultimately responsible for the maintenance and operation of the line, although in practice the actual functions would be sub-contracted, with the RAs operating the trains under contract with infrastructure maintenance also contracted to them or to third parties. Under this option the project company would own the train sets and receive all revenue earned on the services.
38. This model had been implemented at the time on several of the new HSR lines but in the case of JiTuHun an alternative business model was implemented in which the project company is essentially an infrastructure manager, receiving access fees for use of its network and stations by third parties and contracting third parties for infrastructure maintenance and operation.
39. The project company thus has two sources of income: track access fees and payment for traction electricity, which it uses to pay the electricity company. The access fees are set on a national basis and cover both usage of the infrastructure (currently RMB70 per train-km for an eight-car set on a 200 km hour line such as JiTuHun) and the use of railway stations (currently RMB5 per departing passenger at a major station). The train operating company also has to pay for the traction electricity at a rate (on JiTuHun) of RMB53 per thousand gross tonne-km. The access charges are more than enough to pay the cost of maintaining the infrastructure, especially in the early years, but nowhere near enough to pay the debt charges when they begin in full.
40. The RAs, as the train operating companies, earn revenue from passengers which covers train operating and traction electricity costs but is not enough to cover the cost of the track access charges. The RAs, as maintenance and train control contractors, earn revenue from this activity but it is balanced by the corresponding expenditure that they incur. As demand increases, the balance between revenue and expenditure for the RAs will improve, as the access charge for a 16-car train is about 50 percent greater than for an 8- car train, while the passenger capacity and potential revenue is double.
34 41. Against this, the company is responsible for the maintenance and operation of the infrastructure and stations, which in the case of JiTuHun is contracted to the local RAs. As the line has only been open for 18 months, maintenance to date has largely consisted of inspections. There is little experience of what lifetime average costs might be but estimates for this type of line of RMB1 million per route-km are generally considered to be reasonable. Currently the Changji Company is paying the RA about RMB0.73 million per route-km for the JiTuHun line.
42. At appraisal, the financial analysis of the project estimated forecast revenues would average around double operating costs (excluding depreciation) in the early years of operation, with a cash surplus of about RMB 0.2 billion in 2020 (in RMB current assuming 3 percent p.a. inflation). This would clearly have been insufficient to finance the interest payments (at 6.0 percent) of RMB 0.9 billion for the 50 percent of the cost raised by the project company from borrowings and this continued until after 2020, after which it was thought it could begin to consider principal repayments. Much then depended on the repayment profiles that were negotiated with the lending agencies. For example, if the debt was structured as a mortgage, with equal payments over a period of 25 years, the project could have financed this from around 2030, leaving a relatively small shortfall in the previous years. Throughout this appraisal period the project was notionally loss-making, as it was incurring large depreciation charges, but as the operating costs included an allowance for major periodic maintenance this was considered unlikely to be a problem for at least 20 years, by which time the project should be financially viable.
43. The FIRR over 30 years of the project was 3.9 percent nominal, equivalent to about 1 percent in real terms. As the cost of debt was around 6 percent nominal, the FIRR for the equity partners was very low and required significant financial support in the early years15. These projections reflect that this project was being constructed considerably ahead of the likely demand it was an important component in the TRDP, in the absence of which it is unlikely it would be constructed at this time.
44. The results of the financial analysis were discussed with MOR at appraisal. At that time, JiTuHun was just one of many such high-speed projects, with an overall cost of around RMB 2 trillion, that were either planned or being implemented. The JiTuHun project planned to mobilize domestic debt with a tenor of 20 years, including a 5-year grace period, the maximum that was available at the time. In discussion, MOR recognized that this was too short a period for JiTuHun, as with many of the secondary lines, and that many would need to be refinanced, typically around 2015, with longer-term borrowings. MOR at the time was examining alternative mechanisms for this but one option actively under consideration was to create a specialized funding agency for the high-speed lines which could deal with them as a group, enabling them to be financed as a network.
15 All these estimates assumed the equity partners fund the shortfall in debt service in the early years and assumed depreciation would be sufficient to create a tax loss.
