World Bank Document

Document of The World Bank FOR OFFICIAL USE ONLY A /V R- C' CI/L-' Public Disclosure Authorized ReportNo. 11671-1 STAFFAPPRAISAL REPORT Public Disclosure Authorized GRAI DISTRIBUTION ANDMARKEIING PROJECT MAY 17, 1993 Public Disclosure Authorized MICROFIC1IECOPY Report No.: 1t671-CHA Type: (SAR) Title: GRAIO DISTRIBUTION AND MARKETI Author: NYBERG, A. Ext. :84050 Room:A 7057 Dept. :EA2A TITLED CHANGE AT BUFF COVER Public Disclosure Authorized Agriculture Operations DivisioD Chinaand Mongolia Department East Asia and Pacific Regional Office of This document has a restdrted disibution and may be used :y recipients ody in the perfonnance theirofficial duties. Its contents may not othewise be disdo.ed without Wodd Bank authOio CURRENCY EQUIVALENTS (As of December 1992) CurrencyUnit = Yuan (Y) $1.00 = Y 5.80 Y 1.00 = $0.172 FISCAL YEAR January 1 - December 31 WEIGHTS AND MEASURES 1 meter (m) = 3.28 feet 1 kilometer (km) = 0.62 miles I hectare (ha) = 1S mu I ton (t) = 1,00 kg = 2,205 pounds ACRONYMS AND ABBREVIATIONS BCD - ejing CentraDepot MOA - Miistry of Agriculture BOT - BayuquanGrain Terminal MOF - Ministryof Finance CEROILS- Cereals,Oils, and Foodstuffs MOFERT - Minstry of ForeignEconomic Import& ExportCoiportion Relationsand Trade dC - Commerci InformationCenter MOR - Ministryof Railways CTCGDM - ChinaTaniing Center for Grain NEC - Northeast Corridor DistributionMangement NEMC - NortheastMarketng Company DOT - Dayao Bay Grain Terminal NEPA - National Environmental dwt - Deadweighttons ProtectionAgency FOT - FangchengGrain Terminal NGT - NantongGrain Terminal GB - Grain Bureau PD - Primary Depot GDMP - Grain Distributionand Marketing PDRC - Physical DistributionResearch Project Center GIC - Grain EconomicInformation PLG - Project Leaing Group Center PRC - People's Republicof China HRS - Household Responsibility System PW - Project Wharf IBRD - InternationaIBank for RPIO - RegionalProject Implementation Reconstusctionand Development Office ICB - ntationd competitive SAGR - State Adminishadon of Grain Bidding Reserves ID - IntermediatDepot SCOE - ShanghaiCereals and Oils IDA - IntewrnationalDevelopment Exchange Association SOE - Statementof Expenditures IOD - Itegraed Depot SPC - State Planning Commission K17 - Existig Bulk Hopper Railway SWC - Southwest Corridor Wagon TC - Training Coordinator LCB - Local CompetitiveBidding WBPO - World Bank Project Office (in MDT - Ministry of DomesticTrade MDT) MLYR - Middle and Lower Reaches of YRC - Yargtze River Corridor the Yangtze River ZGT - Zhangjiagang Grain Terminal FOROMCUIL USEONLY CHINA GRAIN DISIRJBUTIONAND MARKETINGPROJECT LOAN/CREDTrAM PRoJECT SUMmARY Borroww: People's Republicof China Umenelalces: Ministy of DomesticTrade, Dayao Bay and BayuquanGrain Temina Compamies,and the Provincesand Municipalitiesof Heilongjiang,Jilin, Liaoning, Nei Mongol, Jiangsu, Anhul, Jiangxi, Human, Guangxi, Beijing, Harbin, Shenyangand Wuhan Amount: Loan: $325 million Credit: SDR 118.9 million ($165 million equivalent) Term: Loan: 20 years, includingfive years of grace, at the Bank's standard variable interestrate. Credit: IDA standardterms with 35 years' maturity. Onlending Terna : Loan/Credit funds would be onlent to the reforming and newly estblished enterprises at the IBRD rate, or such lesser rate as IBRD/IDAmay agree, takinginto account marketrates and capacityto repay, with a repaymentperiod of 15 years, inclusiveof five years' grace period. The benficiaries wouldbear the foreigp exchangerisk. Objectives and Description: The project would support the Goverament's grain sector reform program for establishing an improved policy and institutonal evironment to promote efficiency. it would assist institutionaland infrastructuredevelopment in grain commoditymarkets where prices would be detend by market forces, and facilitatethe expansionand improved efficiencyof China's domesticand internationalgrain trade throughinvestments in criticalinfrastucre-ingrain storage, bulk and bagged handling, and transport facilities-in four major grain productionand/or consumptionlocales in the Northeast, YangtzeRiver area, Southwest,and the Beijing area. The project would fmance works, upgrading, and equipping of bulk handling facilities for five major grain port terminals, about 60 intermediategrain depots (major inland grain assemblypoints), about 300 primary grain depots, more th 1,400 bulk rail wagons, over 1,000 bulk trucks, 10 bulk grain vessels, and computers and telecommunicationsequipment for two wholesale/future markets, two training centers, and a Grain Marketing Information Center. A sust l training and technical assistancecomponent would support Thisdocument has a restricteddistribution and may be used by recipients only in the performanc| of their ofcial duties. Its contents may not otherwisebe disclosedwithout