Document of The World Bank FOR OFFICIAL USE ONLY
Public Disclosure Authorized Report No: ICR00004372
IMPLEMENTATION COMPLETION AND RESULTS REPORT Loan number 80360-CN
ON A
LOAN/CREDIT/GRANT
Public Disclosure Authorized IN THE AMOUNT US$100 MILLION
TO THE
People's Republic of China
FOR THE CHINA: ANHUI SHAYING RIVER CHANNEL IMPROVEMENT PROJECT ( P118647 )
Public Disclosure Authorized June 18, 2018
Transport & Digital Development Global Practice East Asia And Pacific Region
Public Disclosure Authorized
CURRENCY EQUIVALENTS
Currency Unit = Renminbi (RMB) US$1.00= RMB6.5342 (Closing, December 31, 2017)
FISCAL YEAR January 1 – December 31
Regional Vice President: Victoria Kwakwa Country Director: Bert Hoffman Senior Global Practice Director: Jose Luis Irigoyen Practice Manager: Binyam Reja Task Team Leader(s): Reda Hamedoun ICR Main Contributor: Jyoti Bisbey
ABBREVIATIONS AND ACRONYMS
ADB Asia Development Bank AM Aide Memoire APTD Anhui Provincial Transport Department APMO Anhui Project Management Office APPSCIG Anhui Provincial Port & Shipping Construction Investment Group Co. Ltd. APPSMB Anhui Provincial Port and Shipping Management Bureau APFD Anhui Provincial Finance Department AAES Anhui Academy of Environmental Sciences APEPB Anhui Provincial Environmental Protection Bureau APAO Anhui Provincial Audit Office APMO Anhui Project Management Office COI Conflict of Interest CPF Country Partnership Framework DO Development Objective EIRR Economic Internal Rate of Return EMP Environment Management Plan FM Financial Management IBRD International Bank for Reconstruction and Development ICB International Competitive Bidding ICR Implementation Completion and Results Report IDA International Development Association IFR Interim Financial Report IP Indigenous Peoples ISR Implementation Status and Results Report IWT Inland Waterway Transport MDB Multilateral Development Bank MOT Ministry of Transport MTR Mid-Term Review NCB National Competitive Bidding PAD Project Appraisal Document PDO Project Development Objective PV Present Value QCBS Quality Cost based Selection RF Results Framework RMB Renminbi or Yuan (Chinese Currency) SCD Systematic Country Diagnostic TOC Theory of Change TTL Task Team Leader USD U.S. Dollar
TABLE OF CONTENTS
DATA SHEET ...... I I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES ...... 1 A. CONTEXT AT APPRAISAL ...... 1 B. SIGNIFICANT CHANGES DURING IMPLEMENTATION ...... 4 II. OUTCOME ...... 6 A. RELEVANCE OF PDOs ...... 6 B. ACHIEVEMENT OF PDOs (EFFICACY) ...... 7 C. EFFICIENCY ...... 9 D. JUSTIFICATION OF OVERALL OUTCOME RATING ...... 10 E. OTHER OUTCOMES AND IMPACTS (IF ANY) ...... 10 III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME ...... 12 A. KEY FACTORS DURING PREPARATION ...... 12 B. KEY FACTORS DURING IMPLEMENTATION ...... 12 IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME .. 13 A. QUALITY OF MONITORING AND EVALUATION (M&E) ...... 13 B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE ...... 14 C. BANK PERFORMANCE ...... 17 D. RISK TO DEVELOPMENT OUTCOME ...... 18 V. LESSONS AND RECOMMENDATIONS ...... 19 ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS ...... 21 ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION ...... 29 ANNEX 3. PROJECT COST BY COMPONENT ...... 31 ANNEX 4. EFFICIENCY ANALYSIS ...... 32 ANNEX 5. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS ... 36 ANNEX 6. SUPPORTING DOCUMENTS (IF ANY) ...... 38
The World Bank China: Anhui Shaying River Channel Improvement Project ( P118647 )
DATA SHEET
BASIC INFORMATION
Product Information Project ID Project Name
P118647 China: Anhui Shaying River Channel Improvement Project
Country Financing Instrument
China Investment Project Financing
Original EA Category Revised EA Category
Full Assessment (A) Full Assessment (A)
Organizations
Borrower Implementing Agency
People's Republic of China Anhui Provincial Transport Department
Project Development Objective (PDO)
Original PDO The project development objective is to contribute to the increased cargo throughput of the Shaying River in Anhui Province throughinfrastructure improvements and capacity building.
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The World Bank China: Anhui Shaying River Channel Improvement Project ( P118647 )
FINANCING
Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$) World Bank Financing
100,000,000 100,000,000 100,000,000 IBRD-80360 Total 100,000,000 100,000,000 100,000,000
Non-World Bank Financing Borrower 191,140,000 199,760,000 185,773,315 Total 191,140,000 199,760,000 185,773,315 Total Project Cost 291,140,000 299,760,000 285,773,315
KEY DATES
Approval Effectiveness MTR Review Original Closing Actual Closing 12-Apr-2011 26-Aug-2011 15-Dec-2014 31-Dec-2016 31-Dec-2017
RESTRUCTURING AND/OR ADDITIONAL FINANCING
Date(s) Amount Disbursed (US$M) Key Revisions 17-Apr-2015 19.19 Change in Results Framework Change in Components and Cost Change in Loan Closing Date(s) Change in Financing Plan Reallocation between Disbursement Categories Change in Procurement Change in Implementation Schedule
KEY RATINGS
Outcome Bank Performance M&E Quality Satisfactory Satisfactory Substantial
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The World Bank China: Anhui Shaying River Channel Improvement Project ( P118647 )
RATINGS OF PROJECT PERFORMANCE IN ISRs
Actual No. Date ISR Archived DO Rating IP Rating Disbursements (US$M) 01 22-Sep-2011 Satisfactory Satisfactory 0
02 24-Oct-2012 Satisfactory Moderately Satisfactory .25
03 26-Jun-2013 Moderately Satisfactory Moderately Satisfactory 5.81
04 22-Dec-2013 Moderately Satisfactory Moderately Satisfactory 7.15
05 03-May-2014 Moderately Satisfactory Moderately Satisfactory 11.54
06 22-Jan-2015 Moderately Satisfactory Moderately Satisfactory 19.56
07 14-Jun-2015 Moderately Satisfactory Moderately Satisfactory 22.56
08 18-Dec-2015 Satisfactory Satisfactory 49.29
09 25-Jun-2016 Satisfactory Satisfactory 59.93
10 22-Dec-2016 Satisfactory Satisfactory 72.77
11 19-Jun-2017 Satisfactory Satisfactory 86.70
12 17-Dec-2017 Satisfactory Satisfactory 97.27
SECTORS AND THEMES
Sectors Major Sector/Sector (%)
Transportation 99 Ports/Waterways 99
Water, Sanitation and Waste Management 1 Public Administration - Water, Sanitation and Waste 1 Management
Themes Major Theme/ Theme (Level 2)/ Theme (Level 3) (%)
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The World Bank China: Anhui Shaying River Channel Improvement Project ( P118647 )
Private Sector Development 10
Jobs 10
Job Creation 10
Urban and Rural Development 30
Urban Development 10
Urban Infrastructure and Service Delivery 10
Rural Development 20
Rural Infrastructure and service delivery 10
Land Administration and Management 10
Environment and Natural Resource Management 60
Climate change 10
Mitigation 10
Renewable Natural Resources Asset Management 20
Biodiversity 10
Landscape Management 10
Water Resource Management 30
Water Institutions, Policies and Reform 30
ADM STAFF
Role At Approval At ICR
Regional Vice President: James W. Adams Victoria Kwakwa
Country Director: Klaus Rohland Bert Hofman
Senior Global Practice Director: John A. Roome Jose Luis Irigoyen
Practice Manager: Ede Jorge Ijjasz-Vasquez Binyam Reja
Task Team Leader(s): Wenlai Zhang Reda Hamedoun
ICR Contributing Author: Jyoti Bisbey
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The World Bank China: Anhui Shaying River Channel Improvement Project ( P118647 )
I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES
A. CONTEXT AT APPRAISAL
Context 1. Anhui has large navigable rivers linking many of its major concentrations of population. These rivers are suitable for developing inland water transport (IWT): Yangtze River, Huai River, and Xin’an Rivers. The total length of the inland waterway network in Anhui is over 6,500 km, of which around 1,100 km are high class waterways (Class IV and above). These rivers carry large volumes of bulk cargoes, especially coal, and construction materials such as sand and gravel, timber, and mineral ores. Many of these cargoes are hauled from rural areas (mines, quarries and forests) to urban centers for processing. These mines, quarries and forests are often important sources of employment in poor rural areas. 2. The Shaying channel is an important part of Category IV to V channel of inland river system in China and is the backbone of Anhui province. The Shaying River, the largest tributary of the Huai River in central China, originates from Henan Province and converges with the Huai River in Anhui Province. The total length of the River is 620 km, of which 206 km flows through Anhui Province. The River’s hinterland has extensive reserves of coal and other minerals and is also a major producer of farming products, cement and fertilizers. 3. Despite Shaying River’s potential for IWT, limited water depth on the river's upper reaches prevented safe year around access by vessels over 300 dwt. To better understand the situation, a study was conducted in 2007, which resulted in ‘A Report on Assessment of Navigation Safety of the Shaying River Channel Improvement Project in Anhui’ or “2007 study”. The main conclusion of the Report was that at a relatively modest cost the navigation channels on the river could be deepened sufficiently to enable larger vessels to reach upstream. Larger vessels and sets of barges pushed by a single power unit can offer substantially lower transport costs. Separating the power unit from the barges allows the former to be kept in revenue-earning operation while the barges are being loaded or unloaded. Intermodal shift to IWT also had the advantage of a lesser impact on the environment than rail or road transport. The 2007 study also included construction conditions, channel engineering, bridge engineering, supporting projects, compensation standards, investment estimates, financing and economic analysis. Based on the findings from the study, Fuyang City proposed the project to the Development and Reform Commission of Anhui Province and the proposal was approved in February 2008. 4. As part of long term planning and potential solutions to tap the natural resource of Shaying River, Anhui Province requested the World Bank to finance the project in 2009. At that time the Bank had just completed a major IWT sector review in China, with the objective of identifying impediments to its sustainable development, learning from six Bank-supported projects in seven different provinces. The request was based not only on the Bank’s existing and extensive experience in IWT projects in China, but also on the long-standing relationship between the Bank and Anhui Province. During project preparation, the cities of Yingshang, Fuyang and Jieshou convened a forum to invite feedback from the main users of the river. The consultation included individual ship-owners, logistics companies, goods
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The World Bank China: Anhui Shaying River Channel Improvement Project ( P118647 )
manufacturers, the ship-owners’ association and local marine/ water management bureaus to discuss existing problems, the need for key improvements, service facilities along the channel, and demand for goods and scale of shipping volumes. The discussion covered the future load and development of the channel and its impact on their businesses. The initial design of the project was commissioned by the Anhui provincial Communications Survey and Design Institute (Design Institute). Special attention was paid to designing flood control and protection of the river embankments. 5. Market assessment and understanding the user’s perspective were key to the long-term success of the implementation of the 2007 study. The cities and the province recognized that steering IWT operators toward larger vessels is a sustainable solution. The Anhui provincial government could encourage new and larger enterprises to enter the IWT market by providing the appropriate infrastructure, all-season navigation, advanced management technology systems, deepening the depth of the channel, and reinforcing flood control. This enabled the cities to increase demand and use of the channel. Small operators lacked the financing to trade up to larger vessels. Therefore, upgrading of the fleet by entrepreneurs contemplating investing in barges and tows need (i) assurance of a steady demand from cargo owners and (ii) uniform and assured navigating conditions on the routes sought by the cargo owners. 6. The objective of the Project was consistent with the Bank’s China Country Partnership Strategy (CPS) for 2006-2010 (Report No. 35435-CN), discussed by the Board on May 23, 2006. The Bank’s involvement in the Project supported two of the five pillars of the CPS: • It addressed the pillar ‘reducing poverty, inequality, and social exclusion’, by promoting inter-regional transport links, particularly for industries, between the lagging inland provinces of Anhui and Henan and the dynamic coastal regions. • It addressed the pillar “managing resource scarcity and environmental challenge, through reducing air pollution, conserving water resources, and optimizing energy use”, by facilitating the use of IWT, a transport mode that is more energy efficient, generates lower greenhouse gases, and uses less land than other transport alternatives.
