PAM: PRC: Integrated Development of Key Townships in Central Liaoning

Project Administration Manual

Project Number: 44021 August 2012

People’s Republic of China: Integrated Development of Key Townships in Central Liaoning

Contents ABBREVIATIONS 5 WEIGHTS AND MEASURES 5 I. PROJECT DESCRIPTION 1 A. Rationale 1 B. Impact and Outcome 4 C. Outputs 4 II. IMPLEMENTATION PLANS 1 A. Project Readiness Activities 1 B. Overall Project Implementation Plan 2 III. PROJECT MANAGEMENT ARRANGEMENTS 1 A. Project Implementation Organizations – Roles and Responsibilities 1 B. Key Persons Involved in Implementation 2 C. Project Organization Structure 4 IV. COSTS AND FINANCING 1 A. Summary Cost Estimates and Financing Plan 1 B. Detailed Cost Estimates by Expenditure Category 3 C. Detailed Cost Estimate by Financier 4 D. Detailed Cost Estimates by Outputs/Components 6 E. Detailed Cost Estimates by Years 7 F. Allocation and Withdrawal of Proceeds 8 G. Contract and Disbursement S-curve 10 H. Fund Flow Diagram 11 V. FINANCIAL MANAGEMENT 1 A. Financial Management Assessment 1 B. Disbursement 1 C. Accounting and Financial Reporting 3 D. Auditing 3 VI. PROCUREMENT AND CONSULTING SERVICES 1 A. Advance Contracting and Retroactive Financing 1 B. Procurement of Goods, Works and Consulting Services 2 C. Procurement Plan 2 D. Consultant's Terms of Reference 8 VII. SAFEGUARDS 1 A. Environment 1 B. Land Acquisition and Resettlement 2 C. Indigenous Peoples 11 VIII. GENDER AND SOCIAL DIMENSIONS 1 A. Social and Poverty Benefits 1 B. Social Development Action Plan 1 C. Gender Benefits 6 D. Gender Action Plan 6 IX. PERFORMANCE MONITORING, EVALUATION, REPORTING AND COMMUNICATION 1 A. Project Design and Monitoring Framework 1 B. Monitoring 5 C. Evaluation 13 D. Reporting 13 E. Stakeholder Communication Strategy 14 X. ANTICORRUPTION POLICY 1 XI. ACCOUNTABILITY MECHANISM 1 XII. RECORD OF PAM CHANGES 1

Attachment 1: Environmental Management Plan

Project Administration Manual Purpose and Process

The project administration manual (PAM) describes the essential administrative and management requirements to implement the project on time, within budget, and in accordance with Government and Asian Development Bank (ADB) policies and procedures. The PAM should include references to all available templates and instructions either through linkages to relevant URLs or directly incorporated in the PAM.

Liaoning Provincial Government (LPG) through the Provincial Project Coordination Group (PPCG) and Liaoning Project Management Office (PMO) - Liaoning Urban Construction and Renewal Project Office (LUCRPO), the project executing agency, Shenyang Shenbei Water Works Co. Ltd. (SBWW), Fuxin City Heating Power Corporation (FHC), Xinmin City Urban Rural Construction and Rehabilitation Project Management Office (XMPMO), Shenbei New District International Financial Institutions Loaned Project Management Office (SBPMO), Heishan County Municipal Construction Management Department (HSCMD), Beichen Road Construction Project Management Office (BCPMO), Huanren County Hunjiang Street, Zhongxin Street and Street Alleys Rehabilitation Project Headquarters (HRPH), and Liaoning Yaodu Investment (Group) Co. Ltd. (YAODU), the implementing agencies, are wholly responsible for the implementation of the ADB-financed project, as agreed jointly between the borrower and ADB, and in accordance with Government and ADB’s policies and procedures. ADB staff is responsible to support implementation including compliance by LPG, PPCG, LPMO, SBWW, FHC, XMPMO, SBPMO, HSCMD, BCPMO, HRPH, and YAODU with their obligations and responsibilities for project implementation in accordance with ADB’s policies and procedures.

At Loan Negotiations the borrower and ADB shall agree to the PAM and ensure consistency with the Loan Agreement. Such agreement shall be reflected in the minutes of the Loan Negotiations. In the event of any discrepancy or contradiction between the PAM and the Loan Agreement, the provisions of the Loan Agreement shall prevail.

After ADB Board approval of the project's report and recommendation of the President (RRP) changes in implementation arrangements are subject to agreement and approval pursuant to relevant Government and ADB administrative procedures (including the Project Administration Instructions) and upon such approval they will be subsequently incorporated in the PAM.

Abbreviations

ADB = Asian Development Bank CNY = Chinese Yuan CQS = consultant qualification selection DMF = design and monitoring framework EIA = environmental impact assessment EMP = environmental management plan EPB = Environment Protection Bureau FMA = financial management assessment FHC = Fuxin City Heating Power Corporation GAP = gender action plan GRM = grievance redress mechanism ICB = international competitive bidding LA&R = land acquisition and resettlement LIBOR = London interbank offered rate LPG = Liaoning Provincial Government LPFD = Liaoning Provincial Finance Department LPMO = Liaoning Project Management Office LRB = Land Resource Bureau NCB = national competitive bidding NMT = non-motorized traffic O&M = operation and maintenance PAM = project administration manual PCA = procurement capacity assessment PIU = project implementation unit PMO = project management office PPCU = project public complaint unit PPMS = project performance management system PRC = People’s Republic of China QBS = quality based selection QCBS = quality- and cost based selection RP = resettlement plan RRP = report and recommendation of the President to the Board SBWW = Shenyang Shenbei Water Works Co. Ltd. SDAP = Social Development Action Plan SOE = statement of expenditure SPS = Safeguard Policy Statement WWTP = wastewater treatment plant

Weights and Measures km = kilometer m2 = square meter m3 = cubic meter mu = Chinese land measuring unit (1 hectare = 15 mu)

o 120 o 00'E 124 00'E

INTEGRATED DEVELOPMENT OF KEY TOWNSHIPS IN CENTRAL LIAONING IN THE PEOPLE'S REPUBLIC OF CHINA

0 20 40 60 80

Kilometers

43 o 00'N 43 o 00'N

Xifeng

FUXIN Tieling TIELING SHENYANG Fuxin Shenbei Xinmin Nanzamu Fushun Beizhen Chaoyang SHENYANG JINZHOU Heishan Waitoushan CHAOYANG FUSHUN Lingyuan Goubangzi Liaozhong Liaoyang Kazuo Linghai Huanren Panshan LIAOYANG Benxi Jinzhou BENXI PANJIN Panjin Anshan Nanfen Jianchang Haicheng HULUDAO Huludao DANDONG Kuandian Yingkou ANSHAN Suizhong Gaizhou Fengcheng YINGKOU Dandong Donggang

Zhuanghe DALIAN Jinzhou

o o 39 00'N Dalian 39 00'N

Phase 2 City or Township (Integrated Development of Key Townships in Central Liaoning) Phase 1 City or Township (Loan 2550-PRC) Provincial Capital City/Town

This map was produced by the cartography unit of the Asian Development Bank. National Road The boundaries, colors, denominations, and any other information shown on this District Boundary map do not imply, on the part of the Asian Development Bank, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries, Provincial Boundary colors, denominations, or information. Boundaries are not necessarily authoritative.

120 o 00'E 124 o 00'E

12-2687 HR I. PROJECT DESCRIPTION

Borrower People’s Republic of China Classification Sector: Multisector Subsectors: Other municipal services, energy utility services, and urban transport

Themes: Economic growth; environmental sustainability; and private sector development Subthemes: Promoting economic efficiency and enabling business environment, urban environmental improvement, and private sector investment

Gender mainstreaming: Effective gender mainstreaming

Climate change impact: mitigation (low)

Targeting classification: General intervention

Location impact: Urban (high)

Risk categorization Complex Environment Assessment A Involuntary Resettlement A Indigenous People Assessment C Implementation Period October 2012 – December 2017 Estimated Completion Date 31 December 2017 (loan closing date = 30 June 2018) Executing Agency Liaoning Provincial Government (LPG) through Liaoning project management office (PMO)a Implementing Agencies 1. Shenyang Shenbei Water Works Co. Ltd. (SBWW) 2. Fuxin City Heating Power Corporation (FHC) 3. Xinmin City Urban Rural Construction and Rehabilitation PMO 4. Shenbei New District International Financial Institutions Loaned PMO 5. Heishan County Municipal Construction Management Department 6. Beichen Road Construction PMO 7. Huanren County Hunjiang Street, Zhongxin Street and Street Alleys Rehabilitation Project Headquarters 8. Liaoning Yaodu Investment (Group) Co. Ltd. a The Liaoning Urban Construction and Renewal Project Office is the official name of the Liaoning PMO.

A. Rationale

1. Located in northeast PRC, Liaoning Province has seen economic growth lag that of other provinces since 1980 due to resource depletion and a painful transition from a state- dominated economy. Moreover, rapid urbanization has left many of Liaoning’s cities and towns with poor infrastructure, severe pollution, significant poverty, and rural migrants with mismatched-employment skills. Central Liaoning's current population of 23.6 million is now 65% urban, and planners expect 85% of the population to be urban by 2050, largely through rural– urban migration.1 Consequently, in the coming decades, demand from millions of rural migrants for urban infrastructure, municipal services, and employment must be satisfied. Recent announcements on hukou reform are expected to intensify this demand.2

2. The Government of Liaoning Province recognizes that urbanization is pressuring Shenyang, the provincial capital, which has a population of 7.4 million. At the same time, it aims to reap the benefits of concentrated urbanization, so it is facilitating the urbanization of key townships by strengthening their infrastructure to support higher populations. Reflecting earlier ADB advice,3 Liaoning urbanization strategies4 support the Shenyang Economic Zone Integration Strategy.5 The project’s rationale is to support strategic urbanization in central Liaoning Province through targeted wastewater management, district heating, and urban transport development in key townships. The participating townships were selected through a competitive process eliciting proposals from eligible townships. Considerations included consistency with planning objectives and a balanced representation of the integrated development concept, as Shenbei and Waitoushan are in the core Shenyang metropolitan area; Fuxin, Gaizhou, and Xinmin are located in intercity connection belts outside the core metropolitan area; and Heishan and Huanren are included to demonstrate rural links with more- concentrated urban areas.

3. Improving wastewater management is a priority for Liaoning Province as water resources are scarce at merely 800 cubic meters (m3) per capita, one-third of the national average. Poor wastewater treatment facilities in Shenbei new district degrade water quality in the Shenbei branch of the Liao River and impede development; the proposed project will construct wastewater management systems to support urban development. Likewise, poor district heating services affect living quality. By the end of 2010, centralized district heating served 19 million square meters (m2) of the Fuxin urban area, with the rest serviced by small boilers and heating stoves in individual households. During winter, pollutants from these coal- fired boilers and stoves pollute the air. The urban poor and especially women suffer disproportionately from poor service quality, limited heating coverage, and higher exposure to pollutants. With project support, the Fuxin municipal government will commission new distribution capacity and close 15 coal-fired boilers. An existing combined heat-and-power plant

1 Liaoning Provincial Government. 2009. Liaoning Yearbook 2009–2010. Shenyang. 2 PRC citizens are assigned a hukou registration and location, either a specific rural township and village or a specific urban district. The hukou location specifies where one is entitled to receive economic and social benefits. When rural people migrate to cities, they have no social benefits unless their hukou status is changed, which is very difficult. Some cities now grant temporary rights for a certain period. In February 2012, the State Council released a circular on hukou reform stating that migrant workers and their families should be eligible to apply for permanent residence permits or urban hukou in all county- and prefectural-level cities (as are most of the townships participating in the project), while adding that new rules pertaining to hukou conversion should not require that people relinquish their claims to rural land. 3 ADB. 2004. Technical Assistance to the People’s Republic of China for the Town-Based Urbanization Strategy Study. Manila (TA 4335-PRC). 4 Liaoning Provincial Government. 2007. Central Liaoning Cluster Development Strategy. Shenyang. 5 Liaoning Provincial Government. 2007. Shenyang Economic Zone Integration Strategy. Shenyang.

will provide hot water to the system. The development will improve energy efficiency and service quality, expand district heating coverage, reduce coal use by 21,500 tons annually, reduce greenhouse gas emissions, and improve air quality.

4. Central Liaoning’s urban population is growing rapidly. However, urban road development is slow, facilities for public transport and nonmotorized transport (NMT) are inadequate, and traffic management and safety are poor. The project will facilitate environmentally sustainable urban infrastructure development and improve urban road links and related facilities by rehabilitating and upgrading urban roads and alleys, constructing urban roads and bridges, improving storm-water pipelines and sewer coverage, installing energy- conserving lighting, and expanding public green areas. The project will improve road safety and public transport services by piloting a public transport program and implementing road safety and traffic management initiatives. Finally, in recent years, local governments in Liaoning have, like others in the PRC, relied on debt issuance and sales of land-use rights to finance infrastructure and service expansion. But with increased local government liabilities and emerging downside risks regarding sales of land-use rights, there is pressure to make local government finances more sustainable. The project will help examine financing options and measures for strengthening creditworthiness by providing financial management support and training, as well as programs to enhance leadership.

5. Strategic fit. The project will support the Twelfth Five-Year Plan, 2011–2015, which sponsors balanced urbanization and the development of cities that are livable, resource- conserving, and inclusive, emphasizing the fostering of urban clusters. The project is consistent with Liaoning urbanization strategies (see footnotes 6 and 7) and aligns with ADB’s country partnership strategy 2011–2015 for the PRC.6 It is consistent with ADB’s urban sector strategy and its Urban Operational Plan, which fosters competitive, green, and inclusive cities.7 It supports ADB’s Climate Change Program by reducing vehicle emissions per trip, enhancing water resource management, and reducing greenhouse gas emissions from coal-fired heating boilers.8 ADB’s Sustainable Transport Initiative has informed the design of urban road components and related capacity development assistance, for instance through support for public transport.9 Finally, in keeping with ADB's Strategy 2020, the project’s support for urban infrastructure and municipal services will strengthen private sector participation and the competitiveness of central Liaoning.10

6. Sector experience. This will be the fourth ADB-financed urban development project in Liaoning Province. Project design reflects lessons from previous ADB-financed urban development projects in the PRC,11 including the need for early support on ADB policies and procedures, as interventions have been particularly effective when they were part of well- conceived urban development approaches and when such support was accompanied by capacity building to strengthen urban management.

6 ADB. 2012. Country Partnership Strategy: People’s Republic of China, 2011–2015. Manila. 7 ADB. 2011. Urban Operational Plan. Manila. 8 ADB. 2008. ADB’s Climate Change Program. Manila. 9 ADB. 2010. Sustainable Transport Initiative: Operational Plan. Manila. 10 ADB. 2008. Strategy 2020: The Long-Term Strategic Framework of the Asian Development Bank, 2008–2020. Manila. 11 Notably ADB. 2009. Report and Recommendation of the Board of Directors: Proposed Loan to the People’s Republic of China for the Liaoning Small Cities and Towns Development Demonstration Sector Project. Manila (Loan 2550-PRC).

7. Innovative features. The project has the following demonstration features: (i) strategic urbanization supporting a model of concentrated urbanization, which evidence suggests yields higher per capita incomes, more efficient energy use, reduced loss of arable land, and lower greenhouse gas emissions than less-concentrated alternatives;12 (ii) strengthened financial management, in recognition of mounting pressures that threaten fiscal sustainability, that is developed to gauge and strengthen participating townships’ creditworthiness and identify alternative financing approaches; (iii) heightened leadership, focusing on a leadership development program that promotes social inclusion; and (iv) people-centric urban infrastructure and public transportation promotion, including holistic road designs, road safety features such as traffic-calming measures and separate NMT lanes, and bus priority lanes.

B. Impact and Outcome

8. The project’s impact will be more competitive, green, and inclusive urbanization in key townships in central Liaoning. The project outcome will be improved sanitation, heating, and transport services in key townships in Liaoning.

C. Outputs

9. The project has four outputs:

(i) Wastewater management improvements. The Qingshuitai town wastewater treatment plant (WWTP) will be constructed in Shenbei new district with a capacity of 10,000 m3 per day and 18.7 kilometers (km) of sewer pipelines. (ii) Fuxin (Sihe town) district heating network. To upgrade Sihe town’s central heating network, the project will build a primary and secondary heat transmission network extending for 31.7 km and 12 heat-exchange stations, increasing district heating coverage by 3 million m2. The heat source will be an existing combined heat and power plant. (iii) Environmentally sustainable urban infrastructure development. The project will improve urban road links and related facilities in six key townships in central Liaoning by rehabilitating and upgrading 73.4 km of urban roads; constructing 51.2 km of urban roads; constructing 18 bridges; and developing related services such as 187.2 km of storm-water pipelines and sewers, energy-saving lighting, public green areas, road-safety features, public transportation support, and NMT lanes. (iv) Capacity development and institutional strengthening. The project will support (a) the Liaoning project management office (LPMO)13 and implementing agencies to ensure efficient and effective project implementation in compliance with PRC and ADB requirements, introduce credit appraisal and credit-rating approaches, and identify alternative financing options; (b) a leadership- enhancement program for senior officials to strengthen capacity for the strategic and holistic management of their jurisdictions, including initiatives to promote social inclusion; and (c) an urban transport capacity-development program.

12 A recent study of the PRC’s urban development options found that more concentrated urbanization, as is supported by this project, has, vis-à-vis less-concentrated urbanization, the potential over 20 years to (i) improve urban GDP per capita by 20% and (ii) improve energy productivity by about 20% (McKinsey Global Institute. 2009. Preparing for China’s Urban Billion. Shanghai.). 13 The Liaoning Urban Construction and Renewal Project Office is the official name of the LPMO.

Summary of Outputs and Components Output/Component Location and Description Implementing Agency Output 1: Wastewater Management Improvements 1. Shenbei New District Shenbei New Construct Qingshuitai Town WWTP (10,000 m3/d), and Central Towns Sewage District (Greater 18.744 km sewer pipeline. Treatment Subproject Shenyang)

Shenyang Shenbei Water Works Co. Ltd. Output 2: Fuxin (Sihe Town) District Heating Network 2. Fuxin City Sihe Town Sihe Town (Fuxin Build 12.6 km of primary heating pipelines and 19.1 km District Heating Network City) of secondary heating pipelines. Install 12 HESs involving Subproject civil works, equipment and auxiliary facilities. Total Fuxin City Heating heating area will be 3 million m2. Power Corporation Output 3: Environmentally Sustainable Urban Infrastructure Development 3. Xinmin Infrastructure Xinmin City Rehabilitate and widen 37 roads with a total length of Subproject (Greater 37.41 km; construct 6 urban roads with a total length of Shenyang) 12.23 km; build 3 bridges; install stormwater and sewage pipelines systems; install street lights and Xinmin City Urban related landscaping; purchase road maintenance Rural Construction equipment; and accommodate related road safety and and Rehabilitation energy-conserving facilities. Project Management Office 4. Shenbei New District Shenbei New Rehabilitate and construct 56 roads with a total length of Central Towns District (Greater 44.16 km (26.0 km in Qingshuitai and 18.1 km in (Xinglongtai and Shenyang) Xinglongtai; construct 6 bridges (2 in Qingshuitai and 4 Qingshuitai) Integrated in Xinglongtai); install related stormwater and sewer Development Subproject Shenbei New pipelines; install related street lighting; build landscaping District areas; and accommodate related road safety and International energy-conserving facilities. Financial Institutions Loaned Project Management Office 5. Heishan Heishan County Rehabilitate and widen Jiefang Road (5.79 km) and Infrastructure Subproject (Jinzhou City) build 2 new roads (9.16 km); construct 6 small bridges; install related storm and sewer piping; install street Heishan County lighting; install traffic safety and public transport Municipal facilities; and purchase road maintenance equipment. Construction

Output/Component Location and Description Implementing Agency Management Department 6. Gaizhou Gaizhou City Rehabilitate and widen Honghuayu Road (2.2 km) and Infrastructure Subproject (Yingkou City) construct Beichen Road (4.3 km); rehabilitate 50 alleys; install stormwater and sewer pipelines; install street Beichen Road lighting; and accommodate related road safety and Construction energy-conserving facilities. Project Management Office 7. Huanren Integrated Huanren County Construct 1 road (Hunjiang Street) with total length of Development Subproject (Benxi City) 5.1 km; rehabilitate 1 road (Zhongxin Street) with total length of 3.1 km; rehabilitate 38 street alleys with total Huanren County length of 13.0 km; construct one bridge of 1,200 m2; Hunjiang Street, install storm water and sewer piping; install street Zhongxin Street lighting; landscaping; and purchase road maintenance and Street Alleys equipment; and accommodate related road safety and Rehabilitation energy-conserving facilities. Project Headquarters 8. Waitoushan Waitoushan Town Construct 1 trunk road (Songbei Street) with total length Mining/Residential Areas (Benxi City) of 0.79 km; rehabilitate 1 branch road (No,1 Road) with and Songbei Street total length of 0.91 km; rehabilitate 8 street alleys (1.16 Road Upgrading Liaoning Yaodu km); construct Beisha River Bridge and Shen-Dan Subproject Investment Railway Interchange; install storm water and sewer (Group) Co. Ltd. pipeline; install street lighting; undertake landscaping; and accommodate related public transport, road safety, road maintenance and energy-conserving facilities.

HES = heat exchange station, km = kilometer, m2 = square meter, m3/d = cubic meter per day, WWTP = wastewater treatment plant. Source: Liaoning project management office.

Output 4: Capacity Development and Institutional Strengthening

10. The capacity development and institutional strengthening components will comprise the following parts:

11. Project management and implementation support. This subcomponent is intended to enable project outputs 1-3 to be delivered on time, within budget, in a sustainable manner, and in accordance with prescribed policies, standards and procedures. The subcomponent includes support for project management consulting services; and capacity building and institutional strengthening; financial management strengthening; external resettlement, social, and environment monitoring; and a 4-year training program. The financial management strengthening part will provide support to the participating key townships to strengthen their financial management arrangements and practices, and enable the project to be implemented smoothly, sustainably, and in full compliance with PRC and ADB policies and operational requirements. In addition, support will be given on: (i) credit appraisal and credit-rating approaches, including shadow credit rating exercises; (ii) identifying alternative financing options, such as bond issuances and public-private partnerships; and (iii) developing a credit-

6 worthiness strengthening plan, using the results of the shadow credit-rating exercises to identify options and priorities for strengthening credit worthiness.

12. Leadership development program. The project will support development and implementation of a leadership development program for senior officials of participating township governments to strengthen capabilities for managing their jurisdictions in a strategic and holistic manner and in full consideration of best international practices in township development and management worldwide. Activities will include, but not necessarily be limited to: (i) identifying and reviewing successful urban management and development practices in PRC and elsewhere, which are relevant to the key townships, including: (a) initiatives to promote social inclusion and equitable access to the new economy (particularly for the urban poor and rural migrants); (b) financing options, which is particularly relevant given heavy reliance on sales of land rights (this will be based on and coordinated with the relevant outputs from subcomponent 1 (project management and implementation support); (c) case studies on urban regeneration including environmental and ecologically friendly sustainable growth; and (d) other topics to be determined through consultation with participating key townships; and (ii) conducting leadership development training on above topics through workshops and study tours for senior officials.

13. Urban transport capacity development program. The project will support the development and implementation of an Urban Transport Capacity Development Program, including people-centric urban road design and road safety audits, promotion of public transportation, and related training. Activities will include, but not necessarily be limited to: (i) undertaking pilot road safety studies in participating townships with road components, with a particular focus on Heishan, where specific survey and analysis will be conducted (i.e., cyclist counts, accident black-spots analysis, travel behavior survey, public awareness on road safety, etc), and preparing guidelines for safety planning, safety design, and safety operation for urban transport for townships in the PRC; (ii) conducting an urban road safety audit to identify road safety issues, and provide recommendations for urban road safety improvements so that the recommendations can be adopted for the project roads; and (iii) conducting road safety-related training, including an urban road, education program to raise the public awareness of road safety, and enforcement program for traffic safety laws and regulations.

14. Training program. A 4-year training program (2013-2017) will be developed and will cover (i) project implementation management; (ii) wastewater management operations and maintenance (O&M); (iii) district heating O&M; (iv) financial management, cost recovery, and financial sustainability; (v) pollution control and environmental monitoring;* (vi) urban transport and management; (vii) emergency preparedness and response;* (viii) asbestos risk assessment and management;* and (ix) other project-related issues. The safeguards assurances and documents require that the training topics include the asterisked items. Training modalities will include workshops and seminars, on-site training, and domestic and overseas study tours.14

* Training referred to in safeguards’ documents.

14 Costs for the overseas study tours should be incurred in ADB member countries, if they are to be financed under the ADB loan.

II. IMPLEMENTATION PLANS

A. Project Readiness Activities

2011 2012 2013 Indicative Activities 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 Responsibility

Advance contracting actions1 EA, PMO, IAs

Establish PIU2 LPG, PMO

Domestic processing Draft RPs approved by ADB ADB

Draft RPs endorsed by LPG LPG

EIA approvals LEPB

FSR approvals LDRC

1 Foreign currency utilization report

Application LDRC, LPFD Approval of application LDRC, NDRC Final approval State Council

Loan negotiations LPG, LPFD, ADB

ADB Board approval ADB

Loan signing ADB, MOF, EA, PMO

Government legal opinion provided MOF, LPG

Loan effectiveness ADB, MOF, LPG, LPMO

ADB = Asian Development Bank, EA = executing agency, EIA = environmental impact assessment, FSR = feasibility study report, IA = implementing agency, LDRC = Liaoning Development and Reform Commission, LEPB = Liaoning Environmental Protection Bureau, LPFD = Liaoning Provincial Financial Department, LPG = Liaoning Provincial Government, MOF = Ministry of Finance, PIU = project implementation unit, PMO = project management office, RP = resettlement plan. 1 Section VI.A describes advance contracting actions. 2 The project implementing unit has been established within the LPMO. Source: Project preparatory technical assistance consultant.

B. Overall Project Implementation Plan

Activities Start Finish 2012 2013 2014 2015 2016 2017 2018 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

A. DESIGN AND MONITORING FRAMEWORK 1. Wastewater Management Improvements 1.1. Design and bidding documents Jan 13 Dec 13 1.2. Final RP based on detailed design * Dec 12 Dec 12 1.3. Land acquisition and resettlement Apr 13 Dec 13 1.4. Bidding and contract award Oct 13 Mar 14 1.5. Civil works Apr 14 Sep 15 1.6. Equipment Jul 14 Sep 15 1.7. Testing and commissioning/completion Apr 15 Sep 15 2. Fuxin (Sihe Town) District Heating Network 2.1. Design and bidding documents Oct 12 Mar 13 Note: land acquisition or resettlement completed 2.2. Bidding and contract award Jan 13 Jun 13 2.3. Civil works Apr 13 Dec 13 2.4. Equipment Jul 13 Mar 14 2

2.5. Testing and commissioning/completion Oct 13 Mar 15 3. Environmentally Sustainable Urban Infrastructure Development 3.1. Gaizhou 3.1.1. Design and bidding documents Jan 13 Jun 14 3.1.2. Final RP based on detailed design * Nov 12 Nov 12 3.1.3. Land acquisition and resettlement Jan 13 Jun 14 3.1.4. Bidding and contract award Jul 13 Jun 15 3.1.5. Civil works Mar 14 Sep 16 3.1.6. Testing and commissioning/completion Jul 14 Dec 16 3.2. Heishan 3.2.1. Design and bidding documents Jan 13 Jun 15 3.2.2. Final RP based on detailed design * Jul 12 Jul 12 3.2.3. Land acquisition and resettlement Jul 13 Jun 16 3.2.4. Bidding and contract award Mar 13 Sep 15 3.2.5. Civil works Jul 13 Sep 16 3.2.6. Equipment Jul 13 Jun 14 3.2.7. Testing and commissioning/completion Mar 14 Sep 16

Activities Start Finish 2012 2013 2014 2015 2016 2017 2018 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

3.3. Huanren 3.3.1. Design and bidding documents Oct 12 Sep 14 3.3.2. Final RP based on detailed design * Jan 13 Jan 13 3.3.3. Land acquisition and resettlement Apr 13 Dec 13 3.3.4. Bidding and contract award Jan 13 Jul 15 3.3.5. Civil works Jul 13 Jul 17 3.3.6. Equipment Oct 13 Dec 14 3.3.7. Testing and commissioning/completion Oct 14 Sep 17 3.4. Shenbei 3.4.1. Design and bidding documents Apr 13 Sep 14 3.4.2. Final RP based on detailed design * Dec 12 Dec 12 3.4.3. Land acquisition and resettlement Jan 13 Dec 15 3.4.4. Bidding and contract award Jul 13 Dec 15 3.4.5. Civil works Jul 13 Jul 17 3.4.6. Equipment Oct 13 Dec 14

3 3.4.7 Testing and commissioning/completion Oct 14 Jul 17

3.5. Waitoushan 3.5.1. Design and bidding documents Apr 13 Dec 14 3.5.2. Final RP based on detailed design * Nov 12 Nov 12 3.5.3. Land acquisition and resettlement Jul 13 Jun 15 3.5.4. Bidding and contract award Jul 13 Mar 16 3.5.5. Civil works Jul 13 Jun 17 3.5.6 Testing and commissioning/completion Jul 17 Sep 17 3.6. Xinmin 3.6.1. Design and bidding documents Jan 13 Sep 15 3.6.2. Final RP based on detailed design * Dec 12 Dec 12 3.6.3. Land acquisition and resettlement Jul 13 Jun 15 3.6.4. Bidding and contract award Apr 13 Dec 15 3.6.5. Civil works Jul 13 Jun 17 3.6.6. Equipment Jul 13 Dec 14 3.6.7. Testing and commissioning/completion Oct 14 Sep 17

Activities Start Finish 2012 2013 2014 2015 2016 2017 2018 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

4. Capacity Development and Institutional Strengthening 4.1. Complete organizational arrangements for IAs Oct 12 Dec 12 4.2. Recruit and mobilize implementation consultants Jan 13 Mar 13 4.3. Develop four-year training plan (2013-2017) Apr 13 Jun 13 4.4. Undertake training and provide implementation suppor Jul 13 Dec 17 4.5. Strengthen financial management & corp. governance Jul 13 Dec 17 4.6. Implement environment and resettlement monitoring Jul 13 Dec 17 4.7. Implement and monitor the GAP and SDAP Jul 13 Dec 17 4.8. Prepare and conduct PPMS monitoring Jul 13 Dec 17 B. MANAGEMENT ACTIVITIES 1. Develop contract package and procurement plan Jan 12 Dec 12 2. Recruit and mobilize the project management consultants Jul 12 Jun 13 3. Implement environment management plan Jul 13 Dec 17 4. Implement and monitor the GAP and SDAP Jul 13 Dec 17

4 5. Annual and mid-term loan reviews Jul 13 Sep 18 inception annual mid-term annual annual

6. Project completion report Jan 18 Jun 18 * As a condition for the award of civil works.

III. PROJECT MANAGEMENT ARRANGEMENTS

A. Project Implementation Organizations – Roles and Responsibilities

Project Implementation Organizations Management Roles and Responsibilities Oversight body - Provincial • Provides strategic guidance, supervision, and support to project Project Coordination Group preparation and implementation (PPCG) Headed by the Liaoning Provincial Government (LPG) vice-governor, it includes senior officials from the Provincial Development and Reform Commission, Provincial Finance Department, Provincial Housing and Urban-Rural Development Department, Provincial Land and Resources Department, and Provincial Environment Protection Department.

