Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No: ICR00004694
IMPLEMENTATION COMPLETION AND RESULTS REPORT P123729
ON A
LOAN Public Disclosure Authorized IN THE AMOUNT OF $50 MILLION
TO THE
PEOPLE’S REPUBLIC OF CHINA
FOR THE Jiangxi Shangrao Sanqingshan Airport Project June 25, 2019 Public Disclosure Authorized
Transport Global Practice East Asia And Pacific Region Public Disclosure Authorized
CURRENCY EQUIVALENTS
(Exchange Rate Effective May 30, 2019)
Currency Unit = RMB RMB1.00 = US$0.14 US$1.00 = RMB6.90
FISCAL YEAR July 1 - June 30
Regional Vice President: Victoria Kwakwa Country Director: Martin Raiser Senior Global Practice Director: Guangzhe Chen Practice Manager: Binyam Reja Task Team Leader(s): Weimin Zhou ICR Main Contributor: Yuan Shao
ABBREVIATIONS AND ACRONYMS
CAAC Civil Aviation Administration of China CPS Country Partnership Strategy EIRR Economic Internal Return Rate EDGE Excellence in Design for Greater Efficiencies EMF Environmental Management Framework EMP Environmental Management Plan FEGP Fixed Electrical Ground Power GDP Gross Domestic Products GSHP Ground Source Heat Pump JAG Jiangxi Airport Group NPV Net Present Value PCA Pre-Conditioned Air PDO Project Development Objective PPP Public-Private Partnership PMO Project Management Office RAP Resettlement Action Plan SAOC Shangrao Airport Operation Company SMCADB Shangrao Municipal Civil Aviation Development Bureau SMG Shangrao Municipal Government SSAC Shangrao Sanqingshan Airport Company Limited
TABLE OF CONTENTS
DATA SHEET ...... 1 I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES ...... 5 A. CONTEXT AT APPRAISAL ...... 5 B. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE) ...... 9 I. OUTCOME ...... 9 A. RELEVANCE OF PDOs ...... 9 B. ACHIEVEMENT OF PDOs (EFFICACY) ...... 10 C. EFFICIENCY ...... 13 D. JUSTIFICATION OF OVERALL OUTCOME RATING ...... 15 E. OTHER OUTCOMES AND IMPACTS (IF ANY) ...... 15 II. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME ...... 17 A. KEY FACTORS DURING PREPARATION ...... 17 B. KEY FACTORS DURING IMPLEMENTATION ...... 18 III. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME .. 19 A. QUALITY OF MONITORING AND EVALUATION (M&E) ...... 19 B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE ...... 20 C. BANK PERFORMANCE ...... 21 D. RISK TO DEVELOPMENT OUTCOME ...... 22 IV. LESSONS AND RECOMMENDATIONS ...... 22 ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS ...... 24 ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION ...... 28 ANNEX 3. PROJECT COST BY COMPONENT ...... 30 ANNEX 4. EFFICIENCY ANALYSIS ...... 31 ANNEX 5. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS ... 41 ANNEX 6. SUPPORTING DOCUMENTS (IF ANY) ...... 43 ANNEX 7. PICTURES OF THE PROJECT ...... 44
The World Bank Jiangxi Shangrao Sanqingshan Airport Project (P123729)
DATA SHEET
BASIC INFORMATION
Product Information Project ID Project Name
P123729 Jiangxi Shangrao Sanqingshan Airport Project
Country Financing Instrument
China Investment Project Financing
Original EA Category Revised EA Category
Full Assessment (A)
Organizations
Borrower Implementing Agency
Ministry of Finance Shangrao Sanqingshan Airport Construction Office (PMO)
Project Development Objective (PDO)
Original PDO The Project Development Objective (PDO) is to improve airline connectivity in Northeastern Jiangxi Province and demonstrate the environmental sustainability of the development and operation of the Shangrao Sanqingshan Airport.
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The World Bank Jiangxi Shangrao Sanqingshan Airport Project (P123729)
FINANCING
Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$) World Bank Financing
50,000,000 49,393,873 49,393,873 IBRD-82560 Total 50,000,000 49,393,873 49,393,873
Non-World Bank Financing 0 0 0 Borrower/Recipient 55,130,000 55,130,000 76,066,127 Total 55,130,000 55,130,000 76,066,127 Total Project Cost 105,130,000 104,523,873 125,460,000
KEY DATES
ApprovalFIN_TABLE_DAT Effectiveness MTR Review Original Closing Actual Closing 13-May-2013 16-Jul-2013 05-Apr-2017 31-Dec-2018 31-Dec-2018
RESTRUCTURING AND/OR ADDITIONAL FINANCING
Date(s) Amount Disbursed (US$M) Key Revisions
KEY RATINGS
Outcome Bank Performance M&E Quality Satisfactory Satisfactory Substantial
RATINGS OF PROJECT PERFORMANCE IN ISRs
Actual No. Date ISR Archived DO Rating IP Rating Disbursements (US$M) 01 25-Jun-2013 Satisfactory Satisfactory 0
02 21-Dec-2013 Satisfactory Satisfactory 0
03 22-Jun-2014 Satisfactory Satisfactory 11.06
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The World Bank Jiangxi Shangrao Sanqingshan Airport Project (P123729)
04 13-Dec-2014 Satisfactory Satisfactory 18.62
05 24-Jun-2015 Satisfactory Satisfactory 24.18
06 07-Nov-2015 Satisfactory Satisfactory 28.27
07 27-Jun-2016 Satisfactory Highly Satisfactory 37.12
08 22-Nov-2016 Satisfactory Highly Satisfactory 40.44
09 18-May-2017 Satisfactory Satisfactory 45.95
10 07-Dec-2017 Satisfactory Satisfactory 45.95
11 21-Jun-2018 Satisfactory Satisfactory 47.77
12 25-Dec-2018 Highly Satisfactory Highly Satisfactory 47.59
SECTORS AND THEMES
Sectors Major Sector/Sector (%)
Transportation 100 Public Administration - Transportation 4 Aviation 96
Themes Major Theme/ Theme (Level 2)/ Theme (Level 3) (%) Economic Policy 33
Trade 33
Trade Facilitation 33
Urban and Rural Development 67
Urban Development 67
Urban Infrastructure and Service Delivery 67
Environment and Natural Resource Management 100
Climate change 100
Mitigation 100
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The World Bank Jiangxi Shangrao Sanqingshan Airport Project (P123729)
ADM STAFF
Role At Approval At ICR
Regional Vice President: Axel van Trotsenburg Victoria Kwakwa
Country Director: Klaus Rohland Martin Raiser
Senior Global Practice Director: John A. Roome Guangzhe Chen
Practice Manager: Mark R. Lundell Binyam Reja
Task Team Leader(s): Binyam Reja Weimin Zhou
ICR Contributing Author: Yuan Shao
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The World Bank Jiangxi Shangrao Sanqingshan Airport Project (P123729)
I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES
A. CONTEXT AT APPRAISAL
Context 1. China’s National Civil Airport Development Plan (2008) envisioned 244 civil airports by the end of 2020 to enable all provincial capitals, major cities, and major tourism destinations to be connected by a functional hub, trunk, and feeder airport network. More than 80 percent of the counties were expected to be within 100 km (1.5 hours by ground transport access) of an airport. During the Eleventh Five-Year Plan (2005- 2010), China’s civil aviation infrastructure had invested RMB250 billion (US$38 billion), which was equivalent to the combined investment of the previous 25 years. As of 2010, China had 175 civilian airports, of which 33 had been built in the previous five years. In July 2012, the State Council issued a document to encourage the development of China's civil aviation industry. The 12th FYP (2011-2015) had a goal of building 82 new airports by 2015 to increase China's airport network by nearly 50%. The Civil Aviation Administration of China (CAAC) was assigned the task to oversee expansion of China's airport network.
2. By 2013, China was the world’s second largest aviation market in terms of traffic volume, and air transport was the fastest growing mode of transport. The Government was increasing investment in building and renovating airports, especially feeder airports, and expanding its aviation network. The country was, nevertheless, faced with considerable challenges especially in the development of feeder airports and aviation services. Issues such as poor connectivity with regional airports, poor operational efficiency, and low utilization of feeder airports were restraining China from building a mature and efficient air transportation network. The number of feeder airports and feeder airlines were relatively small and geographical coverage was yet to be optimized. Besides, the provision of efficient airport services was still lagging, due to: (i) air transport resources and functions between airports not being optimized in some regions; and (ii) air transport not being integrated with local urban planning and surface transport planning.
3. Shangrao Sanqingshan airport was included in the CAAC’s National Civil Airport Development Plan for 2020. Although located in a lagging region, Shangrao owns ample tourism resources, such as Wuyuan, Sanqingshan, and Poyang Lake. The establishment of Shangrao Sanqingshan airport was of significant importance to the economic development of Shangrao Municipality and the Northeastern Jiangxi by facilitating the growth of the region’s tourism resources and by complementing the comprehensive transport system. The Government requested Bank financing support (under this first air transport project in China) in three principal areas: (i) transport modal integration, (ii) environment friendly airport design and operation, and (iii) economic and financial sustainability. The project was expected to be built as a demonstration project for the development of future feeder airport projects in China.
4. The project was well aligned with Strategic Theme 1: Supporting greener growth, and Strategic Theme 2: Promoting more inclusive development, of the World Bank Group’s China Country Partnership Strategy
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The World Bank Jiangxi Shangrao Sanqingshan Airport Project (P123729)
(CPS) for FY2013-16 that identified ‘greener growth’ as a key strategic theme. The PDO element to improve airline connectivity in northeastern Jiangxi Province was relevant to Outcome 2.4: Improving transport connectivity for more balanced regional development, while the PDO element to demonstrate the environmental sustainability of the development and operation of the airport was aligned with Outcome 1.3: Promoting low-carbon urban transport under CPS Strategic Theme 1, Supporting greener growth. The project also gave greater prominence to an underdeveloped inland region, which aimed to reduce the gap in air transport and economic development between coastal and middle regions.
Theory of Change (Results Chain) 5. Figure 1 below presents the Theory of Change of the operation.
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The World Bank Jiangxi Shangrao Sanqingshan Airport Project (P123729)
Figure 1. Theory of Change
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The World Bank Jiangxi Shangrao Sanqingshan Airport Project (P123729)
Project Development Objectives (PDOs) 6. The Project Development Objective (PDO) was to improve airline connectivity in Northeastern Jiangxi Province and to demonstrate the environmental sustainability of the development and operation of the Shangrao Sanqingshan Airport.
