Document of The World Bank

Public Disclosure Authorized Report No: ICR0000529

IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-43290)

ON A

Public Disclosure Authorized LOAN

IN THE AMOUNT OF US$ 200 MILLION

TO THE

PEOPLE’S REPUBLIC OF CHINA

FOR A

GUANGZHOU CITY TRANSPORT PROJECT Public Disclosure Authorized

June 26, 2008

China Sustainable Development Unit East Asia and Pacific Region Public Disclosure Authorized

CURRENCY EQUIVALENTS

(Exchange Rate Effective December 2007)

Currency Unit = Renminbi (RMB) RMB 1.00 = US$ 0.135 US$ 1.00 = RMB 7.4

FISCAL YEAR January 1 – December 31

ABBREVIATIONS AND ACRONYMS

CAS Country Assistance Strategy CD Country Director of the World Bank ERR Economic Rate of Return GCCTP Guangzhou City Center Transport Project GEPB Guangzhou Environment Protection Bureau GIRR Guangzhou Inner Ring Road GMG Guangzhou Municipal Government GREEO Guangzhou Road Expansion and Engineering Office GCCTCC Guangzhou City Center Transport Construction Company GPAO Guangdong Province Audit Office GURCC Guangzhou Urban and Rural Construction Commission GUTS Guangzhou Urban Transport Strategy IRR Internal Rate of Return MoF Chinese Ministry of Finance MVEC Motor Vehicle Emissions Control PAD Project Appraisal Document PAP Project affected People PDO Project Development Objective PLG Project Leading Group PO Project Office PIP Project Implementation Plan RAP Resettlement Action Plan RR Ring Road (i.e., Guangzhou Inner Ring Road) RSMS Road Surface Management System SAB State Audit Bureau SCATS Sydney-Coordinated Adaptive Traffic System VP Vice President of the World Bank TA Technical Assistance TOR Terms of Reference

Vice President: James Adams Country Director: David Dollar Sector Manager: Ede Jorge Ijjasz-Vasquez Project Team Leader: Shomik Mehndiratta ICR Main Authors: Georges Darido/Graham Smith

PEOPLE’S REPUBLIC OF CHINA Guangzhou City Transport Project

CONTENTS

Data Sheet A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Project Performance in ISRs H. Restructuring I. Disbursement Graph

1. Project Context, Development Objectives and Design...... 1 2. Key Factors Affecting Implementation and Outcomes ...... 5 3. Assessment of Outcomes...... 12 4. Assessment of Risk to Development Outcome...... 17 5. Assessment of Bank and Borrower Performance ...... 17 6. Lessons Learned ...... 20 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners ...... 21 Annex 1. Project Costs and Financing...... 23 Annex 2. Outputs by Component ...... 24 Annex 3. Economic and Financial Analysis...... 28 Annex 4. Bank Lending and Implementation Support/Supervision Processes ...... 31 Annex 5. Beneficiary Survey Results...... 33 Annex 6. Stakeholder Workshop Report and Results...... 34 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR...... 35 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders...... 50 Annex 9. List of Supporting Documents ...... 51 MAP – IBRD 29423

A. Basic Information CN-Guangzhou City Country: China Project Name: Transport Project ID: P003614 L/C/TF Number(s): IBRD-43290 ICR Date: 06/26/2008 ICR Type: Core ICR PEOPLE'S REPUBLIC Lending Instrument: SIL Borrower: OF CHINA Original Total USD 200.0M Disbursed Amount: USD 152.4M Commitment: Environmental Category: A Implementing Agencies: Guangzhou City Center Transport Project Cofinanciers and Other External Partners:

B. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 09/28/1994 Effectiveness: 09/23/1998 09/23/1998 Appraisal: 01/14/1998 Restructuring(s): 04/21/2003 Approval: 05/29/1998 Mid-term Review: 06/15/2001 Closing: 12/31/2003 12/31/2007

C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Satisfactory Risk to Development Outcome: Moderate Bank Performance: Satisfactory Borrower Performance: Satisfactory

C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Satisfactory Government: Satisfactory Implementing Quality of Supervision: Moderately Satisfactory Moderately Satisfactory Agency/Agencies: Overall Bank Overall Borrower Satisfactory Satisfactory Performance: Performance:

C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Indicators Rating Performance (if any) Potential Problem Project No Quality at Entry Satisfactory

i at any time (Yes/No): (QEA): Problem Project at any Quality of No Moderately Satisfactory time (Yes/No): Supervision (QSA): DO rating before Satisfactory Closing/Inactive status:

D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) General transportation sector 25 25 Roads and highways 75 75

Theme Code (Primary/Secondary) Access to urban services and housing Primary Primary Municipal governance and institution building Primary Primary Other urban development Primary Secondary Pollution management and environmental health Primary Secondary

E. Bank Staff Positions At ICR At Approval Vice President: James W. Adams Jean-Michel Severino Country Director: David R. Dollar Yukon Huang Sector Manager: Ede Jorge Ijjasz-Vasquez Jeffrey S. Gutman Project Team Leader: Shomik Raj Mehndiratta Richard G. Scurfield ICR Team Leader: Shomik Raj Mehndiratta ICR Primary Author: Georges Bianco Darido Graham Smith

F. Results Framework Analysis

Project Development Objectives (from Project Appraisal Document) The project development objective is to improve the accessibility of the city center of Guangzhou by promoting the efficient use of the urban transport system in an environmentally sustainable way.

The following outcomes and key performance indicators will be monitored to meet this development objective:

Outcome 1: Improved level of service and reduced congestion on the City Center road network as a result of:

ii 1. completion of the Guangzhou Inner Ring Road (GIRR); 2. traffic management.

Outcome 2: Increased throughput (in terms of passengers) of public transport corridors within the City Center as a result of: 1. improved management of bus priority lanes; and 2. development of bus priority lanes.

Outcome 3: Reduction in relative levels of air pollution as a result of: 1. the traffic management measures; and 2. improved coordination amongst responsible agencies.

Outcome 4: Reduction in the relative levels of accidents per capita as a result of: 1. the introduction of unleaded gasoline; and 2. a vehicle emissions control program.

Outcome 5: Improved effectiveness and efficiency of road maintenance as a result of: 1. introduction of modernized road maintenance equipment; and 2. development of a road maintenance system.

Outcome 6: Strengthened management capacity of municipal agencies responsible for urban transport as a result of: 1. technical assistance support and on-the-job training during project implementation; and 2. classroom training and study tours.

Revised Project Development Objectives (as approved by original approving authority)

(a) PDO Indicator(s)

Original Target Formally Actual Value Values (from Revised Achieved at Indicator Baseline Value approval Target Completion or documents) Values Target Years Indicator 1 : Traffic Flows to city center (as bounded by IRR) [Outcome 1] Value quantitative or 138,990 -10% +13% Qualitative) Date achieved 06/30/1998 12/31/2003 12/31/2001 Traffic counts in 1999 and 2000 showed reductions by 14% and 6%, Comments respectively, but by 2001 were 13% above baseline and were expected to rise. (incl. % The Bank and the client agreed to discontinue because of the rising trend and achievement) high cost of collecting the data. Indicator 2 : City Center (Cross-town speeds) on N-S corridor (p.m. peak) [Outcome 1] Value 24km/hr +15% +33%

iii quantitative or Qualitative) Date achieved 06/30/1998 12/31/2003 12/31/2001 Comments The target was achieved in 2001, but speeds were not monitored after that year (incl. % for the same reasons as in Indicator 1. achievement) Indicator 3 : City Center (Cross-town speeds) on E-W corridor (p.m. peak) [Outcome 1] Value quantitative or 24km/hr +15% +49% Qualitative) Date achieved 06/30/1998 12/31/2003 12/31/2001 Comments The target was achieved in 2001, but speeds were not monitored after that year (incl. % for the same reasons as in Indicator 1. achievement) Indicator 4 : Bus Speeds on N-S corridor [Outcome 2] Value quantitative or 11.2 km/hr +43% +63% Qualitative) Date achieved 06/30/1998 12/31/2003 12/31/2006 Comments (incl. % Bus speeds have been consistently at or above the target since 2003. achievement) Indicator 5 : Bus Speeds on E-W corridor [Outcome 2] Value quantitative or 11.2 km/hr +43% +63% Qualitative) Date achieved 06/30/1998 12/31/2003 12/31/2006 Comments (incl. % Bus speeds have been consistently at or above the target since 2003. achievement) Indicator 6 : Increased Public Transport corridors: Percentage Share of Trips [Outcome 2] Value quantitative or 16% 22% 23% Qualitative) Date achieved 06/30/1998 12/31/2003 12/31/2006 Comments Represents mode share in the 10 districts. Mode share in the 8 original districts (incl. % is 35%. achievement) Indicator 7 : Reduction in Air Pollution: Ambient Air Quality, NOx [Outcome 3] Value quantitative or 0.151 mg/m(3) -10% -23% Qualitative) Date achieved 06/30/1998 12/31/2006 12/31/2006 Comments The target has been achieved and sustained since 2002. The monitoring program (incl. % was changed around 2002 to include 9 sites (instead of 6) and NO2 (instead of achievement) NOx). Indicator 8 : Reduction in Air Pollution: Ambient Air Quality, CO [Outcome 3] Value 2.89 mg/m(3) -10% -46%

iv quantitative or Qualitative) Date achieved 06/30/1998 12/31/2006 12/31/2006 Comments The target has been achieved and sustained since 2002. The monitoring program (incl. % was changed around 2002 to include 9 sites (instead of 6). achievement) Improved Road Maintenance: % roads in good condition or better/High-speed Indicator 9 : [Outcome 5] Value quantitative or 50% 60% 91% Qualitative) Date achieved 06/30/1998 12/31/2006 12/31/2006 Comments This indicator has achieved its target. The monitoring methodology was changed (incl. % after appraisal to better conform with local practice, so the original baseline of achievement) 31% was revised to 50%. Improved Road Maintenance: % roads in good condition or better/Primary Roads Indicator 10 : [Outcome 5] Value quantitative or 50% 60% 91% Qualitative) Date achieved 06/30/1998 12/31/2006 12/31/2006 Comments This indicator has achieved its target. The monitoring methodology was changed (incl. % after appraisal to better conform with local practice, so the original baseline of achievement) 31% was revised to 50%. Improved Road Maintenance: % roads in good condition or better/Secondary and Indicator 11 : Access Roads [Outcome 5] Value quantitative or 80% 96% 83.5% Qualitative) Date achieved 06/30/1998 12/31/2006 12/31/2006 Comments This indicator has improved but did not fully achieve its target. The monitoring (incl. % methodology was changed after the appraisal to better conform with local achievement) practice, so the original baseline of 34% was revised to 80%. Indicator 12 : Traffic accidents per capita (10,000 persons) [Outcome 4] Value quantitative or 0.85 -10% -25% Qualitative) Date achieved 06/30/1998 12/31/2006 12/31/2006 Comments (incl. % This indicator has been achieved. achievement) Indicator 13 : Traffic fatalities per capita (10,000 persons) [Outcome 4] Value quantitative or 0.11 -10% -55% Qualitative) Date achieved 06/30/1998 12/31/2006 12/31/2006 Comments This indicator has been achieved. (incl. %

v achievement)

(b) Intermediate Outcome Indicator(s)

Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years Indicator 1 : % of inner ring road completed Value (quantitative 0% 100% 100% or Qualitative) Date achieved 06/30/1998 12/31/2003 12/31/2007 Comments (incl. % achievement) Indicator 2 : % of traffic management and safety improvement program completed Value (quantitative 0% 100% 100% or Qualitative) Date achieved 06/30/1998 12/31/2003 12/31/2007 Comments (incl. % achievement) Indicator 3 : % of Public transport improvement program completed Value (quantitative 0% 100% 100% or Qualitative) Date achieved 06/30/1998 12/31/2003 12/31/2007 Comments (incl. % achievement) Indicator 4 : % of Motor vehicle emission control facilities completed Value (quantitative 0% 100% 80% or Qualitative) Date achieved 06/30/1998 12/31/2003 12/31/2007 Comments (incl. % The scope of this component was reduced. achievement) Indicator 5 : % of Road maintenance facilities completed Value (quantitative 0% 100% 95% or Qualitative) Date achieved 06/30/1998 12/31/2003 12/31/2007 Comments The remaining item is the implementation of the road maintenance information (incl. % management system to be completed with local funds. achievement)

vi Indicator 6 : % of institutional strengthening improved Value (quantitative 0% 100% 100% or Qualitative) Date achieved 06/30/1998 12/31/2003 12/31/2007 Comments (incl. % All elements of the institutional component were completed. achievement) Indicator 7 : % of Guangfo road completed Value (quantitative 0% 100% 100% or Qualitative) Date achieved 06/30/2003 12/31/2004 12/31/2007 Comments (incl. % This indicator was added after project restructuring in 2003. achievement)

G. Ratings of Project Performance in ISRs

Actual Date ISR No. DO IP Disbursements Archived (USD millions) 1 06/15/1998 Satisfactory Satisfactory 0.00 2 10/13/1998 Satisfactory Satisfactory 0.00 3 04/06/1999 Satisfactory Satisfactory 8.00 4 06/16/1999 Satisfactory Satisfactory 8.00 5 12/08/1999 Satisfactory Satisfactory 27.39 6 12/17/1999 Satisfactory Satisfactory 31.61 7 05/17/2000 Satisfactory Satisfactory 57.08 8 06/06/2000 Satisfactory Satisfactory 57.08 9 10/19/2000 Satisfactory Satisfactory 57.08 10 05/03/2001 Satisfactory Satisfactory 69.19 11 06/12/2001 Satisfactory Satisfactory 69.19 12 12/21/2001 Satisfactory Satisfactory 69.19 13 05/14/2002 Satisfactory Satisfactory 69.19 14 12/11/2002 Satisfactory Satisfactory 70.46 15 06/30/2003 Satisfactory Satisfactory 70.46 16 12/29/2003 Satisfactory Satisfactory 79.69 17 04/15/2004 Satisfactory Satisfactory 79.69 18 12/20/2004 Satisfactory Satisfactory 83.12 19 06/16/2005 Satisfactory Satisfactory 93.55 20 07/29/2005 Satisfactory Satisfactory 97.19 21 12/13/2005 Satisfactory Satisfactory 97.19 22 12/08/2006 Satisfactory Moderately Satisfactory 128.36 23 01/14/2008 Satisfactory Moderately Satisfactory 138.15

vii

H. Restructuring (if any)

ISR Ratings at Amount Board Restructuring Disbursed at Restructuring Reason for Restructuring & Approved Restructuring Date(s) Key Changes Made PDO Change DO IP in USD millions (i) the allocation of the loan savings of US$40 million for a new Project component; (ii) the further reallocation of US$12 million of loan proceeds for expanding the traffic 04/21/2003 N S S 70.46 management component; (iii) cancellation of US$20 million from the loan; and (iv) extension of the loan closing date to December 31, 2004.