Executing Agency – LPG • Guides and supports project preparation and implementation through Liaoning project • Ensures that project implementation is consistent with provincial a management office (LPMO) objectives, policies, and regulations, including finance and administration, technical and procurement matters, monitoring and evaluation, and safeguards compliance Liaoning Provincial Finance • Establishment and operation of imprest account Department (LPFD) • Processing and approval of disbursements • Disbursement arrangements, including reviewing disbursement projections, monitoring budgetary allocations of counterpart funds, collecting supporting documents, and preparing and sending withdrawal applications to ADB • Preparation of annual project financial statements LPMO • Coordination and overall management to ensure smooth implementation of the project • Supervision of the work of the subproject PMOs • Packaging of reports prepared by the subproject PMOs and submission of them to ADB • Liaison and coordination with other agencies, such as Provincial Finance Bureau, and Provincial Development and Reform Commission • Liaison with ADB and the loan implementation consultant and reporting to ADB on technical and financial aspects of loan implementation • Supervise project implementation consultants in the review of preliminary and final designs to ensure the quality of design drawings and bill of quantities • Processing of major variations in project scope, costs and standards Key Implementing Agencies • Ensuring successful implementation of the relevant subproject 1. Shenyang Shenbei Water components Works Co. Ltd. • Procurement and management of design, construction and 1

Project Implementation Organizations Management Roles and Responsibilities 2. Fuxin City Heating Power construction supervision services required for component Corporation implementation in accordance with People’s Republic of China 3. Xinmin City Urban Rural (PRC) and ADB procedures and regulations Construction and • Monitoring of technical and financial progress and reports to the Rehabilitation PMO subproject PMO 4. Shenbei New District • Financial management for component implementation, including International Financial budgeting, accounting and cost control Institutions Loaned PMO • Land acquisition, compensation and resettlement measures to 5. Heishan County Municipal make land available for the project, all in accordance with the Construction Management approved resettlement plans, which will be finalized based on Department detailed designs 6. Beichen Road Construction • Execution of the approved environmental management plan PMO • Actions under the ethnic minority development framework 7. Huanren County Hunjiang • Participation in capacity building and training programs Street, Zhongxin Street and • Commissioning of the constructed facilities Street Alleys Rehabilitation • In most cases, operation and maintenance of completed facilities Project Headquarters 8. Liaoning Yaodu Investment (Group) Co. Ltd. ADB • Responsible for administering ADB-funded components of the project a The Liaoning Urban Construction and Renewal Project Office is the official name of the Liaoning PMO.

B. Key Persons Involved in Implementation

Executing Agency Liaoning Urban Construction Officer's Name: Liu Yongjian and Renewal Project Office, Position: Director on behalf of the Executing Telephone: 86-24-23942196 Agency, Liaoning Provincial Email Address: [email protected] Government Office Address: F24, Liaoning Urban Construction and Renewal Project Office, Changxin Building, Qingnian Street, Heping District, Shenyang, Liaoning, PRC

Implementing Agency 1. Fuxin City Heating Power Officer's Name: Jia Guibin Corporation Position: Director Telephone: 86-418-6867096 Email Address: [email protected] Office Address: No.119, Zhonghua Rd, Haizhou District, Fuxin City, Liaoning, PRC 2. Shenyang Shenbei Officer's Name: Zhengnan Zhang Water Works Co. Ltd Position: Director Telephone: +86-24-88082331 Email Address: [email protected] Office Address: No 163,Shenbei Road, Shenbei New District Huishan Economic Zone, Shenyang, Liaoning, PRC 3. Shenbei New District Officer's Name: Liu Yangyang International Financial Position: Director Institutions Loaned Telephone: 86-24-88085272 Project Management Email Address: [email protected] Office Office Address: No.1 Mingzhu Rd. Huishan District, Shenyang, Liaoning, PRC 2

4. Xinmin City Urban Rural Officer's Name: Zhu Wenchang Construction and Position: Deputy Director/Director Rehabilitation Project Telephone: 86-24-23932292 Management Office Email Address: [email protected] Office Address: 12 Shufu Rd. Xinmin, Shenyang, Liaoning, PRC 5. Heishan County Officer's Name: Liu Dongyan Municipal Construction Position: Director Management Department Telephone: 86-416-5522729 Email Address: [email protected] Office Address: No.189, Zhongdazhong Rd. Heishan, Liaoning, PRC 6. Beichen Road Officer's Name: Yang Xuedong Construction Project Position: Director Management Office Telephone: 86-417-7800061 Email Address: [email protected] Office Address: Gaizhou, Yingkou, Liaoning, PRC 7. Huanren County Officer's Name: Yuan Xinxin Hunjiang Street, Position: Director Zhongxin Street and Telephone: 86-414-8873001 Street Alleys Email Address: [email protected] Rehabilitation Project Office Address: No.55, Tianhou Street, Huanren Town,Huanren Headquarters County, Benxi, 117200, Liaoning, PRC 8. Liaoning Yaodu Officer's Name: He Jun Investment (Group) Co. Position: Deputy General Manager Ltd. Telephone: 86-414-5858152 Email Address: [email protected] Office Address: Shenxi New Town, Shenyang Economic Zone, Liaoning, PRC ADB Director Staff Name: Mr. Diwesh Sharan Position: Urban and Social Sectors Division, EARD Telephone No.: (63 2) 632 6730 Email Address: [email protected] Team leader Staff Name: Mr. Barry Reid Position: Principal Public Management Specialist, RSDD Telephone No.: (63 2) 632-6136 Email Address: [email protected] Team members Staff Name: Ms. Margaret Anosan Position: Associate Project Analyst, EARD Telephone No.: (63 2) 632-4444 Email Address: [email protected] Staff Name: Ms. Madhumita Gupta Position: Senior Safeguards Specialist, EARD Telephone No.: (63 2) 632-6943 Email Address: [email protected] Staff Name: Ms. Samantha Hung Position: Senior Social Development Specialist, RSDD Telephone No.: (63 2) 632-4794 Email Address: [email protected] Staff Name: Mr. Shinsuke Kawazu Position: Senior Counsel, Office of the General Counsel Telephone No.: (632) 632-5215 Email Address: [email protected] Staff Name: Ms. Maureen Mamayson Position: Senior Operations Assistant, EARD Telephone No.: (63 2) 632-6136 Email Address: [email protected] 3

Staff Name: Mr. Antoine Morel Position: Environment Specialist, EARD Telephone: (63 2) 683-1964 Email Address: [email protected] Staff Name: Mr. Guangrui Xiao Position: Senior Project Officer (Transport), EARD Telephone: (86 10) 8573 0909 Email Address: [email protected] Staff Name: Ms. Wendy Walker Position: Senior Social Development Specialist, EARD Telephone No.: (63 2) 623-5955 Email Address: [email protected]

C. Project Organization Structure

1. Institutional Arrangements

LPG ADB

LPMO (LUCRPO) TA TEAM

Shenbei New New Shenbei City Gaizhou Xinmin City Xinmin Benxi City Benxi Fuxin City Fuxin Huanren Huanren Heishan County County District

Xinmin City Urban Rural Construction and Rehabilitation Rehabilitation and Construction Rural Urban City Xinmin Beichen Road Construction Project Management Office Management Project Construction Road Beichen Shenbei New District District New Shenbei Huanren County Hunjiang Street, Zhongxin Street and and Street Zhongxin Street, Hunjiang County Huanren Heisha

Waitoushan Mining/Residential Areas and Songbei Songbei Areas and Mining/Residential Waitoushan 1. 1. Street Alleys Rehabilitation Project Headquarters Headquarters Project Rehabilitation Alleys Street 2. 2.

Department Fuxin City Sihe Town District Heating Network Network Heating District Town Sihe City Fuxin Huanren Integrated Development Subproject Development Integrated Huanren Shenbei New District Central Towns Integrated Integrated Towns Central District New Shenbei Liaoning Yaodu Investment (Group) Ltd. Co. (Group) Investment Yaodu Liaoning Shenbei New District Central Towns Sewage Sewage Towns Central District New Shenbei

Ltd. Co. Works Water Shenbei Shenyang n County Municipal Construction Management Management Construction Municipal n County Fuxin City Heating Power Corporation Corporation Power Heating City Fuxin

Office Management Project Loaned Street Road Upgrading Subproject Upgrading Road Street Gaizhou Infrastructure Subproject Infrastructure Gaizhou

Xinmin Infrastructure Subproject Infrastructure Xinmin Project Management Office Management Project

Subproject Development :

Treatment Subproject Treatment Subproject Infrastructure Heishan

International Financial Institutions Institutions Financial International Subproject

Source: Project preparatory technical assistance consultant.

2. Legal and Contractual Arrangements

Asian Development Bank Liaoning Provincial Government

Liaoning PMO

Contract Contract Implementation Tendering Consultant Agent

IA (1) IA (2) IA (3) IA (4) IA (5) IA (6) IA (7) IA (8) Xinmin City Shenbei New Huanren County Shenyang Fuxin City Urban Rural District Heishan County Beichen Road Hunjiang Street, Liaoning Yaodu Shenbei Water Heating Power Construction International Municipal Construction Zhongxin Street Investment Works Co. Ltd. Corporation and Financial Construction Project and Street Alleys (Group) Co. Ltd. Rehabilitation Institutions Management Management Rehabilitation Project Loaned Project Department Office Project 5 Management Management Headquarters

Office Office

Contract Contract Contract Contract Contract Contract Contract Contract Design Design Design Design Design Design Design Design Institute Institute Institute Institute Institute Institute Institute Institute

Contractors Contractors Contractors Contractors Contractors Contractors Contractors Contractors /Suppliers /Suppliers /Suppliers /Suppliers /Suppliers /Suppliers /Suppliers /Suppliers

Suppliers Suppliers Suppliers Suppliers Suppliers Suppliers Suppliers Suppliers Company Company Company Company Company Company Company Company

IV. COSTS AND FINANCING

1. This section describes the project costs, categories, and components to be financed by ADB and the government. Loan proceeds will be disbursed according to ADB’s Loan Disbursement Handbook (2012, as amended from time to time), and subject to the provisions of the loan agreement.

A. Summary Cost Estimates and Financing Plan

2. The project investment cost is estimated at $395.3 million, including taxes and duties of $19.2 million. The total cost also includes physical and price contingencies and financing charges during implementation. The project investment plan is summarized below.

Table 1: Project Investment Plan ($ million) Item Amounta $ million CNY million A. Base Costb 1. Wastewater management improvements 6.99 44.03 2. Sihe Town district heating network 21.08 132.80 3. Environmentally sustainable urban infrastructure development 298.71 1,881.85 4. Capacity development and institutional strengthening 2.00 12.60 Subtotal (A) 328.78 2,071.29 B. Contingenciesc 57.91 364.86 C. Financing Charges During Implementationd 8.66 54.55

Total (A+B+C) 395.35 2,490.70 a Includes taxes and duties of about $19.24 million to be financed from government and Asian Development Bank (ADB) loan resources. The following principles were followed in determining the amount of taxes and duties to be financed by ADB: (i) the amount does not represent an excessive share of the project investment plan, (ii) the taxes and duties apply only to ADB-financed expenditures, and (iii) the financing of the taxes and duties is material and relevant to the success of the project. b In December 2011 prices. c Physical contingencies computed at 10% of base costs except those for land acquisition and resettlement, and project management. Price contingencies computed at an average of 0.3% on foreign exchange costs and an average of 3.8% on local currency costs; includes provision for potential exchange rate fluctuation under the assumption of a purchasing power parity exchange rate. d Includes interest and commitment charges. Interest during construction for the ADB loan has been computed at the 5-year forward London interbank offered rate plus a spread of 0.40% and a maturity premium of 0.10%. Commitment charges for the ADB loan are 0.15% per year to be charged on the undisbursed loan amount. Note: Numbers may not sum precisely because of rounding. Source: Asian Development Bank estimates.

3. The government has requested a loan of $150 million from ADB’s ordinary capital resources to help finance the project. The loan will have a 26-year term including a 5-year grace period, straight-line method of repayment, an annual interest rate determined in accordance with ADB’s London interbank offered rate (LIBOR)-based lending facility,15 a commitment charge of 0.15% per year, and such other terms and conditions set forth in the draft loan and project agreements. Based on this, the average loan maturity is 15.75 years and the maturity premium payable to ADB is 0.10% per annum. The loan will finance 38% of the project cost, including civil works, equipment and materials, and institutional strengthening and training. The

15 The interest includes a maturity premium of 0.10%. This is based on the above loan terms and the government’s choice of repayment option and dates.

loan will also finance taxes and duties for ADB-financed eligible expenditures, bank charges, and transportation and insurance costs. The government has provided ADB with (i) the reasons for its decision to borrow under ADB’s LIBOR-based lending facility based on these terms and conditions, and (ii) an undertaking that these choices were its own independent decision and not made in reliance on any communication or advice from ADB. The government will finance $245.3 million (62% of the project cost). The government will finance financing charges during implementation, design, project, management, environment and social monitoring and contingencies.

Table 2: Financing Plan Source Amount ($ million) Share of Total (%) Asian Development Bank 150.00 38.00 Government 245.35 62.00 Total 395.35 100.00 Source: Asian Development Bank estimates.

4. The PRC is the borrower of the loan. The PRC will relend the entire loan to the LPG, which will onlend the loan proceeds available to the project city and county governments, and on the same terms and conditions as those for the ADB loan. The project city and county governments will assume, as end-borrowers, the foreign exchange and interest rate variation risks for the ADB loan.

B. Detailed Cost Estimates by Expenditure Category

CNY million $ million % of Base Item Foreign Local Foreign Local Total Total Cost Cost Exchange Currency Exchange Currency Cost a

A. Investment Costb 1. Civil works 325.20 975.61 1300.81 51.62 154.86 206.48 63% 2. Equipment 198.49 49.62 248.12 31.51 7.88 39.38 12% 3. Land acquisition and resettlement 0.00 313.92 313.92 0.00 49.83 49.83 15% 4. Environmental and social monitoring 0.00 29.52 29.52 0.00 4.69 4.69 1% 5. Survey, research, design and project management 0.00 166.32 166.32 0.00 26.40 26.40 8% 6. Capacity development and institutional strengthening 12.60 0.00 12.60 2.00 0.00 2.00 1% Subtotal (A) 536.30 1534.99 2071.29 85.13 243.65 328.78 83% B. Contingenciesc 54.41 310.45 364.86 8.64 49.28 57.91 18% C. Financing Charges During Implementationd 54.55 0.00 54.55 8.66 0.00 8.66 3%

Total Project Cost (A+B+C) 645.26 1845.44 2490.70 102.42 292.93 395.35 120% a Includes taxes and duties of $19.24 million to be financed from government and ADB loan resources. b In December 2011 prices. c

3 Physical contingencies computed at 10% of base costs except those for land acquisition and resettlement. Price contingencies computed at an average of 0.3%

for foreign exchange costs and an average of 3.8% on local currency costs and include provision for potential exchange rate fluctuation under the assumption of a purchasing power parity exchange rate. d Includes interest and commitment charges. Interest during construction for ADB loan has been computed at the 5-year forward London interbank offered rate plus a spread of 0.40% and maturity premium of 0.10%. Commitment charges for an ADB loan are 0.15% per year to be charged on the undisbursed loan amount. Numbers may not sum precisely due to rounding. Source: Asian Development Bank estimates.

C. Detailed Cost Estimate by Financier

US$ million ADB Government No. Item % of Cost % of Cost Total Costa Amount Amount Category Category A. Investment Cost b 1. Civil works a. Shenbei wastewater management 1.79 57 1.35 43 3.14 b. Fuxin district heating network 0.00 0 8.56 100 8.56 c. Gaizhou ESUI 10.52 57 7.94 43 18.46 d. Heishan ESUI 20.36 57 15.36 43 35.73 e. Huanren ESUI 12.69 57 9.58 43 22.27 f. Shenbei ESUI 24.01 57 18.11 43 42.12 g. Waitoushan ESUI 10.56 41 15.33 59 25.90 h. Xinmin ESUI 28.68 57 21.64 43 50.32 Subtotal (1) 108.62 53 97.86 47 206.48 2. Equipment a. Shenbei wastewater management 1.87 100 0.00 0 1.87 4

b. Fuxin district heating network 10.20 100 0.00 0 10.20 c. Gaizhou ESUI 0.00 0 0.00 0 0.00 d. Heishan ESUI 3.90 100 0.00 0 3.90 e. Huanren ESUI 4.08 100 0.00 0 4.08 f. Shenbei ESUI 5.55 100 0.00 0 5.55 g. Waitoushan ESUI 0.00 0 0.00 0 0.00 h. Xinmin ESUI 13.79 100 0.00 0 13.79 Subtotal (2) 39.38 100 0.00 0 39.38 3. Land acquisition and resettlement 0.00 0 49.83 100 49.83 4. Environmental and social monitoring 0.00 0 4.69 100 4.69 5. Survey, research, design and project management 0.00 0 26.40 100 26.40 6. Capacity development and institutional strengthening 2.00 100 0.00 0 2.00 Sub-total (A) 150.00 46 178.78 54 328.78 B. Contingenciesc 1. Physical 0.00 0 32.88 100 32.88 2. Price 0.00 0 25.04 100 25.04 Sub-total (B) 0.00 0 57.91 100 57.91

US$ million ADB Government No. Item % of Cost % of Cost Total Costa Amount Amount Category Category C. Financing Charges During Implementation d 1. Interest during construction 0.00 0 8.25 100 8.25 2. Commitment charges 0.00 0 0.41 100 0.41 Sub-total (C) 0.00 0 8.66 100 8.66 Total Project Cost (A+B+C) 150.00 38 245.35 62 395.35 % of Total Project Cost 38% 62% ADB = Asian Development Bank, ESUI = environmentally sustainable urban infrastructure. a Includes taxes and duties of $19.24 million to be financed from government and Asian Development Bank (ADB) loan resources. The following principles were followed in determining the amount of taxes and duties to be financed by ADB: (i) the amount does not represent an excessive share of the project investment plan, (ii) the taxes and duties apply only to ADB-financed expenditures, and (iii) the financing of the taxes and duties is material and relevant to the success of the project. b In December 2011 prices. c Physical contingencies computed at 10% of base costs except those for land acquisition and resettlement. Price contingencies computed at an average of 0.3% for foreign exchange costs and an average of 3.8% on local currency costs and include provision for potential exchange rate fluctuation under the assumption of a purchasing power parity exchange rate. d Includes interest and commitment charges. Interest during construction for ADB loan has been computed at the 5-year forward London interbank offered rate plus a spread of 0.40% and maturity premium of 0.10%. Commitment charges for the ADB loan are 0.15% per year to be charged 5 on the undisbursed loan amount.

Numbers may not sum precisely due to rounding. Source: Asian Development Bank estimates.

D. Detailed Cost Estimates by Outputs/Components

$ million Environmentally Capacity Wastewater Fuxin (Sihe Town) Sustainable Urban Development and Management District Heating No. Item Infrastructure Institutional Total Cost Improvements Network Development Strengthening % of Cost % of Cost % of Cost % of Cost Amount Category Amount Category Amount Category Amount Category A. Investment Cost 1. Civil works 206.48 3.14 2 8.56 4 194.78 94 0.0 0 2. Equipment 39.38 1.87 5 10.20 26 27.31 69 0.0 0 3. Land acquisition and resettlement 49.83 0.00 0 0.00 0 49.83 100 0.0 0 4. Environmental and social monitoring 4.69 0.13 3 0.20 4 4.35 93 0.0 0 5. Survey, research, design and project management 26.40 1.86 7 2.11 8 22.43 85 0.0 0 6. Capacity development and institutional strengthening 2.00 0.00 0 0.00 0 0.00 0 2.00 100 Sub-total (A) 328.78 6.99 2 21.08 6 298.71 91 2.00 1 B. Contingencies 57.91 1.03 2 2.65 5 54.24 94 0.00 0 C. Financing Charges During Implementation 8.66 0.25 3 0.78 9 7.63 88 0.00 0 Total Project Cost (A+B+C) 395.35 8.27 2 24.51 6 360.57 91 2.00 1 % of Total Project Cost 2% 6% 91% 1% Numbers may not sum precisely due to rounding. Note: Exchange rate is US$1 = CNY6.3

E. Detailed Cost Estimates by Years

US$ Million No. Item Total Cost 2013 2014 2015 2016 2017

A. Investment Cost 1. Civil works 206.48 29.70 80.11 62.38 29.55 4.74 2. Equipment 39.38 13.30 26.09 0.00 0.00 0.00 3. Land acquisition and resettlement 49.83 16.77 26.99 6.07 0.00 0.00 4. Environmental and social monitoring 4.69 0.82 1.85 1.11 0.60 0.30 5. Survey, research, design and project management 26.40 10.13 10.51 4.63 1.13 0.00 6. Capacity development and institutional strengthening 2.00 0.73 0.60 0.38 0.15 0.14 Sub-total (A) 328.78 71.45 146.14 74.57 31.43 5.19 B. Contingencies 57.91 9.52 24.01 15.41 7.55 1.43 C. Financing Charges During Implementation 8.66 0.43 1.20 2.03 2.43 2.57

Total Project Cost (A+B+C) 395.35 81.40 171.35 92.01 41.41 9.19 % of Total Project Cost 21% 43% 23% 10% 2% Numbers may not sum precisely due to rounding. a

7 In December 2011 prices and exchange rate of US$1 to CNY6.3.

F. Allocation and Withdrawal of Proceeds

ALLOCATION AND WITHDRAWAL OF LOAN PROCEEDS

(Integrated Development of Key Townships in Central Liaoning)

CATEGORY ADB FINANCING Amount Allocated Percentage and Number Item $ Basis for Withdrawal Category Subcategory from the Loan Account* Wastewater Management 1 3,652,000 Improvements in Shenbei 1A Works 1,787,000 57% of total expenditure claimed

1B Equipmenta 1,865,000 100% of total expenditure claimed District Heating 2 Network in 10,205,000 Fuxin 2A Equipmenta 10,205,000 100% of total expenditure claimed Environmentally Sustainable 3 Urban 10,520,000 Infrastructure in Gaizhou 3A Works 10,520,000 57% of total expenditure claimed Environmentally Sustainable 4 Urban 24,260,000 Infrastructure in Heishan 4A Works 20,365,000 57% of total expenditure claimed

4B Equipmenta 3,895,000 100% of total expenditure claimed Environmentally Sustainable 5 Urban 16,774,000 Infrastructure in Huanren 5A Works 12,695,000 57% of total expenditure claimed

CATEGORY ADB FINANCING Amount Allocated Percentage and Number Item $ Basis for Withdrawal Category Subcategory from the Loan Account* 5B Equipmenta 4,079,000 100% of total expenditure claimed Environmentally Sustainable 6 Urban 29,554,000 Infrastructure in Shenbei 6A Works 24,006,000 57% of total expenditure claimed

6B Equipmenta 5,548,000 100% of total expenditure claimed Environmentally Sustainable 7 Urban 10,563,000 Infrastructure in Waitoushan 7A Works 10,563,000 41% of total expenditure claimed Environmentally Sustainable 8 Urban 42,472,000 Infrastructure in Xinmin 8A Works 28,680,000 57% of total expenditure claimed

8B Equipmenta 13,792,000 100% of total expenditure claimed Capacity Development 9 2,000,000 100% of total expenditure claimed and Institutional Strengtheningb Total 150,000,000 * Including taxes and duties. a Including transportation and insurance. b Includes project implementation and training equipment, and transportation costs and vehicle purchase.

G. Contract and Disbursement S-curve

160

140

120

100

80 Contract Awards 60

Cumulative million) ($ Disbursements 40

Cumulative Quarterly Projections of Contract Awards and Disbursements ($ million)

Period Contract Awards Disbursements Q1-2013 0.0 0.0 Q2-2013 0.0 0.0 Q3-2013 0.0 0.0 Q4-2013 15.0 1.5 Q1-2014 21.8 3.0 Q2-2014 30.8 6.0 Q3-2014 44.3 10.5 Q4-2014 60.0 16.5 Q1-2015 70.1 23.1 Q2-2015 83.6 30.6 Q3-2015 103.9 38.1 Q4-2015 127.5 46.5 Q1-2016 147.8 56.7 Q2-2016 150.0 69.5 Q3-2016 150.0 84.8 Q4-2016 150.0 97.5 Q1-2017 150.0 110.5 Q2-2017 150.0 122.6 Q3-2017 150.0 132.7 Q4-2017 150.0 138.0 Q1-2018 150.0 150.0 Q2-2018 150.0 150.0

H. Fund Flow Diagram

Asian Development Bank Reimbursement/ Lending, relending, onlending Loan replenishment of imprest Principal and interest payments account Counterpart funding and payments Payment claims and withdrawal Ministry of Finance applications (on central government’s behalf) Direct payments to contractors, consultants Relending and suppliers

Liaoning Province Financial Department (on LPG’s behalf) Imprest Account Imprest account Onlending payments 11

Shenyang Finance Bureau Fuxin Finance Bureau Jinzhou Finance Bureau Yingkou Finance Bureau Benxi Finance Bureau (on SMG’s behalf) (on FMG’s behalf) (on JMG’s behalf) (on YMG’s behalf) (on BMG’s behalf) Internal arrangements to disburse loan proceeds a

IA (1) IA (3) IA (4) IA (2) IA (5) IA (6) IA (7) IA (8) SBWW XPMO SBPMO FXHPC HCMMD BCPMO HRPH YAODU

Contractors, Consultants, and Suppliers

BCPMO = Bei ch en Ro ad Construction Pro j ec t Man ag emen t Office, BMG = Benx i Muni cip al Gov ern men t, FHC = Fux in Ci ty Heating Po wer Corporation, FMG = Fuxin Munic ip al Government, HRPH = Huanren County Hunji ang Street, Zhongxin Street and Street Alleys Rehabilitation Project Headquarters, HSCMD = Hei sh an County Municipal Construction Man ag emen t Dep ar tmen t, IA = implementing ag enc y , J MG = Jinzhou Munic ip al Government, LPG = Liaoning Pro vince Government, SBPMO = Shenbei New District International Financial Institutions Lo an ed Project ManagementOffice, SBWW = Sh en y ang Shenbei W ater Works Co . Ltd., SMG = Sh eny ang Municipal Government, XMPMO = Xi n min Ci ty Ur ban Rur al Construction and Rehabilitation Project Management Office, YAODU = Liaoning YaoduInvestment (Group) Limited Company, YMG = YingkouMunicipal Government.

a These arrangements are detailed in the project administration manual (Section V, para. 11).

V. FINANCIAL MANAGEMENT

A. Financial Management Assessment

1. The financial management assessment (FMA) was conducted in October–December 2011 in accordance with ADB’s Guidelines for the Financial Management and Analysis of Projects16 and Financial Due Diligence: a Methodology Note.17 The FMA considered the capacity of the LPMO and the eight project implementing agencies, including funds-flow arrangements, staffing, accounting and financing reporting system, internal and external auditing arrangements, and financial information systems.

2. The assessment concluded that while LPMO and most of the implementing agencies have general experience in managing foreign-financed projects, including ADB-financed projects, significant training and support will be required on ADB policies and procedures, including procurement, disbursement, and project management. The assessment indicated that (i) there are established financial management policies in the PRC, which are followed strictly by LPMO and the implementing agencies; and (ii) the implementing agencies have sound financial management capability and are experienced in managing large projects. The Liaoning Provincial Finance Department (LPFD), which will operate and administer the imprest account, and LPMO have extensive experience administering ADB and other foreign-financed projects, including the phase 1 project.18 However, few of the implementing agencies have significant, recent knowledge and experience of ADB policies and procedures.