Key Expected Outcomes and Outcome Indicators 7. The achievement of the PDO was monitored by the following indicators:
(a) To improve airline connectivity - travel time reduction between Shangrao and major destinations. (b) To demonstrate the environmental sustainability of the development and operation - Shangrao Airport recognized as “Green Airport” through established recognition procedures.
Components 8. At approval, the Project had two components: (i) Airport Infrastructure Development; and (ii) Institutional Development and Capacity Building.
9. Component 1: Airport Infrastructure Development (estimated cost at appraisal: US$100.72 million; completion cost: US$121.52 million). Construction of an airport at Shangrao Municipality, including, inter alia: (i) the carrying out of a series of civil works, pertaining to a runway, taxiway, and terminal; (ii) the carrying out of installation works, including an air traffic control tower, a freight facility, supporting infrastructure facilities (including a fuel station, water supply, power supply, fire stations, heating, storm/water management, parking lots, and fence); (iii) implementation of the EMPs and RAPs, including their recommendations for environmental and social management sustainability inside and outside of the airport; (iv) construction of auxiliary facilities (including an office building and staff quarters); and (v) provision of service vehicles.
10. Component 2: The Institutional Development and Capacity Building (estimated cost at appraisal: US$2 million; completion cost: US$1.53 million). Provision of technical advisory services, studies and training, including, inter alia:
(a) Project Management Consultant to provide advisory services to support the PMO and SSAC on project coordination and monitoring. (b) Management Consultant services to (i) develop Airport Operation Model for SSAC, (ii) prepare and implement Human Resource Development plan, operational and financial manual (in accordance with China’s company’s law), (iii) assist SSAC to comply with CAAC regulations and international practices, and (iv) assist SSAC to develop a marketing plan to attract airlines and assist in service agreement negotiations with airlines. (c) Technical assistance to support the PMO to (i) document the lessons learned in developing Green Airport concept, (ii) share their experience widely with other potential cities considering building green airport in China through wider dissemination and holding workshops and road shows in selected cities, and (iii) other civil aviation related studies. (d) Training and study tours covering several aspects of airport construction and operations.
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The World Bank Jiangxi Shangrao Sanqingshan Airport Project (P123729)
B. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE)
Revised PDOs and Outcome Targets 11. No revisions were made to the PDO during the life of the project.
Revised PDO Indicators 12. No revisions.
Revised Components 13. No revisions.
Other Changes 14. There were no other changes to the loan agreement.
Rationale for Changes and Their Implication on the Original Theory of Change 15. The above approach did not impact the original theory of change.
I. OUTCOME
A. RELEVANCE OF PDOs Rating: Substantial
Assessment of Relevance of PDOs and Rating 16. Relevance of objectives. The World Bank Group CPS at appraisal, i.e., CPS for the period FY2013 through FY20161, has not been updated. As such, the PDO remains relevant at the ICR stage, as at appraisal; see Paragraph 4.
17. At closing, the PDOs remain fully consistent with government priorities. The PDOs continue to be in line with GoC’s 13th FYP (2016-2020) to further improve the capacity of air transport and expand the network for more inclusive development. The GoC planned to have 2602 civil aviation airports by 2020 and 3203 by 2025. China’s growth model is to promote environmental sustainability and investments in ‘greening’ growth. The country has committed to carbon reduction in the Paris Climate Agreement in 2015 and has laid out its intention to achieve peak CO2 emissions by 2030. In June 2018, the State Council issued a
1 The new Country Partnership Framework (FY2020-2025) is still in draft, therefore, this ICR uses the CPS for FY13-16 as reference. 2 13th FYP of Civil Aviation Development 3 ‘National Civil Airport Layout Plan’ issued by NDRC and CAAC jointly in February 2017
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The World Bank Jiangxi Shangrao Sanqingshan Airport Project (P123729)
‘Three-year Action Plan to Win Blue Sky Protection War’, identifying civil aviation industry as a key area to reduce the country’s carbon footprint.
18. The PDOs fully align with both civil aviation and tourism industry development priorities of Jiangxi Provincial Government. The Jiangxi General Airport Layout Plan, issued in July 2017, aims to build more than 20 general airports by 2020 and more than 50 by 2030, covering all cities, major industry zones, and main tourism areas, to further improve air connectivity in the region and stimulate economic development. By 2020, the functions of the current six feeder airports in Jiangxi, including Shangrao airport, would be extended for general airport use. The 13th FYP of Jiangxi Province Tourism Industry Development has also identified these five years as the opportunity period to further stimulate tourism and economic development by improving airline services between tourism cities in Jiangxi and other provinces.
B. ACHIEVEMENT OF PDOs (EFFICACY) Rating: High
Assessment of Achievement of Each Objective/Outcome
19. The efficacy of the project is assessed by the achievement of each of the two PDO elements: (i) improve airline connectivity in Northeastern Jiangxi Province; and (ii) demonstrate the environmental sustainability of the development and operation of the airport. Key outcomes achieved under each PDO element are summarized below.
20. PDO elements 1 – to improve Airline Connectivity in Northeastern Jiangxi Province was measured directly by PDO-level indicator (a) Travel time reduction between Shangrao and major destinations. The airport received construction completion acceptance on December 29, 2016 and overall acceptance by the regional bureau of CAAC in March 2017. The airport became operational on May 28, 2017, with the Chengdu-Shangrao route being made operational by Sichuan Airlines. Since then, five commercial airlines have gradually opened airline routes, connecting eight destinations by the loan closing date: Beijing, Shenzhen, Qingdao, Huizhou, Chengdu, Zhoushan4, Kunming and Harbin.
21. As shown in Table 1 below, the end of project target for PDO-level indicator Travel time reduction between Shangrao and major destinations was significantly exceeded (45% vs. 27%, i.e., by 166 percent) by the end of 2018. The target was already achieved and exceeded one year earlier than designed (57% by the end of 2017, connecting Shangrao to five major cities, including Beijing, Huizhou, Shenzhen, Qingdao and Chengdu). 5 The comparator mode of transport was the shortest travel time before the airport’s opening, which was: (i) a combination of a flight to the nearby airport from the major cities and ground transport; and (ii) rail transport.
4 Reduction in travel time between Shangrao and major cities: Zhoushan city is not included, because it might not be considered as one of the major cities in China. 5 The 2018 result was lower than 2017 result because the Kunming-Shangrao-Harbin route is not served on all days of the week.
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The World Bank Jiangxi Shangrao Sanqingshan Airport Project (P123729)
Table 1. Connectivity between Shangrao and Seven Major Cities Cities Travel Time before Travel Time after Flight Weighted Travel Time Airport Opening Airport Opening Schedule Travel Reduction (hours) (hours) Time Percentage (hours)
Beijing 5 2.33 Everyday 2.33 53% Huizhou 6.8 2 Everyday 2 71% Shenzhen 5 2 Everyday 2 60% Qingdao 5 2 Everyday 2 60% Chengdu 5.5 3 Everyday 3 45% Kunming 9 2.66 Every Tuesday, 6.28 30% Thursday, & Saturday Harbin 7 3.5 Every Tuesday, 6 14% Thursday, & Saturday Total 43.3 17.49 -- 23.61 45%
22. Table 2 illustrates the statistics of Shangrao airport, which indicates substantial growth in total number of flights and passengers carried.
Table 2. Transport Statistics of Shangrao Airport
May 28 – Dec 31, 2017 2018 Number of airplanes 1634 4512 taking-off/landing Number of Passengers (In/Out) 146,700 375,000 Average Passenger Occupancy (% to the 81% 77.8% total number of seats) Cargos shipped (ton) 5.4 121.2
23. Four additional cities were connected to Shangrao when two new routes were opened in early April 2019. The connection of Shangrao with Sanya (one of the most popular tourism cities, located in Hainan Province) and with Jinan (capital city of Shandong Province), with the flights scheduled every Monday, Wednesday, Thursday and Saturday, has shortened the travel time between Shangrao and Sanya from 12 hours to 2.5 hours, and the travel time between Shangrao and Jinan from 6 hours to 1.75 hours. The other route connecting Shangrao with Guiyang (the capital city of Guizhou province) and Ningbo (a major city in Zhejiang province), with the fights scheduled every Tuesday, Thursday and Sunday, has shortened the travel time between Shangrao and Guiyang from 7 hours to 2.25 hours, and the travel time between Shangrao and Ningbo from about 3.5 hours to 1.3 hours.
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The World Bank Jiangxi Shangrao Sanqingshan Airport Project (P123729)
24. Based on the current growth trend and the new routes, it is envisaged that passenger traffic in Shangrao airport will reach about 500,000 in 2020, which was the short-term target of Shangrao airport in the project design.
25. In view of the above, achievement of PDO Element 1 is rated High.
26. PDO Element 2 - To demonstrate the environmental sustainability of the development and operation of the Shangrao Sanqingshan airport was measured by PDO-level indicator (b): Shangrao Airport recognized as “Green Airport” through established recognition process, and supported by Intermediate Result indicator 1A: Green airport design put in place and implemented.
27. The airport was designed, constructed and operated as a “Green Airport”, which focused on the following aspects:
1) Energy efficient architecture and airport layout design. The airport was designed with energy efficient elements, including natural ventilation, double glass facades, and large roof overhangs to protect it from the sun. The energy efficient airport layout provides the most direct route between runways and terminal gates to reduce taxing time and delays.
2) Ground Aircraft Auxiliary Power Unit. This system uses equipment on the ground and functions as an external power source to the aircraft for electricity and ventilation supply to reduce fuel use, improve local air quality and noise in the apron area, including: (i) Fixed Electrical Ground Power (FEGP) located at the terminal gate to provide electric power to the aircraft; and (ii) Pre-Conditioned Air (PCA) unit to provide heating or cooling to the aircraft.
3) Energy efficient equipment and infrastructure. Equipment and infrastructure use energy efficient elements and materials, including LED for lighting, a self-contained drainage system for wastewater treatment, FEGP and PCA units for on-board power supply and ventilation, warm-mix asphalt or recycled content in pavement, and intermittent functioning modes for elevators, escalators and pedestrian conveyors.
4) Storm Water Reuse System uses available storm water more optimally and adjusts storm runoff volume, and also cleans the water used for washing the structure, before it runs off. This system includes: (i) storm water penetration collection system, which was built using the storm water penetration ditch technique; and (ii) storm water treatment and reuse, whereby the polluted water is treated and collected by a water tank built under the parking lot, which is then used for washing the pavement, watering plants, and for flushing in restrooms.
