Technical Assistance Consultant’s Report Project Number: 42010 April 2010 People’s Republic of China: Guangxi Southwestern Cities Development Project (Financed by the Technical Assistance Special Fund) Prepared by NREM International Inc. Beijing, People’s Republic of China For Guangxi Zhuang Autonomous Region Government This consultant’s report does not necessarily reflect the views of ADB or the Government concerned, and ADB and the Government cannot be held liable for its contents. (For project preparatory technical assistance: All the views expressed herein may not be incorporated into the proposed project’s design. Si TA 7160-PRC: Guangxi Southwestern Cities Development Project Submittedto: AsianDevelopmentBank FINAL REPORT Submittedby: NREMInternationalInc.= ChinaRepresentativeOffice= VOLUME ONE OF THREE: 607ASkyPlaza MAIN REPORT AND CORE APPENDICES No.46DongzhimenwaiDajie Beijing,100027,PRChina 1 NREM International Inc. Suite 1150, World Exchange Plaza 25 O’Connor Street Ottawa, Ontario Canada K1P 1A4 Tel : (613) 755-4058; Fax: (613) 237-9145 Suite 607A, Sky Plaza 46 Dongzhimenwai Dajie Beijing 100027 People’s Republic of China Tel: (86)(10) 5129-2269; (86)10) 8453-0051 30 April 2010 www.nreminternational.com Mr. Fei Yue Principal Urban Development Specialist East Asia Department Asian Development Bank 8 ADB Avenue Mandaluyong City 1550 Metro Manila Philippines Subject: Final Report for TA No. 7160-PRC, Guangxi Southwestern Cities Development Project Dear Mr. Fei: Enclosed please find three copies of the Final Report for TA 7160-PRC: Guangxi Southwestern Cities Development Project. Please be advised that an additional three copies will be sent to the Executing Agency, the Guangxi Development and Reform Commission. It has been a great pleasure to work with you and your team on this important and interesting project. Yours faithfully, NREM INTERNATIONAL INC. Zhizhong Si, PhD Project Director Encl.: Final Report c.c.: Guangxi Development and Reform Commission iii ACKNOWLEDGEMENT The PPTA Consultants wish to extend our sincere appreciation to the Governments of Guangxi Zhuang Autonomous Region, Fangchenggang Municipality, Chongzuo Municipality and Baise Municipality for their tremendous support to the successful execution of the PPTA. Special thanks go to the autonomous regional and municipal Project Management Offices and Project Implementing Companies for their able coordination. We are grateful to the technical institutions, who prepared the feasibility study reports, environmental impact assessments, resettlement plans, social and poverty reduction strategy and ethnic minority development plan, for their cooperation in answering our endless questions and information requests and in incorporating our recommendations in the project design documents. Last but not the least, we wish to thank the ADB project team headed by Mr. Fei Yue, the ADB Mission Leader, for their guidance and support. v CURRENCY EQUIVALENTS (As of 1 September 2009) Currency Unit – yuan (CNY) CNY1.00 = $0.1467 $1.00 = CNY6.82 WEIGHTS AND MEASURES km2 – square kilometer m2 – square meter NOTES (i) The fiscal year (FY) of the Government ends on 31 December. (ii) In this report, “$” refers to US dollars. ABBREVIATIONS ADB – Asian Development Bank ADTA – Advisory technical assistance AP – Affected persons ASEAN – Association of South East Asian Nations BDI – Baise Development Investment Company Limited BGEDZ – Beibu-Gulf Economic Development Zone BMG – Baise Municipal Government CAFTA – China-ASEAN Free Trade Area CUCIC – Chongzuo Urban Construction Investment Company Limited CMG – Chongzuo Municipal Government CNY – Chinese yuan DRB – Development and reform bureau DRC – Development and reform commission EA – Executing agency EIA – Environmental impact assessment EIRR – Economic internal rate of return EMDP – Ethnic minority development plan EMP – Environmental management plan FPDUCIC – Fangchenggang City Port District Urban Construction Investment Company Limited FMG – Fangchenggang Municipal Government FYP – Five-year plan GBGEZ – Guangxi Beibu Gulf Economic Zone GDP – Gross domestic product GMS – Greater Mekong Subregion GPMO – Guangxi Project Management Office GZAR – Guangxi Zhuang Autonomous Region vii GZARG – Guangxi Zhuang Autonomous Region Government HDI – Human Development Index IA – Implementing agency ICB – International competitive bidding IDC – Interest during construction LIBOR – London interbank offered rate MDG – Millennium Development Goal NCB – National competitive bidding O&M – Operation and maintenance PIC – Project Implementing Company PLG – Project leading group PMO – Project management office PPMS – Project Performance Monitoring System PPTA – Project preparatory technical assistance PRC – People’s Republic of China PSB – Public security bureau RIB – Resettlement information brochure RP – Resettlement plan SEIA – Summary environmental impact assessment SOE – Statement of expenditure SPRSS – Summary of poverty reduction and social strategy TA – Technical assistance WF – Women’s federation WTO – World Trade Organization viii CONTENTS VOLUME ONE: MAIN REPORT AND CORE APPENDICES LETTER OF SUBMISSION CURRENCY EQUIVALENTS WEIGHTS AND MEASURES ABBREVIATIONS LIST OF TABLES LIST OF CORE AND SUPPLEMENTARY APPENDICES 1. INTRODUCTION 1 1.1 Background 1 1.2 Scope of the TA 1 1.3 Organization of the Report 1 2. RATIONALE: SECTOR PERFORMANCE, PROBLEMS, AND OPPORTUNITIES 3 2.1 Performance Indicators and Analysis 3 2.2 Analysis of Key Problems and Opportunities 3 3. THE PROPOSED PROJECT 7 3.1 Impact and Outcome 7 3.2 Outputs 7 3.3 Special Features 8 3.4 Project Investment Plan 8 3.5 Financing Plan 9 3.6 Implementation Arrangements 10 4. PROJECT BENEFITS, IMPACTS, ASSUMPTIONS, AND RISKS 15 4.1 Benefits and Impacts 15 4.2 Financial Analysis and Financial Management Assessment 15 4.3 Economic Aspects 16 4.4 Social Dimensions 16 4.5 Environmental Aspects 18 4.6 Project Risks and Mitigation Measures 18 5. ASSURANCES 20 CORE APPENDICES VOLUME TWO: SUPPLEMENTARY APPENDICES VOLUME THREE: PROJECT MAPS ix LIST OF TABLES Table 1: Reporting Schedule ................................................................................................................................... 1 Table 2: Project Investment Plan ............................................................................................................................ 9 Table 3: Financing Plan ........................................................................................................................................ 10 xi LIST OF CORE AND SUPPLEMENTARY APPENDICES CORE APPENDICES 1. Sector Analysis: Development Context of Guangxi 2. External Assistance 3. Design and Monitoring Framework 4. Financing Plan 5. Flow of Funds and Onlending Arrangements 6. Implementation Arrangements 7. Implementation Schedule 8. Procurement Plan 9. Outline TOR for Consulting Services 10. Summary Financial Analysis 11. Summary Economic Analysis 12. Summary Resettlement Plan 13. Summary Poverty Reduction and Social Strategy 14. Gender Action Plan SUPPLEMENTARY APPENDICES A. Sector Analysis – Development Context: Western Development Strategy and GMS Program B. Sector Analysis – Urbanization in China C. Sector Analysis – Regional Cooperation D. Sector Analysis – Urban Transport E. Sector Analysis – Climate Change in Guangxi and Project Cities F. Sector Analysis – Urban Development in Fangchenggang G. Sector Analysis – Urban Development in Baise H. Sector Analysis – Urban Development in Chongzuo I. Technical Analysis of Engineering Feasibilities F. Sector Analysis: Urban Transport Analysis G. Sector Analysis: Climate Change in Guangxi H. Detailed Financial Analysis I. Technical Analysis of Engineering Feasibilities J. Detailed Financial Analysis K. Detailed Financial Management Assessment L. Detailed Economic Analysis M. Institutional Analysis N. Summary Environmental Impact Assessment O. Poverty and Social Assessment xiii xv ADB TA 7160-PRC: Guangxi SW Cities Development Project 1. INTRODUCTION 1.1 Background 1. During the country programming review conducted in December 2007, the Government (the Government) of the People’s Republic of China (PRC) requested the Asian Development Bank (ADB) to provide lending support for Guangxi Southwestern Cities Development Project (the Project)1. A project preparatory technical assistance (PPTA) was approved by ADB to help the Government prepare the Project to meet ADB policy, operational, and loan processing requirements. Through the competitive bidding process, NREM International Inc. (Canada) was selected as the PPTA Consultants for the preparation of the Project. The contract negotiations were concluded on 16 April 2009. The Notice to Proceed was received on 4 May 2009. 2. As the Final Report, this document contains a set of project documents, entailing a full set of analyses and designs. 1.2 Scope of the TA 3. The expected outcome of the PPTA is the design of the Project that is agreed upon by the ADB and the Governments of the PRC, the Guangxi Zhuang Autonomous Region, Fangchenggang Municipality, Chongzuo Municipality and Baise Municipality, and is suitable for ADB lending support. 4. The reporting schedule and report submission dates are shown in Table 1. Table 1: Reporting Schedule Contractual Report Reporting Schedule Submission Date Inception Report 10 June 2009 10 June 2009 Interim Report 11 September 2009 11 September 2009 Draft Final Report 4 November 2009 4 November 2009 Final Report 31 January 2010 30 April 2010 1.3 Organization of the Report 5. This