35 45. Since that time, MOR has become CRC and the JiTuHun Company has been absorbed into the Changji Company, which also includes the Changchun – Jilin section, and no separate accounts are now prepared for the JiTuHun line itself. Estimates of the current financial positions of the JiTuHun section of the Changji Company and the train operating companies using this section are summarized in Figure 3.1. Whilst the long-term outlook for the JiTuHun section is promising, thanks to the rescheduling of its principal repayments of its loans, in the short-term it will require continuing cross-subsidy by the local RAs of the infrastructure maintenance and train control that they perform, as was anticipated at appraisal.
Figure 3.1 Estimated financial position of Changji Company and train operating companies (JiTuHun Section) (2016)
Note: IM = Infra Maintenance; PSC = Passenger Cost; TAC = Track Access Cost; TOC = Train Operating Company
46. Based on the estimated data, the JiTuHun line has an FIRR of about 1 percent in real terms, very similar to that estimated at appraisal.
47. Figure 3.2 shows JiTuHun (or the RA operating its services) can, like most 200 km per hour lines, cover its operating costs of around RMB 0.20 per seat-km from its average yield of RMB 0.31 per passenger-km. However, even though it has a load factor (passenger-km/seat-km) of over 70 percent, to cover its current maintenance and train control cost of around RMB 0.73 million per route-km, it requires a passenger density of about 7 million per route-km. The JiTuHun line is well on the way to achieving this. The next target is to be able to repay interest charges. The Changji company as a whole has
36 about RMB 22 billion of debt16, on which it is paying interest at 4.5 percent; the annual interest bill is thus about RMB 0.9 billion. This can be done in the medium-term as long as it is paid before considering any payment for infrastructure maintenance. The Changji Company, in common with other similar HSR lines, is likely to pay the interest on this debt and then negotiate any payment for infrastructure maintenance between itself and the local RAs, who are of course also shareholders in the Changji Company.
48. As was foreshadowed by MOR in discussions at appraisal, the Changji debt, and probably that of many similar projects, has recently been restructured so that it is repayable over a longer time period, with principal repayments gradually increasing over time to reflect the growth in traffic and revenue. Figure 3.2 below presents the breakdown tariff for the JiTuHun line as a whole.
Figure 3.2 Breakeven tariff for the JiTuHun line as a whole
49. At its current volume, the JiTuHun line can pay for the operation of the services and maintenance of the infrastructure and is thus cash-positive and under no threat of a reduction in its services. By 2030, it will be able to be able to also finance debt service, by which time volume, and thus its gross margin over operating costs, will have increased significantly. In the meantime, the shareholding RAs will probably have to absorb the cost of maintaining the JiTuHun infrastructure from their other operations, with some contribution towards debt service from both shareholders.
16 The JiTuHun component of this is not known precisely but is estimated at RMB 17 billion
37 Assessment of GHG Benefits
50. A full analysis of GHG emissions in transport needs to consider emissions during construction of both the infrastructure and rolling stock, emissions during operation (mostly traction power) and emissions during disposal of the replaced equipment and infrastructure. This section assessment concentrates on emissions during operation, which are principally concerned with emissions related to the relative consumption of fuel and energy by HSR services compared to that of the modes from which passengers have been diverted (conventional rail, air, bus, car). Rail can be one of the most energy-efficient passenger modes but this depends on a range of factors such as the speed of the train, the weight of the rolling stock and the passenger occupancy.
51. The analysis concentrates on carbon dioxide (CO2) emissions. Although there are other gases contributing to GHG, these are not significant in analyzing rail operations, typically increasing the impact of CO2 alone by only 0.5 percent, and have not been considered in this table. The only exception is water vapour associated with radiative forcing in the upper atmosphere, associated with aviation and this has been allowed for in the analysis.
52. As both the conventional and high-speed rail services are powered by electricity, an essential first step is to establish the carbon dioxide emissions per kilowatt-hour for electricity generated in China. These have been derived from the fuel mix at power stations and the coal burn required per kilowatt-hour (kwh) (Table 3.4); this table also gives an estimate for 2045 allowing for possible changes in fuel mix and efficiency.