Theory of Change (Results Chain) 7. Key underlying and critical assumptions, as well as external factors that affect or contribute to outcomes, are: (i) increase in shipping companies, ports, wharfs and manufacturing companies; (ii) upgrading of barges and tows by operators; (iii) sustainable growth in demand for materials and goods; (iv) continued competitiveness of water-based transport over rail or roadways; and (v) continued policy and planning support towards waterway transport by Government. The national and provincial priorities to support IWT, the 2007 Report, and the Forum (discussed above) confirmed that, prima facie, conditions existed to provide adequate demand for the proposed increase in IWT capacity in Shaying River in Anhui Province through the Project.
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The World Bank China: Anhui Shaying River Channel Improvement Project ( P118647 )
Project Development Objectives (PDOs) 8. The project development objective is to contribute to the increased cargo throughput of the Shaying River in Anhui Province through infrastructure improvements and capacity building.
Key Expected Outcomes and Outcome Indicators 9. The main outcome of increased cargo throughput of the Shaying River was measured by two outcome indicators: • Aggregate volume of cargo passing through three verifiable measurement points on the Shaying and Quan Rivers (million tons /year). Specifically, throughput passing through Genlou Lock, Fuyang Lock and Yingshang Lock. • Percentage of 500 dwt and above vessels among total vessels passing through Genlou Lock, Fuyang Lock and Yingshang Lock.
Components 10. The Project comprised four components, as summarized below.
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The World Bank China: Anhui Shaying River Channel Improvement Project ( P118647 )
Part A: Navigation Infrastructure and Facilities
a. River Channelization and Dredging: Improvement of the about 205.6 km long river channel to the standard of Class IV by dredging and bank cusp-cutting. b. River Bank Strengthening and Protection: Extension and strengthening of the existing river bank protection, and carrying out of new bank protection works in the river sections with deep and narrow channel, for a total length of about 43.87 km. c. Navigation Signals: Installation of about 213 navigation signals at key sections and locations. d. Service Facilities: Provision of two service areas, six public anchorage areas, communication and monitoring system, and other navigation aid facilities.
Part B: Reconstruction and Relocation of Existing Infrastructure and Facilities
a. Reconstruction of four existing bridges to allow for sufficient clearance for navigation, including the Yumin Bridge and the Sha River Bridge in Jieshou City, and the Ying River Bridges #1 and #2 in Taihe County; as well as reinforcing and anti-collision works to the navigable opening under other existing bridges along the river channel. b. Relocation or elevating of existing cross-river power cables and telephone lines.
Part C: Erection of Waterway Transport Management Systems
a. Provision and installation of the plants and equipment which are needed for building two management systems: (a) Shaying River Waterway Transport Management and Emergency Service System; and (b) Comprehensive Ship Lock Management System, to be developed by the technical studies under Part D.
Part D: Technical Assistance
a. Carrying out of technical studies on: (a) Shaying River Waterway Transport Management and Emergency Service System; and (b) Comprehensive Ship Lock Management System. b. Provision of well-tailored training programs to build the institutional capacity of the inland water transport sector to enable sustainable inland water development in Anhui Province.
B. SIGNIFICANT CHANGES DURING IMPLEMENTATION
Revised PDOs and Outcome Targets 11. The PDO remained unchanged throughout project implementation.
Revised PDO Indicators 12. At the time of restructuring, the Project outcome indicators were expanded through the addition of:
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The World Bank China: Anhui Shaying River Channel Improvement Project ( P118647 )
a. Two indicators on “aggregate volume of cargo passing through five verifiable measurement points on the Shaying River (million tons/year)” for the Second Yingshang ship lock and the Yangqiao ship lock respectively.
b. Two indicators on “Percentage of 500 (dwt) and above vessels among total vessels passing the Second Yingshang ship lock and the Yangqiao ship lock respectively.
Revised Components 13. The level-2 restructuring was approved on April 17, 2015 (Report No. RES18695) Amended Part B of the Project to include: (i) the construction of a second lock on the Shaying River, adjacent to the existing Yingshang lock, and (ii) upgrading and expansion of the existing Yangqiao lock on the Quan River. These additional activities were financed by loan funds freed up as a result of savings under Part A of the Project and the use of counterpart funds to finance two contracts (see discussion on Procurement).
Other Changes 14. As part of the restructuring, the following other changes were made: loan closing date was extended by one year from December 31, 2016 to December 31, 2017; construction/upgrading & expansion of the two ship locks were added as intermediate indicators; project costs were revised based on the values of contracts awarded and the latest estimates for the remaining contracts; and allocations of the loan to disbursement categories were realigned to correspond with the additional civil works in Part B.
Rationale for Changes and Their Implication on the Original Theory of Change 15. The addition of two new ship locks to Part B of the Project was based on operational needs (see below) and was aligned with the PDO outcomes. The original Theory of Change of the Project therefore remained valid. 16. The existing Yangqiao ship lock had become a bottleneck for freight transportation on the Fenquan River, and its upgrading and expansion permitted the navigation of bigger vessels. The Second Yingshang ship lock was built adjacent to the first one in order to add needed navigation capacity.
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The World Bank China: Anhui Shaying River Channel Improvement Project ( P118647 )
II. OUTCOME
A. RELEVANCE OF PDOs
Assessment of Relevance of PDOs and Rating Rating: Substantial
17. The project development objective is aligned with the National Inland Waterways and Ports Plan to 2020 (NIWPP2020) developed by the Government of China (GOC), that aims to develop a ‘high-class’ waterway network (Class IV to Class I). Anhui is one of the six economically under- developed central provinces supported by GOC’s “Rise of Central China” initiative in China’s 13th Five- Year Plan (FYP, 2016-2020). The FYP aims to shift the growth pattern and achieve a medium-high economic growth in a more balanced, inclusive and sustainable manner. Industrial production and new economic sectors are shifting or are being established in new economic zones in the less developed inland regions. The new manufacturing zones that have been established in central and western part of China are far away from major consumption centers and ports. This requires an efficient multimodal transport that can move freight over long distances in a sustainable manner. Yet, for long distance freight transport, the more cost effective and environmentally friendly IWT mode has been underutilized due to a lack of intermodal connectivity, uniformity in standards, and efficient logistics management. According to the Anhui Provincial 13th Five-Year Plan on Waterway Transport and Fuyang Municipal 13th Five-Year Plan (2016-2020), transport is one of the priorities in the Anhui provincial development strategy. The growth of IWT lagged behind road and rail transport in Anhui, even though it has a good natural river network. The Province decided to pursue a more balanced transport strategy that gave more prominence to IWT. The project increased the navigation and generally upgraded 206 km section of Shaying River to class IV to better connect with multimodal flow of goods and raw materials. The goal for Shaying river is to reach 20 million tons of cargo in 2020 from 15 million tons in 2015. 18. The project development objective is in line with the WBG’s Country Partnership Framework (CPF) dated October 11, 2012 for FY13-16 (Report No. 67566-CN). (The CPF has not been updated since then.) Specifically, CPF strategic theme two, “Promoting More Inclusive Development” which includes Outcome 2.4 “Improving Transport Connectivity for More Balanced Regional Development” mentions the project’s relevance and need. The CPF results matrix includes a specific indicator on Shaying river freight volume with a milestone of 205.6 km of Class IV channel to be upgraded along Anhui Shaying River by “…meeting needs sustainably with a strong emphasis on transport modes with lower resource footprint like rail or river transport…and spreading the opportunities for and benefits from development from the richer coastal areas of China to poorer inland regions and to giving those areas efficient access to the eastern cities and ports and widening the pool of firms, labor, service and products within their reach.”
