Implementation Completion Report

Document of The World Bank FOR OFFICIAL USE ONLY

Report No. 19470 Public Disclosure Authorized

IMPLEMENTATION COMPLETION REPORT

CHINA Public Disclosure Authorized

GUANGDONG AGRICULTURAL DEVELOPMENT PROJECT AND EARTHQUAKE RECONSTRUCTION PROGRAM (PORTION OF CREDIT 2307-CHA) Public Disclosure Authorized

June 28, 1999

Urban Development Sector Unit China Country Management Unit Public Disclosure Authorized East Asia and Pacific Regional Office

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS

Currency = Renminbi Currency Unit = Yuan (Y) Y 1.0=100 fen $1.0=Y8.3 Appraisal: $1.0 = Y 8.3; SDR 1.0 = $1.44 Completion: $1.0 = Y 8.3; SDR 1.0 = $1.33

FISCAL YEAR

January1 - December 31

WEIGHTS AND MEASURES

Metric System ABBREVIATIONS AND ACRONYMS DCA - Development Credit Agreement EASUR - Urban Sector Development Unit, East Asia and Pacific Region GOC - Government of China ICR - Implementation Completion Report IDA - International Development Association IMAR - Inner Mongolia Autonomous Region NSP - National Shopping Procedures RS - Richter Scale TA&T - Technical Assistance and Training YP - Yunnan Province YPG - Yunnan Provincial Government

Vice President : Jean-Michel Severino, EAPVP Country Director : Yukon Huang, EACCF Sector Manager : Keshav Varma, EASUR Task Manager : Geoffrey Read, EASUR CONTENTS * FOR OFFICIALUSE ONLY

PREFACE...... III

EVALUATION SUMMARY ...... V

PART I: PROGRAM IMPLEMENTATION ASSESSMENT...... 1 A. Statement/Evaluationof Objectives...... 1l B. Achievement of Program Objectives...... 6 C. Implementation Record and Major Factors Affecting the Project ...... 6 D. Program Sustainability...... 7 E. IDA Performance...... 8 F. Borrower Performance...... 9 G. Assessment of Outcome...... 10 H. Future Operations...... 10 I. Key Lessons Learned...... 1.1

PART II: STATISTICAL TABLES-INNER MONGOLIA AUTONOMOUS REGION...... 13 Table IMAR 1: Summary of Assessments...... 13 Table IMAR 2: Related Bank Loans and IDA Credits...... 14 Table IMAR 3: Program Timetable...... 14 Table IMAR 4: Credit Disbursement: Cumulative Estimate and Actual ...... 14 Table IMAR 5: Key Indicators for Program Implementation...... 15 Table IMAR 6: Key Indicators For Program Operations ...... 15 Table IMAR 7: Studies included in Program ...... 15 Table IMAR 8a-1: Program Cost Estimate...... 16 Table IMAR 8a-2: Total Program Cost Estimate and Actual ...... 17 Table IMAR 8b: Program Financing...... 18 Table IMAR 9: Economic Costs and Benefits...... 18 Table IMAR 10: Status of Legal Covenants...... 19

* Reference should also be made to the primary ICR for Credit 2307-CHA-Guangdong Agricultural Development Project (GADP) and Earthquake Reconstruction Program (Report No. 19492); that report refers to the use of funds allocated to Guangdong Province. This ICR is prepared in connection with the investments undertaken with a portion of the funds in Credit 2307, which arose following the reallocation of credit proceeds from the GADP to the Inner Mongolia and Yunnan Earthquake Reconstruction Program, supported by the International Development Association as an emergency operation, using the latter procedures.

This documenthas a restricteddistribution and may be used by recipientsonly in the performanceof theirofficial duties. Its contentsmay not otherwisebe disclosedwithout WorldBank authorization. - ii -

Table IMAR 11: Compliance with Operational Manual Statements...... 19 Table IMAR 12: IDA Resources: Staff Inputs ...... 20 Table IMAR 13: IDA Resources: Missions...... 20

PART II: STATISTICAL TABLES-YUNNAN PROVINCE'...... 21 Table YP 1: Summary of Assessments...... 21 Table YP 2: Related Bank Loans and IDA Credits ...... 22 Table YP 3: Program Timetable...... 22 Table YP 4: Credit Disbursement: Cumulative Estimate and Actual ...... 22 Table YP 5: Key Indicators for Program Implementation...... 23 Table YP 6: Key Indicators For Program Operations...... 23 Table YP 7: Studies included in Program...... 24 Table YP 8a-1: Program Cost Estimate...... 24 Table YP 8a-2: Total Program Cost Estimate and Actual ...... 25 Table YP 8b: Program Financing ...... 25 Table YP 9: Economic Costs and Benefits ...... 26 Table YP 10: Status of Legal Covenants...... 26 Table YP 11: Compliance with Operational Manual Statements...... 26 Table YP 12: IDA Resources: Staff Inputs ...... 27 Table YP 13: IDA Resources: Missions...... 27

APPENDIX A: ICR MISSION'S AIDE MEMOIRE-INNER MONGOLIA....29

APPENDIX B: ICR MISSION'S AIDE MEMOIRE-YUNNAN ...... 36

APPENDIX C: BORROWER CONTRIBUTION TO THE ICR-INNER MONGOLIA ...... 61

APPENDIX D: BORROWER CONTRIBUTION TO THE ICR-YUNNAN ...73

APPENDIX E: CULTURAL HERITAGE ASSET RECONSTRUCTION COMPONENT-IMPLEMENTATION MISSION REVIEW AND FINDINGS...... 85

MAPS

IBRD 30368-Inner Mongolia and Yunnan Earthquake Reconstruction Program IBRD 30369-Inner Mongolia IBRD 30193-Yunnan Province

Two sets of Statistical Annexes were prepared, since the two programs were managed by different Provincial Governments, the timing of the two earthquake events were also different, and specific funds were allocated within the Credit to each Provincial Government. - 1ii -

IMPLEMENTATION COMPLETION REPORT *

CHINA GUANGDONG AGRICULTURAL DEVELOPMENT PROJECT AND EARTHQUAKE RECONSTRUCTION PROGRAM

(PORTION OF CREDIT 2307-CHA)

PREFACE

This is the Implementation Completion Report (ICR) for the Earthquake Reconstruction Program portion of the Guangdong Agricultural Development Project and Earthquake Reconstruction Program in China for which SDR 41.61 million equivalent of the proceeds of Credit 2307-CHA was approved and made effective on October 16, 1996. In March 1998 a further reallocation of SDR 9.0228 million equivalent of the proceeds of Credit 2307-CHA was approved. The total allocation for the Earthquake Reconstruction Program (implemented in Inner Mongolia and Yunnan) was thus SDR 50.6328 million. Bank Group procedures for Emergency Recovery Assistance (OP 8.50) were followed.

The credit was closed on December 31, 1998, at which time the funds allocated to the Earthquake Reconstruction Program were fully committed. The final disbursement took place on December 30, 1998 for Yunnan Province, and on April 12, 1999 for Inner Mongolia Autonomous Region.

Messrs. Geoffrey Read (Task Manager) and Terry Hall (Consultant) prepared the ICR, with assistance by Yang Dawei (Procurement Specialist), Chen Feng (Disbursement Specialist), in the Urban Development Sector Unit (EASUR) of the East Asia and Pacific Region, and Ken Rippin (Consultant). It was reviewed by Messrs. Keshav Varma, Sector Manager, EASUR, and Yukon Huang, Country Director, China.

Preparation of this ICR was begun during the International Development Association's (IDA's) supervision missions in June 1998 (in the Inner Mongolia Autonomous Region) and in November 1998 (in Yunnan Province), and is based on information in the project file and mission reports prepared during supervision. Since this program was rapidly implemented separately but simultaneously to the Guangdong Agricultural Development Project (GADP), progress reporting was undertaken through

CHINA GUANGDONG AGRICULTURAL DEVELOPMENT PROJECT AND EARTHQUAKE RECONSTRUCTION PROGRAM (PORTION OF CREDIT 2307-CHA)

EVALUATIONSUMMARY

Introduction

1. This reconstruction program addressed the restoration of infrastructure, industrial and cultural heritage facilities in the Inner Mongolia Autonomous Region (IMAR) and Yunnan Province (YP) that were damaged or destroyed due to seismic activities in 1996.

2. In IMAR, on May 3, 1996, an earthquake measuring 6.4 on the Richter Scale (RS) struck near the densely populated industrial city of Baotou in Baotou Municipality. Seven counties in the nearby Yi and Ba Prefectures (populations of 1.3 million and 1.6 million, respectively) were also affected. There were 26 fatalities and some 450 people were injured, and the earthquake caused serious damage to buildings, industrial facilities, and urban and rural housing. Some 135,000 housing units were damaged or destroyed. Altogether, 580,000 households comprising some 2.1 million people were affected. There was urgent need to rehouse people before the onset of the winter of 1996 since in Inner Mongolia, the winter effectively begins in October and the temperature drops to -45°Celsius.

3. In YP, an earthquake registering 7.0 RS struck in Dali, Diqing and Lijiang Prefectures, north of Kunming (the provincial capital) on February 3, 1996. Casualties were heavy, with 309 fatalities and about 4,000 persons injured. Severe property damage occurred involving some 410,000 housing units and affecting about I million people. Schools, hospitals and community facilities were also destroyed, together with local enterprises, infrastructure and cultural heritage facilities in Lijiang Old City.' There were more than 2,000 aftershocks in the range of 4 to 6 RS, which contributed to the substantial damage. The most affected areas were Lijiang Prefecture and County, Heqing and Jianchuan Counties in Dali Prefecture, and Zhongdian County in Diqing Prefecture. Mostly the Naxi minority occupies the affected areas. Employment is mostly in agriculture, and in agricultural- and mining-related small industries.

4. The Government estimated direct losses at about $627 million equivalent in IMAR and $482 million equivalent in YP. The Government of China (GOC) requested

1 LijiangOld Cityhas been designatedby UNESCOas a WorldHeritage site. - vi - support for Yunnan immediately after the earthquake struck Yunnan and, subsequently, shortly after the earthquake struck Inner Mongolia.

Program Objectives

5. The primary objective of the program was to assist in the restoration of economic and social activities in the earthquake-affected areas of IMAR and YP through the restoration of infrastructure and priority production facilities. A secondary objective was to restore cultural heritage assets, particularly in minority areas, thereby assisting to restore living conditions and facilities to conditions comparable before the earthquakes struck. The objectives were clear and realistic, focusing on the immediate needs to restore economic capacity and those facilities essential to the damaged and shocked communities, namely housing, health and education, essential infrastructure services and means of production. These were consistent with the Country Assistance Strategy.

6. The objectives were straightforward, and involved no unreasonable risks, as the skills, services and materials needed to respond and implement the program were locally available; the objectives met the agency needs since immediate short-term relief was provided by national and international authorities, but resources were limited for the provision of longer-term assistance requiring investmnent.The above are confirmed by the successful program outcomes. Program components included restoration of the following: housing (through reconstruction of complex structures or loans to supplement householder reconstruction efforts), schools and education facilities, clinics and hospitals, water/drainage/wastewater services, district heating (IMAR only), power, select road reconstruction, restoration of priority production facilities (employment restoration), and limited training and technical assistance.

7. The program included no special covenants. There was a requirement that an Environmental Assessment be prepared for investments to restore pulp and paper facilities in Yunnan, as these could be polluting; the requirement was satisfactorily met.

Implementation Experience and Results

8. The achievements of the reconstruction programs in IMAR and YP were substantial. The rehabilitation components were carefully prepared by GOC experts from the Ministry of Construction (MOC), adopting standardized procedures for classifying earthquake damage and repairs, in accordance with the 1978 antiseismic Building Design Code for Industrial and Public Buildings and Infrastructure Facilities. Implementation was expedited through properly structured management by government at all levels; simplified procurement procedures; ready availability of local funds; and "fast track" IDA processing. The restoration through the program of urban services, housing and public buildings in the Old City of Lijiang in Yunnan, which is a major heritage asset with a fragile environment, was a major achievement by the Government and the community.

9. Sustainability of the reconstructed buildings and facilities is considered highly likely since the programs were designed and implemented to restore the facilities to their - vii - original pre-earthquake situation, in line with budgets already existing for operation and maintenance. In many cases, the authorities and benefiting communities also took the opportunity to improve the designs and layout of rehabilitated facilities while maintaining compliance with Bank Group guidelines for emergency operations. Construction quality was reported to be consistently highly satisfactory, and the reconstruction was done in accordance with the above-mentioned design code.

10. Program Costs and Financing. The total program cost estimate for IMAR and YP was Y 788.7 million ($95.0 million), including contingencies, and engineering and management costs. A fixed exchange rate of Y 8.3 = $1.0 was adopted since a 24-month implementation period was planned. The actual total cost was $107.1 million, with expenditures almost wholly (99.5 percent) in local currency. IDA financing totaled SDR 50.6328 million ($67.34 million equivalent at closing date) under Credit 2307- CHA. This is SDR 9.028 million ($12.0 million equivalent) more than at appraisal in 1996, since supplementary fund allocations were provided in March 1998 to both Inner Mongolia and Yunnan to enable additional urgent reconstruction to be completed. Second-level priority investments were identified during appraisal and negotiations that could not be financed at the time due to resource limitations but would be suitable for IDA support; these were financed once the supplementary funds became available. The credit closed on December 31, 1998.

Major Factors Affecting Program Implementation

11. The program was completed very successfully and within the time expected.

* Factors Outside Government Control

Procurement Arrangements. Simplified procurement procedures were adopted by GOC and IDA for the reconstruction program: Civil works and goods were mainly procured through lump-sum fixed-price contracts based on National Shopping Procedures (NSP) and output-based force account contracts (to a limited extent). In IMAR, advertised competitive bidding was preferred for some components to achieve lower costs (savings up to 10 percent were reported). Advance contracting up to $15 million (about 20 percent of the program) was permitted starting from the dates of the earthquake occurrences. IDA supervision missions reported generally satisfactory compliance with procurement procedures based on selective post-review of documentation, although it seems in a few cases in YP, in order to achieve high-quality work, contract awards were based on a judgmental marking system of bidders with prices nearest to the "Engineer's Estimate," not necessarily the lowest responding bidder (ICR mission discussions with executing agencies). Overall, the adoption of the simplified procedures was entirely appropriate and had a very positive impact on the effectiveness of the program implementation; the program could almost certainly not have been implemented successfully using normal Bank Group procurement procedures. - viii -

Response by Communities and Outside Donors/Contributors. The communities responded to the crises very positively, as did outside relief givers. This enabled immediate relief to be effective, and created a synergistic effect on the investment program, increasing the scope and impact of the restoration investments.

* Factors Within Government Control

* Funds Availability. In both IMAR and YP (after minor delays) local funds were made readily available by the respective Finance Bureaus, which contributed to the good all-round implementation experience. Both IMAR and YP were able to absorb additional IDA funds to rehabilitate damaged facilities not covered in the original appraisal, although in both IMAR and YP minor problems occurred with counterpart funding at the closing stages of the programs. These problems were due to insufficient contingency provisions in construction budgets and inadequate arrangements by executing agencies to accommodate exchange rate variations (SDR going down against the US dollar and the Yuan). Apart from some minor works, all components were successfully implemented within the original credit closing date (December 31, 1998).

* Rapid Response by State and Local Authorities. The ability of the state authorities, in particular China's Ministry of Finance, and of the Yunnan Provincial authorities to respond rapidly to an emergency was impressive and crucial to the effective provision of immediate-term and longer-term relief. Decisive responsiveness at the center enabled resources to be mobilized and utilized effectively.

* Factors Within Implementing Agency Control

* Program Management Arrangements. In both IMAR and YP, appropriate high- level program management arrangements were set up at the start of the program. In IMAR, a Leading Group was established, headed by a vice-governor, together with about 39 project management offices for execution. In YP, Leading Groups were set up at Provincial, Prefecture and County levels under the leadership of vice-governors; and about 40 project offices were set up at the implementing agency level. Key participation by the respective Provincial Finance Bureaus and Construction Commission (in YP) is noted.

* Procurement and Reporting. Both IMAR and Yunnan made specific efforts to follow the agreed procurement and project reporting procedures. This enabled rapid implementation.

* Community and Minority Group Consultation and Participation. The local authorities, with the support of the central authorities, made strong efforts to facilitate the efforts of the local communities/beneficiaries at all stages. The program could not have been undertaken so effectively without this deep - ix -

involvement. The restoration of livelihoods and facilities for minority groups was given particular attention in Yunnan.

12. IDA Performance. IDA performance in identification, preparation, appraisal and supervision of both programs was fully satisfactory, and initial responses to GOC requests for assistance were very prompt. Appraisal of both programs was satisfactory, although the study on a "Cultural Asset Construction Guide" could have been better defined at appraisal. Internal processing was prompt, although on a number of occasions the IMAR program office expressed concern at the length of time required to replenish the Special Account.

13. Borrower Performance. The Borrower's performance at all levels in preparation and implementation was highly satisfactory. The project management arrangements at both IMAR and YP incorporated the experiences gained in the earlier disaster-relief IDA- assisted projects. Strong central and local leadership, and local management, minimization of "cash flow" delays, community participation and IDA's "fast track" processing (as permitted under OP 8.50) all contributed to the successful and timely implementation of the reconstruction programs. The Borrower complied with the applicable covenants under the legal agreements. This performance was especially satisfactory as both local governments were first-time participants with Bank Group procedures, and were responding to emergency situations with associated complications.

14. Program Outcome. The outcome of the reconstruction program was highly satisfactory. Both IMAR and YP completed the works to high quality and addressed the program objectives satisfactorily. The effectiveness and robustness of IDA's "fast track" procedures for disaster relief were clearly demonstrated.

Summary of Findings, Future Operations, and Key Lessons Learned

15. Future Operations. The implementation of the relief programs in both IMAR and YP could provide a good model for future similar operations. The Yunnan Provincial Government (YPG) has proposed requesting further Bank Group support to assist in developing strategies and programs in the minority prefectures of Dali, Diqing and Lijiang, based on the successful experience of the earthquake rehabilitation programn.

16. Key Lessons Learned from the implementation of this program include:

* Dedicated and sustained project management through high-level Leading Groups at the Provincial, Prefecture and County levels, supported by properly staffed, full-time project management offices at all levels made a major contribution to project success;

* The in-depth involvement and in many cases financial commitment by the local communities at all stages of reconstruction was a major factor in success and sustainability of disaster-relief efforts; Simplified procurement procedures clearly had a major impact on the speed and effectiveness of implementation. Post-review of procurement documentation by visiting IDA missions indicated generally satisfactory compliance, although it seems that in a few cases in YP the lowest responding bid was not always accepted. The adoption of similar procedures could be considered for more widespread use in regular lending operations, in appropriate cases, subject to rigorous monitoring for compliance;

. Appropriate financial and implementation tracking systems as part of project management should be put in place at the start of the project to avoid delays in implementation and sanctioning of expenditures;

* In emergency projects, construction often begins before all design details are finalized. In such cases it is important to allow generous contingency provisions to address unforeseen problems that may occur during construction;

* An unusual feature of the program in Yunnan was that much reconstruction had to be undertaken in sites of unique cultural heritage value. This was done successfully, within the program time scale, restoring the assets to community use (schools, hospitals, urban fabric and public buildings);

* Substantial economic, environmental, financial and social indirect benefits can accrue to the disaster-affected areas through carefully designed rehabilitation and repair programs; and

* Rapid and effective focused decisions by Bank Group and client country management can make a significant positive impact in improving the lives of lower-income communities, especially in emergency situations; the participation by the affected community and their leaders however is central to this success. - 1 -

CHINA GUANGDONG AGRICULTURAL DEVELOPMENT PROJECT AND EARTHQUAKE RECONSTRUCTION PROGRAM (PORTION OF CREDIT 2307-CHA)

PARTI: PROGRAMIMPLEMENTATION ASSESSMENT

A. STATEMENT/EVALUATION OF OBJECTIVES

1. Background. China has experienced some of the most severe recorded earthquakes in the world. Since 1900, there have been 662 earthquakes with a magnitude of over 6 on the Richter Scale (RS), of which 106 registered a magnitude of 7 or more, representing around 30 percent of world earthquakes of that severity. Some five years ago Chinese earthquake specialists predicted that, after a decade of relative calm, China has entered a period of high seismic activity. This prediction is certainly borne out by the earthquake events that occurred in the Inner Mongolia Autonomous Region (IMAR) and Yunnan Province (YP) in 1996, and which are addressed in this Program, by the recent seismic activity (November 1998) in the northern area of YP, and an earthquake in Hebei in January 1999, where the International Development Association (IDA) is supporting reconstruction in a very low-income area.

2. This reconstruction program addressed the restoration of infrastructure, essential social services and facilities, industrial and cultural heritage facilities in IMAR and YP that were damaged or destroyed resulting from seismic activities in 1996.

3. In IMAR, on May 3, 1996, an earthquake measuring 6.4 RS struck near the densely populated (over 2 million) iron and steel-making industrial city of Baotou in Baotou Municipality. Seven counties in the nearby Yi and Ba Prefectures (populations of 1.3 million and 1.6 million, respectively) were also affected. The epicenter of this earthquake was about 10 kilometers (km) north of Baotou City. There were 26 fatalities; some 450 people were injured. The earthquake caused serious damage to buildings, industrial facilities, and urban and rural housing; some 135,000 housing units were either damaged or destroyed. Altogether, 580,000 households, comprising some 2.1 million people, were affected. There was urgent need to rehouse people before the onset of the winter of 1996 since in Inner Mongolia winter starts in October and the temperatures drop to -45°Celsius. The affected rural areas support a population comprising mostly minorities who practice low-input agriculture and animal husbandry activities.

4. In YP, an earthquake registering 7.0 RS struck in Dali, Diqing and Lijiang Prefectures, north of Kunming (the provincial capital), on February 3, 1996. The epicenter of this earthquake was some 60 km north of Lijiang. Casualties were heavy - 2 - with 309 fatalities and about 4,000 persons injured. Severe property damage occurred involving some 410,000 housing units and affecting about 1 million people. Schools, hospitals and community facilities were also destroyed, together with local enterprises, infrastructure facilities (bridges, power, water and telecommunications) and cultural heritage facilities in Lijiang Old City. There were more than 2,000 aftershocks in the range of 4 to 6 RS, which contributed to the substantial damage. The most affected areas were Lijiang Prefecture and County, Heqing and Jianchuan Counties in Dali Prefecture, and Zhongdian County in Diqing Prefecture. The affected areas are poor rural areas some 2,200 meters (m) above sea level, bordering on Myanmar in the west, and occupied mostly by the Naxi minority. Employment is mostly in agriculture, and in agricultural- and mining-related small industries, including papermaking, timber and food processing. The area has a mostly mountain-region climate with cold winters and prolonged snowfall.

5. The Government estimated direct losses at about $627 million equivalent and $482 million equivalent in IMAR and YP, respectively. Assets were mostly uninsured and both provinces received local and international support for immediate relief expenditures such as temporary housing and emergency medical facilities. The Government of China (GOC) requested IDA assistance on February 4, 1996.