Table 3.4 Estimated CO2 emissions per kwh from electricity generation 2015 -2045 2015 2045 % generation Kg CO2/kwh % generation Kg CO2/kwh Coal 74 1.39(1) 35 1.00 Hydro 17 0.00 15 0.00 Nuclear 2 0.00 6 0.00 Solar/wind 3 0.00 30 0.00 Other (oil/gas) 4 0.50 14 0.50 Average 1.05 0.42 (1) Chinese coal assumed as 5000 BTU/tonne; includes transmission losses assumed at 7 percent
53. The energy consumption for each mode has been taken from standard sources. The basic fuel consumption by rail mode has been derived from operational data and the road- based fuel consumption and occupancies per vehicle-km from local data and surveys. Rail energy consumption takes into account the terrain and operating speed of the two types of operation. Air fuel consumption is based on a 150 seat aircraft operating at 80 percent load factor for a flight of 750 km. The weighting factor of 2 applied to air travel is to allow for radiative forcing caused by water vapour in the upper atmosphere. The GHG emissions per liter of fuel are standard numbers (Table 3.5).
38 Table 3.5 Emissions per passenger-km by mode 2015 Fuel Energy/ Wtd kg/ Kgs CO2 Factor consumption pkm pkm Per Kwh/000 gtk Gtk/pkm Kwh Per kwh (1) pkm HSR 200 30 0.80 0.024 1.05(1) 0.025 1 0.025 Conv. rail (Jilin on) 16 1.22 0.020 1.05 0.020 1 0.020
Lt/vkm Litre Per litre Conv. rail (JiTuHun) 3.50 1.22 0.004 2.63 0.012 1 0.012 Pkm/v km Bus 0.30 35 0.009 2.63 0.023 1 0.023 Air 3.75 128 0.030 2.52 0.076 2 0.153 Car 0.08 2.5 0.032 2.30 0.076 1 0.076 (1) Petroleum emissions per pkm include refinery losses of 3.6 percent.
54. Over time, power station emissions per kwh will reduce as the less efficient power stations are phased out and as the energy mix becomes more broad-based. Fuel efficiency for petroleum-based modes will continue to improve; a reduction of 20 percent in unit fuel consumption for these modes over the period has been assumed. Table 3.6 gives parallel figures for 2045 based on these assumptions.
Table 3.6 Emissions per passenger-km by mode 2015 and 2045 Wtd kg/pkm 2015 2045 HSR 0.025 0.010 Conventional rail (beyond Jilin) 0.020 0.008 Conventional rail (JiTuHun) 0.012 0.010 Bus 0.023 0.019 Air 0.153 0.118 Car 0.076 0.061
55. The sources of the with-project passenger demand are given in Table 1.The impact of these changes is summarized in Table 3.7. Table 3.7 Estimated change in GHG emissions 2015 - 45 (000 tonnes) 2015 2045 Kg Kg Mode Pkm 000 tonnes 000 tonnes eCO2/pkm eCO2/pkm Pkm (billion) (billion) eCO2 p.a. eCO2 p.a. Conv. rail (JiTuHun 0.012 821 10 0.010 1671 8 Conv rail (Jilin on) 0.010 406 8 0.008 825 7 Bus 0.023 610 14 0.019 2427 45 Air 0.153 313 48 0.118 1245 152 Car 0.076 457 35 0.061 1819 111 Generated - 528 2103 323 Total 3135 115 CRH 200 0.025 3135 79 0.010 9870 102 Difference 36 221
39 56. These tonnages have been converted into money terms in the economic evaluation using an economic price for GHG in 2015 of $30 per tonne, increasing to $80 per tonne (in real terms) by 2050.
57. For comparison, at appraisal the forecast GHG savings were 35,000 tonnes in 2015 and 646,000 tonnes in 2045. The much larger saving in 2045 is due to different assumptions on the origins of the HSR traffic in the future. In particular, passengers diverted from air transport, a heavy generator of GHG, represented 50 percent of passenger-km in 2045 at appraisal compared to 12 percent in the ICR.