3. Specifically, the FMA recommended capacity development measures to ensure that the implementing agencies are able to meet the project’s financial management requirements. It was agreed that the implementing agencies would strengthen their financial management capability to manage the project, including (i) finalizing institutional arrangements for project implementation; (ii) undertaking training, particularly on ADB policy and procedural requirements; (iii) establishing internal audit arrangements; and (vi) seeking external financial management assistance as needed. The overall financial management risk-rating of the project, after considering mitigating measures, is medium. The identified financial management risks will be closely monitored during project implementation.

B. Disbursement

1. Disbursement Arrangements for ADB Loan Proceeds

Summary

(i) Direct payment procedures for large civil works contracts. (ii) Reimbursement procedures initially funds eligible expenditures. (iii) Imprest account: a. the imprest account will be established and maintained by LPFD, on behalf of LPG, after the loan becomes effective; b. LPFD, on behalf of LPG, will be responsible for the use, management, replenishment, and liquidation of the imprest account;

16 ADB. 2005. Financial Management and Analysis of Projects. Manila. 17 ADB. 2009. Financial Due Diligence: A Methodology Note. Manila. 18 ADB. 2009. Report and Recommendation of the Board of Directors: Proposed Loan to People’s of China for the Liaoning Small Cities and Towns Development Demonstration Sector Project. Manila (Loan 2550-PRC).

c. the imprest account will be exclusively used to finance the ADB share of eligible expenditures; and d. the maximum amount to be deposited into the imprest account will not exceed the estimated expenditures to be financed through the imprest account in the next 6 months or 10% of the loan amount, whichever is lower.

4. The loan proceeds will be disbursed in accordance with the procedures set out in ADB’s Loan Disbursement Handbook (2012, as amended from time to time),19 and detailed arrangements agreed upon between the Government and ADB.

5. Prohibited investment activities. Pursuant to ADB's Safeguard Policy Statement (2009) (SPS),20 ADB funds may not be applied to the activities described on the ADB Prohibited Investment Activities List set forth at Appendix 5 of the SPS. All financial institutions will ensure that their investments are in compliance with applicable national laws and regulations and will apply the prohibited investment activities list (Appendix 5) to the components financed by ADB.

6. Imprest account. To facilitate project implementation through timely release of loan proceeds, the LPFD, on behalf of LPG, will establish an imprest account promptly after loan effectiveness at a commercial bank acceptable to ADB.21 The LPFD will administer the imprest account. The maximum ceiling of the imprest account will not at any time exceed the estimated ADB-financed expenditures to be paid from the imprest account for the next 6 months or 10% of the respective loan amount, whichever will be lower.

7. The initial amount to be deposited in the imprest account will not exceed the estimated expenditures for the succeeding 6 months to be funded from the imprest account, or 10% of the loan amount, whichever is lower. An Estimate of Expenditure Sheet22 setting out the estimated expenditures for the first 6 months of project implementation, and submission of evidence satisfactory to ADB that the imprest account has been duly opened, should accompany the request for initial advance to the imprest account. For every liquidation and replenishment request of the imprest account, the borrower will furnish to ADB (i) Statement of Account (Bank Statement) where the imprest account is maintained, and (ii) the Imprest Account Reconciliation Statement reconciling the above-mentioned bank statement against the executing agency’s records.23

8. Statement-of-expenditure (SOE) procedure. To expedite the flow of funds and simplify the documentation process, the ADB SOE procedure will be used for liquidation and replenishment of the imprest account, and for reimbursement of eligible expenditures not exceeding $200,000 per individual transaction. The payments in excess of the SOE ceiling will be reimbursed, liquidated, or replenished based on full supporting documentation. SOE records should be maintained and made readily available for review by ADB's disbursement and review mission or upon ADB's request for submission of supporting documents on a sampling basis, and for independent audit.24

19 Available at: http://www.adb.org/Documents/Handbooks/Loan_Disbursement/loan-disbursement-final.pdf 20 Available at: http://www.adb.org/Documents/Policies/Safeguards/Safeguard-Policy-Statement-June2009.pdf 21 The bank charges on the imprest account will be financed from the proceeds of the loan. 22 Available in Appendix 29 of the Loan Disbursement Handbook. 23 Follow the format provided in Appendix 30 of the Loan Disbursement Handbook. 24 Checklist for SOE procedures and formats are available at: http://www.adb.org/documents/handbooks/loan_disbursement/chap-09.pdf http://www.adb.org/documents/handbooks/loan_disbursement/SOE-Contracts-100-Below.xls

9. Withdrawal applications. Before the submission of the first withdrawal application, the Borrower should submit to ADB sufficient evidence of the authority of the person(s) who will sign the withdrawal applications on behalf of the Borrower, together with the authenticated specimen signatures of each authorized person. The minimum value per withdrawal application is $100,000 unless otherwise approved by ADB. The Borrower is to consolidate claims to meet this limit for reimbursement and imprest account claims. Withdrawal applications and supporting documents will demonstrate among other things that the goods and/or services were produced in or from ADB members, and are eligible for ADB financing.

2. Disbursement Arrangements for Government Funds

10. For the domestic funds, responsible local governments and implementing agencies will allocate the designated funding for the project. LPFD will monitor the provision of the funds, which will be administered by local finance bureaus and implementing agencies, and disbursed to contractors, consultants, suppliers, etc., according to project progress. The disbursement process will follow this process: (i) for each project subcomponent an onlending agreement will be executed between LPFD and the relevant local finance bureau; (ii) based on project progress, project implementing agencies will submit a disbursement request to the project management office of the respective local government; and (iii) once approved, counterpart funds will be disbursed from the finance bureau of the respective local government and implementing agencies.

C. Accounting and Financial Reporting

11. LPG and implementing agencies will maintain separate project accounts and records by funding source for all expenditures incurred on the project. Consolidated project financial statements will be prepared annually in accordance with applicable guidance and regulations, where these are generally consistent with internationally recognized accounting principles and practices.25

D. Auditing

12. LPG, LPMO, and the implementing agencies will cause the annual consolidated project financial statements to be audited in accordance with International Standards on Auditing and the Government Auditing Standards of the PRC (where these are consistent with International Standards on Auditing), by the Liaoning Provincial Audit Office (LPAO). The LPAO will submit to ADB, in the English language, within 6 months of the end of the financial year:

(i) the annual consolidated project financial statements; (ii) an audit report which includes a separate audit opinion on the use of the imprest accounts and the SOE procedures; (iii) an audit management letter; and

http://www.adb.org/documents/handbooks/loan_disbursement/SOE-Contracts-Over-100.xls http://www.adb.org/documents/handbooks/loan_disbursement/SOE-Operating-Costs.xls http://www.adb.org/documents/handbooks/loan_disbursement/SOE-Free-Format.xls 25 Applicable laws, regulations and guidelines include: • The Accounting Law of the PRC (2000). • State-owned Construction Enterprise Accounting Control Regulations. • Capital Construction Financial Control Regulations. • Accounting Methods for Projects Financed by the World Bank.

(iv) the audited annual financial statements of the implementing agencies of the revenue-earning subcomponents (i.e., Shenyang Shenbei Water Works Co. Ltd, [SSWWC], and Fuxin City Heating Power Corporation [FHC]).

13. The Government and LPG have been made aware of ADB’s policy on delayed submission, and the requirements for satisfactory and acceptable quality of the audited project financial statements. ADB reserves the right to verify the project's financial accounts to confirm that the share of ADB’s financing is used in accordance with ADB’s policies and procedures. ADB will disclose on its website the audited annual consolidated project financial statements together with the auditor’s opinion.

VI. PROCUREMENT AND CONSULTING SERVICES

1. A procurement capacity assessment (PCA) was conducted to assess the capacity of the executing agency and implementing agencies to procure goods, works and consulting services under the project. The PCA found that, while the executing agency and implementing agencies have established procurement procedures and staffing, and have significant procurement experience, including with foreign-funded projects, including ADB-financed projects, the PCA recommends that extensive training and support should be provided on ADB procurement policies and procedures. The early engagement of a tendering agent will further reduce procurement-related risks.

A. Advance Contracting and Retroactive Financing

2. All advance contracting and retroactive financing will be undertaken in conformity with ADB’s Guidelines on the Use of Consultants (2010, as amended from time to time).26 ADB’s management review meeting, which was held on 22 June 2012, approved advance contracting and retroactive financing. The issuance of invitations to bid under advance contracting and retroactive financing will be subject to ADB approval. The borrower, LPG, and implementing agencies have been advised that approval of advance contracting and retroactive financing does not commit ADB to finance the project. In addition, the executing agency and implementing agencies have also been advised that, where advance contracting is approved, ADB's approval must be sought for the draft prequalification and bidding documents before they are issued.

3. To expedite project implementation, the government requested ADB to approve advance contracting, which includes the recruitment of consultants; and the request for retroactive financing of eligible expenditures for consulting services. Section VI (procurement plan) identifies the specific contracts for which advance contracting and retroactive financing has been requested.

4. Advance contracting. Advance contracting will include recruitment of consultants. The advance contracting includes two consulting services packages, viz: (i) external resettlement monitoring, and (ii) project management and implementation support and financial management. The consultant recruitment procedures, including advertising, shall be in accordance with the ADB’s Guidelines on the Use of Consultants (2010, as amended from time to time).

5. Retroactive financing. The government was informed that as a general rule retroactive financing is permitted only if (i) it is specifically agreed by ADB and the borrower; (ii) the goods, works, services, and consultants for which it is requested are procured in accordance with ADB’s Procurement Guidelines or Guidelines on the Use of Consultants by Asian Development Bank and Its Borrowers; (iii) the amount to be retroactively financed does not exceed 20% of the loan amount; and (iv) the expenditures must have been incurred before effectiveness of the relevant loan but, generally, no earlier than 12 months before signing of the loan agreement. In either instance, detailed assessments (due diligence) on each retroactive financing proposal must demonstrate that (a) the expenditures incurred are genuine, reasonable, and material to getting the project off the ground; and (b) they were incurred for proper reasons, in a transparent manner over a reasonable period of time. The retroactive financing will include two

26 Available at: http://www.adb.org/Documents/Guidelines/Consulting/Guidelines-Consultants.pdf

consulting services packages, viz: (i) external resettlement monitoring, and (ii) project management and implementation support and financial management.

B. Procurement of Goods, Works and Consulting Services

6. All procurement of goods and works will be undertaken in accordance with ADB’s Procurement Guidelines (2010, as amended from time to time).27

7. International competitive bidding (ICB) will be used for civil works contracts estimated to cost $10 million and above. National competitive bidding (NCB) will be used for civil works contracts estimated to cost $100,000 or more, but below $10 million. For goods and equipment, ICB will be used for contracts estimated to cost $1 million and above, while NCB will be used for goods and equipment below $1 million equivalent, and above $100,000 equivalent. Under NCB, before the start of any procurement ADB and the government will review the public procurement laws of the central and state governments to ensure consistency with ADB’s Procurement Guidelines. For NCB, the first draft English language of the procurement documents (prequalification, bidding documents, draft contract) should be submitted for ADB approval regardless of the estimated contract amount. Subsequent procurements are subject to post review. All ICB contracts are subject to prior review. Prior review and approval of ADB of the procurement documents (prequalification, bidding, contract) is required.

8. An 18-month procurement plan indicating contract value, “procurement method, threshold and review procedures, goods, works, and consulting service contract packages and national competitive bidding guidelines is in Section C.

9. All consultants will be recruited according to ADB’s Guidelines on the Use of Consultants (2010, as amended from time to time).28 The terms of reference for all consulting services are detailed in Section D.

10. An estimated 180 person-months (31 international, 149 national) of consulting services are required to (i) facilitate project management and implementation, and (ii) provide capacity building and institutional strengthening.

C. Procurement Plan

Basic Data Project Name: Integrated Development of Key Townships in Central Liaoning Executing Agency: Liaoning Provincial Country: People's Republic of China Government Loan Amount: $150,000,000 Loan (Grant) Number: 44021 Date of First Procurement Plan: 16 August 2012 Date of this Procurement Plan: 16 August 2012

27 Available at: http://www.adb.org/Documents/Guidelines/Procurement/Guidelines-Procurement.pdf 28 Checklists for actions required to contract consultants by method available in e-Handbook on Project Implementation at: http://www.adb.org/documents/handbooks/project-implementation/

Procurement Thresholds, Review, and Procurement Plan

1. Project Procurement Thresholds

11. Except as ADB may otherwise agree, the following process thresholds shall apply to procurement of goods and works.

Procurement of Goods and Works Method b Threshold ICB for Works a $10 million or more ICB for Goods a $1 million or more NCB for Works a Below $10 million but more than $100,000 NCB for Goods a Below $1 million but more than $100,000 Shopping for Works $100,000 or below Shopping for Goods $100,000 or below ICB = international competitive bidding, NCB = national competitive bidding. a Refer to paragraph 3 of Project Administration Instruction 3.04 National Competitive Bidding. b Resettlement plans need to be finalized based on final design and detailed measurement survey of affected people and submitted to ADB for review and approval, prior to contract awards.

2. ADB Prior or Post Review

12. Except as ADB may otherwise agree, the following prior or post review requirements apply to the various procurement and consultant recruitment methods used for the project.

Procurement Method Prior or Post Comments Procurement of Goods and Works ICB Works Prior ICB Goods Prior NCB Works The first NCB procurement documents for goods and the first NCB procurement documents for works for NCB Goods each project implementing agency should be submitted for prior ADB review and approval. Subsequent NCB procurement documents will be subject to post review. Shopping for Works Post Shopping for Goods Post

Recruitment of Consulting Firms CQS Prior QCBSa Prior Other selection methods: FBS, LCS, QBS Prior

Recruitment of Individual Consultants ICS Prior ADB = Asian Development Bank, CQS = consultant qualifications selection, FBS = fixed-budget selection, ICB = international competitive bidding, ICS = individual consultant selection, LCS = least-cost selection, NCB = national competitive bidding, QBS = quality-based selection, QCBS = quality- and cost-based selection. a A fixed quality-cost ratio of 80:20 will be used.

3. Goods and Works Contracts Estimates to Cost More Than $1 Million

13. The following table lists goods and works contracts for which procurement activity is expected under the project.

Goods and Works Contracts Estimated to Cost More than $1 Million Contract Prequal- Advertisement Procurement ADB General Description Value ification of Date Comments Method Review ($000) Bidders (Quarter/Year)

A: Works Output 1: Wastewater Improvements Shenbei Wastewater Project SW-C01 Civil Works for Qingshuitai Wastewater Treatment 3,136 NCB No Q2 2013 Prior Plant Subtotal (1) 3,136 Output 3: Urban Transport Gaizhou Project GZ-C01 Beichen Road, East Section 7,855 NCB No Q1 2014 Prior GZ-C02 Beichen Road, West Section 6,235 NCB No Q4 2014 Post GZ-C03 Honghuayu Road and Alley Roads 4,366 NCB No Q1 2015 Post Heishan Project HS-C01 Jiefang Street, North Section 6,940 NCB No Q1 2013 Prior HS-C02 Jiefang Street, South Section 7,915 NCB No Q1 2014 Post HS-C03 Xingongye Da Street 13,742 ICB No Q1 2015 Prior HS-C04 Bintie Road 7,131 NCB No Q1 2014 Post Huanren Project HR-C01 Hunjiang Da Street, West Section (Wunv Square 5,850 NCB No Q2 2013 Prior to Zhaoyang Rd) HR-C02 Hunjiang Da Street, East Section (Zhaoyang Rd 6,313 NCB No Q1 2014 Post to Huancheng Rd) HR-C03 Zhongxin Da Street and 7 Roads 4,783 NCB No Q1 2014 Post HR-C04 38 Alley Roads 5,325 NCB No Q1 2015 Post Shenbei Road Project SD-C01 Xinglongtai Roads 1,6,9 and Branch Road 4,670 NCB No Q1 2014 Post SD-C02 Xinglongtai Roads 3, 5 6,458 NCB No Q3 2013 Post SD-C03 Xinglongtai Roads 2,4,7 and 8 6,011 NCB No Q2 2014 Post SD-C04 Qingshuitai Road 3 3,965 NCB No Q2 2013 Prior SD-C05 Qingshuitai Rads 4,7,and 8 3,678 NCB No Q4 2013 Post SD-C06 Qingshuitai Roads 5,6,and 9 6,888 NCB No Q3 2014 Post SD-C07 Qingshuitai Roads 1,2,10 and 11 3,404 NCB No Q1 2015 Post SD-C08 Qingshuitai Branch Road 7,041 NCB No Q2 2015 Post Benxi Waitoushan Project YD-C01 Songbei Road and No. 1 Road, Alley Roads, and 6,674 NCB No Q4 2014 Post Songbei Bridge, Songbei Overpass YD-C02 Civil works of Songbei underpass 1 (Main framework, railway foundation reinforcement, 4,756 NCB No Q2 2014 Prior relocation of railway 3, and specific railway rehabilitation) YD-C03 Civil works of Songbei underpass 2 (U-type trench, pavement, drainage pump stations and 7,102 NCB No Q2 2015 Post open caisson) Xinmin Project XM -C01 Zhanqian Da Street Overpass and Road, Gongren 5,981 NCB No Q1 2013 Prior Street North Section, and Bridge XM -C02 Zhanqian Da Street South Section 6,400 NCB No Q1 2015 Post XM -C03 Xihuan Street, Shigongmiao Street North Section, 5,736 NCB No Q4 2014 Post and Qingzhenshi East XM -C04 Xinkaihe West Street 6,402 NCB No Q2 2015 Post XM -C05 Railway Underpass 3,276 NCB No Q2 2013 Post XM -C06 21 Roads, including Liaohe Da Street 6,694 NCB No Q4 2013 Post XM -C07 17 Roads, including Xinshi Street 5,908 NCB No Q3 2013 Post XM -C08 Tiebei Drainage and Recovery 6,334 NCB No Q1 2014 Post XM -C09 Tiebei Pump Station, Dongying Pump Station and 3,585 NCB No Q4 2014 Post Nanjiaolu Pump Statiion Subtotal (2) 187,419 Subtotal A (1+2) 190,555

Contract Prequal- Advertisement Procurement ADB General Description Value ification of Date Comments Method Review ($000) Bidders (Quarter/Year)

B: Goods Ouput 1: Wastewater Improvements Shenbei Wastewater Project SW-E01 Equipment Supply and Installation for Qingshuitai 1,865 ICB No Q2 2013 Prior Wastewater Treatment Plant Subtotal (1) 1,865 Output 2: District Heating Fuxin Heating Project F X-E 01 Equipment of HESs, SCADA and pipelines 10,205 ICB No Q2 2013 Prior Subtotal (2) 10,205 Output 3: Urban Transport Heishan Project HS-E01 Equipment for road maintenance (including 1,476 ICB No Q2 2013 Prior rollers, mixers, pavement patchers) HS-E02 Equipment for traffic management (signals, 2,419 ICB No Q3 2013 Prior monitoring) Huanren Project HR-E01 Equipment for road maintenance (including 3,618 ICB No Q1 2014 Prior rollers, mixers, pavement patchers) Shenbei Road Project SD-E01 Equipment for road maintenance (including 4,379 ICB No Q3 2013 Prior rollers, mixers, pavement patchers) SD-E02 Equipment for traffic management (signals, 1,168 ICB No Q3 2013 Prior monitoring) Xinmin Project XM -E 01 Equipment supply and Installation in pump 6,717 ICB No Q1 2014 Prior stations XM -E 02 Equipment for road maintenance (including 4,936 ICB No Q2 2013 Prior rollers, mixers, pavement patchers) XM -E 03 Equipment for traffic management (signals, 2,139 ICB No Q3 2013 Prior monitoring) Subtotal (3) 26,853 Subtotal B (1+2+3) 38,922 Total (A+B) 229,477 HES = heat exchange station, ICB = international competitive bidding, NCB = national competitive bidding, SCADA = supervisory, control, and data acquisition. a Exchange rate used: $1.00:CNY6.30.

4. Consulting Services Contracts Estimates to Cost More than $100,000

14. The following table lists consulting services contracts for which procurement activity is expected under the project.

Consulting Services Contracts Estimated to Cost More than $100,000

Estimated Post or International Advertise- Recruitment Contract Description Cost Prior or National ment Date Method ($ million) Review Assignment (quarter/year) 1. Project management and implementation Q3 2012 1.414 QCBS (80:20) Prior Both support and financial (AD/RF) management 2. External resettlement Q3 2012 0.150 CQS Prior Both and social monitoring (AD/RF) 3. External 0.036 CQS Prior National Q4 2012 environmental monitoring 4. Leadership 0.200 CQS Prior Both 2014 development program

Estimated Post or International Advertise- Recruitment Contract Description Cost Prior or National ment Date Method ($ million) Review Assignment (quarter/year) 5.Urban Transport Capacity Development 0.200 CQS Prior Both 2014 Program AD = advance contracting, CQS = consultant qualifications selection, QCBS = quality- and cost-based selection, RF = retroactive financing.

5. Goods and Works Contracts Estimated to Cost Less than $1 Million and Consulting Services Contracts Less than $100,000

15. The following table groups smaller-value goods, works, and consulting services contracts for which procurement activity is expected under the project.

Procurement/ Cumulative Value of Number of General Description Recruitment Comments Contracts ($ million) Contracts Method Works Contracts

Equipment 0.46 1 NCB NCB = national competitive bidding.

6. Indicative List of Packages Required Under the Project

16. The following table provides an indicative list of all procurement (goods, works and consulting services) over the life of the project. Contracts financed by the Borrower and others should also be indicated, with an appropriate notation in the comments section.

Estimated Value Estimated Domestic General (cumulative, Number of Procurement Preference Description $ million) Contracts Method Applicable a Comments Works 13.74 1 ICB No 176.81 31 NCB No Goods 38.92 10 ICB No 0.46 1 NCB No Estimated Value Estimated General (cumulative, Number of Recruitment Type of Description $ million) Contracts Method Proposal b Comments Consulting 1.414 1 QCBS FTP Services 0.586 4 CQS BTP

BTP = biodata technical proposal, CQS = consultant qualifications selection, FTP = full technical proposal, ICB = international competitive bidding, NCB = national competitive bidding, QCBS = quality- and cost-based selection. a See Procurement Guidelines, Appendix 2. b See Project Administration Instruction 2.02G.

7. National Competitive Bidding

17. The Borrower’s Law of Tendering and Bidding of the People’s Republic of China promulgated by Order No. 21 of the President of the People’s Republic of China on August 30, 1999, are subject to the following clarifications required for compliance with the Guidelines:

(i) All invitations to prequalify or to bid shall be advertised in the national press, or official gazette, or a free and open access website in the Borrower’s country. Such advertisement shall be made in sufficient time for prospective bidders to obtain prequalification or bidding documents and prepare and submit their responses. In any event, a minimum preparation period of thirty (30) days shall be given. The preparation period shall count (a) from the date of advertisement, or (b) when the documents are available for issue, whichever date is later. The advertisement and the prequalification and bidding documents shall specify the deadline for such submission. (ii) Qualification requirements of bidders and the method of evaluating the qualification of each bidder shall be specified in detail in the bidding documents, and in the prequalification documents if the bidding is preceded by a prequalification process. (iii) If bidding is preceded by a prequalification process, all bidders that meet the qualification criteria set out in the prequalification document shall be allowed to bid and there shall be no limit on the number of pre-qualified bidders. (iv) All bidders shall be required to provide a performance security in an amount sufficient to protect the Borrower/Project Executing Agency in case of breach of contract by the contractor, and the bidding documents shall specify the required form and amount of such performance security. (v) Bidders shall be allowed to submit bids by mail or by hand. (vi) All bids shall be opened in public; all bidders shall be afforded an opportunity to be present (either in person or through their representatives) at the time of bid opening, but bidders shall not be required to be present at the bid opening. (vii) All bid evaluation criteria shall be disclosed in the bidding documents and quantified in monetary terns or expressed in the form of pass/fail requirements. (viii) No bid may be rejected solely on the basis that the bid price falls outside any standard contract estimate, or margin or bracket of average bids established by the Borrower/Project Executing Agency. (ix) Each contract shall be awarded to the lowest evaluated responsive bidder, that is, the bidder who meets the appropriate standards of capability and resources and whose bid has been determined (a) to be substantially responsive to the bidding documents, and (b) to offer the lowest evaluated cost. The winning bidder shall not be required, as a condition of award, to undertake responsibilities for work not stipulated in the bidding documents or otherwise to modify the bid as originally submitted. (x) Each contract financed with the proceeds of the loan shall provide that the suppliers and contractors shall permit ADB, at its request, to inspect their accounts and records relating to the performance of the contract and to have said accounts and records audited by auditors appointed by ADB. (xi) Government owned enterprises in the Borrower’s country may be permitted to bid if they can establish that they (a) are legally and financially autonomous, (b) operate under commercial law, and (c) are not a dependent agency of the Borrower/Project Executing Agency. (xii) Re-bidding shall not be allowed solely because the number of bids is less than three (3).

D. Consultant's Terms of Reference

1. Introduction

18. LPMO on behalf of LPG will be responsible for engaging consultants to assist in project implementation and management as well as providing training to LPMO, implementing agencies, and other agencies. All consultants will be recruited according to ADB’s Guidelines on the Use of Consultants (2010, as amended from time to time).29 The consultants will be engaged through two different selection methods, quality- and cost-based selection (QCBS) and consultant qualifications selection (CQS).30

19. There are five consulting services packages: (i) a consulting firm will be engaged for project management, implementation support, and financial management strengthening using the QCBS method, with the standard quality, cost ratio of 80:20, (134 person-months); (ii) a consulting firm or institute will be engaged for external resettlement and social monitoring using the CQS method (17 person-months); (iii) a consulting firm or institute will be engaged for external environmental monitoring using the CQS method (5 person-months); (iv) a consulting firm will be engaged using the CQS method for the leadership development program (8 person- months); and (v) a consulting firm will be engaged using the CQS method for the urban transport capacity development program (16 person-months). The first two packages will be subject to advance contracting.

2. Package 1: Project Management and Implementation Support and Financial Management (consulting firm, 133 person-months, QCBS)

20. This package is intended to enable project outputs 1-3 to be delivered on time, within budget, in a sustainable manner, and in accordance with prescribed policies, standards and procedures. The package includes support for project management consulting services; and capacity building and institutional strengthening; financial management strengthening; and a 4- year training program.

21. The consultancy services will involve international and national experts, with an international team leader and national deputy team leader. The consultants will assist LPG, LPMO, and implementing agencies in (i) liaising and coordinating with ADB; (ii) establishing the project performance monitoring system (PPMS); (iii) procurement and disbursement matters; (iv) design and construction oversight; (v) establishing procedures for, and also preparing and submitting reports to LPMO and ADB; (vi) establishing data collection and monitoring arrangements per the project’s design and monitoring framework (DMF); (vii) implementing and monitoring the social development action plan (SDAP), gender action plan (GAP), resettlement plans, and environment management plan (EMP); and (viii) promoting the adoption of international standard practices for project management and monitoring systems. Support and training will also be given on: (i) credit appraisal and credit-rating approaches; (ii) identifying alternative financing options; and (iii) developing a credit-worthiness strengthening plan. Capacity building and training activities on all of the foregoing aspects will be provided to strengthen implementing agencies, and LPMO design and supervision, and O&M procedures.

29 Checklists for actions required to contract consultants by method available in e-Handbook on Project Implementation at: http://www.adb.org/documents/handbooks/project-implementation/ 30 Terms of reference guidelines available at: http://www.adb.org/Documents/Manuals/Consulting-Services- OperationsManual/CSOM.pdf?bcsi_scan_D4A612CF62FE9576=AORY9a8Nho2ezS9Xss/ligEAAAANNiAA&bcsi_s can_filename=CSOM.pdf (paras 65–72).

22. An international consulting firm will be engaged in accordance with ADB’s Guidelines on the Use of Consultants (2010, as amended from time to time). ADB will select and engage the consultants based on the quality of the proposal (80%) and the cost (20%) of the services to be provided (the QCBS method) using the full technical proposal procedure. The consultants will work with LPG, implementing agencies, LPMO and other relevant agencies to provide assistance and advice on the tasks outlined below.

