20170817 PVR 510 L2244 PRC Hunan Flood Management Sector
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Validation Report August 2017 People’s Republic of China: Hunan Flood Management Sector Project Reference Number: PVR: 2017-510 Project Number: 37641-013 Loan Number: 2244 ABBREVIATIONS ADB – Asian Development Bank CEMP – consolidated environmental management plan CNY – Chinese yuan DMF – design and monitoring framework EAMF – environmental assessment and management framework EIRR – economic internal rate of return EMP – environmental management plan HPG – Hunan Provincial Government IEE – initial environmental examination LPMO – local project management office M&E – monitoring and evaluation NCB – national competitive bidding O&M – operation and maintenance PFD – Hunan Provincial Finance Department PPMO – provincial project management office PRC – People’s Republic of China PWRD – Provincial Water Resources Department TA – technical assistance NOTE In this report, “$” refers to US dollars. Director General M. Taylor-Dormond, Independent Evaluation Department (IED) Deputy Director General V. Salze-Lozac’h, IED Director W. Kolkma, Thematic and Country Division, IED Team Leader G. Kilroy, Evaluation Specialist, Sector and Project Division, IED The guidelines formally adopted by the Independent Evaluation Department (IED) on avoiding conflict of interest in its independent evaluations were observed in the preparation of this report. To the knowledge of IED management, there were no conflicts of interest of the persons preparing, reviewing, or approving this report. The final ratings are the ratings of IED and may or may not coincide with those originally proposed by the consultant(s) engaged for this report. In preparing any evaluation report, or by making any designation of or reference to a particular territory or geographic area in this document, IED does not intend to make any judgments as to the legal or other status of any territory or area. PROJECT BASIC DATA Project Number 37641-013 PCR Circulation Date 26 Aug 2016 Loan Number 2244 PCR Validation Date Aug 2017 Project Name Hunan Flood Management Sector Project Sector and Agriculture, natural Rural flood protection—Rural water policy, Subsector resources, and rural institutional and capacity development development Strategic Agenda Environment sustainable growth Inclusive economic growth Safeguard Environment B Categories Involuntary Resettlement A Indigenous Peoples A Country People’s Republic of China Approved Actual ($ million) ($ million) ADB Financing ADF: 0.00 Total Project Costs 497.40 567.60 ($ million) OCR: 200.00 Loan 200.00 191.17 Borrower 297.40 376.40 Hunan Provincial 2.20 3.00 Government Municipal/County 295.20 373.40 governments Beneficiaries 0.00 0.00 Others 0.00 0.00 Cofinancier Total Cofinancing 0.00 0.00 Approval Date 29 Jun 2006 Effectiveness Date 2 Jan 2007 9 Jan 2007 Signing Date 4 Oct 2006 Closing Date 31 Mar 2013 31 Dec 2014 Project Officers Location From To R. Bolt ADB headquarters Jun 2006 Mar 2007 Y. Kobayashi ADB headquarters Apr 2007 Dec 2014 IED Review Director W. Kolkma, Thematic and Country Division Team Leader G. Kilroy, Evaluation Specialist, Sector and Project Division* ADB = Asian Development Bank; ADF = Asian Development Fund; IED = Independent Evaluation Department, OCR = ordinary capital resources; PCR = project completion report. *Team members: T. Ueda (Principal Evaluation Specialist), M.J. Dimayuga (Senior Evaluation Officer), I. Green (Consultant) I. PROJECT DESCRIPTION A. Rationale 1. A number of cities and industrial centers in the People’s Republic of China (PRC) are in the vicinity of major rivers, which increased the probability of risk from periodic flooding, and consequently adversely affected economic activities. Hunan Province borders the middle portion of the Yangtze River, which had major floods in 1998. This prompted a review of policies and practice on flood protection. The project supported the policies and plans for flood protection investments of the PRC and the Hunan Provincial Government (HPG).1 Despite the sector and subsector classification of Agriculture, Natural Resources and Rural Development, which cover natural resources and rural development, the project was primarily conceived to reduce flood risks 1 ADB. 2006. Report and Recommendation of the President to the Board of Directors: Proposed Loan and Technical Assistance Grant to the People’s Republic of China for Hunan Flood Management Sector Project. Manila. 