40 Annex 4. Bank Lending and Implementation Support/Supervision Processes
(a) Task Team members
Responsibility/ Names Title Unit Specialty Lending John Scales Task Manager EASCS Gerald Ollivier Deputy Task Manager EASCS Jianjun Guo Senior Procurement Specialist EAPCO Ning Yang Environment Specialist EASCS Songling Yao Social Development Specialist EASCS Yi Dong Senior Financial Management EAPFM Specialist Kishor Uprety Legal Counsel LEGES Robert O’Leary Senior Finance Officer CTRFC Weiling Li Program Assistant EACCF Maria Luisa Juico Program Assistant EASIN Richard Bullock Railway Economic & Financial EASIN Evaluation Advisor, Consultant Jitendra Sondhi Railway Engineering and EASIN Management Advisor, Consultant Paul Amos Transport Policy Advisor/Railway EASIN Specialist, Consultant Peishen Wang Environment Specialist, Consultant EASCS Andrew Salzberg Transport Specialist, Consultant EASIN Wang Wei Junior Professional Associate EASIN
Supervision/ICR Martha B. Lawrence Senior Railway Specialist GTIDR Team Leader Co-Task Team Gerald Paul Ollivier Lead Transport Specialist GTIDR Leader Richard G. Bullock HQ Consultant ST GTIDR Wanli Fang Consultant GSURR Senior Financial Management Yi Dong GGODR Specialist Jianjun Guo Senior Procurement Specialist GGODR Maria Luisa G. Juico Program Assistant GTIDR Jitendra Sondhi HQ Consultant GTIDR Ye Song Consultant EASCS Environmental Specialist, Peishen Wang GENDR Consultant Lei Wu Program Assistant EACCF Ning Yang Senior Environmental Specialist GENDR
41 Senior Social Development Songling Yao GSURR Specialist Nanyan Zhou Consultant GTIDR Anita Shrestha Transport Analyst GTIDR Jin Wang Transport Analyst GTIDR Youxuan Zhu Safeguards Specialist, Consultant GSU02
(b) Staff Time and Cost
Staff Time and Cost (Bank Budget Only)
Stage of Project Cycle US$ Thousands No. of staff weeks (including travel and consultant costs)
Lending
FY2011 32.67 268.58
Total: 32.67 268.58 Supervision/ICR FY2012 9.61 92.61 FY2013 6.09 76.68 FY2014 4.86 63.42 FY2015 3.82 37.42 FY2016 3.35 36.88 FY2017 8.64 49.38 Total: 36.37 356.39
42 Annex 5. Beneficiary Survey Results
1. The World Bank organized a passenger survey on the JiTuHun HSR line on May 10, 2016 (pilot) and November 2-24, 2016. In total, a sample of about 500 randomly selected passengers were interviewed, on on-board the trains and in the stations. The survey yielded 406 interviews from on-board the high speed trains and 49 from HSR stations. For comparison, 57 passengers from nearby conventional lines (11 on-board trains and 46 in stations) were interviewed. 2. The interviews were carried out on selected trains: the earliest train departing from Jilin to Hunchun, and a returning train in the afternoon or evening, and the same in the opposite direction. Surveys were conducted on three weekdays and one weekend day (Saturday). Findings
3. The predominant group of passengers on JiTuHun railway was between 19 and 40- year old. Men accounted approximately for 62 percent of the passengers and women for 38 percent. 4. About 17 percent of passengers on the JiTuHun railway line represent generated traffic (travelers who would not have traveled without the high speed rail) and 83 percent of passengers would have taken another mode if HSR had not been available. More than 50 percent of travelers chose high speed railway because of the short travel time. Ease of getting ticket, service frequency and comfort are also important factors (see Figure 5.1). For non-generated travelers, safety is the second most important reason for choosing HSR. Figure 5.1: Reasons for Choosing High Speed Rail
Short travel time
Ease of getting ticket
Comfort
Service frequency
Punctuality
Safety
Affordable fare
Other
Better rest condition
Work during travel
0% 10% 20% 30% 40% 50% 60%
Non-Genrated Generated
43 5. If the HSR were not available, 36 percent of travelers would have taken an ordinary train, 23 percent would take a bus, and 15 percent would drive. For mid to short distance trips (less than 800 km) the pattern is similar with the overall pattern. But for the long distance trip (over 800km), the main alternative transport mode is still ordinary train, but followed by air (34 percent). (See figure 5.2.) Figure 5.2 Alternative Transport Mode
50%
40%
30%
20%
10%
0%
All <800km >800km
6. Business trips accounted for 48 percent on JiTuHun HSR and 37 percent for women. This is similar to the Changji line (45 percent), lower than that on Jinghu line (62 percent), but higher than Guiguang line (37 percent). Among the generated passengers, 42 percent were taking business trips. On the weekend, 67 percent of generated passengers were traveling for tourism or visiting friend and relatives. 7. Overall, about 6 percent of trips were long-distance (>800 km), 44 percent were for medium distance (300~800 km) and 49 percent were short-distance (<300 km). See Figure 5.3. The sample included 33 passengers who were transferring to another train or flight at the Changchun/Jilin station. Seven of them were traveling to a city in Jilin or Liaoning Province with a distance of less than 1000 km. The rest were traveling to destinations over 1000 km. The vast majority of travelers did not transfer. Among them 86 percent of them were traveling within Jilin province. The longest distance in Jilin is from Siping city to Hunchun which is 601 km, while the distance from Changchun to Hunchun is 471 km. Of the travelers within Jilin Province 47 percent were travelling from/to Changchun Station.