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The World Bank China: Anhui Shaying River Channel Improvement Project ( P118647 )
B. ACHIEVEMENT OF PDOs (EFFICACY) Rating: Substantial.
19. The project development objective is to contribute to the increased cargo throughput of the Shaying River in Anhui Province through infrastructure improvements and capacity building. Project components gave rise intermediate outcomes/outputs, which in turn contributed to the achievement of the PDO. 20. Project Outcome: Increased Cargo Throughput. As indicated earlier, this outcome was assessed based on two indicators: aggregate volume of cargo passing through five verifiable points on the Shaying River (two of which were added at the time of restructuring); and the percentage of 500 dwt and above vessels among total vessels passing each of five locks (two of which were added at the time of restructuring). The project’s successful outcome shows increased vessel sizes, larger cargo loads and higher climate co-benefits per ton transported. 21. At project completion, the end-of-Project targets for volume of cargo passing through has exceeded in each of the three original locks under the Project. The two new locks added at the time of restructuring, almost 60% of the target was met in the case of Yangqiao lock, while the Second Yingshang lock was just becoming operational. By May 2018, the throughput of the Second Yingshang lock was 2.8 million tonnes, exceeding the annual target of 2.4 million tonnes by 116%. Similarly, the end-of-Project targets on the percentage of 500 dwt and above vessels among total vessels passing was either achieved or exceeded in each of the three original locks under the Project. Of the two new locks added at the time of restructuring, the target was met in the case of Yangqiao lock, while the Second Yingshang lock was just becoming operational. By May 2018, the percentage of 500 dwt and above vessels among total vessels passing through the Second Yingshang lock was achieved at 99.2%. Annex 1 provides details on the achievement of the PDO indicators. 22. Without the project, above traffic growth would be severely constrained. The Shaying river section upstream of Fuyang generally only permited navigation of 300 dwt vessels in the low-water season. The section downstream of Fuyang was blocked by the construction of a sluice dam. Alternative was Cihuaixin River, which could not accommodate all-year navigation. For example, without the project, bulk commodities produced in Anhui Province would be truck loaded to Yingshang Lock (a distance travelled of about 60-90 kilometers) before getting loaded on a barge. When the shipments exceed the capacity of the Yingshang lock, direct road transport as substitution is on average 700 kilometers. 23. The Project has achieved the climate benefit objectives set in the “Rise of Central China” initiative. IWT projects are included in the climate mitigation positive list and therefore would receive 100% climate co-benefits; e.g. in 2017, about 1700 tons of cargo passed Fuyang ship lock, which is equivalent to 850,000 20 tonne-trucks. Climate co-benefits were not noted in the Board paper at the time of preparation. The project contributes to the reduction of carbon emissions. Based on the information by the Borrower, full replacement of the cargo-modal shift from road to IWT during 2015- 30 would result in emissions being reduced 203 million tonnes cumulatively, and about 12 million tonnes on average annually.
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The World Bank China: Anhui Shaying River Channel Improvement Project ( P118647 )
24. The Project has benefited direct users, as evidenced by the increase in circulation of throughput1. This has made transportation costs more competitive. Increase in demand has also implied that there has been an increase in jobs in the local logistics and shipping related industry, leading to an overall benefit to the local economy. a. Number of port operators increased from one in 2011 to nine in 2017, shipbuilding companies from 12 to 16, and water transport enterprises from 24 to 31. b. Freight rates on Shaying waterway are about RMB0.085/ton-km in comparison to national rail of about RMB0.11/ton-km and road freight about RMB0.5/ton-km. c. Travel time. In 2011, 600 tonne ships used to take 15 days from Fuyang to Jiangsu (800km, travelling at an average speed of 9 km/h) at about RMB120/ton and wait for 3-7 days for the ship lock to open. In 2017 ships carrying 1100 tonnes of goods from Fuyang to Jiangsu take 7 days (at average speed of 12 km/h) at a cost of RMB60/ton, with no waiting time at the ship locks. 25. Project outcome: Infrastructure Improvements. As stated before, the Bank-funded project is part of a bigger plan to promote inter-modal connectivity and environment friendly economic growth. All infrastructure improvements described under the original Project and its subsequent restructuring were carried out. Specifically: a. 206 km of river channel was improved to Class IV standard in line with technical specifications and norms, through dredging, bank-cutting and bank protection works, and navigation signal works. b. Four existing bridges were modified to allow 7 meters of height and 90 meters of width clearance, including Yumin Bridge and Shahe Bridge in Jieshou City, and Ying River Bridge #1 and #2 in Taihe County. c. Auxiliary facilities were constructed, including two service areas and six public anchorage areas. d. The communication and monitoring system, and necessary navigational aids were installed. e. The Second Yingshang lock was constructed and Yangqiao lock was upgraded and expanded.
26. In parallel and in addition to the Bank-funded project, in line with its 13th five-year plan and the 2007 study, Fuyang municipality invested in complementary infrastructure. Between 2014-2017, the City built about 15 berths for container, public, and bulk cargo along the river and established a program to dismantle old ships. It is also planning to construct a modern port logistics industrial park to cultivate integration among land, air and railway transport with the Yangtze River Delta to promote regional economic and social development. 27. Project outcome: Capacity Building. As part of Fuyang City’s broader strategy to improve the enabling environment for IWT, uniformity in standards, and efficient logistics management, the Project installed advanced information systems throughout the navigation infrastructure. This is truly an innovative approach in IWT projects globally. The Bank reinforced Fuyang’s policy actions towards a sustainable and efficient waterway system by integrating soft infrastructure with physical infrastructure. The two technical studies under the technical assistance component – Shaying River Waterway Transport Management and Emergency Service system, and Comprehensive Ship Lock
1 Source: APMO, APDT
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The World Bank China: Anhui Shaying River Channel Improvement Project ( P118647 )
Management System – were integrated with a common software and application platform in line with China’s key standards for river management systems. These operating systems were specifically designed to: (i) integrate application of advanced IT instruments intro waterway safety management; (ii) establish an intelligent monitoring and salvage system on waterway pollution; and (iii) improve the operational capacity and passage efficiency of the ship locks (for which APPSCIG is responsible) through a comprehensive IT-based lock management system, which includes tolling, real-time monitoring, operational control, asset and personnel management. 28. The capacity building trainings were designed for waterway public services based on the two systems. The systems used the knowledge gained in implementing lock management systems in the Three Gorges locks multistage joint scheduling system, Jialing River cascade locks, Beijing- Hangzhou lock area, and the Grand Canal in China. The two studies and trainings referred to international experience in similar circumstances and complexity; e.g., Germany’s wireless video-based remote lock shipping joint scheduling system for multi-stage locks, progress in the USA to optimize the use of congested locks, and the computer-aided centralized control of lock scheduling on the Panama Canal, as well as coordination on the St. Lawrence Seaway. 29. Additional trainings were designed to enhance understanding of inland water transport operational aspects. Training topics included project management, water safety and environmental management, and waterway engineering design optimization investigation groups. Additionally, specific technical trainings were organized in themes relevant to the Project as needed, e.g., port and shipping planning and waterway information management. Foreign trainings were organized specifically to countries with similar project circumstances and scale, e.g., Germany. Trainees learned advanced technology and management methods at home and abroad; improved project management; and enhanced institutional capability of inland waterway transport management industry in Anhui Province. These programs were availed by project implementation agencies at both provincial and county levels. As of the end of December 2017, over 580 persons-months of trainings were provided, including domestic training of over 570 persons-months, study tours of 7.6 persons-months, as well as foreign training of 5.6 persons-months. As a result, there has been little turnover at the Borrower’s offices. Most staff remain committed to the broader agenda and have learned learn new skills and application to further standardize operations in future projects. 30. Based on the above discussion, it is evident that the Project has fully achieved its intended outcomes. As such, achievement of the PDO is rated Substantial.
C. EFFICIENCY
Assessment of Efficiency and Rating Rating: Substantial
31. Economic Analysis. At appraisal, the economic internal rate of return (EIRR) of the Project was estimated to be 14.6%. For the ICR, the CBA was expanded to include the newly added activities under the project restructuring. The EIRR at completion is estimated at 31.5%. For both appraisal and ICR, CBA was done based on the volume of freight which relates all physical and navigations aids funded by the project or about 98% of the project components except trainings. The main benefits are from transport cost savings, cost savings from increased barge sizes, and carbon emission reductions. Sensitivity analysis (assuming 20%
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The World Bank China: Anhui Shaying River Channel Improvement Project ( P118647 )
increase in costs and 20% decrease in economic benefits) shows that the economic return is still favorable with an EIRR of 21.6% under the combined conservative assumptions. The significantly better EIRRs at completion are primarily due to both the aggregate cargo volume and the percentage of 500 dwt vessels exceeding their targets significantly at the three original ship locks (Genlou, Fuyang, and Yingshang) and expected similar results in the case of the Second Yingshang Lock and the Yangqiao Lock going forward. See Annex 4 for more details of the economic analysis. 32. Aspects of design and implementation. As of April 2018, the Project had disbursed 100% of the loan, with all civil works completed and assets created by the project operational. Overall project design and implementation were satisfactory. Anhui PMO was proactive in learning from mistakes and correcting them to avoid repetition of such missteps. Difficulties were encountered during implementation in two aspects: delays in land acquisition by county land bureaus, and a genuine misunderstanding and misinterpretation of the Conflict of Interest (COI) clause in the bidding documents, resulting in the declaration of misprocurement of two contracts without cancellation (see section on Procurement). However, these were satisfactorily addressed with minimal impact on successful project implementation. Project’s ISR ratings were generally Satisfactory. There was a two year plus period between June 2013 and December 2015 when either Achievement of the PDO or Implementation Progress or both were rated Moderately Satisfactory. Both the Bank and the Borrower were conscious of the project’s potential and resolved the errors proactively. The increase in IWT traffic in the River channel had been growing at a fast pace and Fuyang Municipality was already investing in other ports and wharfs to complement the Bank funded project. Motivation was high on both sides. 33. Procurement efficiencies and the freeing up of loan funds as a result of the misprocurement (without cancellation) enabled additional infrastructure investments, which extended project closing by a year, but increased project impact and efficiency. 34. Rating of Efficiency. Taking into account economic efficiency and aspects of design and implementation, the overall efficiency of the Project is rated Substantial.
D. JUSTIFICATION OF OVERALL OUTCOME RATING 35. Based on the discussions above and the ratings of the Relevance of the PDO, efficacy and efficiency, the overall outcome of the Project is rated Satisfactory.