6. While not major disasters by Chinese or world standards, both the IMAR and YP earthquakes significantly affected the local economies. IDA involvement in the reconstruction programs, following requests by GOC for emergency assistance, focused on: (a) the restoration of economic and social activities through the rebuilding of schools, health centers, infrastructure, housing, cultural heritage and selected enterprise facilities; (b) the use of cost-effective earthquake-resilient construction standards for housing, industry and infrastructure; and (c) modest institutional development in emergency program management and implementation.

7. Program Objectives. The primary objective of the program was to assist in the restoration of economic and social activities in the earthquake-affected areas of IMAR and YP through the restoration of economic and social infrastructure and priority production facilities. A secondary objective was to restore cultural heritage assets, particularly in Naxi minority areas.

8. Program Description and Components. The program was designed to support emergency reconstruction, repair and rehabilitation activities to be carried out in IMAR and YP during the period mid-1996 through mid-1998. The program components, as identified in 1996, indicated costs including physical and price contingencies, and engineering and management charges were defined as follows (from the Operations Implementation Plans). Supplementary rehabilitation components, which were identified in both IMAR and YP in 1997/98, are also defined below: - 3 -

Inner Mongolia Autonomous Region

* Health Care-Y 80.9 million ($9.7 million). Investments to support the reconstruction, repair and rehabilitation of about nine hospitals and healthcare institutions and other facilities in Baotou City and in Yi and Ba Prefectures, to restore the existing inpatient, outpatient, and clinic facilities, totaling about 49,200 square meters (m2).

* Education-Y 88.8 million ($10.7 million). Investments to support the reconstruction, repair and rehabilitation of about 11 elementary and middle schools in Baotou City and in Yi and Ba Prefectures, and the rehabilitation, repair and reinforcement of teaching, library, laboratory, dormitory and other facilities, totaling about 76,610 in2.

* Village and Urban Rehabilitation-Y 65.2 million ($7.9 million). Rehabilitation and reconstruction of about 83,500 housing units in about 351 villages in Yi and Ba Prefectures, and in Baotou City.

- Power and Gas Sectors-Y 93.7 million ($11.3 million).

* Power: Construction of a reinforced concrete structure to "wrap" two existing switchgear buildings; restoration of power transmission and distribution systems in Yi and Ba Prefectures, and restoration of power supply in Baotou City; and

* Gas: construction of a gas tank of about 54,000 cubic meters (m3) capacity; repairs to an existing gas tank damaged in the earthquake; and repairs to the gas network of Baotou City.

* Institutional Development-Y 0.8 million ($0.1 million). Investments to provide technical assistance, training and support to provincial-, municipal-, prefectural- and county-level agencies.

* Supplementary Rehabilitation Components-Y 61.8 million ($7.5 million). Investments to support the reconstruction, repair and rehabilitation of additional facilities in schools, housing, infrastructure and heating plant in Bautou City, Ba and Yi Prefectures totaling around 51,700 rn2 of building area.

Yunnan Province

* Education-Y 86.0 million ($10.4 million). Investments to support the reconstruction, repair and rehabilitation of about 10 primary and secondary schools in urban centers, in Lijiang, Heqing, Jianchuan and Zhongdian Counties, including Lijiang Health Care School, and about 35 primary and middle schools in county areas in Lijiang, Heqing, Jianchuan and Zhongdian Counties, including the rehabilitation, repair and reinforcement of about 110,000 M2 of teaching, library, laboratory and dormitory facilities. -4-

* Health Centers-V 42.1 million ($5.1 million). Investments to support the reconstruction, repair and reinforcement of about six county- and city-level hospitals in Lijiang, Dali and Diqing Prefectures, to restore the existing inpatient, outpatient, and clinic facilities, totaling about 25,000 M2 .

* Cultural Heritage-Y 65.9 million ($7.9 million). Investments to support urban fabric renewal and infrastructure in:

* Lijiang Old City, including restoration of the Mu Minority Cultural Center totaling about 20,000 m2 area and public buildings of some 2,100 ni2 area, and provision of construction materials in support of property reconstruction of about 2,400 family rooms for lower- and middle-income groups, thus benefiting about 15,300 families (see also Appendix E).

* Jianchuan Hong Dynasty Museum Park and Dongba Cultural Art Museum. Investments to support the restoration and repair of damages to this national-level Museum Park and Dongba Cultural Art Museum, including repairs to pavilions and exhibits (see also Appendix E).

* Infrastructure-Y 109.3 million ($13.2 million). Investments in water supply and treatment, irrigation and drainage and roads in Lijiang City, Diqing, Heqing and Jianchuan Counties of Dali, Diqing and Lijiang Prefectures including:

* Lijiang City Water Supply. Repair and replacement of water distribution mains in range 25 to 150 millimeters (mm) diameter, in pipes of galvanized mild steel, cast iron or other materials to replace defective and broken pipes, of a total length of about 150 km. Repair and rehabilitation of water treatment works of about 20,000 cubic meters per day (m3/d) capacity, and raw water headworks and transmission culvert/pipeline totaling about 11.6 km.

* City Sanitation and Drainage. Reconstruction of drainage channels and culverts of about 3.0 km length, repair and reconstruction of about 100 community toilets and outlet sewers.

* Heqing County. Rehabilitation of existing water treatment and distribution system of about 6,000 m3/d capacity, including repair/replacement of broken water mains in sizes in the range 150 to 500 mm diameter, of about 10 km total length.

* Jianchuan County. Rehabilitation, repair and replacement of (a) distribution system of pipes in sizes in the range 100 to 300 mm diameter of about 9 km total length; and (b) raw water pipeline of about 5 km total length.

. Zhongdian Water Supply. Rehabilitation, repair and replacement of water supply system comprising water treatment facilities of about 6,000 m3 /d capacity, replacement of leaking and defective concrete transmission and distribution pipes -5 -

with cast iron, galvanized or other materials in sizes in the range 100 to 500 mm diameter of about 25 km total length.

Jianchuan Irrigation System Conveyor. Rehabilitation, repair and replacement of irrigation water conveyor system comprising elevated and ground-level channels, of about 7 km total length to serve an area of about 2,000 hectares.

. Lijiang Spine Road Drainage System. Repairs to roadside drainage systems comprising pipes in the range of 600 to 800 mm diameter of about 1,200 m total length, and drain channel retaining walls.

* Lijiang Airport-Heqing Road Rehabilitation. Repairs to about 25 km of road surface and drain channel retaining walls.

* Industrial Enterprises-Y 97.3 million ($11.6 million). Investments to support the rehabilitation, repair and replacement of buildings and equipment in about eight selected industrial enterprises in Lijiang, Dali and Diqing Prefectures, including Diqing Pulp Works, Heqing Manganese Mine, Heqing Agriculture Machinery Factory, Heqing County Paper Mills, Lijiang Food Processing Factory, Lijiang Machine Tool Factory, Lijiang Window Frame factory, and Lijiang County Paper Mill, to restore their original pre-earthquake capacity.

* Power Sector-Y 57.0 million ($6.9 million). Investments to support the rehabilitation and repair of about three hydropower stations including Xizhong, Hei Bai Shui and Zhongdian stations, to restore their original pre-earthquake capacity.

- Institutional Development-Y 1.7 million ($0.2 million). Investments to provide technical assistance, data management facilities, training and support to provincial, prefecture and county-level agencies.

* Supplementary Rehabilitation Components-Y 83.1 million ($10.0 million). Investments in Dali, Diqing and Lijiang Prefectures to support the reconstruction, repair and rehabilitation of about 13,700 rn2 area in 12 schools, 3,600 rn2 area and equipment in five hospitals, provision of construction materials in Zhongdian City, repair of the Confucius temple school in Heqing, Lijiang drainage and waste treatment, additional repairs at the Lijiang airport road, repairs in four enterprises, and power station building repairs of 3,000 rn2 area.

9. The total program cost estimate for IMAR and YP was Y 788.7 million ($95.0 million), including contingencies, and engineering and management costs. The foreign exchange component was estimated at about Y 101.3 million ($12.2 million) or about 13 percent of program costs. A fixed exchange rate of Y 8.3 = $1.0 was adopted since the implementation period was planned for about 24 months. However, although the US dollar vs. Yuan exchange rate has remained around 1.0 to 8.3 throughout the project period, the SDR vs. US dollar exchange rate has varied from SDR 1.0 = $1.44 at appraisal (1996) to SDR 1.0 = $1.33 in late 1998 (7.6 percent devaluation of SDR). - 6 -

Expenditures were almost wholly in Yuan, and as a result, reimbursements from the credit in Yuan are reduced. Overall in YP the impact of the SDR devaluation is around 3 percent of total cost of the Yunnan program. Program engineering and management costs of 12 percent (except for Institutional Development) were included in the estimates. Interest during construction was estimated at Y 14.9 million ($1.8 million), with a total resulting financing requirement of Y 803.6 million ($96.8 million). Details of the estimated and actual expenditures for both IMAR and YP are given in Part II.

10. Evaluation of Objectives. This was an emergency program to address disaster relief. The objectives as defined above were entirely appropriate and realistic. These objectives were consistent with the Bank Group's Country Assistance Strategy for China, which focused on poverty alleviation and the reconstruction of essential infrastructure and social sector support (in the case of YP).

B. ACHIEVEMENTOF PROGRAM OBJECTIVES

11. Restoration of Economic and Social Activities in Earthquake-Affected Areas of IMAR and YP. This objective was completely achieved through the restoration of the earthquake-affected facilities and infrastructure. Program implementation indicators are compared in Tables IMAR and YP 5 in Part II of this report indicating that, in many instances, the actual restoration well exceeded the expectations at appraisal. In many cases in YP, while undertaking the rehabilitation and repairs within the IDA emergency guidelines, the government, benefiting communities and enterprises took advantage of improved designs, modem equipment and layouts. This has achieved indirect benefits such as enhanced education successes, better medical facilities, improved tourism and commercial benefits. Additional local and foreign investment has also accrued in the earthquake-affected areas (hotels, commercial, banking and industrial enterprises).

12. Restoration of Cultural Heritage Assets in Minority Areas. This objective was also achieved satisfactorily. See Table YP 5 for details. The involvement of the minority community at all stages of implementation was essential to ensure success.

C. IMPLEMENTATION RECORD AND MAJOR FACTORS AFFECTING THE PROJECT

Factors Not Generally Subject to Government Control

13. Procurement. This was done in accordance with simplified procedures. The Government could not control the outcome of the bidding process. In any event, however, it appeared that bidders were responsive and a market-based pricing approach worked fully satisfactorily.

14. Community and Donor Relief Response. The communities' capacity to respond in crises proved to be much larger than expected. This enabled the expansion of the project impact in a highly cost-effective manner. Donors (bilaterals, nongovernmental organizations, and private gift or grant givers to support the reconstruction) also made -7 - significant resources available for initial relief, which was instrumental in effective. implementation, as people's lives had been helped at this early stage of reconstruction.

Factors Generally Subject to Government Control

15. Funds Availability. This is an important issue, particularly when dealing with emergency reconstruction against tight time schedules. In both IMAR and YP (after initial delays) local funds were made readily available by the respective Finance Bureaus. This contributed to the good all-round implementation experience. It is also noted that both IMAR and YP were able to absorb additional IDA funds to rehabilitate damaged facilities that were not covered in the original appraisal, although in YP (and to a lesser extent in IMAR) minor problems occurred at the end of the project due to a shortage of counterpart funds. This arose due to inadequate arrangements by executing agencies to accommodate exchange rate risks (SDR vs. Yuan).

16. Procurement Arrangements. The following simplified procurement procedures were adopted by GOC and IDA. Civil works were carried out mainly through: (a) lump- sum fixed-price contracts based on National Shopping Procedures (NSP) with at least three relevant quotations; and (b) output-based force account contracts (only used for about 4 percent of the work). Goods were also procured mainly through NSP with at least three relevant quotations. In IMAR, although NSP was permitted, the agencies preferred to adopt advertised competitive bidding for two hospitals and a 50,000 m3 gas tank to achieve lower-cost bids (cost savings up to 10 percent were reported after awards to the lowest responding bidders). Advance contracting up to $15 million equivalent (about 20 percent of the program) was permitted starting from the dates of the earthquakes in IMAR and YP. Contracts above $1.0 million for civil works, $0.2 million for goods, and subloans for paper mill reconstruction greater than $1.0 million were subject to prior review by IDA. In any event, two civil works, two goods and no subloan documents were subject to prior review by IDA (representing about 4 percent of total program cost).

Factors Within Implementing Agency Control

17. Program Management Arrangements. In both IMAR and YP, appropriate program management arrangements were set up at the start of the programs. In IMAR, a provincial-level and five sector-level Leading Groups were established with the provincial-level Leading Group headed by a vice-governor, together with about 30 project management offices for execution of subcomponents. In YP, Leading Groups were set up at the provincial, prefecture and county levels under leadership of vice- governors. Project offices were also established at provincial, prefecture and county level and about 40 subproject offices were set up at the implementation agency level. Key participation by the respective Provincial Finance Bureaus and Construction Commission (in YP) is noted. This allowed for efficient communications and rapid project implementation.

18. Asset and Facility Maintenance. Since this was a reconstruction program, existing arrangements were already largely in place for asset maintenance and operations. - 8 -

D. PROGRAM SUSTAINABILITY

19. With the possible exception of Cultural Heritage repairs in YP, sustainability of the reconstructed buildings and facilities is considered highly likely since the programs were designed and implemented to restore the facilities to their original pre-earthquake status. The authorities and benefiting communities also took the opportunity to improve designs and layouts within the criteria set out by IDA for emergency operations. Existing budgets for operation and maintenance were already in place; no additionality of operating budget was involved. Construction quality, based on IDA mission site inspections, in both IMAR and YP was reported to be consistently highly satisfactory. In 1978, China adopted a revised antiseismic Building Design Code for Industrial and Public Buildings and Infrastructure facilities. Reconstruction was carried out in accordance with the latest antiseismic code to level VIII of the modified New China Intensity Scale (NCIS). The effect of this design code was evident in Yunnan since recently constructed buildings suffered only light damage in comparison with the extensive damage suffered by pre-1978 buildings. In addition, participation by Naxi minorities during implementation strengthened the case for sustainability.

20. In the case of YP Cultural Heritage repairs (see Appendix E for a detailed description), although this work has been carried out to a consistently high quality in accordance with emergency construction guidelines issued by the Yunnan Provincial Government (YPG) in 1996, the concerned authorities acknowledge that a more comprehensive "Construction Guide" is urgently needed to assist communities living in a heritage environment in upgrading and repairing properties and facilities. This subject was discussed extensively with YP authorities during visiting IDA missions throughout the implementation period. The Guide is expected to be prepared by December 1999.

21. Overall, YP and IMAR have made a major recovery in the earthquake-affected areas, with significant benefits accruing to the local economy. Also, additional funding and indirect benefits have resulted from the IDA-supported reconstruction program. Schools report improved education benefits (more pupils going for higher education) and hospitals have increased patient numbers. Infrastructure rehabilitation has impacted positively on the tourism economy, and the rehabilitated Mu Family Complex in Lijiang, opening to visitors in May 1999, is expecting revenue from tourism of Y 35 million a year ($4.2 million a year).

E. IDA PERFORMANCE

22. IDA's performance on the IMAR and YP programs was satisfactory. Initial responses to GOC requests for assistance were very prompt. In the case of IMAR, an IDA reconnaissance/appraisal mission visited IMAR in June 1996, within two weeks of the request from GOC for emergency assistance. Responding to a request from YPG, an IDA reconnaissance mission visited the affected area within 10 days of the earthquake occurrence, and an appraisal mission followed shortly after in March 1996. IDA appraisal of both programs was satisfactory, although in retrospect it may have been useful for the -9- study on "Cultural Asset Construction Guide" to have been better defined at appraisal. IDA's attempts to coordinate the work on the Construction Guide with activities under Bank Group-supported cultural asset components in other provinces (Liaoning and Ningbo) were not successful. During implementation of the IMAR program, substantial time lags occurred between withdrawal applications and disbursement (despite IDA procedures being more rapid than normal), requiring IMAR to seek short-term credit from other sources (suppliers and contractors). The procurement plan agreed to was found to be effective, and the program did not include unacceptably risky elements, while it met the most urgent needs of the unfortunate earthquake victims.

23. During implementation IDA carried out seven supervision missions (three in IMAR and four in YP) and two ICR missions. This was considered an appropriate level of supervision, considering the scope and complexity of the program. The mix of professional disciplines in the missions was appropriate, focusing on implementation, financial and program planning, procurement, disbursement and cultural asset repair (in YP), although in the case of YP, economies in the size of some mission teams may have been possible.

F. BORROWERPERFORMANCE

24. The Borrower's performance at all stages and levels was highly satisfactory. The project management arrangements in both IMAR and YP incorporated the experiences gained in the earlier disaster-relief IDA-assisted projects (Da Xing An Ling Forest Fire Rehabilitation Program, FY88, $56.9 million; and the North China Earthquake Reconstruction Project, FY90, $30.0 million). The strong local leadership and local management, minimization of "cash flow" delays, genuine community participation, and IDA's "fast track" processing all contributed to the successful and timely implementation of the reconstruction programs. Satisfactory progress reports were submitted in a timely manner. Some contracts in IMAR overran the initial budgets due to inadequate contingency provisions. In YP, the provincial government instructed the executing agencies to set aside contingency sums to cover the exchange rate variation. This was not always done and in a number of supplementary components, contractors were not fully paid initially; some minor works were completed later than planned due to a shortfall of local funds. The central authorities (led by the Ministry of Finance) were very effective in mobilizing IDA support and coordinating the relationship.

25. The Borrower maintained compliance with the covenants, as required under the Development Credit Agreement (DCA).

26. Modest provisions for Technical Assistance and Training (TA&T) were included in the IMAR and YP programs (0.3 percent of the total program cost), although specific studies and training to be undertaken during the reconstruction programs were not defined at appraisal. Nominal amounts from the TA&T allocations were used by both IMAR and YP to provide support for project management offices and training of personnel in project management systems and operation. This was entirely appropriate. Other available TA&T -10- funds remained unused. YPG preferred to use local funds for an overseas cultural asset familiarization study tour. The need for a comprehensive "Construction Guide" for the reconstruction of cultural assets and facilities for national use was discussed throughout the project life without achieving any tangible outcome (terms of reference were not finalized by the closing date). In retrospect: (a) this was a lost opportunity for YPG to establish construction guidelines for cultural assets; (b) the study content, budget and time schedule should have been defined during appraisal; and (c) IDA underestimated the administrative difficulty and time required to coordinate the activities of a number of cultural asset components in several Bank Group-supported projects (IMAR/YP Earthquake Reconstruction, Liaoning Environment Project, Ningbo Project).

27. IDA supervision missions reported generally satisfactory compliance with procurement procedures based on selective post-review of documentation, although it seems in a few cases in YP, in order to achieve high-quality work, contract awards were based on a judgmental marking system to bidders with prices nearest to the "Engineer's Estimate," not necessarily the lowest responding bidder (ICR mission discussions with executing agencies). Overall, it is apparent that the adoption of the above simplified procurement procedures was entirely appropriate for disaster-relief reconstruction and had a major impact on the speed and effectiveness of the rehabilitation and repair programs. In IMAR, the program management office has also incorporated the IDA guidelines into the Government Procurement Regulations to be implemented at the regional level from April 1999. Apart from a few minor works, all components were successfully implemented within the credit closing date (December 31, 1998).

G. ASSESSMENT OF OUTCOME

28. The overall assessment of the project is highly satisfactory. The objectives were fully achieved within a reasonable time and cost. Economic activity has resumed; education, health and housing services were restored; and the communities were rapidly able to resume their lives without apparent major unhealed stress. No shortcomings were found in the program. Both programs were executed efficiently by the respective agencies in IMAR and YP. The implementation organizations in both cases were based on the successful model from the earlier IDA-funded North China Earthquake Reconstruction Project, which emphasized: (a) strong local leadership and program management; (b) attention to Borrower's priorities; (c) accelerated reconstruction activities; (d) benefits of using IDA's "fast track" processing; and (e) simplified procurement procedures consistent with the emergency nature of the reconstruction programs while maintaining IDA procurement principles.

H. FUTURE OPERATIONS

29. The implementation of the disaster relief programs in both IMAR and YP proved highly successful and could provide a good model for future similar operations should the need arise, which would hopefully not be soon. Indeed, YPG has proposed requesting further Bank Group support to assist in developing urban strategies and programs to enhance economic growth in the Minority Prefectures of Dali, Diqing and Lijiang, based on the successful experience of the earthquake rehabilitation and repair program in those prefectures. Assets reconstructed and rehabilitated through the program would be operated and maintained by persons responsible for these activities before the earthquakes.

I. KEY LESSONS LEARNED

30. Key lessons learned from the implementation of this program include:

* Implementation of the program was greatly enhanced through dedicated and sustained project management through Leading Groups at the Provincial, Prefecture and County level, supported by properly staffed, full-time project management offices at all levels. This setup, which was modeled on implementation experience from an earlier IDA-assisted earthquake relief project, could usefully be adopted for future similar lending operations.

* The local communities have been consistently involved at all stages of reconstruction in IMAR and YP. In both cases Naxi minority groups were involved. Such participation was important for satisfactory implementation and long-term sustainability.

* The adoption of simplified procurement procedures clearly had a major impact on the speed and effectiveness of implementation. In IMAR the original program was completed well ahead of schedule (spurred on by the pending onset of severe winter weather). Post-review of procurement documentation by visiting IDA missions, indicated satisfactory compliance with the procurement procedures although it seems that in a few cases in YP the lowest responding bid was not always accepted (in attempts to obtain high-quality work). The adoption of similar procedures could be considered for more widespread use in regular investment lending operations in appropriate cases subject to rigorous monitoring for compliance.

* Appropriate financial and implementation-tracking systems should be put in place at the start of the project to avoid delays in implementation and sanctioning of expenditures.

* In emergency reconstruction programs, early availability of funds or authorization, together with competent business procedures and record keeping are essential to address the disaster repairs in a timely manner. Dedicated high-level government management and close interaction between Provincial, Prefecture and County-level management teams is essential to achieve success.

* In emergency projects, construction often begins before all design details are finalized. In such cases it is important to allow generous contingency provisions for unforeseen problems that may occur during construction. - 12-

* The methods successfullyadopted for the reconstructionof urban services in an important and fragile heritage environment clearly demonstrated community commitmentand increasedthe likelihoodof sustainability. * An unusualfeature of the programin Yunnanwas that much reconstructionhad to be undertaken in sites of unique cultural heritage value. This was done successfully, within the program time scale, restoring the assets to community use (schools, hospitals,urban fabric and public buildings)(see AppendixE for details).