2 in priority municipality and county-level cities. The recurrent flooding of Lishui, Xiangjiang, Yuanjiang, and Zishui rivers and their tributaries and the effects on the Dongting Lake area were constraining socioeconomic development in Hunan Province, with 56.4 million people and with 84% of the provincial population affected. Strengthened flood management was needed and the proposed project aimed to achieve this by supporting the government’s shift from a flood-control approach to one that is based on integrated river basin flood management and with a focus on economic and environmental sustainability and social inclusion. 2. The project was designed to support the implementation of part of Hunan's integrated flood control program under the Hunan Provincial 11th Five-Year Plan (2006–2010).2 The Asian Development Bank (ADB) country strategy and program supported this innovation.3 A sector loan modality was adopted as an appropriate way to support the government’s sector development plan that included organizational changes, investments, and policy reforms—all aimed at making broad sector improvements. The provincial project management office (PPMO) had experience with past and ongoing flood-control projects financed by the World Bank (WB) and the Japan Bank for International Cooperation (JBIC), and sector experience in the PRC was being gained through ADB support to two other flood management projects in the PRC.4 B. Expected Impacts, Outcomes, and Outputs 3. The intended impact of the project was sustainable and inclusive socioeconomic growth in flood-prone areas of Hunan Province. The expected outcome was improved flood protection for strategic and priority flood-prone areas in the upper reaches of the four main river basins in Hunan Province. Outputs were described as (i) nonstructural flood management systems, which comprise operational flood warning and management systems for up to 35 municipalities and counties linked to the provincial flood warning and management system; (ii) structural flood protection, resettlement, and environment management, which cover flood protection works completed in priority locations as part of Hunan's River Basin Flood Control Plan and the 11th Hunan Provincial Five-Year Plan—in compliance with the PRC regulations and ADB safeguard policies; (iii) project management and capacity building, which cover operational and strengthened project management and monitoring systems; and (iv) flood management sector planning, which encompasses selected sector assessments and planning to support the development of integrated flood management plans. This additional output was to be implemented with a grant-financed technical assistance (TA).5 C. Provision of Inputs 4. The project was approved on 29 June 2006, with the loan and project agreements signed on 4 October 2006 and loan effectiveness was on 9 January 2007. The original loan closing date of 31 March 2013 was extended to 31 December 2014. Reasons for the delayed closing date included (i) delays in land acquisition and resettlement; (ii) flood protection designs needed modification to be consistent with urban development plans, and construction schedule had to be 2 See the Hunan Provincial 11th Five-Year Plan (2006–2010). 3 ADB. 2005. Country Strategy and Program Update (2006–2008): People’s Republic of China. Manila. 4 ADB. 2002. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the People’s Republic of China for the Songhua River Flood Management Sector Project. Manila; and ADB. 2001. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the People’s Republic of China for the Yellow River Flood Management Sector Project. Manila. 5 ADB. 2006. Technical Assistance to the People’s Republic of China for Strengthening Flood Management Sustainability in Hunan Province. Manila. (TA 4813-PRC. This technical assistance supported the development or assessment of priority aspects of the provincial-level strategic plan to support national policy developments in integrated flood management.) 3 synchronized with the implementation of urban development plans;6 (iii) contract variations were needed following the design changes, which increased material and labor costs; and (iv) inefficient contractor performance where some contractors that won contracts did not have sufficient resources, which slowed completion of the contracts. 5. At appraisal, the total project cost was estimated to be equivalent to $497.4 million— comprising $242.3 million in foreign exchange and $255.1 million in local currency. Of this amount, $200.0 million (40%) was provided by ADB loan and $297.4 (60%) by government funds. At loan closing, project costs amounted to $567.6 million (a 14% increase in total project cost) with $191.2 million provided by ADB loan and $376.4 million by government funds—a 26.6% increased contribution in US$.7 On completion, some $8.8 million of the $200 million ADB loan as approved was not used because some contracts were canceled near the end of the project.8 The actual total project cost was higher than the estimate at appraisal mainly due to the