I. Disbursement Profile

viii 1. Project Context, Development Objectives and Design

1.1 Context at Appraisal

1. The Guangzhou project was the Bank’s third stand-alone urban transport investment in China following two loans in Shanghai. The strategic framework for the project was the Guangzhou Urban Transport Studies begun in 1994. The project was designed to support three goals of the Country Assistance Strategy (February 25, 1997) by promoting growth with economic stability, alleviating infrastructure constraints, and safeguarding the environment. While the CAS evolved over the period of implementation, essentially the same goals are relevant at the time of completion. The rationale for Bank involvement was and remains the concern for the negative impacts of rapid urbanization and preserving the livability of China’s third largest city. The Bank offered experience in five key areas: (i) strategic planning of multi-modal urban transport systems, (ii) impacts of motorization, (iii) public transport operations, (iv) traffic management, and (v) transport environmental issues.

2. In 1997, Guangzhou’s city-proper population was 4.6 million and growing rapidly due to a continuing influx of unregistered workers from rural areas. The population density was extremely high, exceeding 20,000 inhabitants per square km. The vehicle fleet in 1997 was under 200,000, but growing at over 20% per year, with the number of motorcycles growing at 30% per year. The decline of the walk mode share was a source of concern for transport planners. Use of the bicycle, the traditional mode of transport in Chinese cities, was becoming increasingly restricted and dangerous due to the progressive expansion of road space for motor vehicles.

3. By the mid 1990s, traffic congestion was becoming an important constraint to Guangzhou’s productivity, as evidenced by increased travel times and higher vehicle operating costs. Guangzhou lacked a functional hierarchy of streets, which complicated the task of separating fast-moving from slow-moving traffic. Although the City’s first underground metro line started operating in July 1997 and two other lines were planned or under construction, road-based public transport (a potentially efficient mode of passenger transport) was hindered by lack of capacity, slow operating speeds and outdated equipment and practices. Air pollution from vehicle emissions was a concern for the health of the urban population. The road accident rate was high with pedestrians and cyclists especially at risk. The accident rate per million inhabitants was growing at 10 percent per year.

4. The project attempted to address these challenges by promoting a cost-effective and environmentally-balanced framework for urban transport development. The project was to add needed infrastructure, promote safer and more efficient use of existing road capacity via traffic management and improved public transport, and mitigate the environmental impact. In addition, the project included the strengthening of the capacity of local institutions to better manage the sector. The project was fully consistent to the Bank’s sector strategy ("Sustainable Transport," 1996), which emphasized the integrity of

1 economic, social, and environmental dimensions of a sustainable transport policy. These priorities were also consistent with the Bank’s urban transport strategy for China articulated at a major national symposium in Beijing in 1995.1

1.2 Original Project Development Objectives (PDO) and Key Indicators (as approved)

5. The principal PDO was to improve the accessibility of the city center of Guangzhou by promoting the efficient use of the urban transport system in an environmentally sustainable way. The following outcomes and key performance indicators were included in the PAD: 1) Improved level of service and reduced congestion on the City Center road network as a result of: • Completion of the Guangzhou Inner Ring Road • Traffic management. 2) Increased throughput (in terms of passengers) of public transport corridors within the City Center as a result of: • Improved management of bus priority lanes; and • Development of (new) bus priority lanes. 3) Reduction in relative levels of air pollution as a result of: • The introduction of unleaded gasoline; and • A vehicle emissions control program. 4) Reduction in the relative levels of accidents per capita as a result of: • Traffic management measures; and • Improved coordination amongst responsible agencies. 5) Improved effectiveness and efficiency of road maintenance as a result of: • Introduction of modernized road maintenance equipment; and • Development of a road maintenance system. 6) Strengthened management capacity of municipal agencies responsible for urban transport as a result of: • Technical assistance (TA) support and on-the-job training during project implementation; and • Classroom training and study tours.

6. Under Outcome 1, the completion of the Guangfo Radial Road was added as a key indicator when the project was amended in April 2003. Specific baseline and targets for each indicator were not included in the PAD, but were qualitatively described relative to a “no project” scenario. The definition of the indicators, along with baseline and target values (presented in Section F of the Data Sheet), were established or refined during negotiations as follows: a. “Increased passenger and freight throughput” was monitored by traffic flows (cordon counts) to the city center as bounded by the RR.

1 China’s Urban Transport Development Strategy: Proceedings of a Symposium in Beijing, November 8-10, 1995. (Editors: S. Stares and Liu Z.)

2 b. “Reduced journey times” was monitored using cross-town speeds on a major north-south and a major east-west corridor in the p.m. peak period c. “Reduced per capital accident rates” was measured by accidents and fatalities per 10,000 people. An additional indicator for the percentage of accidents involving pedestrians or bicyclists was contemplated but never monitored. d. “Increased average bus speeds” was measured along a major north-south and a major east-west corridor. Public transport “modal share” was originally monitored in 8 districts and then 10 districts after 2001. No target was set for public transport “ridership” and therefore it is not reported. e. “Reduced tailpipe emissions” was altered to measure annual average “ambient air quality” in milligrams per cubic meter of NOx and CO, at first in 6 and then 9 monitoring sites. f. “Increased sales of unleaded gasoline” was never monitored despite being included in the PAD. g. “Reduced unit costs of road maintenance” was never monitored despite being included in the PAD. h. “Increased percentage of roads in good condition” was refined to distinguish between high-speed, primary, secondary and access roads and the methodology was changed after appraisal to better conform to local practices. i. “Project agencies' satisfaction with training and services received” and “improved efficiency and effectiveness of public service delivery” were not monitored quantitatively.

1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification

Not applicable.

1.4 Main Beneficiaries

7. The project was proposed to benefit all residents of Guangzhou to some degree, but especially those who lived and worked in the city center. Those who traveled into or out of the city each day would benefit most from the reduction in travel times compared to what they would have been without the project. About 60% of the Project’s economic benefits were expected to come from travel time savings. The PAD also outlined: • The main beneficiary of the Guangzhou Inner Ring Road (RR) were private vehicle users • The beneficiaries for the traffic management component were private vehicle users, bus passengers, bus operators, cyclists and pedestrians • Air quality improvements would benefit especially those who lived and worked on the most heavily congested streets

3 1.5 Original Components (as approved)

8. The original components are summarized below. Additional details are provided in Annex 2. • Part A: Inner Ring Road - Construction of the Inner Ring Road, including resettlement, rehabilitation of and compensation for people affected by the project. • Part B: Traffic Management and Safety - Traffic management civil works and road safety measures, including the provision of equipment, services and training. • Part C: Public Transport - Implementation of bus information, management and maintenance programs, including program equipment, consultant services and training, and a bus maintenance depot at Longxi. • Part D: Vehicle Pollution Control - A program to control and reduce air pollution from mobile sources through the provision of equipment, consultant services and training. • Part E: Road Maintenance - Provision of equipment, consultant services and training to include undertaking of a comprehensive inventory of maintenance requirements and updating of the maintenance expenditure requirements. • Part F: Institutional Development - Strengthening of the managerial, technical, planning and implementation capacity of the municipal agencies through the provision of equipment, consultant services and training, and studies to assist Guangzhou to formulate plans and policies.

1.6 Revised Components

Project Restructuring 9. In November 2002, the MoF formally requested: (i) the allocation of the loan savings of US$40 million for a new Project component (Guangfo Road); (ii) the further reallocation of US$12 million of loan proceeds for expanding the traffic management component to include channelization at major road intersections and installation of the Sydney Coordinated Adaptive Traffic System (SCATS); (iii) cancellation of US$20 million of the loan due to unused funds (see cost variations in Section 2.2), and (iv) extension of the loan closing date from December 31, 2003 to December 31, 2004. The size of the cancelled loan and the scope of these other changes in relation to thresholds at the time required the project team to seek World Bank Board approval, which it received on a no-objection basis allowing the loan and project agreements to be amended in April 2003.

10. The new component consisted of the first section of the Guangfo (Guangzhou-Foshan Road) Radial Road (5.5 km), connecting the city center of Guangzhou with the nearby city of Foshan. It formed part of the proposed urban highway network recommended in the 1994 Guangzhou Urban Transport Strategy study (GUTS) and supported the PDO. It was fully appraised and found to be economically justified and technically, environmentally and socially sound. Preparation of the proposal required a full environmental assessment in accordance with Bank safeguard policies.

4 11. The vehicle pollution control component had the objective to introduce unleaded gasoline in Guangzhou but was overtaken by a decision of the central government in 1999 to begin phasing out leaded gasoline. As a result, TA funds for this component were reallocated to purchase of equipment for automatic noise monitoring along the Ring Road. The final decision to delete the vehicle emissions research function in 2006 reflected the national government’s new role in emissions research and standards development in Beijing. When the project was designed a decade earlier, the national government’s role in setting emission standards had not yet been clearly established.

1.7 Other significant changes

12. There were four approved extensions (the second extension being provisional), moving the project’s closing date a total of four years: (i) from 12/31/03 to 12/31/04, approved by the Board in April 2003; (ii) from 12/31/04 to 6/30/05, approved by CD on 12/29/04; (iii) from 6/30/05 to 12/31/06, approved by VP on 6/27/05; and (iv) from 12/31/06 to 12/31/07, approved by VP on 12/15/06.

13. First extension: The first extension for one year (from December 2003 to December 2004) was approved to allow the use of the loan savings to help finance construction of the Guangfo Road and complete the third phase of the traffic management program and the information technology-based systems for bus management, ring road monitoring and road maintenance. While amending the project agreement, the Bank emphasized to the City the full scope of the resettlement and environmental requirements triggered by the addition of Guangfo Road.

14. Second extension: By September 2004, three months before the closing date corresponding to the first extension, all procurement was complete except the double- glazing of windows to reduce noise from the Ring Road, traffic signals, three important computer-based management systems (traffic control, bus dispatching and tracking, and road maintenance), and the latest urban transport strategy study (GUTS4). As disbursement was still very slow, the mission urged the construction commission and the municipal finance bureau to speed up their review of withdrawal applications. An audit report for 2003 by the Guangdong Province Audit Office (GPAO) qualified its opinion for lack of sufficient financial documentation of the Ring Road resettlement activities, which were financed by the city using counterpart funds (see Section 2.4 under fiduciary issues). As a result, the Bank granted a provisional 6-month extension to June 2005.

15. Third extension: The Bank approved the one-year extension to December 2006 after the delivery of an “unqualified” (clean) audit report for 2004. The second and third extensions were motivated by the disruptions caused by the SARS epidemic in 2003, which restricted activities in Guangzhou for half a year, and to allow more time to finalize design of the three management systems. Neither side had foreseen the technical complexities and delays involving system design and procurement (further described in Section 2.2).

16. Fourth extension: A final extension of one year was requested and approved in December 2006, which moved the closing date to December 31, 2007. This extension

5 was requested to allow the client to fully utilize the loan and complete four remaining components deemed important to the achievement of the development objective: (i) provision and installation of air quality inspection equipment (US$2.8 million), (ii) construction of a noise barrier adjacent to the Guangzhou City Zoo (US$0.9 million), (iii) consultants services for the second phase of the Guangzhou Urban Transport Strategy (US$2.0 million), and (iv) provision and installation of the traffic control and surveillance, bus dispatching and monitoring, and road asset (maintenance) management systems (US$7.2 million). The Bank also agreed in August 2006 to increase civil works disbursement percentages from 43% to 85% at the client’s request, although the remaining amount of civil works was small.

2. Key Factors Affecting Implementation and Outcomes

2.1 Project Preparation, Design and Quality at Entry

17. The quality of the project at entry was satisfactory. This was also the conclusion of QAG’s overall assessment of quality at entry in 1999 (QEA2), although it rated the “lack of any assessment of executing agencies’ capacity” as unsatisfactory. Lessons from earlier operations (notably the two urban transport projects in Shanghai) and early preparation activities (e.g. GUTS) were taken into account in designing a comprehensive package of urban transport components. Risks associated with GMG’s limited experience with public transport reforms, emissions testing, and traffic management were noted in project documents. The project design attempted to address the required capacity building by including an institutional development component and various studies under each of the other components (see Annex 2). An adequate participatory process involving project affected people, road users, neighborhood and working groups was used to mitigate risks.

18. It took nearly four years from the first mission to loan negotiations in 1998. Project preparation was suspended when senior officials in the national government questioned whether it was appropriate for Guangzhou to take on an international loan for urban transport, which would not directly generate revenue for repaying the loan. During this time the City prepared its first urban transport strategy (GUTS), followed by a more detailed strategy (GUTS2), with substantial help from an international consultant and extensive Bank supervision.