E. OTHER OUTCOMES AND IMPACTS (IF ANY)
Gender 36. This project was not gender tagged and did not have either gender specific activities or a gender specific indicator. During 2012-2013, the Project organized six training workshops for contractors and supervision engineers on HIV/AIDS and HIV/AIDS posters were displayed in the worker’s camp. These activities would have benefited women in the project area.
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The World Bank China: Anhui Shaying River Channel Improvement Project ( P118647 )
Institutional Strengthening 37. As discussed previously, the Project integrated knowledge capture, systems efficiency and critical infrastructure investments. This holistic approach was based on the lessons from the previous six Bank funded IWT projects in China, international case studies, and similar ship locks in China. China’s approach to IWT development has been systematic with a mix of river upgrade and investments along the river. In the process, the work has expanded to other active projects where lessons and experience from Bank-funded projects are being applied. Anhui Province has partnered with ADB2 to build the next downstream IWT project. Sustainability of the investment and freight levels are expected to grow with positive impact on businesses.
Mobilizing Private Sector Financing 38. The Project did not directly mobilize private sector financing. However, businessmen in the area invested in ships with large freight capacity to take advantage of the improved capacity of the Shaying River. The Project removed the binding constraint of ability of the river to carry heavier ships, enabling private companies to move their goods to a more efficient mode of transport. The increase in traffic and in the volume of cargo signifies more business activity as a result of the project supported improvements in the river. From 20113 till 2017, the number of water transport enterprises increased from 24 to 31, port operators from one to nine, and shipbuilding enterprises from 12 to 16. As a result of the increase in businesses, total crew count went up from 5,700 in 2011 to over 9,700 in 2017.
Poverty Reduction and Shared Prosperity 39. The Project did not have a poverty focus and did not directly address poverty alleviation. However, the increased shipping activity and the resultant economic impact is expected to have also benefited the poor. As the project was specifically designed to support the ‘Rise of Central China’ initiative, economic growth along the Shaying river is expected over time with the increase in river-based activities. Inland waterway projects generally serve commodity sectors which employ the lower paid employees, as well as serve inland areas which tend to have higher levels of poverty. The living standards of resettled households have been improved to a certain extent; and the completion of the project has brought more convenience to their life and travel. Resettled households indicated that the bridge in Jieshou City has given them access to schools, medical facilities, and convenient public transport.
Other Unintended Outcomes and Impacts 40. The project contributes directly to climate co-benefits. According to the “Joint MDB report on Climate Finance 2015”, “Waterways transport ensuring a modal shift of freight and/or passenger transport from road to waterways (improvement of existing infrastructure or construction of new infrastructure)” project type is included in the mitigation positive list and therefore would receive 100%
2 Anhui Intermodal Sustainable Transport Project, project number 45021-002. Anhui Provincial Port and Shipping Construction Investment Group will be the implementing agency for the inland waterway transport. 3 Source: APMO
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The World Bank China: Anhui Shaying River Channel Improvement Project ( P118647 )
climate co-benefits. This low energy consumption, more efficient mode of transport has effectively reduced carbon emissions and pollution, and has improved traffic and road conditions.
III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME
A. KEY FACTORS DURING PREPARATION
41. Realistic objectives. The Project identified the targeted section of the river with specific interventions. As stated in Paragraph 17, in accordance with the NIWPP2020, the Project sought to re- establish continuous, year around navigation along the Shaying River between Jieshou on the Henan - Anhui border and Mohekou at the confluence of the Shaying River with the Huai River. The improvement works were to raise the standard of the channel and associated infrastructure to the China national standard Class IV, which accommodates 500 dwt vessels. 42. Simple design. The Project design was focused on optimizing navigability at the lowest cost, with due regard to minimizing social and environmental impacts. The Project design took advantage of existing infrastructure on the Shaying River and explored alternatives and design optimizations. 43. Design of Results Framework (RF). The RF was simple and was appropriate for measuring the Project’s intermediate outcomes and end-of-Project outcomes. It included baselines and end-of Project targets. However, the estimation methodology could have been more rigorous. The arrangements for data collection, compilation, analysis and reporting were appropriate. 44. Identification of risks and putting in place mitigation measures. The overall risk to achieving the PDO was correctly rated as Moderate. Six main risks were identified: delays in procurement (Moderate); inadequate capacity of implementing units (Low); variations/changes to design and work quantities during construction (Low); implementation of agreed measures for social and environmental safeguards (Low); weak FM capacity (Moderate); and lack of timely availability of adequate counterpart funds (Moderate). Mitigation measures incorporated in the project design and planned implementation support were generally appropriate. Despite these measures, it is not unusual for issues to emerge during implementation, e.g., in procurement and social safeguards (see sections on Procurement and Social Safeguards). The existing mitigation measures reduced their impact and further supported the Borrower and the Bank to course correct towards successful completion of the project. 45. Readiness for implementation. The Project met EAP regional criteria for readiness for implementation when it was presented to the Board. Institutional arrangements, including staff for key functions (e.g., environmental and social safeguards, technical and engineering quality assurance, procurement and financial management) were in place. APMO had prepared the Procurement Plan for the Project, which comprised five ICB contracts and one QCBS consulting contract.
B. KEY FACTORS DURING IMPLEMENTATION
46. Delays in Land Acquisition. Land acquisition was delayed because of (i) weak coordination between county land bureaus (which have responsibility for land acquisition) and APPSCIG, and (ii) delays in reaching agreement on the unit price for land compensation. These issues were resolved following
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The World Bank China: Anhui Shaying River Channel Improvement Project ( P118647 )
extensive discussions between the Bank and Borrower in 2014. Discussions emphasized actions that would provide timely support to the counties which are not used to land acquisition by more experienced authorities such as Fuyang Municipality. A firmer coordination framework was put in place in 2014 to resolve this issue ensuring smoother implementation from 2015. The Framework required participation of agencies at all levels and monthly reporting to the Fuyang City Mayor and to the Bank. APMO coped with the challenge and enabled the project’s rating of implementation progress to be upgraded to satisfactory. The Bank provided hands-on support by responding to monthly reports and understanding the situation on each land plot to be acquired. 47. Procurement and Contract Management. As discussed in the section on Procurement, a misunderstanding and misinterpretation of the COI clause of the bidding documents resulted in the declaration of misprocurement of two contracts without cancellation. This affected Project implementation until the reasons were identified and the matter was satisfactorily resolved. Contract management issues included price adjustments, works variations, and claims. These were resolved through additional trainings to the design institute in preparing the bills of quantities and strengthening the technical review of bidding documents.
IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME
A. QUALITY OF MONITORING AND EVALUATION (M&E)
M&E Design 48. Based on the assessment during appraisal that the binding constraint was the adequacy of freight capacity in the Shaying River, the PDO formulation was appropriate. As discussed in the section on Key Factors During Preparation, the Results Framework was appropriate, with relevant PDO level and intermediate outcome indicators, along with appropriate arrangements for data collection, compilation, analysis and reporting. In addition to the RF, the project also included the standard reporting requirements for financial aspects (IFRs, annual audited reports), safeguards (periodic reports on safeguards implementation), and regular progress reports in agreed formats.
M&E Implementation 49. Progress reports and supervision missions deemed the M&E progress satisfactory throughout project implementation. Records were collected, data was analyzed in a sound manner, and presented in the regular progress reports, during bi-annual supervision missions’ aide memoire/ISRs and coordination system’s monthly reports to the Bank. APMO tracked the RF indicators throughout the project, including post-restructuring.
M&E Utilization
50. Issues identified in the various M&E reports were followed up actively by the Borrower and the Bank and were addressed in a timely manner, e.g., construction quality and safety, including on
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The World Bank China: Anhui Shaying River Channel Improvement Project ( P118647 )
dredging ramp control and bank protection works. While data collection was satisfactory and kept project reporting on track, the M&E reports highlighted the key issues resulting in implementation delays, e.g., construction delays due to non-availability of temporary landfills. These M&E reports helped identify the underlying issues that required more rigorous support from the Bank, e.g., a firmer coordination system in 2014 as well as the restructuring when two ship locks were added to scale up Project impact.
Justification of Overall Rating of Quality of M&E Rating: Substantial
51. The M&E system as implemented was generally sufficient to supervise the achievement of the objectives and test the links in the results. B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE
52. Safeguards and fiduciary compliance were rated satisfactory throughout project implementation. The following safeguards were triggered: • Environmental Assessment (OP/BP 4.01) • Natural Habitats (OP/BP 4.04) • Involuntary Resettlement (OP/BP 4.12)
Environment
53. The project was assigned Category A at preparation due to environmental concerns over water quality deterioration caused by dredging and silt disposal, as well as other impacts caused by construction activities, waste management, and safety. OP4.01 Environmental Assessment and OP4.04 Natural Habitats were triggered and a full Environmental Impact Assessment (EIA) and Environmental Management Plan (EMP), acceptable to the Bank, were prepared and disclosed. EMP implementation performance was rated satisfactory throughout. APMO set up and maintained a sound environmental management system, assigned dedicated environmental management staff, and engaged an experienced independent environmental monitoring consultant to monitor and supervise EMP implementation. 54. OP 4.04 Natural Habitats was addressed satisfactorily during EMP implementation. Dredging and silt disposal impacts were minimized through proper dredging and disposal practices, as well as the selection, management and post-rehabilitation of disposal sites. Construction activities were carried out outside the conservation zone of the Anhui Taihe Shaying River National Wetland Park; and mitigation measures were duly implemented to avoid and minimize impacts on the wetland park. 55. APMO submitted good quality semi-annual EMP implementation monitoring reports on time. EMP training (including health and safety aspects, e.g., HIV awareness raising) was provided to contractors, supervision engineers and local officers at the beginning of the project and was continued during construction. EMP implementation was supervised through regular field visits and review of reports. Special attention was given to key issues such as control of impacts caused by dredging, management and monitoring of silt disposal, and post-disposal site rehabilitation, construction near sensitive environmental receptors, and post-construction rehabilitation. APMO demonstrated strong
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The World Bank China: Anhui Shaying River Channel Improvement Project ( P118647 )
capacity and took timely actions to address these issues. EIAs and EMPs were prepared, reviewed and disclosed for the Yangqiao and Second Yingshang ship locks, in line with OP 4.01 requirements. Overall, project EMP implementation demonstrated good practices in terms of environmental assessment, close monitoring and supervision, training, and institutional capacity building.
