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Document of The World Bank Public Disclosure Authorized Report No: 19286-CHA PROJECT APPRAISAL DOCUMENT Public Disclosure Authorized ONA PROPOSED LOAN IN THE AMOUNT OF US$200 MILLION TO THE PEOPLE'S REPUBLIC OF CHINA FOR A Public Disclosure Authorized SECOND FUJIAN HIGHWAY PROJECT June 3, 1999 Public Disclosure Authorized Transport SectorUnit East Asia and PacificRegional Office CU:RRENCY EQUIVALENTS (Exchange Rate Effective June 1999) Currency Unit = RMB RMB 1.00 = USO.12 US$1.00 = RMB 8.3 FISCAL YEAR January I - December 31 ABBREVIATIONS AND) ACRONYMS 9FYP - Ninth Five Year Plan (1996-2000) ITIC - International Trade and Investment Corporation IOFYP - Tenth Five Year Plan (2001-2005) LA&R - Land Acquisition and Resettlement ADB - Asian Development Bank MOC - Ministry of Communications AIS - Accident Information System MOF - Ministry of Finance BMS - Bridge Management System MTE - Medium Truck Equivalent BOT - Build-Operate-Transfer NAO - National Audit Office CAS - Country Assistance Strategy NCB - National Competitive Bidding E&M - Electrical, Electronic and Mechanical NH - National Highway EA - Environmental Assessment NPV - Net Present Value EAP - Environmental Action Plan NR - National Road EASES - Enviromnent and Social Development Sector NTHS - National Trunk Highway System Unit EASTR - Transport Sector Unit OECF - Overseas Economic Cooperation Fund (of Japan) EDB - Expressway Data Bank OED - Operations Evaluation Departnent EIA - Environmental Impact Assessment PAD - Project Appraisal Document EIRR - Economic Internal Rate of Return PAP - Project Affected Persons EPB - Environmental Protection Bureau PCU - Passenger Car Unit EPO - Environmental Protection Office PEO - Project Execution Office ERR - Economic Rate of Return PMS - Pavement Management System ES - Executive Summary (Environmental Report) PPI-PSD - Private Participation in Infrastructure Group in Private Sector Development ESW - Economic and Sector Work PRC - People's Republic of China FIAS - Foreign Investment Advisory Services PRO - Project Resettlement Office FH2 - Fujian Highway II Project PSB - Public Security Bureau FIAS - Foreign Investment Advisory Services RAP - Resettlement Action Plan FPECD - Fujian Provincial Expressway Construction RDB - Road Data Bank Directorate FPTD - Fujian Provincial Transport Department RMC - Resident Mission China GNP - Gross National Product RMF - Road Maintenance Fee GOC - Government of China ROC - Regional Operations Committee GOVAI - Gross Output Value of Agriculture and SOE - Statement of Expenditures Industry HDM - Highway Design and Maintenance Model SDPC - State Development Planning Commission ICB - International Competitive Bidding TA - Technical Assistance IFC - International Finance Corporation Y - Yuan RMB IRP - Interconnecting Road Program ZZE - Zhangzhou-Zhao'an Expressway Regional Vice President: Jean-Michel Severino, EAPVP Country Director: Yukon Huang, EACCF Sector Manager: Jitendra N. Bajpai, EASTR Task Team Leader/Task Manager: Alfred Nickesen, Pr. Transport Specialist, EASTR China Second Fujian HlighwayProject CONTENTS Page No. A. Project Development Objective ............................................................. 2 1. Project development objective and key performance indicators..................................... 2 B. Strategic Context............................................................. 2 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project ....... 2 2. Main sector issues and Government strategy ............................................................. 2 3. Sector issues to be addressed by the project and strategic choices .............. .................4 C. Project Description Summary ............................................................ 5 1. Project components ............................................................ 5 2. Key policy and institutional reforms supported by the project .................. ...................5 3. Benefits and target population ................ ............................................. 6 4. Institutional and implementation arrangements ............................................................ 7 D. Project Rationale ............................................................ 9 1. Project alternatives considered and reasons for rejection ............................................. 9 2. Major related projects financed by the Bank and/or other development agencies ...... 11 3. Lessons learned and reflected in the project design .................................................... 12 4. Indications of borrower commitment and ownership .................................................. 13 5. Value added of Bank support in this project ....................................................... 