5) Ground Source Heat Pump (GSHP) system has been installed to convert the energy source for heating and cooling the Airport Terminal from oil-fired boilers with large air handling units to a new geothermal system. The GSHP system uses ground source heat pumps to exchange heat with the earth and replaces the traditional system that relied on outdoor air for combustion and make-up.
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The World Bank Jiangxi Shangrao Sanqingshan Airport Project (P123729)
28. The “Green Airport” concept was fully incorporated in the design of the airport. The PMO prepared the “Shangrao Sangqingshan Green Airport Design Guidelines”, which listed the requirements for the general plan, deck bridge facilities, comprehensive rainwater and sewage utilization system, sound insulation and noise reduction to ensure that the “Green Airport” concept was fully incorporated in the airport design. The Intermediate Result indicator 1A - Green airport design put in place and implemented was achieved per schedule during implementation.
29. According to the survey and estimates in the TA Report on the Green Operation of Shangrao Sanqingshan Airport supported under this Project, energy consumption per unit area of the terminal building is 15.0 kgce/m², which is 40% lower than the maximum national value (25 kgce/m²) and 17% lower than the national guiding value (18kgce/m²) listed in Guidelines for Energy Efficiency Evaluation on Civil Airport Terminal buildings (MH/T5112-2016). The study also compared the energy consumption with Yichun airport and Jingdezhen airport in Jiangxi province, which are located in a similar climatic geographical region, and reported that Shangrao airport had achieved 20% energy saving per unit area, as a result of the GSHP system.
30. The PDO indicator Shangrao Airport recognized as “Green Airport” through established recognition process has been achieved, as the airport was awarded the ‘EDGE’6 (Excellence in Design for Greater Efficiencies) green building certificate on January 21, 2019. The “EDGE” evaluation fully considered the design and the operational parameters of related facilities of the airport. According to the ‘EDGE’ evaluation, the Shangrao Sanqingshan airport achieved 24% energy saving (427 Mwh/ year), 42% water saving (36,392 m3/year), 38%
building materials embodied energy saving (15,662 GJ), and 24% operational CO2 saving (306t/ year).
31. In view of the above, achievement of PDO Element 2 is rated High.
Justification of Overall Efficacy Rating 32. The overall efficacy is rated as High, based on the above assessments of the achievement of the two PDO elements.
C. EFFICIENCY Rating: Substantial
6 EDGE (“Excellence in Design for Greater Efficiencies”), as an innovation of IFC, is an online platform, a green building standard and a certification system for over 140 countries. The EDGE application helps to determine the most cost-effective options for designing green within a local climate context. A project that reaches the EDGE standard of 20 percent less energy use, 20 percent less water use, and 20 percent less embodied energy in materials compared to a base case building can be independently certified. The value of EDGE certification is a promotional advantage, as customers benefit from lower utility bills. EDGE is part of a holistic strategy to steer construction in rapidly urbanizing economies onto a more low-carbon path. It’s an example of IFC’s commitment to creating markets that are competitive, sustainable, inclusive and resilient. (www.edgebuildings.com)
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The World Bank Jiangxi Shangrao Sanqingshan Airport Project (P123729)
Assessment of Efficiency and Rating 33. Economic Analysis. As shown in Table 3, the results of the ex-post economic analysis compare favorably with the results of the analysis at appraisal, using the same methodology and economic analysis model. The details of the analysis are provided in Annex 4. Table 3. Results of Economic Analysis at Appraisal and at Completion
At Appraisal At ICR NPV NPV Scenarios EIRR EIRR (million RMB) (million RMB) Base Scenario 172.5 17.13% 448.9 17.84 % 20% cost increase 164.1 16.89% 317.8 15.70% 20% benefit decrease 74.5 14.36% 228.0 15.23% 20% cost increase and 20% benefit 66.0 14.10% 96.8 13.23% decrease
34. The airport is indispensable for tourism development in Shangrao. In 2017, the total revenue from tourism related activities in Shangrao reached RMB148 billion, up 31.5% compared to 2016. The total number of tourists in Shangrao in 2017 reached 1.6 billion, up 30.3% compared to 20167. For the first time, Shangrao ranked in the Top 10 tourist cities China (ranked 10th) in 2017; the other nine cities were all capital cities of provinces. From May 2016 to October 2018, jobs in the tourism industry in Shangrao increased from 342,000 (direct: 92,000, indirect:250,000)8 to 650,000 (direct: 250,000; indirect:400,000)9.
35. Financial Analysis. The ICR conducted an ex-post financial analysis, which incorporated the following adjustments to the financial analysis in PAD:
1) The capacity of Shangrao government in paying for principle investment and interest was examined for each year during project implementation. 2) Revenue and expenditure data of the Airport in 2017 and 2018 was collected and adopted in the financial analysis. 3) The aggregate Government subsidy is significantly higher than estimated in PAD.
36. Financing capacity of the government. CAAC allocates operating subsidy and interest subsidy to Shangrao airport during its operation. The fund is financed by the central fiscal revenue from the Civil Aviation Development Fund, which is guaranteed. The capital cost for the airport is borne by central government grants and the IBRD loan, and the IBRD loan will be repaid by the Shangrao Municipal Government. The government has also committed RMB27 million as operating subsidy to the airport, which was provided in 2017 and 2018. The subsidy amount is very small compared to the forecast budgetary revenue of Shangrao government.
7 2018 Shangrao Statistical Yearbook 8 http://www.sohu.com/a/86983064_362103 9 http://sr.jxntv.cn/2018/1009/8995838.shtml
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The World Bank Jiangxi Shangrao Sanqingshan Airport Project (P123729)
37. Financing capacity of the airport. The airport is projected to generate adequate revenue to cover operational costs. The cash inflow and outflow of the airport throughout its operational life is summarized in Annex 4. The cash inflow of the airport exceeds the cash outflow in all operational years.
38. Administrative Efficiency. Simple project design and successful project implementation contributed greatly to implementation efficiency. Upon loan effectiveness, the PMO moved expeditiously to contract works. Throughout the implementation period, the disbursement rate was higher than forecast in the PAD; at midterm, disbursements had reached over 80% of commitments. The construction of the airport, which accounted for 97 percent of the total Project investment, was completed about one year earlier than anticipated at appraisal. The loan closed without requiring an extension and was fully disbursed. The key persons of PMO staff and the Bank task team remained the same throughout.
D. JUSTIFICATION OF OVERALL OUTCOME RATING
Rating: Satisfactory
39. The overall outcome of the project is rated as Satisfactory, based on the ratings of Substantial for Relevance of the PDO and Efficiency, and High for Efficacy.
E. OTHER OUTCOMES AND IMPACTS (IF ANY)
Gender 40. The Project promoted gender-balanced access to infrastructure investments and to training, and to the PMO and SAOC. Two lactation rooms and two changing rooms were arranged at the airport, and associated facilities are accessible for people with disability. Among the 104 staff that were hired by SAOC for the operation of the airport, 32 are female. Although the data is not available at present, it is anticipated that increased transportation, commerce, and tourism industry development will create additional jobs for women in the city and in the region.
41. The Project also supported gender-balanced consultation during the preparation of the resettlement plan and during resettlement implementation. The local government and the resettlement implementing agency conducted participatory approaches to disclose resettlement policies, negotiate with affected people, and mobilize affected people's participation in major resettlement activities; in particular, women’s views and concerns on resettlement were collected and analyzed. The external social monitoring reports indicated that consultation meetings held in communities with project-affected people on resettlement issues had 50% of women participants.
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The World Bank Jiangxi Shangrao Sanqingshan Airport Project (P123729)
Institutional Strengthening 42. The Project contributed to the institutional development of stakeholders through Component 2 by helping strengthen their human and organizational capacities. The Project supported 20 trainings to 301 persons, including government officials, PMO staff, contractors, and supervision agencies. The trainings improved skills related to project management and administration, technical competence, and service delivery, as well as fiduciary and safeguard aspects.
43. The project supported local authorities to become familiar with the concept and technologies of “Green Airport”. The Bank team and the PMO jointly held several “Green Airport” knowledge exchange activities during preparation, and the “Shangrao Sangqingshan Green Airport Design Guidelines” was prepared, which listed detailed requirements for airport design. The project supported a technical study on the Shangrao Green Airport experience and lessons learnt, which consolidated Green Airport experiences of planners, designers, contractors, and operators of the airport. The Project also supported two workshops regarding green airport development, including planning, design, construction and operation, with the participation of around 150 representatives from CAAC, several other airports, and various airport construction, consulting and engineering companies. The Bank team also invited several international aviation experts to join Bank missions or the workshops to introduce global best practices. The concept of green airport was well disseminated, and local institutional capacity was improved with a better understanding of “Green Airport” techniques and its sustainable benefits.
Mobilizing Private Sector Financing 44. The SMG adopted a PPP approach for airport operations and management, based on similar airport experiences in China. The SMG signed an operation concession agreement with JAG, which established a sub-company of SAOC to take over the operations of the airport.
Poverty Reduction and Shared Prosperity 45. Although the available data did not support direct measurement of the Project’s impact on city-wide poverty reduction, its positive impact on tourism industry development has been confirmed as described earlier. Tourism helps to reduce poverty by generating economic growth, providing employment opportunities, increasing tax collection, and by fostering the development and conservation of protected areas and the environment10. Rural tourism development in Shangrao was estimated to create 200,000 jobs in 2017, especially for villagers11. Of the 537 “poverty villages” in Shangrao, 126 identified tourism related jobs as their main approaches for poverty reduction. The airport project, together with the development of local transport infrastructure, will therefore make a long-term positive contribution to overall poverty reduction and shared prosperity.
10 The economic & social benefits of air transport report, 2005. The Air Transport Action Group, Switzerland. 11 http://www.wuyuan999.com/web/chengshi/fuchun/2018/0120/40085.html
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The World Bank Jiangxi Shangrao Sanqingshan Airport Project (P123729)
46. According to a 2016 consultant survey of 30 affected households in Zunqiao town (which was the town most affected by resettlement under the Project), between 2013 to 2015 the average household income increased from RMB28,534 to RMB35,950, a growth of 26%. The average household living area increased from 388 m2 to 472 m2. The share of agriculture in average household income decreased from 12.9% to 10.4%, which indicates that after resettlement fewer affected villagers tended to work in agriculture, as the airport construction and operation provided better job opportunities.