Social Safeguards
56. A social impact assessment was conducted and a Resettlement Action Plan (RAP) was prepared to address the land acquisition and involuntary resettlement needs of the Project, based on the findings of the assessment and information gathered through public consultations. OP 4.12 for Involuntary Resettlement was triggered. Social safeguards implementation was generally satisfactory, except for a pending issue discussed below. Training was provided to PIU staff at project launch on World Bank social safeguards policy and procedures. While there was sufficient capacity in county land bureaus to manage land acquisition and resettlement, there was a learning curve in the project. Qualified independent consultants were commissioned to monitor social safeguards implementation. Issues were identified in time and new RAPs were prepared when additional land was required. 57. By project closure, all resettlement was complete with one outstanding issue at Sanba village in Yingshang county (where 23 rural households had been resettled). However, in January 2018 the Bank was informed that a large area in Sanba village, including the Sanba resettlement site, has been identified by the county government for economic development and the 23 households would be moved to another site. Subsequently, 10 of these 23 rural households opted for cash compensation and departed; the remaining 13 households have opted to relocate to Xiayuan Resident Compound, a new site assigned by Yingshang county government, where construction is expected to be completed only by June 2019. The 13 households have received 18 months transition fee, which is sufficient to rent houses in nearby towns. 58. The Bank remains committed to the satisfactory resettlement of these 13 households in compliance with Bank policy. Anhui PMO has agreed to continue monitoring their resettlement as part of the proposed Bank-supported Anhui Rural Road Program (expected Board date September 2018) which includes Fuyang municipality, where Yingshang county is located. Yingshang County will furnish interim six-monthly reports on the progress of resettlement housing construction. A grievance mechanism is being established to ensure the remaining 13 HH can raise their concerns, if any, to Anhui PMO. Bank social specialists will conduct monitoring missions in early 2019 and June 2019 to confirm the satisfactory conclusion of this resettlement, in line with Bank requirements.
Financial Management and Disbursement
59. The Project generally maintained an acceptable financial management system. Project financial staff at APMO and the PIUs were permanent staff who were assigned to work throughout the project. In addition to joining the launch workshop, they also participated in the countrywide financial management and disbursement training to share experience and exchange views with other PMOs. Sufficient counterpart funds were provided and Bank loan disbursement was in line with the overall construction progress. Funds were released in a timely manner for payments to contractors. All the financial records,
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The World Bank China: Anhui Shaying River Channel Improvement Project ( P118647 )
including financial statements, ledgers, invoices, payment statements, and other necessary supporting documents were systematically maintained. The project financial management system was adequate and provided, with reasonable assurance, accurate and timely information to assure that Bank loan proceeds were being used for the intended purposes. 60. The Project complied with Bank polices and the legal agreement to submit the interim financial reports (IFRs) to reflect the overall project implementation status on a semi-annual basis. The IFRs were prepared in accordance with accounting guidelines issued by MOF and were consistently applied. The annual project audit reports were issued with unqualified (clean) opinion by Anhui Provincial Audit Office and were submitted to the Bank on time. During the first-year audit, the auditors identified issues with the bank account for counterpart funds; these were properly addressed by the PIU. No audit issues were noted in the subsequent years.
Procurement
61. Procurement under the Project included procurement of works, goods and selection of consulting firms. There was one4 ICB works contract for the Yingshang ship lock; however, there was no participation from foreign bidders. All other works and goods contracts were NCB. There was one QCBS consultant contract. The Bank provided timely support to APMO and conducted special procurement support missions, as necessary. Several tailored trainings were delivered during project preparation and during implementation. PMU staff were also invited to several training workshops sponsored jointly by the Bank, MOF, and appointed universities. The Project Progress Reports (which also covered procurement) and the financial reports were submitted regularly. 62. The Project complied with Bank Procurement Guidelines except for the award of two contracts. In June 2014, a one-time misprocurement was declared by the Bank, without cancellation of the Loan funds allocated to bridge construction contract QL-01 and river channel dredging contract HD-01. During a procurement review, the Bank found that bidders recommended for the award of these two contracts were affiliated to one or more other bidders who had submitted bids for the same contract, and should therefore have been disqualified during bid evaluation for conflict of interest. After a careful review of the circumstances and documents, the Bank concluded that this violation may have been due to a genuine misunderstanding and misinterpretation of the COI clause in the bidding documents. The Bank declared misprocurement in June 2014, but consented as a one-time exception (and without setting any precedent) to not cancel corresponding Loan funds of US$15.6 million allocated to these two contracts. 63. Procurement related issues included price adjustments, works variations, and claims. While APMO and the PIUs had capacity for procurement, the bills of quantities were not prepared well, and as in many China projects, there were too many variations after contract award. As a result, the Bank provided further training to the design institute on preparing bills of quantities and strengthened the technical review of the bidding documents.
4 At the time of the Board, there were five ICB contracts. During the implementation, procurement threshold for ICB contracts was raised for China which left only one contract under ICB threshold.
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The World Bank China: Anhui Shaying River Channel Improvement Project ( P118647 )
C. BANK PERFORMANCE
Quality at Entry 64. As discussed in the section on Context at Appraisal, the Project was prepared based on a careful assessment of Government (national and provincial) priorities for the IWT sector and an assessment of demand for increased cargo throughput in the Shaying River. The section on Key Factors during Preparation highlights that: (i) the objectives were realistic; (ii) project design was simple; (iii) M&E design was appropriate and arrangements were in place for M&E implementation; and (iv) risks to achieving the PDO were identified correctly and mitigation measures were put in place. The earlier section on Environmental, Social and Fiduciary Compliance confirms that Bank requirements on these important areas were satisfactorily appraised and could be implemented effectively, except for minor issues. As indicated in the PAD and mentioned in Annex 4, economic analysis was carried out in a satisfactory manner. 65. Project preparation and appraisal were efficient. There were four missions to prepare the project: fact finding and identification mission in 2009 and preparation and appraisal missions in 2010. The Project was negotiated and presented to the Board in April 2011, even though the lending program agreement between the Government and the Bank had envisaged an FY12 Board date.
Quality of Supervision 66. Focus on development impact. Bank supervision focused on issues affecting efficient project implementation and the achievement of the PDO. Bank support was timely and understanding in respect of procurement and resettlement issues, as discussed earlier. As part of the coordination system established to address issues and speed up project implementation, the Bank adopted a hands- on approach and provided feedback to APMO and the PIUs on a weekly basis. The Mid Term review was carried out in December 2014 and the Project was restructured in April 2015, to inter alia: add two new ship locks to the Project; amend the RF; extend the loan closing date; and reallocate loan funds between disbursement categories. 67. Supervision of Bank fiduciary and safeguards policies. Compliance with Bank fiduciary and safeguards aspects were supervised diligently through the participation of the relevant experts in missions and through desk reviews of key documents, and the provision of appropriate implementation support to APMO, the PIUs, and relevant staff. The focus was to respond on time, anticipate any major issues, and help APMO to work through the challenges as best as possible. Throughout project implementation, safeguards compliance and financial management were rated satisfactory. Among the three safeguards triggered, involuntary resettlement required the most attention; for further details, please refer to the section on Social Safeguards. 68. Supervision inputs and processes (including missions, location and availability of key staff). The Bank carried out 12 supervision missions in all, i.e., an average of two per year. Additional support was provided through regular consultations with the PMO on the phone, as well as through additional technical missions when necessary. The Bank supervision task team comprised the TTL, geo-technical engineer, and specialists on procurement, social, environment and financial management. The Project had three Bank TTLs over the implementation period, which is considered reasonable. Most staff were
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The World Bank China: Anhui Shaying River Channel Improvement Project ( P118647 )
Beijing based, including the TTL for a portion of the implementation period; this facilitated closer interaction with the client and quick identification and early resolution of issues. 69. Quality of performance reporting. Supervision reports such as aide memoires and management letters identified the main issues and appropriate follow-up actions by the responsible parties. Project ratings were assigned candidly in the ISRs. Progress towards achieving the PDO and Implementation Progress were rated Satisfactory, except for two-year period when one or both was rated Moderately Satisfactory. The Project was not in problem status at any time. 70. Operation of Project financed assets. Special attention was paid to the handover of completed assets (including construction data and measurements, training, staffing, parts, warranties, and systems management) to the various relevant agencies, see below.
Justification of Overall Rating of Bank Performance Rating: Satisfactory
D. RISK TO DEVELOPMENT OUTCOME
71. Different agencies will operate and maintain project financed assets based on jurisdiction. The Commission of Housing and Urban-Rural Development, the government functional department of Jieshou, will be responsible for operating and maintaining the two rebuilt bridges in Jieshou. Taihe government functional department Commission of Housing and Urban-Rural Development will be responsible for operating and maintaining the two rebuilt bridges in Taihe. There is adequate qualified staff, and costs will be included in the budgets of local governments. 72. Professional ship lock companies set up by APPSCIG (Anhui Yingshang Yinghe Ship Lock Co., Ltd., Anhui Yangqiao Ship Lock Co., Ltd.) will be responsible for operating and maintaining the newly built and rebuilt Second Yingshang ship lock and the Yangqiao ship lock. There is adequate qualified staff, and costs will be included in the budget of APPSCIG. The mud dumping area has been leveled for second ploughing and handed over to the original village committees for management and utilization. Fuyang Port and Navigation Administration has taken charge of managing, using and maintaining the intelligent shipping system (each ship lock will take charge of the specific ship lock section). Costs after defect liability period will be included in the budgets of the local governments and APPSCIG respectively. 73. The daily management and maintenance of the river channel is the responsibility of Fuyang Port and Navigation Administration, with management costs listed in the Fuyang financial expenses and maintenance costs listed in the provincial financial expenses as guarantee. 74. Beyond the project, the risk to development outcome is deemed low. The Project is part of a larger and long-term plan by Anhui Province to develop and sustain inland waterway transport. Anhui Province has partnered with ADB5 to build the next downstream IWT project. As a result, sustainability of
5 Anhui Intermodal Sustainable Transport Project, project number 45021-002. Anhui Provincial Port and Shipping Construction Investment Group will be the implementing agency for the inland waterway transport.