* Substantialeconomic, enviromnental, financial and social indirectbenefits can accrue to the disaster-affectedareas through carefully designed rehabilitationand repair programs;the EarthquakeReconstruction Program is a successfulexample of this. * Rapid and effectivefocused decisions by Bank Groupand client countrymanagement can make a significant positive impact in improving the lives of lower-income communities,especially in emergencysituations; the participationby the affected communityand their leadershowever is centralto this success. - 13 -

PART II: STATISTICAL TABLES-INNER MONGOLIA AUTONOMOUS REGION

TABLE IMAR1: SUMMARY OF ASSESSMENTS A. Achievement of Objectives Substantial Partial Negligible Not Applicable Macroeconomic policies x Sector policies x Financial objectives x Institutional development x Physical objectives x Poverty reduction x Gender issues x Other social objectives-minority support x Environmental objectives x Public sector management x Private sector development x Economic benefits x

B. Project Sustainability Likely Unlikely Uncertain x

C. IDA Performance Highly Satisfactory Satisfactory Deficient Identification x Preparationassistance x Appraisal x Supervision x

D. Borrower Performance Highly Satisfactory Satisfactory Deficient Preparation x Implementation x Covenant compliance x Operation (if applicable) x

E. Assessment of Outcome Highly Satisfactory Satisfactory Unsatisfactory Highly Unsatisfactory x - 14-

TABLE IMAR 2: RELATED BANK LoANs AND IDA CREDITS

Loan/credit title Purpose Year of Approval Status Cr. 1918-CHA, Rehabilitation of damages due to forest fire FY88 Complete Da Xing An Ling Forest Fire Rehab Cr. 2091-CHA, Rehabilitation of damages due to FY90 Complete North China Earthquake earthquake occurrence Reconstruction Ln. 3560-CHA Restoration and flood protection following FY90 Complete Taihu Basin Flood major floods in lower Yangtze Delta Control Cr. 3078-CHA Rehabilitation of damages due to FY98 Ongoing Hebei Earthquake earthquake occurrence Rehabilitation Cr. 3169-CHA Rehabilitation of damages due to flood FY99 Ongoing Ln. 3560-CHA occurrences Yangtze Flood Emergency Project

TABLE IMAR 3: PROGRAM TIMETABLE

Steps in project cycle Date planned Date actual/latest estimate Identification Combined with appraisal Preparation Combined with appraisal Appraisal June 1996 June 1996 Negotiations July 1996 July 1996 Board presentation Amendment to Cr. 2307-CHA Signing October 16, 1996 October 16, 1996 /a /b Effectiveness October 16, 1996 October 16, 1996 Program completion Mid-1998 December 31, 1998 Loan closing December 31, 1998 December 31, 1998

/a Amendment to Credit 2307-CHA, Guangdong Agricultural Development Project. /b Further reallocation to Credit 2307-CHA made in March 1998.

TABLE IMAR 4: CREDIT DISBURSEMENT: CUMULATIVE ESTIMATE AND ACTUAL ($ million) Financial Year Appraisal Estimate Actual Actual as % of Estimate Initial Revised FY97 1996 1998 17.8 17.80 11.90 67 FY98 6.9 12.04 15.50 129 FY99 0.3 0.30 1.07 400 Total 25.0 30.14 28.47 95/a

/a The total allocation of SDR 21.159 million to Inner Mongolia was not fully drawn down. At the close, SDR 20.89 million had been drawn. - 15 -

TABLE IMAR 5: KEY INDICATORSFOR PROGRAM IMPLEMENTATION

Indicator Targeted Achieved Health care restoration 49,200 m2 in Baotou City, and Yi & Ba 77,756 m2 Prefectures 2 2 Education restoration 76,610 m in I I elementary & middle schools in 125,561 m Baotou City, and Yi & Ba Prefectures Village & urban rehabilitation 83,500 housing units in 351 villages in Yi & Ba As appraised Prefectures Power and gas sectors RC structure round two existing switchgear As appraised buildings Power transmission & distribution lines Rehabilitation in Yi & Ba Prefectures & Baotou As appraised City Gas tank construction 54,999 m3 capacity As appraised

TABLE IMAR 6: KEY INDICATORSFOR PROGRAM OPERATIONS

None relevant to this program

TABLE IMAR 7: STUDIES INCLUDEDIN PROGRAM

Study Purpose as defined at Appraisal Impact None defined at appraisal. Office facility support & training of project management Very positive benefits for personnel in management systems & procedures implementation success - 16-

TABLE IMAR 8A-1: PROGRAM COST ESTIMATE ($million)

Item Estimate Supplementary Works Estimate Local Foreign Total Local Foreign Total 1. Bautou Municipality Health Care 7.7 0.9 8.6 1.1 0.2 1.3 Education 8.1 0.7 8.8 2.1 - 2.1 Power Sector 8.2 0.8 9.0 1.4 - 1.4 Infrastructure 1.2 0.1 1.3 - - Earthquake Monitor ------

Subtotal 25.2 2.5 27.7 4.6 0.2 4.8

2. Ba Prefecture Health Care 0.5 0.1 0.6 ------Education 0.9 0.1 1.0 0.7 -- 0.7 Infrastructure 3.4 0.3 3.7 0.4 0.4 Power Sector 1.4 0.2 1.6 -- --

Subtotal 6.2 0.6 6.8 1.1 -- 1.1

3. Yi Prefecture Health Care 0.5 0.1 0.6 -- Education 0.8 0.2 1.0 0.2 --0.2 Infrastructure 2.6 0.3 2.9 1.3 --1.3 Power Sector 0.6 0.1 0.7 ------

Subtotal 4.6 0.5 5.1 1.5 -- 1.5

4. Institutional Development 0.1 -- 0.1 ------

Total Baseline Cost 36.1 3.6 39.7 7.2 0.2 7.4

Physical Contingencies Included above Price Contingencies Included above

TOTAL COSTS 36.1 3.6 39.7 7.2 0.2 7.4 - 17 -

TABLEIMAR 8A-2: TOTALPROGRAM COST ESTIMATE AND ACTUAL ($million)

Item Total Cost Estimate Actual Cost Local Foreign Total Local Foreign Total 1. Bautou Municipality Health Care 8.8 1.1 9.9 6.2 0.6 6.8 Education 10.2 0.7 10.9 9.0 - 9.0 Power Sector 9.6 0.8 10.4 10.4 - 10.4 Infrastructure 1.2 0.1 1.3 1.3 -- 1.3 Earthquake Monitor ------0.2 -- 0.2

Subtotal 29.8 2.7 32.5 27.1 0.6 27.7

2. Ba Prefecture Health Care 0.5 0.1 0.6 1.2 -- 1.2 Education 1.6 0.1 1.7 2.4 -- 2.4 Infrastructure 3.8 0.3 4.1 3.3 -- 3.3 Power Sector 1.4 0.2 1.6 0.6 -- 0.6

Subtotal 7.3 0.6 7.9 7.5 -- 7.5

3. Yi Prefecture Health Care 0.5 0.1 0.6 0.9 -- 0.9 Education 1.0 0.2 1.2 2.1 -- .2.1 Infrastructure 3.9 0.3 4.2 4.3 -- 4.3 Power Sector 0.6 0.1 0.7 1.4 -- 1.4

Subtotal 6.1 0.5 6.6 8.7 -- 8.7

4. Institutional Development 0.1 -- 0.1 0.1 -- 0.1

Total Baseline Cost 43.3 3.8 47.1 43.4 0.6 44.0

Physical Contingencies Included above Price Contingencies Included above

Total Costs 43.3 3.8 47.1 43.4 0.6 44.0

Note: Figures may not add due to rounding. - 18-

TABLE IMAR 8B: PROGRAMFINANCING ($ million)

Appraisalestimate Actual/lateestimate Source Local Foreign Total Local Foreign Total Bank Group Cr. 2307-CHA Initial allocation 21.4 3.6 25.0 Additionalallocation 1998 4.9 0.2 5.1

Total IDA 26.3 3.8 30.1 27.9 0.6 28.5

DomesticContribution GOC, IMAR, Enterprises Initial allocation 14.7 -- 14.7 Additional allocation 1998 2.3 -- 2.3

Total Domestic 17.0 - 17.0 15.5 - 15.5

Total 43.3 3.8 47.1 43.4 0.6 44.0

TABLE IMAR 9: EcoNoMic COSTSAND BENEFITS

Not applied for the ICR as not appropriate - 19-

TABLE IMAR 10: STATUS OF LEGAL COVENANTS (onlycovenants relevant to this programare mentioned)

Loan Original Revised Agreement Covenant Present FulflUment Fulfillment Descriptionof Agreement Section Type Status Date Date Covenant Comments DCA 3.01 (c) 3 C Borrowerto make proceedsof creditallocated to IMAR& YP as definedin Sch.4 of DCA. DCA 3.02 (b) 3 C _ Procurementto be in accordance I______with Schedule5 of DCA. _ DCA 4.01 (a) 1 C Borrowerto cause to be maintainedadequate records and accounts. DCA 4.01 (b) i, ii, 1 C _ Accountsto be auditedby iii, & independentauditor acceptable to Sch. 1, para Association.Audited reports to 3,(d),& (e) be furnishedto Associationnot later thansix monthsafter each year-end. DCA 4.01 (c) (i) to 3 C _ - For expenditureson basis of (iv) "Statementsof Expenditures" maintainrecords, retain at least one year after audit report submittedto Associationfor review,& ensurerecords includedin audit report. CovenantClass: Status: 1 = Accounts/audits 8 = Indigenouspeople C = covenantcomplied with 2 = Financialperformance/revenue 9 = Monitoring,review, and reporting CD = compliedwith after delay generationfrom beneficiaries 10 = Projectimplementation not CP = compliedwith partially 3 = Flowand utilizationof project coveredby categories1-9 funds 11 = Sectoralor cross-sectoral 4 = Counterpartfunding budgetaryor otherresources 5 = Managementaspects of the allocation projector executingagency 12 = Sectoralor cross-sectoralpolicy/ 6 = Environmentalcovenants regulatory/institutionalaction 7 = Involuntaryresettlement 13 = Other

TABLE IMAR 11: COMPLIANCEWITH OPERATIONALMANUAL STATEMENTS

Therewas no significantlack of compliancewith an applicableBank Group Operational Manual Statement (ODor OP/BP) - 20 -

TABLEIMAR 12: IDA RESOURCES: STAFF INPUTS (aggregatedfor both IMAR and Yunnan)

Stage of Project Cycle Actual Actual (Weeks) ($'°°°) Identification } Preappraisal } 14.7 61.6 Appraisal & Negotiations } Supervision 50.4 142.1 Completion Report 9.5 30.0

Total 74.6/a 233.7/a

/a Total for both IMAR and Yunnan programs.

TABLE IMAR 13: IDA RESOURCES: MISSIONS Performance rating lb Specialized staff Imple- Devel- Stage of project cycle Monthl No. of Days skills represented mentation opment Type of year persons in field /a status objectives problem

Identification Included in appraisal Preparation Included in appraisal Appraisal 06/96 4 12 F, ME, C Board approval through Effectiveness 10/96 3 3 F, ME, 0

SupervisionIB 02/97 3 4 0, P, C S Supervision2B 10/97 3 4 ME,P, F S Supervision3B 06/98 3 3 0, P, C S Completion 04/99 3 2 P, F, C

/a F: FinancialAnalyst, ME: Municipal Engineer, C: Consultant,0: OperationsExpert, P: ProcurementExpert. lb RegularForm 590 reportingnot includedin Credit2307 Reporting,as Yunnanwas a separateprovince and it is for a normalcredit operation;the IMYERPProgram was an emergencyoperation and kept separaterecords. - 21 -

PART II: STATISTICAL TABLES-YUNNAN PROVINCE

TABLE YP 1: SUMMARY OF ASSESSMENTS A. Achievement of Objectives Substantial Partial Negligible Not Applicable Macroeconomic policies x Sector policies x Financial objectives x Institutionaldevelopment x Physical objectives x Poverty reduction x Gender issues x Other social objectives-minority support x Environmental objectives x Public sector management x Private sector development x Economic benefits x

B. Project Sustainability Likely Unlikely Uncertain x

C. IDA Performance Highly Satisfactory Satisfactory Deficient Identification x Preparation assistance x Appraisal x Supervision x

D. Borrower Performance Highly Satisfactory Satisfactory Deficient Preparation x Implementation x Covenant compliance x Operation (if applicable) x

E. Assessment of Outcome Highly Satisfactory Satisfactory Unsatisfactory Highly Unsatisfactory x - 22 -

TABLE YP 2: RELATED BANK LOANS AND IDA CREDITS

Loan/credit title Purpose Year of Approval Status Cr. 1918-CHA, Rehabilitation of damages due to forest fire FY88 Complete Da Xing An Ling Forest Fire Rehab Cr. 2091-CHA, Rehabilitation of damages due to FY90 Complete North China Earthquake earthquake occurrence Reconstruction Ln. 3560-CHA Restoration and flood protection following FY90 Complete Taihu Basin Flood major floods in lower Yangtze Delta Control Cr. 3078-CHA Rehabilitation of damnagesdue to FY98 Ongoing Hebei Earthquake earthquake occurrence Rehabilitation. Cr. 3169-CHA Rehabilitation of damages due to flood FY99 Ongoing Ln. 3560-CHIA occurrences Yangtze Flood Emergency Project

TABLE YP 3: PROGRAM TIMETABLE

Steps in project cycle Date planned Date actual/latest estimate Identification February 1996 February 1996 Preparation Combined with appraisal Combined with appraisal Appraisal March 1996 March 1996 Negotiations July 1996 July 1996 Board presentation Amendment to Cr. 2307-CHA Signing October 16, 1996 /a /b Effectiveness October 16, 1996 Program completion Mid-1998 December 31, 1998 Loan closing December31, 1998 December31, 1998

/a Amendment to Credit 2307-CHA, Guangdong Agricultural Development Project. /b Further reallocation to Credit 2307-CHA made in March 1998.

TABLE YP 4: CREDIT DISBURSEMENT: CUMULATIVE ESTIMATE AND ACTUAL ($ million) Financial Year Appraisal Estimate Actual Actual as % of Estimate Orig. Suppl. Total FY97 16.3 -- 16.3 11.71 71.8 FY98 18.4 2.0 20.4 21.54 105.6 FY99 0.3 5.0 5.3 6.84 129.8 Total 35.0 7.0 42.0 40.10/a 95.6

/a Although the YP allocation was fully drawn down, the actual amount received was $40.1 million equivalent due to SDR devaluation. - 23 -

TABLE YP 5: KEY INDICATORS FOR PROGRAM IMPLEMENTATION

Indicator Targeted Targeted Achieved (As appraised, 1996) (Additional Works, 1998) Educationrehabilitation Rehabilitationof 110,00m 2 in 45 Rehabilitationof 13,700rn 2 in 12 Rehabilitationof 125,000mi 2 and primary& secondaryschools in schoolsin four counties. equipmentin 47 middle& four counties. primary schools in four counties. Health Centers Rehabilitationof 25,000m2 area Rehabilitationof 3,600 m2 area & Rehabilitationof 30,000m 2 area in six hospitals. equipment. & equipmentin eight hospitals. CulturalHeritage Rehab. Confuciustemple As appraised. repairsto school 2 2 2 LijiangOld City Mu CulturalCenter: 20,000 nm _5,000 M Mu House-25,000 m -as PublicBuildings: 2,100 m 2 appraised. 15,300families. Families to benefit: 15,300. ZhongdianCity 500 houses As appraised. materials JianchuanShi Baoshan Repairsto damages As appraisal DynastyMuseum Park Infrastructure Rehab. LijiangWater Supply 150 km, pipessizes: 25-150mm As appraised. Rehabilitation dia. WTW-20,000m3 Transmission pipe 11km. LijiangSanitation & Culvert 3 km. 100 latrines. Drainagepipe 8.2 km. & STP of Culvert4 km. 20 toilets./a DrainageRehabilitation. 30,000 3l/d cap. Drainagepipe & STPas appraised. HeqingCounty Watersup. - 6,000m 3/d. Water supply9000 m3/d. Mains150-500 mm dia. Supplymain 8 km length. 10 km length. JianchuanCounty Pipelinerehab., 100-300 mm dia., Pipelineas appraised. 14 km length. 6,000m 3/d watersupply ______rehabilitated. ZhongdianWater Supply Watersup.6,000 m 3/d As appraised. pipeline 100-500mm dia. 25 km length. JianchuanIrrigation 7 km lengthof conveyor. As appraised. Conveyor LijiangSpine Road Roadsidedrainage 600-800 mm As appraised. | ______|dia. 1,200 m long. l LijiangAirport-Heqing 25 km. surfacing& retainingwall 25 km surfacing& retainingwall As appraised. Road repairs. rep Industry Rehabilitationin eight industrial Rehabilitation.in four Rehabilitationin 12 enterprises. enterprises. enterprises. Power Rehabilitationin three Repairof further3,000 m 2 Rehabilitationin three power hydropower plants. building plants

/a Balanceof latrinesbuilt by local resources.

Note: Aboutone third of housing units damagedby the earthquakewere repairedunder the project;the balancewas done by local programs,partly government assisted.

TABLE YP 6: KEY INDICATORS FOR PROGRAM OPERATIONS

Not relevant to this program and ICR - 24 -

TABLE VP 7: STUDIES INCLUDEDIN PROGRAM

Study Purpose as defined at Appraisal Impact None defied at appraisal. Office facility support & training of project management personnel in Highly effective

._____ management systems and procedures Study tour of cultural heritage sites also undertaken, led by Vice Highly effective Governor

TABLE YP 8A-1: PROGRAM COST ESTIMATE ($million)

Item Estimate Supplementary Works Estimate Local Foreign Total Local Foreign Total Education 9.4 0.9 10.4 1.9 0.0 1.9 Health 4.6 0.5 5.1 1.5 0.0 1.5 Cultural Heritage 7.2 0.7 7.9 0.6 0.0 0.6 Infrastructure 1.0 3.2 13.2 4.2 0.0 4.2 Industry 9.9 1.7 11.6 1.3 0.0 1.3 Power Sector 5.2 1.5 6.9 0.5 0.0 0.5 Institutional Development 0.2 0.0 0.2 0.0 0.0 0.0

Total 46.7 8.6 55.3 10.0 0.0 10.0

Physical Contingencies Included above Price Contingencies Included above

Total Costs 46.7 8.6 55.3 10.0 0.0 10.0 - 25 -

TABLEYP 8A-2: TOTALPROGRAM COST ESTIMATE AND ACTUAL ($million)

Item TotalCost Estimate ActualCost Local Foreign Total Local Foreign Total Education 11.3 0.9 12.2 14.6 0.0 14.6 Health 6.1 0.5 6.6 6.1 0.0 6.1 CulturalHeritage 7.8 0.7 8.5 7.8 0.0 7.8 Infiastructure 14.2 3.2 17.4 16.1 0.0 16.1 Industry 11.2 1.7 12.9 11.8 0.0 11.8 PowerSector 5.7 1.5 7.2 6.7 0.0 6.7 InstitutionalDevelopment 0.2 0.0 0.2 0.0 0.0 0.0/a

Total 56.7 8.6 65.3 63.1 0.0 63.1

Physicalcontingencies Includedabove Price contingencies Includedabove

Total Costs 56.7 8.6 65.3 63.1 0.0 63.1

/a $22,000equivalent used for projectoffice equipment and stafftraining.

Note:Figures may not add due to rounding.

TABLEYP 8B: PROGRAMFINANCING ($ million)

Appraisalestimate Actual/lateestimate Source Local Foreign Total Local Foreign Total BankGroup Cr. 2307-CHA Initialallocation 26.4 8.6 35.0 Additionalallocation 1998 7.1 - 7.1

TotalII)A 33.5 8.6 42.1 40.1 - 40.1/a

DomesticContribution GOC,YP, Enterprises Initialallocation 20.3 -- 203 Additionalallocation 1998 2.9 - 2.9

TotalDomestic 23.2 - 23.2 23.0 - 23.0

Total 56.7 8.6 65.3 63.1 - 63.1

/a Althoughthe credit allocationwas fully drawn down in SDRs, the amount disbursedin US dollar equivalentwas $40.1 million instead of $42.1million, due to devaluationof the SDRvs. the US dollarand the Yuan overthe projectperiod. - 26 -

TABLE YP 9: EcONOMIC COSTSAND BENEFITS

Not applied for the ICR as not appropriate

TABLEYP 10: STATUSOF LEGAL COVENANTS (only covenants relevant to this program are mentioned)

Loan Original Revised Agreement Covenant Present Fulfillment Fulfillment Descriptionof Agreement Section Type Status Date Date Covenant Comments DCA 3.01 (c) 3 C Borrowerto makeproceeds of creditallocated to IMAR& YP as definedin Sch. 4 of DCA. DCA 3.02 (b) 3 C Procurementto be in accordance withSchedule 5 of DCA. DCA 4.01 (a) I C _ Borrowerto causeto be maintainedadequate records and accounts. DCA 4.01 (b) i, ii, 1 C Accountsto be auditedby iii, & independentauditor acceptable to Sch. 1, para Association.Audited reports to 3,(d),& (e) be fumishedto Associationnot later than six monthsafter each year-end. DCA 4.01 (c) (i) to 3 C For expenditureson basis of (iv) "Statementsof Expenditures" maintainrecords, retain at least one year after auditreport submittedto Associationfor review,& ensurerecords includedin audit report. CovenantClass: Status: 1 = Accounts/audits 8 = Indigenouspeople C = covenantcomplied with 2 = Financialperformance/revenue 9 = Monitoring,review, and reporting CD = compliedwith afterdelay generationfrom beneficiaries 10 = Projectimplementation not CP = compliedwith partially 3 = Flow and utilizationof project coveredby categories1-9 funds 11 = Sectoralor cross-sectoral 4 = Counterpartfunding budgetaryor otherresources 5 = Managementaspects of the allocation project or executingagency 12 = Sectoralor cross-sectoralpolicy/ 6= Environmentalcovenants regulatory/institutionalaction 7 = Involuntaryresettlement 13 = Other

TABLE YP 11: COMPLIANCEWITH OPERATIONAL MANUAL STATEMENTS

There was no significant lack of compliancewith an applicableBank Group Operational Manual Statement (OD or OP/BP) - 27 -

TABLE YP 12: IDA RESOURCES:STAFF INPUTS (aggregatedfor both IMARand Yunnan)

Stage of ProjectCycle Actual Actual (Weeks) ($'000) Identification } Preappraisal } 14.7 61.6 Appraisal& Negotiations } Supervision 50.4 142.1 CompletionReport 9.5 30.0

Total 74.6/a 233.7/a

/a Totalfor both IMARand Yunnanprograms.

TABLE YP 13: IDA RESOURCES:MISSIONS Performance rating /b Specialized staff Imple- Devel- Stage of project cycle Month/ No. of Days skills represented mentation opment Type of year persons in field /a status objectives problem s Identification 02/96 1 3 SE Preparation Included in appraisal Appraisal 03/96 3 14 F, ME, C Board approval through Effectiveness 10/96 3 3 F, ME, 0

Supervision IA 10196 7 4 0(2), P, CH, ME, S SE, F Supervision 2A 07/97 3 5 0, CH, ME S Supervision 3A 12/97 2 5 0, CH S Supervision 4A 12/98 7 6 CH, F, ME, PH, IN, S 0 Completion 04/99 2 5 P, SE -

/a SE: Sanitary Engineer, F: Financial Analyst, ME: Municipal Engineer, C: Consultant, 0: Operations Expert, P: Procurement Expert, CH: Cultural Heritage Expert, PH: Photographer, IN: Institutional Specialist. /b Regular Form 590 reporting not included in Credit 2307 Reporting, as Yunnan was a separate province and it is for a normal credit operation; the IMYERP Program was an emergency operation and kept separate records.