Other Unintended Outcomes and Impacts
47. The implementing agencies adopted several new technologies during project implementation, which greatly improved the efficiency of project management and airport operation, and lowered project costs. During airport construction, besides normal supervision, an unmanned aerial vehicle mounted with a camera was used to monitor construction progress and soil/water conservation. This innovative approach allowed the PMO and the supervision engineers to monitor the real-time status of implementation in inaccessible areas of the project site. Based on local geological conditions, the implementing agencies adopted the new technology of red sandstone construction during the rainy season, which saved more than RMB10 million on airfield foundation construction.
II. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME
A. KEY FACTORS DURING PREPARATION
48. At appraisal, the objectives, and components of the project were highly relevant to the country conditions and government priorities. The PDOs were realistic and clearly formulated, and were in line with the 2011-2015 FYP of the Civil Aviation Development, that aims to increase the capacity of air transport and expand the air network. The Project was fully aligned with the needs of the country and the region, as well as government priorities.
49. The readiness for implementation was strong with full support from all stakeholders, which facilitated the rapid take-off of civil works after the loan was declared effective in July 2013. Project preparation fully engaged CAAC and benefited from international experiences. With the support of SMG, coordination between municipal local bureaus was efficient and effective. The PMO proactively coordinated between CAAC, NDRC and the Bank on approval procedures. Technical, safeguard, and fiduciary preparation was carried out thoroughly, including an in-depth feasibility study and a pragmatic implementation framework.
50. The “Green Airport” concept was continuously emphasized throughout project preparation. The project was aimed as a green airport demonstration for other feeder airports in China. Project preparation was therefore focused on “Green Airport”, and the task team and the PMO jointly held several “Green Airport” workshops, and prepared the “Shangrao Sangqingshan Green Airport Design Guidelines”, which listed
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The World Bank Jiangxi Shangrao Sanqingshan Airport Project (P123729)
requirements for the general plan, deck bridge facilities, comprehensive rainwater and sewage utilization system, sound insulation and noise reduction for incorporation in the airport design. The PMO appointed a high-quality research institute as the “Green Airport” consultant to guide the detailed design of the airport.
51. M&E Design. The Project’s results framework was based on a clearly defined PDO, and was supported by measurable performance indicators at the PDO and intermediate levels, including baselines, end-of-project targets, and arrangements for data collection, compilation, analysis and reporting.
52. The risk assessment and mitigation measures proposed at appraisal were appropriate. The risks were adequately identified during preparation, including: the capacity weakness of the PMO; confirmation of counterpart funding from the national government; and implementing the Green Airport concept. The risks were mitigated by procuring project management consulting services, securing commitment from CAAC and NDRC for funding, and the Bank team’s continuous involvement during preparation and implementation. Overall, the risk mitigation measures put in place were appropriate.
B. KEY FACTORS DURING IMPLEMENTATION
53. The SMG continued to demonstrate strong commitment to the Project throughout implementation, with support from the CAAC. The SMG provided the required co-financing of about 60% of total project costs, and was proactive in solving challenges, for example the formulation and approval of important policies for resettlement and land acquisition, and issuing the necessary legal documents.
54. Linked Activities. The SMG constructed - outside of the project - a 4.65 km access road to link the proposed airport with the nearest main road, as well as other utility infrastructure along the same access road. Bank safeguard policies agreed for the proposed project were applied for the access road.
55. Operating arrangements for the airport. Under Component 2, the Project had proposed to hire a management consultant to develop the airport operation model and support SSAC to prepare and implement a Human Resource Development plan, and an Operational and Financial Manual. During implementation, it was agreed instead to adopt a Public-Private Partnership (PPP) approach, based on similar airport experiences in China. Based on a study of the arrangements in other Chinese airports, and in consultation with CAAC, the SMG signed an operational concession agreement with the Jiangxi Airport Group (JAG, which currently operates all seven airports in Jiangxi), to operate the Shangrao airport. As a result, the consulting service under Component 2 was cancelled.
56. Substantial co-financing subsidy from the national government was important. Of the about RMB478 million counterpart funding (60% of total project costs), RMB350 million (about 44% of total project costs) was appropriated from the Civil Aviation Development Fund as a grant to support feeder airport development. SMG also provided about RMB7million as subsidies for the GSHP system from Civil Aviation Energy Saving & Carbon Reduction Special Funds.
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The World Bank Jiangxi Shangrao Sanqingshan Airport Project (P123729)
57. The PMO contributed to successful implementation. The PMO deployed sufficient staff resources for project implementation, who were stable throughout, and managed the project in an efficient and proactive manner. Fiduciary arrangements and processes were effective, including implementation of the procurement plan and in preparing financial reports that consistently received unqualified project audit reports. The timely resolution of implementation issues enabled project objectives and targets to be met one year ahead of the formal closing date. The SMG established Shangrao Municipal Civil Aviation Development Bureau (SMCADB) to be responsible for airline marketing and related management works, and assigned the PMO Director as the director of the SMCADB. Most of the PMO staff were also re-assigned to the SMCADB.
58. Technical assistance under the Project was instrumental in effective implementation by: (i) strengthening the capacity of the PMO and other implementing agencies through setting up the M&E system and the preparation of several guidelines for the construction stage, as well as for future operation and management; and (ii) training of staff and stakeholders.
59. Use of disruptive technologies. The implementing agencies adopted several new technologies during project implementation, including an unmanned aerial vehicle mounted with camera for supervision and red sandstone construction during the rainy season, which greatly improved the efficiency of project management and operation. The PMO also analyzed big data from the Tourism Bureau and mobile service providers to facilitate the selection of airlines. The use of these new technologies was not anticipated during appraisal, but greatly improved the efficiency and management of the project.
III. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME
A. QUALITY OF MONITORING AND EVALUATION (M&E)
M&E Design 60. The project’s results framework was simple but concise, and reflected a clear theory of change. As discussed in Section II.B, the project’s indicators adequately measured the achievement of the two PDO elements. The intermediate indicators were designed to measure achievement of green airport design, construction progress and institutional development. The roles and responsibilities for tracking indicators were clearly identified, to be carried out mainly by the PMO, with support from the PMC. The methodologies for the calculation of PDO indicator Travel time reduction between Shangrao and major destinations was clearly described in the PAD. The design of the M&E system was overall sound, but could have been improved in terms of target value requirements for PDO indicator 2 at an earlier stage, and by adding an indicator to measure progress towards achieving the institutional development component.
M&E Implementation 61. The M&E was not adjusted during the life of the project. The PMO, with assistance from the PMC, collected data and reported on the Results Framework. For outcome indicators, data was collected from the real-time SAOC records after the airport commenced operation in May 2017. For intermediate
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The World Bank Jiangxi Shangrao Sanqingshan Airport Project (P123729)
indicators, the Quarterly Progress Report was used as a basis to update the Results Framework. M&E reports were furnished in the appropriate formats in a timely manner.
M&E Utilization 62. The quality of M&E data was good during the entire implementation period. The M&E data was used to improve project management and implementation, especially during the mid-term review and for the application of the “Green Airport” concept.
Justification of Overall Rating of Quality of M&E 63. M&E quality is rated Substantial, despite the minor weaknesses in design.
B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE
64. Safeguards Policies Triggered. The project triggered three safeguard policies: Environmental Assessment (OP/BP 4.01), Physical Cultural Resources (OP/BP 4.11), and Involuntary Resettlement (OP/BP 4.12).
65. Environment Assessment (EA). The project was classified as Category A, as it invested in an airport and its associated facilities. Environmental safeguard documents (i.e., EA, EMP, and EMF) were prepared by accredited consulting institutes and were disclosed locally in September 2012 and at the Infoshop in Washington D.C in October 2012. The EAs identified potential adverse impacts and specified mitigation measures accordingly, including on airport site selection, noise impact management, sustainable storm water management, waste and wastewater management, energy efficiency and universal access design, and construction impacts management. The EMP was implemented satisfactorily.
66. Physical Cultural Resources. Field surveys found 137 household graves in the airport site. Relocation of household graves was compensated in accordance with the project RAP.
67. Social Safeguards. Project construction required land acquisition and resettlement activities. RAPs and a resettlement policy framework were prepared and publicly disclosed to affected persons and affected communities in accordance with Bank policy OP4.12, and were approved by the Bank in 2012 prior to appraisal. The project required the acquisition of 2,913 mu of village land and the demolition of 7,708 m2 of existing structures of 21 affected households. These impacts were slightly higher than planned, based on detailed measurements during implementation. Resettlement monitoring reports showed that affected people have better housing, including better infrastructure facilities like water, drainage, and community services. Semi-annual external monitoring reports were arranged to evaluate compliance of resettlement actions with the RAP, and confirmed that land acquisition and compensation were in accordance with the RAPs. Resettlement activities commenced in 2013 and were completed by the end of 2018.
68. Financial Management. Key financial staff was capable and accountable throughout project implementation. The Bank team maintained timely communications with the Finance Bureau and provided necessary advice on Bank FM requirements. Interim financial reports and audit reports were submitted in a timely manner. All audit reports were issued with unmodified (clean) opinions, and internal
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The World Bank Jiangxi Shangrao Sanqingshan Airport Project (P123729)
control issues detected by the audit reports were fully addressed by the PMO. An efficient and effective funds flow arrangement led to nearly full disbursement of the Bank loan. Project financial management performance is rated Satisfactory.
69. Procurement and contract management. Procurement under the Project was carried out in accordance with Bank procurement policies, procedures and requirements. The PMO had a designated procurement officer and contract management staff. To further enhance the PMO’s capacity, a procurement agent and project management consulting company were hired by the PMO. The procurement and contract management capacities of staff were greatly improved by attending several related trainings held by the Bank (or institutions acceptable to the Bank) throughout project preparation and implementation. The PMO Director and key PMO staff remained unchanged throughout the project cycle.
70. Some important procurement related lessons include: (i) early procurement planning, including the identification of Bank financed activities, as well as advance contracting will facilitate successful implementation; (ii) regular updates of the procurement plan, at least every year or as needed are essential for good procurement monitoring; (iii) timely award of the most important airfield works contract, which was procured through International Competitive Bidding using prequalification, was key to successful implementation; (iv) joint efforts and frequent discussions among the PMO, the designer, the procurement agent, and the Bank team in preparing quality bidding documents ensured competitiveness without restrictions, and smooth contract implementation; and (v) the strong PMO team on site helped to manage and monitor the daily execution of contracts. Project procurement performance was rated as Satisfactory throughout the project cycle.
C. BANK PERFORMANCE
Quality at Entry 71. The Bank team worked closely with the counterparts to design a sound project that was fully aligned with China’s 12th FYP and the local government’s priorities, as well as the Bank Group’s CPS for FY2013-16. The Bank team provided valuable inputs in defining the PDO that was supported by a sound results framework. It provided timely and quality support during project preparation and appraisal, and incorporated best practices in technology, particularly in incorporating the “Green Airport” concept in the project design as a demonstration for the development of other feeder airports in China.