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The World Bank China: Anhui Shaying River Channel Improvement Project ( P118647 )
Project investments is likely and freight levels are expected to grow, with a positive impact on businesses and the environment.
V. LESSONS AND RECOMMENDATIONS
75. The project was designed taking into account the wealth of experience and lessons learned from six earlier Bank supported IWT projects in seven difference provinces and has achieved its objectives. As such, there are several observations from the project that are relevant for other upcoming Bank IWT projects globally. • China’s consistent IWT policy to be more inclusive and interconnect farther upstream parts of the large river system is a lesson learned globally. Currently, many governments pursue inland waterway projects as they contribute to climate co-benefits. IWT is likely to be successful when developed with road/rail modes, national/local level and upstream/downstream development together. In China, the IWT policy takes root in the 13th Five-year plan at the National level to support underdeveloped provinces with connectivity and increase in economic trade and in the NIWPP2020 at the provincial level to increase navigation capacity of specific river channels which lead to further transfer of goods to other modes of transport. This is long term planning and systematic approach to multi-modal investments. The project has demonstrated how a low carbon transport mode in 21st century can support local economic growth and overall development in the long term. • The project has built the navigational aids and management systems bringing technological innovation in operation of river channels and ship locks. Project design goes beyond dredging and navigation improvement. Both Transport Management & Emergency Service System and Comprehensive Ship Lock Management System will improve ship locks usage efficiency and emergency response rates. Most IWT projects focus on physical infrastructure and do not incorporate such solutions which can optimize the need and use of infrastructure to make the system operate at a higher utilization rate. This is a significant paradigm shift in the design of IWT projects. • With the growth of more and more IWT projects, there is increasing need to emphasize capacity building initiatives. Capacity building activities are often insignificant part of public sector funds in IWT projects. This project focused on trainings, study tours and studies. The studies used practical international examples which could be applied to build the IT systems for this project. This a unique approach for Bank-funded projects where studies were not only conducted but also implemented to the benefit of development impact. The international study tours were specifically designed to educate participants in the practical applications of where such systems were being used. This enabled the Borrower to exchange views on the application and customization needed for the project. • Project design should include identification of beneficiaries and demand analysis. Project benefited from upfront consultation and confirmation of project components by the users of the Shaying river channel i.e. shipping companies, associations of logistic companies, manufacturers. This market sounding validated the long-term strategy of the Anhui Province
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The World Bank China: Anhui Shaying River Channel Improvement Project ( P118647 )
to provide the supply side of the infrastructure investment to increase navigation potential of the river section. Traffic went up as project progressed and increased the likelihood of higher developmental impact. • Emphasize both planning and coping strategies for land resettlement and procurement aspects. This is true even for a country like China, which has a deep understanding of World Bank’s procedures and policies for safeguards and procurement. The project faced challenges in land acquisition, resettlement and procurement. These issues tend to require greater time and planning to handle them effectively, and further should be carefully planned and coordinated with schedule of works to avoid delays in their execution, and consequently impede the project implementation. Important lesson learned here is that problems cannot be avoided completely, even when the client is high capacity. However, the project can still be successful; provided a proactive, timely and reliable approach to manage and resolve these issues is applied.
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The World Bank China: Anhui Shaying River Channel Improvement Project ( P118647 )
. . ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS
A. RESULTS INDICATORS
A.1 PDO Indicators
Objective/Outcome: The project development objective is to contribute to the increased cargo throughput of the Shaying River in Anhui Province through infrastructure improvements and capacity building. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Percentage of 500 (dwt) and Percentage 15.00 25.00 25.00 97.00 above vessels among total vessels passing - Genglou 31-Dec-2009 31-Dec-2015 31-Dec-2017 31-Dec-2017 Lock
Comments (achievements against targets): Target achieved 334%.
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Percentage of 500 (dwt) and Percentage 0.00 30.00 34.00 99.00 above vessels among total vessels passing - Fuyang Lock 31-Dec-2009 31-Dec-2015 31-Dec-2017 31-Dec-2017
Comments (achievements against targets): Target achieved 323%. The lock was under construction as of end 2009.
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The World Bank China: Anhui Shaying River Channel Improvement Project ( P118647 )
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Percentage of 500 (dwt) and Percentage 20.00 20.00 99.00 99.00 above vessels among total vessels passing - Yingshang 31-Dec-2009 31-Dec-2015 31-Dec-2017 31-Dec-2017 Lock
Comments (achievements against targets): target achieved 485%.
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Percentage of 500 (dwt) and Number 0.00 99.00 99.00 99.20 above vessels among total vessels passing - 2nd 17-Apr-2015 31-Dec-2017 31-Dec-2017 18-May-2018 Yingshang Lock
Comments (achievements against targets): New ship lock added at Restructuring. Updated numbers by the Borrower as of May 18, 2018. Target achieved.
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Percentage of 500 (dwt) and Number 0.00 75.00 75.00 75.00 above vessels among total vessels passing - Yangqiao 17-Apr-2015 31-Dec-2017 31-Dec-2017 31-Dec-2017
Comments (achievements against targets): New ship lock added at Restructuring. Target achieved.
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The World Bank China: Anhui Shaying River Channel Improvement Project ( P118647 )
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Aggregate volume of cargo Number 1.00 3.00 3.60 13.00 passing through five verifiable measurement 31-Dec-2009 31-Dec-2015 31-Dec-2017 31-Dec-2017 points on the Shaying River (million tonnes/year) - Genglou Lock
Comments (achievements against targets): Target achieved 433%.
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Aggregate volume of cargo Number 0.00 1.37 3.00 11.90 passing through five verifiable measurement 31-Dec-2009 31-Dec-2015 31-Dec-2017 31-Dec-2017 points on the Shaying River (million tonnes/year) - Fuyang Lock
Comments (achievements against targets): Ship lock was under construction till 2009. Target achieved 869%.
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Aggregate volume of cargo Number 0.17 3.07 10.00 18.30
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The World Bank China: Anhui Shaying River Channel Improvement Project ( P118647 )
passing through five 31-Dec-2009 31-Dec-2015 31-Dec-2017 18-May-2018 verifiable measurement points on the Shaying River (million tonnes/year) - YingshangLock
Comments (achievements against targets): updated numbers by the Borrower as of May 18, 2018. Target achieved 596%.
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Aggregate volume of cargo Number 0.00 2.40 2.40 2.80 passing through five verifiable measurement 17-Apr-2015 31-Dec-2017 31-Dec-2017 18-May-2018 points on the Shaying River (million tonnes/year) - 2nd Yingshang Lock
Comments (achievements against targets): this is the new lock added at restructuring. Lock was completed at Project close. Traffic ramp up period occurred post project closing. updated numbers by the Borrower as of May 18, 2018. Target achieved 116%.
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Aggregate volume of cargo Number 0.04 0.80 0.80 1.47 passing through five verifiable measurement 17-Apr-2015 31-Dec-2017 31-Dec-2017 18-May-2018 points on the Shaying River (million tonnes/year) - Yangqiao Lock
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The World Bank China: Anhui Shaying River Channel Improvement Project ( P118647 )
Comments (achievements against targets): this is the newly upgraded lock added at restructuring. Upgrading work was completed at Project close. Traffic ramp up period occurred post project closing. updated numbers by the Borrower as of May 18, 2018. Target achieved 184%.
A.2 Intermediate Results Indicators
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion
Navigation infrastructure- Number 0.00 206.00 206.00 206.00 Length of Class IV channel upgraded (km) 31-Dec-2009 31-Dec-2015 31-Dec-2017 31-Dec-2017
Comments (achievements against targets): Target completed 100%.
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Navigation aids-Installation Number 0.00 206.00 206.00 206.00 of modern comprehensive navigation aids system (km) 31-Dec-2009 31-Dec-2015 31-Dec-2017 31-Dec-2017
Comments (achievements against targets): Target completed 100%
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The World Bank China: Anhui Shaying River Channel Improvement Project ( P118647 )
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Bridge reconstruction- Number 0.00 4.00 4.00 4.00 Attainment of required clearances (no. of bridges) 31-Dec-2009 31-Dec-2015 31-Dec-2017 31-Dec-2017
Comments (achievements against targets): target achieved 100%
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Ship lock construction: Number 0.00 2.00 2.00 2.00 Completion of construction (cumulated no. of ship locks) 31-Dec-2014 31-Dec-2017 31-Dec-2017 31-Dec-2017
Comments (achievements against targets): Target completed 100%
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion TA Studies-Development of Text No plan developed Done Done Done time-bound implementation plan based on outputs of the 31-Dec-2009 31-Dec-2015 31-Dec-2017 31-Dec-2017 TA study on Water Transport Management and Emergency
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The World Bank China: Anhui Shaying River Channel Improvement Project ( P118647 )
Service System
Comments (achievements against targets): Target 100% achieved.
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion TA Studies-Application of the Text No system in place Done Done Done integrated lock management system 31-Dec-2009 31-Dec-2015 24-Dec-2017 31-Dec-2017
Comments (achievements against targets): Target 100% complete.
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Training Programs-Number Number 0.00 550.00 550.00 585.00 of trainees who attend the training and study tours 31-Dec-2009 31-Dec-2015 31-Dec-2017 31-Dec-2017 (Person-Month)
Comments (achievements against targets): target achieved 106%. Numbers are on cumulative basis.