- 29 - Appendix A

APPENDIX A: ICR MISSION'S AIDE MEMOIRE-INNER MONGOLIA

(April 9 to 12, 1999) AIDE-MEMOIRE FINAL

Contents Main Text Annex 1 List of Persons Met Annex 2 The Statistic Table Of The Implementation Status Of $30.14 Million IDA Credited IMERP By The End Of 1998 (Provided by PMO and available separately)

Main Text

1. A World Bank Implementation Completion Report Mission visited Baotou, Inner Mongolia during April 9 to 12, 1999 to discuss the draft ICR Inner Mongolia earthquake component of the Inner Mongolia/Yunnan Earthquake Reconstruction Program (IMYERP) with the project officials from Inner Mongolia Regional, Municipal and County Project offices. The mission comprised Messes Yang Dawei, Chen Fang and Ken Rippin (Consultant).

2. The mission expresses its appreciation for the support and hospitality received from the officials of Inner Mongolia Regional Government (IMRG), Baotou Municipal Governments and the various project offices at regional, municipal, prefecture and county level in Baotou City (Annex 1). The Bank received the Borrower's contribution to the ICR in March, 1999. The mission congratulated the various project offices for the successfully completion of the project.

3. The mission discussed with the various project executing agencies a draft ICR. In addition to the Statistical Table of the Implementation Status of $30.14 Million IDA Credit IMERP By The End Of 1998 (Annex 2 ) provided by the regional Project Office, the mission has also received the completion report from project offices of Baotou Municipality, Yi and Ba Leagues and IM Earthquake Bureau during the discussion. This Aide-Memoire briefly describes the project completion status and addresses issues needed for ICR finalization. Major mission findings will be contained in the ICR. - 30 - Appendix A

Completion Status

4. The mission found that since the previous mission 3B in June 1998 the authorities and the concerned communities had completed all the reconstruction of damaged or destroyed facilities, with two minor exceptions. By the end of 1998 nearly all the construction of various projects and sub-projects had been completed except two subprojects supported by supplement IDA Credit which will be completed in 1999 after 1998-1999 winter. These two sub-projects are some minor works on the Baotou Industrial school and the hospital attached to the Baotou Medical College.

5. Based on the information provided to the mission (Annex 2), it is understood that the following value of works was completed by the end of 1998:

Sub-projects supported by $25 million IDA Credit Component Total Project Cost (US$,000) Percent Completed Education 9,975 98.1% Health 8,065 98% Housing 7,229 97.4% Public Utilities 10,903 100% Earthquake Monitoring 243 100% TA 107.5 83.7% Total 36,521 98.5%

Sub-projects supported by Supplement $5.14 million IDA Credit Component Total Project Cost (US$,000) Percent Completed Baotou 4,199.6 103.5% Yi League 1,543 100% Ba League 1,100 100% Regional Education Bureau 602.4 80.6% Total 7,445 99.9%

Total of all projects supported by $30.14 million IDA Credit ____=____ _ Total Project Cost (US$,000) JPercent Completed Total 43,966.3 98.7%

6. The mission was provided a statistical table of the implementation status of the $30.14 million IDA credited to IMERP by the end of 1998 (Annex 2) which presented the data on planned, contracted and completed investment amount and percentage in terms of IDA credit, counter-part fund and total cost; planned, contracted and completed building floor area (m2) and percentage; date of commencement and completion of each sub-project and procurement arrangements.

7. The work completed to the end of 1998 is summarized below. - 31 - Appendix A

Sub-projects supported by $25 million IDA Credit Component Total Building Area (m2 ) Percent Completed compared to contracted value Education 118,063 98.9% Health 77,765 100.2% Housing 166,547 100% Public Utilities 55,190 100.1% Earthquake Monitoring 770 100% TA 83.7 % Total 418,335 99.7%

Sub-projects supported by Supplement $5.14 million IDA Credit Component Total Building Area (m2 ) Percent Completed Baotou 8,180 39.5% Yi League 19,275 100% Ba League 17,960 100% Regional Education Bureau 6,278 80.6% Total 51,693 70.7%

Total of all projects supported by $30.14 million IDA Credit |______TTotal Building Area (m2) Percent Completed Total | 470,028 | 93.9

8. There are 56 sub-projects (47 sub-projects supported by $25 million IDA Credit and 9 sub-projects supported by supplement $5.14 million IDA Credit) in 6 sectors of Education, Health, Housing, Public Utilities, Earthquake Monitoring and TA. Of these, 54 have been completed and put into operation. The main structures of Baotou Municipal Industrial School and the Affiliated Hospital of Baotou Medical College were completed at the end of 1998 but because of the coming of winter, the finishing, power supply, water supply and equipment installation was postponed and will be completed in the spring, 1999 using counterpart funds.

Project Management

9. Project leading groups and project offices have been successfully operated for nearly 3 years since being established at the beginning of the project. The project leading groups and the project offices at regional, municipal and county level will be disbanded after internal account closing and approval of the Government.

10. The Provincial, municipal, prefecture and county Financial Bureaus will take responsibility together with the project beneficiaries for repayment of the IDA credit. - 32 - Appendix A

Project Procurement

11. The project has been procured according to DCA Schedule 5 and benefited from simplified procurement procedures. The results of post review in previous supervision missions have demonstrated that the legal covenants on procurement stated in the Schedule 5 of the DCA have been fulfilled. The procurement of 50,000 m3 dry type gas tank for Baotou Gas company and CT instruments for Baotou No. 4 hospital have be prior reviewed by the Bank and cleared from the Bank's HQ in Washington DC.

12. The advertisement of bidding for Baotou No.2 and No. 4 hospitals was appeared on Baotou Daily although Shopping is allowed in the legal documents. The procurement of 50,000 cubic meter dry type gas tank was advertised on China Mechanical and Electrical Daily by the procurement agent, International Tendering Corporation of China Machine and Equipment Import and Export Corp. The contract was awarded to a township enterprise of Jiangsu province in East China at the lowest bid price. The works was completed in time at high quality. By bidding Baotou gas company has saved the cost of 10%. The project office of IMAR is established in No. 1 Division of Regional Government Office which is in charge of preparation of Government Procurement Regulations of IMAR. Since PMO has learned the Bank's procurement policy and guidelines by executing IMERP and the project has benefited a lot, they has incorporated the Bank's guidelines into their own Government Procurement Regulations which has been approved by Regional Government. This regulations will be implemented at regional level from April 20, 1999. Then, after trial period, this regulations will be disseminated to government of all level in IMAR. IMAR has been the one of a few early provinces to draft government procurement regulations in China.

13. Construction of Baotou No.2 and No. 4 hospitals met foundation problem cursing estimated cost overrun. This has shown that enough contingency should be reserved for emergency recovery projects in case the time is urgent and design time is short.

Disbursement

14. The total credit allocated to the Project component has been SDR 21,117 thousand, including the initial allocation of SDR17,370 thousand and the supplementary allocation of SDR3,747 thousand. The special account set up for Inner Mongolia was fully recovered on Feb 19, 1999. To date (within four months after Closing Date), 14 withdrawal applications have been submitted to IDA. Among them, the No.1 to No.13 withdrawal applications have a total reimbursement of SDR 20.01 million, equivalent to USD 28.42 million. The final No. 14 withdrawal application of USD297,226 (equivalent to SDR 0.21 million) submitted on March 22, 1999, is claimed for direct payment on eligible expenditures incurred. This will need adjusting to avoid overdrawing. It is likely that Inner Mongolia will draw down all the allocated credit proceeds of SDR 21,117 thousand if their No. 14 withdrawal application is fully reimbursed by IDA. It is expected that this would be done to ensure the smooth completion of the Project. - 33 - Appendix A

Category Authorized amount Disbursed amount (SDR thousand) (SDR thousand) Civil Works 17,247 ? Goods 3,800 Training and Consultants 70 60 Total 21,117 ?

15. Actual contract payment under the project is in local currency at the exchange rate of 1 USD = 8.23 CNY. The procurement plan was in USD at the fixed exchange rate of 1 USD = 8.3 CNY and IDA Credit is in SDR at the exchange rate of 1 SDR = 1.4393 USD in 1996 and I SDR = 1.3595 USD in 1998. Since the devaluation of USD to SDR, even the IDA credits are fully withdrawn, most executing agencies found difficulty to fulfill the procurement plan in terms of USD.

Actions to be taken and Next Steps

16. Based on the various discussions and meetings with the concerned project agencies, the mission draws attention to the following steps which should be addressed in order to submit the Project Completion Report to the Bank Management before June 30, 1999: (a) Final Audit Report and audited financial statement for fiscal year 1998 shall be provided for the Bank's review in May 1999 when it is due. (b) Bank will provided its draft ICR to the Borrower for their comments shortly after this mission concludes in both Inner Mongolia and Yunnan. Comments should be sent to the Bank within two weeks after receiving the Bank's draft. - 34 - Appendix A

CHINA EARTHQUAKE RECONSTRUCTION PROGRAM (Credit 2307-CHA) Inner Mongolia Earthquake Reconstruction Program

IMPLEMENTATION COMPLETION REPORT MISSION (April 9 to 12, 1999)

ANNEX 1. LIST OF PERSONS MET

Persons from Hohhot: Mr. Jia Feng: Division Chief of Foreign Economic Div. Regional Planning Committee Mr. Song Liang: Division Chief of No.1 Div. Office, Regional Government, Regional PMO Mr. Yu Xuezhong: Staff member of Regional Project Office Ms. Xie Huiping Staff of Foreign Economic Div. Regional Finance Bureau Mr. Yang AiJun Staff of Foreign Economic Div. Regional Finance Bureau Ms. Wang Ping Interpreter, Regional Foreign Affairs Office Mr. Chang Ming PMO of Regional Electric Power Bureau Mr. Li Xian: Chief of Planning Div., Regional Earthquake Bureau Mr. Chen JinLiang Chief of Science Research Div., Regional Earthquake Bureau

Persons from Baotou: Mr. Geng Zhixiang: Dep. Secretary General of Baotou Government Mr. Du Shougang: Director of Baotou Planning Committee Director of Baotou Project Office Mr. Liu Zhongbing: Div. Chief of Baotou Planning Committee Dep. Director of Baotou Project Office Ms. Zhang Yanming: Chief of Foreign Economic Div. Baotou Financial Bureau

From Dongsheng, Yi Prefecture Mr. Zhao Hu: Deputy Chief of Prefecture Finance Bureau Ms. Yun Meiling Division Chief of Foreign Economic Div. Prefecture Finance Bureau

From Dalate County: Mr. Sun Youshi: Director of Project Office, County Financial Bureau

From Wuladeqian County: Mr. Liu Junbi: Director of Project Office, Assistant to County Governor - 35 - Appendix A

Annex 2 CHINA EARTHQUAKE RECONSTRUCTION PROGRAM (Credit 2307-CHA) Inner Mongolia Earthquake Reconstruction Program

IMPLEMENTATION COMPLETION REPORT MISSION (April 9 to 12, 1999)

Annex 5. The Statistic Table of The Implementation Status of $30.14 Million IDA Credit at the end of 1998

(Provided by PMO during the mission and contained in project files, available upon request.) -36 - Appendix B

APPENDIX B: ICR MISSION'S AIDE MEMOIRE-YUNNAN

AIDE-MEMOIRE NO. SA FINAL December 22, 1998

1. A World Bank mission visited Yunnan during November 18 to 24, 1998 in order to supervise the Yunnan earthquake component of the Inner Mongolia/Yunnan Earthquake Reconstruction Program (YERP). The mission comprised Messrs. Donald Hankey, Patrick McCarthy, Zhang Zhun, Curt Carnemark, Katrinka Ebbe, Dawei Yang and Geoffrey Read (mission leader).

2. The mission expresses its appreciation for the support and hospitality received from the Yunnan Provincial Government (YPG) officials and the officials of the Prefectural, municipal, and county governments of Lijiang, Dali and Diqing, officials of the project entities and members of the project communities, including those met at the various project sites. A list of persons met is shown in Annex 1.

3. The mission met with the various government entities and the executing agencies, to supervise the project. This Aide-Memoire provides a summary of mission findings and recommendations, and is confirmed by World Bank management, following review in Washington. The mission sets out below the main findings and principal issues that need to be addressed.

Summary of Mission Findings

4. The mission found that, following an effective start providing immediate relief to the effected communities, during the past year the authorities and the concerned communities had made impressive and significant progress by substantially completing implementation of the entire reconstruction program identified at appraisal. Recovery from many of the effects of the earthquake has been impressive, and a significant amount of reconstruction work has been fully completed. The communities impacted by the earthquake, appear to have substantially recovered from both the physical destruction and the emotional trauma of the disaster. High credit is due to the management skills of the Yunnan Provincial and Prefecture authorities, and to the local communities for their resilience.

5. In addition, the mission found that the effectiveness of the IDA resources made available for the program has been greatly enhanced from a normal IDA/Bank financed operation due to the following: - 37 - Appendix B

. Leadership. As mentioned above, the government ensured rapidly mobilized, dedicated, and sustained project management leadership, through a Provincial Vice Governor-led Leading Group, and local-level prefecture government support at all stages of reconstruction;

* Community Involvement. This and previous Bank missions have found that there has been all-encompassing community involvement at every stage of reconstruction - this finding is based both on mission observation and informal interviews with the project participants. Yunnan is possibly unique in this aspect, being a province of minorities;

. Procurement. The Bank's agreement to using simplified procurement procedures clearly had a major impact on the speed and effectiveness of implementation. The Bank's supervision missions have found that these procedures proved to be time and cost-effective, and did generate competition. The mission will recommend to management that these simplified procedures should be considered for more widespread use in regular investment lending operations;

• Obtaining Supplementary Resources. Considerable additional and supplementary resources in cash and in kind were provided by the Provincial Government, local government, the local communities, project beneficiaries (including those directly impacted by the earthquake) and outside donors (such as groups of overseas Chinese). This effectively leveraged the IDA funds by a factor of 2 to 3 (mission rough estimate) and also leveraged the non-IDA funds vice versa. All this was done in the context of Yunnan being a low income province;

* Funds availability. The Provincial Government either made funds readily available or gave authorization to incur expenditures as soon as the magnitude of the disaster was realized. In addition, competent business procedures and record keeping consistent with good project management was implemented simultaneously. Credit for this goes to the Finance Bureau, the Construction Commission, and the Prefecture Governments;

Creative Planning under Emergency Conditions. When facilities were rehabilitated/ reconstructed, the authorities and beneficiary communities took advantage to improve designs, equipment and layouts, while remaining within the IDA/Bank criteria laid down for emergency operations; IDA funds are intended to be applied to rehabilitate and reconstruct to a similar level of service as that which prevailed before the emergency - the various supervision missions were satisfied that this guideline had been followed. This has meant that most of the replacement investments will provide incrementally improved long-term service. Since the items reconstructed were generally parts of existing infrastructure, budget provision for operations and maintenance is generally included in the existing budgets. - 38 - Appendix B

Mission Findings

Credit Amount

6. The total allocation made to Yunnan Province for completing its portion of the Inner Mongolia and Yunnan Earthquake Reconstruction Program is SDR29.4297 million. This figure comprises an initial allocation (first phase) of SDR24.24 million, and a supplementary allocation (second phase) of SDR5. 1897 million.

Financing Plan

7. Yunnan's earthquake reconstruction program has been funded by IDA and Yunnan Province in the following approximate proportions: IDA - 65 percent; Yunnan - 35 percent. Funds Flow

8. The flow of funds (both IDA Credit proceeds and counterpart funding) has been through established channels between higher and lower authorities, i.e., Province, Prefecture and Counties.

Disbursements

9. To date, 15 withdrawal applications have been submitted to IDA. 14 withdrawal applications have been reimbursed for a total of SDR28.1 million, equivalent to US$38.2 million, or Y316.8 million. About US$4.3 million of the Special Account has been recovered, leaving a balance of US$1.7 million. Depending on the rate of exchange applied, the reimbursement of Withdrawal Application No. 15, for US$1.8 million, submitted on October 30, 1998, could fully draw down the Credit and pay off the balance of the Special Account. If that is not to be the case, the Yunnan Provincial Finance Bureau has pending a further Y15 million, or US$1.8 million equivalent, of eligible expenditures which it could claim the remaining balance of the Credit..

10. It is likely that Yunnan will draw down all the proceeds of the IDA Credit allocated to it by December 31, 1998, the Closing Date of the Credit. If necessary, IDA may permit Yunnan to claim reimbursement of any eligible expenditures incurred prior to the Closing Date up to four months after that date. It is expected this would be done.

11. The mission reviewed the procedures used to account for, record and claim reimbursement of eligible expenditures. It spot-checked the records and accounts, statements of expenditures (SOE) and supporting documentation held in (a) Lijiang Prefecture Project Office, (b) Heqing No. 1 Middle School, and (c) Diqing Pulp Works. The relevant documentation was readily available and complete in every respect. The mission commends all parties on the excellent record keeping and accounting of project expenditures. -39 - Appendix B

Status of Implementation

12. The status of implementation of the Program with respect to the financing of agreed projects and subprojects is shown as Annex 2. This also shows the status of implementation of Lijiang Prefecture subprojects up to November 19, 1998.

13. In Lijiang Prefecture, there were 21 subprojects in the first phase and 11 subprojects in the second phase, of which five subprojects were extensions of subprojects in the first phase. There was therefore a total of 27 subprojects in Lijiang Prefecture, of which 25 have been completed and 2 have some remaining work. The mission commends all concerned on this excellent achievement. The projects in Diqing and Dali Prefectures have been completed, except for minor tidying up of the construction sites in some cases.

14. Based on the information provided to the mission, it was found that that the following works have been completed:

Works Contracted Project % Cost Complete RMBY million Dali Prefecture 100% 113.1 99% Lijiang Prefecture 100% 301.3 95% Diqing Prefecture 100% 42.1 99%

Total 100% 456.5 97%

15. Details are shown in Annex 2. The mission recommends that on completion of full disbursement of the Credit, Annex 2 be updated to reflect the final disbursement against each subproject.

16. The mission congratulated the Provincial, Prefecture and local level authorities, and the communities at the impressive progress made following the earthquake, in restoring basic facilities, and meeting the needs of the people.

Project Management

17. The following arrangements were established for managing and implementing the project:

Leading Groups: one leading group at the Provincial level, headed by a vice- governor; three leading groups at the Prefectural level (Dali, Lijiang and Diqing),under the leadership of the Cormmissionersof the Prefectures; and four leading groups at the County level (Heqing and Jianchuan Counties in Dali Prefecture; Lijiang County in Lijiang Prefecture, and Zhongdian County in Diqing Prefecture), under the leadership of the Vice Governors of the Counties; - 40 - Appendix B

Project Offices: one Project Office at the Provincial level, located in Kunming; four project offices at the Prefectural level; four County project offices; and 40 subproject offices, have been established at the implementing agency level.

18. All of the above project and subproject offices functioned satisfactorily during implementation. The small amount of remaining works to be completed will be the responsibility of the Lijiang Project Office, under overall guidance of the Prefectural leading group, and the Province.

19. Yunnan Province, the Prefectures and the participating counties are to be commended for this institutional framework. These arrangements enabled the project to be implemented fully satisfactorily. However, appropriate financial and project progress tracking systems were put in place later than expected; this should be given attention on future projects of this kind. In this case, the delays did not hinder the emergency response, since funds or the required authorizations to incur expenditures and enter into contracts were provided rapidly by the relevant authorities. This rapid response competence was in the view of the mission one of the main reasons for project success.

Procurement post review

20. The mission reviewed a portion of the procurement documents of Heqing No. 1 Middle School at the office of the school, and found the records were in order; based on the review of the available materials, the mission was satisfied that procurement procedures agreed at negotiations had been followed. Based on several discussions held by the mission, the mission concluded that the Bank's small works procurement procedures set out in the Credit Development Agreement and the Operations Implementation Plan (OIP) for this emergency project had been followed by the project offices. The adoption of these procedures, which are similar to the local procurement procedures and easy to follow, have contributed heavily to the successful implementation of the project. In addition, the competent management, coordination and high level of ownership by the project offices in the provincial, prefectural and county level, have led to achieving results on the ground.

Cultural Heritage, Urban Upgrading and Architectural Rehabilitation

21. There has been considerable progress in the project since the last mission. The works are well advanced and nearing completion on all cultural heritage and architectural rehabilitation components of the Program. The mission was able to express its satisfaction that the quality of the works on this project (with many diverse building types needing repair or renewal) that the management of the emergency construction works has been very good. The Mu Dynasty complex and the principle areas of city renewal and repair have been carried out efficiently. The schools and hospitals have been energetically completed and the contribution from the Chinese Government has added significant value and sustainability to the quality and service that the buildings and their functions can - 41 - Appendix B offer to the community. Detailed findings and recommendations for future consideration are shown on Annex 3.

22. The Mu dynasty complex would not be fully complete by the project closing date (December 1998) due to the scale of the works, and the need to give sufficient attention to authentication and quality control; the importance of these two items was fully recognized by all concerned, in view of the pending application by Lijiang and China to obtain World Heritage status for Lijiang. It was agreed that a further visit will be needed when the works are finally complete in the Spring of 1999. The Lijiang administration confirmed that the execution of works had required research into the significance and the value of the original entailing an unusual time for project preparation.

23. The mission noted the following areas of improvement recommended for the execution of future project planning and implementation arising out of observations made during the visit:-

Mu Dynasty complex * The final use for the buildings of the Mu Dynasty complex must be urgently decided in relation to the market for tourism, education, employment and commerce; * The proposed future use of the buildings must determine the optimum supply and location of services for lighting, power supply, drainage, sanitation, water, and other environmental controls; * Should the storage of organic and other sensitive materials be required appropriate environmental controls must be installed. Also while the climate of Lijiang is mild, it is sufficiently cold in winter for some spaces being used for sedentary occupation to need adequate heating; - The staffing, operation and management of the Complex must be worked out, and facilities for the training of staff must be selected; 3 The interpretation and presentation of the site for the benefit of the tourism, education and employment must be urgently evaluated and researched by academics and specialists so that the marketing of this special tourist facility can successfully be undertaken; and * The financial and economic sustainability and the target revenues that can be generated by the project must be stated and costs of the operation and maintenance agreed with the administration.

Old Lijiang - Dayan City . Dayan City upgrading requires further consideration in the light of its high profile in the tourism market. Urban services of street lighting, soil drainage services, fire fighting, electrical services distribution, and access needs to be further improved in order to ensure the sustainability of the old City as a place for safe and healthy tourism, commerce and habitation; and - 42 - Appendix B

There is an urgent need for the research and publication of guidelines for the improvement to the construction of traditional buildings in a manner that retains their historical and cultural value and significance. The mission provided a draft Terms of Reference (TOR) for the preparation of these guidelines (see attachment to Annex 3).