19. The executive project summary (i.e., project concept note), and later the PAD, made a cogent case for a comprehensive approach to addressing Guangzhou’s transport problems and the national government eventually approved the approach. The project documents also stressed that a sustainable coordination mechanism across the many City agencies would be essential to the success of the project. It gave traffic management and road safety pride of place in the project composition. The implementation of the first phase of the traffic management improvements was covered by a dated covenant (18 months from the date of loan signing to completion).

6 2.2 Implementation

20. The implementation of the project was generally very successful, but it is important to note the significant delays with non-road components and cost variations. The Ring Road (representing over 80% of the investment) was largely complete and open to traffic in January 2000, less than 2 years after construction began. The last ramps were opened by mid-2000. The original schedule allowed five years for project implementation, but soon after construction started the City decided that faster implementation would reduce the exposure of residents to construction noise and traffic disruptions and offered the contractors substantial financial bonuses as incentives for early completion (including sizeable overtime). Bank supervision specialists were initially concerned by the accelerated implementation plan because (i) it was decided upon without prior consultation with the public or the Bank (per agreement), (ii) it could negatively affect the quality, cost, and environmental impact of construction, and (iii) it could affect the progress of the other project components. Nevertheless, later supervision missions rated the overall construction quality as “commendably high” and the project was responsive to requests for noise mitigation measures and detailed cost documentation.

21. On the other hand, the construction of Guangfo Road experienced initial delays because of (i) funding eligibility and (ii) late possession of site due to resettlement issues, which were eventually resolved (see Section 2.4 for more detail), and (iii) technical complications with bridge construction and geological conditions. Guangfo Road included the construction of four large bridges across the Zhu (Pearl) River, a viaduct across an island in the middle of the river, bus priority lanes, and lanes and intersection arrangements for cyclists. Guangfo Road was completed in 2005, about one year behind the original schedule.

22. The Ring Road experienced significant cost variations from appraisal to completion. The total bid price was less than 50% of the engineering estimate used in the project appraisal. This difference was due to the use of Chinese Government unit costs for civil works (rather than actual market prices) and the Bank’s suggested method of incorporating contingencies for price and physical quantities. Until 2005, inflation had been less than expected so contracts awarded in the later years of project implementation were at lower prices than had been expected at appraisal. However, the final construction cost was about 50% higher than the bid price primarily because of: (i) major design changes including two additional lanes of traffic and structural redesign; (ii) low-noise porous asphalt concrete was used throughout instead of only at sensitive locations as originally planned; (iii) additional geotechnical work; (iv) additional payments to contractors for overtime work; and (v) incentives to contractors for quality and advanced completion. Nevertheless, the cost overrun from bid price to completion did not affect the EIRR of the project as it was still less than the estimate at appraisal.

23. There were significant schedule delays with most non-road infrastructure components because of technical problems and an initial lack of capacity. A Quality of Supervision Assessment in 2006 (QSA7) also concluded that a lack of ownership by the borrower “turned out to be a shortcoming that was later to affect implementation of the non-civil works components of the project.” The mid-term review in April 2001 focused on the

7 progress and challenges to the traffic management, public transport, vehicle pollution control, road maintenance, and institutional components. The SARS epidemic in 2003 affected the planned supervision of these components, justifying two extensions. The repeated delay of most of these “soft” components was the justification for a reduction in the implementation progress rating to “moderately satisfactory” in December 2006. The most important factors influencing the implementation of the non-road components are described below. a) Unexpected technical issues or challenges (i) Traffic Management -- the Ring Road traffic control system went through an extended decision-making period of over one year to define an implementation approach that would reconcile the proprietary technology of the existing traffic light system with open bidding for its expansion. The project considered the adoption of North American or United Kingdom interface standards, which would affect the eligible suppliers and the technical compatibility with the current system and future generations of traffic signals, but in the end, adopted no international standard for its two centers. (ii) Bus Depot - Technical problems, clearances, and new building codes for a waste water treatment facility and refueling station at the Longxi Bus Depot caused repeated delays. (iii) Geological conditions-- Construction of the bridges for Guangfo Road was complicated by the discovery, during detailed geotechnical investigations, of a number of karst caves in the river bed beneath the intended bridge foundations. b) Contractual and procurement issues (i) Traffic Management and Surveillance -- The design was initially delayed by performance problems with the local consultant hired to prepare the technical specifications. The systems were also delayed by a discussion of the procurement approach that lasted well over one year. The City’s consultant recommended a design-build contract, whereas the Bank team questioned whether bids for construction could be feasible and effective before the design was finalized. (ii) Maintenance Management Systems – After a prolonged discussion period of over one year, the City decided to package the road, bridge and drainage maintenance into a single integrated system but procurement was split into three contracts: (1) equipment for the initial development phase, (2) design consulting services, and (3) equipment for long-term system use. In the end, the Bank provided an experienced international consultant to assist with procurement. (iii) Pollution Control -- Although not financed by the Bank loan, the construction of the motor vehicle emissions control building affected the installation of the Bank- financed monitoring equipment due to repeated delays in site preparation and the bidding of design and consulting services. It was eventually completed in March 2005. Bank missions identified a lack of PO staff for this component as one reason for the delay.

8 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization

24. The M&E program was designed on a comprehensive set of indicators corresponding to six outcomes (summarized in Section 1.2). The loan and project documents specified the following M&E activities in addition to regular supervision missions by the Bank, which were generally observed by the PO: • Annual project reports with performance indicators (see Section F of Data Sheet) • Joint review of progress annually and near project mid-term (2001) • Submittal of monthly progress and disbursement reports, and quarterly reports of planned and actual progress for each component (cost and physical works)

25. The project was being implemented in a city undergoing unprecedented levels of change (annual growth of 12% from 2000 to 2005 resulting in a doubling of the GDP per capita to US$8,500). The administrative boundaries of the urban area were changed in 2001 resulting in a 35 percent net increase in population. In the case of the Inner Ring Road, the performance indicators were structured to measure the impact of the road in reducing traffic in the city center. In reality, economic development patterns in Guangzhou eclipsed all expectations and by 2001, traffic volumes into the City Center were above projections. In fact, the Bank and PO agreed to stop monitoring the indicators for improved level of service and reduced congestion (#1, 2 and 3) after 2001 because of their limited usefulness in the context of overwhelming growth and high cost. Though the Ring Road diverted some through traffic, economic development generated additional traffic into the center. It is safe to say that the Ring Road played a role in facilitating the continued economic development and congestion today would have been much worse without the project. In hindsight, a performance indicator that focused on the amount of traffic diverted to the Ring Road from the city center (rather than the absolute levels of traffic into the city center) may have been a better proxy for capturing the facilitating impact of the Ring Road.

26. Utilization of the M&E data was somewhat limited because of: (1) problems with realism or reliability of the data and (2) the reports were sometimes submitted late or incomplete. A Quality of Supervision Assessment in 2006 called for “a more critical examination of the realism of the indicators and interpretation of data.”

2.4 Safeguard and Fiduciary Compliance

27. The project was classified as a Category “A” because of substantial new construction and involuntary resettlement. Environmental Assessments (EA) were carried out for the RR, Guangfo Road, and the Longxi Bus Depot, and were reviewed by both the Chinese State Environmental Protection Agency and the World Bank.

Environmental Impacts 28. Although there were initial concerns about the environmental impact of the accelerated construction of the Ring Road, the Project has met all requirements and greatly expanded the scope of the mitigation measures from appraisal. The widening of the RR design from 4 lanes to 6 lanes in some segments caused noise levels for nearby

9 residents in excess of design standards, requiring installation of additional noise barriers. This took several years to complete, partly because the City wanted to investigate alternative designs. Noise barriers are now widely used in China but were new at that time and, as such, these investigations were not unreasonable. The noise barriers recommended in the original EAP totaled 1,860m, but were expanded many times over using local funds to accommodate design changes during construction and requests from those affected. In early 2002, the City, in response to continued complaints, adopted the policy to pay for double-glazing windows and improved ventilation in the remaining residential units where the noise standards were not met, eventually installing these in about 5,000 housing units. New trees, shrubs, flowers and grass were planted at ground level below the Ring Road to improve the aesthetics. Air quality monitoring showed marked decreases in the ambient levels of NOx and CO concentrations. Residents have expressed full satisfaction with these measures.

Resettlement 29. The mid-term review praised the high quality of the resettlement actions taken and satisfactory indicators. It achieved the basic objectives of: (i) compensating Project Affected People (PAPs) for their losses at replacement cost prior to the actual move; (ii) assisting with the move and providing rehabilitation during the transition period in the resettlement site; and (iii) assisting PAPs in their efforts to restore their former living. The key factors supporting the favorable outcome were: • Good institutional arrangements and capacity of staff • Supportive leadership and availability of funds • Effective coordination with major agencies and stakeholders • Systematic program of consultation with PAPs and their participation • An innovative computer program that facilitated implementation

30. On the other hand, the financial and internal management of the resettlement program was inadequate. The original plans expected construction of the Ring Road to take four years, but it was actually built in less than two years. Resettlement activities had to be completed in 1999 before the civil works could start, but internal processes and financial controls were not in place. Fifteen thousand households, shops and businesses were moved in less than one year. Though the vast majority of displaced persons were satisfied with the outcome, audits found that financial controls were lacking as a consequence of the expedited schedule (see fiduciary section below).

31. The total cost of implementing the RAP reached US$525 million-- more than three times larger than the US$161 million estimated at appraisal. It is important to note that all resettlement work was funded by the client. One reason for the cost increase was a rapid rise in land costs, but a 2003 financial management audit of the resettlement program also pointed to the following reasons, which have been largely addressed in the City’s current resettlement practices: • Initial differences between the compensation policies of the World Bank and the local government, which were appropriately reconciled • Lack of appropriate resettlement management and supporting systematic regulations and procedures

10 • Lack of effective internal controls, communications, and training for the multi- layer organizational set-up • Lack of proper financial management structure and disbursement arrangements, or effective internal and external monitoring mechanisms

Fiduciary 32. While there were no issues with the financial management of Bank-financed works, the audit for 2003 conducted by GPAO flagged serious shortcomings in the financial management of resettlement activities financed by the borrower. These shortcomings, which have since been resolved, included: • Lack of land certifications for certain areas to which the households were moved • Lack of housing certifications and supporting evidence • Discrepancies between the reported size of land areas paid for and what actually changed hands • Lack of supporting documents for the resettlement contracts with affected people and the compensation amounts paid

33. The audit for 2004, although unqualified, pointed out that the Guangzhou Road Expansion and Engineering Office (GREEO) had acquired new housing (apartment buildings) to receive the displaced people but not all units had been occupied by households displaced by this project. The Bank’s financial management review (including the 2004 audit) concluded that record keeping was adequate and financial management of the loan was satisfactory. By the time that the Bank was reviewing the request for the final loan extension in 2006, an unqualified audit for 2005 had been accepted by the Bank’s financial management specialists and the issue was closed.

Procurement 34. Procurement was generally successful and fully compliant with Bank rules. However, there were significant issues and contract variations (described in Section 2.2), due in part to the client’s unfamiliarity with the implementation of new and complex technologies (including for road maintenance, traffic management and public transport) and the Banks’ procurement guidelines. There were several unsuccessful procurements or contracts for consulting services that did not meet or deliver on the requirements, including a road user education program, air monitoring equipment (eventually replaced by noise monitoring equipment), and hybrid buses for a demonstration project (eventually scrapped). The difficulties in designing and procuring three computer-based management systems were only resolved with the involvement of Bank-hired specialists with international experience with such complex systems.

35. Guangzhou made the Bank aware of one particular case of fraudulent procurement practice for a small sub-component during a supervision mission in February 2007. The case involved the use of sub-standard materials by the contractor for a pedestrian information system. The client cancelled the contract as part of a zero-tolerance policy on fraud and corruption (valued at about US$2.7 million) and barred the contractor from participating in future bids for contracts financed by Guangzhou Construction Commission. By the time the contract was cancelled, the closing date was imminent and

11 the contract was ultimately not financed by the Bank. The Bank’s task team supported the client’s investigation by (i) hiring a consultant to provide evidence and (ii) reporting the case internally on October 25, 2007, although no subsequent Bank action has been taken.

2.5 Post-completion Operation/Next Phase

36. The important road network investments financed by the project (including the Ring Road and Guangfo Road) are being successfully operated and maintained. The budget for operations and maintenance is adequate. However, several contracts remained open after the project closing date including (i) the GUTS4 implementation study, (ii) traffic management equipment, and (iii) the road and bridge management system. GMG agreed to take responsibility for completing these contracts and for contract payments related to activities undertaken after the closing date.

37. Well before the original completion date, the City expressed interest in a second Bank-supported urban transport project. It would require an update of the City’s urban transport strategy, analysis of the new demand for urban transport reflecting the shift in modal shares (more cars, less biking and walking), and review of the strengths and weaknesses of current practices. In April 2005 the head of the PO formally conveyed to the Bank its interest in securing a second loan to support Guangzhou’s urban transport development plans, but no formal decision by the central government was made. The Bank has agreed to review the GUTS4 study once completed (expected by end of 2008).

38. In 2007, Guangzhou entered into dialogue with the Bank’s GEF-supported program for urban transport development in China and qualified as one of the demonstration cities. Given that the amount of the GEF grant is relatively limited, the program is intended to carry out key studies and pilots that can help demonstrate the positive impacts of innovative practices in mitigating GHG emissions and help pave the way for scaling up those initiatives through major investments.