23. The project management consultants will assist and support LPG, implementing agencies, LPMO, and other relevant agencies at project start-up and during project implementation with:

(i) advice and assistance to establish institutional frameworks, operating procedures, filing systems, and workplans to guide and facilitate project implementation; (ii) assistance to establish the PPMS in accordance with ADB requirements, including establishing baselines and mechanisms for data collection, analysis, and reporting; (iii) advice and training on ADB disbursement procedures and assistance to establish sound accounting, financial management, and reporting systems in accordance with ADB guidelines and procedures; (iv) assistance to develop reporting formats and establish mechanisms for preparing and submitting the reports specified in the loan and project agreements; (v) assistance to prepare and review bidding documents in cooperation with the tendering agent and in accordance with ADB's Procurement Guidelines (2010, as amended from time to time); (vi) assistance in contract management, including monitoring construction progress, quality assurance and control, reviewing and certifying contractors’ claims for payment, and coordinating daily operations; (vii) technical review of engineering designs in accordance with design codes and standards; (viii) assistance to develop an effective construction supervision program, and to provide guidance and support for its implementation; (ix) construction inspection and supervision of key construction components; (x) advice and training on ADB’s safeguard policy and operational requirements including on resettlement, environment, poverty reduction, gender development, and ethnic minorities; (xi) assistance to review and finalize the EMP and resettlement plans based on final design and detailed measurement survey of affected persons, and monitor the implementation of the EMP and resettlement plans prepared for the project, assist the preparation of related reports to ADB, and prepare and submit to ADB the semi-annual environmental and resettlement monitoring reports and resettlement completion reports; (xii) training on implementing the measures specified in the EMP; (xiii) assisting the LPMO and implementing agencies on implementation and monitoring of the SDAP and GAP activities; (xiv) trainings on the skills needed for construction supervision, project management, and implementation of social and environmental safeguards; (xv) advice and training on ADB policy and procedural requirements to ensure full compliance; (xvi) in addition to providing support to participating key townships to strengthen their financial management arrangements and practices, and enable the project to be

implemented smoothly, sustainably, and in full compliance with PRC and ADB policies and operational requirements, training and support will be given on: (a) credit appraisal and credit-rating approaches, including shadow credit rating exercises; (b) identifying alternative financing options, such as bond issues and public-private partnerships; and (c) developing a credit-worthiness strengthening plan, using the results of the shadow credit-rating exercises to identify options and priorities for strengthening credit worthiness; and (xvii) assist in the development of a 4-year training plan (2013-2017), and provide assistance and coordination to implement the training plan. The training program will cover (a) project implementation management; (b) wastewater management operations and maintenance; (c) district heating operations and maintenance; (d) financial management, cost recovery, and financial sustainability; (e) pollution control and environmental monitoring;* (f) urban transport and management; (g) emergency preparedness and response;* (h) asbestos risk assessment and management;* and (i) other project-related issues. The safeguards assurances and documents require that the training topics include the asterisked items. Training modalities will include workshops and seminars, on-site training, and domestic and overseas study tours.

3. Package 2: External Resettlement and Social Monitoring (consulting firm or institute, 17 person-months, CQS)

24. An external resettlement and social monitor will be engaged intermittently for the whole duration of project implementation. The consulting firm or institute will be engaged by the CQS method to provide an estimated total input of 2 person-months of international and 15 person- months of national consulting inputs. The external resettlement and social monitor will assist LPG, LPMO and implementing agencies in:

(i) conducting a baseline survey of affected persons and monitoring to ensure implementation of the resettlement plans, GAP, and SDAP in compliance with ADB’s safeguard and other relevant policies; (ii) making recommendations to resolve any issues or problems on implementation of resettlement plans, and providing advice to the implementing agencies; (iii) paying special attention to vulnerable groups, including women, the poor, and any ethnic minority households, to assess whether they have participated and fully regained their standard of living; and (iv) submitting English and Chinese external resettlement and social monitoring reports to the LPG and ADB, with quality acceptable to ADB every 6 months, during resettlement implementation and annually for 2 years after resettlement completion.

4. Package 3: External Environment Monitoring (consulting firm or institute, 5 person-months, CQS)

25. An external environment monitor will be engaged intermittently for the entire duration of project implementation. The consultant firm/institute with estimated total input of 5 person- months of national consultants will be engaged by CQS method. Responsibilities will include:

(i) conducting independent verification of the project’s environmental management performance, including identification of any environment-related implementation issues and EMP compliance issues;

(ii) comparing the predicted with the actual environmental impacts, assessing the effectiveness of the mitigation measures, and suggesting enhancement measures, as required; (iii) providing advice to LPG, LPMO and implementing agencies on required corrective actions; and (iv) submitting EMP implementation compliance verification reports to LPG, LPMO, implementing agencies (in Chinese) and ADB (in English) on semiannual basis during project implementation period.

5. Package 4: Leadership Development Program (consulting firm, 8 person- months, CQS)

26. This package will support the development and implementation of a Leadership Development Program for senior officials of participating township governments to strengthen capabilities for managing their jurisdictions in a strategic and holistic manner and in full consideration of best international practices in township development and management worldwide.

27. A consulting firm will be engaged by the CQS method to provide an estimated total input of 1 person-month of international and 7 person-months of national consulting inputs. The consultants will work with LPG, implementing agencies, LPMO and other relevant agencies to develop the leadership development program. This will include an appropriate mix of formal and informal training delivery including workshops, seminars, study tours and on-the-job training, to be provided directly by the consultants, under locally arranged training contracts, or through approved in-country or overseas study activities. Activities will include, but not necessarily be limited to:

(i) identifying and reviewing successful urban management and development practices in PRC and elsewhere, which are relevant to the key townships, including: a. initiatives to promote social inclusion and equitable access to the new economy (particularly for the urban poor and rural migrants); b. financing options, which is particularly relevant given heavy reliance on sales of land rights (this will be based on and coordinated with the relevant outputs from subcomponent 1 (project management and implementation support); c. case studies on urban regeneration including environmental and ecologically friendly sustainable growth; and d. other topics to be determined through consultation with participating key townships; and (ii) Conducting leadership development training on above topics through workshops and study tours for senior officials.

6. Package 5: Urban Transport Capacity Development Program (consulting firm, 16 person-months, CQS)

28. This package will support the development and implementation of an Urban Transport Capacity Development Program, including people-centric urban road design and road safety audits, promotion of public transportation, and related training.

29. A consulting firm will be engaged by the CQS method to provide an estimated total input of 2 person-months of international and 14 person-months of national consulting inputs. The consultants will work with LPG, implementing agencies, LPMO and other relevant agencies to develop the urban transport capacity development program. This will include an appropriate mix of formal and informal training delivery including workshops, seminars, study tours and on-the- job training, to be provided directly by the consultants, under locally arranged training contracts, or through approved domestic study activities. Activities will include, but not necessarily be limited to:

(i) Conduct road safety audit to identify road safety issues and provide recommendations on improving road safety in small towns of Liaoning so that the recommendations can be adopted for the project roads; (ii) Conduct a pilot study on public transport system in Heishan and other towns in this project and provide recommendation on promoting public transport for small cities in Liaoning in a proper and effective manner; and (iii) Develop training course on improving road safety and promoting public transportation, and organize workshop, seminar and domestic study tour.

7. Consultancy Inputs and Costs

30. The consulting service inputs and associated costs are summarized below.

Schedule of Consultancy Services (person-months)

Package and Expert International National Package 1: Project Management and Capacity Building Project Manager and Chief Engineer/ Team Leader 11 0 Procurement, Contract Management and PPMS Expert/ Deputy 0 50 Team Leader Civil Engineer (Road) 0 6 Civil Engineer (Bridge) 0 4 District Heating Engineer 0 3 Wastewater Engineer 0 4 Urban Land Use and Transport Planning Experts 2 4 Financial and Economic Experts 2 14 Resettlement, Social and Gender Development Experts 5 14 Environment Experts 5 9 Subtotal 25 108

Package 2: External Resettlement and Social Monitoring Resettlement and Social Experts 2 15 Subtotal 2 15

Package 3: External Environmental Monitoring Environment Experts 0 5 Subtotal 0 5

Package 4: Leadership Development Program Urban Planning Expert/ Team Leader 0 3 Fiscal Expert 0 2 Social Development Experts 1 2 Subtotal 1 7

Package and Expert International National

Package 5: Urban Transport Capacity Development Program Urban Transport Planning and Safety Experts 2 14 Subtotal 2 14

Grand Total 30 149

Indicative Consultancy Services Budget Estimate Package and Item ($’000) Package 1: Project Management and Capacity Building 1. Consultants Remuneration and per diem (including fees, international and local travel) i. International consultants (25 person-months at $23,000 per month) 575.0 ii. National consultants (108 person-months at $5,000 per month) 540.0 2. Workshops, training, seminars and conferences 100.0 3. Miscellaneous administration and support costs (including equipment) 37.0 4. Vehicle purchase 88.0 5. Contingency 74.0 Subtotal 1,414.0

Package 2: External Resettlement and Social Monitoring 1. Consultants Remuneration and per diem (including fees, international and local travel) i. International consultants (2 person-months at $23,000 per month) 46.0 ii. National consultants (15 person-months at $5,000 per month) 75.0 2. Surveys and data collection 6.0 3. Miscellaneous administration and support costs (including equipment) 8.0 4. Contingency 15.0 Subtotal 150.0

Package 3: External Environmental Monitoring 1. Consultants Remuneration and per diem (including fees, international and local travel) iii. International consultants (0 person-months at $23,000 per month) 46.0 iv. National consultants (5 person-months at $5,000 per month) 25.0 2. Surveys and data collection 5.0 3. Miscellaneous administration and support costs (including equipment) 2.0 4. Contingency 4.0 Subtotal 36.0

Package 4: Leadership Development Program 1. Consultants Remuneration and per diem (including fees, international and local travel) i. International consultants (1 person-month at $23,000 per month) 23.0 ii. National consultants (7 person-months at $5,000 per month) 35.0 2. Workshops, training, seminars and conferences 110.0 3. Miscellaneous administration and support costs (including equipment) 12.0 4. Contingency 20.0 Subtotal 200.0

Package 5: Urban Transport Capacity Development Program 1. Consultants Remuneration and per diem (including fees, international and local travel)

Estimate Package and Item ($’000) i. International consultants (2 person-months at $23,000 per month) 46.0 ii. National consultants (14 person-months at $5,000 per month) 70.0 2. Workshops, training, seminars and conferences 50.0 3. Miscellaneous administration and support costs (including equipment) 14.0 4. Contingency 20.0 Subtotal 200.0

Grand Total 2,000.0

8. List of Training Programs

31. Training programs including the following list will be delivered by the project management consultants during the course of project implementation.

Training Program Scope of Training Trainer Trainee ADB’s disbursement • ADB loan disbursement procedure Project LPMO, PMOs, procedures and • Role and responsibility of each management Implementing financial management stakeholders consultants agencies • Monitoring of fund flow and utilization of loan proceeds • Risk of delay in disbursement

Organizational • Basic financial management of the Project LPMO, PMOs, financial management project and project implementing entity management Implementing and financial audit (e.g. EA, IAs and PICs) consultants agencies system • Annual financial audit and its preparation for domestic and ADB requirement

Procurement and • ADB’s procurement process Project LPMO, PMOs, contract management • Bidding document preparation management Implementing • ADB’s guideline for bid evaluation consultants agencies, • Risk of misprocurement and mitigation contractors, measures tendering • Handling variation orders and contract agent management

Corruption risks in • Definition and type of corruption Project LPMO, PMOs, project implementation • Risk of corruption under the project management Implementing and anti-corruption implementation consultants agencies measures • Mitigation measures • Institutional framework and anticorruption mechanisms • Case studies and international best practices

Safeguard and social • ADB’s SPS policy Project LPMO, PMOs, monitoring • Legal requirements management Implementing • Implementation of EMP, RPs including consultants and agencies, labor re-employment plan, GAP and external contractors, SDAP monitors EPBs • Role and responsibility of different stakeholders

Training Program Scope of Training Trainer Trainee • Monitoring and reporting mechanisms and information handling • Emergency response and actions

Innovative ideas, • Basic urban road maintenance Project LPMO, PMOs, procedures and best • Daily/routine maintenance management Implementing practices for urban • Major maintenance consultants agencies, road operation and • Road and infrastructure monitoring and contractors maintenance assessment • Technical requirement of urban road maintenance • Innovative approaches in foreign countries

Basic operation and • Basic facility operation and maintenance Project LPMO, PMOs, management of urban of wastewater treatment plant management Implementing wastewater treatment • Daily/routine maintenance and consultants agencies plant and long-term monitoring municipal sewerage • Technical requirement treatment and sludge • Facility management (e.g. financial disposal planning. management, governance, emergency response mechanism, occupational health and safety) • Strategic urban wastewater treatment and sludge disposal planning

Urban transport • Urban road and transport planning Project LPMO, PMOs, planning for natural methodology management Implementing and man-made • Risk of emergency and its implication of consultants agencies, emergency response road system contractors • Institutional framework and stakeholder involvement for emergency response and road safety • International experiences and best practices

Urban land use and • Urban neighborhood planning Project LPMO, PMOs, planning for promoting methodology management Implementing people-centered • Urban planning for promoting road safety consultants agencies neighborhood design and non-motorized transport system • Stakeholder consultation and participation to urban planning • International experiences and best practices

ADB = Asian Development Bank, EA = executing agency, EPB = Environment Protection Bureau, EMP = environmental management plan, GAP = gender action plan, IA = implementing agency, LPMO, Liaoning project management office, PIC = project implementation company, RP = resettlement plan, SDAP = social development action plan, SPS = Safeguard Policy Statement.

VII. SAFEGUARDS

A. Environment

1. Environment impact assessment. The project is classified as environment category A. Environment safeguards issues during construction include earthwork and soil erosion, noise and air pollution, surface water pollution, and risks to occupational and community health and safety. During operation, the main potential adverse impacts include traffic noise at some sensitive areas which will require mitigation by sound-proofing, and odor and secondary pollution from the effluent and sludge of the WWTP.

2. The project will have substantial environmental and socioeconomic benefits. Improved and extended road systems will reduce traffic congestion and improve road safety conditions. The interaction of pedestrians, NMT, and motorized traffic will be rationalized through both engineering works (roads, paths, kerbs) and community involvement in safety campaigns. The improved wastewater collection and treatment system in Qingshuitai Town will result in cleaner and healthier living environment for town residents; and reduced contamination of rivers and waterways. The expansion of centralized domestic heating system will bring cheaper heating to the residents of a new urban area totaling 3 million square meters without requiring the combustion of additional coal equivalents and replacing existing domestic heating stoves. Both the people and the local air quality will benefit significantly.

3. An environmental impact assessment (EIA) was prepared and disclosed on the ADB website. The EIA complies with ADB’s policies and requirements including ADB's Safeguard Policy Statement (2009).31 The EIA concludes that the construction and operational impacts can be mitigated through the implementation of the EMP. The EMP, which will be updated during detailed engineering design, is annexed and forms part of the PAM (Attachment 1).The EMP defines mitigation measures, monitoring requirements, and institutional responsibilities to ensure proper environmental management throughout the project construction and operation. In the design stage the LPMO will provide the EMP to the design institutes for incorporating mitigation measures into the detailed designs. The updated EMP will be reviewed and cleared by ADB, reposted on ADB’s website, and provided to the construction contractors. To ensure that contractors comply with the EMP’s provisions, the LPMO will prepare and provide the following specification clauses for incorporation into the bidding procedures: (i) a list of environmental management requirements to be budgeted by the bidders in their proposals, (ii) environmental clauses for contractual terms and conditions, and (iii) updated individual EIAs and updated EMP for compliance.

4. Institutional arrangements. The LPG and the implementing agencies will be responsible for ensuring the project to be designed, constructed, decommissioned, and operated in accordance with (i) the national and local government environmental, health and safety laws, regulations, procedures, and guidelines; and (ii) ADB’s Safeguard Policy Statement, and the EIA including EMP. The LPG holds final responsibility for the implementation and compliance with the EMP. The LPMO is responsible for overseeing the implementation of the EMP. Environmental Management Units will be established within the LPMO and the implementing agencies to undertake effective environmental management activities specified in the EMP. The effectiveness of mitigation measures will be evaluated through environmental inspections and monitoring. The contractors and construction supervision companies will be responsible for internal environmental monitoring during

31 ADB. 2009. Safeguard Policy Statement. Manila.

construction. The Environmental Management Units will be responsible for supervising the contractors. The implementing agencies will be responsible for internal monitoring during operation. Compliance-related environmental impact monitoring will be conducted by licensed environment monitoring centers, contracted by the implementing agencies. An external environment monitor will be procured to conduct independent verification of the borrower’s compliance with the EMP and progress toward the expected outcomes.

5. The LPG shall make available, and cause the implementing agencies to make available, the necessary budgetary and human resource to fully implement the EMP. If any unanticipated environmental risks and impacts arise during construction or operation of the project that were not considered in the EIA and/or EMP, the LPG, through the implementing agencies, should promptly inform ADB in writing of the occurrence of such risks or impacts, with detailed description of the event and the proposed action plan for incorporation in the updated EMP.

6. Grievance redress mechanism. Environmental grievances may occur during construction and operation of the project. An environmental Grievance Redress Mechanism (GRM) has been designed for the project. It requires the designation of a project public complaints unit (PPCU) within the LPMO. Procedures and timeframe for the grievance redress process are described in the EIA. The project will provide training to the members of the PPCU and the access points of the GRM to ensure that responsibilities and procedures are clear. Plans for future public consultation and participation were developed and defined in the EMP. The implementing agencies will be responsible for meaningful consultation and participation during project implementation.

B. Land Acquisition and Resettlement

7. Land acquisition and resettlement. The project is classified as resettlement category A, since construction of the project’s components will necessitate significant land acquisition and resettlement (LA&R). The six subcomponents that have land acquisition and resettlement impacts will affect 12 neighborhoods in 6 subdistricts and 19 villages in 6 townships.32 Based on the preliminary impact survey,33 a total of 1,208 mu34 of land will be permanently acquired— comprising: (i) 1,057 mu of village collective land, including 807 mu of farmland, and (ii) 151 mu of state-owned (urban) land. A total of 100,263 square meters (m2) of houses and structures will be acquired and demolished, comprising: (i) 31,609 m2 of rural residential houses; (ii) 25,374 m2 of urban residential houses; (iii) 11,617 m2 of enterprises and shops; and (iv) 31,663 m2 of other structures (simple shanties). Farmland acquisition will affect 500 households with 1,770 persons. Demolition of houses and structures will affect: (i) 326 rural households with 1,204 persons; (ii) 309 urban households with 1,025 persons; and (iii) 29 small enterprises and shops with 339 staff and employees. In total, the project will affect 1,076 households with 3,762 persons35 and 29 enterprises and shops with 339 staff and employees.

8. Details of the subproject components that require LA&R are presented in Table 1 below.

32 ADB’s Safeguard Policy Statement (2009) trigger for involuntary resettlement changed the terminology of "affected persons" to "displaced persons", which is defined as persons who are physically and/or economically displaced as a result of involuntary acquisition of land or involuntary restrictions on land use or on access to legally designated parks and protected areas. In the PRC, although the resettlement plans maintain the original terminology of "affected persons”, the definition is equivalent to ADB's definition of "displaced persons”. 33 A detailed measurement survey can be conducted only upon the availability of project design. 34 A mu is a Chinese unit of measurement (1 mu = 666.67 m2). 35 After deducting 59 households with 237 persons which were double counted.

Table 1: Impact of Land Acquisition and Resettlement Benxi- Unit Xinmin Shenbei Heishan Gaizhou Huanren Total Waitoushan Affected township/urban subdistrict No. 3 2 2 2 2 1 12 Affected village/community No. 7 4 8 3 6 3 31 Permanent land Collective land mu 193.6 287.5 230.33 157.5 81.3 106.95 1057.18 acquisition Farmland mu 185 155.26 175.42 125.2 69.0 96.68 806.56 House plot mu 5.6 120.24 20.68 12.3 10.27 169.09 Construction land mu 7.96 7.96 Enterprise land mu 3 12 2.33 17.33 Other land mu 0 23.93 32.3 56.23 State land (urban) mu 52.95 48 9.18 1.1 29.91 10.12 151.26 Acquisition of Rural house m2 1094.2 20021 5216.53 0 3128.67 2149.01 31609.41 residential houses 2 and structures Rural Shanty m 1017 13460 3929.95 1350.50 1345.25 21102.7 Urban house m2 20224 0 1002.65 0 4051.35 96.30 25374.3 3 2 Urban Shanty m 8185 0 1362.17 0 934.50 105.5 10560.17

Urban 2 m 3915 4000 3185.77 320 196 11616.77 Enterprise/shop Affected rural Acquisition of HH 107 115 44 115 42 77 500 households and farmland Person 340 402 147 419 166 296 1770 persons Acquisition of HH 11 216 33 0 41 25 326 residential houses Person 36 779 119 0 165 105 1204 Both land and HH 2 6 1 0 25 25 59 house acquisition Person 8 20 3 0 101 105 237 Affected urban Acquisition of HH 211 0 14 0 82 2 309 households and residential houses persons Person 712 0 49 0 257 7 1025 HH 327 325 90 115 140 79 1076 Total of affected households and persons Person 1080 1161 312 419 487 303 3762 Total of enterprises/shops No. 15 5 3 2 4 0 29 Person 120 180 19 10 10 339 HH = household, m2 = square meter, mu = Chinese unit of measurement (1 mu = 666.67 m2). Note: Shenbei subcomponent refers to Shenbei Road and Shenbei wastewater improvements. Source: Liaoning Provincial Government.

9. Resettlement implementation arrangements. The LPMO and implementing agencies will assume the overall responsibility of planning, implementation, financing, and reporting on LA&R activities. Six draft resettlement plans and a due diligence report have been prepared for the project, and have been endorsed by the executing agency and implementing agencies, and were disclosed to affected people in local languages. The resettlement plans have been uploaded on ADB’s website. During project implementation, the resettlement plans will be finalized based on the final design and detailed measurement survey, disclosed to affected persons in local language and submitted to ADB for review and approval before awarding civil works contracts.

10. Grievance redress mechanism. In order to solve problems effectively and ensure the project construction and land acquisition are carried out successfully, a transparent and effective grievance, resolution, redress, and appeal channel has been set up. The basic procedures for grievance include the following:

(i) If any affected person is aggrieved by any aspect of the resettlement, he/she can state his/her grievance and appeal to the village collective in oral or in written form. If an oral appeal is made, the village collective will record it on paper and process it. The village committee will make a decision on or resolve it in 2 weeks. and/or (ii) The aggrieved affected person can state the grievance and appeal to the subdistrict office in oral or in written form. The sub-district office will decide on or resolve it in 2 weeks. (iii) If the aggrieved affected person is not satisfied with the decision of the subdistrict office, he/she can appeal to Resettlement office or the Land Resource Bureau (LRB) of the respective city after receiving the decision. The Resettlement office/LRB will reach a decision within 2 weeks. (iv) If the aggrieved affected person is still not satisfied with the decision of the Resettlement office/LRB of the respective city, he/she will appeal to the Liaoning Liaoning PMO (i.e., executing agency for all subprojects). After receiving the appeal, the Liaoning PMO will reach a decision in 2 weeks. (v) Affected persons can have recourse to their own legal system at any stage and do not necessarily have to proceed through the project grievance redress mechanism.

11. Affected persons can appeal on any aspect of resettlement, including compensation criteria and price. Affected persons will be apprised of their rights for lodging appeals during participation in the public meetings and by receiving the resettlement information booklets. At the same time, the grievance and appeal process will be publicized among the affected persons through media. The relevant authorities will sort out the opinions and proposals of the affected persons and the resettlement offices and implementing agencies will process the information in a timely and effective manner. The organizations will accept the grievance and appeals of the affected persons free of charge, and the reasonable expenses incurred there will be covered by contingency of the resettlement plan budget.

12. The aggrieved person may also express grievance to the external monitor, who would then report it to Resettlement office/LRB, implementing agency, and PMO. If there is more than one household with similar grievances that stemmed from a violation of ADB's safeguard policy, they may appeal directly to ADB in accordance with ADB's Accountability Mechanism (2012).36

36 http://adb.org/Documents/Policies/ADB_Accountability_Mechanism/ADB_accountability_mechanism.pdf

13. Resettlement monitoring and evaluation. The LPMO will submit an internal monitoring report semiannually to ADB on the progress of resettlement implementation. The LPMO will also employ an external monitoring institute or firm that will submit semiannual monitoring reports to ADB during resettlement implementation, and annually for 2 years after resettlement completion.

14. Resettlement implementation schedules. The implementation and supervision milestones for the 6 resettlement plans are shown in Tables 2–7.

Table 2: Implementation and Supervision Milestones: Gaizhou

Responsible No. Resettlement Tasks Target Deadline Agency 1. Consultation and Information Disclosure 1.1 Distribution of RIB among APs 115 copies GPUREB June 2012 RP distribution to affected villages and 1.2 subdistricts and relevant government 10 copies GPUREB June 2012 agencies 2. RP Updating based on DMS 2.1 DMS GPUREB and DI Sep-Oct 2012 2.2 Disclosure of final RP 10 copies GPUREB Nov 2012 2.3 Final RP GPUREB Nov 2012 3. Capacity Building Establishment of resettlement department of 3.1 GPUREB June 2012 GPUREB 3.2 IA, FLRB, and GCRO capacity building 30 staff Aug-Sep 2012 3.3 Designate village authorities Jul 2012 4. Resettlement implementation Agreements with villages Dec 2012 - Feb 4.1 3 villages 2013 Agreements with enterprises Dec 2012 - Feb 4.2 2 GLRB/GCRO 2013 Agreements with APs Dec 2012 - Feb 4.3 115 HHs 2013 5. M&E Entrusting external monitor, preparing 5.1 LPMO and GPMO Dec 2012 internal monitoring plan 5.2 Baseline survey 10% of APs External monitor Jan 2013 Internal monitoring reports GPUREB and 5.3 quarterly 2013-2014 PMO 5.4 External monitoring reports Semi-annually External monitor 2013-2015 Resettlement completion report GPUREB & 5.5 Dec 2016 GPMO

Table 3: Implementation and Supervision Milestones: Heishan

Responsible Completion No. Resettlement Tasks Target Agency Deadline 1. Capacity Building 1.1 Establishment of HSRO under HSCMD HSCMD Aug 2012 1.2 Designate village authorities HSCMD Oct 2012

Responsible Completion No. Resettlement Tasks Target Agency Deadline 1.3 Staff training PMO Oct 2012 2. Consultation and Information disclosure 2.1 Distribution of RIB among APs 90 copies HSCMD June 2012 RP distribution to affected villages/community, township HSCMD 2.2 8 copies Jul 2012 and relevant government agencies 2.3 Submit RP to ADB for acceptance PMO/ADB May 2012 3. RP Updating Based on DMS HCLRB, 3.1 DMS HSCMD, and June 2012 DI 3.2 Finalizing RP and submit to ADB HSCMD July 2012 4. Compensation agreements HCLRB and 8 villages/ 4.1 Agreements with Community/village committee HSRO, Dec 2012 Communities HSCMD HCLRB and 4.2 Agreements with affected HHs/enterprises 90 HHs HSRO, Jan 2013 HSCMD 5. Resettlement and Rehabilitation 5.1 Moving to new houses VC, HSCMD June 2013 5.2 Start Civil works HSCMD Jan 2013 6. M&E 6.1 Internal monitoring HSCMD 2013-2015 External 6.2 External monitoring 2013-2015 monitor HSCMD and 6.3 Internal monitoring report Quarterly 2013-2015 PMO Semi- External 6.4 External monitoring report 2013-2015 annually monitor External 6.5 Resettlement completion report monitor/PM Dec 2015 O

Table 4: Implementation and Supervision Milestones: Huanren

Responsible Completion No. Resettlement Tasks Target Agency Deadline 1. Consultation and information disclosure 1.1 Distribution of RIB among APs 144 copies IA June 2012 RP distribution to affected villages/communities, 1.2 township/subdistrict and relevant government 10 copies IA June 2012 agencies 2. Capacity Building 2.1 Establishment of HSRO under IA IA Aug 2012 2.2 Designate village authorities IA Aug 2012 2.3 Staff training PMO Sept-Oct 2012 3. Final RP based on DMS

Responsible Completion No. Resettlement Tasks Target Agency Deadline HCLRB, IA Nov 2012-Dec 3.1 DMS and DI 2012 3.2 Final RP disclosure IA,HCLRB Jan 2013 3.2 Submit Final RP to ADB for approval IA and ADB Jan 2013 4. Compensation agreements 3 villages HCLRB and Feb-March 4.1 Agreements with community/village committee 3 HSRO 2013 communities HCLRB and Feb-March 4.2 Agreements with shops 4 HSRO 2013 HCLRB and Feb-March 4.3 Agreements with affected HHs 144 HSRO 2013 5. Relocation and Livelihood Measures May 2012 - 5.1 Relocation House construction IA Mach 2013 HCLRB and 5.2 Land acquisition and house demolition April-Oct 2013 HSRO HCLRB and 5.3 Resettlement and rehabilitation April-Oct 2013 HSRO 6. M&E 6.1 Internal monitoring IA 2013 External 6.2 External monitoring 2013-2015 monitor 6.3 Internal monitoring report Quarterly IA 2013 6.4 Resettlement completion report for the whole Project PMO Dec 2015 Semi- External 6.5 External monitoring report 2013 annually monitor External External monitoring report annually 2014-2015 monitor External 6.6 Resettlement completion report for the whole Project Dec 2015 monitor 7. Civil works and loan closure Commencement of civil works for components without 7.1 IA July 2013 LA&R impacts Completion of civil works for components without 7.2 IA June 2014 LA&R impacts Commencement of civil works for components with 7.3 IA Jan 2014 LA&R impacts Completion of civil works for components with LA&R 7.4 IA June 2017 impacts

Table 5: Implementation and Supervision Milestones: Shenbei

Responsible Completion No. Tasks Objective Agency Deadline 1. Consultation and Information disclosure 1.1 Distribution of RIB among APs 1,341 copies PMO June 2012 RP distributed to affected villages and 1.2 12 copies PMO June 2012 townships and relevant government agencies 2. Capacity Building