He Qing No 1 Middle School * As for the Mu dynasty complex the No I Middle School requires the services to be appropriately arranged for the required functions. Adaptation to completed works will be required to install services after completion of the building works; and * The installation of toilets for the girls dormitories has been inadequately considered and adaptation to the site plan is advised by the mission.

Zhong Dian Hospital . The works to the hospital have been completed without the adequate consideration of functional layouts so that the location of services as installed is inadequate and unrelated to the probable functions. The location of electrical services too close to water services is a threat to health and safety. TThe expenditure of money of high quality finishes in public and circulation areas is in contrast to the lack of thought given to the quality of services and the environmnentin the functional areas.

Heritage Construction Manual & Guide

In order to ensure sustainability of the investments in the repairs of the Old Town, the mission agreed with the Lijiang authorities (as had been discussed during previous missions) that a construction guide was still badly needed; this would assist communities living in a heritage environment when undertaking upgrading and making improvements to residential and institutional properties. These improvements relate to the installation of services, improvements to the insulation against wind and the cold, and help in planning for safety, means of escape in case of fire and other desirable characteristics of a modern household. It was recognized that if the properties are not improved there, is a risk that Dayan City would not remain attractive for domestic housing. A draft Terms of Reference for a group of local and international specialists to prepare the Manual is shown in Annex 3.

Provision for Future Maintenance.

24. The mission reminded all concerned of the need for making full and adequate budget provision for the long term maintenance of the assets which had been financed through the project. -43 - Appendix B

Implementation Completion Report (ICR)

25. The mission requested that the project authorities prepare an ICR, reflecting their views on implementation and completion of the project, and in particular, highlight lessons learned. Examples of typical ICRs were provided to the Provincial Project Office. YPG agreed to prepare a draft ICR and submit this for Bank review before the end of February, 1999.

Next Supervision Mission

26. The next supervision mission would be scheduled, depending of overall progress, to suite YPG and the IMYERP Yunnan Program Project Office. It is expected to take place early in 1999, and would focus on reviewing the draft ICR.

Agreed Actions/Recommendations Due Date

By Yunnan:

Prepare draft ICR March 1999

Prepare Construction Manual May 1999

By the Bank Review draft ICR May 1999 - 44 - Appendix B

CHINA Credit 2307-CHA Yunnan Earthquake Reconstruction Program AIDE-MEMOIRE NO. 5A FINAL 22 December 1998 LIST OF PERSONS MET

Yunnan Provincial Government

Mr Niu Shao Yao, Vice Governor

Yunnan Provincial Construction Commission Mr Shi Xiao Ce, Senior Architect, Director of YERPO and Vice-Director of Yunnan Construction Commission Mr. Shao Jianguo, Vice Director; Deputy Chief of the Project Office, YPCB Mr Wang Zhiyi, Manager

Yunan Earthquake Reconstruction Project Office Mr Jiao Jun, Vice Director of YERPO and Senior Engineer Mr Li Ji, Architect No 3 ConstructionOffice

Yunnan Polytechnic University Research and Design Institute of Architecture and Engineering Mr Gong Xin Jian Engineer Ms. Xu Hua Architect Mr Xie Jin Feng Architect

Yunnan Finance Bureau

Ms Sheng Fan Project Officer and Translator

Yunnan Urban and Rural planning Design and Research Institute

Mr Gu Qi Wei Senior Planner and technical Consultant - Chief Architectural Adviser - Mr. Fu P......

Yunnan Construction Commission Urban Construction Training Centre

Mr Zhao Zhiyong Director

Yunnan Horticultural Exposition Bureau

Mr. Guo Fang Ming, Director, Mr Xia Jianfeng Director - 45 - Appendix B

Lijiang Prefectural Project Office: Mr. Luo Xie Jun, Vice Governor of Lijiang Prefecture Mr. Xie Yi, Vice Commissioner of Lijiang Prefecture Mr. Nian Jiwei, Chief of the Project Office, Deputy Director of Lijiang Prefectural Construction Bureau (LPCB) Mr. He Shangqin, Deputy Chief of the Project Office Ms. Yang Yulin, Accountant, Project Office

Lijiang County Project Office: Mr. Sun Jiayi, Deputy County Governor Mr. Cai Hexi, Chief of the Project Office, Deputy Director of Lijiang County Planning Commission Mr. Shi Jinyun, Deputy Chief of Lijiang County Construction Bureau

Li Jiang Educational College Ms Yang Li Ping, English Teacher and Translator Mr Huang Bi De, Dean of the English Department and Translator

The Mu Dynasty Research and ConstructionTeam Mr Huang Naizhen, Director of the Li Jiang Cultural Bureau Mr Chen Yao Dong, Research Fellow of the Institute of Architectural History and the China Building Technology Centre Interpreter: Mr. Huang Bide, teacher of Lijiang Education College

The People's Government of Dali Bai Ethnic Group Autonomous Prefecture Mr. Li Ying De, Governor Mr. Liang xi Yong, Vice-Prefectural Governor

Earthquake Reconstruction Office of Dali Prefecture Urban & Rural Construction Mr. Wang Yongyu, Project Administrative Engineer Mr. Yang Ding Lhong, Secretary of the Party Committee

Dali prefectural Project Office: Mr. Shan Yuming , Chief of the Project Office, Director of Dali Prefectural Construction and Evironmental Protection Bureau (LPCB) Mr. Zao Hexin, officer of the Project Office

Heqing County Mr Hong Shi Jiu, Vice Governor Mr Yang Jia He, Officer of Project Office

Heqing County Project Office: Mr. Wang Rongwei, officer of the Project Office - 46 - Appendix B

Heqing Nol Middle School

Mr Li Zhi Kui, Headmaster Mr Hong Jie Qian, Vice Director

Diqing Autonomous Prefecture Mr Luo Yong Xiang, Vice Governor

Diqing Prefectural Project Office: Mr. Luo Yongxiang, Deputy Governor of Diqing Prefecture Mr Xiao Bang Ma, Vice director Mr Mu Hong Bin, Clerk

Zhongdian County Project Office: Mr. Xiao Banma, Chief of the Project Office Mr. Mu Hongbin, Officer of Project Office -47 - Appendix B

CHINA Credit 2307-CHA Yunnan Earthquake Reconstruction Program AIDE-MEMOIRE NO. 5A FINAL 22 December 1998

Detailed Project Costs and Completed Component Listing

Contained in the Project Files-in English and Chinese - 48 - Appendix B

CHINA YUNNAN EARTHQUAKE RECONSTRUCTION PROJECT CULTURAL HERITAGE COMPONENT AIDE-MEMOIRENO 5A FINAL December 22, 1998

27. The mission wishes to thank the officials of the Yunnan Provincial Government (YPG) and the Prefectures and Counties of Lijiang, Dali, Heqing, and Zhong Dian and Di Qing for their assistance during the days spent in Kunming and the above places. The mission focussing on a review of those project components of specific cultural significance was carried out by Mr Donald Hankey, Ms Katrinka Ebbe, Mr Zhang Zhun, and Mr Curt Carnemark, assisted by Mr Xin Gong Fu between the 18th and 24 " of November 1998. A list of persons met during the mission is given in Annex 1.

Objectives

28. Following the field visits of December 1997, and with the substantial completion of the project due at the end of December 1998, the mission objectives were to:- a) assess progress made in the rehabilitation, reconstruction and conservation works to the Mu Dynasty properties; b) assess the content of the construction manual for the repair and upgrading of traditional buildings in Dayan City; c) review planning and construction of project components, in particular the reconstruction and repair of the various buildings of Dayan and the Heqing No.1 Middle School, as scheduled in the IDA and PRC agreements; d) assess the effectiveness of administrative, institutional systems and controls required to deliver the project as planned; e) hear the opinions of the Yunnan and county teams as to the efficiency and impact of the project's cultural heritage component; and f) ensure that the works undertaken represent a sustainable investment and benefit to the community.

The Mu Dynasty Properties

29. Impressive progress had been made since the last mission. It was reported to the mission that there were 3600 people working to complete the project. Some delay had been incurred through the poor weather in 1998 and care was necessary with the intricate painting for the works. Completion of most of the complex was expected during the spring of 1999. It had been found that care had to be taken to restore to the original style and the work could not easily be researched adequately and carried out in the time available for buildings of such importance for the future of Lijiang's economy.

30. The mission noted that the next essential steps were to finalize the detailed plans for the use and furnishing of the buildings and that these studies were critical for the - 49 - Appendix B proper installation of services and working environments. Each building must be given an effective use as noted previously in discussions with the Bank in order to ensure sustainability, maintenance and conservation, and the use must be supported by modem services, to ensure the continued effectiveness of the buildings.

31. The mission noted that the interpretation of the historic sites and the presentation to the public and to the tourists will be essential for the generation of revenue, tourism and education, and to give benefit to the local community through increased awareness, employment and commerce. The appropriate form of presentation would need to be proved in relation to the expected market and the revenues calculated in relation to the type and financial status of the visitors. The mission advised that the assessment of appropriate functions for the buildings and the methods for presentation of the history and significance to the public needed to be studied and strengthened immediately. The Bank hereby requests that proposals for these matters are sent to the Bank in Washington as soon as they can be finalized.

32. The costs of operation and maintenance had still to be calculated in relation to the expected staffing, and the intensity and type of use. This in turn must show the profitability and the need for any permanent subsidy for the operation of the future use. The market for the future use must be analyzed, and the management staff and their necessary skills need to be urgently defined, selected and trained. (See Item 5f) of Annex 2 Aide Memoire of December 1997). To carry out the work of items 4, 5 and 6 above, requires the assistance of experts in archaeology, history, architectural history and design, tourism, market analysis, economics and finance. It was agreed that a business plan for the funding, operation and maintenance of the project would be prepared for presentation to the Bank by April 1999.

33. It was agreed that the construction detail at the base of the timber columns to all the buildings could be improved; the present design being used showed lack of protection against water penetration between the stone bases and the timber; the timber may rot and decorations fail unless the joints are sealed with a modem flexible polysulfide sealant applied in accordance with the manufacturer's instructions. The mission and the YPG team noted that in historic buildings it was important to take advantage of modem construction techniques so long as the historic value is not reduced.

Lijiang Old City

34. Drainage systems were complete. Toilets were complete and in operation; maintenance could be improved however, as many were not cleaned regularly, and at risk of failing to provide an adequate and hygienic service. Earthquake damage to the private housing was still being repaired and techniques for reinforcing traditional construction and upgrading the quality of the traditional environments was urgently required. There is still great danger from fire with the electrical systems using the local standards of installation; the lack of fire hydrants in the city also gives rise for concern. In time these - 50 - Appendix B problems must be addressed for the Old City to be a desirable, safe and sustainable place for tourism, commerce and habitation.

He-Qing No 1 Middle School

35. Good progress had been made in completing the works, and in addition to the repair of earthquake damage, the support of additional local funding has added considerable value and capacity to the school. The works were of good quality but the mission noted the following important points:- a) The restored Confucian Temple will be used for gatherings, exams, exhibitions. Provision has not as yet been made for the necessary electrical services, power supply and lighting of the working or exhibition areas and the fine new roof. The mission advised strongly that the lighting be designed to shield the light source in order to avoid glare;

b) The Main Entrance Gate was being constructed off center to the access road. Careful design of roads and landscaping is required to overcome this problem;

c) The new toilets for the girls dormitory block are to be sited some 100 meters from the building, which is insensitive to the needs of teenage girls who require adequate privacy. The mission suggested that the toilets should be located near to the dormitory block between the dormitory and the new classroom block and attached at each floor level. The cleanliness of the toilets and their maintenance, and the provision of adequate mains drainage will be essential;

d) The mission noted that the provision of soil water drainage was still inadequate for the school site and that the consideration of services needed to be taken into account earlier in the design process; and

e) Rainwater pipes to the historic teachers' offices building should be routed against the structure in the corner courtyards.

Zhong Dian Hospital

36. In Di Qing County, the Zhong Dian Outpatients clinic was a fine new building; more attention was now needed to make adjustments to the functional planning to determine the final location of and any needed adjustments to services, the provision of hot and cold water, power supply and lighting. These adjustments to services will be difficult to add/adjust now that the building has been constructed. The mission suggested that the planning and administrative process for project preparation and design needed to account better for the future use, the adaptability of that use to anticipate changing market requirements, and the services required to provide the necessary functional environment. It was agreed that plans for the functional organisation of the hospital would be sent to the World Bank in Washington for comment. - 51 - Appendix B

Project Administration

37. The YERP directors and staff noted the lack of mission time to review design of projects. The mission took note and requested that in future information should be presented earlier for the Bank staff to review.

Guidelines for the upgrading of historic environments

38. Draft Terms of Reference (TOR) for this Study were given to YERP in December 1996 (This remains valid and is given again in the Attachment to this annex). The YERP responded in October 1997 with a statement and TOR of their own. A further draft TOR of the manual was available for comment in July 1997 and the Aide Memoire reported the Bank's conclusions. The final TOR for the manual was reviewed by the Bank in December 1997and agreement given to the Cost estimates of RMB590,000 for the production with 100% reimbursement from the project. YERP is hereby requested to formally confirm the funding and program requirement for the TOR and publications and the World Bank will assess if the works can be funded out of the project budget or from other funding sources. YERP are requested to note the comments of the December 1997 Aide-Memoire, but the city of Ningbo and Liaoning Province cannot at this stage be included in the project.

39. The mission noted the great potential benefit to the people of Lijiang from the investment of the Chinese into the repair and improvement to their environment, The investment has given added value if the management, operation, maintenance and continuous adjustment to the market and the user requirements is effectively carried out. There will be long term benefits to the community in education health and tourism. - 52 - Appendix B

DRAFT TERMS OF REFERENCE FOR TECHNICAL STUDY INTO LIJIANG HOUSING STRENGTHENINGAND IMPROVEMENT

Introduction

1. The IMYERP Program (Credit 2307-CHA) to assist the Province of Yunnan in its repair of the Damage from the earthquake of 3 February 1996, involves the reconstruction of the traditional housing of Dayan (Lijiang Old City). The laws issued both pre- and post-earthquake set out the standards and requirements for planning, design and construction. Various matters remain however to be resolved, and for the investment into repair to be in support of sustainable quality of construction and a worthy asset, the avoidance of future damage as far as possible and the construction of repair which incorporates the improvement in the environmental planning and construction must be achieved.

2. Debate continues on the question of the appropriate relationship between the traditional earth brick structures at the rear and gable end walls, and the timber framing which has survived over the centuries through the heavier walls collapsing without bringing down the timber framing. The latter has often retained adequate flexibility to resist the shock of earthquakes. There are of course many instances of displacement and collapse of timber frames, but for the most part evidence suggests that this collapse is always associated with the collapse of masonry structures. Construction detail has in some instances not provided a key between components, such as between timber column and stone base, leading to damage or displacement of the components.

3. The stability of timber frames is given by well tried systems of jointing and paneling. But in the conditions of a serious earthquake as has recently occurred this has proved to be potentially inadequate.

4. The modem recommendations require the introduction of concrete framing and brick panels. This is not appropriate for the traditional historic environment of the City of Dayan, and alternate external construction materials must be used to conserve the traditional architectural expression of the City. The scope of modem science and constructional experience must be tapped to assess the potential for discrete and appropriate strengthening measures.

5. As a general rule, the properties of the Old City have some electricity, no drainage or sanitation, poor means of escape in case of fire, no means of fighting fires, some telephones, a lack of fresh water supply, uninsulated timber panel walls and roofs, and an absence of heating systems. What systems there are have been installed without adequate safety and protection and without adequate consideration for the aesthetic and safety requirements for both the street scene and the interior of the buildings. There is much good experience that can be used to design methods of upgrading properties in ways which can be for the enjoyment of the inhabitants. The tourism industry, being seen as a - 53 - Appendix B principal generator of employment and trade in the future, also requires that the distribution of services and the provision of safety and adequate access is carried out in ways that are sensitive to the visual charm and historic quality of the urban and built environments.

6. The Ministry of Construction in Beijing is understood to be studying a range of problems associated with the rehabilitation of buildings in Dayan, but the scope of these studies is not known as yet. Any study carried out for this project must be complementary to any other study, and the knowledge thereby gained must be pooled for the benefit of the City as a whole. The means selected for improving planning and construction must be within the limits of affordability both for initial capital expenditure and for future maintenance. Solutions to the problems must therefore be set in the context of the economic and financial character of the City.

7. The present reconstruction and rehabilitation within the City is being carried out without always conforming to the recommendations correctly issued by the Province and the Prefecture. Not unnaturally the emergency nature of the disaster has required immediate action by any means possible. There is a problem of communicating requirements of the law and of design recommendations to the householders who are often dependant upon their own initiatives but do not read sufficiently to understand the recommendations that are given. The means of communicating any requirements becomes an essential consideration in developing a sustainable and controlled urban environment.

8. There is a need to develop literature in both written and graphic form that can be interpreted by the householders and their builders, giving guidance on:- * construction improvements, and the means of improving safety, thermal and sound insulation, safety in case of fire, the assurance of the means of escape in case of fire and the protection of escape routes by the use of non-combustible materials; * safety and installation requirements to electrical, water supply, sanitation, drainage, telephone, television and services giving the typical solution to concealment of pipes conduits and wiring, the prevention of damage from the use of equipment to adjacent parts of the building; * construction of traditional buildings and the use of traditional materials, decorative and construction detailing, and the means of improving the earthquake resistance of traditional buildings as found in the City; . Planning improvements to the traditional layout of rooms to incorporate the requirements of modem lifestyles. • planning and design solutions and the environmental requirements for lighting of streets, electrical, water, drainage, telephone and television services distribution; * design limitations for the placing of advertisements within the historic areas (if not already covered by the legislation) - 54 - Appendix B

9. The above measures are potentially very useful to the people of the City to help them know of action that they could take to improve the enjoyment of their properties, to defend the use and values of traditional properties, and to demonstrate the qualities of the traditional house over the mass housing solutions of blocks of flats now under construction in the new parts of the city. The support of the people is important to ensure maintenance and upgrading of the traditional environment, and the historic environment is the expression of the traditional minority Naxi culture and the principal lure for tourism and all its associated trade and economic benefits that are derived from it.

10. It is likely that most properties would be able to undertake only a part of the recommended works. The importance of the advice however is to give safety, quality control, construction and design information to all people concerned.

11. The following skills are required to carry out the study, to negotiate and adjust the details of the study in relation to the requirements of the administration of the Province of Yunnan, the Prefecture and City of Lijiang, and to produce reports and literature that may be reviewed and adopted by the relevant departments of the administration:- * architect and urban planner specialized in the design and construction of traditional Chinese housing; this may be two people depending upon the availability of skills; * structural engineer specialized in the design of traditional Chinese houses and a services engineer skilled in the routing of services in existing buildings; and * architects and engineers from the administration to work with the appointed specialists. - 55 - Appendix B

CHINA YUNNAN EARTHQUAKE RECONSTRUCTION PROJECT COMMENTS ON FIELD VISITS AIDE-MEMOIRENO 5A FINAL December 22, 1998

40. The mission visited a number of the project sites. Comments on the individual sites are shown below.

41. Traditional Chinese Hospital of Lijiang County. Constructed from October, 1996 to May 1997, the hospital has been fully rehabilitated and is provide services to patients. Located in old city of Dayuan Town, the hospital was built in traditional wooden structure of Lijiang Naxi style compatible with old city surroundings. The construction quality is satisfactory, but some improvement is needed in the longer term, such as the stairs are too steep for patients

42. Water Supply Factory of Lijiang County. Not visited on this mission. Work is complete, and the plant is reportedly functioning satisfactorily.

43. Reconstruction of Drainage Ditch of West Bypass Highway. Rehabilitation of earthquake damaged conduits were completed in August 1996 by original contractor who got the works through bidding before earthquake. Procurement documents and SOE support documents were provided to the mission for review and local bidding procedure was followed.

44. Steel Window Manufacture Works. All work is complete, and factory back to full employment. During a field visit, the mission found that the reconstructed factory appeared to have expanded since completion of the earthquake reconstruction work, and seemed to have more capacity than orders.

45. Other. The mission visited several of the schools supported through the project. The mission found that workmanship was generally of a high standard, work had been completed, and the facilities were being fully utilized.

46. Housing of Old Town Residents. This project-supported portion of the work had been completed some while back. However, even though project funds were not sufficient to meet all reconstruction costs (it has been estimated that the Credit would have provided some 25 to 35 % of the costs, the mission found that the majority of the houses damaged had been repaired by this time, and possibly most houses had even been improved; the main improvements were that many of the walls which were formerly of unbaked mud brick(with little resistance to earthquake damage) were now of sand/cement block or burnt brick, and also it is understood had been constructed with reinforcing, which would improve the earthquake resistance. - 56 - Appendix B

47. Mu Family House. Work in this area is very advanced, and substantially complete. Details and recommendations are set out in Annex 3.

48. Wastewater and Drainage System Upgrading. Work on upgrading of the collector system is substantially complete; the main item still to be completed is the treatment plant. The mission found that additional attention was required in order to improve the quality of construction. It was reported that the plant would be substantially complete by the end of 1998.

49. Lijiang Prefectural Hospital. As the largest pieces of contract, the procurement documents of the hospital has passed Banks prior review. Mission has requested that alternative foundations be considered, including considering constructing a basement on raft, instead of individual pillars in present design. Particular attention to be given to considering earthquake conditions prevailing in Lijiang. These alternatives to be given consideration by PMO and concerned design Bureau. Bank to be advised.

50. Education College of Lijiang Prefecture. The Student Dormitory facilities and the main Teaching Building have been completed, equipment installed, and the facilities are fully operational. School management appears to be of a high quality, and the academic results achieved by the pupils were reported to have improved significantly, as a result of the reconstruction of the facilities; even though the facilities were essentially reconstructed, in line with project goals and procedures for emergency operations, the opportunity was taken to improve while reconstruction gave a chance to innovate. This has according to the local authorities achieved academic results far greater than those which could have been achieved previously.

51. Other Public Infrastructure and support to Industrial Enterprises. The mission visited several of the other industrial facilities which had been reconstructed with project support. Work was substantially complete, and the facilities functional in most cases; in some sub projects, additional counterpart funds were still needed in order to complete the works to full functionality. YPG assured the mission that these funds would be provided. - 57 - Appendix B

CHINA EARTHQUAKE RECONSTRUCTION PROGRAM (CREDIT 2307-CHA)

YUNNAN EARTHQUAKE RECONSTRUCTION PROGRAM (YERP)

IMPLEMENTATION COMPLETION REPORT MISSION (April 13 to 18, 1999)

AIDE-MEMOIRE

DRAFT

June 24, 1999

Contents

Main Text

Annex I List of Persons Met - 58 - Appendix B

Main Text

1. A World Bank Implementation Completion Report (ICR) mission visited Lijiang and Kunming, Yunnan during April 13 to 18, 1999 to discuss the Yunnan component of draft ICR for the Inner Mongolia/Yunnan Earthquake Reconstruction Program (IMYERP) with the project officials from Provincial, Prefecture and County Project offices. The mission comprised Messrs. Terry Hall and Yang Dawei.

