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World Bank Document Document of The World Bank Public Disclosure Authorized Report No: 21909-CHA Public Disclosure Authorized PROJECT APPRAISAL DOCUMENT ON A PROPOSED LOAN IN THE AMOUNT OF US$100 MILLION TO THE PEOPLE'S REPUBLIC OF CHINA Public Disclosure Authorized FOR A THIRD INLAND WATERWAYS PROJECT May 24, 2001 Transport Sector Unit East Asia and Pacific Region Public Disclosure Authorized CURRENCY EQUIVALENTS (Exchange Rate Effective January 1, 2001) Currency Unit = Yuan Yuan 1.00 = US$0.12 US$1.00 = Yuan 8.30 FISCAL YEAR January I -- December 31 ABBREVIATIONS AND ACRONYMS CNAO China National Audit Office MBD Model Bidding Document CQ Consultants' Qualification MERR Modified Economic Rate of Return EA Environmental Assessment MOC Ministry of Commnunication EAP Environmental Action Plan MOF Ministry of Finance EIA Environmental Impact Assessment NCB National Competitive Bidding EPO Environmental Protection Office NPV Net Present Value EPS Environmental Protection Sections OED Operations Evaluation Department ERR Economic Rate of Return PAP Project Affected Person FIRR Financial Internal Rate of Return PHRD Policy and Human Resources GDP Gross Domestic Product Development GOC Government of China PIP Project Implementation Plan GPN General Procurement Notice PRC People's Republic of China HPCD Hunan Provincial QCBS Quality and Cost-Based Selection Communications Department RAP Resettlement Action Plan HPFB Hunan Provincial Finance Bureau RIB Resettlement Information Booklet HPEPC Hunan Provincial Electric Power SDPC State Development Planning Company Commission HXNCDC Hunan Xiangjiang Navigation SOE Statement of Expenditure Construction and Development SOE State-owned Enterprises Corp. Ltd. SPN Specific Procurement Notice ICB International Competitive Bidding TA Technical Assistance IWT Inland Waterway Transport TOR Terms of Reference IWW Inland Waterway WBOB World Bank Office in Beijing Kwh Kilo-watt-hour Vice President: Jemal-ud-din Kassum, EAPVP Country Director: Yukon Huang, EACCF Sector Director: Jitendra N. Bajpai, EASTR Task Team Leader/Sr. Port Engineer: Toshiro Tsutsumi, EASTR CHINA THIRD INLAND WATERWAYS CONTENTS A. Project Development Objective Page 1. Project development objective 2 2. Key performance indicators 2 B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project 2 2. Main sector issues and Government strategy 3 3. Sector issues to be addressed by the project and strategic choices 4 C. Project Description Summary 1. Project components 5 2. Key policy and institutional reforms supported by the project 6 3. Benefits and target population 7 4. Institutional and implementation arrangements 7 D. Project Rationale 1. Project alternatives considered and reasons for rejection 8 2. Major related projects financed by the Bank and other development agencies 8 3. Lessons learned and reflected in proposed project design 9 4. Indications of borrower commitment and ownership I 0 5. Value added of Bank support in this project 10 E. Summary Project Analysis 1. Economic 10 2. Financial I1 3. Technical 11 4. Institutional 12 5. Environmental 13 6. Social 15 7. Safeguard Policies 17 F. Sustainability and Risks 1. Sustainability 17 2. Critical risks 18 3. Possible controversial aspects 19 G. Main Loan Conditions 1. Effectiveness Condition 19 2. Other 19 H. Readiness for Implementation 21 I. Compliance with Bank Policies 21 Annexes Annex 1: Project Design Summary 22 Annex 2: Detailed Project Description 26 Annex 3: Estimated Project Costs 32 Annex 4: Cost Benefit Analysis Summary 34 Annex 5: Financial Summary 42 Annex 6: Procurement and Disbursement Arrangements 53 Annex 7: Project Processing Schedule 61 Annex 8: Documents in the Project File 62 Annex 9: Statement of Loans and Credits 64 Annex 10: Country at a Glance 68 Annex I1: Summary of Environmental Assessment and Action Plan 70 Annex 12: Summary of Resettlement Action Plan 80 Annex 13: Review of Financial Management System 84 Annex 14: (Draft) Terms of Reference for Study of Containerization Development Along 91 Xiangjiang River Annex 15: The Power Demand Assessment 94 Annex 16: Poverty Alleviation Impact 96 MAP(S) IBRD 31205, May 2001 IBRD 31206, May 2001 CHINA Third Inland Waterways Project Appraisal Document East Asia and Pacific Region EASTR Date: May 24, 2001 Team Leader: Toshiro Tsutsumi Country Director: Yukon Huang Sector Director: Jitendra N. Bajpai Project ID: P056199 Sector(s): TP - Ports & Waterways Lending Instrument: Specific Investment Loan (SIL) Theme(s): Transport Poverty Targeted Intervention: N Program Financing Data [X] Loan [ ] Credit E ] Grant ] Guarantee [ Other: For Loans/Credits/Others: Amount (US$m):$100.00 Proposed Terms (IBRD): Variable Spread & Rate Single Currency Loan (VSCL) Grace period(years): 