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The World Bank China: Anhui Shaying River Channel Improvement Project ( P118647 )
B. KEY OUTPUTS BY COMPONENT
Objective/Outcome 1 1. Utilization of the capacity created measured by aggregate traffic volumes. Outcome Indicators 2. Greater efficiency of vessels measured by increase in vessels of 500 dwt and above. 1. Attainment of capacity in the improved river sections to handle 500 dwt vessels all year. 2. Length of river channel equipped with navigation aids. Intermediate Results Indicators 3. Attainment of required bridge clearances. 4. Adoption of the recommendations of technical studies. 5. Number of trainees who attend the training and study tours. 1. River channelization and dredging works Key Outputs: Component A 2. River bank strengthening and protection works 3. Navigation signals 4. Service facilities 1. Reconstruct four existing bridges 2. Construction/upgrading of 2nd Yingshang/Yangqiao ship locks Key Outputs: Component B 3. Reinforcing anti-collision works to the navigable opening under other existing bridges 4. Relocate or elevate existing cross-river power cables and telephone lines
1. Provision and installation of the plants and Key Outputs: Component C equipment which are needed for building the
management systems 1. Shaying River Waterway Transport Management and Key Outputs: Component D Emergency Service System Study 2. Comprehensive Ship Lock Management System Study 3. Trainings
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The World Bank China: Anhui Shaying River Channel Improvement Project ( P118647 )
ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION
A. TASK TEAM MEMBERS
Name Role Preparation Wenlai Zhang Task Team Leader (TTL)/Sr. Transport Specialist EASCS Jian Xie Co-TTL/Sr. Environmental Specialist EASER Kishor Uprety Senior Counsel LEGES Robert O‟Leary Senior Finance Officer CTRFC Songling Yao Social Development Specialist EASCS Ning Yang Environmental Specialist EASCS Yi Geng Financial Management Specialist EAPFM Jianjun Guo Procurement Specialist EAPPR Xuan Peng Program Assistant EACCF Yunqing Tian Project Assistant EACCF Teresita Ortega Program Assistant EASIN Paul Amos Transport Advisor, Consultant EASCS Jianming Zhao Geotechnical Specialist, Consultant EASCS Peishen Wang Environmental Specialist, Consultant EASIN Wanli Fang Economics Analyst, Consultant EASCS Simon David Ellis Peer Reviewer/Sr. Transport Economist SASDT Reynaldo Bench Peer Reviewer/Sr. Port Specialist ETWTR Baher El-Hefnawy Peer Reviewer/Sr. Transport Economist EASIN
Supervision/ICR Reda Hamedoun Task Team Leader(s) Jianjun Guo Procurement Specialist(s) Yi Geng Financial Management Specialist Shunong Hu Team Member
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The World Bank China: Anhui Shaying River Channel Improvement Project ( P118647 )
Limei Sun Team Member Jianming Zhao Team Member Ning Yang Environmental Safeguards Specialist Aimin Hao Social Safeguards Specialist Weimin Zhou Team Member Yuan Shao Team Member Yin Yin Lam Peer reviewer/Sr. Transport /Trade Logistics Specialist, GTD02 Bernard Aritua Peer reviewer /Sr. Infrastructure Specialist, GTD06 Xiaoke Zhai Peer reviewer /Sr. Transport Specialist, GTD10
B. STAFF TIME AND COST
Staff Time and Cost Stage of Project Cycle No. of staff weeks US$ (including travel and consultant costs) Preparation FY10 15.400 90,170.84 FY11 17.824 70,288.62
Total 33.22 160,459.46
Supervision/ICR FY12 8.739 40,139.56 FY13 11.650 73,146.03 FY14 18.882 80,105.11 FY15 24.000 118,609.51 FY16 18.501 91,206.99 FY17 17.240 78,164.78 FY18 12.050 90,501.85 Total 111.06 571,873.83
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The World Bank China: Anhui Shaying River Channel Improvement Project ( P118647 )
ANNEX 3. PROJECT COST BY COMPONENT
Amount at Actual at Project Percentage of Amount at Approval Components Restructuring Closing (US$M) Approval to (US$M) (US$M) Closing (US$M) A - Navigation Infrastructure and 189.05 138.65 159.19 84.21% Facilities B - Reconstruction and Relocation of Existing 71.04 133.20 109.4 154.00% Infrastructure and Facilities C - Erection of Waterway Transport 6.75 6.75 4.39 65.04% Management System D - Technical 1.74 1.74 1.61 92.53% Assistance Total 268.6 280.34 274.59 102.23%
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The World Bank China: Anhui Shaying River Channel Improvement Project ( P118647 )
ANNEX 4. EFFICIENCY ANALYSIS
At appraisal, the economic analysis was conducted only for the originally proposed activities. The economic internal rate of return (EIRR) was estimated to be 14.6%. For the ICR, the CBA was expanded to include the newly proposed activities during project restructuring. It indicates an EIRR of about 31.5%. Sensitivity analysis (assuming 20% increase in costs and 20% decrease in economic benefits) shows that the economic return is still favorable with an EIRR of 21.6% under the combined conservative assumptions for future scenario.
Methodology and Conclusion at Appraisal and Restructuring
A cost-benefit analysis was employed to examine the economic viability of the Project at Appraisal. The main benefits identified of the Project include: economic development and living standard improvement benefits through transport cost saving and promotion of local and regional economic development; avoided land use for roads and railways; and local and global environmental benefits through reduction of carbon emissions. In the medium and long term, the project should boost regional economic development of the affected hinterlands in Anhui and Henan, mainly through facilitating the exploitation and economical transport of coal and other bulk goods to industrial areas in the Yangtze Delta. The benefits being quantified included: a) Transport cost saving of coal and construction materials, b) transport cost saving by barge size upgrading, and c) benefit of carbon emission reduction. Economic costs of the project were identified as capital investments and operation and maintenance (O&M) costs during project operation. The economic internal rate of return (EIRR) of the Project was estimated to be 14.6%. Sensitivity analysis (assuming 20% increase in costs and 20% decrease in economic benefits) showed that EIRR would be 11.1% under the combined conservative assumptions.
During project restructuring, two new activities were added to project component 2. It required further investment compare to original proposal financing plan. The investment partly comes from Bank funds saved from declared misprocurement, and partly comes from the Borrower. An economic analysis was carried out for the proposed additional investment. The benefits being quantified could also be classified as: a) transport cost saving from road transport to IWT, b) transport cost saving from higher transport efficiency and shorter vessel waiting time, and c) reduction in vehicle emission. The EIRR of the new activities were evaluated to be 17.8%.
Economic Analysis at Project Completion
Restructuring did not change the PDO and main components of the benefits of the project activities. However, with completion of the original activities with its real impact on IWT and the addition of two new ship locks, both benefit and cost needed to be reevaluated. To be specific, adjustment to the original economic analysis should reflect the following key changes: • Much larger aggregate volume of cargo on the Shaying and Quan Rivers. Results Monitoring Indicators show that aggregate volume of cargo passing through five verifiable measurement points on the two relevant rivers from 2011 to 2017 was much higher than target value. It indicates more significant impact of the project on mass goods transportation than proposed. • Much higher percentage of large vessels among total vessels passing. Results Monitoring
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The World Bank China: Anhui Shaying River Channel Improvement Project ( P118647 )
Indicators show that percentage of 500 (dwt) and above vessels among total vessels passing approximate to 99 percent at the completion of project activities. The percentage at certain locks reaches up to three times higher than target value. It partly contributes to enlarged aggregate volume of cargo, and partly contributes to higher transport efficiency. • Benefit and cost of the two new activities added to the project during restructuring should be included into the comprehensive estimation of benefit and cost of the project.
Main Assumptions
1. The life of the originally proposed activities of the project is assumed to be 50 years plus 5 years of construction period. Life of the newly added Yingshang 2nd lock is assumed to 28 years plus 3 years of construction period, and life of the newly added Yangqiao lock is assumed to be 28 years plus 2 years of construction period. The assumed life and construction are set to be consistent with according assumption at appraisal so that estimation result is comparable. The discount rate adopted in this analysis is 12%. 2. Road transport and IWT cost of construction materials and minerals and coal from 2009 to 2017 is given by the Borrower. The forecast of the cost was estimated based on the observed trend of cost applying OECD’s projection of economic growth rate of China adjusted by economic growth difference between China and Anhui province. 3. Aggregate volume of cargo passing through five verifiable measurement points on the Shaying and Quan Rivers and percentage of 500(dwt) and above vessels among total vessels passing of year 2011 to 2017 is tracked as project outcome indicators. The trend is analyzed and applied to years from 2018 to 2064 adjusted by projected economic growth trend of year 2018 to 2063 and limited to designed capacity of the locks.
Baseline and Alternatives
The baseline is based on the assumption of a “non-project scenario” in which: (a) navigation between Jieshou and Cihekou is seasonal; (b) the carrying capacity of Cihuaixin River is full; (c) the river section between Fuyang Lock and Yingshang Lock is barely navigable due to poor navigation conditions; (d) Yingshang lock is approaching its passing capacity while transportation demand of mass goods keeps increasing due to economic growth; and (e) facility of the old Yangqiao lock does not permit passing of vessels with 500(dwt) and above. The project's economic benefit analysis compares the "project scenario" and "non-project scenario" to show IWT increase and incremental cost savings compared with other transport modes such as highways and railways.
Cost-benefit Analysis
Transport cost saving. The benefits of local economic development are represented by the cost savings of transporting large bulk goods by IWT compared to other transport modes. In particular, the transport cost savings of construction materials and coal due to improved navigation conditions are quantified and summarized. Transport cost savings capture only a part of local economic development benefits, and hence is a conservative estimate.
In the “project scenario”, construction materials and minerals from Liuan and Huaibin will be transported through the Cihuaixin River. Some road transport of short distance is needed through Fuyang and other
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The World Bank China: Anhui Shaying River Channel Improvement Project ( P118647 )
upstream regions. Freight transport through Shaying River will save at least 60 km. Transport cost savings are estimated at RMB62.7 million in 2020, RMB166.7 million in 2030, and RMB309.3 billion in 2040.
In the “non-project scenario”, coal produced in Anhui Province have to be carried to the Yingshang Lock before it is loaded on a barge. Road transport is about 60-90 kilometers, depending on the location of coal mines. Passing capacity of Yingshang lock is 8.95 million tons. When the shipments exceed capacity of Yingshang lock, direct road transport as substitution is 700 kilometers on average. In the “project scenario”, coal can be loaded directly on a boat at an upstream port in Fuyang or Liuzhuang to use IWT. Yingshang 2nd lock expands passing capacity by 10 million tons by 2020, 14.8 million by 2030 and 17.5 million by 2040. Road transport cost savings in 2020, 2030 and 2040 are estimated to be RMB111.6 million, RMB232.7 million and RMB530.4 million respectively.
In the “non-project scenario”, coal produced in Henan Province has to be carried to Jieshou and Taihe before they are loaded on a barge. In the “project scenario”, the coal can be transported directly by water from ports at Luohe, Zhoukou and Shenqiu. This change can save 200 km road transport, and result in road transport cost savings in 2020, 2030, and 2040 of RMB210.3 million, RMB432.6million and RMB878.1 million respectively.
