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Document of The World Bank Public Disclosure Authorized Report No. 15358-CHA STAFF APPRAISAL REPORT CHINA Public Disclosure Authorized SECOND BEHAN PROVINCIAL HIGHWAYPROJECT MAY 1, 1996 Public Disclosure Authorized Infrastructure Division Public Disclosure Authorized China and Mongolia Department East Asia and Pacific Regional Office CURRENCY EQUIVALENTS (As of January 1, 1996) Currency Name = Renminbi Currency Unit Yuan (Y) I Yuan = 100 fen $1.00 = Y 8.30 Y .00 = $0.12 FISCAL YEAR January I - December 31 WEIGHTS AND MEASURES Metric System ABBREVIATIONS AND ACRONYMS 7FYP - Seventh Five-Year Plan 8FYP - Eighth Five-Year Plan 9FYP - Ninth Five-Year Plan AXE - Anyang-Xinxiang Expressway BOT - Build-operate-transfer E&M - Electrical, electronic and mechanical EA - Environmental Assessment EAP - Environmental Action Plan EIA - Environmental Impact Assessment EIRR - Economic Internal Rate of Return GNP - Gross national product GOVAI - Gross output value of agriculture and industry HPCD - Henan Provincial Communications Department HPHAB - fIenan Provincial Highway Administration Bureau HPHGHCA- Henan Provincial I-ligh-GradeHighway Construction Authority HPHSRI - Henan Provincial Highway Scientific Research Institute HPPSDI - Henan Provincial Planning, Survey and Design Institute HPTC - Henan Provincial Transport College HPTVS - Henan Provincial Transport Vocational School HRI - Highway Research Institute HSDI - Highway Survey and Design Institute ICB - International competitive bidding [iS - Intensive Institutional Strengthening IST - Institutional Strengthening and Training ITC - International Tendering Company JST - Joint Supervision Team LA&R - Land Acquisition and Resettlement LAB - Levying Administration Bureau LGTPA - Leading Group for Transportation for Poverty Alleviation LSE - Luoyang-Sanmenxia Expressway MAAP - Microcomputer Accident Analysis Package MOC - Ministry of Communications MOF - Ministry of Finance mte - Medium truck equivalent mvpd - Motor vehicles per day NTHS - National Trunk Highway System O-D - Origin-Destination pcu - Passenger car unit PSB - Public Security Bureau PTS - Provincial Traffic School PTTS - Provincial Traffic Technical School RAP - Resettlement Action Plan RIPA - Roads Improvement for Poverty Alleviation RMF - Road maintenance fee SAA - State Audit Administration SOE - Statement of Expenditures SPC - State Planning Commission STC - Staff Training Center TCU - Technical Coordination Unit ton-km - Ton-kilometer TRL - Transport Research Laboratory VS - Vocational School WBFPO - World Bank-Financed Projects Office ZLE - Zhengzhou-Luoyang Expressway CHINA SECOND HENAN PROVINCIAL HIGHWAY PROJECT LOAN AND PROJECT SUMMARY Borrower: People's Republic of China Implementing Agency: Henan Provincial Communications Department Beneficiaries: Henan Provincial Government Poverty: Not a poverty-focused operation, but one project component provides rural roads for poor counties. Amount: $210 million Terms: 20 years, including 5 years of grace, at the standard interest rate for LIBOR-based US dollar single currency loans. Commitment Fee: 0.75 percent on undisbursed loan balances, beginning 60 days after signing, less any waiver. Financing Plan: See para. 3.52. Economic Rate of Return: 19.2 percent for the project overall 19.0 percent for the Luoyang-Sanmenxia Expressway 13.4 percent for the Yangjia-Baijiazhai Connection 19.6 percent for the first package of the Road Improvements Program for Poverty Alleviation (RIPA) Project ID Number: CN-PE-40513 I CONTENTS 1. TRANSPORT BOTTLENECKS AND REFORMS .............................................. 1 A. Background ................................................ 1 B. Traffic................................................. C. Transport Reforms................................................ 2 D. The Highway Subsector ................................................ 2 E. Bank Group Participation................................................ 5 F. Lessons From Previous Bank Operations................................................ 6 2. HENAN PROVINCIAL TRANSPORT SECTOR ............................................... 8 A. Economic Background................................................ 8 B. The Transport System ................................................ 8 C. Traffic............................................... 10 D. The Trucking Industry ................................................ 11 E. Highway Safety ............................................... 12 F. Highway Administration ............................................... 13 G. Planning, Budgeting and Financing............................................... 14 H. Engineering, Construction and Maintenance ................................................ 15 I. Staff Training............................................... 