Responsible Completion No. Tasks Objective Agency Deadline Establishment of LA&R department under SWWC and 2.1 Jun 2012 IAs SNDPMO PMO, SWWC 2.2 Designation of village authorities Jun 2012 and SNDPMO 2.3 Staff training PMO Jul 2012 3. Final RP based on DMS SNDLRB, SWWC, 3.1 DMS Dec 2012 SNDPMO and DI SWWC and 3.2 RP updating SNDPMO and Dec 2012 DI SWWC and 3.3 Submit Final RP to ADB for approval SNDPMO and Dec 2012 ADB 4. Compensation agreements SNDLRB, 4.1 Agreements with villages 4 villages Mar 2013 SSLARO SNDLRB, 4.2 Agreements with enterprises 5 enterprises Mar 2013 SSLARO SNDLRB, 4.3 Agreements with affected HHs 325 HHs Mar 2013 SSLARO 5. Relocation and Livelihood Rehabilitation SWWC and Nov 2012 - Apr 5.1 Skill training for APs 200 APs SNDPMO and 2013 SNDG 325 HHs, 5 SNDLRB, 5.2 Land acquisition and house demolition enterprises, Mar - Oct 2013 SSLARO 180 employees 261HHs 5.3 Relocation SSLARO Mar - Oct 2013 3 enterprises SWWC and 115HHS, 180 5.4 Rehabilitation SNDPMO and Mar - Oct 2013 employees SNDG 6 M&E Entrusting external monitor, preparing 6.1 PMO Nov 2012 internal monitoring plan External 20% of monitor relocated HHs 6.2 Baseline survey SWWC, Jan 2013 and 10% of SNDPMO and land loss HHs PMO 6.3 Internal monitoring SWWC and 6.4 Internal monitoring report quarterly 2013 - 2014 SNDPMO Resettlement completion report for the whole 6.5 Dec 2015 Project 6.6 External monitoring 2013 - 2016 External 6.7 External monitoring report Semi-annual 2013 - 2014 monitor External External monitoring report annual 2015 - 2016 monitor

Responsible Completion No. Tasks Objective Agency Deadline External Resettlement completion report for the whole 6.8 monitor Dec 2016 Project IAs and PMO 7 Civil works Commencement of civil works for SWWC and 7.1 Jul 2013 components without LA&R impacts SNDPMO Commencement of civil works for SWWC and 7.2 Jan 2014 components with LA&R impacts SNDPMO SWWC and 7.3 Completion of civil works Nov 2015 SNDPMO

Table 6: Implementation and Supervision Milestones: Waitoushan

Responsible Completion No. Resettlement Tasks Target Agency Deadline 1. Consultation and Information disclosure 1.1 Distribution of RIB among APs 79 copies IA June 2012 RP distribution to affected villages/community, 1.2 5 copies IA June 201 township and relevant government agencies 2. Capacity Building 2.1 Establishment of BSRO under IA IA June 2012 2.2 Designate village authorities IA July 2012 Aug-Sept 2.3 Staff training PMO 2012 3. RP Updating BCLRB, IA Sept-Oct 3.1 DMS and DI 2012 3.2 Disclosure of final RP 5 copies IA Nov 2012 3.3 Final RP submitted to ADB IA Nov 2012 4. Compensation agreements 2 villages and BCLRB and Dec 2012- 4.1 Agreements with Community/village committee 1 community BSRO Feb 2013 BCLRB and Dec 2012- 4.2 Agreements with affected HHs 79 HHs BSRO Feb 2013 5. Resettlement and Rehabilitation IA BCLRB and 2011-June 5.1 House construction BSRO 2012 BCLRB and April-Oct 5.2 Land acquisition and house demolition BSRO 2013 BCLRB and July-Oct 5.3 Move to new houses 27 HHs BSRO 2013 6. M&E 6.1 Internal monitoring quarterly IA 2013-2014 Semi- External 6.2 External monitoring 2013-2014 annually monitor 6.4 Resettlement completion report PMO Dec. 2015 External 6.7 Resettlement completion report monitor Dec 2015 monitor/PMO

Table 7: Implementation and Supervision Milestones: Xinmin

No. Resettlement Tasks Target Responsible Deadline Agency 1. Consultation and disclosure 1.1 Draft RP circulation and XCG XHCB June 2012 endorsement 1.2 RIB distribution All likely affected villages, XHCB, subdistrict June 2012 communities and HHs offices 1.3 Consultations for updating RP Seriously affected HHs XHCB, resettlement Nov-Dec 2012 taskforce 2. Final RP & Budget 2.1 Final design completion XHCB & DI Nov 2012 2.2 DMS XHCB, resettlement December 2012 taskforce, AP, viilages and communities 2.3 Final RP based on DMS XHCB December 2012 2.4 Review and approval of final XCG, LPMO, ADB December 2012 RP & budget 3. Capacity Building 3.1 Establishment of resettlement XCG Done by 2011 division in XHCB and resettlement taskforce 3.2 Establishment of resettlement XCG Nov 2012 taskforce 3.3 Capacity building 30 staff LPMO, Consultant Nov. 2012 4. Resettlement Implementation 4.1 Agreements affected enties All affected villages, XHCB March 2013 and households communities,HHs and entities 4.2 Payment of compensations Ditto XHCB March 2013 4.3 Commence LA&R HCB, resettlement April 2013 taskforce onwards 4.4 Completion of LA&R HCB, resettlement 1 Oct 2014 taskforce 4.5 Move into new houses All relocation HHs Ditto May 2014 4.6 House demolition All relocation HHs Ditto May-Aug 2014 5. Monitoring & Evaluation 5.1 Internal monitoring reports 8 quarterly XHCB & LPMO Attach to reports quarterly progress Reports 5.2 Contracting external monitor LPMO December 2012 5.3 Baseline survey 10-20% of seriously External monitor January 2013 affected HHs (shortly after All affected communities DMS) and villages 5.4 External monitoring report 4 semi-annual report External monitor 2 weeks after followed by 2 annual each half year evaluation reports 5.5 Resettlement completion 1 report XHCB December 2016 report

No. Resettlement Tasks Target Responsible Deadline Agency 6. Civil Works 6.1 Commencement of civil works XHCB and Contractors June 2013 6.2 Completion of construction Contractors Dec 2015

C. Indigenous Peoples

15. The project is classified as indigenous peoples category C. The assessment conducted during the PPTA found that there will be no adverse impacts on ethnic minority communities. The project components are located on the outskirts of urban area (towns) where some ethnic minority households have migrated and became assimilated into the urban population. These ethnic minority households are quite well off and will benefit from the project. About 79 ethnic minority households will suffer land acquisition and resettlement impacts and it was confirmed that none of them are vulnerable. The resettlement plans include adequate provisions to mitigate these impacts. The assessment also found that both Manchu and Xibo are well integrated socially and economically into the broader society and urban environment. They will benefit equally from improvements in the wastewater system, local road networks and traffic safety programs.

16. LPG shall ensure that the Project does not have any indigenous peoples impact, within the meaning of the Safeguard Policy Statement. In the event that the Project does have any such impact, the LPG shall take all steps required to ensure that the Project complies with the Borrower’s applicable laws and regulations and with the Safeguard Policy Statement.

VIII. GENDER AND SOCIAL DIMENSIONS

1. A social, poverty, and gender analysis was undertaken in accordance with ADB’s policies on Gender and Development in ADB Operations (Operations Manual Section C2) and Incorporation of Social Dimensions into ADB Operations (Operations Manual Section C3). The analysis collected information to assist in the design of the project by identifying the poor, examining causes of poverty and recommending poverty reduction measures within the project scope.

A. Social and Poverty Benefits

2. Liaoning Province’s economic growth in recent decades has been comparatively slower than other provinces due to resource depletion and a painful transition from an economy dominated by state-owned heavy industries to that of light industries and services. Consequently, urban unemployment rates in central Liaoning cities have remained at over 4%. Moreover, official poverty rates for the urban poor37 in resource-depleted cities are very high (e.g., 18.5%, 16.5% and 10.2% in Fuxin, Tieling and Fushun in 2009) compared with the national average of about 4% in 2010.38

3. A poverty and social assessment that included a household survey, community and focus group discussions, and key informant interviews, was conducted during project preparation. The project will directly benefit about 1.54 million urban residents by 2020—by improving living conditions, public health standards, and the urban environment—of whom about 0.81 million are residents currently living in the participating townships, and 0.73 million will be future residents (including rural migrants). Among the current 0.81 million beneficiaries: (i) 75.3% and 24.7% are urban and rural residents, respectively; (ii) 9.9% of the urban residents and 4.7% of the rural residents were receiving support in 2010 from minimum living standard security programs;39 (iii) about 18.3% are ethnic minority people of Manchu, Xibo, Chaoxian, Hui and others; and (iv) 49.1% are females. The project will create 25,000 person-months of jobs for unskilled laborers during construction and about 160 direct and 840 indirect jobs during operations. Employment targets for vulnerable groups and women are included in the DMF, GAP, SDAP, and loan assurances. Air and water quality and traffic improvements through provision of wastewater management and district heating services, development of the urban road network and improvements in NMT, and road safety and transport planning will enhance public health and safety. Improving the urban road and bridge network will boost public access and mobility and reduce time burdens. A GAP and SDAP have been prepared and will be implemented by LPMO and implementing agencies during project construction. The heating component will improve air quality and district heating access, but the closure of 15 small heating boilers will not affect any workers.

B. Social Development Action Plan

1. Introduction

4. This social development action plan (SDAP) was prepared jointly by the Liaoning project management office (LPMO) and the participating local governments, with the assistance of the project preparatory technical assistance social experts.

37 Defined as those under the minimum living standard security program, 38 http://finance.hsw.cn/system/2011/08/04/051063127.shtml, Per study conducted by the Academy of Social Sciences of China using data from the Ministry of Civil Affairs. 39 The standards are CNY225-285 and CNY250-310 per person per month among the subproject areas in 2009 and 2010 respectively. 1

2. Purpose

5. The purpose of this SDAP is to ensure that important social and poverty issues are addressed during project implementation and its implementation is to enhance project benefits and mitigate any likely negative impacts. The SDAP emphasizes social inclusion and equitable access to project benefits.

3. Basis for the Social Development Action Plan

6. The SDAP has focused on issues related to directly affected people, vulnerable people, gender, and local social and small business development. Measures to address these issues have been formulated based on the poverty and social assessment report and adopted based on further stakeholder consultation. The main actions can be grouped into three types: (i) project benefits and enhancement measures within the direct control of the implementing agencies; (ii) mitigation measures to address social risks caused by the project, being the responsibility of the LPMO and the implementing agencies; and (iii) complementary enhancement measures that can be taken by local governments to increase the mutual benefits derived from the project construction or operations. The table below provides details of the SDAP, including the proposed actions, target groups, implementing agencies, timing, funding source, and monitoring indicators.

4. Poverty Reduction Aspects

7. The LPMO and the participating local governments have agreed to take following actions to enhance project benefits for the poor: (i) coordinating with contractors and local street offices or the affected villages to hire the poor for the project construction and operation; (ii) hiring laborers from poverty villages/households with a target 15% of newly created positions during construction; (iii) providing special support for poor households affected by resettlement such as a special living subsidy for their resettlement, and priority to choose location, type, area of relocation house, etc; (iv) supporting local governments in technical training programs or providing training for new workers before taking positions; and (v) supporting local governments in promoting non-farm employment opportunities.

5. Implementation Arrangements

8. The SDAP will be implemented by the LPMO, the seven PMOs, and eight implementing agencies in coordination with local government agencies as indicated in the table below. The LPMO will be responsible for overseeing the SDAP and implementing those actions within their direct control, as well as supervision of related activities that involve the construction contractors. For actions outside the direct mandates of the LPMO, the assigned staff will be responsible to liaise with the relevant district government agencies under the coordination of the leaders of the PMOs; this will ensure appropriate measures are taken in a timely and satisfactory manner. The LPMO will also be responsible for monitoring and reporting progress, issues, and results to the executing agency. A national social and gender development consultant will be engaged to assist with monitoring and reporting, as deemed necessary. The executing agency will annually provide to ADB SDAP monitoring reports for review and follow-up during loan supervision missions. If necessary, ADB and the executing agency may agree to revise the SDAP to improve the effectiveness of the proposed measures.

6. Funding Sources

9. The funding sources for the SDAP implementation will come from the project and from local government sources as shown in the Table. LPMO will recruit an independent external monitoring agency for the resettlement monitoring with the budget for consulting services for the project. A social and gender specialist will be on the supervision consultants team to help with implementation and monitoring of the SDAP and gender action plan.

7. Monitoring and Evaluation of SDAP

10. It is proposed that comprehensive monitoring be conducted during project construction to ensure that the project fulfils its aims and objectives. The LPMO will be responsible for the monitoring and evaluation, and for reporting to ADB once each year during project implementation.

Social Development Action Plan and Monitoring Framework Funding Target Agencies Monitoring Proposed Actions Timing Needs & Group(s) Involved Indicators Source A. ENHANCEMENT MEASURES (Responsibility of Implementing and operating agencies) 1. Employment Priority to • No. of local Local People During people Project Implementation employed • Priority to local labor in (disaggregated by sex, skilled/ general. Targets: LPMO,  unskilled and 20% women for labor in Subproject Included in poverty status) landscaping and civil work 2,520 full time PMOs, IAs,  project civil • Wages 15% poor for unskilled positions contractors, 2012- works cost (disaggregated) labor in landscaping and during project local street 2015 and paid by paid to local civil work construction offices, • contractors people Use of local construction township • Value of materials, e.g., rock, gravel, governments clay, cement construction • Training to be provided by materials contractors supplied locally • Training of local workers 2. Employment Priority to Local People During Project Operation • No. of local LPMO, • people Priority to local labor in Subproject employed general. Targets: PMOs,  (disaggregated 20% women for labor in contractors, Included in by sex, skilled/ landscaping and road 161 full time local street 2013- project unskilled and maintenance positions offices, 2015  operation poverty status) 20% women for heating during project township and cost and • Wages exchange station operation governments, onwards paid by IAs (disaggregated) operation in Fuxin labor bureau, paid to local subproject urban  people 20 women for new bus construction • routes in six subproject bureau Training of local townships workers  20 women for new wastewater treatment

Funding Target Agencies Monitoring Proposed Actions Timing Needs & Group(s) Involved Indicators Source plants in Shenbei subproject  15% poor for unskilled labor in landscaping and road maintenance • Training to be provided by IAs 3. Subsidizing District Heating to the Poor

• Inclusion of some future • No. of poor urban residents, currently designated from rural, under the urban Existing and Fuxin the affected minimum living standard future urban government Fuxin villagers security program based on poor served by and civil 2013 Government • No. and % of careful assessment of their district heating affairs onwards budget subsidized HHs economic status in Fuxin City bureau (%) • Subsidized district heating in • % of exemption Fuxin subproject of heating tariff  100% of existing urban poor  100% of future urban poor B. MITIGATION MEASURES (Responsibility of LPMO and subproject PMOs) 4. Protect local communities from construction disturbances and ensure • No. and safe construction practices resolution of • Prohibit nighttime complaints (sex construction and adhere to disaggregated) proposed noise standards Subproject • Number of Residents Included in • Reconstruct public facility PMOs, IAs, public facilities close to project project cost systems such as road contractors, 2012- (% recovery) sites (refer to recovery due to pipe and local 2015 • Accidents on EMP) installation, poles and governments temporary transformers construction • Construction safety roads enhancement, including • Accidents on temporary road traffic (e.g., project site safe road conditions and proper warning signage) 5. Control and Prevention of Awareness • No. of manuals, HIV/AIDS/STIs All project training costs posters and • CDPC provides training to construction for workers drawing workers are included distributed worksite health promoters Subproject • in contract • No. of training Health promoters provide PMOs, IAs, Service costs. sessions and training to all workers and Contractors, providers 2012- Local trainees (sex managers and local CDPCs, 2015 CDPCs disaggregated) subcontractors and local All costs • • HIV/AIDS and STI counseling governments No. of tests and program and voluntary communities in included in HIV/AIDS/STI testing by health agencies for the project Department cases workers area of Health (disaggregated) • Provide manuals, posters budget 4

Funding Target Agencies Monitoring Proposed Actions Timing Needs & Group(s) Involved Indicators Source and drawings C. ENHANCEMENT MEASURES (Responsibility of Local Governments) 6. Strength traffic awareness to improve road safety • Road safety workshop in schools (picture exhibition, etc.) Target:  100% primary and 18 primary and middle schools in DPA 6 middle • Road safety education in schools, and • No. of schools rural area of DPA (picture 24,000 rural Local EB and • No. of exhibition, etc.) Target: residents and TPB, Local participants (sex  70% local residents at 2013 - 35,000 urban Subproject government disaggregated) least 30% women 2016 residents in PMOs, IAs, budget • No. of traffic participants direct project EA accidents (death • Road safety education in areas of six and injured) urban area of DPA (picture subproject exhibition, etc.) Target: townships  70% local residents • Traffic signal and marks on street • Road construction safety • Pedestrian and non-motor travel access studies 7. Leadership Development • Workshops on social inclusion and equitable • No. of workshops access to the new economy Local LPMO, Budgets • No. of (particularly for the urban government Subproject 2013 - included in participants poor and farmer transitions) officials, PMOs, Local 2015 Capacity (target = 30% • Workshops on urban representatives governments, Development women) expansion and employment of communities IAs (local poor and rural labor • No. of female opportunity) decision-makers • Case studies on social impacts of urbanization 8. Public Hearings for Heating and/or Water Tariff • Public hearings for heating Subproject tariff in Fuxin city PMOs, IAs,  At least 30% of female Residents in local FB, PB, Sihe Township Heating representatives No. of  of Fuxin City or company, 2013 No budget 15% of women from participants (sex Shenbei New Water and onwards need poverty households disaggregated) • Public hearings for water District of wastewater tariff in Shenyang city Shenyang City treatment  At least 30% of female plants, representatives communities  15% of women from poverty households 9. Promote non-farming All people in Subproject 2012- Ongoing • No. of jobs 5

Funding Target Agencies Monitoring Proposed Actions Timing Needs & Group(s) Involved Indicators Source employment and improve DPA – PMOs, Local 2016 government created livelihood targeting labor bureau, project • No. of new • Promote information and women and CAB, PADO migrant laborers training on non-farming jobs young adults (sex for local jobs and migrant and the poor disaggregated) jobs • No. of • Provide education to migrant employers laborers on labor law, involved contract, and right issues • No. of migrant  30% of female laborers trained participants (sex disaggregated) CAB = Civil Affairs Bureau, CDPC = center for disease prevention and control, DPA = Direct Project Area, EA = executing agency, EB = Education Bureau, EMP = environmental management plan, FB = Finance Bureau, HH = household, IA = implementing agency, LPMO = Liaoning Project Management Office, PADO = Poverty Alleviation and Development Office, PB = Price Bureau, STI = sexually transmitted infection, TPB = Traffic Police Brigade.

C. Gender Benefits

11. The proposed urban roads will bring both women and men with safer and more convenient transportation, and will facilitate women to better access to more social services, such as healthcare and technical services. The proposed district heating system will liberate many women by one hour a day from the tedious work of handing coal -fire stoves for heating. Women and children will benefit more from the reduced incidences of some diseases related to living environments that the proposed sewage systems and the district heating system will improve. The potential risks of HIV/AIDS associated urbanization are insignificant and will be further reduced by ever-intensifying government interventions.

D. Gender Action Plan

12. The project will implement a GAP that will facilitate employment opportunities and improvement of livelihoods for women through training, and mitigate possible negative impacts of the project on women due to LA&R, and environmental impacts. It will address gender concerns in three project outputs, namely: (i) Shenbei New District wastewater management improvements; (ii) Fuxin (Sihe Town) district heating network; and (iii) environmentally sustainable urban infrastructure development in six subproject townships. The GAP will enhance women’s active and equitable participation in the project. Furthermore, gender-specific measures are included in the resettlement plans and SDAP.

13. Principles. The principles of this GAP are: (i) equality of project benefits and opportunities designed to share between men and women; (ii) systematic approaches created to reduce gender disparities in the project areas; (iii) sex disaggregated data collection before, during, and after the project implementation; and (iv) female representation increase in the decision-making process at all management levels.

14. Gender analysis. Extensive consultation and gender analysis was conducted during the poverty and social assessment survey and qualitative discussions. The assessment indicated that women strongly support the project and anticipate benefits, such as improved living conditions, new employment opportunities, improved access and safer transport routes, and reduced time burdens and incidence of preventable illness. 6

15. Gender plan actions. The gender action plan stresses inclusion through:

(i) Public consultation. Public consultations on the affordability, tariffs, wastewater management, heating improvements, road safety, public transport services, and pedestrian and NMT design will require participation by women. Outreach will be conducted through community meetings, dissemination of materials such as posters and radio spots, and coordination with organizations such as the All China Women’s Federation will ensure their involvement. The social and gender development expert and PMOs will conduct outreach activities with contractors, local street administration offices, township governments, and the Labor Bureau to ensure that women are aware of the employment opportunities and contractors strive to reach the targets. Results will be regularly reported on in the project performance monitoring system. Public consultation has a target of 30% women participants; (ii) Employment enhancement. Employment enhancement measures will include consultation and participation of women during project design and implementation, preferential employment of women as unskilled laborers during and after project implementation, as well as the formal employment of female staff in heat-exchange stations and for new bus routes, etc. The employment plan includes a target of 20% for women during project implementation and operation; and (iii) Capacity building. Measures will include leadership development, training, meetings, consultations, case studies, and workshops on topics including decision making, urban expansion, inclusive social transition, traffic safety, project management and implementation to enhance public awareness and institutional capability. The training plan for capacity development has a target of 30% for women’s participation.

16. Budget and implementation arrangements. The GAP will be implemented under guidance of a social and gender development expert who will be a member in the consultant team during project implementation. The action plan will not require a separate budget and will be funded by the project budget. The GAP will be implemented over the 5-year life of the project. The Liaoning PMO, with support from the social and gender development expert, will be responsible for coordinating and monitoring implementation of the plan and will assign responsible staff.

17. Monitoring and evaluation of the action plan. This will be incorporated into the overall monitoring and evaluation plan for the project. The implementing agencies will be responsible for establishing and coordinating monitoring and evaluation. ADB staff with expertise in gender issues will participate in the midterm review. The social and gender development expert will work with LPMO and implementing agency staff to create a detailed implementation and monitoring plan for each of the tasks outlined, help to complete the first gender plan implementation report, and review the second report prepared by the implementing agencies. The detailed GAP is presented in table below.

Gender Action Plan and Monitoring Framework

Project Output Actions Indicators Responsibility Output 1: Ensure women’s At least 30% of LPMO, implementing Improved participation during public participants in public agencies, subproject wastewater hearings, in decision-making hearings on wastewater PMOs, ACWF, FB, PB, management processes, and in any local treatment interventions Heating supply facilities are decision-making bodies and are women company, wastewater operating structures, including for tariff treatment company, increases (water) Record of women’s views CCs, contractors and LB and actions taken (reporting indicators will Create job opportunities At least 20% new jobs be reflected in the for women during and created by project project performance after project targeted for women management system implementation, at equal and submitted to ADB pay for equal work, and At least 20% of annually) provide appropriate wastewater treatment training plant employees are women

Ensure women’s At least 30% of participating in seminars, participants in consultative workshops, and meetings workshops are women on project implementation and management to discuss wastewater treatment plans Output 2: Reduce use of single- Number of households LPMO, implementing Upgraded district family heating stoves to using single-family heating agencies, subproject heating network is reduce women's and stoves reduced. PMOs, ACWF, FB, PB, operating in Fuxin children's respiratory Heating supply (Sihe Town) infections company, wastewater treatment company, Ensure that all women 100% affected women CCs, contractors and LB employed in small boiler workers in small boiler (reporting indicators will houses retain jobs houses retain jobs be reflected in the project performance Promote job opportunities At least 20% of those management system for women in new district employed in district and submitted to ADB heating operations heating system operations annually) are women

Ensure that women At least 30% of participate in seminars, participants in consultative workshops, and meetings workshops are women on project implementation and management to discuss district heating Output 3: Ensure women participate in At least 30% of LPMO, Subproject Urban roads and public in decision-making participants in public PMOs, CCs, ACWF, bridges are opened processes, and in local contractors and LB consultations are women to traffic and related decision-making bodies and (reporting indicators will services are structures be reflected in the operating 8

Project Output Actions Indicators Responsibility Create job opportunities At least 20% of new jobs project performance for women during and created by the project are report system and after project targeted for women submitted to ADB implementation, at equal annually) pay for equal work, and provide appropriate training Create job opportunities At least 20% of drivers on for women in new bus new bus routes are transport services women Ensure that women At least 30% of participate in seminars, participants in workshops workshops, and meetings are female students and conducted to discuss road residents safety design, pedestrian and NMT access, road safety awareness, and environmental protection plans of project areas Involve women in road At least 30% women safety awareness training participants in road safety training Output 4: Ensure that women At least 30% of LPMO, executing Capacity developed participate in leadership leadership development agency, implementing and institutions development and training to training participants are agencies, Subproject strengthened strengthen their capability in women PMOs, local managing urban expansion, governments (LPMO inclusive social transition, shall submit annual employment, and public monitoring reports to participation and other Asian ADB) countries

Assign staff to be At least one staff responsible for member of EA/IAs implementation, monitoring assigned to manage and reporting of the GAP. GAP implementation, The staff shall be trained on monitoring and by consultants on ADB GAP reporting requirements

Gender awareness capacity building and GAP 50 staff trained orientation conducted for EA ACWF = All China Women’s Federation, ADB = Asian Development Bank, CC = community committee, EA = executing agency, FB = Finance Bureau, GAP = Gender Action Plan, IA = implementing agency, LB = Labor Bureau, LPMO = Liaoning project management office, PB = Price Bureau, NMT = non-motorized traffic.

IX. PERFORMANCE MONITORING, EVALUATION, REPORTING AND COMMUNICATION

A. Project Design and Monitoring Framework

Design Performance Targets and Indicators Data Sources and Summary with Baselines Reporting Mechanisms Assumptions and Risks Impact

More competitive, By 2020 (baseline year 2011), in the green, and participating key townships in central Assumption inclusive Liaoning Shenyang Economic Zone urbanization in Competitive: Average annual per capita Statistics published Master Plan accelerates key townships in disposable income of urban households is annually by LPSO socioeconomic gains in central Liaoning increased by 140% from CNY20,467† central Liaoning

Green: Days of air quality equal to or Statistics published by Risk above grade II increased from 265 to 300 Liaoning Environment Development pressures per year Protection Department outpace planned

infrastructure Statistics published Inclusive: Unemployment reduced by developments 0.5% from 5.5% and maintained at no annually by LPSO more than 5%

Outcome By 2018 (baseline year 2011), in the Improved participating key townships in central Assumptions sanitation, Liaoning Government commitment Summary: Wastewater collection rate Liaoning Province heating, and increased on average from 43% to 83% † Environment Statistics and support for transport services − Shenbei from 50% to 90% Annual Report infrastructure development in key townships − Gaizhou from 70% to 90% continues in central − Huanren from 40% to 70% Liaoning − Heishan from 30% to 80% Project facilities are − Waitoushan from 30% to 80% properly operated and − Xinmin from 40% to 90% maintained

Wastewater treatment capacity increased PCC issued by the Risks 3 3 ‡ from 5,000 m /day to 10,000 m /day Liaoning HURCC Actual economic growth and population increases PCC issued by the Fuxin Heating-related carbon dioxide emissions are far from estimates reduced by 53,690 tons per annum HURCC

Actual sanitation, heating District heating coverage increased in PCC issued by the Fuxin 2 HURCC and transport demands are Fuxin from 18.9 to 21.9 million m far from estimates

Summary: Road network density PCC issued by the Costs are much higher increased on average from 393.5 to 2 Liaoning HURCC than foreseen 460.2 km of road per 100 km of land area − Shenbei: Xinlongtai from 621.3 to 938.7, Qinshuitai from 486.0 to 572.7 − Gaizhou from 70.0 to 87.9 − Huanren from 1347.9 to 1375.7 − Heishan from 126.7 to 138.9 − Waitoushan from 50.6 to 51.3 − Xinmin from 51.7 to 56.2

Operational length of bus lines increased PCC issued by the from 391 km to 563 km Liaoning HURCC

Design Performance Targets and Indicators Data Sources and Summary with Baselines Reporting Mechanisms Assumptions and Risks

Summary: Traffic fatality rates for every Statistics issued by Public 10,000 vehicles decreased by 15% on Security Bureau average from 4.26 to 3.62a − Huanren: 2.16 to 1.83 − Heishan from 2.46 to 2.09 − Xinmin: from 9.15 to 7.78 − Gaizhou: from 3.26 to 2.77

2,520 jobs during project implementation PCC issued by the and 161 jobs during operation are Liaoning HURCC created, with 20% targeted for women, and 15% for the poor

Outputs By 2018 (baseline year 2011) 3 1. Improved Qingshuitai Town (10,000 m /day) WWTP PCC issued by the Assumptions wastewater and 18.74 km of wastewater pipes are Shenbei HURCC Project financing is management operating provided on time facilities are operating Existing WWTP in Qingshuitai Town is closed and the site is rehabilitated Risks Lack of project At least 30% of participants in public PCC issued by the coordination and hearings on wastewater treatment Shenbei HURCC synchronization between interventions are women agencies

Semi-annual progress reports

2. Upgraded 31.7 km of heating transmission pipe and PCC issued by the Fuxin Delays in land acquisition district heating 12 heat exchange stations are operating HURCC approvals and network is implementation operating in Fuxin Standard coal inputs are reduced from PCC issued by the Fuxin (Sihe Town) 72,440 to 50,904 tons per annum, with HURCC Difficulties in complying coal saving of 21,536 tons per annum with ADB procedures

At least 30% of participants in PCC issued by the Fuxin Recruitment of the loan consultative workshops are women HURCC implementation consultant or the tendering agent Semi-annual progress is delayed reports

3. Urban roads Summary: Improved urban road linkages PCC issued by the and bridges are and related facilities operating, including Liaoning HURCC opened to traffic 73.4 km of rehabilitated or upgraded and related urban roads, 51.2 km of new urban roads, services are and 18 bridges opened to traffic. Related operating services along the roads operating, including 129.8 km of stormwater pipes and drains, and 57.4 km of sewers

Gaizhou: 2.2 km of upgraded secondary PCC issued by the roads, 4.3 km of new trunk roads, and 50 Gaizhou HURCC sidewalks opened to traffic. Related

Design Performance Targets and Indicators Data Sources and Summary with Baselines Reporting Mechanisms Assumptions and Risks services along the roads operating, including 11.242 km of stormwater pipes and 7.511 km of sewers

Heishan: 5.79 km of upgraded trunk PCC issued by the roads, 9.16 km of new trunk roads, and 6 Heishan HURCC bridges (162 m long) opened to traffic. Related services along the roads and bridges operating, including 34.192 km of stormwater pipes and 8.008 km of sewers

Huanren: 8.2 km of secondary roads (5.1 PCC issued by the km of new urban road and 3.1 km of Huanren HURCC upgraded urban road), 12.849 km of alleys and 40 m long bridge opened to traffic. Related services along the roads and bridge operating, including 19.995 km of stormwater pipes, 1.36 km, of drains, and 11.055 km of sewers

Shenbei: 44.16 km of urban roads (22.20 PCC issued by the km of new urban road, 21.96 km of Shenbei HURCC upgraded road), and 6 bridges (169 m long) opened to traffic. Related services along the roads and bridges operating, including 33.826 km of stormwater pipes and 11.709 km of sewers

Waitoushan: 0.91 km of upgraded PCC issued by the secondary roads, 0.79 km of new trunk Waitoushan HURCC roads, 8 alleys (1.16 km), and 2 bridges (800 m long) opened to traffic. Related services along the roads and bridges operating, including 3.658 km of stormwater pipes and 0.68 km of sewers

Xinmin: 37.41 km of 38 reconstructed PCC issued by the roads, 12.23 km of new urban roads, 3 Xinmin HURCC bridges (80 m long) and 34.4 m long railway crossing opened to traffic. Related services along the roads and bridges operating, including 26.93 km of stormwater pipes and 18.41 km of sewers

At least 20% of drivers on new bus routes Semi-annual progress are women reports

At least 30% women beneficiaries in road Semi-annual progress safety training reports 4. Capacity A 4-year (2013–2017) training plan is PCC issued by the developed and developed and implemented, with a target Liaoning HURCC institutions for 30% women beneficiaries, which

Design Performance Targets and Indicators Data Sources and Summary with Baselines Reporting Mechanisms Assumptions and Risks strengthened together with project implementation support, enables outputs 1-3 to be delivered on time, within budget, in a sustainable manner, and to prescribed

quality standards and policies

Leadership, financial management and PCC issued by the sustainability, and transport planning and Liaoning HURCC safety, training programs designed implemented. At least 30% of participants in the leadership workshops on social inclusion and equitable access to the new economy, and urban expansion and employment are women.