3. Assessment of Outcomes

3.1 Relevance of Objectives, Design and Implementation

39. The project was and remains fully consistent with the country's development priorities to relieve infrastructure bottlenecks and foster economic growth. It was also consistent with the Bank’s urban transport strategy (“Cities on the Move,” 2001) and, later, with the most recent China urban transport strategy (“China: Building Institutions for Sustainable Urban Transport,” 2006). Both of these Bank documents emphasized that the impacts of rapid motorization can be dealt with on a sustainable basis only by a comprehensive set of actions, going beyond new road infrastructure, all of which were included in the design and implementation of the project: • Improvement of public transport services, • Facilities for pedestrians and cyclists (particularly the poor and other vulnerable groups),

12 • Non-physical ways to derive greater flow capacity from existing streets (traffic management), • Restraints on car use (such as paid parking), and • Institutional development.

3.2 Achievement of Project Development Objectives

40. The project is rated satisfactory because it was generally successful in delivering the anticipated objective of promoting the efficient use of the urban transport system in an environmentally sustainable way, as detailed below.

a) Improved level of service and reduced congestion on the City Center road network-- Satisfactory 41. The project has successfully achieved this objective by implementing an elevated Ring Road within schedule and under budget, without sacrificing quality or environment for nearby residents. Guangfo Radial Road was also successfully implemented. The level of service in the city center has improved as measured by indicators of cross-town speeds in north-south and east-west corridors during the p.m. peak (33-49% increase from 1998 to 2001). Congestion however does not appear to have been reduced as traffic volumes in the city center bound by the Ring Road were already above forecast in 2001. The performance indicator for congestion was undermined by higher than expected economic growth resulting in faster than expected motorization.

42. Traffic management measures are working satisfactorily. Observers report a distinct improvement in the general discipline among Guangzhou’s road users, due in part to the channelized intersections and coordinated traffic light systems. Left turns (the most disruptive of traffic movements) are appropriately restricted by median dividers or controlled at intersections by having their own green phase in the traffic light cycle, with left-turn bays so that vehicles waiting to turn do not obstruct other vehicles. The channelization at intersections carried out under the first phase of the Traffic Management component was one of the first demonstrations of such low-cost and effective techniques in China.

b) Increased throughput (in terms of passengers) of public transport corridors within the City Center-- Satisfactory 43. Public transport mode share of total trips has grown from 16% to 23%, meeting the target. Average speeds in bus corridors have increased by 63%, greatly surpassing the targets. This was due to improved management of existing bus lanes and development of new bus lanes. The adoption of the fleet management system in Guangzhou has been exemplary. The implementation included revisions to business practices and institutional arrangements, and has achieved outstanding results in terms of the reliability and sustainability of operations. The system is currently owned and managed by the city, which gets information from it to help monitor operations. All the operators use the system for planning and monitoring, and passengers have benefited from the improved performance. This kind of “win-win” situation requires very careful structuring, and the Bank's role in nurturing it reflects real value-added.

13

c) Reduction in relative levels of air pollution-- Satisfactory 44. Measured ambient concentrations of nitrous oxide and carbon monoxide have been reduced well beyond the original target reduction of 10%. Observers have also noted that the exposure of people to air pollution from the traffic in the city center has probably been reduced because vehicles on the elevated ring road are farther away from the people. One can also deduce that vehicles are traveling at closer to ideal speeds and steady flow conditions (i.e., less ‘stop-and-go’ traffic) thus emitting fewer pollutants. These outputs can be attributed in part to the additional infrastructure and traffic management measures (including better road maintenance practices) implemented by the project that helped enhance traffic flows and efficiency (such as channelization and signalization) and general driving conditions.

d) Reduction in the rate of accidents per capita-- Satisfactory 45. Provisions for cyclists and pedestrians required some fine-tuning but have been successful. Pedestrians are safer at intersections due to dedicated traffic lights and signal phases, raised ‘islands’, and footbridges. The benefits are confirmed by the reduction in the number of per capita traffic accidents by 25% and fatalities by 55%, which have surpassed their targets.

e) Improved effectiveness and efficiency of road maintenance-- Satisfactory 46. The shares of primary and secondary city roads in ‘good’ or better condition have both increased to 91%, although the measurement methodology changed during implementation. The share of primary roads in particular has surpassed its target as a result of the introduction of modernized road maintenance equipment and the development of a road asset (maintenance) management system.

f) Strengthened management capacity of municipal agencies responsible for urban transport—Satisfactory 47. The institutional rationale for the project to help the City coordinate the many agencies implementing different parts of this comprehensive project has been largely achieved despite delays early on (see also Section 3.5(b)). A Project Leading Group (PLG), chaired by a vice-mayor, initially performed the coordination role though it lost momentum and focus with time. The Construction Commission eventually drove much of the project implementation, which was dominated by the Ring Road. While this arrangement was not initially effective in advancing non-road components, the Construction Commission eventually formed productive relationships with line authority agencies including the traffic police, managers of bus services, environmental protection, and resettlement. For example, missions noted that working relations with the Guangzhou traffic police, the lead agency for the traffic management component, were excellent.

48. The project also financed extensive amounts of training (both on-the-job and classroom) and study tours (domestic and international) that had the desired effect of strengthening the capacity of the personnel and agencies involved. In all, this project component financed 28 technical assistance contracts, 15 investigations, and 191 training

14 events (including to Curitiba, Brazil and Bogotá, Colombia). Hundreds of senior and mid-level officials have directly benefited from Bank training.

3.3 Efficiency

49. A traditional cost-benefit analysis was used by the Bank at appraisal to evaluate the two largest components of the project investment, the Guangzhou Inner Ring Road and the Traffic Management Component. The economic efficiency measures for both are shown in the table below. The decrease in the net present value and economic rate of return for the RR is attributed to the large increases in the scope and costs of civil works (widening of Ring Road and addition of Guangfo Road), resettlement program, and environmental mitigation (see Sections 2.2 and 2.4 for additional details). Annex 3 provides more detail on the economic analysis.

PAD ICR Guangzhou Inner Ring Road NPV (12% discount) US$351 million US$147.9 million ERR 34.1% 14.3% Traffic Management Component NPV (12% discount) US$49 million US$15.2 million ERR 35% 18.3%

50. The economic evaluation in the PAD and at completion used traffic forecasts from a typical four-stage urban transport model with fixed trip matrices developed by consultants for a “do-nothing” and “with project” scenarios. The PAD also described the sensitivity analyses carried out separately for the Traffic Management and Inner Ring Road components with respect to the some key variables: (i) the level of motorization; (ii) rate of economic growth for the city; (iii) delays in completion of construction; (iv) cost overruns; and (v) alternative design standards (4 lanes or 6 lanes of traffic throughout). No values of these key variables were found to produce a negative NPV or an economic rate of return of less than 12%.

51. The analysis of the fiscal impact of the project found GMG's financial capacity adequate to meet implementation cost (including debt finance and ongoing maintenance costs) and it continues to be the case with ongoing operations and maintenance costs.

3.4 Justification of Overall Outcome Rating Rating: Satisfactory

52. The combination of the project relevance, achievement of PDOs and efficiency described above justify an overall outcome rating of satisfactory. The project has substantially achieved its main objective of promoting the efficient use of the urban transport system in an environmentally sustainable way despite considerable delays. Though their utility is limited by the unprecedented changes in context during the extended project period, the performance indicators for traffic safety, air pollution, public

15 transport generally confirm the project's success. The projects institutional objectives were also substantially achieved.

3.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development

53. Nearly 10,000 households and 4,800 shops and enterprises were relocated as part of the resettlement of the project. This was the biggest resettlement project in the history of urban construction in Guangzhou. Almost all PAPs were pleased with their new and larger apartments, which, for the first time for many households, had their own kitchen and bathroom. The new dwellings were on average 20-35% larger than the old homes (16 m2 more floor space). The new communities had better environmental conditions (air quality and vegetation, etc.) as well. Restoration of livelihood was at least as good as the control group, except initially for a small number of unskilled workers and small shopkeepers. The financial management issues were eventually resolved to the Bank’s satisfaction. The scale and quality of the standard of living improvements as a result of the resettlement program have been substantial.

(b) Institutional Change/Strengthening

54. The institutional capacity of Guangzhou to successfully implement a large and complex project was also greatly improved by the following developments: a. GUTS was the foundation of the investment and urban development strategy for Guangzhou for nearly a decade and a model many other Chinese cities have emulated. The follow-on efforts (GUTS2, 3 and 4) demonstrate a great deal of city ownership and the sustainability of the strategy. The current GUTS is expected to be completed in 2008 and will embody three principles fully consistent with the Bank’s development partnership strategy for China.: (1) comprehensive urban planning, (2) demand management to help solve transportation problems, and (3) ‘putting people first’ (the title of the current Chinese government policy on urban transport). b. The discussions with the Bank team during preparation laid the foundation for Guangzhou's public transport reform. The adoption of a franchised model regulated and controlled by the city is more or less what the Bank had envisioned and reflects international best practice. c. The traffic management component reflected the first time in China that the police and construction personnel worked out solutions to traffic problems in a coordinated manner. This was a model not just for Guangzhou, but other Chinese cities as well. d. The resettlement management software was a major innovation, which has been used elsewhere in Guangzhou in other projects. e. Guangzhou greatly values the capacity built in the PMO with respect to project management, financial management (particularly for resettlement), and procurement. The office is now in charge of special projects and is seen by the Bureau for Municipal Management (where it is now housed) as an important asset. f. The project showed the need to plan for dealing with environmental impacts not just during the construction phase of infrastructure but on a continuing basis during operation. As late as June 2005, five years after the Inner Ring Road was opened to traffic, new noise mitigation cases were still being reported by residents and a health

16 care facility. As a result, the City needed to retain the capacity to respond appropriately many years after the RR had opened to traffic.

(c) Other Unintended Outcomes and Impacts (positive or negative) Not applicable.

3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops Not applicable.

4. Assessment of Risk to Development Outcome Rating: Moderate

55. Guangzhou is becoming an international city of great importance, but it faces some uncertainties with regard to the project’s objectives as it continues to grow. First, traffic volumes will continue to increase as more people and cars crowd the roads. Growing congestion in the ring road is almost certain, but would have been far worse without the project. The indicators suggest that the project struck an appropriate balance of increasing the supply of roads with public transport and traffic management investments. Further capacity building and balanced urban transport investments will be required to ensure that the mobility and accessibility in the city center are not degraded over time. Second, the impact of motorization on the supply and safety of facilities for non- motorized and public transport modes is also an issue that requires the continued attention of the public authorities.

5. Assessment of Bank and Borrower Performance

5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Satisfactory

56. The quality of the Bank performance at entry was satisfactory. The project’s objectives and design were closely aligned with both the government and World Bank strategies for urban transport. The Bank facilitated the planning and preparation of a balanced and comprehensive project. The project’s technical assistance components have brought about great progress in terms of institutional capacity and plans. A few minor deficiencies are also noted in the following: • The PAD correctly recognized but perhaps could have better mitigated the risk of delays in implementing non-road investments in a complex project in light of the experience in Shanghai where, “ … supporting traffic management and public transport facilities have so far seen only limited implementation. Weak implementation of these components is partly due to lack of ownership of designs produced largely by foreign consultant assistance and partly due to the fragmentation of responsibility across agencies.” Other critical risks identified in the PAD, while appropriate, were not thoroughly described. For example, the risk for “local government support for any project activity erodes” is vague and went unrated. • A Quality at Entry report from 1999 observed that there had been "no assessment of executing agencies’ capacity." The complexity of the project design required 13

17 different agencies to implement the project. Given the tendency in China for effective vertical interaction but poor horizontal cooperation, this arrangement ran the risk of inertia after project preparation as the interest of the various stakeholders waned and the PLG did not sustain the necessary commitment, coordination and momentum.

(b) Quality of Supervision Rating: Moderately Satisfactory

57. The Bank’s supervision was deemed moderately satisfactory given the overall success of the project with moderate shortcomings. The Bank approved the project in May 1998 and was declared effective in September 1998. The frequency of supervision missions was appropriate and specialists with relevant skills were brought in as needed, although the outbreak of SARS in 2003 hindered supervision for a period of time. Back-to-office reports and management letters were generally comprehensive, and usually action- oriented.

58. While the project’s implementation was rated satisfactory on all ISRs from 1998 (project start) until 2005, a Quality of Supervision Assessment in 2006 (QSA7) had an overall rating of “moderately satisfactory” and concluded that the Bank could have been more proactive in finding solutions to the problems that delayed implementation, perhaps with more effective use of field office staff for supervision. For example, disbursements early on were slow because staff were unfamiliar with the Bank’s procedures and rules, and contractors were slow in filing invoices. Even after the original loan closing date had passed, less than US$80 million had been disbursed from the loan out of the US$180 million remaining after the restructuring. This is a common problem for a new borrower and could have been dealt with sooner through: (1) a targeted workshop at project launch focusing on financial management and disbursement issues, and (2) more proactive interventions when it became clear that the Guangzhou Finance Bureau was contributing to the delays of withdrawal applications. In retrospect, the Bank’s supervision should also have identified the value of certain indicators that appeared overly optimistic, particularly those with impact areas beyond the project.

59. Though the financial management shortcomings of the borrower’s resettlement program were significant (see Section 2.4), the audit process complemented by the Bank’s supervision effectively addressed the problems. The Bank found shortcomings in the financial control structure, but no evidence of fraud or wrong-doing.

60. The Bank also showed due flexibility in discussing alternative approaches to allow Guangzhou to use the savings, both as regards additional components consistent with the original project developmental objective and in raising the disbursement percentage for the final loan extension.