44 Figure 5.3: Trip Distance
25%
20%
15%
10%
5%
0%
Trip Distance on Train (km)
8. The survey results provide an initial indication that the CRH services are used by a relatively broad range of income levels. Female passengers tend to have lower income than male passengers. The major income group falls into 280017-5000. The average monthly reported income is about RMB 5,500, while 22 percent reported an income of less than RMB 2,800. Figure 5.4: Income Distribution of HSR Travelers
45% 41% 40% 35% 30% 25% 21% 20% 15% 10% 11% 10% 7% 6% 5% 1% 2% 0%
17 The threshold of bottom 40 percent in 2015 is RMB 2800. We use the same category as in previous surveys on Guiguang, Nanguang and Shizheng line for consistency.
45 Annex 6. Stakeholder Workshop Report and Results (if any)
Not applicable
46 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR
Project Background
1. The Jinlin-Tumen-Hunchun High-speed Railway (hereinafter referred to as ‘JiTuHun Railway’) is 360 km in length and is located in Jilin Province, northeastern part of China. This area experiences extremely cold temperatures in winter (-29.2～-42.5℃). There is an existing detoured railway line between Jilin City and Tumen, border city with North Korea in east of Jilin, with travel time of 7 hours. Hunchun City, located far eastern Jilin Province and borders North Korea and Russia city, did not have passenger railway service prior to the Project.
2. JiTuHun Railway is jointly constructed by the former MOR and Jilin Province. The construction unit is Changji Intercity Railway Co. Ltd (hereinafter referred to as ‘Changji Company’). The line commenced construction in August 2011, finished track laying in April 2015, started testing and commissioning on June 30, 2015, and started operation on September 20, 2015.
Route Overview
3. The JiTuHun line connects Jilin City in the center of the province to Hunchun City in the east. The train also stops in the following stations: JiaoheXi, WeihulingBei, Dunhua, DashitouNan, AntuXi, YanjiXi, and TumenBei station before arriving at Hunchun station. Dunhua station is reconstructed and the remaining seven stations are newly built.
4. The railway was built as a passenger dedicated line (PDL) with a design speed of 250 km/h. The line goes through a mountainous area with many rivers. Approximately two-thirds of the line is in tunnels (85 tunnels, 156 km total) or on bridges/viaducts, (115 bridges/ viaducts, 91km total).
Objective and Implementation
5. The project is part of the national strategy of Northeast Area Revitalization Plan which aims to rejuvenate industrial bases in Northeast China. This line has integrated development of the Tumen River area, strengthened exchange and cooperation of the Northeast Asian region, improved coverage of the railway network, and encourages tourism-related development in between the Changbai Mountain and Tumen River regions. The line dramatically shortens the travel time from the border city to Changchun, capital city of Jilin province, by providing connecting services to the Changchun-Jilin Intercity Railway. Furthermore, Changchun Railway Station provides access to the main HSR corridor, linking eastern Jilin province to the national high-speed railway system. The JiTuHun Railway line provides efficient, high quality, low-cost transportation service to this remote border region.
47 6. During the construction process, all construction companies implemented the policies, regulation, rules, and mandatory standards as required by the former MOR and the CRC. The construction objectives regarding quality, safety, construction period, investment, and environmental protection were achieved. The principal function and physical quality of specialty systems satisfied the design requirement and the safety and stability of the running of passenger trains met applicable standards.
Operation
7. The JiTuHun Railway began operating in September 2015.The original goal is 13 train pairs. While opening, there are 21.5 pairs of daily passenger trains running (21 train fleet running in one direction and 22 trains running back) on the HSR line, and now the number of trains rose to 26 pairs, far exceeded the goal. Travel time between the cities of Tumen and Jilin decreased from over 7 hours by conventional train to about 2.5 hours.