72. The Bank ensured that appropriate economic and financial analysis was carried out, and Bank fiduciary and safeguard policies were complied with. As discussed earlier, risks were correctly identified, and appropriate mitigation measures were put in place. The project was ready for implementation, as subsequently demonstrated. The minor weakness in M&E design is mentioned in the M&E section.
Quality of Supervision
73. The Bank team carried out eight implementation support missions on a regular basis, which included site visits and interactions with project stakeholders. The strong continuity in Bank team leadership (i.e., only two TTLs during implementation, both of whom were based in China) contributed to maintaining effective working relationships with the SMG and the PMO, while providing timely guidance and quick approvals.
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The World Bank Jiangxi Shangrao Sanqingshan Airport Project (P123729)
The Bank team provided technical support on the TOR for the TA study and comments on the draft report. It invited international experts to give speeches at the two workshops regarding Green Airport design and operation. The supervision missions provided practical recommendations and sound technical solutions; these were shared with the PMO during wrap up meetings, and were documented in mission aide- memoires. The Bank team demonstrated pro-activity in providing support on the “Green Airport” certification application procedures, including on the “EDGE” certification application.
74. Safeguards and Fiduciary. Social and Environmental Specialists satisfactorily supervised environmental and social safeguards through field visits to review progress, and ensured the timely submission of the external monitor’s report on safeguard implementation. The specialists worked closely with counterparts and provided specific analysis and advice on the implementation of the monitoring activities and recommendations on actions to take, as evidenced in the Aide Memoires. Compliance with financial management and procurement activities was monitored satisfactorily by the specialists from the Beijing office, who also provided guidance and implementation support on a regular basis.
75. Airport operation. The Bank team provided on-going support to ensure that arrangements were in place for the satisfactory operation of the airport, once construction was completed and acceptance certificates were issued.
Justification of Overall Rating of Bank Performance Rating: Satisfactory, based on the discussion above on Quality at Entry and Quality of Supervision.
D. RISK TO DEVELOPMENT OUTCOME 76. The overall risk to the development outcome is low. Most of the project outcomes are found to be sustainable. Connectivity between Shangrao and other cities or regions will continue to be reinforced by the strengthened air transport capacity. The airport is expected to see increasing demand going forward, with growth in annual tourist traffic and the economy. Sustainability of outcomes is also expected as a result of improved institutional capacity in the local civil aviation bureau, including improved technical, project management and business development skills, and improved collaboration between various sector stakeholders. In the context of China’s commitment in the Paris Climate Agreement in 2015, CAAC has issued several plans and provided subsidy programs to incentivize local authorities to adopt the “Green Airport” approach.
77. Responsibility and resources for management and operation of the airport are clearly defined in the contract between SMG and SAOC. The financial risk to the project outcomes is low, as SMG has been providing an operational subsidy of RMB27 million to SAOC.
IV. LESSONS AND RECOMMENDATIONS
78. Technical Study and M&E indicator on the Green Airport experiences. The Technical Assistance reports supported under the Project not only document the good design, implementation and operational
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The World Bank Jiangxi Shangrao Sanqingshan Airport Project (P123729)
approaches that the airport conducted for carbon reduction, but also provide several recommendations to improve performance. These reports are a good reference for future airport expansion, as well as the dissemination of experiences to other feeder airports in China and around the world. The M&E system played a key role in incentivizing the local implementing agencies to obtain the EDGE certification.
79. PPP Operation Model. After conducting an in-depth research on the operation models of 14 Chinese airports and careful evaluation of local capacity, the SMG signed an operation concession agreement with the Jiangxi Airport Group (JAG) to operate the Shangrao airport. The PPP approach adopted in the project, as well as the many other similar airport experiences in China, greatly improved the efficacy of operations and management. This successful experience should be disseminated widely to other developing countries.
80. Use of disruptive technologies. New technologies adopted during project implementation, including the use of an unmanned aerial vehicle mounted with camera for supervision, and red sandstone construction during the rainy season, greatly improved project management and operational efficiency, and reduced project costs. Analysis of big-data from the Tourism Bureau and mobile service providers facilitated airline selection. The use of these new technologies (which was not anticipated during appraisal) greatly improved the efficiency and management of the project.
81. Multi-modal access to the airport. Shangrao’s high-speed rail station is currently operational, and the SMG has subsidized the bus service between the airport and the high-speed rail station, through the downtown area. The SMG could coordinate with transport agencies and tourism agencies to develop combination transport and tourism tickets. In addition, the high-speed rail train station could have remote check-in counters for flights, and discounted bus tickets to the airport.
82. Impact Evaluation. Most of the feeder airports are experiencing operational losses and need local government subsidies to continue operations. As the only Bank-financed airport in China, an impact evaluation study should be conducted on the catalytic benefits that the airport brings to the city and the region, so that other local governments are better informed on whether an airport would provide development stimulus or result in a higher debt burden.
.
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The World Bank Jiangxi Shangrao Sanqingshan Airport Project (P123729)
ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS
A. RESULTS INDICATORS
A.1 PDO Indicators
Objective/Outcome: To improve airline connectivity in northeastern Jiangxi Province Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Reduction in travel time Percentage 0.00 27.00 45.00 between Shangrao and major cities. 31-Dec-2012 31-Dec-2018 31-Dec-2018
Comments (achievements against targets): By the closing of the project, the target value was significantly exceeded (45% vs. 27%, by 166 percent). Actually, the target was already achieved and exceeded one year earlier than designed (57% by the end of 2017, connecting to five major cities, including Beijing, Huizhou, Shenzhen, Qingdao and Chengdu).
Objective/Outcome: To demonstrate the environmental sustainability of the development and operation of Shangrao airport Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Shangrao Airport recognized Text None Recognition Received Recognition Received
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The World Bank Jiangxi Shangrao Sanqingshan Airport Project (P123729)
as “Green Airport” through 31-Dec-2012 31-Dec-2018 21-Jan-2019 established recognition process.
Comments (achievements against targets): Fully achieved by receiving the ‘EDGE' green building certificate on January 21, 2019.
A.2 Intermediate Results Indicators
Component: Component 1: Airport Infrastructure Development
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Green airport design put in Text None Construction carried Construction carried place and implemented. out according to out according to design design
31-Dec-2012 31-Dec-2017 31-Dec-2017
Comments (achievements against targets): Well implemented on schedule.
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion
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The World Bank Jiangxi Shangrao Sanqingshan Airport Project (P123729)
Timely, cost-effective Text None 100 percent milestone 100 percent milestone construction of the airport reached reached
31-Dec-2012 31-Dec-2018 31-Dec-2017
Comments (achievements against targets): The target was exceeded with the actual construction progress was much advanced than anticipated.
Component: Component 2: The Institutional Development and Capacity Building
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Airport operation model Text None Recommendation Recommendation developed and adopted by implementation implementation Shangrao started started
31-Dec-2012 31-Dec-2016 31-Dec-2016
Comments (achievements against targets): The indicator was achieved. During implementation, the SMG entrusted the JAG to operate the airport, which owns mature operation model experiences.
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The World Bank Jiangxi Shangrao Sanqingshan Airport Project (P123729)
B. KEY OUTPUTS BY COMPONENT
Objective/Outcome 1: to improve airline connectivity in northeastern Jiangxi Province
Outcome Indicators 1. Travel time reduction between Shangrao and major destinations.
1. Timely, cost-effective construction of the airport Intermediate Results Indicators 2. Airport operation model developed and adopted by Shangrao. 1. Construction and Operation of Shangrao Sangqingshan Airport including: a) 4c level airfield – construction of runway, taxiway, etc; b) Terminal building and apron; c) Air traffic control building & tower; Key Outputs by Component d) Freight Facility; (linked to the achievement of the Objective/Outcome 1) e) Supporting Infrastructure facility; f) Auxiliary Facility (office building, staff quarters, etc); g) Service vehicles; h) Storm water reuse system and ground aircraft auxiliary power unit.
Objective/Outcome 2: to demonstrate the environmental sustainability of the development and operation of the Shangrao Sanqingshan Airport 1. Shangrao Sanqingshan Airport recognized as “Green Airport” Outcome Indicators through established recognition process.
Intermediate Results Indicators 1. Green airport design put in place and implemented. 1. ‘EDGE’ green building certificate for the terminal building Key Outputs by Component 24% energy savings (linked to the achievement of the Objective/Outcome 2) 42% water savings 38% less embodied energy in materials
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The World Bank Jiangxi Shangrao Sanqingshan Airport Project (P123729)
ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION
A. TASK TEAM MEMBERS
Name Role Preparation Binyam Reja Task Team Leader(s)
Guoping Yu Procurement Specialist(s)
Yi Geng Financial Management Specialist
Juan D. Quintero Social Specialist
Feng Ji Social Specialist
Jun Zeng Social Specialist
Supervision/ICR Weimin Zhou Task Team Leader(s) Guoping Yu Procurement Specialist(s) Yi Geng Financial Management Specialist Binyam Reja Team Member Feng Ji Environmental Specialist Yuhui Jiao Team Member Mauricio Monteiro Vieira Social Specialist
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The World Bank Jiangxi Shangrao Sanqingshan Airport Project (P123729)
A. STAFF TIME AND COST
Staff Time and Cost Stage of Project Cycle No. of staff weeks US$ (including travel and consultant costs) Preparation FY11 10.300 48,255.39 FY12 38.000 225,791.09 FY13 24.101 138,582.52
Total 72.40 412,629.00
Supervision/ICR FY11 0 0.00 FY14 7.597 60,251.33 FY15 14.404 79,857.68 FY16 13.755 61,592.16 FY17 13.361 59,553.81 FY18 13.550 86,572.18 FY19 29.662 114,896.14 Total 92.33 462,723.30
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The World Bank Jiangxi Shangrao Sanqingshan Airport Project (P123729)
ANNEX 3. PROJECT COST BY COMPONENT
Total World Bank Actual at Actual at Amount at Amount at No. Components Project Percentage Project Approval Approval Closing of Approval Closing (US$M) (US$M) (US$M) (US$M)
Airport Infrastructure 1 100.72 121.52 121% 45.59 46.49 Development
Institutional Development 2 2.00 1.53 76% 2.00 0.50 and Capacity Building
3 Interest during construction 2.28 2.28 100% 2.28 2.28
4 Front-end Fees 0.125 0.125 100% 0.125 0.125 Total 105.13 125.46 119% 50.00 49.39
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The World Bank Jiangxi Shangrao Sanqingshan Airport Project (P123729)
ANNEX 4. EFFICIENCY ANALYSIS
Economic Analysis
Methodology and Conclusion at Project Appraisal
1. The ICR conducted a cost-benefit analysis mainly for the Airport Infrastructure Development component of the project. The proposed investment of this component accounted for 95.8 percent of total project investment. The main benefits identified of the Project in the analysis were the benefit of air passengers since the connectivity to Shangrao will be enhanced. In the medium and long term, the project should boost regional economic development of Shangrao and other northeast municipalities of Jiangxi in a sustainable way. The benefit being quantified was the value of travel time saving of: a) existing air passengers, b) existing train passengers who will shift to use Shangrao Sanqingshan Airport, and c) induced demand, over the assumed project life of 20 years. Economic costs of the project were identified as capital investments and operation cost. The economic internal rate of return (EIRR) for the project was estimated as 17.13%. The Net Present Value (NPV) at 12 percent discount rate was 172.5 million RMB. Sensitivity analysis (assuming 20% benefit decrease, 20% cost increase, and both happening) showed that EIRR keeps higher than the discount rate of 12% for all scenarios. The investment was considered economically feasible and has the risk resistance ability.