(c) Justification of Rating for Overall Bank Performance Rating: Satisfactory

18 61. The Bank’s overall performance was satisfactory based on the quality of the project at entry and during supervision. There has been substantial completion of the project without compromising environmental, social, or financial safeguards. The design and implementation also ensured the delivery of a majority of the project development objectives.

5.2 Borrower Performance (a) Government Performance Rating: Satisfactory

62. The performance of the government was satisfactory considering the complexity of the project design and novelty of some interventions. The primary investment, the Ring Road, was completed in record time (18 months opposed to scheduled 5 years) with high quality, within budget, and featuring state-of-the-practice environmental mitigation measures (noise-dampening pavement, over 22 one-way km of noise barriers and double glazed windows for 5000 households).

63. The resettlement program epitomizes the unprecedented complexity of the development challenges in China. Fifteen thousand households, shops and businesses were moved in less than one year to minimize the disruption from the construction and to deal with a very rapidly growing congestion problem. It is unlikely that there are many projects in the history of development (Bank-financed or otherwise) of this dimension and speed. In the end, the program was considered very successful and the Bank’s review concluded that the issues raised were not so much with the substance of the resettlement actions, but the regulation, management and internal control systems needed to govern such a financially large undertaking. From all accounts, Guangzhou has taken on this lesson and moved to address the gaps.

(b) Implementing Agency or Agencies Performance Rating: Moderately Satisfactory

64. The performance of the implementing agencies was moderately satisfactory. Nearly all components were completed as planned, but the project was very slow to disburse, had to be restructured (including the cancelling of US$20 million), and the loan was extended by four years. Progress on the smaller components in particular was considerably delayed and four extensions of the closing date were required for substantial completion.

65. Project governance, including the PLG, was often inconsistent on non-road investments, which greatly contributed to delays. However, institutional development and implementation improvements have been continuous. For example, the third phase of the traffic management program was a considerable improvement over the first two phases, reflecting continuous learning by the City. It recommended incorporation of the latest international thinking on bus lanes and bus rapid transit, channelization and pedestrian safety islands, and physical separation through curbs and ‘green islands’. The extended duration of the project coupled with regular turnover necessitated additional institutional strengthening and training.

19 (c) Justification of Rating for Overall Borrower Performance Rating: Satisfactory

66. The satisfactory rating is justified by performance of the government and implementing agencies, including the adoption of institutions, policies and programs in support of the project objectives described above.

6. Lessons Learned

67. Project design and governance should carefully consider the institutional capacity for each component and recognize that progress may not occur in parallel. Major challenges were experienced with the “softer” components due to weaker institutional capacity. The role of a project leading group is essential to ensure that the various components are implemented in a coordinated fashion, but sustaining their interest and effective functioning is difficult to achieve. Moreover, setting up institutional capacity for what may be a short but intensive resettlement or a prolonged environmental mitigation program demands special care. For example, the Project showed the need to deal with noise mitigation not just during the construction but on a continuing basis during operation.

68. Computer-based management systems require exceptional inter-disciplinary coordination and specialized experience for procurement.2 The technical complexity of these systems, which often involve intellectual property rights embodied in proprietary software, is complicated by the procurement policies that aim to promote competition. Close coordination is needed between specialists who understand the business processes being computerized, technology options, and procurement. A technical and functional architecture encompassing the project is also needed to ensure current and future system interoperability. Guangzhou’s GPS-based bus dispatching and monitoring system, which also provides real-time passenger information, was eventually scaled up to the entire bus fleet and is a model for other cities.

69. Formulating a comprehensive strategy with government ownership is crucial to institutional reform and implementation of innovative urban transport initiatives. A lengthy but very successful urban transport strategy effort and project preparation period anchored transport investments in Guangzhou for over a decade. Guangzhou is a model for other cities in the effective demonstration of low-cost traffic management investments, representing the first instance in China where the traffic police collaborated with planning and municipal engineering bureaus to design and implement such schemes. Furthermore, the Project initiated important institutional reform in the structure and operation of bus services. Discussions during preparation resulted in a successful, state-of-the-practice model of publicly-controlled (but franchised) and privately-operated bus operations.

2 The Bank’s task team is distilling this lesson and additional experiences from the technology implementation and related institutional issues in a technical note (to be published) entitled “Bus Fleet Management Systems: Improving Public Transport in China.”

20 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies 70. A Bank ICR mission was undertaken in Guangzhou on June 10-11, 2008. The Project Office commented that the Bank’s ICR made a true and precise description of the project, and a fair and objective appraisal of the outcomes. A summary excerpt of the borrower’s ICR is included in Annex 7.

21 (b) Cofinanciers None.

(c) Other partners and stakeholders (e.g. NGOs/private sector/civil society) None.

22 Annex 1. Project Costs and Financing

(a) Project Cost by Component (in USD Million equivalent) Actual/Latest Appraisal Estimate Percentage of Components Estimate (USD (USD millions) Appraisal millions)* INNER RING ROAD 431.5 1,037.5 240% TRAFFIC MANAGEMENT & 27.7 SAFETY 45.6 165% PUBLIC TRANSPORT 19.0 19.7 104% VEHICLE POLLUTION 7.6 CONTROL 11.6 152% ROAD MAINTENANCE 6.7 14.0 208% TECHNICAL ASSISTANCE 9.4 10.2 108% GUANGFO ROAD Added 64.9 n/a

Total Baseline Cost 501.8 1,203.4 240% Physical Contingencies 36.0 n/a Price Contingencies 48.2 n/a Total Project Costs 586.1 1203.4 205% Project Preparation Fund 0.00 n/a n/a Front-end fee IBRD 0.00 n/a n/a Total Financing Required 586.1 1203.4 205%

* The actual costs reflect a much expanded scope of the project in civil works (widening of Ring Road and addition of Guangfo Road), expanded resettlement program, and environmental mitigation (22 km of noise barriers).

(b) Financing Appraisal Actual/Latest Type of Estimate Estimate Percentage of Source of Funds Cofinancing (USD (USD Appraisal millions) millions) Borrower 386.1 1122.8 291% International Bank for Reconstruction 200.0 and Development 103.0 51%

23 Annex 2. Outputs by Component

Components PAD At Project Completion Part A: Inner 1. Construction of the Inner Ring Road including: 1. All work completed. Ring Road (a) construction of 15.5 km of an elevated Changes included: highway, with grade-separated interchanges, - additional 2 lanes of primary roads and access ramps to the street traffic in sections with network, and (b) upgrading of 15.5 km of existing 4 lanes ground level roads underneath the elevated - addition of the highway; and (c) provision of noise barriers and Guangfo Radial Road traffic management equipment for said sections (5.5 km) of the Inner Ring Road. - 67,478 m2 of 2. Resettlement, rehabilitation of and insulated windows compensation for people affected by the project. - 22.1km of noise barriers and 800,000 sq.m. of sound isolation windows 2. All work completed.

24 Part B: 1. Carrying out of a program of traffic 1. All work competed, Traffic management in Guangzhou through civil works except pedestrian Management and the provision of equipment, consultant information system and Safety services and training to include: (dropped from project, to a) establishment of a bus lane network of 5 be locally funded) km; (i) pedestrian facilities consisting of 2. All work completed, sidewalks and footpaths of 2 km, 30 except for ongoing pedestrian crossings equipped with training activities. refuges, signal controls and special facilities for the aged and the handicapped; and (ii) segregated bicycle routes of about 2 km. b) installation and replacement of traffic signals and controllers; c) monitoring and control of traffic on the Inner Ring Road; and d) parking management. 2. Carrying out of a program of road safety, through the provision of equipment, consultants services and training to include: a) updating of the traffic accident management computer software; b) undertaking of an analytical review of accident information collection procedures; and c) implementation of accident reduction measures.

25 Part C: 1. Construction of: (a) a bus maintenance depot at 1. All work competed. Public Longxi, (b) a related waste water treatment plant; Transport and (c) provision of maintenance equipment for 2. All work completed: said maintenance depot. - Bus dispatching and 2. Carrying out of a program to develop public monitoring system transport in Guangzhou, through the provision of covering entire fleet equipment, consultant services and training to (8374 buses) installed include: in 2006 a) development of information systems for - A single advanced the location, operational and financial pilot bus was procured control, regulatory management and service planning of buses; b) establishment of a pilot system for bus operations and management; c) carrying out of a program to test selected buses with more advanced and environmentally benign specifications on the main routes for purposes of determining the most suitable types to be operated in Guangzhou; and d) carrying out of a program of maintenance of public transport buses. Part D: Carrying out of a program to control and reduce All work completed, Vehicle air pollution from mobile sources in Guangzhou except: Pollution through the provision of equipment, consultant - Vehicle emissions Control services and training, such program to include: research center was (i) initiation of the distribution of unleaded cancelled in 2006 as gasoline; standards set by the (ii) strengthening of the vehicle inspection national government. and maintenance (I/M) system; - I/M equipment (iii) strengthening of the vehicle emission subcomponent research centre; and (iv) improvement cancelled and financed of the air pollution monitoring network. using local funds - Noise monitoring equipment added Part E: Road Carrying out of a program of road maintenance Pavement and bridge Maintenance management in Guangzhou through the provision management system of equipment, consultant services and training to procured and installation include: undertaking of a comprehensive will continue after inventory of maintenance requirements and project closing using updating of the maintenance expenditure local funds. requirements.

26 Part F: 1. Strengthening of the managerial, technical, 1. All work competed. Institutional planning and implementation capacity of the 2. All work completed, Development municipal agencies involved in aspects of city except contracts for transport, through the provision of equipment, studies to remain open consultant services and training. after project closing: 2. Carrying out of studies to assist Guangzhou to - Guangzhou Urban formulate plans and policies in respect of, inter Transport Improvement alia, motor vehicle pollution control, traffic Implementation demand management, bus operations and Schemes. management. - Guangzhou Project Management Information System and Guangzhou Transport GIS System. - Operational Project Management Study

27 Annex 3. Economic and Financial Analysis

Tables A and B are the economic analyses for the Ring Road and Traffic Management components, respectively, using the benefits and costs presented in the borrower’s ICR from May 2008. The remaining components under the project were smaller in cost and less amenable to a quantitative cost-benefit analysis, but international experience has shown that these types of investments are cost-effective.

The main assumptions used in the economic analysis were: • The local economy would continue to grow at about 8 percent per year over the evaluation period and motorized vehicle ownership would grow at about the same rate. • The value of time for passengers was assumed to be equal to the wage rate and vehicle operating costs were consistent with those used recently in other highway projects in China. • The traffic management component of the project was assumed to result in a suppression of 20 percent of the motorized trips that would otherwise be made to the central area. The associated metro and outer area highway developments would take place as planned.

28 Table A: Guangzhou Inner Ring Road Economic Analysis

Benefits (million RMB) Costs (million RMB) Travel Acciden Residu VOC time t al Invest- O&M Net Year savings savings savings value Sum ment costs Sum Value 1998 1,112 1,112 (1,112) 1999 4,360 4,360 (4,360) 2000 573 289 4 866 1,584 102 1,686 (820) 2001 657 331 5 993 397 117 514 479 2002 733 369 5 1,107 100 130 230 877 2003 784 395 5 1,185 100 139 239 945 2004 837 421 6 1,264 25 149 174 1,090 2005 857 432 6 1,294 152 152 1,142 2006 813 409 6 1,228 145 145 1,084 2007 837 422 6 1,265 149 149 1,116 2008 666 545 6 1,218 153 153 1,064 2009 530 705 6 1,241 158 158 1,084 2010 422 911 6 1,339 162 162 1,177 2011 491 930 7 1,428 165 165 1,263 2012 573 949 7 1,528 169 169 1,359 2013 667 968 7 1,642 172 172 1,470 2014 777 988 7 1,772 176 176 1,597 2015 906 1008 7 1,921 179 179 1,742 2016 1007 1026 7 2,040 182 182 1,858 2017 1119 1045 7 2,172 186 186 1,986 2018 1245 1064 7 2,316 189 189 2,126 2019 1384 1083 8 2,474 192 192 2,281 2020 1538 1102 8 1535 4,184 196 196 3,988 Total 17,417 15,392 132 1,535 34,477 7,677 3,362 11,040 23,437

NPV (@12%) 1.094 Billion RMB NPV (@12%, US$1=8 RMB) US$147.9 Million IRR 14.3%

29 Table B: Traffic Management Component Economic Analysis

Millions of RMB Sum of Investment O&M Sum of Year Benefits* Costs costs Costs Net Value 1998 - 25 25 (25) 1999 - 50 50 (50) 2000 6 50 4 54 (48) 2001 7 50 5 55 (47) 2002 16 37 5 42 (26) 2003 32 25 10 35 (3) 2004 43 25 12 37 6 2005 85 25 25 50 34 2006 86 25 25 50 35 2007 115 25 35 60 55 2008 123 35 35 88 2009 132 35 35 96 2010 141 36 36 105 2011 151 36 36 116 2012 162 36 36 127 2013 175 36 36 139 2014 188 36 36 152 2015 203 36 36 167 2016 219 36 36 183 Total 1,883 337 443 780 1,103 * Sum of Benefits includes all relevant benefits calculated in the borrower’s ICR using standard Chinese methodologies, including time, accident, and other savings from traffic improvements due to SCATS, junction channelization improvements, and bus lane efficiency improvements.