2. The mission expresses its appreciation for the support and hospitality received from the officials of Yunnan Provincial Government (YPG), Lijiang Prefecture Governments and the project offices of Yunnan Province, Lijiang Prefecture, Lijiang County and Heqing County.

3. The mission discussed the draft ICR with the provincial project office and provided the draft of the ICR to the provincial project office on April 14, 1999. the mission has also received the Borrower's contribution to the completion report in Chinese from the project office. The mission received comments, issues, experiences and lessons earned on the project by various project offices and executing agencies of Lijiang county (in the evening of April 14), Lijiang Prefecture (in the morning of April 15) and Heqing County (in the afternoon of April 15). The people met by the mission were listed in the Annex 1 of this Aide-Memoire. The mission findings will be incorporated into the ICR. This Aide-Memoire is subject to review and confinnation by World Bank Management in Washington.

Completion Status

4. The implementation of the project was completed by the end of 1998. The mission found that the IDA Credit was fully withdrawn on December 31, 1998.

Actions to be taken and Next Steps

5. Based on the various discussions and meetings with the concerned project agencies, the mission draws attention to the following steps which should be addressed in order to submit the Project Completion Report to the Bank Management before June 30, 1999:

(a) Final Audit Report and audited financial statement for fiscal year 1998 shall be provided by Yunnan Provincial Government (YPG) for the Bank's review before June 30, 1999.

(b) The comments on the draft ICR, and English version of the Borrower's contribution to ICR shall be provided by YPG to the Bank by the end of April, 1999. -59 - Appendix B

CHINA EARTHQUAKE RECONSTRUCTION PROGRAM (CREDIT 2307-CHA) Yunnan Earthquake Reconstruction Program

IMPLEMENTATION COMPLETION REPORT MISSION (April 13 to 18,1999)

ANNEX 1. LIST OF PERSONS MET

Persons from Province:

Mr. Shi Xiaoze: Deputy Director of provincial construction bureau Mr. Shao Jianguo: Division Chief of Planning and Finance Division, provincial construction bureau Ms. Chuan Zhiming: Staff member of provincial Project Office

Persons from Lijiang Prefecture:

Mr. Shi Weiqing Dep. Governor of Lijiang Prefecture Government Mr. He Shangqing Lijiang Prefecture Project Office Ms. Yang Yulin Lijiang Prefecture Project Office Ms. He Jiafeng Lijiang Prefecture Project Office Mr. He Gang Lijiang Prefecture Hospital Mr. Wang Guang Lijiang Prefecture Education College Mr. He Shangyou Lijiang Prefecture Education College Mr. He Wenxin Lijiang Prefecture Ethnic Teacher Training School Mr. He Kechun Lijiang Prefecture Ethnic Teacher Training School Mr. Tang Weixue Lijiang Prefecture Finance Bureau Mr. He Pinwen Lijiang Prefecture Power Company Mr. Liu Daoxiang Lijiang Prefecture Middle School Mr. Zhu Feng Lijiang Prefecture Education Commission Mr. Li Chengwei Lijiang Prefecture Experiment School Mr. Li Xinming Lijiang Prefecture Health School Ms. Zhuang Lianmei Lijiang Prefecture Window Frame Factory Mr. Nian Jiansheng Lijiang Prefecture Window Frame Factory

Persons from Lijiang County:

Mr. Li Baotang Dep. Governor of Lijiang County Government Mr. Wang Chunhong Lijiang County Project Office Mr. Xi Liwu Lijiang County Project Office Mr. He Lisheng Lijiang County Traditional Chinese Medical Hospital Mr. He Yixin Lijiang County Education Bureau Mr. Wu Lishen Lijiang County Urban Construction Bureau - 60 - AppendixB

Mr. Su Jingfa LijiangCounty Estate ManagementStation Mr. Duang Wunhau LijiangCounty Finance Bureau Mr. YangYugen Lijiang CountyWater SupplyPlant Ms. Ma Chixian LijiangCounty Women and ChildrenHospital Mr. Chen Yiaojun LijiangCounty Paper Mill Ms. Huang Meixian Lijiang CountyFood Stuff Factory - 61 - Appendix C

APPENDIX C: BORROWER CONTRIBUTION TO THE ICR- INNER MONGOLIA

IMPLEMENTATION COMPLETION REPORT

CHINA

INNER MONGOLIA EARTHQUAKE RECOVERY & RECONSTRUCTION PROJECT

(CREDIT NO. 2307-CHA)

January 10, 1999 CHINA INNER MONGOLIA EARTHQUAKE RECOVERY & RECONSTRUCTION OFFICE

AVERAGE RATE VALUE OF DIFFERENT YEARS

1996 lUSD=8.30YUAN 1SDR(SPECIALDRAWINGRIGHT)=1.4393USD 1997 1USD=8.30YUAN 1SDR=1.3682USD 1998 1USD=8.29YUAN ISDR=1.3595USD - 62 - Appendix C

CONTENT

I. PROJECT TARGET------(4) II. PROJECT BACKGROUND------(5) III. PROJECT ACTUAL EFFECT------(6) IV. PROJECT APPRAISAL------(8) V. MAIN ELEMENTS AFFECTING PROJECT------(11) VI. ACHIEVEMENTS OF THE WORLD BANK------(12) VII. ACHIEVEMENTS OF THE LOANER------(13) VIII. PROJECT FUTURE OPERATION------(14) IX. PROJECT MAIN EXPERIENCE------(15)

APPENDIX

TABLE I: PROJECT APPRAISAL COLLECTON TABLE TABLE II: PROJECT TIME TABLE TABLE III: PROJECT RENDER TABLE TABLE IV: PROJECT INVESTMENT COLLECTION TABLE TABLE V: WORLD BANK INVOLVED GROUPS TABLE I. PROJECT TARGET

1.1 At 11:32 on May 3, 1996 a severe earthquake of 6.4 degree happened in BaoTou, Inner Mongolia, China, where most industries and population of Inner Mongolia are concentrated. The epicenter is only 10 km away from the city. The highest earthquake intensity is 8 degree. 6 counties and districts in Baotou city, YiKeZhao league and BaYanNaoEr league were affected. This earthquake has the characteristics of no signs, high degree and causing severe losses. It is another seriously destructive earthquake happened in a city with over one million people following the TangShan Big Earthquake of China. BaoTou is the largest industrial city of Inner Mongolia. The banners and counties around it are dry and poor, mainly engaged in agriculture and animal husbandry and populated by minority nationalities. The earthquake caused serious inner destruction to different buildings, underground structures and industrial facilities. It laid unpredictable problems and caused severe losses to the life and work of fanners and herdsmen. Through careful investigation and collective appraisal made by the relevant national and provincial departments, 580 thousand households and 2.1 million people suffered from the earthquake. 26 people died and 454 people injured. The direct economic losses reached 5.215 billion Yuan.

1.2 In order to do the work of anti-earthquake and disaster-relieving, recovering the production and reconstructing homeland well, the concerned national departments, other provinces and the international community have given great support and help. Inner Mongolia government made overall plan for the reconstruction work, sticking to the - 63 - Appendix C principle of mainly self-reliance combining international and domestic aids. It was planned that all the reconstruction work would be finished step by step in two years.

1.3 Inner Mongolia is a minority nationality autonomous region. Her economy is still lagging behind and the financial strength is still weak. Therefore, it is difficult for her to finish all the reconstruction work only by herself. As a result, the aids of the World Bank ( hereinafter referred as WB ) is needed.

1.4 The aids of the WB is mainly for solving the problems of housing, education, hygienic facilities and the repair and reconstruction of the urban public facilities for the people in disaster-stricken areas, so that the social order of living, working, educating and medical care can be normalized and the economy in these areas can be continuously developed.

II. PROJECT BACKGROUND

2.1 This project is the urgent aiding project utilizing the largest foreign investment and possessing the largest scale in the post-earthquake reconstruction work in BaoTou.

2.2 This project is comprised of 6 sub-projects of education, hygiene, public facilities, housing, earthquake observation and technical aids and is arranged to be implemented in 6 counties of 3 leagues and cities.

2.3 From June 25 to 29, 1996, the WB Investigation Group headed by Mr. Daud Ahmad made an on-the-spot investigation to Inner Mongolia. From July 18 to 21, 1996, through technical negotiations between the WB and the China Finance Ministry and the Inner Mongolia Delegation, a loan of 25 million USD is officially approved to be granted.

2.4 The total investment of the project is 37.0914 million USD. Among this amount the International Development Association (IDA) granted 17.37 million SDR, equal to 25 million USD and accounting for 67.4% of the total contract amount.

2.5 The IDA credit is to be trans-granted from the Finance Ministry to the Inner Mongolia People's Government. The annual rate is 2%. The promising fee annual rate is 0.5%. The returning period is 15 years, including 5 years of grace period.

2.6 Project Implementation. On December 16, 1991, the WB and the Chinese Government signed the Development Credit Agreement and it shall become valid from October 16, 1996. - 64 - Appendix C

2.7 Project Mid-term Adjustment

2.7.1 IDA Credit Loan Re-allocation. In October of 1997 and June 1998 the WB Delegation twice came to Inner Mongolia and confirmed the project list of supplementing 3.747 million SDR, so that the IDA credit loan finally reached 21.117 SDR.

III. PROJECT ACTUAL EFFECT

3.1 Project Implementation Progress

3.1.1 Project Total Investment. The actual completed investment is 43.9663 million USD which is 98.7% of the actual contract. Among this: IDA credit 30.0587 million USD, accounting for 99.7%; the domestic investment equal to 13.9076 million USD, accounting for 96.6%. For details, see Appendix 4.

3.1.2 The project was started from August 1996 and finished on Dec. 31, 1998. The construction plan of the project was basically finished and the implementation was fine.

3.1.3 IDA Credit Payment: The actual payment is 2,013,2 million SDR ( equal to 27.5 mnillionUSD ) and the last payment was on ,1999. For details, see Appendix 3.

3.1.4 Purchase: The bidding and purchasing of the project were basically carried out as the WB required. The contractor of the BaoTou Gas Project, Bao Tou No. 2 Hospital and Bao Tou No. 4 Hospital was selected through competitive bidding. The housing construction in rural areas and some electrical facilities maintenance projects were self- managed. The contractor of the rural housing construction in Yi League was selected through inquiry bidding. The rest projects all adopted the method of inquiry bidding and purchasing through careful comparison. The documents and the process of the bidding and purchasing basically conform to the standard.

3.2 Project Actual Effect

3.2.1 Education

A. The reconstruction and maintenance of 22 rural and urban secondary professional schools, special educational centers, middle and primary schools and kindergartens were finished.

B. The reconstruction and maintenance of 75 rural middle and primary schools were finished.

3.2.2 Hygiene

A. 15 urban hospitals and epidemic prevention stations were finished. - 65 - Appendix C

B. 24 rural hygienic stations were finished.

3.2.3 Housing

A. 3 urban residential buildings with the area of 12,562 m2 were finished and 225 quake- stricken households moved into the new home by the end of 1996.

B. 191,481 m2 of rural housing were finished.

3.2.4 Public facilities

A. The Bao Tou Gas Project was finished. A new dry storage tank of 50,000 m3 was constructed. The former wet storage tank of 54,000 m3 and the pipes and other strike- destroyed facilities were repaired.

B. The boiler room and equipment purchase of the BaoTou Qing Shan Heating Plant were finished.

C. The civil work and equipment repair of the Bao Tou No. I Power Plant, Bao Tou Power Supply Bureau, Ba League Electric Administration Bureau and Yi League Electric Administration Bureau were finished.

D. The water supply project of DaLaTe Banner was finished.

3.2.5 Seismic Observation. The work of changing part of the observation equipments and meters and repair part of working and residential houses in 8 seismic observation stations were finished.

3.2.6 Technical Aids. The training of the finance and purchase management of the project and the office equipment purchase were finished.

IV. PROJECT APPRAISAL

4.1 This project is the aiding project utilizing the biggest WB loan and occupying the largest scale in the post-earthquake reconstruction work of Inner Mongolia. It covers the fields of education, hygiene, public facilities, housing, seismic observation and technical aids, etc., involving 6 counties in 3 leagues and cities. It greatly helped the quake-stricken area to formalize its working and living order, improved people's living, educating and medical conditions and strengthened the infrastructure construction. This project will be very important in keeping social stability and impeding economic development. It show fairly good social and economic benefit.

4.2 The implementation of the education project: The reconstruction of schools in an area of 125,561 m was finished and large amount of teaching facilities were purchased. - 66 - Appendix C

This guaranteed children's study in school, greatly bettered the educational condition in these areas and helped to raise the educational level.

4.3 The implementation of the hygienic project: The hospitals in the quake-stricken area were repaired and the medical condition was greatly improved. Number of patients and the income of the hospital were increased. It helped to increase the medical capability and develop the hygienic undertaking, especially the medical condition in the local rural area. It is more convenient for farners and herdsmen to seek medical advice.

4.4 The implementation of the housing project: Homeless quake-stricken people moved into the new houses and are able to lead a stable life. New villages were constructed with an entirely new look. It guides and drags the development of the local countryside construction.

4.5 The implementation of the public facilities project: The hidden trouble in the Bao Tou gas, heating and Da La Te banner hot water system was completely abolished. It assured the safe utilization of gas for 120,000 people of 30,000 households in Bao Tou Qing Shan District. It guaranteed the winter warming of 11,800 households in Bao Tou and the water supply for the residents in Shu Lin Zhao County of Da La Te Banner and gained a good social effect.

4.6 The implementation of the seismic observation project: It not only normalized the observation and broadcasting work of the harmed observation stations, but also improved the observation, working and living conditions of these stations. The purchasing of the digital seismic meter and the forewarning meter and the construction of the information net system greatly improved the seismic observation ability and the seismic analysis and broadcasting level and will surely play a better role in the work of anti-quake and disaster-relieve.

4.7 The implementation of the technical aids project: It guaranteed an effective carrying-out of the work of the Earthquake Project Office and a smooth going-on of the WB-loaned recovery and reconstruction work.

4.8 Through the implementation of this project we gained many beneficial experience in improving and increasing investment and project management. What's more, a group of project management officials of utilizing WB loan is trained.

4.9 Comparison of with this project and without this project: If there were no this project, the post-disaster construction work may still have achieved some progress. However, compared with having this project, the speed and effect of the reconstruction work would be much worse and the people's life, social production and economic development would be seriously limited. This project not only made the destroyed schools, hospitals, houses and public facilities quickly reconstructed, but also greatly improved the condition in these systems so that the potential of development was deepened. - 67 - Appendix C

V. MAIN ELEMENTS AFFECTING PROJECT

5.1 Governments at different levels have attached great attention to this project and strengthened the leading and management of it which made this project a success. Governments at the provincial, city and county levels have all listed it into the VIP agenda. They made special researching and arrangement about this project and determined special officials to be in charge of it. They all set up the Project Office to be specially responsible for managing this project.

5.2 All departments concerned closely coordinated with each other which made this project smoothly carried out. The Planning & Developing Commission, the Finance Departmnent,the Earthquake Bureau, the Electric AdmninistrationBureau, the Education, Civil Construction, Hygienic and Audit Departments, etc. have all been involved in this project. During the implementation of this project the officials and specialists of these Departmnentsall attend into this project actively and cooperated with each other closely. The Education Department, the Electric Administration Bureau and the Earthquake Bureau have set up Project Offices and determined special persons to be responsible which guaranteed a smooth implementation of this project.

5.3 All project construction units are responsible and hardworking which laid a solid foundation for the smooth implementation of the project. During the implementation, all these units have determined special officials to be responsible for the project and saved no effort to finish it.

5.4 Due to the changing of the currency rate, an insufficiency of some project investment was resulted in, which inserted heavy pressure onto the project units.

VI. ACHIEVEMENTS OF THE WORLD BANK

6.1 The WB has given great support to the project in supplying capital, information, technical guide and management, etc.. The governments and project units at different levels and residents in the quake-stricken area were very satisfied with the WB in selecting, preparing, guiding and supervising of the project and would like to extend the most sincere appreciation to the WB.

6.2 The WB did very well in implementing this project. During the rectification of the project, the WB sent Delegations both headed by Mr. Daud Ahmad in June and July of 1996 to rectify the projects.

6.3 After the project was started, each time when the WB Delegation camneto Inner Mongolia, regardless of the tiredness, the WE officials all saved no effort in their work and were extremely careful and responsible and showed very good qualifications and high efficiency. We are deeply impressed by their high working-spirit and the warm feelings that they hold toward people in quake-stricken areas. Inner Mongolia will never forget the contributions that they made to this project. - 68 - Appendix C

6.4 The officials from the WB Mr. Geoffrey Read, Mr. Bao TaiLi, Ms. Austin Hu, Mr. Daud Ahmad, Mr. Patrick McCarthy, Mr. Ken Rippin, Mr. Yang DaWei, Ms. Yang XiaoHong, Mr. Zong Yan, Mr. Chen Xin, Mr. Chu JunXue and other official have kept a close and harmonious relation with the Project Office and other departments. They gave great support to the Project Office which is an important reason for the success of the project.

6.5 Since 1996 the WB have sent 5 groups of 21 officials to help and guide the project in Inner Mongolia.

VII. ACHIEVEMENTS OF THE LOANER

7.1 Under the leadership of the Inner Mongolia Governmnent,the Inner Mongolia World Bank Anti-quake & Disaster-Relief Loan Project Leading Group was set up. This Group is responsible for leading and coordinating in this project. A vice-governor was appointed to be the chief of this Group. The leading officials of the General Office of Inner Mongolia People's Government, Planning & Developing Commission, Finance, Construction, Electric Administration, Education and other Departments and officials from the Government of Bao Tou City, Yi League and Ba League are the members of the Group. Under the Leading Group there exists the WB Loan Project Office. A vice-general secretary of the Inner Mongolia People's Government was appointed to be the director of the Office. A vice-general director of the Inner Mongolia Planning & Developing Commission and a vice-general director of the Inner Mongolia Finance Department were appointed to be the vice-director of the Office. The Project Office have selected some engineers, technical and financial specialists to be in charge of the implementing, managing, training, supervising, observing, coordinating and serving of the project.

7.2 The Inner Mongolia Govermnent is responsible for bearing and transferring the IDA credit. The Foreign Economy Division of the Inner Mongolia Finance Department is responsible for the financial management of the project, including drawing, rendering, reclamation and repay, and supervising the implementation situation in the leagues, cities and counties concerned.

7.3 The Inner Mongolia Audit Department is responsible for auditing this project. Through auditing problems were found without delay and suggestions were raised which guaranteed the smooth implementation of the project. Audit reports were supplied to the WB each year.

7.4 The Project Offices at the league ( city ) and county levels are responsible for management of the project all through its implementation under the direction of the Inner Mongolia Project Office and local Government Project Leading Group. The Project Offices in Electric Administration Bureau and Earthquake Bureau are responsible for the management of the project belong to them all though its implementation. - 69 - Appendix C

7.5 The project construction units selected the designing units and constructing units through bidding as was required by the WB and the domestic infrastructure management regulations.

7.6 The domestic finance of all the sub-projects was raised by the Finance Departments of different levels and enterprises, units and farmers ( Some of them do labor with the same value of the fund instead of paying the cash ) concerned. Bidding purchase was used in WB loan and repay and render were all done as the W13required.

7.7 The bidding purchase of goods: The construction units put forward a purchase list according to the bidding design documents to the Finance Departments of the same level to be rectified. After all the lists were rectified the Inner Mongolia Project Office revised and rectified them and raised them to the Inner Mongolia Finance Department for rectification. The Project Office is responsible for bidding.

7.8 The Project Offices at different levels are responsible for supervising the progress of the project. Each quarter of the year a completion table was applied to the upper- leveled Project Offices till the Inner Mongolia Project Office. Each quarter of the year the Inner Mongolia Project Office applied a completion table to the WB. That the Office frequently communicated with the WB for guidance and support is an important guarantee for a smooth implementation of the project.

VIII. PROJECT FUTURE OPERATION

8.1 After the project was turned over to the departments responsible for the work the Project Offices at all levels would be removed. The Foreign Economy Division ( sector ) of Planning & Developing Commissions and Finance Departments at different levels will be responsible for operating and supervising the project, urging the repay and render of the WB loan and coordinating problems occurred during the operation.

8.2 Governments at different levels will take actions to strengthen the repay ability of different project units and to guarantee a timely and sufficient repay to the WB.

IX. PROJECT MAIN EXPERIENCE

9.1 That the governments at different levels paid great attention to the project is the key to the success of the project. They have been giving care and support to the project and solved problems without delay.

9.2 That the close cooperation between all departments concerned and the positive efforts of all project units are the foundation of the success of the project.

9.3 The help from the WB and the effective management of all the Project Offices at different levels is the key guarantee to the success of the project. - 70 - Appendix C

TABLE I. PROJECT APPRAISAL COLLECTION TABLE

A.TARGETREALIZATION ALMOST PARTIALLY NOT NOT REALIZED REALIZED REALIZED PRACTICAL MACRO-POLICY DEPARMENTPOLICY _ FINANCIALTARGET SYSTEMDEVELOPMENT / TARGETIN KIND RELIEVINGPOVERTY CAREABOUT WOMEN OT'HERSOCIAL TARGET ENVIRONMENTALTARGET STATE-OWNEDDEPARTMENT MANAGEMENT PRIVATE-OWNEDDEPARTMENT MANAGEMENT OTHERS

B. PROJECTENDURENCE POSSIBLE NOT NOTSURE POSSIBLE

C. WBACHIEVEMENT EXCELLENCE GOOD BAD PROJECTSELECTION ______

PREPARE FOR AIDING ____ APPRAISAL __

SUPERVISATION__I______

D.LOANERACHIEVEMENT EXCELLENCE GOOD BAD PREPARATION / IMPLEMENTATION/ SITUATIONOF ABIDING BY THE / CONTRACT FUTUREOPERATION /

E.APPRAISAL RESULT EXCELLENCE GOOD BAD

V I______- 71 - Appendix C

TABLE II.

PROJECT TIME TABLE

STEPS IN THE PROJECT PLANNED DATE ACTUAL DATE/FINAL APPRAISAL PROJECT SELECTION PEEPARATION PRE-APPRAISAL APPRAISAL POST-APPRAISAL PUT FORWAD TO BOARD NEGOCIATION 1996.7 1996.7.18-7.21 SIGNING THE CONTRACT 1996.10.16 START TO BE EFFECTIVE 1996.10 PROJECT COMPLETION 1998.12 CLOSING ACCOUNT 1998.12

TABLE 3 PROJECT RENDER TABLE USD TIME 1997 1998 1999 APPRAISAL ACTUAL 20,785 6,715 MILLION MILLION ACTUALLY TO BE APPRAISED FINAL RENDER DATE X X_L_X - 72 - Appendix C

TABLE 4

PROJECT INVESTMENT COLLECTION TABLE

PROJECT APPRAISAL COMPLETION COMPLETION ACCOUNTING FOR APPRAISAL % DOMESTIC FOREIGN DI Fl T DI Fl T INVEST- INVEST- TOTAL MENT (DI) MENT (Fl) (T)

EDUCATION 1,273.64 2,697.17 1,316.16 HYGIENE 263.19 658.11 921.3 HOUSING 254.76 567.7 822.46 PUBLIC FACILITY 436.66 865 1,301.66 EARTHQUAKE 4.3 20 24.3 OBSERVATION TECHNICAL AIDS 2.85 7.9 10.75s PROJECT TOTAL 1,390.76 3,005.87 4,396.63 COST

TABLE 5.