17 J. Highway Development............................................... 17 3. THE PROJECT ............................................... 19 A. Project Formulation and Preparation ................................................ 19 B. Project Objectives and Rationale for Bank Involvement.................................. 20 C. Project Scope............................................... 21 D. Environmental Assessment ............................................... 32 E. Land Acquisition and Resettlement Issues............................................... 33 F. Cost Estimates ................................................ 35 G. Financing ............................................... 36 This report is based on the findings of an appraisal mission that visited China during November 1995, comprising Messrs./Mmes. Hatim Hajj (Task Manager); Robin Carruthers (Economist); Claude Salem (Institutional Strengthening and Training); Katsunori Suzuki (Environment); Maninder Gill (Resettlement); and Setty V. Pendakur (Consultant, Rural Transport). Messrs. Richard Muskaug and Adriaan Schelling (Consultants, Road Safety Specialists) helped prepare the safety component of the project. Ms. Xin Chen and Ying Du of the Bank's Resident Mission in China also contributed to the preparation of the project. Messrs./Ms. C. Hoban (Sector and Engineering); S. Thomas (Transport Economics) E. Schaengold (Poverty and Resettlement); M. Cohen (Institutional Strengthening and Training); and S. Lundebye (Highway Safety) were the peer reviewers. Mr. Richard Scurfield is the Division Chief and Mr. Nicholas C. Hope is the Department Director. - ii- H. Implementation ............................................... 38 I. Procurement ............................................... 40 J. Disbursements ............................................... 44 K. Auditing ............................................... 46 L. Project Supervision, Reporting and Monitoring ............................................... 46 4. ECONOMIC EVALUATION............................................... 48 A. Main Benefits And Beneficiaries............................................... 48 B. Luoyang-Sanmenxia Expressway ............................................... 49 C. Guanyintang Interchange And Linking Road ............................................... 55 D. Yangjia-Baijiazhai Connection (YBC) ............................................... 55 E. Evaluation of RIPA Component............................................... 56 F. Evaluation of Risks............................................... 57 5. AGREEMENTS REACHED AND RECOMMENDATION................................... 61 TABLES Table 1.1: Traffic Turnover by Mode, 1980-93.64 Table 1.2: Road Accident Risks in Various Countries, 1993 .65 Table 1.3: China: Bank Group-Financed Transport Projects .66 Table 2.1: Henan Road Network, 1994.68 Table 2.2: Henan: Vehicle Fleet, 1980, 1985-94 .69 Table 2.3a: Henan: Freight Traffic, 1980-94.70 Table 2.3b: Henan: Passenger Traffic, 1980-94.70 Table 2.4: Freight Transported by Road (1985-94) .71 Table 2.5: Traffic Accidents in Henan Province(1988-94).71 Table 2.6: Henan: Highway Revenues and Expenditures (1991-2000) .72 Table 2.7: Henan: Fuel Prices .73 Table 2.8: High-Grade Highways to be Constructed During 1995-2000 .74 Table 3.1: Proposed Improvements to Linking Roads to Luoyang-Sanmenxia Expressway .75 Table 3.2: Institutional Strengthening And Training Component .76 Table 3.3: Summary of Training Program.77 Table 3.4: Project Cost Summary .79 Table 3.5: Estimated Disbursement Schedule.81 Table 4.1: Growth of Traffic on Existing Luoyang-Sanmenxia Highway .82 Table 4.2: Low Traffic Projection.82 Table 4.3: Financial and Economic Unit Costs.83 Table 4.4: Economic Evaluation-Base Case and Sensitivity Test Evaluation Results83 Table 4.5: Sensitivity of Evaluation Results (EIRR %) to Cost and Benefit Variation.84 Table 4.6: Financial Evaluation .84 Table 4.7: Economic Evaluation of the First Package of RIPA.85 - iii - ANNEXES Annex 1: Roads Improvement for Poverty Alleviation (RIPA)..................................... 87 Annex 2: Terms of Reference for Study of Organization, Management and Maintenance of Toll Highways ................................................ 95 Annex 3: Road Safety Improvement................................................ 107 Annex 4: Terms of Reference for Study of Factors Contributing to Highway Traffic Accidents ................................................ 116 Annex 5: Environmental Assessment and Action Plan Summary ............................... 123 Annex 6: Land Acquisition and Resettlement Issues ................................................ 152 Annex 7: Implementation Program...............................................
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