NPV (@12%) 112.6 Million RMB NPV (@12%, US$1=8 RMB) US$15.2 Million IRR 18.3%

30 Annex 4. Bank Lending and Implementation Support/Supervision Processes

(a) Task Team members Responsibility/ Names Title Unit Specialty Lending Richard Scurfield Task Team Leader EACCF Peter Midgley Former Task Team Leader EASTR Stephen Stares Former Task Team Leader EACCF Hoon Mok Chung EASFP Mary Judd EASSD Hoi-Chan Nguyen Sr. Counsel LEGEA Richard Leonard EASTR Robin Carruthers EASTR John Flora TWUTD Zhi Liu Lead Infrastructure Specialist TWUTD Yan Zong Transport Specialist EACCF Anil H. Somani Consultant EASTE Tilly Chang Rodney J. Stickland Consultant EASTE

Supervision/ICR Jitendra N. Bajpai Adviser EAPVP Christopher R. Bennett Sr. Transport. Specialist EASTE Edward B. Dotson Consultant EASTE Boping Gao Consultant EASUR Yi Geng Financial Management Specialist EAPCO Dahong Li Consultant EASTE Zhefu Liu Sr. Social Development Specialist EASSO Graham Smith Consultant EASTE Anil H. Somani Consultant EASTE Rodney J. Stickland Consultant EASTE ECSIE- Roy L. Sumner Consultant HIS Peishen Wang Environmental Spec. EASRE Dawei Yang Procurement Spec. EAPCO Yan Zong Transport Specialist EACCF Shomik Mehndiratta Sr. Transport Specialist EASCS Georges Bianco Darido Young Professional EASTE

31 (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage of Project Cycle USD Thousands (including No. of staff weeks travel and consultant costs) Lending FY93 4.51 FY94 4.21 FY95 109.91 FY96 210.55 FY97 167.31 FY98 232.03 FY99 5.74 FY00 0.00 FY01 0.00 FY02 0.00 FY03 0.00 FY04 0.00 FY05 0.00 FY06 0.00 FY07 0.00

Total: 734.26 Supervision/ICR FY93 0.00 FY94 0.00 FY95 0.00 FY96 0.00 FY97 0.00 FY98 10.51 FY99 79.04 FY00 26 93.29 FY01 17 46.30 FY02 16 93.64 FY03 14 52.28 FY04 12 62.14 FY05 19 41.72 FY06 19 58.32 FY07 8 37.59

Total: 131 574.83

32 Annex 5. Beneficiary Survey Results Not applicable

33 Annex 6. Stakeholder Workshop Report and Results Not applicable

34 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR

Excerpt from Borrower’s ICR dated June 4, 2008:

“Through ten years joint efforts of World Bank and Guangzhou, the predetermined target, was fulfilled, which are as follow:

1. To improve center road network service level and reduce congestions. The evaluation indicators of this objective are shown in Annex 1 table1 and table 2. Screen- line surveys in 1999 and 2000 showed that traffic volume decreased by 14% and 6% respectively. But in 2001, traffic volume was 13% above the base year and was predicted that the rising would continue. Considering ever-increasing trend of traffic volume and limitation of charges, GCCTPO and World Bank codetermined not to carry out screen- line surveys. Compared with base year, the speed of through traffic in central district on N-S corridor increased by 33% in 2001 while on E-W corridor the speed increased by 49% .

2. To improve capacity of public transport corridors in city center. The evaluation indicators of this objective are bus speed and percentage share of bus trips, as shown in Annex 1 table4. Compared with base year’s 11.2km/h, the bus speed increased by 63% in 2006, while the percentage share of bus increased from 16% to 22.3%. The predetermined target has been achieved.

3. To reduce air pollution relatively. The indicators of this objective are shown in 3 Annex 1 table 6. Compared with base year, NOX decreased to 0.117mg/m in 2006 from 0.151 mg/m3 , dropping by 23%,while CO decreased to 1.55 mg/m3 from 2.89 mg/m3 , dropping by 46%.The predetermined target has been achieved and sustained.

4. To reduce per capita traffic accident rate relatively. The indicators of this objective are shown in appendix 1 table 3. Traffic accidents per 10,000 persons dropped from 0.85 in base year to 0.67 in 2006, while traffic fatalities per 10,000 persons dropped from 0.11 in base year to 0.05 in 2006. The predetermined target has been achieved.

5. To improve the effectiveness and efficiency of road maintenance. The evaluation indicators are shown in Annex 1 table 7. The availability rate of major arterial road rose from 50% in base year to 91% in 2006, while the availability rate of minor arterial road and collectors rose from 80% to 83.5%. The predetermined target has been achieved.

6. To strengthen management ability of urban transportation institutions. More than 1000 person times, in 180 groups accumulatively were arranged to take inspection and training. The ability of management, research and technology of government institutions which administrate urban transportation were improved greatly. predetermined target has been achieved.

35 The project content were carried out according to original items, both sides have adjusted and increased a batch of sub-projects according to in-depth request during the implementation. The implementation and evaluation of each sub-project are as follows: I. Inner Ring Road 7. The inner ring road is an express viaduct belt road, which is built on the original road of central area. The total length is 26.7km. According to the traffic demand and implementation conditions, some sections of viaduct are dual 6 lanes; some are dual 4 lanes with emergence stop area, others are on the ground. There are 12 interchanges, 13 ramps and 3 over-river bridges along IRR in total .The running speed of main line is 60 km/h.

8. Land acquisition and resettlement of IRR: on January 5 1998, Guangzhou Urban Housing Units Management Office announced demolition bulletin of inner ring road first phase project-Dongshan interchange. In mid-May of the same year, Guangzhou municipal Party Committee and municipal government proposed to shorten IRR project period from 5 years to 2 year. Subsequently, they proposed that inner ring road must be finished within one year. At the beginning of July, the second, third, fourth phase removal of IRR were at preparatory stage; the whole IRR removal and resettlement work was fully carried out from October and demolition of civil works was finished smoothly under the guidance of GMCC and GREEO on March, 1999. At this time, the total amount of demolition was 14737 households involving 44,000 persons, while area was 759,700 square meters.

9. Demolition engineering of IRR created four “first” in Guangzhou demolition history. It was the first project that international financial organization (World Bank) participated in; it was the first time that independent supervisor was designated by international institution; it was the first time that computer was introduced to demolition project management; and it was the first time that detailed public participation and consultation plan was covered. Meanwhile, it was the largest demolition project with shortest period and least complaint.

10. On April 8, 1999, the IRR was in full-scale construction. According to geographical location and construction organization, it was divided into four parts namely west ring road, north ring road , east ring road and south ring road in which west ring road and north ring road were built with cooperation of World Bank ( eight sections in all) and the others were invested by Guangzhou independently (12 sections in all). On December 25, 1999, the main project of IRR was completed. On January 1, 2000 it was open to public and on January 28 of the same year it was completely open to traffic.

11. The construction management and operation of IRR was implemented by GTPCC. All sections of IRR project were bid for according to the international common practice. The civil works design of IRR was undertaken by GMEDRI and Guangdong Construction Design and Research Institute which are both national designing institutes of first rate. Construction unit for IRR project was chosen through public competitive bidding (PCB) and national competitive bidding (NCB), and their procedure was according to World Bank procurement guidelines. The bid of IRR civil works was got by

36 21 construction enterprises at the national first class including the Guangzhou Municipal Civil Engineering Group Co., Ltd., CHINA Hong Kong Fourth Flight Operations Engineering Bureau, Guangzhou Municipal Construction Machinery Co., Ltd. and so on.

12. The construction of IRR was stressed on not only speed but also quality and the quality were not influenced by the short project period. To ensure project quality, GCCTPO insisted on testing and inspecting every link, every process and every kind of material strictly, and invited road and bridge experts to carry out construction technical guidance. Municipal quality supervisors and municipal engineering supervisors monitored the quality of IRR project and formed a "three-pronged" which was self- inspection of construction enterprises, the independent Commissioner recheck and quality supervision units further, therefore the project quality was under omni-directional monitoring. Ultimately, through final completion acceptance and verifying check by Guangzhou Quality Supervision Station, all designs met requirements and quality conformity rate was 100%.

13. IRR was put into use in January 2000 completely and the social and economic benefits can be summarized as follows: a. IRR played a connection role between city center and outlying area. Through construction of IRR, four lateral and four longitudinal major arterial roads (four lateral major arterial roads : Huanshi Road, Dongfeng Road, Zhongshan Road, Yanjiang road; 4 longitudinal major arterial roads: Liwan Road, Renmin road, Jiefang Lu, Donghaoyong Viaduct) have been linked organically and form new layout- square and radiation, so road network of central area have been optimized. b. Traffic capacity was improved by implementation of IRR. It provided 210,000 vehicles -kilometers capacity for central district which accounted for 30% of artery capacity in 2001. c. IRR alleviated traffic pressure inner and outside area, especially city center. The saturation of IRR increased seriously. For example: in 2001, saturation of IRR was just 0.48, in 2005, it increased to 0.85. By contrast, the network saturation of central area in the same period is only 0.8 and 0.88. Because of IRR undertaking a lot of traffic, the road services of central area remained at acceptable level. So IRR contributed a lot to central area. d. Construction of IRR accelerated land development and optimization of surrounding areas. IRR construction promoted the optimization of land use of central area constantly. There was stratification and decentralization trend in the central area. For example, coast of the Pearl River (Ersha Dao, Binjiang Road area) emerged new high living area; Yuexiu and Dongshan districts also emerged living grade improving and location concentration. In addition, traditional commercial advantage、area status and characteristics were enhanced. And there was commercial 、leisure and tourism integration trend. For instance, some areas began to concentrate on original commercial maturity like Shangxia jiu Road, Beijing Road, Nonglin Middle Road and Zhongshan

37 Road and so on. As a result, Hill pattern commercial network was formed and became the backbone of Guangzhou City. Some office areas like Huanshi Road and Dongfeng Road were also further strengthened. And Pearl River coastal region will become the new regional office. As the same time, pedestrian area, in which commerce、leisure and tourism were integrated, also emerged. The combination of modern and custom recreation areas along Pearl River and large commercial facilities, commercial area (Such as the Beijing Road, Shangxia jiu Road) in center was a good example. e. Traffic environmental impact of IRR. IRR construction made certain environmental impact on alongside, but improved environmental quality of centre area generally. The residents reflected that the more prominent issues were IRR large capacity, high-speed and large noise effect. In order to solve the noise problem, soundproof windows were installed and achieved good effect. Guangzhou’s climate is humid, sunshine is very critical. After the construction of IRR, the duration of sunshine shorted, several residents reflect a great affect; the majority reflected declining of sunshine but not affecting normal life. On the other hand, because part of IRR passed through old town, by demolitions, the old, dirty, and chaotic appearance was changed. On this extent, completion of IRR improved people’s living environment. f. Economic benefits evaluation of IRR According to economic assessment indicators in this report: EIRR is 18.49%, ENPV is 9.63272 billion yuan, EBCR is 2.31, EN is 9.02. Under the worst circumstance- investment increased by 20% and benefits decreased by 20%, EIRR is 12.11%, ENPV is 4.12042 billion yuan, EBCR is 1.40 and EN is 15.4. All indicators meet requirements. This shows that the project is reasonable. II. Traffic Management and Safety 14. Traffic Management and Safety included four phases. The former two were originally planned while the later two were added. The first phase, as a demonstration project, mainly transformed junctions of old city center; the second phase paid more attention to junctions of Liwan, West Mountain, Yuexiu districts and so on. Meanwhile, because the former two phases had achieved good effect on traffic improvement, World Bank and GCCTPO agreed with adding third and fourth phases to expand implementation effect continuously. In particular, the third phase implementation range was the built-up areas around city ring expressway, especially Haizhu, Tianhe, Fangcun district. The fourth phase-SCATS system was added to further expand sub-project on March, 2006. In a word, this sub-project contained two parts: Traffic facility improvement and Road user's safety education.

15. Traffic facility improvement mainly included: civil works, SCATS procurement and installment project, CCTV procurement and installment project, traffic information induction variable message board, and GIS procurement. • Civil works: It contained three phases, including reforms of more than 350 junctions and 20 arterial roads. This project has been finished in June, 2006. ( including : Bus priority network, Pedestrian facilities improvement, and reform of traffic black spot and so on)

38 • SCATS procurement and installment: The purpose was to extend traffic control system of Guangzhou. The specific work was operating the latest RTA PC SCATS software so as to realize intercommunication between a control center and 5 sub- control centers. The finished time was December 2007. • CCTV procurement and installment: The main work of this project was introducing CCTV system. Detailed work was installing 30 videos in city center. Monitoring pedestrians and vehicles in real time, it controlled urban traffic on the whole to make sure traffic diverging reasonably and traffic violation descending, and further promote urban traffic management level. These works have been finished in August, 2006. • Traffic information induction variable message board and GIS procurement: Main work of this part was installing traffic information induction variable message boards on main skeleton road network in Guangzhou. Based on real-time traffic data, through various variable limit speed device, variable information board, parking information inducing card and so on, traffic real time condition and control programs could be sent out timely to induce the traffic flow, evacuate blocking, so that people could reach their destinations rapidly and safely. These equipments have been installed in June, 2006. • Road user's safety education: The main purpose was improving traffic quality of citizens by kings of propaganda methods. Since December 2003, the project has carried out 8 TV propagandas, 31 media notices and wall charts, manuals, cards and other forms of materials a total of 2.62 million. It has been finished August 2005, and achieved good effects.

16. The implementation of World Bank's traffic management and safety promoted road traffic management level to a new step. The project has improved the relationship between people and car, especially citizens’ quality. The project was building with the principle of “people-oriented” and concerned about disadvantaged groups in society, and produced far impact on the harmonious transport, thus prompted harmonious development of Guangzhou city.