Activities with Milestones Inputs ($ million) 1. Wastewater management improvements ADB $150.00 million loan 1.1. Design the facilities, acquire land, and procure the works by Q1 2014 from ordinary capital 1.2. Construct and commission the facilities by Q3 2015 resources: 1.3. Decommission existing WWTP by Q4 2017 Civil works 108.62 2. Fuxin (Sihe Town) district heating network Equipment 39.38 2.1. Design the facilities, acquire land, and procure the works by Q2 2013 Institutional strengthening 2.2. Construct and commission the facilities by Q1 2015 and capacity building 2.00

3. Environmentally sustainable urban infrastructure development Government and 3.1. Design the facilities, acquire land, and procure the works by Q1 2013 implementing agencies 3.2. Construct the roads and bridges by Q3 2017 counterpart funding: $245.35 million: 4. Capacity development and institutional strengthening 4.1. Complete necessary organizational arrangements for implementing agencies Civil works 97.86 (hiring staff; setting up accounting systems; and improving financial, Land acquisition and administrative, and human resource policies and procedures) by Q4 2012 resettlement 49.83 4.2. Recruit and mobilize implementation support consultants by Q1 2013 Environment and social 4.3. Develop a 4-year training plan by Q2 2013 monitoring 4.69 4.4. Undertake training and provide project implementation support to the Survey, research, design implementation agencies by Q4 2017 (including on ADB procedures, procurement, disbursement, operations and maintenance, traffic management, and project management road maintenance, environmental monitoring, and financial management) 26.40 4.5. Strengthen financial management and corporate governance in wastewater and Contingencies 57.91 heating agencies and/or companies in subproject cities and towns with Financial charges during wastewater or heating component by Q4 2017 implementation 8.66 4.6. Implement environmental monitoring plan and resettlement plans, and conduct internal and external safeguard monitoring until Q4 2017 Numbers may not sum 4.7. Implement the GAP and SDAP by Q4 2017 precisely because of 4.8. Conduct project-specific surveys to measure results for the mid-term review rounding. mission (Q3 2015) and project completion (Q2 2018) ADB = Asian Development Bank, EIA = environmental impact assessment, EPB = environment protection bureau, GAP = gender action plan, GDP = gross domestic product, HURCC = housing and urban-rural construction commission, km = kilometer, km2 = square kilometer, m = meter, m2 = square meter, m3/d = cubic meter per day, LPSO = Liaoning Provincial Statistics Office, PCC = project completion certificate, SDAP = social development action plan. a For Gaizhou, Heishan, Huanren, and Xinmin only. Shenbei and Waitoushan are excluded due to data unavailability. † ‡ Source of performance targets: = PRC statistics (per ADB Handbook) = ADB level 2 indicator.

B. Monitoring

1. Project Performance Monitoring

1. The PPMS indicators, their relevance, and monitoring practicalities will be discussed with the executing agency, LPMO, implementing agencies, and project beneficiaries during project implementation. Disaggregated baseline data for output and outcome indicators gathered during project processing will be updated and reported semiannually through the LPG semiannual progress reports and after each ADB review mission. These semiannual reports will provide information necessary to update ADB's project performance reporting system.40 At the start of project implementation, LPMO and the implementing agencies, with the project implementation consultant’s assistance, will develop integrated PPMS procedures to generate data systematically on the inputs and outputs of the components, as well as the indicators to be used to measure the project’s impact and outcome taking into account the components’ scope. LPMO will be responsible for monitoring and reporting on project performance. The basis for performance monitoring will be the DMF, which identifies performance targets for the impact, outcomes, and outputs of the project. By collecting data from the sources identified in the DMF, LPMO will be able to report on an annual basis the performance of the project. Specific reporting requirements will be set out in the agreement between ADB and the government. LPMO will collect the data, calculate the indicators, analyze the results, and prepare a brief report describing the extent to which the project is generating the intended outputs and outcomes, as well as the overall impact on central Liaoning Province. The relevance and practicability of data collection for indicators was confirmed with LPMO and the implementing agencies. Meanwhile, the agreed socioeconomic, environmental, and health indicators to be used will be further enhanced to measure project impacts. LPMO and the implementing agencies agreed and confirmed that they will (i) refine and integrate the PPMS framework at the start of project implementation; (ii) confirm that targets are achievable; (iii) develop recording, monitoring, and reporting arrangements; and (iv) establish systems and procedures no later than 6 months after project inception.

2. Compliance Monitoring

a. Legal Covenants

i. Change in Ownership

2. LPG shall cause the implementing agencies to inform LPG in a timely manner of any events involving (i) any change in ownership or control of the project facilities; or (ii) any anticipated sale, transfer, or assignment of the shares of any of the implementing agencies. In such case, LPG will consult with ADB at least 6 months prior to the implementation of such change. LPG and the implementing agencies will further ensure that such changes are carried out in a lawful and transparent manner.

40 ADB's project performance reporting system is available at: http://www.adb.org/Documents/Slideshows/PPMS/default.asp?p=evaltool

b. Financial Covenants

i. Counterpart Funding

3. LPG shall cause the Participating Township Governments and the implementing agencies to provide counterpart funding in a timely manner, including any additional counterpart funding required for any shortfall of funds or cost overruns. LPG shall cause the Participating Township Governments and the implementing agencies to maintain adequate annual funding for the operation and maintenance of project facilities.

ii. Tariffs and Cost Recovery

Wastewater Treatment

4. LPG, through Shenbei District Government, shall cause the Shenyang Shenbei Water Works Co. Ltd (SBWW) to ensure that (i) wastewater tariffs will be established and set progressively in order to achieve cost recovery; (ii) an annual review of tariffs is undertaken in accordance with specified tariff-setting mechanisms, including mandatory public hearings, where revisions are made; and (iii) the impact to the poor of wastewater connection fees and tariffs will be assessed and, based upon the assessment, necessary subsidies will be provided to ensure sanitation provision to the poor. LPG, through the Shenbei District Government, shall provide subsidies as necessary to enable Shenyang Shenbei Water Works Co. Ltd to continue operations until such time that the Shenyang Shenbei Water Works Co. Ltd has achieved implemented full cost recovery.

District Heating

5. LPG, through Fuxin Municipal Government, shall cause the Fuxin City Heating Power Corporation (FHC) to ensure that (i) heating tariffs are set progressively in order to achieve cost recovery; (ii) an annual review of tariffs is undertaken in accordance with specified tariff-setting mechanisms, including mandatory public hearings, where revisions are made. LPG will cause the Fuxin Municipal Government to ensure that the necessary subsidies are maintained to ensure continued affordability of district heating for recipients of the minimum living guarantee system. LPG shall continue to maintain, and cause the Fuxin Municipal Government to continue to maintain subsidies to enable FHC to continue operations until such time that FHC will have implemented full cost recovery.

iii. Financial Management

6. LPG shall establish and maintain, and cause the implementing agencies to establish and maintain sound financial management systems in accordance with ADB’s Guidelines on the Financial Management and Analysis of Projects, including the establishment of separate project accounts and the maintenance of minimum balances to ensure smooth cash flow and the timely settlement of project construction liabilities and future debt servicing.

c. Safeguards Covenants

i. Environment

7. LPG shall cause the Participating Township Governments and the implementing agencies to ensure that the preparation, design, construction, implementation, operation and

decommissioning of the project and all project facilities comply with (i) all applicable laws and regulations of the PRC relating to environment, health and safety; (ii) the Environmental Safeguards; and (iii) all measures and requirements set forth in the updated EIA, the updated EMP, and any corrective or preventative actions set forth in a Safeguards Monitoring Report. LPG will cause the implementing agencies to incorporate such mitigation and monitoring measures into the design and bidding documents and construction contracts.

8. LPG shall cause the Participating Township Governments and the implementing agencies to ensure that emergency preparedness and response mechanisms are developed for the project in compliance with relevant PRC regulations and the EMP, and that these mechanisms are incorporated into the emergency preparedness and response system of the respective cities and districts.

9. LPG shall cause the Participating Township Governments and the implementing agencies to ensure that to the extent as agreed between ADB and LPG, installation of streetlights and traffic lighting system with energy-saving technology along selected roads constructed/rehabilitated under the project.

10. LPG shall ensure that Associated Facilities are constructed, operated, maintained, and monitored in strict conformity with (i) all applicable laws and regulations, including national, provincial, and municipal laws and regulations and standards on environmental protection, district heating, health, labor, and occupational safety; and (ii) all environmental mitigation and monitoring measures detailed in the applicable environmental impact assessments for the associated facilities under the guidance of the Liaoning Province Environment Protection Bureau (EPB) or other designated environmental monitoring centers.

11. LPG shall cause the Fuxin Municipal Government and the concerned implementing agency to ensure that (i) the deconstruction and disposal of old coal-fired boilers and single- family heating stoves will follow national regulations on disposal of construction waste and standards for occupational health and safety, especially regarding hazardous materials, such as asbestos containing materials and ash residues, and will be done with approval and supervision by Liaoning Province EPB; and (ii) an asbestos risk assessment is conducted by a licensed institute for all 15 small boilers affected by the project prior to implementation of the district heating network component. In case of identified presence of asbestos, LPG will ensure that an asbestos management plan is developed for all affected boiler houses. LPG will cause the Fuxin Municipal Government to ensure that the contractors receive adequate training on asbestos management, occupational health and safety, and that the rehabilitation or deconstruction of asbestos containing boiler houses is conducted and supervised in conformity with the approved asbestos management plans.

12. LPG shall cause the Shenbei District Government and the concerned implementing agency to ensure that sewage conducted in project sewers along roadways will be treated in a manner acceptable to ADB before discharge.

13. LPG shall cause the concerned implementing agencies to ensure that a full predictive analysis of sensitive receptor sites along all roads will be carried out and funds for noise mitigation at affected properties will be reserved before construction of the Shenbei and Gaizhou road subprojects commences.

ii. Land Acquisition and Resettlement

14. LPG shall cause the implementing agencies to ensure that all land and all rights-of-way required for the project are made available to the works contractor in a timely manner in accordance with the schedule agreed under the related works contract and all LA&R activities are implemented in compliance with (i) all applicable laws and regulations of the PRC relating to land acquisition and involuntary resettlement; (ii) the involuntary resettlement safeguards; and (iii) all measures and requirements set forth in the resettlement plan, and any corrective or preventative actions subsequently agreed upon with ADB.

15. Without limiting the application of the involuntary resettlement safeguards or the resettlement plan, LPG will cause the Participating Township Governments and the implementing agencies to ensure that no physical or economic displacement takes place in connection with the project until:

(i) the resettlement plans are finalized upon completion of the detailed design and detailed measurement survey and submitted to ADB for approval prior to commencement of land acquisition and/or house demolition and award of any civil works contract, and such final resettlement plans are disclosed to the relevant affected people in accordance with ADB’s disclosure requirements applicable for resettlement-related activities; (ii) compensation and other entitlements have been provided to affected people in accordance with the resettlement plan; and (iii) comprehensive income and livelihood restoration programs have been established in accordance with the resettlement plan and in consultation with all affected persons to enhance, or at least restore, the livelihoods of all affected persons in real terms relative to pre-project levels; and to improve the standards of living of the poor and other vulnerable groups.

iii. Indigenous Peoples

16. LPG shall ensure that the project does not have any indigenous peoples impact, within the meaning of ADB’s Safeguard Policy Statement. In the event that the project does have any such impact, the LPG shall take all steps required to ensure that the project complies with the applicable laws and regulations of the PRC and with ADB’s Safeguard Policy Statement.

iv. Human and Financial Resources to Implement Safeguards Requirements

17. LPG shall make available and cause the Participating Township Governments and the implementing agencies to make available necessary budgetary and human resources to fully implement the EMP and the resettlement plans.

18. LPMO shall ensure that the capacity-building program described in the EMP is implemented as planned from June 2013 until physical project completion.

v. Social

Bidding Documents and Works Contracts

19. LPG shall cause the implementing agencies to ensure that all bidding documents and contracts for works contain provisions that require contractors to:

(i) comply with the measures relevant to the contractor set forth in the updated EIA, the EMP and the resettlement plans (to the extent they concern impacts on the affected persons during construction), and any corrective or preventative actions set forth in a safeguards monitoring report; (ii) make available a budget for all such environmental and social measures; (iii) provide the relevant implementing agencies with a written notice of any unanticipated environmental, or resettlement risks or impacts that arise during construction, implementation or operation of the project that were not considered in the EIA, the EMP and the resettlement plans; (iv) adequately record the condition of roads, agricultural land and other infrastructure prior to starting to transport materials and construction; and (v) reinstate pathways, other local infrastructure, and agricultural land to at least their pre-project condition as soon as possible and no later than the completion of construction.

20. LPG shall cause the implementing agencies to ensure that the bidding document for works contracts under the project will include provisions to require the contractors to (i) prioritize employment of women and the poor; (ii) provide equal pay for equal work; (iii) provide the timely payment of wages; (iv) use local unskilled labor, as applicable, (v) comply with core labor standards and the applicable labor laws and regulations, including stipulations related to employment; related to employment; and (vi) not employ child labor. LPG will further cause the implementing agencies to ensure that records of labor employment are properly maintained and tracked in the PPMS.

21. LPG shall cause the implementing agencies to ensure that the contractors will (i) implement an HIV/AIDS awareness and prevention training for all employees in collaboration with the Center for Disease Control; (ii) provide necessary measures to ensure the safety and health of its employees; (iii) together with the local health bureaus, disseminate information on the risks, hazards, impacts and prevention know-how on HIV/AIDS among the staff, workers on the construction sites and the local community by means of information disclosure, education and consultation; and (iv) observe local customs concerning acceptable behavior toward the local population.

22. LPG, through the Shenbei District Government, shall cause the Shenyang Shenbei Water Works Co. Ltd to ensure that the bidding document for the wastewater treatment equipment includes provision for (a) training facility operators and supervisors during the initial stage of operations, and (b) ongoing technical support.

vi. Safeguards Monitoring and Reporting

23. LPG shall do, or cause the Participating Township Governments and the implementing agencies to do, the following:

(i) submit (a) semiannual safeguards monitoring reports during construction, and (b) annual safeguard monitoring reports for environment during operation of Project facilities until the Project post-review to be carried out by ADB, to ADB for review and disclose relevant information from such reports to affected persons promptly upon submission;

(ii) if any unanticipated environmental and/or social risks and impacts arise during construction, implementation or operation of the project that were not considered in the EIA, the EMP and the resettlement plans, promptly inform ADB of the occurrence of such risks or impacts, with detailed description of the event and proposed corrective actions; (iii) no later than the date of award of works contract, engage qualified and experienced external environment expert(s) under terms of reference acceptable to ADB, to verify information produced through the environment monitoring process, and facilitate the carrying out of any verification activities by such external experts; (iv) for resettlement activities, engage an independent monitoring agency acceptable to ADB which carries out monitoring and evaluation, including data disaggregated by gender where applicable, and forward semiannual reports to ADB during resettlement implementation and annually for 2 years after completion of resettlement; and (v) report any actual or potential breach of compliance with the measures and requirements set forth in the EMP and the resettlement plans promptly after becoming aware of the breach.

Prohibited List of Investments

24. LPG shall cause the Participating Township Governments and the implementing agencies to ensure that no proceeds of the Loan are used to finance any activity included in the list of prohibited investment activities provided in Appendix 5 of the Safeguards Policy Statement.

Gender and Social Development Action Plans

25. LPG shall cause the Participating Township Governments and the implementing agencies to implement and monitor in a timely manner the GAP including ensuring (i) women’s participation during consultations with the general public during public hearings, in decision- making processes, and in any local decision-making bodies and structures; (ii) where appropriate, a gender-sensitive approach is taken when analyzing affordability of household wastewater and heating tariffs and subsidies; (iii) the prioritization of job opportunities for women during and after project implementation, and providing appropriate training; (iv) reemployment of female workers affected by closure of small boilers; (v) women are included as participating members in project-related seminars, workshops, and meetings; (vi) the collection of sex disaggregated data where appropriate; (vii) women’s participation and consultation during pedestrian and non-motor travel access studies; and (viii) executing agency and implementing agencies assign suitable staff to work on implementation and monitoring of the GAP, who will be trained on safeguard and gender impacts by the project implementation consultants. LPG shall also ensure that LPMO and the implementing agencies will monitor the project's impacts on women during project implementation and report them in the PPMS.

26. LPG shall cause the Participating Township Governments and the implementing agencies to implement and monitor in a timely manner the SDAP including (i) actions to enhance local employment for construction work and other services; (ii) actions to control HIV/AIDS and sexually transmitted infections; (iii) activities to protect local communities from construction disturbances and ensure safe construction practices; and (iv) livelihood training to assist income recovery for people affected by LA&R.

Public Awareness

27. LPG shall cause the Participating Township Governments and the implementing agencies to undertake public awareness campaigns through information disclosure, education and consultation on the project and its benefits, including but not limited to information related to the resettlement plans, EMPs, GAP, and SDAP under the project.

d. Other Covenants

i. Engineering and Technical

Wastewater Treatment Facility

28. LPG, through the Shenbei District Government, shall cause the SBWW to (i) adequately resource, train and support management and operational staff of the wastewater treatment facility; (ii) ensure that beneficial sewage sludge utilization (including composting and agriculture use) is promoted; (iii) ensure that industrial wastewater to be discharged to the WWTP is adequately pre-treated in accordance with relevant national and local standards prior to discharge; and (iv) prepare a time-bound closure and rehabilitation plan for the existing wastewater treatment facility to be closed before commissioning of the new wastewater treatment facility, and implement this plan within three years of completion of the wastewater treatment facility.

District Heating

29. LPG, through the Fuxin Municipal Government, shall cause the FHC to (i) ensure that the district heating network, equipment and instrumentation constructed under the project are operated and maintained in accordance with prescribed standards, specifications and regulations; (ii) ensure that heating distribution systems to individual end-users are established, operated and metered in a manner that would minimize any unaccounted-for-heat supplies once the heating network under the project has been constructed and is in operation; and (iii) annually report greenhouse gas emissions for that portion of the operation of the Fuxin combined heat and power plant corresponding to the heat used in the Fuxin heating component, in accordance with internationally recognized methodologies during the first 3 years of its operation, and submit such reports to the provincial PMO and ADB.

Urban Transport

30. LPG shall cause the Participating Township Governments and the implementing agencies to cooperate with all relevant agencies to promote public transport and NMT and traffic safety provisions for all roads and bridges constructed under the project, including the provision of public transport and NMT, adequate traffic and safety signage, signal lamps, median separators, traffic control and other necessary facilities. LPG will conduct holistic urban road design with the objective of nurturing public transport and NMT services, and coordinating all agencies concerned to improve utility management along urban roads. LPG shall also cause the Participating Township Governments and the implementing agencies to ensure that traffic safety education activities are conducted through radio and television broadcast and traffic safety booklets to enhance the local awareness of traffic safety.

31. LPG shall cause the Participating Township Governments to (i) coordinate urban transport planning improvements with all agencies concerned, (ii) assign responsibilities to

agencies concerned, (iii) coordinate urban transport planning and management including sub- planning and management systems, (iv) discuss policies and regulations, and (v) establish actions to implement proposed coordinated urban transport planning and management.

32. LPG shall cause the Participating Township Governments to (i) prepare a sustainable road and bridge maintenance program; (ii) prepare a budget plan on an annual basis for the maintenance of the roads and bridges under their supervision; and (iii) provide sufficient financial and staffing resources to the relevant local bureau responsible for road and bridge maintenance to carry out the program.

ii. Implementation Arrangements

33. The LPMO established by LPG, led by a Director, and equipped with sufficient staff, will be responsible for daily implementation work.

34. LPG will cause the Participating Township Governments to ensure that the PMOs are equipped with suitable and sufficient staff, reasonable office space, equipment, and adequate financial resources for implementation of the project throughout project implementation.

iii. Grievance Redress Mechanism

35. LPG shall, through the Participating Township Governments, ensure that, within 60 days from the effective date, PMOs have established the respective PPCUs and a GRM, acceptable to ADB and in accordance with the project administration manual (PAM) to (i) review and document eligible complaints of project stakeholders; (ii) proactively address grievances; (iii) provide the complainants with notice of the chosen mechanism and/or action; and (iv) prepare and make available to ADB upon request periodic reports to summarize (a) the number of complaints received and resolved, (b) chosen actions, and (c) final outcomes of the grievances. The PPCU shall (i) instruct contractors and construction supervisors if people complain about the project; (ii) coordinate with the PMOs, implementing agencies, and local EPBs, if necessary; and (iii) be supported by the environmental consultants of the loan implementation consultancy services. Eligible complaints shall include those related to the project, any of the service providers, or any person responsible for carrying out the project including complaints on misuse of funds and other irregularities, including grievances due to environment and resettlement.

iv. Governance and Anticorruption

36. The Government (i) acknowledges ADB's right to investigate, directly or through its agents, any alleged corrupt, fraudulent, collusive or coercive practices relating to the Project; and (ii) agrees to cooperate, and shall cause the Participating Township Governments, the implementing agencies ,and all other government offices, organizations and entities involving in implementing the project to cooperate, fully with any such investigation and to extend all necessary assistance, including providing access to all relevant books and records, as may be necessary for the satisfactory completion of any such investigation. In particular, the Government will ensure that (i) periodic inspections of the project contractors’ activities related to fund withdrawals and settlements are carried out; (ii) relevant provisions of ADB’s Anticorruption Policy (1998, as amended to date) are included in all bidding documents for the project; and (iii) contracts, financed under the project, include provisions specifying the right of ADB to audit and examine the records and accounts of LPG, Participating Township Governments, the implementing agencies, LPMO, Shenbei New District Municipal Management Department, Shenbei New District Water Works, Xinmin Municipal Management Department,

Heishan County Municipal Management Department, Gaizhou City Municipal Management Department, Fuxin City Municipal Management Department, Huanren County Municipal Management Department, Liaoning Yaodu Investment (Group) Ltd. Company, contractors, suppliers, consultants, and other service providers as they relate to the project.

37. For the project, LPG shall undertake the following anticorruption actions: (i) maintain the operation of a supervisory body to prevent undue interference in business practices with adequate resources made available for its effective operation; (ii) involve the agencies responsible for oversight of bidding processes; and (iii) periodically inspect the contractor’s activities related to fund withdrawals and settlements.

C. Evaluation

38. ADB and LPG will undertake a semi-annual review mission to evaluate the progress of project implementation. ADB and LPG will undertake a comprehensive midterm review 2 years after the start of project implementation to have a detailed evaluation of the scope, implementation arrangements, resettlement, achievement of scheduled targets, and progress on the agenda for policy reform and capacity building measures. Feedback from the PPMS activities will be analyzed. Within 3 months of physical completion of the project, LPMO will submit a project completion report to ADB.

D. Reporting

39. The LPMO will provide ADB with (i) semi-annual progress reports in a format consistent with ADB's project performance reporting system; (ii) consolidated annual reports including (a) progress achieved by output as measured through the indicator's performance targets, (b) key implementation issues and solutions; (c) updated procurement plan and (d) updated implementation plan for next 12 months; and (iii) a project completion report within 3 months of physical completion of the project. To ensure projects continue to be both viable and sustainable, project accounts and the executing agency audited financial statements, together with the associated auditor's report, should be adequately reviewed.

40. The executing agency, through the LPMO, has agreed on the following reporting commitments: (i) submission of quarterly progress reports during project implementation; (ii) submission of semiannual reports on the progress of safeguards monitoring, i.e. resettlement activities, environment management plan implementation, and SDAP and GAP implementation; (iii) submission of project completion report 3 months after completion of the project; and (iv) submission of audited financial statements 6 months after the end of fiscal year. PPMS data will be incorporated in the quarterly progress reports.

Report Reference Due Time Project Performance Monitoring System Project Agreement, No later than 6 months after (PPMS) Schedule, paragraphs loan effectiveness  Develop comprehensive PPMS Semiannual procedures  Reporting of baseline and progress data including environmental management plan Semiannual Project Reports Project Agreement, Semiannual, within 1 month Schedule, Article after the end of each 6 months (July and January) Audited Financial Statements Project Agreement, Not later than 6 months after

Report Reference Due Time Schedule, Article the closure of fiscal year (June) Land Acquisition and Resettlement Project Agreement, Monitoring Schedule  Internal monitoring reports for the • Twice a year implementing agencies/executing agency  Construction Phase – External • Baseline report and then Monitoring Report twice a year  Operations Phase – External • Annual reports Monitoring and Evaluation Report  Resettlement Completion Report • Within 3 months after project completion Other Social Monitoring Project Agreement, • Twice a year (included in  Reporting on GAP implementation Schedule project progress reporting)  Reporting on SDAP implementation Environmental Report Project Agreement,  Internal monitoring reports for LPMO Schedule • Twice a year  Construction Phase – Environment • Twice a year Monitoring Report, External EMP compliance verification report  Operations Phase – Environment • Once a year during first Monitoring Report, External EMP two years of operation compliance verification report • Within 3 months after  Environmental Acceptance Monitoring project completion Report Project Completion Report Project Agreement, Not later than 3 months after Schedule the physical completion of the project

E. Stakeholder Communication Strategy

41. Project information will be communicated through public consultation, information disclosure mechanism in ADB’s and government’s website, meetings, interviews, focus group discussions, and community consultation meetings, in accordance with ADB’s requirements of information disclosure policy.

42. Environment. Meaningful consultation was carried out with affected people and other concerned stakeholders during project preparation. Direct public participation was conducted as an ongoing element in the development of the sub-components. These activities were carried out by the implementing agencies in their preparation of the FSRs and EIAs and by the Technical Assistance (TA) consultants following PRC National Environmental Impact Assessments Technical Guidelines and ADB’s Safeguard Policy Statement (2009). Future consultation will include involvement of affected people in monitoring impacts and mitigation measures during the construction and operation stages; evaluating environmental and economic benefits and social impacts; and interviewing the public after the project is completed. During construction, the affected people will be consulted through formal questionnaire surveys and informal interviews by the on-site environmental engineers of the construction contractors, construction supervision companies, and voluntary monitors of the local residents living in the project areas, especially those around the construction sites. In particular, households who are connected to the new Sihe district heating network and along new road alignments will be

targeted. A PPCU will be established in the LPMO to coordinate the project GRM. The Liaoning EPB maintains hotlines for environmental complaints, which will also be made available for continued public complaints after project completion.