8. Shenyang Railway Bureau and Changji Company monitor the state of the railway track using a comprehensive detection car, as well as measurements of the roadbed slope, roadbed settlement, frost heaving, and bridge settlement deformation. Once a problem is detected, effective and timely measures will be taken to ensure the safe and smooth operation of the high-speed railway.
Land acquisition and resettlement
9. According to the agreement between the former MOR and the Jilin government, the works of land acquisition and demolition would be carried out by the local governments and the temporary land acquisition lay with the construction unit. All land acquisition and demolition fees are reviewed and checked by independent audit agency.
10. During the construction, we strictly followed the basic national policy of “Cherish and give a rational use to the land as well as to give a real protection to the cultivated land”. This is in accordance with the principle of reducing land consumption and minimizing to appropriate basic cultivated land and basic farmland. This railway line has high proportion of bridges and tunnels, which save a lot of land. The temporary construction of the project, on the basis of proximity and long-lasting and temporary combination principles, made use of surrounding idle land and uncultivated land. The beam factory, mixing station, and small parts factory basically reused the temporary lands. The construction access roads also make best use of existing roads to reduce earth works.
48 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders
Not applicable
49 Annex 9. List of Papers published by the Bank on China Railways
The following Railway briefs, policy notes and papers are published by the Bank on China Railways. Also available at the ImageBank and OpenKnowledge.
• High-Speed Rail: The Fast Track to Economic Development? 2010, by Paul Amos, Richard Bullock, and Jitendra Sondhi • Railway price regulation in China: time for a rethink?, 2011, By John Scales, Gerald Ollivier and Paul Amos • Governance and structure of the railway industry: three pillars, 2011, by Paul Amos and Richard Bullock • China Rail Financial Futures Model, 2012 • Fast and Focused - Building China’s Railways, 2012, by John Scales, Jitendra Sondhi and Paul Amos • High-Speed Rail: the first three years taking the pulse of China’s emerging program, 2012, by Richard Bullock, Ying Jin, Andrew Salzberg • China: The environmental challenger of railway development, 2012, by Ning Yang, Juan D. Quintero and Peishen Wang • Overseas HSR Testing and Commissioning, 2012, the World Bank • High-Speed Rail, Regional Economics, and Urban Development in China, 2013, by Andrew Salzberg, Richard Bullock, Ying Jin, and Wanli Fang • High-Speed Railways in China: A Look at Construction Costs, 2014, by Gerald Ollivier, Jitendra Sondhi and Nanyan Zhou • High-Speed Railways in China: A Look at Traffic, 2014, by Gerald Ollivier, Richard Bullock, Ying Jin and Nanyan Zhou • Regional Economic Impact Analysis of High Speed Rail in China, June 2014, Report No. ACS9734, the World Bank • Attracting Capital for Railway Development in China, 2015, by Martha B. Lawrence, Gerald Ollivier • High-Speed Railways in China: an update on passenger profiles, 2016, by Gerald Ollivier, Nanyan Zhou, Richard Bullock, Ying Jin, Martha B. Lawrence
50 Annex 10. List of Supporting Documents
• The World Bank, Project Preparation Documents on the proposed Loan for JiTuHun Railway Project, 2010 to 2011
• The World Bank, JiTuHun Railway Project: Project Appraisal Document (Report No. 61298-CN), April 22, 2011
• The World Bank, JiTuHun Railway Project: Loan Agreement (Loan Number 8052- CN) between the People’s Republic of China and the International Bank for Reconstruction and Development, July 5, 2011
• The World Bank, Aide Memoires for the JiTuHun Railway Project (Loan Number 8052-CN), from 2010 to 2016
• The World Bank, Implementation Status and Results for the JiTuHun Railway Project (Loan Number 8052-CN), from 2011 to 2016
• Internal Investigation Report of Xiaopanling #1 Tunnel Accident, submitted by Changchun-Jilin Intercity Railway Co., Ltd.
• Borrower’s Implementation Completion Report, June 2016
• Final Resettlement Report of JiTuHun Railway Project, Migrant Resettlement Plan
• Monitoring Report on Project Completion, prepared by Beijing OASIS Environmental Protection Technology Co., Ltd., February 2017
51 MAP
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