17. The implementation of this project regulated traffic order, improved about 30% of motor vehicle average speed in centre. Bus lane average speed has reached to 15 km/h and increased by 20% in comparison with that of 1998. In addition, Number of traffic fatality also decreased by 336, about 18.2%.The passenger volume of public transport increased from 10.4million in 1997 to 20.77 million in 2005. Meanwhile, the proportion of public transport also increased to 22.31%, ranked the first in various auto modes, which increased by 19.6% in comparison with that of 1998. Social economic evaluation also shows, until 2007, the project saved passengers’ time 80 million hours, which was equality to 3.51 million Yuan. Benefits of accident loss and public transport operation reducing were 2.27 million Yuan and 2.30 million Yuan. The total economic benefits were about 12.25 million Yuan, and this project relieved the traffic congestion in Guangzhou urban area, ensured the traffic safety. In particular, the implementation of Road user's safety education changed concepts of traffic participants such as traffic departments and road users, improved citizen's traffic consciousness, and gradually promoted traffic management to a new step.

39 III. Public Transport Improvement 18. Public Transport Improvement Project, as an important composition of Guangzhou City Center Transport Project, obtained great emphasis of provincial and municipal governments and World Bank. There were three parts: Bus Automatic Monitoring and Dispatch System, Longxi Depot, Environmental Protection Demonstration Car. In order to improve public transport services level, Bus Automatic Monitoring and Dispatch System could monitor, track and schedule 64 city bus lines and 1424 buses real-timely by GPS (Global Positioning Satellite) technology, and also provided bus information timely with 310 electronic stops (200 intermediates stops and 110 Terminus). The specific work plan was as follow: Contract about system development and installation was signed on May 22, 2006. This project has finished in October 2007. Now it has been put into operation.

19. Longxi Depot provided three types of maintenances and parking services for 620 buses from southwest of Guangzhou. It has been finished in October 2007 and transferred to GTC.

20. A pilot Bus has been purchased by introducing international bus with up-to-date technology. It provided reference for Guangzhou about vehicle type selection in future.

21. The implementation result of the project is basically satisfactory. Bus Automatic Monitoring and Dispatch System and Longxi Depot have basically reached the predetermined target. The intellectual deployment system of public transit has improved the overall service level and intelligent intensity of urban public transport, and successfully changed from line dispatch to area dispatch. With the sub-project implementation, public traffic become attractive, while the private traffic reduced and traffic jam and environmental pollution were also alleviated. Take the Second Automobile Company as an example; there were four bus routes such as 283, 297, 527 and 803, which have realized intellectual dispatch. Assumed that travel distance was not added, comparing with same period of last year, income has increased by 12.98% and the income per thousand car-kilometers increases by 13.49% in May to July, 2007. The accomplishment of Longxi Depot has filled the blank field of Fangcun district in Guangzhou, and reduced the deadhead kilometers. At the same time, as the depot located out of the centre district, it had great contribution to improve transportation efficiency of public transit, utilize the land resource effectively, and relieve traffic pressure in city centre, so that the traffic condition in centre was improved.

IV. Motor Vehicle Emission Control 22. The final implementation contents of MVEC included IRR automated noise monitoring system and automated motor vehicle pollution monitoring system.

23. GCTP lasted 9 years, under the situation of changes such as the regulation and standard of motor vehicle in China, the social economic level of Guangzhou, environmental monitoring ability construction, etc. the contents of project were adjusted, particularly, the construction of motor vehicle emission centre and the system of motor

40 vehicle monitor and maintenance were cancelled. Although some sub-project contents were cancelled, World Bank thought some Guangzhou motor vehicle emission control work had already exceeded the origin contents, and environment protection work had been forefront among Chinese cities. This sub-project perfected networks of environment monitoring, improved ability of environment detecting, and could provided reasonable data for research on reducing pollution.

V. Road Maintenance 24. Guangzhou Municipal Engineering Maintenance Department was responsible for specific implementation. This project mainly carried out Road and Bridge Facilities Management Systems and three batches of road maintenance equipments procurements as well as new addition equipments procurements.

25. Implementation of Road Maintenance promoted road maintenance work of Guangzhou. It kept road in good condition of arterial road more than 90% from 2001 and minor arterial more than 83%. These efficiently improved road avail ability rate and evenness, accelerated efficiency of maintenance work, and further improved road maintenance quality and scientific and technological innovation ability of Guangzhou. In addition, purchasing and using road maintenance equipments made Guangzhou road maintenance equipment level, engineering level and management level reach to domestic leading level, and realized modernization of equipment and technology maintenance.

VI. Technical Assistance 26. The functions of this project were making the relevant personnel who participated in project construction trained, improving equipment ability and staff technical and management level of sub-project and relevant units by providing local and overseas trainings and consultation so that the whole project could be implemented on planned schedule.

27. The project has been implemented for about ten years and covered numerous sub- projects, total including 110 domestic trainings, 81 abroad trainings, 28 local and international consultant services and 15 science researches.

28. The benefits of Technical assistance were mainly as follows: a. The popularization of science research achievements overcome technical difficulties during implementation of GCTP, improved construction methods, reduced number of staffs and equipment investment, shortened construction time and decreased cost. For example, the application of external prestressing technology on IRR Bridge did not only reduce time and cost, but also created domestic construction precedence of reinforced concrete overlay beam. In addition, incremental launching method and simulation analysis technology and relevant technological research results were popularized in Guangfo Road Construction, also became new technology representatives.

41 b. TA project provided technical support for other sub-projects, especially difficulties of design and implementation so as to promote other sub-projects smoothly. c. The implementation of trainings and inspections, improved personnel quality and work efficiency, accelerated implementation progress. In addition, expert consultations reduced project risks and unnecessary expenses.

29. In short, Technical Assistance provided technical support for other sub-projects. Regardless of project quality, progress and staff cost, it achieved good social and economic benefits.

VII. Guangfo Road 30. Guangfo road, as west export of Guangzhou 7 radiation lines, was an important composition of Guangzhou express way network. Its complementation fundamentally improved traffic capacity of Guangzhou west export, relieved along traffic congestion and promoted Fangcun region's socio-economic coordinated development.

31. Guangfo road started from Zhongshan 8th road, passed Zhujiang East Bridge and Da Tansha district, ended to Fangcun road .Particularly, A and B viaducts were set up along sides of Sanmao railway. Full range of one direction length was about 2.5km. Line A is 2.598km while line B is 2.459km. There are 4 east and west dual over river bridges and Fangcun interchange with altogether dual 6 lanes.

32. GCCTPO was responsible for this project. The design unit was Guangdong Architectural Design and Research Institute. Guangfo first phase civil works and supervision units were chosen by international competitive bidding and national competitive bidding respectively. The final construction units were Guangzhou Municipal Engineering Company, Wuhan Municipal Engineering Company, Anhui Road and Bridge Company and China 16th Railway Engineering Bureau. Final supervision unit was Guangzhou Guangda Project Management Limited Company. On July 1, 2003, the civil engineering started. On February 16, 2005, four over Pearl River Bridges and main line were open.

33. In 2005, Guangfo Road was open to operation. The average traffic volume of all lanes would reach to 75819pcu per day. In 2007, the average traffic volume of all lanes would reach to 92700pcu per day, and average speed was 55km/h, which was in accordance with the standard design speed. Influenced by various factors, the project failed to finish constructing on December 31, 2004 according to the original plan, but the total construction quality was better, and it played have much effect on relieving traffic pressure of the west export of the city.

34. Through national economic benefits calculation and sensitivity analysis, we can find, the project EIRR was 24.51%, ENPV was 1444.46 million Yuan, EBCR was 2.17 and EN was 7.69. Under the worst circumstance-investment increased by 20% and benefits decreased by 20%, EIRR became 18.68%, ENPV became 9399.93million Yuan, EBCR

42 became 2.07, and EN became 10.6. All indicators meet request and proved that decisions of this project were correct and implementation was rational.

B. Evaluation of project executing agency Evaluation of World Bank 35. The evaluation result to World Bank’s performance is satisfactory. The World Bank has done massive difficult and effective work, which promoted the preliminary work of the project progressing powerfully. Since 1995, the World Bank had sent out the World Bank Investigation Group, which was made up of experts with rich experience in urban transportation to take preliminary work inspection for four times, and meanwhile, the World Bank tried their best to make Guangzhou Municipal Government understand the World Bank's relevant policies. They identified and evaluated the Project on the basis of experience which was gathering from transportation project implemented in china.

36. On the basis of full consideration of Chinese national situation and Guangzhou real traffic situation, the World Bank demonstrated and analyzed the optional loan project carefully to choose the highly efficient project of solving urban transportation problem. During preparation stage, The World Bank not only provided a loan, but also brought Guangzhou advanced idea and methods like TMS, the public transport institutional reform, advanced experience of road maintenance to promote urban transportation development. Meanwhile, in view of ability training of executing department, technical assistance project was set up to strengthen relevant departments’ ability. During the project appraisal, the World Bank evaluated management and consultation institution construction, project funds, load and loan repayment, EIA, resettlement and public participation, and provided suggestions.

37. The World Bank’s inspection team performed its duty carefully and handled various changes of the project flexibly and responsibly during the project implementation. The delegation, conducted by project manager visited Guangzhou a total of 27. During the inspection, the World Bank experts provided many constructive suggestions about TMS, resettlement, environmental protection and so on, and discussed the design and construction difficulties of Inner Ring Road and Guangfo Road. At the same time, the World Bank cared about project progress, required Project Office to provide project progress report on time and added explanation if the project was delayed. Except for the delegation’s inspection, the World Bank office in China gave a lot of help about project procurement, payment, financial management and operation to support Project Office’s work. Since SARS took place in 2003, the World Bank's supervision degree over the project decreased because of the condition limitation.

38. The World Bank fund management surveillance system is also perfect. After signing contract, the World Bank, according to the contract treaty, paid the loan amount on time. In contract executing phase, if that the project changed or non-predicative case took place resulted in increase of loan, a detailed written explanation material should be submitted according to World Bank stipulated procedure.

43 39. In this cooperation between World Bank and Guangzhou, there were also some problems. For example, in the examining and approving work, the project usually needs the World Bank and domestic examination and approval dually, thus examination and approval time was too long, the enterprise beard bigger risk and pre-payment time was too long. We suggest the World Bank integrate its procedure with domestic examination and approval procedure, simplify procedure, and enhance efficiency to reduce the examination and approval time under the premise of maintaining quality and quantity. Meanwhile, considering Chinese actual condition, it needs to use more flexible procurement way rather than the way of minimum price to win a bid only.

Evaluation of Project Implementation Unit

40. The evaluation result of Guangzhou project Implementation unit’s performance is satisfactory. GCTP is the second urban transportation project which World Bank carries on in China. Guangzhou municipal government pays much attention to this project， first-phase preparation of the project moved forward well, and the preparation was very perfect and effective. Since March, 1993, Guangzhou municipal government carried out subject study about “Guangzhou Urban Transport Study (GUTS1)”and “Guangzhou Urban Central Area Traffic Improvement Execution Scheme (GUTS2)”.This was the foundation of prophase preparation for Guangzhou City Center Transport Project (World Bank) loan. The research team had made success: the financing and repayment of loan plan was deeply researched, technical support service system was reasonable. In a word, the preparation work was totally good, and met the World Bank’s requirements.

41. The project concrete implementation organization used three-class management system, which consisted of leading group, project office and sub-project office. GCCTPO ,which was in charge of project implementation was a full-time project office, employed enough staffs, could consult with the leading agency effectively, and did properly with each sub-project office in the coordination and communication work. GCCTPO took the World Bank inspection team carefully, feedback their opinions and questions timely, solved difficulties that sub-project offices were faced with, simultaneously reported problems founded without delay. In order to assure communication with the sub-project office and other participation units, GCCTPO with the sub-project office also launched regular meeting each month to hear parties’ reports about project progresses and difficulties.

42. GCCTPO financial management is satisfactory, it established plan-fund department to manage project finance. Simultaneously, in Technical Assistance project, GCCTPO also sent corresponding staffs to participate in inspection and training, and the professional ability improved gradually. Problems occurred was able to deal with correctly, and the whole efficiency was improved much.

43. As direct executing agency, the sub-project office complied with procedure strictly, cooperated with GCCTPO actively, and also promoted personnel's quality continually through the Technical Assistance and training.

44 44. In sum, during the past ten years of project implementation, World Bank made joint efforts with related institute in Guangzhou. Good cooperation took place in every respect including project preparation, identification and implementation and so on. GCTP has brought Guangzhou advanced international experience and given security for sustainable development of urban transport.

C. Main experiences and lessons

I. Experiences

1) Leaderships’ focus and efficient organization are the foundation of project implementation.

45. GCTP is a large-scale comprehensive traffic improvement project. It involved wide area, and was urgent, difficult to coordinate. In order to organize the project efficiently, the project took PLG-GCCTPO- Implementation Units management mode to monitor project among entire process. Many miracles were created. Take the IRR as example, its original construction time was 5 years, while it was open to traffic only in 1 year through adopting some measures such as “green channel”, “two-way choice of demolition and resettlement”, “public participation” and so on. It created “high efficient”,” high quality”,” comprehension”, “struggle” spirits and became a high quality miracle in Guangzhou municipal engineering history.

2) Being familiar with World Bank Loan policy, coordinating domestic and World Bank procedure are critical for project progress.

46. The World Bank loan project does not only need to follow policy and procedure of World Bank, but also regulation and requests of domestic relevant departments. Being familiar with these procedures and requests; and setting up several important time nodes could guarantee consistence of progress. Being familiar with loan policy and procedure of World Bank is helpful for us to make preparation reasonably, maximally reduce commitment fee and increase quality of fund-use.

3) Introduction of new ideas, new concepts, and raising management level are important conditions for project promotion. 47. People-oriented and all-round developments are new management ideas. This project paid attention not only to construction process, but also to management system establishment, overall benefits and environment sustainable development. From project plan to implementation process, people-oriented and all-round development concepts were manifested everywhere. For example, through sub-projects implementation, related systems were established, bus priority was developed, use ratio of road resources was improved efficiently, road management level was improved, so goal of environment improvement was realized. In addition, demolition and resettlement realized society's prosperous life through guiding idea varying from “resettlement” to “re-housing”, and “two-way choice of material object and currency compensation”.