43. Resettlement. All the affected households will be involved throughout the project cycle starting from planning, implementation, monitoring and evaluation. Through meetings, interviews, socio-economic surveys, focus group discussions, public consultation workshops, and community consultation meetings, local representatives have participated in the planning and concerns have been integrated into the resettlement plans. Before implementation, the LPMO and implementing agencies will further discuss and consult with the affected persons’ representatives the impacts on affected persons and the detailed compensation plan to ensure affected persons’ interests are protected and to provide employment opportunities for the affected persons’ livelihoods as a result of project implementation. LPMO and implementing agencies will disclose the final resettlement plans in district, county, township and village offices and to affected people in local language. The resettlement plans have been posted on the ADB website. Resettlement information booklets have been distributed to affected households. The booklets contain information such as the affected project area, proposed land acquisition and relocation, implementation progress and procedures, compensation standards for land acquisition, relocation assistance, livelihood restoration strategy, grievance mechanism and monitoring and evaluation. The respective implementing agencies will establish project resettlement units for supervision of implementation, continued public consultation, monitoring of progress, and response to grievances. The grievance redress procedures have been established and explanations have been included in the resettlement information booklets.

44. Gender action plan and social development action plan. Public disclosure of all project documents will be undertaken through the implementing agencies and on the ADB website including the project information document, DMF, Consolidated EIA, resettlement plans, and the Report and Recommendation of the President (RRP). Disclosure of social and environmental monitoring reports will be done during project implementation.

45. Consultations with communities have taken place at different points in the preparation of the GAP and SDAP within the components, and have been designed not only to inform people about the component or specific activities related to its preparation and implementation, but also to enable people in the community to ask questions, make suggestions, state preferences and express concerns. Further consultation will be conducted during SDAP and GAP implementation. Special attention will be paid to the participation of women and any other vulnerable groups, such as the poor.

X. ANTICORRUPTION POLICY

1. ADB reserves the right to investigate, directly or through its agents, any violations of the Anticorruption Policy relating to the project.41 All contracts financed by ADB shall include provisions specifying the right of ADB to audit and examine the records and accounts of the executing agency and all project contractors, suppliers, consultants and other service providers. Individuals/entities on ADB’s anticorruption debarment list are ineligible to participate in ADB- financed activity and may not be awarded any contracts under the project.42

2. To support these efforts, relevant provisions are included in the loan agreement and the bidding documents for the project. In particular, all contracts financed by ADB in connection with the project shall include provisions specifying the right of ADB to audit and examine the records and accounts of LPG, implementing agency, and all contractors, suppliers, consultants, and other service providers as they relate to the project. For the project, LPG has indicated its commitment to promote good governance and establish a corruption-free environment under the project.

41 Available at: http://www.adb.org/Documents/Policies/Anticorruption-Integrity/Policies-Strategies.pdf 42 ADB's Integrity Office web site is available at: http://www.adb.org/integrity/unit.asp

XI. ACCOUNTABILITY MECHANISM

1. People who are, or may in the future be, adversely affected by the project may submit complaints to ADB’s Accountability Mechanism. The Accountability Mechanism provides an independent forum and process whereby people adversely affected by ADB-assisted projects can voice, and seek a resolution of their problems, as well as report alleged violations of ADB’s operational policies and procedures. Before submitting a complaint to the Accountability Mechanism, affected people should make a good faith effort to solve their problems by working with the concerned ADB operations department. Only after doing that, and if they are still dissatisfied, should they approach the Accountability Mechanism.43

43 For further information see: http://www.adb.org/Accountability-Mechanism/default.asp.

XII. RECORD OF PAM CHANGES

1. The PAM is a living document subject to change after ADB Board approval of the project's RRP. It is concise yet informative, providing checklists of all activities related to project implementation along with the necessary procedures for the PMO’s to effectively implement and monitor the project.

Attachment 1

ENVIRONMENTAL MANAGEMENT PLAN

A. Introduction

1. This environmental management plan (EMP) for the Integrated Development of Key Townships in Central Liaoning Project covers all phases of subproject implementation from preparation through commissioning and operation of all subprojects, and it aims to ensure the monitoring of environmental impacts and activation of environmental mitigation measures. Relevant parts of the EMP will be incorporated into the construction, operation, and management of each sub-component.

2. Environmental protection measures will (i) mitigate environmental impacts, (ii) achieve compliance with national environmental regulations and ADB safeguard standards, (iii) provide compensation or offsets for lost environmental resources, and (iv) enhance environmental resources.

3. Environmental monitoring programs will be carried out and the results will be used to evaluate the extent and severity of actual environmental impacts against the predicted impacts and the performance of the environmental protection measures or compliance with related rules and regulations.

B. EMP Implementation Responsibilities

4. The project administration manual (PAM) provides the institutional organization for the Project illustrated in Table A1.1 below. In this table, the responsibilities related primarily to the environmental management of the project are listed.

Table A1.1 Institutional Responsibilities for Environmental Management Project Implementation Environmental Management Roles and Organizations Responsibilities Provincial Project Management Coordination and overall management to ensure smooth implementation of Office (PPMO) - Liaoning Urban the Project Construction and Renewal Project Office (LUCRPO) • Supervision the work of the subproject PMOs • Procurement of Loan Implementation Environmental Consultant (LIEC) to assist in supervision, tracking and reporting on environmental management plan (EMP) implementation of all subprojects. • Procurement of external environment expert (EEE) to conduct independent EMP compliance verification • Packaging of environmental monitoring reports prepared by the subproject PMOs and submission of them to ADB • Establishment of a Grievance Redress Mechanism (GRM) with a dedicated Project Complaints Coordinating Unit (PCCU)

Subproject PMOs (SpPMOs) Overall guidance and support to the preparation and implementation of the subprojects  Benxi City PMO  Fuxin City PMO • Preparation of final EMP relating to each subproject  Gaizhou City PMO • In conjunction with IAs, and with the assistance of Design Institutes,  Huanren County PMO incorporation of EMP into bidding documents for construction contractors  Heishan County PMO • Supervision of the implementation agencies responsible for implementing  Shenbei New District PMO the EMP  Xinmin City PMO

A1-2

Project Implementation Environmental Management Roles and Organizations Responsibilities • Tracking of the EMP implementation and reporting to the provincial PMO • Act as a local entry point for the project GRM and deal with/refer complaints to the PCCU

Implementing Agencies (IA) Ensuring successful implementation of the relevant subproject components

 Benxi Yaodu • In conjunction with Subproject PMOs, incorporation of EMP into bidding  Fuxin City Municipal documents for construction contractors Management Department • Procurement and management of construction supervision companies  Gaizhou City Municipal (CSC) required for subproject implementation in accordance with Management Department People’s Republic of China (PRC) and ADB procedures and regulations  Huanren County Municipal • Procurement of environment monitoring centers (EMCs) to conduct Management Department environment effect monitoring  Heishan County Municipal • Execution of the approved EMP Management Department • Monitoring of environmental performance and reports to the Subproject  Shenbei New District PMO Municipal Management • Participation in capacity building and training programs Department • Commissioning of the constructed facilities  Shenbei New District Water Works  Xinmin Municipal Management Department Facility Operators Ensuring successful ongoing operation and maintenance of the relevant subproject components  Shenbei New District Municipal Management • In conjunction with IAs, commissioning of the constructed facilities Department (SMMD) • O&M of completed facilities, including environmental management,  Shenbei New District Water monitoring and reporting responsibilities. Works (SWW)  Xinmin Municipal Management Department (XMMD)  Heishan County Municipal Management Department (HSMMD)  Gaizhou City Municipal Management Department (GMMD)  Fuxin City Municipal Management Department (FMMD)  Huanren County Municipal Management Department (HRMMD)  Liaoning Yaodu Investment (Group) Ltd. Company (Yaodu)

5. The provincial project management office (PPMO) - Liaoning Urban Construction and Renewal Project Office (LUCRPO) has the responsibility of co-ordination and overall supervision of Project Implementation. The PPMO will coordinate and assist the implementation of the EMP by the Subproject Project Management Offices (SpPMOs).

6. In the design stage, the SpPMOs and the implementing agencies (IAs) will pass the EMP to design institutes to incorporate mitigation measures in the detailed designs. The EMP will then be passed on to construction contractors through the bidding process. To ensure that the contractors comply with the EMP’s provisions, the SpPMOs and IAs with the help and

A1-3

technical support of the loan implementation environmental consultant (LIEC), will prepare and provide the following specification clauses for incorporation into the bidding procedures: (i) a list of environmental management requirements to be budgeted by the bidders in their proposals; (ii) environmental clauses for contractual terms and conditions; and (iii) major items in domestic environmental impact assessments (EIAs), the consolidated EIA (CEIA), and the EMP. The SpPMOs will prepare semi-annual environment progress reports, which will be consolidated by the PPMO and submitted to ADB.

7. Each IA shall form an environmental management unit (EMU) to coordinate environmental issues associated with each subproject on behalf of the IA. The EMU will take charge of (i) implementing the EMP and developing implementation details; (ii) supervising the implementation of mitigation measures during construction; (iii) the internal monitoring and coordinating the compliance monitoring of construction supervision companies (CSCs); (iv) implementing training programs for contractors; (v) incorporating environmental management, monitoring, and mitigation measures into the construction and operation management plans; (vi) reporting on the EMP performance to the Subproject PMOs; and (vii) arranging environmental monitoring reviews and responding to any adverse impact beyond those foreseen in the EIA reports.

8. The SpPMOs will nominate staff to act as environmental supervisors/inspectors check the overall implementation of environmental management provisions of the EMP. Their work will coordinate with, and be assisted by, the EMUs of the IAs. It will also be supported by the LIEC. Construction contractors and the CSCs contracted by each of the IAs will be responsible for the daily inspection, monitoring, and evaluation of mitigation measures’ implementation. The SpPMOs will receive reports of all these activities and pass them on to the provincial PMO.

9. During the operational phase, the environmental protection bureaus (EPBs) and the SpPMOs will supervise the environmental management and implementation of mitigation measures by the subproject operators. The cost of mitigation measures in this phase will be borne by the relevant facility operators. Environmental monitoring centers (EMCs) contracted and paid for by the IAs will ensure compliance with the People’s Republic of China’s (PRC) environmental standards and regulations through regular and random environmental effect monitoring and inspection during construction and operation.

10. The Liaoning Provincial Government (LPG) will provide the IAs with financial and management autonomy to operate project facilities. Since the IAs have limited capacity for environmental management, relevant training has been arranged, which has been summarized in Table A1.8 below.

C. Role of the Loan Implementation Environmental Consultants

11. The LIEC can be either a company or individuals, contracted by the PPMO to provide assistance during the pre-construction, construction and initial operational periods. The LIEC should be contracted as soon as possible after loan approval so that the LIEC can assist in the important pre-construction activities listed in the EMP. The LIEC will advise the PPMO, the SpPMOs, the IAs and contractors on all aspects of environmental management and monitoring for the project. The LIEC will (i) assist LPG and PPMO to design the project performance management system in terms of environmental management; (ii) assist PPMO and SpPMOs to update the EMP and environmental monitoring program; (iii) review the Site Environmental Management and Supervision Manual, the Emergency Preparedness and Response Plan, and the Site Environmental Health and Safety Plan; (iv) review the implementation of the

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environmental protection measures specified in the EMP; (v) review internal and environmental effect monitoring reports; (vi) prepare the semi-annual environmental monitoring report; (vii) provide training to SpPMOs and IAs on environmental management implementation and monitoring (items T1, T2, T4, T5, T7 and T9 in Table A1.9) and assist in the preparation of training materials (items T3, T6, and T8 in Table A1.9); (viii) identify any environment-related implementation issues and necessary corrective actions and reflect these in a corrective action plan; and (ix) undertake site visits as required.

D. Role of External Environmental Expert

12. In response to ADB’s Safeguard Policy Statement (2009), the environment performance of the project will be verified by an external, qualified expert. The external environmental expert (EEE) will be employed by the Borrower using proceeds from the loan. The EEE will (i) verify the internal and environmental effect monitoring information provided by the Borrower; (ii) review the semi-annual environmental monitoring report prepared by Liaoning PMO (LPMO) and the LIEC; (iii) conduct its own investigation by visiting the project sites, taking samples and/or conducting visual inspections; (iv) identify any environment-related implementation issues and EMP compliance issues and necessary corrective actions; and (v) prepare a EMP compliance verification report for ADB and the client.

E. Summary of Potential Impacts and Mitigation Measures

13. Table A1.2 summarizes the potential impacts of the sub-components during construction and operation as identified by the EIA, as well as corresponding mitigation measures designated to minimize those impacts. Each subproject IA has prepared environmental management sections in the EIAs covering the components within their jurisdiction. These have been integrated into a consolidated EMP and environmental monitoring plan in this chapter covering all subproject sectors and settings (see Tables A1.2 and A1.5).

14. The following mitigation measures will be incorporated into tender documents, construction contracts, and site management plans. The effectiveness of these measures will be carefully watched via the environmental monitoring to determine whether to continue them or to make improvements.

Table A1.2: Summary of Potential Impacts and Mitigation Measures

For all Components For Road Sub-Components only For Wastewater Sub-Components only For Heating Sub-Components only

Item/Media Environmental Mitigation Measures and/or Who Who Costs Issues and Safeguards Implements Supervises Impacts Pre-construction 1.1 Feasibility Site/alignment The recommended sites for IAs, LDI and IA, local EPB* Included in and Design selections the individual sub- PPTA team the FS stage components were selected Stage from various alternatives to minimize adverse impacts on the environment. EIA reports As required by law, ensure EIA Institutes IA, local EPB* Included in EIA has been prepared for and PPTA the FS and

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Item/Media Environmental Mitigation Measures and/or Who Who Costs Issues and Safeguards Implements Supervises Impacts each subproject. team on Design behalf of IAs Stages Public consultations Meaningful consultation IA, PPTA IA Included in conducted in each county on team the FS environmental issues, Stage poverty, resettlement and the Grievance Redress Mechanism during the project design and EIA preparation. Resettlement Plans As required by law, prepare LDIs, IAs and SpPMOs and Included in RPs for the project in each PPTA team PPMO the RP subproject locality to required ADB and PRC standards. i. Establish a resettlement office comprising local government officials to manage the resettlement process. ii. Conduct community consultation programs and ensure information is disseminated about entitlement based on the Land Administration Law. iii. Ensure that all relocation and resettlement activities are reasonably completed before construction starts on any subproject. iv. Include provisions for households suffering economic displacement through new landfill controls. Verification of To confirm design standard LDI, IA SpPMO Included in inflow quality of WWTP, monitor influent the Detail quality from Qingshuitai and Design verify that planned process Stage will achieve Class 1A discharge standard. Design for failures Design of WWTP to include: LDI, IA SpPMO Included in and overflows i. spare parts for key the Detail components; Design ii. regular inspection and Stage proper maintenance of the WWTP; iii. regular staff training; and iv. automated online, real- time monitoring of influent and effluent quality.

An emergency holding pond with a volume equivalent to 12 hours operation will be constructed as part of the

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Item/Media Environmental Mitigation Measures and/or Who Who Costs Issues and Safeguards Implements Supervises Impacts plant to deal with a possible accidental release. Sludge transport A transport plan that, at a LDI, IA SpPMO Included in planning, sludge minimum, identifies the the Detail emergency route, time of day, frequency Design response plan of hauling, type of truck to Stage use, truck speed, will be developed and implemented to cover transport of sludge.

An emergency preparedness and response plan should be included to cover slurry spillage during transport.

The approval of Shenyang EPB and of other concerned government agencies (e.g., city health office) as required for the transport, will be obtained.

A back-up system and emergency response plan for sludge storage and landfill disposal in case of temporary closure of the centralized sludge treatment plant will be developed. Bridge designs to Design bridges and culverts DI, IAs SpPMOs Included in minimize with an adequate hydraulic the Detail hydrological opening to ensure effective Design impacts flood discharge capacity stage (100-year flood).

Bridging is either by box culvert or continuous beam where the in-stream structures (box culvert sides or piles) account for less than 25% of the bed width. Stormwater outlets Environmental protection LDI, IAs SpPMOs Included in design measures for stormwater will the Detail include: Design i. trash racks to catch Stage garbage and objects and prevent them entering waterbodies; and ii. water velocity dampening structures at outlets to waterbodies, which lack reinforced or canalized banks and beds, to prevent scouring and erosion. 1.2 Establishment of Contracting LIEC and EEE PPMO LPG Included in Implementation implementation the Detail Support support positions Design Stage

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Item/Media Environmental Mitigation Measures and/or Who Who Costs Issues and Safeguards Implements Supervises Impacts Contracting CSCs SpPMOs PPMO Included in the Detail Design Stage Establishment of Nomination/appointment of SpPMOs, IAs, LIEC Included in environmental units environmental supervisors in the Detail at different levels of PMO. Design supervision Stage Establishment of EMUs in each IA with appropriately skilled staff. 1.3 Construction Updating EMP Mitigation measures defined LDIs, PPMO, LIEC, Included in Preparation in this EMP will be updated SpPMOs, IAs local EPB* the Detail Stage and incorporated into the Design detailed design to minimize Stage adverse environmental impacts. Incorporate the provisions of LDIs, PPMO, LIEC, Included in the emergency response SpPMOs, IAs local EPB* the Detail plans for road accidents Design involving hazardous Stage materials into the updated EMP Land-take RP will be updated and LDIs, PPMO, LIEC, Included in confirmation incorporated into the detailed SpPMOs, IAs local EPB* the Detail design. Design Stage Contract Prepare environment section LDIs, PPMO, LIEC, Included in documents in the terms of reference for SpPMOs, IAs local EPB* the Detail bidders. Design stage Prepare environmental contract clauses for contractors, namely the special conditions (e.g., reference EMP and monitoring table). Provide Development and SpPMOs, IAs PPMO, ADB comprehensive and implementation of GRM responsive Establishment of PPCU complaints process within PMO. Construction site Preparation of Site Head IA Included in planning Environmental Management contractor for construction and Supervision Manual, each contracts including an emergency subproject preparedness and response plan, and site environmental health and safety plan for approval by the IAs. • Include hazardous and polluting materials handling guidelines and directions in the plan. • Include work schedules for each construction site. Where construction techniques or situations require longer work periods

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Item/Media Environmental Mitigation Measures and/or Who Who Costs Issues and Safeguards Implements Supervises Impacts extending beyond normal work hours (between 0600 and 2000 hours) the construction unit must reach prior agreement with APs and provide compensation. Environmental Environmental specialists IAs, local LIEC, EMP costs. Protection Training and/or officials from local EPBs SpPMOs See Table EPBs will be invited to A1.7 provide training on implementation and supervision of environmental mitigation measures to contractors. 1.4 Ancillary Borrow pits and Spoil disposal sites and IAs, LDIs Local EPB* Included in sites and spoil disposal sites borrow pit locations will be the Detail construction identified and defined in the construction Design support approved by EPB tender documents, subject to stage preparation approval by the EPBs, and selected using the following criteria: i. Siting to minimize transportation and the need for temporary storage; ii. Siting to avoid potential flood areas or floodways; iii. Sites to be small, and have no encroachment on cultivated land or forestland; and iv. Design of spoil disposal sites to be concave land, gullies or gentle slopes. 1.5 Current WWTP Prepare and implement an Shenbei New SpPMO, local Included in Infrastructure require closure and action plan for the closure of District govt. EPB* the Detail planning restoration. the existing WWTP and Design influent pipe network in stage accordance with national standards including proper remediation, sludge disposal and monitoring of environmental conditions. Centralized The construction of SSTP is SpPMO, PPMO, ADB Included in composting of completed and a 12-month Shenbei New the Detail sludge operational running-in period District govt. Design successfully achieved before stage the commissioning of subproject WWTP

The QA/QC mechanisms and compliance process in place at the SSTP before the commencement of operations.

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Item/Media Environmental Mitigation Measures and/or Who Who Costs Issues and Safeguards Implements Supervises Impacts Buffer zone around Establish 100 m buffer zone IA, Shenbei SpPMO, local Included in WWTP for odour around WWTP. Add to New District EPB* the Detail resettlement planning if govt. Design and required. RP Traffic Prepare Traffic Management Contractors IA, local Included in management Plan for each road Traffic Bureau construction planning subproject. Plan to include: contracts i. Selecting haulage routes to reduce disturbance to regular traffic (where possible). ii. Diverting or limiting construction traffic at peak traffic hours. iii. Siting and management of interim tracks to avoid traffic problems. iv. Blocking and reinstating interim tracks to original condition on completion of construction. Noise prediction Before construction EIA Institute, SpPMO Included in analyses for commences a full predictive IAs the Detail Shenbei and analysis of sensitive receptor Design Gaizhou road sites along all roads for stage – part subprojects 2015, 2020 and 2030 will be of EIA. carried out. EMP costs. Funds for noise mitigation at See Table affected properties will be A1.7 reserved. Asbestos risk Confirm asbestos in small Licensed SpPMO, EPB EMP costs. assessment local boilers (15) planned for asbestos See Table demolition. assessment A1.7 and removal Define an action plan for all contractor, on boilers, including labelling behalf of IA. requirements, establishment of a register, control mechanism (from elimination, removal or isolation to safe working practices), health and safety requirements, and working procedures for disposal of the asbestos and ACM, based on the World Bank EHS (April 2007). Construction 2.1 Water Wastewater from Latrines and seepage pits Contractors IA, local EPB* EMP costs. construction camps will be installed in any See Table camps. After project A1.7 completion, the sites will be vacated only after waste has been effectively treated or removed. Wastewater from i. Settling ponds, oil-water Contractors IA, local EPB* EMP costs. washing separators. See Table aggregates, ii. Recycled water will be A1.7

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Item/Media Environmental Mitigation Measures and/or Who Who Costs Issues and Safeguards Implements Supervises Impacts pouring and curing used to spray for dust concrete, control. machinery repairs iii. Residue will be removed from site and disposed in municipal landfills. Handling of i. A construction materials Contractors IA, local EPB* EMP costs. hazardous and handling and disposal See Table harmful materials protocol that includes spill A1.7 responses will be a part of the Site Environmental Management Supervision Manual and will be applied to prevent soil and surface/ground water pollution. ii. Construction of storage facilities (including fuel and oil storage), with bunds and clean-up equipment. iii. Fuel supplier is properly licensed and follows the proper protocol for transferring of fuel and in compliance with JT 3145- 88 (Transportation, Loading and Unloading of Dangerous or Harmful Goods). iv. Vehicles and equipment are properly parked in designated areas to prevent contamination of soil and surface water. v. Vehicle, machinery, and equipment maintenance and refueling will be carried out so that spilled materials do not seep into the soil or into waterbodies. vi. Fuel storage and refilling areas will be located at least 300 m from drainage structures and important waterbodies. vii. Oil traps will be provided for service areas, and parking areas. Hydrological Both the river embankment Contractors IA, local EPB* n/a impacts and and the bridge pier flooding at constructions will be bridge/culvert conducted during the dry construction sites season (from October to next May), and construction during the rainy season shall be prohibited 2.2 Air Generation of dust i. Vehicles carrying soil, Contractors IA, local EPB* EMP costs. by construction sand or other fine See Table

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Item/Media Environmental Mitigation Measures and/or Who Who Costs Issues and Safeguards Implements Supervises Impacts activities materials to and from the A1.7 sites must be covered. ii. Materials storage sites must be 300 m from residential areas and covered or sprayed with water. iii. Water will be sprayed on construction sites and access roads each day. iv. All roads and tracks used by vehicles of the contractors or any subcontractors or supplier will be kept clean and clear of all dust, mud, or extraneous materials dropped by their construction vehicles. Air emission from i. Vehicle emissions must Contractors IA, local EPB* EMP costs. vehicles and be in compliance with See Table equipment PRC-GB18352-2005, A1.7 GB17691-2005, GB 11340-2005, GB3847- 2005, and GB18285- 2005. ii. Equipment and machinery will be maintained to a high standard to ensure efficient running and fuel- burning. High-horsepower equipment will be installed with tail gas purifier to ensure emissions be in compliance with PRC- GB16297-1996. iii. A regular inspection and certification system must be initiated. Generation of i. Use modern equipment Contractors IA, local EPB* EMP costs. asphalt flue gas which complies with the See Table asphalt flue gas standard A1.7 of GB16297-1966 ii. Locate asphalt mixing stations at least 500m from residences. 2.3 Noise and Noise from The following safeguards will Contractors IA, local EPB* EMP costs. Vibration Vehicles and be implemented: See Table construction i. Noise levels from A1.7 machinery equipment and machinery to conform to PRC- GB12523-90. ii. Install portable noise shields near sensitive receptors such as schools and residential areas. iii. At construction sites, noise-generating construction work will be

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Item/Media Environmental Mitigation Measures and/or Who Who Costs Issues and Safeguards Implements Supervises Impacts stopped between 2000 and 0600 hours. iv. In unexpected cases where construction noise needs to continue into the night, the construction unit must reach an agreement with APs and provide compensation 2.4 Solid wastes Domestic waste i The contractors will Contractors IA, local EPB* EMP costs. from construction provide appropriate waste See Table camps storage containers. A1.7 ii Trash collection bins will be regularly sprayed with pesticides to reduce flies. iii Wastes will be stored away from water bodies and will be regularly hauled to a suitable landfill or designated dumping site. iv Agreements will be signed with local authorities for waste disposal, where appropriate, through local facilities and to approved disposal sites. Construction Construction wastes that Contractors IA, local EPB* EMP costs. wastes could have cannot be reused will be See Table adverse impacts on regularly transported off-site A1.7 surrounding for disposal, and not allowed environments. to accumulate on site over long periods. Demolition of small The demolition of small Contractors Fuxin District Govt. local boilers and boilers and disposal of govt. and local funding removal of domestic stoves needs to be EPB* domestic stoves will undertaken in compliance have environmental with standards for and occupational occupational health and health impacts safety and disposal of Licensed demolition wastes. (Law on asbestos the Prevention and Control assessment of Environmental Pollution by and removal Solid Waste of PRC (2004) contractor, on and Occupational Disease behalf of IA. Control Act (2002) and Work Safety Act (2002))

Where asbestos is present, follow action plan for all boilers, including labelling requirements, establishment of a register, control mechanism (from elimination, removal or isolation to safe working practices), health and safety requirements, and working procedures for disposal of

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Item/Media Environmental Mitigation Measures and/or Who Who Costs Issues and Safeguards Implements Supervises Impacts the asbestos and ACM, based on the World Bank EHS (April 2007).

The handling of fly ash should also be subject to hazardous materials precautions, including laboratory testing to verify their regulatory classification. 2.5 Soil erosion Erosion from The following safeguards will Contractors IA, local EPB* EMP costs. and ecology construction sites be implemented for all See Table construction-related A1.7 earthworks: i. Construct interception ditches and drains to prevent runoff entering construction sites, and divert runoff from sites to existing drainage. ii. Limit construction and material handling during periods of rains and high winds. iii. Stabilize all cut slopes, embankments, and other erosion-prone working areas while works are going on. iv. All earthwork disturbance areas shall be stabilized within 30 days after earthworks have ceased at the sites. Replacement of lost i. In compliance with the Contractors, IA, local EMP costs. vegetation PRC’s forestry law, IA will IA EPB*, FB See Table undertake compensatory A1.7 planting of an equivalent or larger area of affected forest trees. ii. The re-vegetation will comprise a selection of species that are suitable for this area and have the most appropriate attributes to survive and serve their designated functions. iii. New plantings will be maintained during the operation period. Erosion from spoil The following safeguards will Contractors IA, local EPB* EMP costs. disposal sites and be implemented: See Table operation of borrow i. Strip and stockpile A1.7 pits topsoil from new sites. ii. Provide temporary detention ponds or containment to control silt runoff.