Economic Analysis at Project Completion
2. The PDO remained the same throughout project implementation. The economic analysis at project completion keeps focusing on the Airport Infrastructure Development component and aims to quantify the value of travel time saving as main benefit. However, compare to the economic analysis in PAD, the economic analysis in ICR incorporates the following adjustments: 1) Potential beneficiaries of the project were expected to be the passengers between Shangrao and four cities, including Beijing, Guangzhou, Shenzhen and Haikou, which were the target cities of initial services of Shangrao Sanqingshan Airport. The direct flights were not designed to be available every day in a week. The travel time reduction was evaluated as the average travel time saving weighted among the days with direct flight and the days without. However, by the end of 2018, Shangrao Sanqingshan Airport have provided direct flight between Shangrao and eight cities in China. Six out of the eight flights run in a daily mode. The economic analysis takes into account of the expanded target cities and intensified frequency of flight service. 2) A significant number of train passengers were expected to shift to take flight with the completion of the project. The travel time saving of them were calculated. However, adopting air travel mode costs higher unit operation expense and increases carbon emission. These induced increases of costs were not considered in the economic analysis in PAD. In the analysis of ICR, they are deduced from the evaluation of passengers’ travel time saving benefit. 3) The average time value of passengers and the number of train passengers who will shift to use Shangrao Sanqingshan Airport are reevaluated based on the economic performance of Shangrao and connected cities from 2009 to 2018, traffic volume of Shangrao Sanqingshan Airport in 2017 and 2018 since its opening, and OECD projected economic growth during project life which ends in 2036. Compared to parameters used in PAD, the benefit per air passenger is higher than expected, and the number of shifted train passenger is higher.
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The World Bank Jiangxi Shangrao Sanqingshan Airport Project (P123729)
Main Assumptions
3. Ridership of Shangrao Sanqingshan Airport includes the travelers to and from Shangrao who would use Nanchang airport and other surrounding airports in the non-project scenario (also called existing air passengers), and part of the train travelers who would shift to use Shangrao Sanqingshan Airport with the project.
For Existing Air Passengers
4. In the non-project scenario, the total traffic volume of Nanchang airport is shared by passengers of Nanchang municipality and eight municipalities close to Nanchang including Shangrao.12 The proportion of the passengers spared to each of the nine municipalities from 2009 to 2016 is estimated based on the municipalities’ traffic demand and supply. The traffic demand is evaluated considering the municipalities’ economic scale, population, distance to Nanchang airport, and whether being capital city and has provincial level demand. The traffic supply is evaluated considering whether other airports exist nearby, their distance, and service quality being indicated by the number of service destinations and frequency of airlines. The Shangrao passengers using other four airports surrounding Shangrao13 is predicted based on the airports’ status comparing to Nanchang airport on the distance to Shangrao and service quality.
5. In the project scenario, fifty percent of Shangrao passengers who use Nanchang airport in non-project scenario will choose Shangrao Sanqingshan Airport with the completion of the project. The rest fifty percent will choose to stay with Nanchang airport since it is a trunk airport and has more destinations and more frequent services. All the Shangrao passengers who use other four surrounding airports in non-project scenario switch to Shangrao Sanqingshan Airport with the completion of the project.
For Train Passengers
6. In the non-project scenario, most passengers between Shangrao and the eight cities that Shangrao Sanqingshan Airport provides direct flight in 2017 take train as travel mode. The travel time is long and varies from four hours for Zhoushan to 15.5 hours for Harbin.
7. In the project scenario, a proportion of the train passengers will shift to Shangrao Sanqingshan Airport to save travel time. The proportion is estimated based on the traffic volume performance of Shangrao Sanqingshan Airport since its being operated, OECD’s projection of economic growth during project life, and the evaluated scale of air passengers shifted from Nanchang and other four nearby airports. However, air flight has higher operational cost and carbon emission than train. The operational cost for air flight and train is separately assumed to be 0.50 and 0.21 RMB per passenger per kilometer in 2017.14 The carbon emission for air flight and train is separately assumed to be 186g and 26.7g CO2 per passenger per kilometer. The cost of carbon emission is assumed to be 60 RMB per tonne of CO2.
12 The rest seven municipalities include Yingtan, Fuzhou, Xinyu, Yichuan, Pingxiang, Jingdezhen, and Jiujiang. 13 These airports include airports of Jingdezhen, Quzhou, Wuyishan, and Huangshan municipalities. They locate near Shangrao but are significantly smaller than Nanchang airport. 14 The value is given according to the Annual Report of China Airline and China Railway Company.
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The World Bank Jiangxi Shangrao Sanqingshan Airport Project (P123729)
The increased operational cost and carbon emission offset the time saving benefit of passengers when they switch from train to air travel.
8. The travel time saving considers both ground and in-flight or in-train trip. Saved travel time between Shangrao and each of the eight cities that have direct flight with Shangrao in 2017 is separately calculated. For air passengers shifted from Nanchang airport, additional half an hour of time saving is introduced as avoided scheduled delay since Shangrao Sanqingshan Airport will have much lower flight frequency compared with the Nanchang airport.
9. The share of total traffic volume among the eight cities from and to Shangrao is estimated reflecting the cities’ economic connection with Shangrao. Passengers’ time value is estimated based on GDP per working hour of the cities. It grows with projected economic growth rate from year 2017 to 2036. The average time value of the existing air passengers is estimated to be 235.9 RMB per hour in 2016. Following the assumption in PAD, the time value of the train passengers to be shifted to Shangrao airport is half of that of the existing air passengers. That is 118.0 RMB per hour in 2016.
Table 4.1: Summary of Traffic Assumption and Estimated Time Value of the Passengers Average travel Existing Assumed Predicted time of the travelers proportion passenger passengers Average to and shift to shift to (including time value Passengers from Shangrao Shangrao ground trip) of the Shangrao Sanqingshan Sanqingshan (hour) passengers in 2016 Airport in Airport in in 2016 2016 Non- Project (RMB/hour) (10,000) 2016 (%) (10,000) projec t Scenario Air passengers 26.2 50.0 6.6 10.5 4.7 235.9 using Nanchang airport Air passengers 3.3 100.0 3.3 9.8 4.7 235.9 using other
airports Train passengers 1215.7 0.3 14.1 17.6 4.7 118.0
10. The passenger throughput, average time value per passenger per hour and increased cost shifting passenger from train to air flight in representative years during project life is summarized in table 4.2. Table 4.2: Trend of passenger throughput and benefit with offset 2017 2021 2026 2031 2036 Annual passenger growth (%) . 104.5 103.7 103.5 103.5 Passenger throughput 146979 431364 525552 625251 742266 from Nanchang airport 76104 223356 272126 323749 384338 from other nearby airports 15521 45553 55500 66028 78386 from train 55353 162455 197927 235474 279542 Average time value (RMB per passenger per hour) Air passenger 249.4 302.1 368.1 437.9 519.9 Train passenger 124.7 151.1 184.0 219.0 259.9 Increased cost (RMB per passenger shifted from train to air flight) Travel operation cost 872 1057 1288 1532 1819 Carbon emission 28 34 42 50 59
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The World Bank Jiangxi Shangrao Sanqingshan Airport Project (P123729)
11. The service life of Shangrao Sanqingshan Airport is assumed to be 20 years from 2017 to 2036. Routine operation cost of Shangrao Sanqingshan Airport mainly comes from labor, utility and maintenance. It is estimated to be 640,000 RMB in 2012 and increases with observed and projected economic growth rate. Management cost is calculated as 0.1 percent of the building value after depreciation and 1 percent of the equipment value after depreciation. The buildings are depreciated for thirty-five years, while the equipment is depreciated for ten years. The residual value of the equipment is 5 percent of the original investment at the end of the project. The discount rate adopted in this analysis is 12%.