45 48. This project provides platforms of experience exchange and propaganda promotes innovation idea. From the perspective of management innovation, all projects implemented by GCCTPO have referred to international advanced contract management pattern, adopted international general FIDIC articles, introduced contract management, and established inspection mechanism. From the perspective of project implementation process , through exchange and cooperation with local and overseas experts, international advanced management experience and equipments, project cycle and construction cost were reduced, technical level of correlation departments was impelled to improve, city competitive power was enhanced. In addition, drawing support from the World Bank is also helpful for expanding influence power.

49. The project provides strict procedure and management experiences. For World Bank loan project, there are a set of management procedures adapting with project determination, appraisal, loan activation, implementation procurement, withdrawals、 account and payment, post evaluation and so on. These procedures have intense principle, policy, standard and pertinence.

50. Establishing good communication and coordination relationship is basis of project success. During the implementation, there were variable changes, which the loan agreement and project agreement cannot include and solve. Therefore, it needs to communicate with and ask instructions for project manager, officials and experts of World Bank in Chinese Representative Office. So that they understood project further. World Bank gave vigorously support on many aspects such as procurement, contract variations and payment and so on.

51. Comprehensive traffic improvement platform is established successfully.

52. Through project implementation, GCCTPO did not only integrate many fields such as infrastructure construction, traffic management, environment protection, public transport and road maintenance, but also established a comprehensive traffic improvement platform in Guangzhou successfully, which was the immaterial asset of Guangzhou urban transport. It mainly manifested as follow:

53. It improved field management level. This is an important cooperation target of municipal government and World Bank. By implementation, advanced management ideas have been fully absorbed; open bidding, engineering finance management and project management and so on are developed in local front row.

54. It enhanced Guangzhou traffic technique level. This project is an important platform, by which Guangzhou urban transport technology development can realize well connection with international. And Guangzhou municipal government realized the goal consciously. Project setup is foresighted, practically impels local transportation technology development.

46 55. It strengthened talent cultivation. Based on talent cultivation mechanism and strategy, Technical Assistance Sub-project provided 180 batches, more than 1000 people inspections and trainings for GMCC, GTC, GEPB, TPDGPSB，Traffic Planning Research Institute and so on. GCTP introduced advanced urban traffic management ideas, and cultivated modern management and technical talented persons who were familiar with international management procedure and could connect with international. II. Main lessons 1) Decision-making、management、organization institute for traffic integration should be guaranteed. 56. PLG was cancelled a period during project implementation. Without its organization, project work progress was slow-down, and there were some communication problems between GCCTPO and Sub-Project Office. So suggest enhancing coordination, holding meeting regularly to improve traffic decision-making and coordinated ability.

2) In order to guarantee the project development smoothly, GCCTPO’s construction should be strengthened.

57. Majority of contents were already implemented but parts of following work need continue to develop. Moreover, because Guangzhou new-round transport strategy planning has been carried out, GCCTPO needs to further strengthen its ability construction to promote sustainable development of Guangzhou transport.

3) Management procedures of World Bank and local should be better coordinated and simplified.

58. World Bank’s payment procedure is extremely strict, its examination and approval procedure is different from Chinese, and its payment time is longer, so that expected funds can not be used ultimately. In addition, it is usually complicated and long-term. With these differences, when a project is urgent to implement, World Bank’s loan can’t meet its demands, so some contents cannot obtain World Bank’s approval and loan can’t be fully used in project certainly. Thus, when World Bank and Chinese government choose World Bank Loan project, they should coordinate, simplify procedure and accelerate payment process together according to Chinese actual conditions World Bank’s requests.

D. Further actions of Guangzhou urban transportation system 59. Guangzhou will be constructed into a modern metropolis which leads Guangdong province, radiates southern China, impacts Southeast Asia, and becomes a city suitable for living and business, and will support 16th Asian Sports Meeting in 2010 and a new round revision of the urban overall planning. Under these backgrounds, it is crucial to provide a good transportation system. In 2006, Guangzhou timely launched a new round “Guangzhou Urban Transport Strategy Planning” (GUTS3). The first-stage study summarized traffic implementation after 10 years since the first round of traffic development strategic planning, scientifically diagnosed key points to current urban

47 transportation problems, deeply analyzed situation, opportunities and challenges that Guangzhou urban traffic faced. Based on resident trip survey in 2005, it also established traffic strategic model and put forward transport development strategy objectives, tasks, policies, layout and recent action plan. Its achievements have obtained approvals of local and abroad experts and have pointed out directions for next urban transport development.

60. In September 2006, Guangzhou Municipal Planning Bureau proposed the city development goal: "health and safety for all" at “Urban Traffic Forum”. In December, Guangzhou municipal government added “center adjustment” to original urban development strategy: “South Extension, North optimization, east progress, West Union”. “Center” means Guangzhou city center, and “adjustment” means perfection and promotion. The new concept shows that gravity of Guangzhou city development began to change from "development" to “promotion ".

61. Along with the improvement of living standards and promotion of scientific, balanced and harmonious development, as a city circle system, traffic supports “Center Adjustment " strategy strongly, and insures realization of city development goal-every person is healthy and safety. In order to carry out, deepen and carry out achievements of “Guangzhou Urban Transport Strategy Planning”, to alleviate traffic pressure in city center, to improve road safety, to promote scientific, balanced and coordinated development of all fields, to ensure Asian Games held smoothly, Guangzhou municipal government will further cooperate with World Bank about research of a new round “Guangzhou Urban Central Area Traffic Improvement Execution Scheme” (GUTS4). By means of travel and network models, this research will get the current and future trends, and form traffic-related standards used for sorting strategic programs. The specific improvement programs should be around but not limit to the following aspects:

(1) Road network improvement ƒ perfect road network structure and external connection, improve traffic nodes, adjust layout of connectors ƒ optimize and adjust traffic function of main corridors ƒ propose traffic organization optimized programs for key areas or nodes ƒ make road network planning for Asian Games stadiums ƒ Analyze future city road sections

(2) Public transport improvement ƒ propose distribution programs of pedestrian transfer facilities with integration of rail transportation and conventional public transit ƒ Bus priority/ traffic management integration • BRT network • bus station、operation、depot ƒ integration of fare and service • passenger information • improvement of public transport management and engineering methods

48 (3) Programs of slow traffic improvement ƒ sidewalk、pedestrian crossing facilities and pedestrian street ƒ bicycle network and parking facilities, especially the transfer between bicycle and bus or metro

(4) Road safety management program, including motor and non-motor traffic guidance

(5) Implementation programs of public parking ƒ propose public parking development policy and management measures of on-road or sidewalk parking according to parking demand management and parking industry development ƒ develop off-road parking facilities, ride-parking public facilities

(6) Implementation plan for improving freight transportation ƒ make plan for organization and operation ƒ study the relationship between goods transportation and urban transport ƒ put forward the planning of goods transportation passages (7) Study of the external contact of urban passenger and goods

(8) Implementation programs of ITS ƒ propose method for traffic signal coordinated control，particularly in critical regions ƒ make programs for ITS ƒ make ITS application programs to traveler information and traffic management

(9) Implementation programs of traffic demand management ƒ propose programs and measures of congestion pricing in center and other areas ƒ conduct parking management by charging

(10) Implementation programs of traffic environmental management ƒ popularize policy and measures for using clean energy and controlling vehicle emission to reduce air pollution

62. `Except for GUST3 and GUST4, in 2007, Guangzhou participated in urban traffic development plan, which is sponsored by World Bank with Global Environment Funds (GEF). Guangzhou obtained the qualification of demonstration city. As purpose of this plan is alleviating loan cost and stimulating traffic policies about reducing greenhouse gas by using IBRD loans and GEF. Guangzhou will carry out Transport Demand Management research to balance traffic demand, to save energy and reduce emission, and finally keep Guangzhou traffic sustainable development.

49 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders Not applicable.

50 Annex 9. List of Supporting Documents

Guangdong Provincial Audit Office. Memoranda on Audit Report. 2003-2006.

Guangzhou City Center Transport Project Office (prepared by Beijing ZZZD Traffic Engineering Technology Co., Ltd.). “Borrower’s Implementation Completion Report.” Draft dated June 4, 2008.

Guangzhou City Center Transport Project Office (prepared by Beijing ZZZD Traffic Engineering Technology Co., Ltd.). “Details of Economic, Financial Cost-benefit Analysis.” June 15, 2008.

The World Bank, Guangzhou City Center Transport Project: Project Appraisal Document, Report No. 17745-CHA, May 4, 1998.

The World Bank, Guangzhou City Center Transport Project Aide-Memoires and Implementation Status and Result Reports, 1998-2007.

The World Bank, Guangzhou City Center Transport Project Minutes of Negotiation, March 23, 2000.

The World Bank, Guangzhou City Center Transport Project: Loan Agreement and Project Agreement, Loan No. 4329-CHA, June 26, 1998 (Amended April 21, 2003).

The World Bank. Quality of Supervision Assessment (QSA7), 2006.

The World Bank. Quality at Entry Assessment (QAE), 1999.

51 IBRD 29423R JAPAN PACIFIC OCEAN Japan Sea of KOREA REP. OF PHILIPPINES Sea East China KOREA D.P.R. OF JILIN Sea TAIWAN Yellow SHANGHAI LIAONING ZHEJIANG JIANGSU FUJIAN TIANJIN ANHUI HONG KONG SHANDONG JIANGXI Guangzhou MACAO HEBEI BEIJING GUANGDONG BEIJING The Overpass HENAN of Meidong Rd. HUBEI HUNAN SHANXI

HAINAN NEI MONGOL NEI NEW VIADUCT (3 LANES) TOTAL LENGTH = 17.34 KM NEW VIADUCT (2 LANES) TOTAL LENGTH = 23.17 KM REBUILD EXISTING VIADUCT (3 LANES) TOTAL LENGTH = 0.93 KM REBUILD EXISTING VIADUCT (2 LANES) TOTAL LENGTH = 1.44 KM NEW GROUND ROAD (MAIN LINE, 3 LANES) TOTAL LENGTH = 0.19 KM NEW GROUND ROAD (MAIN LINE, 2 LANES) TOTAL LENGTH = 2.85 KM EXISTING ROAD & RIVER CROSSING BRIDGE TOTAL LENGTH = 3.3 x 2 KM RIVER CROSSING BRIDGE EXPANDED STRUCTURE TOTAL LENGTH = 0.5 x 2 KM GUANGXI

SHAANXI CHONGQING NINGXIA GUIZHOU VIETNAM CHINA . N.

D GANSU

G R

RD.

G G ON N IDO E

EID M SICHUAN

P.D.R. M MONGOLIA

LAO

RD. YUNNAN

N

The Overpass of Hengfu Rd. A

. H S

D. E NG

R

O H

SHI Z

RD.

1

RD. RD. o. o.

UAN

N ANLIE H

YONGFU I X

Overpass

.

Dongshankuo D

R

.

E

U

F

.

G RD.

RD

D.

. R

HU G

N HAIYIN O

HEN D BRIDGE

NG

E S D.

Haiyin Bridge

GSHAN R The Overpass of

Southern Side of

NGF

INNER RING ROAD: CONFIGURATION (NUMBER OF LANES) UA

ON .

LUHU RD. RD

O H

H

G AO AO

D I

GUANGZHOU CITY CENTER TRANSPORT PROJECT Z N

NGX

O

2 O

D

. D

o

N JIANGWAN BRIDGE .

LLY RD D. D.

GU ted) Sushe

E. va

le Overpass E R G

( N RD.

A N

of Luhu Rd. N A

The Overpass JIANG

.

RD

. NDE

D WE

R

I

E

B

O A XI

CHANGG

Center of Guangzhou Color T.V. ) .

D.

R

N N D. BRIDGE

RD. N RD.

HAIZHU RD.

A

R G I

AN

HUANSHI RD. C. . G

NT NG

D T13 RD. E.

R

A BAO

QIYI RD.

GA

N

O

G

A NG

B G G

FANG RD. ( JIE JIA

AN N

BRIDGE

N

I

IA

J

B Ramp of

JIAF Baogang

E.

(Reserved) N

.

A E AV

Y W The Overpass of

the Railway Station

RENMIN RD. D.

AO

R GONGY

.

D

BRIDGE HU R HU

IZ

A

H 13 13

T HAIB

N RD. N

MI N E Staton R

Railway BRIDGE

Guangzhou HEDONG Pearl River

Ramp of GUANGYUAN RD. W. RD. GUANGYUAN

N RD. Hongde Rd. The overpass of ZHEN'A Guangyuan Rd. W. BRIDGE . RENMIN

D

R

AN

S ZHOUTOUZUI BRIDGE ZHOUTOUZUI

R N RD. RD. N E Planned with Connected

' Entrance

U

I . HUANSHI RD. W. RD. HUANSHI L

Zhen'an Rd. SHA D DONGFENG RD. W.

R

G The Overpass of . TUNNEL

O E V

A

B

A A HUANGSHA ZHON O H

U S

D o. 8 8 o. Ruyifang

Overpass

N

HANG The Overpass of D

No. 8 Zhongsan Rd.

ROA

.

Xichang NAN'AN Overpass

ZENGBU

A RD BRIDGE River

H l

ear

GC P N BRIDGE RUYIFANG E

Z BRIDGE Planned with Connected ZHUJIANG This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, the part of The World Bank Group, any judgment on the legal status of territory, or endorsement or acceptance of such boundaries.

JULY 2008