WB INVOLVED GROUPS TABLE

NO. TIME HEAD NUMBER OF WORK CONTENT MEMBERS 1 96.6.25-30 Mr. Daud Ahmad 7 Project investigation 2 96.7.26-31 Mr. Daud Ahmad 3 Project starting 3 97.2.23-27 Mr. Ken Rippin 3 Checking the project 4 97.10.27-30 Mr. Geoffrey Read 5 Checking the project 5 98.6.14-16 Mr. Ken Rippin 3 Checking the project - 73 - Appendix D

APPENDIX D: BORROWER CONTRIBUTION TO THE ICR- YUNNAN

CHINA LIJIANG, YUNNAN EARTHQUAKE RECONSTRUCTION PROJECT CREDIT NO. 2307 -- CHA OCT. 16, 1996 -- DEC. 12,1998

COMPLETION REPORT

LIJIANG, YUNNAN EARTHQUAKE RECONSTRUCTION PROJECTOFFICE MARCH 25, 1999

CONTENTS

1. PROJECT OBJECT 2. PROJECT BACKGROUND 3. THE FACE EFFECT OF THE PROJECT 4. EVALUATION ON PROJECT IMPECTION 5. MAIN FACT TO IMPACT THE PROJECT 6. PROJEC CONTINUITY 7. WB'S ACHIEVEMENTS 8. BORROW'S ACHIEVEMENTS 9. PROJECT EVALUATION 10. PROJECT FUTUTE OPERATION 11. MAIN EXPERANCE AND LESSON OF PROJECT 12. ATTACHMENT 12.1 THE SUM OF PROJECT EVALUATION 12.2 PROJECT SCHEDULE 12.3 PROJECT PAYMENT 12.4 PROJECT PUECHASING 12.5 THE SUM OF PROJECT INVESTMENT 12.6 PROJECT FINANCING 12.7 COMMISSION OF WB

Average exchange rate of each year 1996 SDR1.00=US$1.44 US$1.00=RMB8.30 YUAN 1997 SDR1.00=US$1.36 US$1.00=RMB8.30 YUAN 1998 SDR1.00=US$1.33 US$1.00=RMB8.29 YUAN - 74 - Appendix D

Lijiang, Yunnan Earthquake Reconstruction Project Completion Report

1. Project object

1.1 An earthquake of magnitude 7.2 happened in Lijiang on Feb. 1996. Most seriously destroyed area of Lijiang area, Dali Prefecture and Diqing prefecture are mountain area where there are three minorities inhabitant. These areas are backward in economy. The total GNP in 1995 was RMB 2,000 Yuan per Capital. It only possessed 2/3 of Yunnan province and 1/2 of China. The fiscal revenue of Lijiang area is RMB 106 million Yuan and the expenditure is RMB 31.7 million Yuan. The fiscal revenue of Dali prefecture is RMB 552 million Yuan and the expenditure is 1155 million Yuan. The fiscal revenue of Diqing prefecture is RMB 52 million Yuan and the expenditure is 207 million Yuan. The earthquake made a loss more than RMB 4000 million Yuan and impact on the local social economy development and people's normal living greatly. The volume of reconstruction is considerable. It's very difficulty to complete only depending on local fund in a short time. Therefore WB gives help.

1.2 This project is one of the important compositions of Lijiang earthquake reconstruction project. It focuses on supporting the reconstruction of destroyed area and impacting on the main field to develop. The reconstruction will conduce to console people lived in destroyed area, recovery the normal production and people's living, promote the ability of helping by engaging in production and do spade work for future development. The direct beneficiary from the project is 100 thousand. Most of them get a middle income or a low income. Project's social benefit will be outstanding. Having been completed, the project not only can solve the education and medicine problem for 50 thousand people, and 12 factories' production problem, but also can supply 23 thousand ton of water for 2500 houses. It can deal with 30 thousand ton of polluted water, and 57 thousand kW of generated energy and a road for 50 km's long. It as well as contributes to reconstructing on Lijiang old city, Mu family and Jianchuan gem mountain which are of protected units at county level and province level. It not only protects the unsteady heritage, but also benefits to the recovery and development of tourism.

2. Project background

2.1 The project is the Guangdong agricultural development project and Yunnan Earthquake Reconstruction Project that is helped by IDA loan.

2.2 The project consists of seven classifications (They are education, medicine, cultural heritage, basic facility, industrial and mining enterprise, electric power and technology help.), 2 batches, 53 subprojects. The total credit is SDR 29429700 which is equal to US$40141900.23, RMB 332119005.30 Yuan. It was arranged in four areas (Lijiang, Heqing, Jianchuan and Zhongdian) which are counties of three prefectures (Lijiang, Dali, and Diqing). - 75 - Appendix D

2.3 The earlier work of the project is divided into four stages.

2.3.1 Setting up: After being investigated by WB in March, 1996, it was confirmed and set up.

2.3.2 Preparation: It was prepared by Construction Department of Yunnan Province, Finance Department of Yunnan Province and Economic Planning Committee of Yunnan Province.

2.3.3 Evaluation: WB commission evaluated the project officially in May, 1996.

2.3.4 Executing: WB negotiated with the delegation of Chinese government in Washington, U.S.A and Beijing, China in May, 1996 and in July, 1996. The loan agreement was signed up by both and went into effect. The expense, which happened since Feb. 3, 1996, can be rendered an account. The closed date is Dec. 31, 1998 when the project end.

2.4 According to the project agreement, total investment is RMB 456500 thousand Yuan. It includes SDR 24240 thousand units from IDA credit, which convert into US$35000 thousand, possessing 70% of total investment.

2.5 IDA loan is transferred to People's Government of Yunnan Province by finance bureau. Its annual rate is 2% and promising expense rate is 0.5%. The payment time is 17 years, including 5 years for extending.

2.6 Adjustment in project middle term

2.6.1 During the executing, WB commission gives inspection twice a year. Considering supplying equipment for reconstruction project in destroyed area, through the completeness agreement, WB commission increases SDR 518970 thousand units which convert into US$7000 thousand.

2.6.2 Adjustment of project middle term: Considering the necessity and investment effect of the reconstruction, we adjust the former evaluation for the investment of three enterprises after WB agreed.

Heqing agricultural machinery enterprise: Evaluated investment is RMB 400 thousand Yuan. Adjusted investment is RMB 1150 thousand Yuan.

Heqing paper mill: Evaluated investment is RMB 5600 thousand Yuan. Adjusted investment is RMB 3160 thousand Yuan. - 76 - Appendix D

Heqing manganese mine enterprise: Evaluated investment is RMB 1100 thousand Yuan. Adjusted investment is RMB 6890 thousand Yuan.

Total: Evaluated investment is RMB 11200 thousand Yuan. Adjusted investment is RMB 11200 thousand Yuan.

2.6.3 During the evaluation, we get a scale on civil works and goods investment. However, there is some difference between this scale and the fact executing. Having been agreed by WB, the loan on goods was increased SDR 3293261 units and the loan on the civil works was decreased SDR 3293261 units. There is no change in the total loan.

2.7 Last investment of project

Investment classified by the use of project currency unit: RMB 10 thousand Yuan Project Project Total WB Loan Domestic Payable Classification Unit Investment Matched Funds Education 19 9455 5907 3548 Medicine 8 5407 3234 2173 Cultural Heritage 4 6507 4855 1652 Basic Facility 6 13546 8476 5070 Industrial and Mining Enterprise 13 10060 6658 3402 Electronic Power 3 5495 4064 1431 Consulting 384 18 366 Project Management fee Total 53 50854 33212 17642

Classified by investing area currency unit: RMB 10 thousand Yuan Project Classification Project Total WB Loan Domestic Payable Unit Investment Matched Funds Lijiang area 25 30846 20642 10204 Dizhi 13 11103 7452 3651 Lijiang prefecture 12 19743 13190 6553 Dili prefecture 17 11736 7169 4567 Heqing county 11 9753 6000 3753 Jianchuan county 6 1983 1169 814 Diqing prefecture 11 8272 5401 2871 Zhouzhi 3 4897 3387 1510 Zhongdian county 8 3375 2014 1361 Total 53 50854 33212 17642 - 77 - Appendix D

3. Project fact effect

3.1 The executing progress: The project agreement is in valid from Oct. 16, 1996. It defines the expense, which happened from Feb. 3, 1996 (the date that Lijiang earthquake happened) to the date that the agreement validated, can be rendered an accountant retroactively. Therefore, from Feb. 3, 1996 to Dec. 31, 1998 (the closed date), the total working time is tow years and eleven months, 1061 days in all. During the period, all projects have been completed and the total investment is RMB 508540 thousand Yuan, possessing 100% in the hole evaluation report. It concludes WB loan RMB 332120 thousand Yuan. Having been checked after they are completed, all the buildings have been put into use.

3.2 The payment of WB loan: This project gets SDR 29429700 units of WB loan, converting into US$40141900.23 or RMB 332119005.30 Yuan. From the first payment on May 7, 1997 to the last payment on Dec. 31, 1998, the replenishment was paid for 12 times in all.

4. Project evaluation

4.1 The project is the first one to use WB loan to relieve the destroyed area in Yunnan. It includes three prefectures' (Lijiang, Dali and Diqing) and four counties' (Lijiang, Heqing, Dali and Zhongdian) education, medicine, basic facilities, cultural heritage, factories, electronic power and technology help. There are 53 subprojects and more than 400 works.

4.2 47 middle schools and prime schools are reconstructed. They provide a good environment for more than 50 thousand teenagers to study. They stimulate teachers' zeal on teaching and make students study hard. All of these factors promote the quality of education quickly. This year, students who graduated from each school make a historic record on the exam for entering a higher school. Many minority students entered the famous university.

4.3 Having been reconstructed, eight hospitals at prefecture and county level improve their facilities, promote their ability, decrease the difficulty in sending patients to a far place to cure and increase the ability of local cure.

4.4 After five factories for supplying water and dealing with polluted water are reconstructed and the drainage pipeline about 50 km's long is restored, drinking water for 200 thousand people and four county's environment are improved.

4.5 After irrigation and water conservancy, three hydropower station, road about 50 km's long, 12 enterprises are reconstructed, the production in destroyed area and residents' living condition become convenient. - 78 - Appendix D

4.6 After three cultural heritage are rebuilt, the result is outstanding and gets praise from local residents. Local residents have a deep impression on WB.

4.7 Purchasing, bidding, designing, working, checking quality, rendering an accountant, auditing, replenishing, organizing and managing on the project are praised by WB.

5. Main fact to impact on the project

5.1 Because the earthquake reconstruction covers more widely than WB loan project involves, time is tight and the traffic in destroyed area is inconvenient and the climate effects the weather, also because it is the first time for destroyed area to use WB loan to recover, the procedure is unknown. All of these factors lead to finishing the project more slowly.

5.2 Because of the exchange rate, the evaluated loan, which bases on RMB, isn't replenished thoroughly. The rest of the loan about 3% must be raised by subproject units. It adds difficulty to each subproject unit.

6 Project continuity

6.1 This project is the earthquake reconstruction project. Every subproject begins to work one after another and is completed and put into use early or late. Its social efficiency begins to form. In order to enhance and improve the project results, each project unit will go on strengthening the later management and make the project having more strong ability to continuously developing.

6.2 Some of the subprojects' continuously developing lie on the law of state, such as the law on factory's dealing with the polluted water and supplying using water. Their charge standard must be checked and confirmed by government. Now government in each area are designing the relative policy so that these project' results can be strengthened and improved.

6.3 Because some of the subprojects lack funds for reconstruction, hospital's and school's civil work is done in order of importance and urgency. These subproject units go on raising funds for adding equipment. There is more potential for the project to develop.

6.4 The project investing the recovery of cultural heritage not only restores and protects these unsteady historic and cultural heritage but also considerably improves the recovery development of local tourism. With the earthquake reconstructing and the tourism developing, the name of destroyed area will be more and more well-known, especially the success on applying world cultural heritage for Lijiang old city. There were 1700 thousand people to visit Lijiang in 1998. From now on, more and more people will visit there with the further improving on environment. - 79 - Appendix D

7. WB's achievements

7.1 The project involves many prefectures and counties. Work of project is small and working time is tight. WB commission conquers difficulty such as traffic and gives great help on fund, information, technology guiding, project managing and operating. They ensure work to be done successfully. Governments at all levels and people in destroyed area are satisfied with the work of project selection, preparation, evaluation, supervision and replenishment which are done by WB.

7.2 WB is excellent on the project confirming, evaluating and supervising during the working on project. It is not long after earthquake happened in Lijiang, a supervision commission of WB led by Mr. Read was sent for the project on March 10, 1996. Later a delegation of WB led by Mr. Read was sent for the project on April 10, 1996 again. Both of them inspected, evaluated and confirmed the project and made an Evaluation Report which is regarded as a basement for the work.

7.3 During the working, WB send 2 or 3 supervision commissions every year. There are 10 supervision commissions, 42 people to come to Yunnan till the project is completed. The schedule for supervision commission is intense. WB officials start to work without having a rest as soon as they get off plane. In the day time, they inspect and talk with officials of project office, staffs and local residents. They look over the reference and master the practice working. At night, they often hold a meeting to discuss work late into the night. WB gives a valid guide on technology, economy and organization in time. Their attitude on work, their management way and their spirit of working hard give us a deep impression. They set up a model for us to study. The working on project practices a group of staffs to be good at managing and to be more ability.

8. Borrower's achievements

8.1 Under the leading with Yunnan Province Government, Lijiang earthquake reconstruction project group takes the leader. The vice-governor of Yunnan Province, Niu Shao Yao is the chairman of this project group. The vice-leader of this group are the main responders coming from Finance Department of Yunnan province, Construction Department of Yunnan province, Economic Planning Committee of Yunnan province, and Civil Administration of Yunnan province. The rest officers of this group come from Education Committee of Yunnan province, Public Health Department of Yunnan province, Cultural Department of Yunnan province, Communication Department of Yunnan province and Hydraulic and Hydropower Department of Yunnan province. The group also includes the Department of Yunnan province which helps the distressed and succoring those in peril. The group takes responsibility for major things which run through the hole project. Under its leading, there is a project office at province level setting up in Construction Department of Yunnan province, as a permanent organization. It responses for project's carrying out, management, supervision, inspection, coordinating, service and association. Lijiang area, Dali prefecture and Diqing prefecture - 80 - Appendix D and Lijiang county, Heqing county, Jianchuan county and Zhongdian county set up administrative organ at second level and third level basing on province level. They provide the reliable guarantee for project to be carried out smoothly.

8.2 As a administration to organize funds, Finance Department of Yunnan province responses for financial management of the project which includes contracting credit, transferring credit, rendering on account, replenishing, getting back loan, paying back loan and arranging the raise of domestic payable matching fund. At the same time, it supervises and checks the work on project. It also takes part in other management of project office.

8.3 Economic Planning Committee of Yunnan province responses for the project's setting up, auditing, and authorizing for feasibility since it is a construction and planning administration. It also takes part in other management of project office.

8.4 As a construction administration, Construction Department of Yunnan province responses for the work of project office. Its relative units give an irregular check and guide on project's planning, designing, constructing, supervising, managing and costing. It responses for organizing the reconstruction of the whole earthquake area.

8.5 Audit Department of Yunnan province responses for auditing. Through auditing and advising, it ensures the project is carried out successfully. It sends audit report to WB every year.

8.6 Project's guide and service are responded by Education Committee of Yunnan province, Public Health Department of Yunnan province, Hydraulic and Hydropower Department of Yunnan province, Light industrial Department of Yunnan province and other relative organizations.

8.7 Every project construction unit has its responders. According to the pOroject's content, which is discussed and agreed by WB, and the basic domestic construction management procedure, constructing plan of the project is drawn up and reported and admitted by county project office level by level after we set up and get the feasibility researching report, planning license, construction license and the procedures of project's site selection letter. Designing unit, construction unit and supervision unit on work's quality is decided by bidding. With the constructing progress, we render an account and replenish fund to county project office according to the legal receipt. It is checked by project office at every level and WB.

8.8 WB requires the contract involving the purchasing price over U.S.$200 thousand and the civil work's price over U.S.$100 thousand can be carried out after WB audited the bidding document, the evaluating report on bidding and WE gives advice innegatively. In this project, the civil work of Lijiang hospital (its total investment is RMB 12400 thousand Yuan), the equipment purchasing of Chongjiang hydropower station construction (its total investment is RMB 5990 thousand Yuan) and the evaluation - 81 - Appendix D on enviromnent of the paper mill in Lijiang county and Heqing county are performing the preauditing procedure strictly according to the requirement of WB.

8.9 Project's purchasing is decided by the simple tending through comparing with three enterprises. It saves time and cost and promotes the project to be finished in time.

8.10 In order to start the project successfully and ensure the project operation having a high speed and high efficiency, Finance Department of Yunnan province and the project office hold class twice for project's starting (August, 1996 and November, 1996). The class is for training relative officials coming from the unit of Finance Department of Yunnan province and the project office. It defines the procedure of WB loan project. The procedure covers the designing way of purchasing plan, the accounting way on the project and finance system, the procedure of drawing up and the management way on construction project. Through training, officials' professional level gets the further improving. The training makes the construction on using WB loan has rules to obey.

8.11 In order to improve the work efficiency according to the advice given by WB officials, 568 computers are equipped for project offices. Relative officials are trained on management procedure and get a good result.

8.12 An inspection will be given when the project is completed. Project office requires every project unit giving an initial check when the project is finished and reported to project office at county level to be inspected after the reference on project constructing is collected. Those projects, which aren't checked and accepted by project office, can't replenish the rest cost of the work. Therefore, the work in each area is put into use according to the predesigned use after they are checked and accepted successfully. These work make the investment yield well in time.

9. Project evaluation

9.1 After these project is done, the main facilities for school, hospital, drainage system, traffic, cultural heritage, industrial and mining factory and hydropower station get reconstructed in time. When these facilities are put into use, people's production condition and living condition in destroyed area are improved and promoted well. Because of the reconstruction investment, it establishes the basement on applying world cultural heritage successfully for Lijiang. The historic and cultural value of Lijiang old city will rise.

9.2 During the work, WB's attitude and ways on working impact all people who are involved in this project. It establishes the basement on strengthening the firther cooperation between Yunnan and WB. -82 - Appendix D

10. Project future operation

10.1 Each subproject unit of this project is charge for this project. The reconstructed buildings are use as the fixed asset when they are finished and given the unified management by the subproject unit.

10.2 After they help to finished the project audit and the relative policy is laid down, the project office at each level ends its work. The loan to each subproject is responded by itself according to the contract about converting finance into credit. The credit is paid level by level after it is paid back to finance department.

10.3 Finance Department of Yunnan Province is the highest organ to represent government of Yunnan province to supervise and make a promise on payment of credit and pay off the credit.

11. The main experience and lesson of the project

11.1 There are four pieces of experiences which are worth summing up and using for reference.

11.1.1 The attention paid by leaders, the closed organization and the means of management ensured the working on project.

11.1.2 Requiring strictly, organizing actively and working coordinately are the strong basement of project to be done successfully.

11.1.3 Designing elaborately, comparing with many plans and using in time are essential to save the construction investment and improve the effect of project.

11.1.4 Catching the opportunity, guiding with typical case and holding competition on studying are the good ways to accelerate the project's progress.

11.2 There are two pieces of lessons which are worth summing up and using for reference.

11.2.1 Because of the change of national policy, it's difficult to change their type of industry after these industrial factories on forest are reconstructed.

11.2.2 The reconstruction time is tight and some of the preparation of the earlier work isn't careful. All of these factors affect the investment to yield well. - 83 - Appendix D

Attachment 1

(a) Summary of project evaluation

Object's Realization Realized Realized Unrealized Unapt Mainly Partly Macroscopic Policy * Department Policy _ Financial Object System Department Material Object Poverty Decrease Pay attention to Woman Other Social Object Environment Object * Public Department's Management Private Department's Management _ Others r 2 Project's Lasting Possible Impossible Undefined

3 WB's Achievements Excellent Fine Nil Selected Project Raising Support * Evaluation * Supervision * 4Borrow' Achievements Excellent Fine Nil Preparation * Carrying Out _ Obey the Agreement Future Operating 5 Results of Evaluation Excellent Fine Nil - 84 - Appendix D

Attachment 2

(b) Project Schedule

The procedure in the project period Planning date Practice date/ Last estimate Selected project Feb. 10, 1996 Feb. 13, 1996 Preparation Feb. 13, 1996 Feb. 13, 1996 Advanced evaluation Evaluation March 29, 1996 March 29, 1996 Later evaluation Hand in to board of directions June 25, 1996 June 25, 1996 Negotiation June 17, 1996 June 17, 1996 Signing Oct. 16, 1996 Oct. 16, 1996 Valid Oct. 16, 1996 Oct. 16, 1996 Project completing June 30, 1998 Sep. 30, 1998 Accountant closed Dec. 31, 1998 Dec. 31, 1998

Attachment 3

(a) Project Payment

currency unit: US$1 Time 1996 1997 1998 1990 Total Evaluation 9160000.00 17320000.00 15390000.00 3630000.00 42000000.00 Practice 0.00 26420838.83 13721061.40 0.00 40141900.23 Practicepossess evaluation(%) 0 152 89 0 96 The last date for payment Nov. 15,1997 Dec. 31,1998

Notice: Because the exchange rate changed between US dollar and RMB, the practice payment in US dollar is below the evaluation. - 85 - Appendix E

APPENDIX E: CULTURAL HERITAGE ASSET RECONSTRUCTION COMPONENT-IMPLEMENTATION MISSION REVIEW AND FINDINGS

Response to Natural Disaster In the early evening of February 3, 1996, an earthquake measuring 7.0 intensity on the Richter Scale struck Yunnan Province. Three hundred and nine people were killed and more than 4,000 people were seriously injured in Lijiang, Dali and Di Qing Prefectures. Some 410,000 housing units collapsed or were severely damaged and rooms in schools, hospitals and community facilities were destroyed. Buildings of local enterprises as well as infrastructure such as bridges, power, water and telecommunication lines were severely damaged. As of mid March over 90 percent of the households (302,000 people) in the affected areas were in temporary housing and 1,200 schools were operating in tents or other temporary facilities.

The cost for reconstruction was estimated at $482 million. While this earthquake was not a major disaster by Chinese or world standards in terms of value of physical assets destroyed, its effects seriously threatened the regional economy .