Summary of Benefit and Cost
12. The benefit and cost of all three components throughout project operating years is summarized in table 4.3. Table 4.3: Benefit and Cost Summary
Discount rate: 12% PV (in 2012) Construction Period (Unit: 10,000 RMB) 1 2 3 4 5 6 7 Economic Benefits 2012 2013 2014 2015 2016 2017 2018 Benefit a) Saving in passenger time costs 188,462 0 0 0 0 0 11,265 27,957 b) Incresed travel operation cost -74,763 0 0 0 0 0 -1,528 -11,437 c) Increased carbon emission -2,435 0 0 0 0 0 -50 -372 Subtotal 111,264 0 0 0 0 0 9,688 16,148 Cost a) Captital Investment 56,789 15,401 23,101 15,401 11,550 7,700 3,850 0 b) Operation 8,124 64 68 73 78 83 972 1,522 c) Management 1,900 0 0 0 0 0 302 616 d) Residual Value -1,239 0 0 0 0 0 0 0 Subtotal 65,574 15,464 23,169 15,474 11,628 7,783 5,125 2,137
Discount rate: 12% PV (in 2012) Operation Period (Unit: 10,000 RMB) 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Economic Benefits 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 Benefit a) Saving in passenger time costs 188,462 30,837 33,847 36,993 40,281 43,713 47,291 51,020 54,912 58,989 63,276 67,802 72,603 77,722 83,205 89,096 95,433 102,243 109,535 b) Incresed travel operation cost -74,763 -12,615 -13,846 -15,134 -16,479 -17,883 -19,346 -20,872 -22,464 -24,132 -25,886 -27,737 -29,701 -31,795 -34,038 -36,448 -39,041 -41,827 -44,810
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The World Bank Jiangxi Shangrao Sanqingshan Airport Project (P123729)
c) Increased carbon emission -2,435 -411 -451 -493 -537 -582 -630 -680 -732 -786 -843 -903 -967 -1,035 -1,108 -1,187 -1,271 -1,362 -1,459 Subtotal 111,264 17,811 19,549 21,367 23,266 25,248 27,315 29,468 31,716 34,071 36,547 39,161 41,934 44,891 48,058 51,461 55,121 59,054 63,266 Cost a) Captital Investment 56,789 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 b) Operation 8,124 1,598 1,674 1,750 1,826 1,903 1,979 2,056 2,132 2,210 2,289 2,370 2,452 2,537 2,625 2,716 2,811 2,910 3,012 c) Management 1,900 600 579 554 525 491 453 410 363 311 309 307 304 300 296 291 285 278 271 d) Residual Value -1,239 0 0 0 0 0 0 0 0 -616 0 0 0 0 0 0 0 0 -19,353 Subtotal 65,574 2,198 2,253 2,304 2,351 2,394 2,432 2,465 2,495 1,905 2,598 2,676 2,756 2,837 2,921 3,007 3,096 3,188 -16,070
13. Results. The net present value (NPV) of the total net economic benefits of the Project is estimated to be 448.9 million RMB and the economic internal rate of return (EIRR) of the Project is 17.84%. The benefit-cost ratio (BCR) is 1.70. Results of the analysis are presented in table X.4. Sensitivity analysis assumes a 20% increase in total cost, a 20% decrease in total benefits and both of them happen. EIRR of the whole project reduces to 15.70%, 15.23% and 13.23% respectively.
Table 4.4: Economic Evaluation Summary NPV in 2012 Scenarios (10,000 RMB) EIRR B/C Ratio Baseline 44,890.7 17.84% 1.70 Sensitivity Test 1) 20% Increase in total cost 31,775.8 15.70% 1.41 2) 20% Decrease in total benefit 22,797.7 15.23% 1.36 3) Both of above happen 9,682.8 13.23% 1.13
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The World Bank Jiangxi Shangrao Sanqingshan Airport Project (P123729)
Financial Analysis
Methodology and Conclusion at Project Appraisal
14. According to project financial design, the capital cost for the airport is borne by central government grants and the IBRD loan, and the IBRD loan will be repaid by the Shangrao Municipal Government. The financial analysis in PAD consequently focused on whether the Shangrao Airport has adequate revenue to cover its operation cost. Net income analysis was adopted, and the stream of revenue and expenditure of the airport were evaluated and compared. The airport operating income considered included aeronautical business revenues and non-aeronautical business revenues. Aeronautical business revenues include taking off and landing fees, parking fees, passenger service fees, security fees and boarding bridge fees. Non-aeronautical business revenues include grounding service fee, venue rental fee in the terminal building, agent ticketing, extension services, and other revenues. The total cost considered included depreciation fees, amortization fees, interest expenses, management fees, and operating costs. Each component of the revenue and cost was estimated referring to the number of comparable airports and applied a number of assumptions. Shangrao government was expected to repay the debt and cover the interest. But the financing capacity of the government was only broadly reviewed without detailed examination for each operation year.
Financial Analysis at Project Completion
15. Compared to the financial analysis in PAD, the financial analysis in ICR incorporates the following adjustments.
1) The capacity of Shangrao government in paying for principle investment and interest was examined for each year during project implementation. 2) The real revenue and expenditure data of the Airport in 2017 and 2018 was collected and published in its annual report. The government subsidy the airport received was higher than expected at project appraisal, and the operation expense of the airport was also significantly higher. These real operation data were adopted in this financial analysis. The revenue and expenditure for year 2019 to 2036 was projected based on the observation of these two years. 3) Government subsidy is an important income source of medium and small size airports in China. Financial analysis in PAD included subsidy when evaluating the stream of income but did not specify the category and calculation base of the subsidy. This analysis classified the government subsidy that Shangrao Airport receives into four categories: 1) loan repayment and interest coverage financed by Shangrao government according to project design; 2) the operation subsidy amounted RMB 27 million from Shangrao government according to the management institutional agreement between the government and the airport; 3) national level operation subsidy from CAAC according to “Interim Management Measures for Small and Medium Airports Subsidy of CAAC”; 4) national level loan interest subsidy from CAAC according to “Interim Management Measures for Infrastructure Construction Loan Interest Subsidy of CAAC”. The analysis separately evaluated each category according to their policy spcification. The aggregated subsidy is significantly higher than estimated in PAD.
Main Assumptions 16. The capital cost for the airport is borne by central government grants and the IBRD loan. The central government grants need not to be repaid. The IBRD loan will be repaid by the Shangrao
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The World Bank Jiangxi Shangrao Sanqingshan Airport Project (P123729)
Municipal Government using its budgetary revenue of public finance. The repayment would be arranged under the “equivalent repayment of capital” principle.
17. Shangrao Government also takes responsibility of paying for the interest of the IBRD loan. But the loan interest will be firstly subsidized by General Administration of Civil Aviation (CAAC) according to its “Interim Management Measures for Infrastructure Construction Loan Interest Subsidy of CAAC”. According to the policy, CAAC subsidized 80 percent of the loan interest for five years since project construction. The rest of the interest due each year is considered as responsibility of Shangrao Government.
18. Shangrao Airport is expected to cover its operation cost from operation revenue. The revenue of the airport includes operating income and non-operating income. The operating income includes the aeronautical business revenues, namely, taking off and landing fees, parking fees, passenger service fees, security fees and boarding bridge fees, and the non-aeronautical business revenues, namely, grounding service fee, venue rental fee in the terminal building, agent ticketing, extension services, and other revenues. The operating income of the airport for year 2017 and 2018 is drawn from the annual report of the airport management company. The revenue and expenditure for year 2019 to 2036 was projected based on the observation of these two years and took into consideration of the estimated growth of ridership of Shangrao Airport as evaluated in the economic analysis.
19. The key component of the non-operating income is government subsidy. It is composed of local subsidy and national subsidy. The local subsidy refers to the operation subsidy amounted 27 million RMB committed by Shangrao government according to the management institutional agreement between the government and the airport. This subsidy has been fully disbursed by Shangrao government in 2017 and 2018. The national subsidy refers to the operation subsidy from General Administration of Civil Aviation (CAAC) according to “Interim Management Measures for Small and Medium Airports Subsidy of CAAC”. The subsidy for year 2017 and 2018 has been received and recorded. The subsidy for year 2019 to 2036 is evaluated according to the CAAC published subsidy standard. For Shangrao airport that is a small sized airport in Jiangxi as a central province, the subsidy standard is a fixed subsidy amounted RMB 4.95 million each year plus a variable subsidy amounted 7,050 RMB per ridership. The subsidy is applied with an increase after each five year according to OECD’s projection of economic growth in China.
20. The total cost of the airport includes capital investment and the expense during project operation. Three major components as cash outflow of the project include interest expense, operation cost, and management fees. Interest expense is calculated for the unpaid capital investment in each year under the equivalent repayment principle. The operation cost and management fees are calculated using the same methodology in economic analysis.
Financial Analysis and FIRR
21. The revenue and expenditure stream of the airport throughout project operating years are summarized in Table 4.5. FIRR is estimated to be 8.54%. NPV of the net income is estimated to be RMB 17.4 million.