5 Yearsto maturity:20 Commitmentfee: 0.75% Front end fee on Bank loan: 1.00% FinancingPlan (US$m): Source Local Foreign Total BORROWER 120.22 0.00 120.22 IBRD 0.00 100.00 100.00 Total: 120.22 100.00 220.22 Borrower: PEOPLE'S REPUBLIC OF CHINA Responsibleagency: HUNAN PROVINCIAL GOVERNMENT EXECUTED BY HIUNANXIANGJIANG NAVIGATION CONSTRUCTION AND DEVELOPMENT CORPORATION LTD. (HXNCDC) Address: 286 West Wuyi Road, Changsha, Hunan Contact Person: Mr. Li Jun Tel: 0731-2252233 Fax: 0731-2252299 Email: [email protected] Estimateddisbursements ( Bank FY/US$m): FY 2002 2003 2004 2005 2006 2007 2008 Annual 2.50 10.00 21.00 28.00 21.00 15.00 2.50 Cumulative 2.50 12.50 33.50 61.50 82.50 97.50 100.00 Project implementation period: May 2001 - June 30, 2007 Expectedeffectiveness date: 11/21/2001 Expectedclosing date: 12/31/2007 DCS -A -Rl RV -aE 200 A. Project DevelopmentObjective 1. Project development objective: (see Annex 1) The objective of the Third Inland Waterways Project is to reduce transport and energy bottlenecks by: (a) improving market access of the remote inland areas of Hunan Province; (b) providing more efficient and economic inland waterway transport (IWT); and (c) generating power to supplement the needs of the remote areas. 2. Key performance indicators: (see Annex 1) Key perfornance indicators are proposed in accordance with the project's major objectives: ProjectObjectives Outcome/ImpactIndicators PerformanceIndicators 1. Improve marketaccess The freighttariff for IWT is lower than for WaterwayTraffic ('000) (Zhuzhou of remote inland areas railway and highway. IWT will remain Section) competitivemode and the traffic will increase. ContainerTraffic (teus) 2. Providemore efficient Economicand financialcosts in ton-kmwill AverageBarge Size (dwt) at the and economicinland decrease with the increaseof inland water ZhuzhouShiplock Section waterwaytransport vesselsize along the XiangjiangRiver. InlandWaterway Agency, Hunan Xiangjiang FinancialPerformance NavigationCconstruction and Development (a) WorkingRatio (%) CorporationLtd. (HXNCDC),is financially (b) Self-financingRatio (%) sustainable. (c) Debt ServiceCoverage Ratio (%) 3. Generatepower to Annual power output and sales:(a) Output Power Output of ZhuzhouDam (MWh) supplementthe needs 640.5 millionkwh/year; (b) Utilization4,575 of the remote areas hours/year;and (c) Sale price 0.27 Yuan/kwh. B. StrategicContext 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex 1) Document number: R98-107 (CAS Progress Report) Date of latest CAS discussion: 05/28/98 The CAS, which reflects the Bank's strategic goal to foster growth and reduce poverty, identifies infrastructure improvement as a key area to support China's development agenda, particularly in inland provinces. The proposed project, a combination of navigation and hydropower, aims to ameliorate the economic well-being of the majority of families along Xiangjiang River in Hunan Province (5.9 million inhabitants) with below dollar per day average income (Annex 16). The project will remove dangerous shoals, upgrade 157 km channel, create a deeper channel along Xiangjiang River to enhance safety and productivity of the IWW system. These improvement will facilitate transition to a more efficient mix of vessel sizes using the waterways (from 40-300 dwt to 1000 dwt), and reduce their travel time by up to 2.5 hours. In addition, almost 640.5 million kwh power will be produced annually for Hunan Province to reduce the incidence of outage. -2 - The sector specific goals supported by the project are: * to promote growth by reducing infrastructure bottlenecks in transport and power deliveries; * to improve transport accessibility of inland poor regions; and * to strengthen governance and competitiveness of IWT through improved waterway management and planning. 2. Main sector issues and Government strategy: The main issues and Government strategy in China's inland water transport are as follows: (a) Competitive development of IWT sector Investment in waterways infrastructure over the last half century has been insignificant compared with the investment in other transport modes. The waterways infrastructure is presently inadequate, and thus it prevents IWT from contributing fully to support economic development. Railway and highway infrastructure have steadily improved, and is now close to allowing these sectors' operations to be cost-effective and user-friendly. In contrast, waterways infrastructure has improved little, and in the last three Five-Year Plans, its share of investment has been significantly less than its share of ton-kms. Although some waterway services are efficient, most are operated by inefficient companies that have small vessels with high operating costs. (O) Decentralization
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