The World Bank mobilized a loan via the Yunnan Earthquake Reconstruction Program, in order to assist in getting children back to school, adults back to work and health centers back in operation. An existing Bank credit was amended to enable $30 million in reconstruction support, including a $7 million Cultural Heritage component. The purpose of the loan was to help normalize life and economic activity in a much shorter time than would be possible with the limited local financial and material resources. It was also to support the use of cost effective earthquake resilient construction standards for housing, industry and infrastructure and rehabilitate the culturally and economically valuable historic assets in the area.

One of the most dramatic of these cultural assets is the old city of Lijiang, which was designated as a UNESCO World Heritage Site in 1997. Lijiang, also know as Dayan Old Town, is an exceptional ancient city which represents the harmonious fusion of different cultural traditions and architectural styles and ingenious accommodation to its natural setting. The town's historic landscape is enhanced by the fact that the Old City is surrounded by hills which protect and separate it from most 20th century development. These factors combined with the vibrant ethnic culture of Lijiang's people today make it a city of immense cultural value. - 86 - Appendix E

Lijiang's Historic Development There has been a continuous human presence in the area of Lijiang since Paleolithic times. Situated in the foothills of the Himalayas, Lijiang's location was probably first chosen for its excellent water supply and proximity to a series of strategic passes which give access to the plains. It has been a major trading hub since early times when it was a staging point for caravans on their way to India.

In the late 13' century, the local ruling family established their administrative center at the foot of Shizi (Lion) Mountain. When the region came under Ming rule in 1382, the prefect at the time was given the surname Mu, and made a hereditary ruler. This family controlled the area for the next 340 years until 1723, when the Qing dynasty changed the policy on local rule and the native prefect was replaced by an imperial appointee. The city continued to prosper, and over the course of the centuries, it has maintained its position as the political, economic, educational and cultural center in north-western Yunnan. Today it is considered an unique and valuable representation of ancient Chinese urban form, architectural heritage and cultural development.

Lijiang Today Lijiang Naxi Autonomous County, incorporated in 1961, is located in the northwestern corner of Yunnan Province, and covers an area of 7,648 square kilometers. Set against the dramatic backdrop of Yulong Snow Mountain (5,590 m above sea level) Lijiang is known for its beautiful scenery and moderate climate. The county has a great wealth of botanical resources. In the 1800s botanists .and more than 600 species of medicinal plants have been identified in the area.

Liijiang county is home to more than ten distinct national minorities including the Naxi, Lisu, Pumi, Han, Bai, Yi and Zang. The Naxi are the most populous ethnic group in the county, accounting for 56 percent or 184,000 people. Today, the population of Lijiang Old City is 25,500 with 67% (17,000) of Naxi origin. About 30% of the residents are still engaged in the traditional handicraft occupations and commercial activities such as making utilitarian items from copper, silver, fur and leather. Local textiles and wine are also produced.

Urban Landscapes: The Impact of Cultural History and Natural Conditions Land Use Patterns: Lijiang has not developed according to the same traditional pattern used by most older Chinese cities on the Central Plains - the strict rectilinear layout of grid-like streets along a north-south axis. It has neither the rigid street pattern nor the usual city walls. Instead, its mountainous setting and the presence of numerous streams have shaped streets and lanes which hug the hills in natural topographical patterns and take full advantage of the natural water source. Five major streets in L~iiang radiate out like wheel spokes from the commercial heart of the city, Sifangjie Square.

The Old City in Lijiang has a remarkable water supply system which flows from Black Dragon Lake at the foot of Xianshan Mountain to the city's north. The Yu River brings water to the Shuangshi Bridge at the edge of town where it branches into three tributaries, - 87 - Appendix E the Eastern, Central and Western Rivers. From these rivers the water divides into a network of streams and channels, providing fresh water to every part of town. The city also has several "three eyed" wells with separate openings for drinking, cleaning vegetables and washing. Another feature of the water system, almost unique in the world, is Dayan's street cleaning mechanism. When a floodgate across the Western River, at the highest point in town is opened, water flows to the lower Central River, washing the streets in the process.

Three hundred and fifty-four bridges have been built to accommodate this water supply system and given rise to Lijiang's nickname, "The City of Bridges." These structures range in style from elaborate covered bridges and carved stone arches, to simple wooden planks and stone slabs. Many have evocative names such as the One Hundred Arches Bridge.

Architectural Style: Lijiang residents have developed their own unique style of housing in response to local conditions and tradition. While the local architecture incorporates the fine design traditions of Han houses on the Central Plains, it has been strongly influenced and adapted by Lijiang's predominant minority group, the Naxi. Over time, local architectural designs have also incorporated the best ideas of other local minority groups, especially the Bai and Zhang. Innovative adaptations for such needs as earthquake resistance, protection from the sun and precautions against flooding are hallmarks of the local architecture. However, the most striking feature of Lijiang's domestic dwellings is the lack of uniformity. Rather than following the exact prescriptions used by most traditional Han houses, the layout of each house in Lijiang is specially adapted to its own terrain to take full advantage of its site.

Lijiang has always been prone to earthquakes - there have been 10 major earthquakes recorded since the 15* century. To resist these shocks, Lijiang's basic timber-framed houses are built to be flexible and the upright timbers are canted slightly inward to increase stability. Special construction techniques have been developed for the load- bearing points and joints so as to ensure that the frame survives even if the walls collapse. The frames are filled in with adobe walls on the ground floor and wooden planks on the upper floors.

The basic layout of the dwellings is that of the four sided compound with a courtyard in the center. Open air balconies overlook the central courtyard from the second stories. Exterior walls are plastered and the roofs consist of dark gray tiles. Houses are usually two storied, a little more than 7 meters high.

Special attention is paid to the decoration of homes, especially to gateway arches, screen walls, doors, windows, balconies and roof beams. Most wooden elements such as beams, pillars, railings and eaves are elaborately carved with representations of lions, musical instruments, flowers, birds, fish and vignettes from folktales. The courtyards are paved with colored stones depicting the same images in mosaic patterns. -88 - Appendix E

Living Culture: Today, Lijiang is known, not only for its natural beauty and architectural interest, but also its vibrant living culture. For example, traditional Naxi orchestras play for their own enjoyment and perform for tourists almost daily. Women weave and embroider the traditional clothing which is still widely worn. Shamen of the Dongba, an ancient animistic religion's still read the ancient scriptures. Although it is not quantifiable, the inhabitants have an obvious and positive sense of community and strong identity with their urban environment.

Protection of the Living Culture, Urban Landscape and Natural Environment Recognizing its unique natural and architectural assets, the city has a long history of historic and environmental protection. Early in the Qing Dynasty, imperial announcements decreed "forever compliance" protection measures for Lijiang's environment and religious buildings. Annals of Lijiang compiled during the Qing Dynasty contained detailed descriptions and drawings of the town's layout, water system and architectural styles. The local population itself erected stone tablets at key points both inside and outside the town, specifying measures to protect the watershed from erosion and contamination. Local songs and poems with lyrics advocating protection of the Old City's water resources, streets and landscapes can still be heard today.

(63 ancient historic trees that are protected).

Protect Lijiang which represents the achievements of urban construction in ancient China.

Legislation Today, laws and regulations at the national, provincial and local level are being used to protect the historic properties, sites and landscapes of Liijiang. * Article 22 of the Constitution of the People's Republic of China sets out, at the national level, the obligation to protect "scenic places and historical sites, valuable cultural relics and other important historical and cultural heritage".

* At the regional level, "The Planning and Management Regulations for Yunnan Cities, 1992" lays out regulations for the management, organization of responsibilities and rules for the preparation and implementation of urban plans with references to both new and historic areas.

. At the municipal level the "Protection and Management Regulations for Lijiang, Historical and Cultural City of Yunnan Province, 1994" establishes three cultural heritage protection zones in the Old City. Regulations of varying stringency are laid out according to the importance of the zones and penalties for non-compliance are established.

These laws are good in theory, however, experience has shown in other parts of China that enforcement of the laws and norms has not been adequate to control development. The pressure brought to bear through the rapid expansion of construction and growing - 89 - Appendix E liberalization of the market economy is showing that revision and strengthening of the laws is necessary.

Administration and Management Administrative and management mechanisms have been designed for protecting the Old City as well. * The Municipal Master Plan for Lijiang stipulates that development in the new city and surrounding area must give full consideration to the space, scale and function of the Old City. The master plan has been instrumental in routing major new roads around the Old City and directing new development to the west.

* The Old Town Protection Plan de.veloped in 1988 contains, identifies and defines regulations for three heritage protection zones. In Zone I there is an absolute ban on all development and in Zones II and III there are strict controls on height and appearance of new development. Demolition is allowed only with special permission. The Protection Plan stipulates that development of the new city should be separated from that of the old city. It also indicates that functions in the new city should serve the old one and improve the economics and living standards of the Old City.

• A near term engineering plan has been established to address the city's most pressing problems. This includes work on a new drainage and sewerage system, installation of tourist facilities (toilets and landscaping), restoration of several main streets, and demolition of buildings whose size and appearance is not compatible with the historical and cultural character of the Old City.

World Bank Project The earthquake caused significant damage to the old city's buildings, bridges, paving and service infrastructure. Residents' low income levels and dislocation by the earthquake put at serious risk the local efforts to restore and maintain this historic and scenic center.

To speed the earthquake recovery, the Bank worked with Lijiang's administration to address the needs of the displaced and poor population by providing loans and subsidies for home repair; advice and recommendations on repair and construction techniques such as reinforcement of walls and foundations. The work focused on improving living standards while preserving the World Heritage quality of the buildings. Infrastructure work addressed street lighting, improved sanitary facilities, pollution control and access for fire fighting and other service vehicles.

Lijiang Old City Property and Infrastructure Reconstruction Program Damage to Structures As a first step in project planning a cultural heritage assessment was undertaken in Lijiang to: * assess the extent of damage to the historic buildings * assess action being undertaken to repair the damage; - 90 - Appendix E

* evaluate the appropriateness of these actions in relation to the historic importance of the heritage, its conservation and potential use; and * assess the effectiveness of current administrative, institutional and legal systems and controls required to deliver the project.

Damage to buildings was severe in some places and lighter in others, depending on the direction of the earthquake's impact, the quality of construction and amount of support provided by adjacent buildings. The nature of the damage can be described as:

* Severe damage to internal structures, finishes and wall paneling; * Displacement of columns on their stone bases; * Destruction of mud brick walls that were: inadequately tied to the timber structures; constructed without adequate reinforcement in the brick courses; constructed without adequate bonding between inner and outer wall surfaces; or constructed of poor materials. * Collapse of entire timber framed structures or their loss of vertical integrity • Displacement of roofing tile and loss of bond between tiles which compromised their weatherproofing capacity.

The mission noted that the loose attachment between walling and timber frame advantageously allowed the frames to shake without collapsing, although the mud brick walls often did collapse independently, resulting in some injuries and deaths. The traditional carved and turned joinery also survived the earthquake and is repairable.

The Housing Repair Loan Program An immediate response put in place to ameliorate the housing problem was a Housing Repair Loan Program. With World Bank funds the administration made loans available for a interest rate 2% per year repayable over 15 years with a 5 year grace period. To reinforce the use of funds for emergency repairs a commitment charge of 1/2 percent per year on the amount of credit not used in a "timely" manner.

Box with 2 women interviewed? (Loan Program details coming)

Modernizing Historic Cities The Need for Repair and Modernization Guidelines Guidelines for Earthquake Resistance: The emergency nature of the disaster required immediate action by any means possible. Authorities responded quickly to the emergency by issuing the "Design and Construction Technical Requirements for Houses in Lijiang Prefecture" on February 20, 1996. This set of guidelines for repair and reconstruction explains the reinforcing techniques that should be used to strengthen housing to resist future earthquakes. Such as vertical and horizontal bamboo reinforcement poles in the mud brick walls. Since many homeowners in Lijiang do not read sufficiently to - 91 - Appendix E understand the recommendations that are given it is important, this document would benefit from editing and simplifying with more diagrams. There should also be more information on how to consult the administration on construction situations that do not conform to the models described.

Considering the predictions that China is entering a 10-15 year period of increased seismic activity, it is gravely important that there be wide dissemination of these techniques, sufficient training for homeowners and construction workers, effective supervision and control over work done.

Guidelines for modernization of housing and infrastructure. Another set of guidelines is urgently needed to assist the residents of Lijiang Old City to upgrade and modernize their housing in order to: * Maintain the Old City's current population and way of life while at the same time promoting a higher standard of living; * Enable current residents to modernize their housing without compromising their most significant cultural asset - the urban landscape; and - Enhance the potential for sustainable tourism that benefits local residents and provides a meaningful experience for tourists.

To maintain the current population: It is important to note that the Old City's homes were severely substandard before the earthquake by comparison with what is found in modern housing in the newer parts of the city. Nearly all buildings lack sanitation facilities, many lack electricity, there are few cooking facilities that are both modern and safe and there is no thermal insulation.

There are several possible scenarios for urban areas when these conditions exist and at the same time the population has expectations for improved standards of living, as is the case in China today. * There will be inevitable pressure to alter and improve the old buildings as work becomes affordable to the existing residents. If improvements are done on an ad hoc basis by individual families without clear guidelines and requirements for maintaining the historic nature of the environment, Lijiang's chief cultural asset, its uniformly historic cityscape, will be lost. * Residents in the Old City, who have the means, will move to more modern housing in new Lijiang. This population is likely to be replaced by a. poorer population which will be, either financially unable or uninterested in maintaining these properties. At this point decay sets in and the entire physical and social structure of the Old City is in danger of collapse. As for tourism potential, without the community, the streets and lanes of the town become an artificial construct with no intrinsic life of their own, providing visitors with little experience of true historic value.

The adaptability of architectural space is the key to its long term attractiveness to the user. The challenge is to repair earthquake damaged homes and develop and promote - 92 - Appendix E options to improve the internal environment of the Old City's buildings while maintaining the World Heritage quality of their interior and exterior design. Inadequacy of the houses to support modem life

For instance, most of Lijiang's homes currently have no insulation. Interiors are finished with paper glued over cracks in the open joints between walls and windows. In an area where temperatures drop below 100 Centigrade during three or four months of the year, consideration should be given to acceptable methods of imnprovingthermal insulation. Effective and fire resistant insulation materials are available and could be incorporated into designs that are compatible with the timber framed and panel systems of the historic construction. Other issues such as sanitation and safe cooking facilities are much more difficult to solve. A design study to develop appropriate and cost effective means of upgrading housing is urgently needed. Once established these guidelines should be actively publicized and disseminated in the form of easy to understand design guides on construction and improvements.

To enhance the potential for tourism: These issues apply equally to the broader urban environment. The present, extremely dense city plan lacks adequate access for fire fighting and other service vehicles. The service vehicles which are used at the edges of the Old City damage property and pollute the area. Small scale non-polluting options need to be identified by city authorities. In addition, there is virtually no street lighting. The future viability of the city for both residents and visitors requires attention to these issues of safety, pollution control and access.

Guidelines for housing should include: * Construction improvements to increase safety and provide thermal insulation and fire escape routes; * Safety and installation requirements for electrical, water supply, sanitation, drainage telephone and television service; * Suggestions for aesthetic installation and concealment of pipes, conduits and wiring, and the prevention of damage to the building; * Adjustrnents to the traditional layout of rooms to incorporate the requirements of modern lifestyles; * Suggestions for the use of traditional materials and construction techniques.

Guidelines for the exterior urban environment should include: . Planning and design solutions for installation of street lighting and service distribution (telephone, electricity) compatible with historic streetscapes. * Limitations on signage and other advertisements. - 93 - Appendix E

Mu Family Compound Mr. Huang Naizhen, Mr. Gu Qi Wei

In the late Southern Sung Dynasty (1127-1279), the local ruling family established their administrative center at the foot of Shizi Mountain in the area that was to become known as Dayan and later Lijiang. When the region came under Ming rule in 1382, the prefect at the time was given the honorific surname Mu, and made a hereditary ruler. The next year the family began building its administrative compound, known today as the Mu Fu or Mu Mansion.

For the next 340 years each successive Mu prefect enlarged and embellished the 22,000 m2 administrative center. The rectilinear site included administrative, ceremonial, religious, business, entertainment and domestic structures which progressed up Shizi Mountain, culminating in an elaborate temple at the top of the hill.

In 1723, the Qing dynasty changed the policy on local rule and the native prefect was replaced by an imperial appointee. While the family remained influential, over the course of the next three centuries, the compound gradually deteriorated. Many buildings were destroyed or damaged by earthquakes and fire. After the formation of the People's Republic of China, some contemporary buildings were added to the site, existing buildings were converted to government offices for 500 workers and eighteen families became permanent residents in the compound. The earthquake of 1996 caused further damage to the site and local officials decided to use some of the earthquake reconstruction loan to restore the complex and develop it as a tourist destination.

The World Bank cultural heritage advice on the Mu Fu work emphasized that the historic value of the reconstruction work depends upon the completeness and reliability of the evidence for the reconstruction. Reconstructions must be historically correct and authentic in order to: * be historically significant and valuable; * meet UNESCO standards for a World Heritage Site; and * present the site to the public so that they understand the nature of past lifestyles. * carry out valuable archeological work before the site is finished and no longer available for excavation.

Because of the UNESCO standards for authenticity in World Heritage Sites, it was of critical importance to ascertain as much information as possible on the compound's building layout, construction techniques and architectural details and decoration before any demolition or adaptation work was begun. The means of obtaining this information include: * Measured surveys of existing buildings and site layout; * Archaeological and ground level investigation; • Research of historical records including family papers (wills, letters) photographic collections, municipal surveys, newspapers and other public and private archives; -94 - Appendix E

Recording and archiving of all available evidence to justify the work done.

Preservation Process The Mu group is doing their own record of the process and keeping a record of the difficulties they found and how they dealt with them. Research and Documentation Process (Lijiang to supply) One characteristic of Chinese architectural detail and form which greatly assists the process of research for preservation is the tradition of following strict precedent of design according the approved style of the period and the rank of the building's owner. Did Professor Zhang Xin Ling and Mr. Liu Jiang Hui from the Yunnan Provincial Institute of Archaeological Research work on the site? Bringing in old trees to duplicate the mature gardens that existed on the site. Spent one year researching and defining the plan for the site. Went to the descendants of the Mu family for information and collaboration of details. Used archaeologists to determine the location and size of buildings.

Implementation Process Mr. Huang Naizhen reports that he has been coordinating a work force of 3,600 people (2,800 off-site working in rock quarries and factories and cutting timber) and 1,600 on- site. The number of workers has been employed in order to meet the time constraints for the project requirements for disbursement or spending the money.

Labor Force Ms. Zhang Xiu Qiang is typical of the women who are working at the Mu compound on site preparation, digging and carrying heavy loads of soil. She lives in a village some 30 km from the site and is paid on a daily basis coming to the site when she is not needed at home. She usually works seven or eight hours a day and earns 30 Y per day. Wood carvers have come from Dali, He Qing and Sichuan the most talented usually get about 100 Y per day. Several older men are volunteering at the site carving motivated by the fact that they are helping to preserve their Naxi heritage. Li Gui Cheng is a painter who applies the elaborate decoration to the Chinese roofs. He also finishes and paints the massive columns which hold up the roofs. He leamed his skills from his father and his Naxi family has been doing this work for several generations. He has been invited to as far away as Burma to restore columns there.

The team found that determining the correct color schemes for buildings was only part of their difficulties. They had difficulty actually achieving the colors which were historically correct. They made at least 20 attempts before in a lucky coincidence a worker removing paint that had been unsatisfactory only partially removed the pigment. When they painted again they achieved the desired color and had their process defined. - 95 - Appendix E

Plans for Adaptive Reuse

The plan in November of 1998 included far less adaptive reuse for the buildings than optimal. The building once known as Ten Thousand Volumes is to be a library again, housing as much of the original collection as still exists on the second floor. The first floor will be a reception area and the third floor will be for reading and quiet study. One pavilion which was once used for formal ceremonial occasions such as "receiving" the imperial laws will be used for presentations of Naxi traditional music. The other buildings will be furnished with Ming Dynasty period furniture and hung with the Mu prefect's portraits and family trees.

Interpretation

Lijiang will train guides to present the site and will have signage at the site as well. Mr. Huang Naizhen will develop a book and Mr. Gu Qi Wei the chief architect for the site will prepare a video. Both will be in at least Chinese, English and Japanese.

He Qing, Dali Prefecture, Middle School No. 1

The historic He Qing Middle School No. 1, founded in 1926, suffered typical earthquake damage to end-gable walls, loss of roof tiling and displacement of walls and columns. However, within a week of the disaster, the school was functioning with activities moved into the less damaged buildings and temporary structures.

At appraisal, six buildings were identified for project assistance that were part of the historic composition and critical to the functions of the present school. These consisted of a Confucian temple (focal point of the historic area), an exhibition hall, two blocks of teachers' dormitories, a student dining room and meeting room. During implementation Bank Group missions reviewed and suggested revisions to the school's site development plans and gave advice on historic design and construction details. The school reports that they received Y 13.95 million in Bank Group funding, Y 8 million from the national matching fund and raised Y 1.50 million themselves for a total project cost of Y 23.45 million.

Jianchuan, Dali Prefecture, Jing Fen Park

Jing Fen Park is a 4.5-hectare area that contains many historic structures dating from the Yuan, Ming and Qing Dynasties. Over several centuries the park has drawn families with new babies to two of its most outstanding temples, one dedicated to the scholar Confucius and the other to the famous military hero, Guan Yu. Here families pray that their children will excel at either one or both of these endeavors. The park is also a popular site for informal relaxation and recreation. It is ideal for quiet reading as well as large family gatherings. Numerous concerts, theater performances and festivals are held here in good weather. The park has been designated as a Kunming EXPO '99 site visit. In preparation, a guidebook explaining the park's history and architecture has been developed. - 96 - Appendix E

The reconstruction and repair of earthquake damage to the buildings was done for a total of Y 3.6 million, with Y 2.1 million coming through IDA funding and the remainder from national assistance. Bank Group missions gave advice on historic conservation standards and techniques and emphasized the need for an informative explanation of the site either through guidebooks or trained guides.

Project Strengths

Private Initiative and Energy and Determination In November of 1998, a World Bank supervision mission visited Lijiang, Dali and Di Qing Prefectures to evaluate progress on all subprojects funded under the loan. The mission found that the local authorities have substantially completed the reconstruction program identified at appraisal. The communities affected by the earthquake appear to have substantially recovered from both the physical destruction and the emotional trauma of the disaster. Much credit is due to the Yunnan Provincial and Prefecture authorities for their excellent management skills and to the local communities for their energy and resilience.

Future Work Because of its distinguished architectural and environmental legacy Lijiang Old City has been identified by the National government as a future center for tourism in the region. Tourism and the related commerce would provide important employment and other income generating opportunities to the area's low-income population. However, thought needs to be given to what will happen to Lijiang's social fabric when large numbers of tourists visit the town bringing with them lifestyles, behavior and material goods that are in sharp contrast with local norms. Special efforts must be made to assure that the economic benefits of tourism are captured at the local level in order to maintain positive attitude on the part of residents. MAP SECTION 7 o0' \ 0so' 90' 10 110' 120 130

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