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The World Bank Jiangxi Shangrao Sanqingshan Airport Project (P123729)
Table 4.5: Project Revenue and Expenditure Summary
Construction Period (Unit: 10,000 RMB) PV (in 2012) 1 2 3 4 5 6 7 2012 2013 2014 2015 2016 2017 2018 Revenue a) Operating Income 19,210 0 0 0 0 0 654 1,643 b) Operating Subsidy from 1,562 0 0 0 0 0 700 944 Shangrao Gov. c) Airport operating subsidy 6,047 0 0 0 0 0 86 692 from CAAC d) Payment of loan and interest 13,028 0 0 0 0 0 1,650 1,650 from Shangrao Gov. e) Interest subsidy from CAAC 1,850 0 0 0 0 427 787 787 Subtotal 41,696 0 0 0 0 427 3,877 5,716 Expenditure a) Capital investment from 26,762 6,600 9,900 6,600 4,950 3,300 1,650 0 IBRD b) Interest due 0 166 414 580 704 787 787 c) Operation 13,308 64 68 73 78 83 972 1522 d) Management 2,890 0 0 0 0 0 302 616 e) Residual Value -3,006 0 0 0 0 0 0 0 Subtotal 39,954 6,664 9,968 6,673 5,028 3,383 2,924 2,137
Operation Period (Unit: 10,000 RMB) PV (in 2012) 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 Revenue a) Operating Income 19,210 1,812 1,989 2,174 2,368 2,569 2,780 2,999 3,227 3,467 3,719 3,985 4,267 4,568 4,890 5,237 5,609 6,009 6,438 b) Operating Subsidy from Shangrao Gov. 1,562 1,056 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 c) Airport operating subsidy from CAAC 6,047 759 773 786 799 812 1,022 1,039 987 1,003 1,020 1,241 1,262 1,283 1,304 1,327 1,601 1,630 1,660 d) Payment of loan and interest from Shangrao Gov. 13,028 1,799 1,791 2,313 2,271 2,230 2,188 2,147 2,106 2,064 2,023 1,981 1,940 1,899 1,857 1,816 1,774 1,733 1,691 e) Interest subsidy from CAAC 1,850 596 563 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Subtotal 41,696 6,023 5,116 5,273 5,438 5,611 5,990 6,185 6,320 6,535 6,762 7,208 7,469 7,749 8,052 8,379 8,985 9,372 9,789 Expenditure a) Capital investment from IBRD 26,762 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 b) Interest due 746 704 663 621 580 538 497 456 414 373 331 290 249 207 166 124 83 41
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The World Bank Jiangxi Shangrao Sanqingshan Airport Project (P123729)
c) Operation 13,308 1,598 1,674 1,750 1,826 1,903 1,979 2,056 2,132 2,210 2,289 2,370 2,452 2,537 2,625 2,716 2,811 2,910 3,012 d) Management 2,890 600 579 554 525 491 453 410 363 311 309 307 304 300 296 291 285 278 271 e) Residual Value -3,006 0 0 0 0 0 0 0 0 -616 0 0 0 0 0 0 0 0 -19,353 Subtotal 39,954 2,198 2,253 2,304 2,351 2,394 2,432 2,465 2,495 1,905 2,598 2,676 2,756 2,837 2,921 3,007 3,096 3,188 -16,070
22. Financing capacity of the government. CAAC allocates operating subsidy and interest subsidy to Shangrao airport during its operation. The fund is financed by central level fiscal revenue from the Civil Aviation Development Fund. Central government delivers the subsidy at a yearly base to 168 medium and small sized airports including Shangrao airport throughout China. The funding source of the subsidy is highly guaranteed. Shangrao government takes responsibility for payment of the principle investment and interest. The government also committed RMB 27 million of operating subsidy to the airport which had been delivered in 2017 and 2018. The subsidy that needs to be disbursed by Shangrao government in each year is calculated and compared to projected budgetary revenue of Shangrao government in table 4.6. Table 4.6: Comparison of financing responsibility and capacity of Shangrao Government Construction Period (Unit: 10,000 RMB) 1 2 3 4 5 6 7 2012 2013 2014 2015 2016 2017 2018 Total payment due a) Repayment to capital investment 0 0 0 0 0 1,650 1,650 b) Total loan interest 0 166 414 580 704 787 787 c) Operating subsidy 0 0 0 0 0 700 944 Financing sources of payment for interest a) Pre-reserved budgerary fund by the project for interest 0 166 414 580 277 0 0 b) Interest subsidy from CAAC 0 0 0 0 427 787 787 c) Rest interest needs to be covered by Shangrao Gov. 0 0 0 0 0 0 0 Total payment needed from Shangrao Gov. 0 0 0 0 0 2,350 2,594 Budgetary revenue of public finance in Shangrao 1,341,619 1,644,320 1,942,099 2,223,687 2,275,000 2,139,784 2,228,300 Share of due payment to to budgetary revenue of 0.000 0.000 0.000 0.000 0.000 0.110 0.116 Shangrao (%)
Operation Period (Unit: 10,000 RMB) 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 Total payment due a) Repayment to capital investment 1,65 1,65 1,65 1,65 1,65 1,65 1,65 1,65 1,65 1,65 1,65 1,65 1,65 1,65 1,65 1,65 1,65 1,65
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The World Bank Jiangxi Shangrao Sanqingshan Airport Project (P123729)
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 b) Total loan interest 746 704 663 621 580 538 497 456 414 373 331 290 249 207 166 124 83 41 1,05 c) Operating subsidy 6 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Financing sources of payment for interest a) Pre-reserved budgetary fund by the project for interest 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 b) Interest subsidy from CAAC 596 563 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 c) Rest interest needs to be covered by Shangrao Gov. 149 141 663 621 580 538 497 456 414 373 331 290 249 207 166 124 83 41 Total payment needed from 2,85 1,79 2,31 2,27 2,23 2,18 2,14 2,10 2,06 2,02 1,98 1,94 1,89 1,85 1,81 1,77 1,73 1,69 Shangrao Gov. 5 1 3 1 0 8 7 6 4 3 1 0 9 7 6 4 3 1 2,34 2,45 2,56 2,67 2,78 2,89 3,01 3,12 3,23 3,35 3,47 3,59 3,71 3,84 3,97 4,11 4,26 4,41 Budgetary revenue of public 0,24 1,79 3,22 4,70 6,32 8,10 0,18 2,90 6,76 2,30 0,12 0,88 5,32 4,13 7,89 6,93 1,29 0,64 finance in Shangrao 1 0 3 8 0 1 3 2 5 7 2 7 3 6 5 6 2 2 Share of due payment to to 0.12 0.07 0.09 0.08 0.08 0.07 0.07 0.06 0.06 0.06 0.05 0.05 0.05 0.04 0.04 0.04 0.04 0.03 budgetary revenue of Shangrao 2 3 0 5 0 6 1 7 4 0 7 4 1 8 6 3 1 8 (%)
23. Financing capacity of the airport. According to project design, the airport is expected to generate enough revenue to cover operational costs. The cash inflow and outflow of the airport throughout operation years is examined and summarized in the following table. Cash inflow of the airport exceeds the cash outflow in all the operation years. The airport is capable to cover its operational expense. Table 4.7: Stream of cash flow of the airport during operation
Operation Period (Unit: 10,000 RMB) 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 Cash inflow 1,440 3,279 3,628 2,762 2,960 3,167 3,382 3,802 4,037 4,215 4,471 4,739 5,226 5,529 5,851 6,195 6,563 7,210 7,639 8,098 a) Operating Income 654 1,643 1,812 1,989 2,174 2,368 2,569 2,780 2,999 3,227 3,467 3,719 3,985 4,267 4,568 4,890 5,237 5,609 6,009 6,438 b) Operating Subsidy from Shangrao Gov. 700 944 1,056 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 c) Airport operating subsidy from CAAC 86 692 759 773 786 799 812 1,022 1,039 987 1,003 1,020 1,241 1,262 1,283 1,304 1,327 1,601 1,630 1,660 Cash outflow 1,274 2,137 2,198 2,253 2,304 2,351 2,394 2,432 2,465 2,495 1,905 2,598 2,676 2,756 2,837 2,921 3,007 3,096 3,188 -16,070 a) Operation 972 1,522 1,598 1,674 1,750 1,826 1,903 1,979 2,056 2,132 2,210 2,289 2,370 2,452 2,537 2,625 2,716 2,811 2,910 3,012 b) Management 302 616 600 579 554 525 491 453 410 363 311 309 307 304 300 296 291 285 278 271 c) Residual Value 0 0 0 0 0 0 0 0 0 0 -616 0 0 0 0 0 0 0 0 -19,353 Net Cash Inflow 166 1,142 1,430 509 656 816 988 1,370 1,572 1,719 2,565 2,141 2,550 2,773 3,014 3,274 3,556 4,114 4,451 24,167
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The World Bank Jiangxi Shangrao Sanqingshan Airport Project (P123729)
ANNEX 5. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS
Shangrao Sanqingshan Airport is the first aviation project in China to use the World Bank loan, and it is also the first independent World Bank loan project undertaken by Shangrao City. From the initial connection with World Bank team in December 2010 till the project negotiation and implementation, the Bank successfully had a full eight-year cooperation with the Shangrao Sanqingshan Airport Project until December 31, 2018. From the initial unfamiliarity on the World Bank loan project and the insufficient capability of the, along with the project progress, the PMO gradually knew more about the World Bank and truly felt the benefits brought by the World Bank team:
Firstly, effectively solved the construction fund needs of project. Compared with domestic commercial banks, World Bank loan interest rate was relatively lower, and loan terms was longer, which reduced the loan interest cost of airport projects and effectively alleviated the pressure of construction funds shortage.
Secondly, the innovative concept promoted the high-quality construction of the project. The Bank has advanced project operation concepts and internationally accepted management methods, focusing on market survey, public participation, environmental assessment, social assessment, financial processes and procurement methods, which brought four main aspects of innovation to the project:
a. Urban transportation integration. The World Bank attaches great importance to the integration of urban road network, transportation hub, strategic service network and airport service facilities. The ICT put forward the advanced concept of establishing a comprehensive transportation system such as setting up a remote boarding counter at the high-speed railway station. b. Environmentally friendly. The Bank pays attention to environmental protection, pays attention to livelihood, and attaches importance to environmental safeguard impacts such as energy conservation and emission reduction, noise reduction, and solid waste discharge. It also pays attention to social issues and ensures that the production and living standards of affected households by land acquisition and resettlement are not lowered. It also focuses on public participation, and carred out public surveys and other activities in the process of environmental impact assessment and social assessment, which widely collected opinions of affected people, and formulated the Environmental Impact Implementation Framework and Resettlement Action Plan in light of the actual situation. The project strictly followed the implementation of relevant social security documents at all stages of design, construction and operation, and no mass petitions have occurred.
Meanwhile, combined with the concept of green airport proposed by the World Bank at the beginning of the project, Shangrao Sanqingshan Airport continued complying with the guideline of “green airport” concept in the overall planning, design, construction and operation, and advocated the “four innovations” of the World Bank -- “resource conservation, environmental friendliness, scientific and technological innovation, and humanized service” to create a safe, efficient, economical, efficient and sustainable airport. The airport finally received the green certification of EDGE, providing a successful research case for the green airport standard of the civil aviation industry in China. c. Economic sustainability. The Bank paid attention to the forecasting of passenger volume and sustainable planning, and provided many professional opinions for the planning and design of the project;
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The World Bank Jiangxi Shangrao Sanqingshan Airport Project (P123729)
d. Financial sustainability. According to the relevant requirements of the World Bank Loan Agreement, during the implementation of the project, the World Bank entrusted the National Audit Office to conduct the financial revenue, expenditure and performance auditing of the project in the previous year before June 30 of each year. The Provincial Audit Office conducted specific auditing of the Shangrao Sanqingshan Airport Project each year. Through regular audit work, the project's financial work was legally legalized, and six annual audits were completed after the closing of the accounts, all of which were unqualified.
Thirdly, improve project management. During the preparation and implementation of the project, the experts of the World Bank team actively provided guidance to the project and PMO, and provided relevant training in finance management, procurement, contract management, etc., to promote the improvement of the capacity of the PMO. Through the adoption of the Bank's sound financial processes and procurement methods, many high-quality construction and supply contractors were identified. In addition, because of the high creditworthiness of the World Bank, many well-known companies were able to actively participate, which increased the procurement competitiveness. At the same time, the Shangrao Sanqingshan Airport Project used the World Bank loan to select and hired an excellent project management consulting team to provide professional technical consulting services for the project construction, which effectively improved the project implementation progress and standardization.
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The World Bank Jiangxi Shangrao Sanqingshan Airport Project (P123729)
ANNEX 6. SUPPORTING DOCUMENTS (IF ANY)
1. Project Appraisal Document 2. Aide Memoires and ISRs after implementation of support missions 3. Management letters after implementation of support missions 4. China Country Partnership Strategy FY2013-16 5. Draft China Country Partnership Framework FY2020-25 6. China’s 13th FYP of Civil Aviation Development 7. Environmental and Social Management Framework 8. Government project completion report 9. Semi-annual Progress Reports from PMO 10. 2017 & 2018 Financial Reports of Shangrao Airport Operation Company 11. 2017 & 2018 Operation Reports of Shangrao Airport Operation Company
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The World Bank Jiangxi Shangrao Sanqingshan Airport Project (P123729)
ANNEX 7. PICTURES OF THE PROJECT
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