WorldBank authorization. (a) designwork, constructionsupevision, operationand commissio of the grain handling facilities; and (b) impl ion of the market development,Ifonafotion Center, and TrainingCenter componentand policy reform aspes of the project. BNets and Risks: The principal benefit Asthe ability to move grains at a lower cost and in larger volumes from grain surplus areas of China to deficit areas. Also, the project will facilitatelower cost and larger volume exports of grain, eaning more foreign exchange. This benefit, involving estly the commercializationof China's grain sector, will be shared by producers, intemediate users, and consumers of grain located primarily in the transport corridors. In addition, others will benefit sice the project will releasetraditional grain handlingcapacity to other locales and will introduce competitivetransport modes by providing infstructure for water movementof bulk commodities. The primary risk is that grain surplusesmay not continueas projected, ereby leavng unused capaciq in the logisticalchain. However, the grain surplusprojections are basedon carefulanalyses by well-informed Wronomists and agricultural economists. Another risk is that the project may not be Implementedon schedule and within budget, given its complexity. To reduce this risk, substantialuse will be made of domestic and international technical consultants throughout implementation. There remains some risk that the ongoing govenmental organization reform, which is reducing ministry staff mnbuers, could result in the eliminationof staff positions needed to manageproject implementation. To minimizethis risk a commitment ha been obtainedfrom governmenttiat project staff numberswould be manitainedat levels agreed with the Bank/lDA. atimaed P et Costs: Local Foreign Total ($ million))- Land acquisition 10.6 0.0 10.6 Works 335.4 112.2 447.6 Goods 70.6 282.6 353.2 Training and tech. assistance 13.6 20.3 33.9 Base Cost 430 2 M 8453 Physical contingencies 31.9 30.8 62.7 Price contgencies 42.5 40.9 83.4 Total Proiecan C ost 224, -D Finang Plan: Local Foreign Tolal ($ mion )- - Cen" overmen 300.0 0.0 300.0 Provica and Loc Govements and Entepis 201.4 0.0 201.4 IBRDIDA 3.2 486.8 490.0 lad EAi_matedDisbursement: Banki/DAFY 14 199S 126 122 2 18 (s million) Annual 40 128 127 97 74 24 Cumulative 40 168 295 392 466 490 Ecnmic Rate of Reun: 26 percen CONTENTS 1 MmbeGrdlSetor ................................... 1 A. btroduction ........................................ 1 B. GrainP oducton ..........................ndPanem 1 C.GainConsumption ............... 3 D. Natlo adRegiondlGralnEaWncinanal s ....................... e . 4 E. GrainDbionrkbtion . .adg. .. n...... S F. CurentTTenologes inGrainHtnadlig ......................8 0. OriginOftheproject .................................. 9 H. Ratonae for BankGroupInvolvement . ......................10 2 Reformsnthe GrainSector ..................... 12 A. Introduction ........................................ 12 B. Recent Reforns .....................................13 C. Re gion ..................................alE xp erim e n s 16 D. FutureReifrm ...................................... 18 3 The Projed ..........................................20 A. Objectivesand Scope ..................................20 B. DetailePFeatr .....................................21 C. StatusofPreparation ................ ..................29 D.Smplementionchedule . 31 E. ProjectCosts and Financing ............... ...............31 F. Procurement............... 33 0. Disbursements................ 34 H. Account and Audit ................. 35 1. Environetd Impact............... 35 `his rt is basedon the findingsof preappraisaland ppraisa missiousIn Septemberand December1992, compr'sing Mes. A. Pazau, A. Nyberg,J. Goldberg,D. Ahmad,R. van der Luqg IR BurcroffII, W. Smith,W. Ziou, Y. Zou, H. Xu (IBRD/IDA),A. de Harog, E.van Randwijck, R. Lacroix,B. Ainouche,C. Saint-Pierre,P. Mignot,S. Roesdser,D. Pko, B. Sims-Williams,J. Dubber,T. Kundu, B. Burke, G. Edwards,J. Manson,T Lwin, K. Broeder, A. Grobman, W. Grossman, W. Gerrish, C. Newman and R. Huemannn (Consultants).Peer reviewer were S. Bhatia(PBDPR), J. van Hoist Pellekaan (AF2AH), and T. Waunatada A2TP). The missiongtfmlwtly acknowledges the strong support of the Canadian,Autdran, Netherlas ad Frenchgovernent truhout the preparon of the ve The DivisionChief i JosephGoldbrg and the DepatmentDieor isShabid Javed B*ik. -vi- 4 rJectgIzaIonand Maagenut . ....0.... .............. 37 A. hnpleentatlon Manageme ............................ 37 B. Operatlond Management ....................... .. 40 C. Flow of Fundsand Cost Rewvery ......................... 42 D. Moniorig, Evduaion, and Rq tig ......... ..............42 E. Projec LamchWokshop

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