Cost savings by increasing barge size. The Project will upgrade the navigation level of the river channel from Class V to IV between Jieshou and Mouhekou. As a result, the average vessel size will be 500 dwt instead of the current 300 dwt. Construction of Yingshang 2nd lock will also largely release crowding of vessels at Yingshang lock due to its passing capacity limitation. This will bring extra benefits of transport cost savings for the existing traffic due to higher transport efficiency. The transport cost savings are estimated at RMB2.2 million in 2020, RMB3.9 million in 2030, and RMB4.2 million in 2040.
Benefit of carbon emission reduction. The Project is in line with Chinese national policies related to energy efficiency and conservation through improving IWT capacity and reducing energy consumption in the transport of bulk goods by waterway compared with other transport modes. Based on the information by Borrower, full replacement of the cargo, mode shift from road to IWT from the period of 2015-30 resulted in emission reduction of 203 million tons cumulatively and about 12 million tons on average annually.
Other benefits. Development of IWT will avoid using scarce land resources for roads and railways. The avoided land use costs, as well as resettlement costs, as observed in transport projects in many places in China, can be considerable. In addition, the Project has a special land restoration plan which will change wasteland to farmland, and improve quality of farmland. The increased IWT activities will boost local economies along the River, and will bring more opportunities and positive spillover effects to the local people, including the poor. These benefits are hard to quantify and are not included in the analysis as economic analysis at appraisal.
Results. The net present value (NPV) of the total net economic benefits of the Project is estimated to be RMB2.11 billion and the economic internal rate of return (EIRR) of the Project is 31.5%. The benefit-cost ratio (BCR) is 3.55. Results of the analysis are presented in the table followed. If the global benefits of carbon reduction were excluded, the EIRR will be 30.6%.
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The World Bank China: Anhui Shaying River Channel Improvement Project ( P118647 )
Sensitivity analysis assumes a 20% increase in total cost and a 20% decrease in total benefits. Under these assumptions, the investment will yield an EIRR of 21.6% and an NPV of RMB1.35 billion, with a BCR of 2.37. The Project is therefore economically viable and the benefits are robust.
Table X: Results of Economic Analysis
Comparison of EIRRs at Appraisal and Close
The difference between estimated EIRR in PAD and ICR should be mainly explained by the delayed inflow of capital investment and inclusion of new investments. Capital investment was proposed to start from 2010 and completed by 2013, while real investment was delivered from 2013 to 2017 and 82 percent was disbursed in the last two years. The discount rate of 12% largely influences the estimated PV of economic cost of the project. Estimate shows that if the real capital investment was delivered within originally proposed investment period, the EIRR will be reduced to 19.4%, compared to the current estimation of 30.9%. Furthermore, if the capital investment was delivered with the originally proposed investment scale plus within the proposed period, the EIRR will be reduced to 16.7%, which would be only slightly higher than EIRR estimate in PAD which is 14.0%.
Controlling the change of delivery of capital investment, economic benefit is higher than estimated at project appraisal, and the structure of economic benefit by components is different. The main reasons that attribute to the change of benefit is as follows. First, the increase of induced traffic during project implementation is larger than estimated at appraisal. Results monitoring indicators show that aggregate volume of cargo passing through Genlou, Fuyang and Yingshang lock with project implementation is on average 5.8 times higher than target value; percentage of 500 (dwt) and above vessels among total vessels passing of the three locks is on average 60% higher than target percentage. Second, newly added project activities bring extra benefit to the original project plan. Especially, building of Yangqiao lock significantly increases transportation capacity of coal produced in Henan. It brings 39% of increase in TCS of coal in Henan. Third, the transportation unit cost was supposed to be constant during year 2009 and 2064 in economic analysis of PAD. In ICR economic analysis, the cost was adjusted to be real value for year 2009 to 2017 (according to Borrower) and projected for year 2018 to 2064 with reference from OECD and NBS of China. Lastly, ICR economic analysis adopts 12% as discount rate in estimation which is different from 8% discount rate used in PAD. The change of discount rate would not bring change of estimated result of EIRR, as it affects both cost and benefit equally.
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The World Bank China: Anhui Shaying River Channel Improvement Project ( P118647 )
ANNEX 5. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS
Overall, the report’s evaluation on this project is objective and fair, and its recommendations have certain reference significance for reform in water transport development in China.
Anhui province is rich in inland water transport (IWT) resources, and its navigable mileages, inland shipping capacity and volume of freight traffic rank top in China. China will vigorously transform its development mode to form the layout of the Four-pronged Comprehensive Strategy, which puts forward higher requirements for the development of inland water transport. The summary of this report is concise, complete and with correct background description. The project development objectives are in line with the development plan of Chinese government and cooperation framework of the World Bank Group. Based on the practice of comprehensive transportation development in Anhui province, the IWT is growing stronger in recent years. The report points out that the cargo throughput in Shaying River has increased by improvement of infrastructure and capacity building. The conclusion of this report is rated as satisfactory due to sufficient demonstration, explicit relations of result chains. This rating is regarded as rigorous and reasonable.
The WB team has conducted management and guidance missions during the whole process on aspects of project progress, bidding, engineering management, fund utilization and disbursement during the construction period of this project; and put forward improvement actions and requirements on execution and supervision to realize the overall goals of implementation progress of this project ensuring implementation of key action indicators. At the stage of the preparation of ICR report, discussions were held to solicit views from the stakeholders and the concrete practices of poverty alleviation and focused on resettlement household. The outputs including collection of accurate lock’s data, scientific analysis and treatment, accurate efficiency analysis & calculation and test results, as well as the results with application value, which are very beneficial for guiding the development of inland water transport in Anhui.
Meanwhile, the report proposes several comments and points out project risks. From a forward-looking perspective, it will further strengthen guidance in insufficiencies of Anhui’s comprehensive transportation system. The connection between waterway transportation and other transportation means is still not smooth; the collecting and distributing system in ports needs to be improved; daily maintenance management and operating management on waterway in later stage should be strengthened to establish a sound multi-level capital market system.
We also note that there are a few statements and views in the report that we do not fully agree with6. We believe that the initial design in the report was carried out by Anhui provincial Communications Survey and Design Institute. The throughput capacity in the 2nd Yingshang Ship lock is 2.8 million tons, that is, accounting for 116 percent of the target of 2.4 million tons over the same period. The living standards of resettled households have been improved to a certain extent; and the completion of the project has brought more convenience to their life and travel. The actual achieved timing at completion should be December 31, 2017 in Annex 1.
6 ICR has addressed all of Borrower’s comments and corrected the data in the results framework.
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The World Bank China: Anhui Shaying River Channel Improvement Project ( P118647 )
In the next step, relevant departments of Chinese government will focus on transformation and upgrading, improving quality and increasing efficiency, strengthening the construction of inland water transport system and consolidating the development foundation; focusing on developing modern logistics and improving the quality and functioning of water transport services; vigorously promoting law-based administration and improving the ability and level of industry governance; as well as pressing ahead with reform and innovation and giving impetus to development. We will strive to build a smooth, efficient, safe, green, intelligent modern IWT system; strengthen the cooperation and exchanges with international organizations, to make greater contribution to build a well-off society in an all-round way and accelerate rise in Anhui.
In view of the completion of ICR report of this project, the detailed modifications suggested by the stakeholders are shown as follows:
1. Para 4: The initial design of the project was commissioned by Anhui provincial Communications Survey and Design Institute. 2. Para 10, Part B: a. “Reconstruction of four existing bridges to allow for sufficient clearance for navigation, including the Yumin Bridge and the Shaying Bridge in Jieshou City, and the Ying River Bridges #1 and #2 in Taihe County; as well as reinforcing…”, Of which, “Shaying Bridge” should be changed into “Sha River Bridge (or existing S204 Bridge)”. 3. Para 21: “…the throughput of the Second Yingshang lock was 2.8 million tonnes, already exceeded the annual target of 2.4 million tones.” May be changed into “The throughput capacity in the 2nd Yingshang Ship lock is 2.8 million tons, that is, accounting for 116 percent of the target of 2.4 million tons over the same period.” 4. Para 39: We may describe this paragraph like this, “The living standards of resettled households have been improved to a certain extent; and the completion of the project has brought more convenience to their life and travel.” 5. Para 46: “Framework required participation of all levels of agencies and weekly reporting to the Fuyang City Mayor and to the Bank.” should be changed into “Framework required participation of all levels of agencies and monthly reporting to the Fuyang City Mayor and to the Bank.” 6. Please see relevant modifications in Annex 1 results framework.7
7 ICR has addressed all of Borrower’s comments and corrected the data in the results framework. Borrower had attached the full Results Framework with the edits in the “actual completion date” from 30-September-2017, which refers to the last ISR date to 31-December-2017 for original indicators. These changes have been made. Therefore, Borrower’s version of the Results Framework is not attached.
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The World Bank China: Anhui Shaying River Channel Improvement Project ( P118647 )
ANNEX 6. SUPPORTING DOCUMENTS (IF ANY)
1. Project Appraisal Document (PAD) (Report No. 55660-CN) 2. Loan agreement and Project agreement 3. Aide Memoires and Implementation Status Reports (Sequence 1-12) 4. Restructuring paper (Report no. RES16985) 5. Amendment to Loan Agreement and Amendment to Project Agreement (dated April 17, 2015) 6. Environment and Social Safeguards Documents (Environment Impact Assessment, Environmental Management Plan, Social Assessment, Resettlement Action Plan) 7. Project Close Cost-Benefit Analysis data files 8. Borrower’s ICR and accompanying notes 9. China Country Partnership Strategy (CPS) for 2006-2010 (Report No. 35435-CN) 10. National Inland Waterways and Ports Plan to 2020 (NIWPP2020) (Chinese) 11. A Report on Assessment of Navigation Safety of the Shaying River Channel Improvement Project in Anhui (Chinese) 12. The 13th, 5-Year Plan of Anhui Provincial Inland Waterway Development (Chinese) 13. Asian Development Bank (ADB) Anhui Intermodal Sustainable Transport Project, project number 45021-002
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