14 E. Summary Project Analysis .................. 14 1. Economic ................. 14 2. Financial ................. 14 3. Technical ................. 15 4. Institutional ................. 15 5. Social ................. 15 6. Environmental assessment ................. 17 7. Participatory approach ................. 19 F. Sustainability and Risks ................ 19 1. Sustainability ................ 19 2. Critical Risks ................ 20 3. Possible Controversial Aspects .................... 21 Page No. G. Main Loan Conditions ..................................... 21 1. Effectiveness Conditions .. 21 2. Agreement Reached with the Government .............................. 21 3. Agreements Reached with the Beneficiary ........ ........................................... ...... ... 21 H. Readiness for Implementation . 23 I. Compliance with Bank Policies . 24 Annexes Annex 1. Project Design Summary ............................................................................................. 25 Annex 2. Fujian Highway Sector Revenues and Expenditures, 1996-2005 ........ 33 Annex 3. Project Description ................................................................... .. 3..............35 Annex 4. Policy and Institutional Reform Program .............................................................. .. 38 Annex 5. Road Traffic Safety Program ...................................................................................... 44 Annex 6. China's Evolving Highway Program and Financing Issues ........................ ........ 48 Annex 7. Bank Involvement and Achievements in China's Highway Sector ............................ 53 Annex 8. Estimated Project Costs ............... 5.........57 Annex 9. Financing Plan ............................................................................................................. 58 Annex 10. Procurement and Disbursement Arrangements ........................................................... 59 Annex 10, Table A: Project Costs by Procurement Arrangements ................................ 61 Annex 10, Table B: Thresholds for Procurement Methods and Prior Review .62 Annex 10, Table C: Allocation of Loan Proceeds ........ 63 Annex I0, Table C- 1: Estimated Disbursement Schedule ................................................. 64 Annex 11. Implementation Schedule ..................................................... ..... 6......5..655.......... Annex 12. Economic and Financial Evaluation .......... 74 Annex 13. Financial Management System ................................................................. 89 Annex 14. Environmental Assessment and Action Plan Summary .............................................. 94 Annex 15. Resettlement Action Plan Summary ................................................. 99 Annex 16. Project Processing Budget and Schedule .................................................................. 102 Annex 17. Documents in the Project File ........ 103 Annex 18. Statement of Loans and Credits ................................................................................. 105 Annex 19. Country at a Glance .............................................................. ........... ... 108 Maps 1. CHINA: National Trunk Highway System (NTHS), IBRD 29902 2. Zhangzhou-Zhao'an Expressway, IBRD 29903 China Second Fujian HighwayProject Project Appraisal Document East Asia and Pacific Regional Office TransportSector Unit Date: June 3, 1999 Task TeamnLeader/Task Manager: Alfred Nickesen Country Director: Yukon Huang Sector Manager: Jitendra N. Bajpai Project ID: CN-PE-5 1705 Sector: Transportation Program Objective Category: Lending Instrument: SIL Program of Targeted Intervention: []Yes [x] No Project FinancingData [x] Loan [] Credit [] Guarantee [] Other [Specify] For Loans/Credits/Others: Amount(US$M): 200.0 Proposed terms: [ Multicurrency [X] Single currency, specify US dollars Grace period (years): 5 [] StandardVariable [] Fixed [X] LIBOR-based Years to maturity: 20 Commitmentfee: 0.75% Front-end fee: 1% Financingplan (US$ M): Source Local Foreign Total Central Government 106.0 106.0 Provincial Government 289.6 289.6 IBRD 200.0 200.0 Total 395.6 200.0 595.6 Borrower: People's Republic of China Guarantor: Responsible agency: Fujian Provincial Transport Department Estimated disbursements (Bank FY/US$ M): 2000 2001 2002 2003 2004 Annual 28 63 63 38 8 Cumulative 28 91 154 192 200 Project implementationperiod:5 years 3 months (October 1999-December2004) Expected effectiveness date: October 1999 Expected closing date: June 2005 China: Second Fujian Highway Project Page 2 Project Appraisal Document A: Project Development Objective 1. Project development objective and key performance indicators (see Annex 1): The aim of the proposed Second Fujian Highway Project (FH2)
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