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Item/Media Environmental Mitigation Measures and/or Who Who Costs Issues and Safeguards Implements Supervises Impacts iii. Construct intercepting ditches and drains to prevent outside runoff entering disposal sites, and divert runoff from sites. iv. Preserve existing vegetation where no construction activity is planned. Erosion of banks i. Embankment and pier EMP costs. and sedimentation constructions during the See Table of watercourses dry season only. A1.7 during bridge ii. Slopes on both sides of construction bridges and culverts will be protected through the planting of grass and stabilizing vegetation. iii. Slurry from pile drilling in the river bed will be pumped to shore and properly disposed of. iv. Pier construction in the waterbodies will be planned and laid out to ensure adequate opening for water flow. 2.6 Social and Resettlement of All affected persons will be IA SpPMOs Included in Cultural affected persons resettled in a timely and the RPs adequate manner, in accordance with the RP. Compensation of All affected persons will be IA SpPMOs Included in lost assets compensated in a timely and the RPs adequate manner, in accordance with the RP. When odor buffer zones for IA SpPMOs Included in WWTP are confirmed, any the RPs resettlement or asset compensation required will be implemented in a timely and adequate manner, in accordance with the RP. Traffic The following safeguards will Contractors, IA, Traffic EMP costs. management – all be implemented: IA authorities See Table projects i. Selecting haulage routes A1.7 to reduce disturbance to regular traffic (where possible). ii. Diverting or limiting construction traffic at peak traffic hours. Traffic The following safeguards will Contractors, IA, Traffic EMP costs. management – be implemented: IA authorities See Table road subprojects i. Siting and management of A1.7 interim tracks to avoid traffic problems. ii. Blocking and reinstating interim tracks to original

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Item/Media Environmental Mitigation Measures and/or Who Who Costs Issues and Safeguards Implements Supervises Impacts condition on completion of construction. Community safety i. Advance notice of Contractors, IA, Traffic EMP costs. construction will be IA authorities See Table published before the A1.7 construction through radio and TV. ii. Construction billboards, which include construction contents, schedule, responsible person and complaint phone number, will be erected at each construction site. Work camp health i. Contractors will be Contractors, IA, Local Construction and hygiene required to safeguard IA and/or costs environmental hygiene in Provincial the construction camps, Health Bureau including the quality of water supplies. ii. All construction sites must provide the necessary personal protective equipment and other resources to create a safe working environment. iii. Construction site operations must comply with PRC’s State Administration of Worker Safety Laws and Regulations. Cultural heritage i. Cultural heritage values Contractors IA, Local Included in protection will be preserved where Cultural Relics construction identified. In accordance Preservation costs with PRC regulations, no Office person shall destroy, damage, deface, conceal, or otherwise interfere with a relic. ii. In case an important site is unearthed, work should be stopped immediately and the matter promptly referred to the local Cultural Relics Preservation Office for evaluation and decision on appropriate actions. South Mosque, At the construction site near Contractors, Shenyang Included in Xinmin the South Mosque in the IA, SpPMO Cultural Relics construction Xinmin road subproject, the Preservation costs and following safeguards will be Office, contingency applied: Mosque Imam i. No construction activities, disturbance, stockpiling or vehicle/machinery use will be undertaken on the mosque side of the

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Item/Media Environmental Mitigation Measures and/or Who Who Costs Issues and Safeguards Implements Supervises Impacts sidewalk; ii. Jackhammers and generators will not be operated within 100 m of the mosque outer wall; and iii. All work within 200 m of the mosque will be supervised by staff of the Shenyang Cultural Relics Protection Office. iv. Workers’ canteen and sanitation facilities will be located at least 100 m from the Mosque; v. Construction activities will be forbidden during Muslim religious service period. vi. Regular consultation of Mosque imam and Shenyang Cultural Relics Preservation Office. 2.7 Unexpected If unexpected environmental IA SpPMOs Included in environmental impacts occur during project construction impacts construction phase, the IAs costs and will update the EMP, and contingency environmental protection measures will be designed and resources will be utilized to cope with these impacts. Operation 3.1 Water Performance Prior to commissioning of the Operator, SpPMO Included in testing of WWTP WWTP, a series of tests will EPB operational processes be conducted to ensure costs proper functioning of the WWTP and ability to achieve Class 1A discharge standard. Wastewater being i. Install wastewater quality IA and Local EPB Included in discharged without monitoring devices for Operators design and meeting relevant real-time monitoring at operating requirements WWTP. costs /standards ii. Establish real-time monitoring framework . Protection of water i. Routine clearing of trash IA and Local EPB Included in quality from racks at stormwater Operators operational Stormwater outlets. costs discharge ii. Routine street cleaning. 3.2 Air Exhaust emissions i. Speed limiting signs and IA and Local EPB Included in from predicted enforcement. Operators, operational traffic volumes on ii. Air pollution monitoring. local TBs costs roads iii. Road vehicle inspections to ensure compliance with exhaust emission codes. Exercise town planning County/ LPG n/a controls to ensure future District and developments of sensitive City Planning receivers to vehicle Departments

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Item/Media Environmental Mitigation Measures and/or Who Who Costs Issues and Safeguards Implements Supervises Impacts pollutants (hospitals, schools, nursing homes) are not built within 20 m of subproject roads Odor from WWTP i. Equip odor generating IA and Local EPB EMP costs. facilities with ventilation or Operators See Table odor containment. A1.7 ii. Implement timely sludge cleanup. iii. Institute daily check, repair and maintenance of all wastewater treatment facilities/equipment. 3.3 Noise Noise from i. Increase control of IA and Local EPB Included in increasing traffic vehicle noise, including Operators operational volumes on project the installation of costs roads effective mufflers. ii. Traffic and parking management to avoid noise produced by stop- and-start driving and traffic jams. iii. Driving speed limitations. iv. Large and heavily loaded vehicles forbidden during night time. v. Signs and public education to reduce use of horn. vi. Road maintenance and timely repair of damaged road pavements. vii. Noise monitoring at regular intervals to check compliance. Noise impact from For road subprojects at IA and SpPMOs, EMP costs. traffic on sensitive Heishan and Huanren only Operators Local EPB See Table receptors small exceedences are A1.7 predicted and will be mitigated by the installation of ventilated sound insulation windows for affected properties in the short and medium term and noise administration fees reserved for mitigation measures in the long term.

In the Waitoushan subproject, predicted noise levels exceed PRC Class 4 standard for one component (No.1 Rd) and will require the construction of noise barriers in addition to the usual residential sound- proofing works.

One sensitive receptor site in

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Item/Media Environmental Mitigation Measures and/or Who Who Costs Issues and Safeguards Implements Supervises Impacts the Heishan subproject, the geriatric clinic on Bintie Street, will also require additional mitigation measures in the form of a noise barrier wall and noise- absorbing landscaping. Traffic noise impact Exercise town planning County/ LPG n/a on future controls to ensure future District and developments developments of sensitive City Planning receivers to vehicle noise Departments (hospitals, schools, nursing homes) are not built on subproject roads with noise standard exceedence levels >3 dBA. Noise produced i. Design and implement IA and Local EPB Included in during wastewater noise absorbing, noise Operators design and treatment reduction, noise insulation operating (mechanical and vibration reduction costs equipment ) measures during operation. Adopt low noise level equipments. ii. Create green buffer zone >10 m. 3.5 Solid Waste Solid waste from Develop and implement a IA and Local EPB Included in primary separation sewage solid waste handling Operators design and of inflow sewage plan which includes: operating i. Packaging, costs ii. Transportation, and iii. Disposal in landfill. Beneficial reuse of Ensure sludge meets quality WWTP PPMO, ADB Included in sludge from WWTP standards for reuse Operators and design and at Qingshuitai (GB18918-2002) through SSTP operating laboratory testing. Operators costs

Transport of dewatered sludge to SSTP for reuse as compost and building materials. Disposal of sludge Develop and implement a IA and Local EPB Included in from sludge handling plan for Operators design and decommissioned decommissioning WWTP operating WWTP in Shenbei which includes: costs i. Collection, initial drying and transport to new WWTP; and ii. Along with sludge from new WWTP, dewatering and transport to SSTP for composting. 3.6 Emergency Spills of hazardous i. Establishment of a road IA and Local EPB EMP costs. preparedness materials in road accident emergency Operators, See Table and response accidents command organization; local Security A1.7 ii. Establishment of an Bureau emergency response plan; and iii. Preparation of emergency equipment

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Item/Media Environmental Mitigation Measures and/or Who Who Costs Issues and Safeguards Implements Supervises Impacts and training. WWTP breakdowns An emergency preparedness IA and Local EPB EMP costs. and overflows and response plan will be Operators, See Table formulated and put in place A1.7 before the WWTP becomes operational. The emergency preparedness and response plan will address, among other things, training, resources, responsibilities, communication, procedures, and other aspects required to respond effectively to emergencies associated with the risk of accidental discharges. 3.7 Insufficient Conduct training for IA and Local EPB, EMP costs. Environmental environmental environmental management Operators, SpPMOs See Table capacity management and develop facility and staff County EPB A1.7 capacity setup. 3.8 Unexpected If unexpected environmental IA and SpPMOs Included in environmental impacts occur during project Operators, operational impacts operation phase, the IA will costs update the EMP, and environmental protection measures will be designed and resources will be utilized to cope with these impacts ADB = Asian Development Bank, AP = affected person, CSC = construction supervision companies, EEE = external environment expert, EHS = environmental health and safety, EIA = environmental impact assessment, EMP = environmental management plan, EMU = environmental management unit, EPB = Environment Protection Bureau, FB = Forestry Bureau, FS = feasibility study, GRM = grievance redress mechanism, IA = implementing agency, LDI = local Design Institute, LIEC = loan implementation environmental consultant, LPG = Liaoning Provincial Government, m = meter, n/a = not applicable, PPCU = project public complaints unit, PPMO = provincial project management office, PPTA = project preparatory technical assistance, PRC = People’s Republic of China, QA/QC = quality assurance/quality control, RP = resettlement plan, SpPMO = subproject project management office, SSTP = Shenyang Sludge Treatment Plant, WWTP = wastewater treatment plant. * Local EPB = County, District or City level EPB as appropriate. Sources: PPTA Team; subproject EIAs.

F. Assessment of Project Readiness

15. Before construction, the LIEC will assess the project’s readiness in terms of environmental management based on a set of indicators (Table A1.3), and report it to ADB and the PMOs. This assessment will demonstrate that environmental commitments are being carried out and environmental management systems are in place before construction starts, or suggest corrective actions to ensure that all requirements are met. Table A1.3: Project Readiness Assessment Indicators Indicator Criteria Assessment

CEIA approval and • The CEIA was approved by ADB, and disclosed on ADB’s project Yes No disclosure website Measures during • Measures defined in Table A1.2, Detailed Design Phase, Yes No detailed design included in detailed designs for each component implemented EMP update • The EMP was updated after detailed design, and approved by Yes No

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Indicator Criteria Assessment ADB and the local EPBs Compliance with loan • The borrower complies with loan covenants related to project Yes No covenants design and environmental management planning • The completion and agreements to resettlement plans before the Yes No construction Yes No Consultation, GRM • Meaningful consultation commenced in early feasibility stage and clear plans for ongoing consultation during implementation. • GRM (including PPCU) established and discussed with / Yes No disseminated to relevant stakeholders • EMU established within IAs Yes No • LIEC and EEE contracted Yes No • EMCs contracted Yes No Environmental • CSCs contracted Yes No Supervision in place • Compliance monitoring plan established Yes No • Environmental Supervisors/Inspector of SpPMOs identified Yes No • Local EPBs fully appraised about the subprojects and the relevant EMP Yes No • Bidding documents and contracts incorporating the Yes No Bidding documents and environmental activities and safeguards listed as loan contracts with assurances environmental Yes No safeguards • Bidding documents and contracts incorporating the impact mitigation and environmental management provisions of the EMP • Site Environmental Management and Supervision Manual, Yes No including an emergency preparedness and response plan and site environmental health and safety plan, established for Contractor readiness construction sites – and reviewed by LIEC

• Environment, Health and Safety Officers appointed Yes No • Internal environmental monitoring plan prepared Yes No Yes No EMP financial support • The required funds have been set aside to support the EMP implementation according to the financial plan. Facility closure plans • Closure and restoration plans for existing WWTP completed and Yes No approved by Shenbei EPB

• Demolition plans for small boilers completed and approved by Yes No Fuxin City EPB (including hazardous materials assessments)

• Budget and implementation schedules identified/allocated Yes No • For Shenbei and Gaizhou road subprojects, a full predictive Yes No Additional noise analysis of sensitive receptor sites along all roads for 2015, 2020 predictive modeling and 2030 will be carried out. • Funds for noise mitigation at affected properties reserved. Yes No ADB = Asian Development Bank, CEIA = consolidated environmental impact assessment, CSC = construction supervision companies, EEE = external environment expert, EMC = environment monitoring centers, EMP = environmental management plan, EMU = environmental management unit, EPB = Environment Protection Bureau, GRM = grievance redress mechanism, IA = implementing agency, LIEC = loan implementation environmental consultant, PPCU = project public complaints unit, SpPMO = subproject project management office, WWTP = wastewater treatment plant. Sources: Project preparatory technical assistance team.

16. During the construction and operation of the project, negative impacts might occur to the environment; appropriate mitigation measures were defined to avoid or minimize these potential impacts. Performance indicators were defined to measure the effectiveness of mitigation measures, including quality of wastewater discharged; groundwater, surface water, soil and air

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quality; noise; and relevant public health indicators. Table A1.4 below is a list of indicators that measure the environmental performance of the Project.

Table A1.4: Monitoring Indicators of Mitigation Measures and Their Relevant Standard Period Subproject Indicators Standard Constructio All Dust Grade II, Ambient Air Quality Standard n (GB3095-1996)

All Noise limits for construction Construction Noise Limits (GB12523-90) machinery

All Vibration Standard for Urban Area Environmental Vibration (GB10070-88)

Roads Asphalt flue gas Class II Atmospheric Pollutant Emission Standard (GB16297-1996).

Operation Roads CO, PM10 and NO2 Grade II, Ambient Air Quality Standard (GB3095-1996) and EHS guidelines for Air Quality

Roads Noise Class 2 and 4 standards of Noise Environment Quality (GB3096-2008) and EHS targets for operational noise.

Wastewater BOD5, DO, COD, and NH3- Class IV and V Surface Water Ambient Treatment: N Quality Standard (GB3838-2002) Receiving waters

Wastewater pH, oil, BOD5, COD, NH3-N, Grade 1A of Discharge Standard of Pollutants Treatment: TP and SS for Municipal Wastewater Treatment Plant Discharge (GB18918-2002)

Wastewater NH3, H2S Class II standard of the Emission Standard for Treatment Plant Odor Pollutants (GB14554-93)

Wastewater Noise Class 3 Emission Standard for Industrial Treatment Plant Enterprises Noise at Boundary (GB12348- 2008) and EHS targets for industrial noise

Heating Plants Noise Class 2 Emission Standard for Industrial Enterprises Noise at Boundary (GB12348- 2008) and EHS targets for industrial noise Sources: Project preparatory technical assistance team; subproject environmental impact assessments.

G. Environmental Monitoring

1. Monitoring Program

17. The project monitoring program will focus on the environment within the project’s area of influence. A detailed consolidated environmental monitoring program is summarized in Table A1.5 below. The program considers the scope of monitoring, monitoring parameters and frequency.

18. Internal environmental inspection/monitoring. Each contractor will recruit, or assign from its own staff complement, officers for its internal environmental inspection and monitoring during construction; and the IAs’ EMUs and facility operators shall be responsible for their

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internal inspection and monitoring during the operation. The SpPMOs’ environmental supervisors and local EPBs shall be responsible for advising and supervising the monitoring to ensure that environmental mitigation measures defined in the EMP are properly implemented. At the start of project implementation, the IAs’ EMUs, assisted by the LIEC will prepare more detail for internal environmental monitoring programs to be implemented during construction and operation where necessary to facilitate and clarify their application. Similarly the EMUs and LIEC will incorporate any changes which occur through the EMP mechanism of feedback and adjustments into the monitoring program. Internal monitoring and inspection is to be conducted by the contractors (weekly), CSCs and IAs (monthly), and reported to the ADB semi-annually.

19. Environmental effect monitoring. Licensed EMCs, contracted and paid by the IAs, shall conduct environmental effect monitoring during both construction and operation, as well as in the event of emergencies. Environmental effect monitoring shall be conducted four times a year, and semi-annual monitoring reports shall be prepared by EMCs and then submitted to the SpPMOs and local EPBs for review. Monitoring requirements are defined in Table A1.5, including the parameters to be monitored, the numbers and locations of monitoring points, as well as monitoring frequencies and durations.

Table A1.5: Environmental Monitoring Program

For all Components For Road Sub-Components only For Wastewater Sub-Components only For Heating Sub-Components only

Implementing Supervising Time and Item Parameters Location Agency Agency Frequency

Construction

1.1 Work pH, SS, DO, NH3- Internal monitoring Internal monitoring: IA Random spot camp N, TP, BOD5, will be conducted Contractors, IA check of the domestic CODCr, Total at all construction domestic wastewater coliform, oil sites and domestic wastewater quality wastewater effluent sites (at discharge areas. least monthly) Compliance-related Local EPB Twice per year Compliance- impact monitoring: related impact Licensed EMC monitoring will be conducted at selected camp sites. 1.2 pH, SS, Oil Internal monitoring Internal monitoring: IA Random spot Construction will be conducted Contractors, IA check of the wastewater at all construction wastewater and sites. effluent sites wastewater Compliance-related Local EPB Twice per year pollution Compliance- impact monitoring: mitigation related impact Licensed EMC measures monitoring will be conducted at selected sites 1.3 Water pH, SS, DO, Internal monitoring Internal monitoring: IA Random spot quality of NH3N, TP, BOD5, will be conducted Contractors, IA checks nearest CODCr, Total at all construction

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Implementing Supervising Time and Item Parameters Location Agency Agency Frequency water body coliform, oil sites. Compliance-related Local EPB Four times per impact monitoring: year Compliance- Licensed EMC related impact monitoring will be conducted upstream and downstream of the construction sites 1.4 Air Use of dust Internal monitoring Internal monitoring: IA Spot check the Air pollution shrouds, water will be conducted Contractors, IA construction sites prevention spraying. at all of the measures construction sites Maintenance and and sensitive Compliance-related Local EPB Twice per year condition of receivers impact monitoring: during vehicles and Licensed EMC construction equipment. Compliance- period, two related impact samplings one TSP, SOx, NOx monitoring will be day at each conducted at work location each sites and sensitive time receivers 1.5 Noise Leq (dB[A)) Nominated Internal monitoring: IA Random, but at Noise sensitive sites at Contractors, IA least once pollution each subproject monthly, one day control each time and measures two samples each day: Once during daytime, once during night time Compliance-related Local EPB Random, but at impact monitoring: least four times Licensed EMC per year, a day each time and two samples each day: Once during daytime, once during night time 1.6 Soil Topsoil stockpile, All spoil disposal Internal monitoring: IA Random spot Erosion detention ponds sites and Contractors, IA check, in rainy control construction, construction sites season and at measures intercepting least four times a ditches, year rehabilitate Compliance-related Local EPB Quarterly construction sites impact monitoring: Licensed soil erosion monitoring unit Compensatory Disposal sites and, Internal monitoring: IA Random spot plantings. Re- borrow pits Contractors, IA check vegetation of spoil Compliance-related Local EPB Quarterly disposal sites and impact monitoring: construction sites. Licensed soil erosion monitoring unit 1.7 Hygiene Health status Construction sites Internal monitoring: IA Random spot and disease Hygiene status and work camps Contractors, IA check Availability of and resettlement Compliance-related Local EPB Once a year

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Implementing Supervising Time and Item Parameters Location Agency Agency Frequency

clean water, and areas impact monitoring: medical advice County and District HIV/AIDS Epidemic awareness Prevention Departments Operations: Road, WWTP and Heating Subprojects 2.1 Temperature, DO, Receiving waters, Internal monitoring: Operator/ Four times a year Downstream SS, NH3N, TN, downstream of Operators, IA County EPB surface water TP, BOD5, CODCr, treated effluent quality fluoride, sulfate, discharge (200m). nitrate, As, Hg, Compliance-related Local EPB Four times a year Gd, Cu, Mn, Se, impact monitoring: Cu, Zn, Pb, Cr, Licensed EMC Fe, chloride, oils 2.2 pH, CODcr, SS, Effluent discharge Internal monitoring: Operator/ Local Four times a year Wastewater BOD5, NH3-N, TP point Operators, IA EPB discharge Compliance-related Local EPB Four times a year from WWTP impact monitoring: Licensed EMC 2.3 Air and H2S, NH3 Upwind and Compliance-related Local EPB Four times per noise Odor downwind of the impact monitoring: year concentration boundary of Licensed EMC WWTP Leq dB(A) 4 monitoring points Compliance-related Local EPB Twice a year located at 1 m impact monitoring:

outside of the Licensed EMC WWTP boundary CO, NOx and At nominated Compliance-related Local EPB Twice a year PM10 sensitive sites at impact monitoring: (high and low

each subproject Licensed EMC dispersion conditions) Leq dB(A) At nominated Compliance-related Local EPB Twice a year (day sensitive sites at impact monitoring: and night) each subproject Licensed EMC 2.4 Solid Implementation of At WWTP and Internal monitoring: Operator Spot check, twice waste sludge handling other areas Contractors, IA a year plan covered by the sludge handling Compliance-related Local EPB Spot check, once and utilisation plan impact monitoring: a year Licensed EMC 2.5 Soil and Inspect vegetation Revegetation sites Internal monitoring: Local EPB Spot check, once vegetation survival and (spoil disposal Contractors, IA a year coverage rate. sites, planted road Compliance-related Local EPB and Spot check, every verges and impact monitoring: FB second year landscaping Licensed EMC around WWTP) Erosion of Regular inspection Operator Four times per embankments and of embankments year roadside batters. and slopes to detect signs of slope instability and ensure revegetation. Road drainage structures will be regularly monitored.

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Implementing Supervising Time and Item Parameters Location Agency Agency Frequency

2.6 Traffic Vehicle numbers Subproject roads IA Operator, local Road traffic flow – road use TB monitoring (against program predictions) Operations: Associated and Peripheral Facilities 3.1 Water Monitor environmental performance and SpPMOs, Operators LPG, ADB Yearly continued compliance of WWTPs which receive sewage from sewerage pipes laid in road subprojects. 3.2 Solid Monitor environmental performance and SpPMO, Operator LPG, ADB Yearly Waste continued compliance of SSTP which receives sludge from the project’s WWTP Monitor the continued acceptance of SpPMO, Operator LPG, ADB Yearly sludge from Qingshuitai WWTP. 3.3 Air Report yearly CO2 emissions from CHP is SpPMO, Operator LPG, ADB Yearly producing heat for the Sihe new town. Use GHG accounting methods. Monitor environmental performance and SpPMO, Operator LPG, ADB Yearly continued compliance of Fuxin CHP plant. 3.4 Safety Monitor staff health and safety standards SpPMO, Operator LPG, ADB Yearly and conditions at heat exchange stations and undertake safety checks along all heating pipelines ADB = Asian Development Bank, BOD5 = 5-day biological oxygen demand, CHP = combined heat and power plant, CODCr = chemical oxygen demand, DO = dissolved oxygen, EMC = environmental monitoring center, EPB = Environment Protection Bureau, FB = Forestry Bureau, Fe = iron, IA = implementing agency, Leq = noise unit, LPG = Liaoning Provincial Government, m = meter, Mn = manganese, NH3-N = free nitrogen, NOx = nitrogen oxides, SOx = sulfur oxides, SS = suspended solids, SpPMO = subproject project management office, SSTP = Shenyang Sludge Treatment Plant, TP = total particles, TSP = total suspended particles, WWTP = wastewater treatment plant. * Local EPB = County, District or City level EPB as appropriate. Sources: Project preparatory technical assistance team; subprojects environmental impact assessments.

20. Independent EMP compliance verification. The compliance-related internal and environmental impact monitoring as well as the IAs’ and PMOs’ compliance with EMP during project implementation and operation will be verified by an independent EEE not involved in day-to-day project implementation. The EEE will verify the monitoring information prepared by the Borrower. In verifying, the EEE may conduct its own investigation, by visiting the project site, taking samples and/or conducting visual inspections. The EEE will discuss the verification results with the PPMO, the IAs and the LIEC, suggest corrective actions, and reflect his/her findings in the EMP compliance verification reports.

21. Quality assurance (QA) /quality control (QC) for environmental monitoring. To ensure monitoring accuracy, the QA/QC procedure will be conducted in accordance with the following regulations:

(i) Regulations of QA/AC Management for Environmental Monitoring issued by SEPA in July 2006; (ii) QA/QC Manual for Environmental Water Monitoring (Second edition), published by the State Environmental Monitoring Centre in 2001; and (iii) QA/QC Manual for Environmental Air Monitoring published by the State Environmental Monitoring Centre in 2001.

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22. The standard monitoring methods required by these manuals are listed in Table A1.6.

Table A1.6: Standard Monitoring Methods of Ambient Air, Noise and Water Media Monitoring Parameter Method (Standard No.)

TSP (mg/m3) Gravimetric (GB/T15432-1995) 3 PM10 (mg/m ) Gravimetric with specific sampler (HJ/T93-2003) Air 3 SO2 (mg/m ) Spectrophotometry (GB/T15262-1994) NOx (mg/m3) Saltzman Method (GB/T15435-1995) Noise Equivalent Continuous A Sound (Leq) Acoustimeter Method (GB12524-90) pH value Glass electrode method (GB6920-86)

CODMn (mg/L) Permanganate index (GB11914-89) Surface water Petroleum (mg/L) Infrared spectra photograph (GB/T16488-1996) SS (mg/L) Gravimetric method (GB11901-89) Total coliforms (no./L) Membrane filter (GB/T575.12-2006)

23. The results/data of environmental inspection and monitoring activities will be used to assess: (i) the extent and severity of actual environmental impacts against the predicted impacts and baseline before the project implementation; (ii) performance or effectiveness of environmental mitigation measures or compliance with pertinent environmental rules and regulations; (iii) trends in impacts; (iv) overall effectiveness of EMP implementation; and (v) the need for additional mitigation measures and corrective actions if non-compliance is observed.

H. Mitigation Measures and Monitoring Costs

24. The costs of implementing the environmental management and impact mitigation measures listed in the EMP matrix (Table A1.2) are shown in Table A1. 7 below. The cost for environmental management and impact mitigation measures are listed against line items in the EMP matrix (Table A1.2) and broken down into county/district/city contributions according to subprojects. Environmental monitoring costs are also included in the table. Construction monitoring and project acceptance inspections total CNY 3.157 million and operational environmental monitoring (internal and external) is a recurrent cost of CNY 2.69 million per year. These are to be included in the construction contracts and counterpart budgets. It should be noted that the IAs will pay for (external) environmental effect monitoring carried out by licensed EMCs. During implementation, the cost required can be adjusted based on actual requirements. If there are unpredictable environmental impacts found during the implementation of the environmental monitoring, EIA and EMP should be updated in timely manner and mitigation measures will be put forward to reduce the impacts to the environment.

25. The IAs will bear all monitoring costs and will ensure the necessary budgets are available for the EMCs. Internal monitoring costs will be borne by the IAs and contractors during construction and by the IAs during operation. Before implementing a monitoring plan, the IAs’ EMUs, supported by the LIEC, will present a more detailed breakdown of the estimated budget. During sub-component implementation, the budgets will be adjusted based on actual requirements.

26. Contractors will bear the costs for all mitigation measures during construction, which will be included in the tender and contract documents. The IAs will bear the costs related to

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mitigation measures during operation and the costs related to environmental supervision during construction and operation. The project as a whole will bear the costs for training and the Loan Implementation Environment Consultant. Training programs budget will be included in the construction and operation contracts. During the operation phase the training budget will be included in the operation and maintenance budget.

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Table A1.7: Cost Estimates for Environmental Management Plan (CNY x 106) EMP Item Group SB* WTS GZ HS HR XM FX Total Pre-construction 1.1 Environmental impact assessmenta 0.45 0.35 0.35 0.35 0.35 0.35 0.2 2.4 1.2 Environmental traininga 0.425 0.275 0.275 0.275 0.275 0.275 0.275 2.2 Subtotal 0.875 0.625 0.625 0.625 0.625 0.625 0.475 4.6

Construction 2.2 Wastewater management (construction wastewater and construction a 0.5 0.2 0.1 0.04 0.08 0.05 n/a 0.97 camp effluent) 2.2 Air pollution control 3.9 0.25 0.42a 0.23 0.1 0.21 0.02 5.13 2.3 Noise control 0.6a 0.25a 0.6a 0.25 0.05 0.03 0.3 2.08 2.4 Solid waste management 1.2 0.1 0.04a 0.065 0.07 0.02 0.21b 1.705 2.5 Erosion control (construction site, borrow pits and spoil disposal) 16 0.47 2a 1a 0.2a 0.2 0.1 19.97 2.5 Landscaping/revegetation 2 0.093 1.5a 1.5 0.35a 0.75 n/a 6.193 2.6 Traffic management (diversions, signage) 0.2a 0.02a 0.05a 0.06 0.1a 0.025 0.02 0.475 A1 2.6 Community safety 1.5a 0.1a 0.15a 0.2 0.2a 0.075 0.1 2.325 - 29 Construction monitoring and project acceptance inspections 0.82a 0.23 0.34a 0.21 0.397 0.62 0.54 3.157

Operation (Capital Costs) 3.2 Air quality 1 0.1 0.8a 0.4 0.1a 0.4 n/a 2.8 3.3 Noise control 2.98ac 0.512 0.4ac 0.99 2.13 0.2 n/a 7.212c 3.6 Hazard management and emergency preparedness 0.9a 0.1 0.4a 0.2 0.1a 0.2 n/a 1.9 3.7 Environmental training 0.2a 0.1a 0.1a 0.2 0.1a 0.2 n/a 0.9 Subtotal 31.8c 2.525 6.9c 5.345 3.977 2.98 1.29 54.817c

Operation (Ongoing costs (spread over first 3 years of operations) Vegetation maintenance 0.6a .015a 0.3a 0.15 0.15 0.15 n/a 1.365 Operational Environmental monitoring – Internal and external 1.5 0.3 0.4a 0.21 0.08 0.2 n/a 2.69 Subtotal (Ongoing costs) 2.1 0.45 0.7 0.36 0.23 0.35 0 4.055 EMP = environmental management plan, SB = Shenbei, WTS = Waitoushan, GZ = Gaizhou, HS = Heishan, HR = Huanren, XM = Xinmin, FX = Fuxin, n/a = not applicable. All figures are from the local environmental impact assessment documents and feasibility study reports except where noted. * Environmental management costs for Shenbei roads and waste water treatment plants are combined. a Estimates based upon scale and nature of proposed works. b Includes CNY 200,000 for asbestos and fly ash assessment. c Will change as a result of additional predictive noise modelling for Shenbei and Gaizhou roads, as required by loan assurance (iv). Source: People’s Republic of China’s environmental impact assessment documents.

I. Consultation, Participation and Information Disclosure

1. Consultation during Project Preparation

27. Meaningful consultation was conducted during project preparation. The consultation process and its outcome are described in Chapter VI of this CEIA. Direct public participation was conducted as an ongoing element in the development of the sub-components. These activities were carried out by the IAs in their preparation of the FSRs and EIAs and by the Technical Assistance (TA) Consultants following PRC National Environmental Impact Assessments Technical Guidelines and Asian Development Bank guidelines and the Safeguard Policy Statement (2009).

2. Future Consultation Plan

28. Future plans for public involvement during the detailed design, construction and operation phases were developed during the project preparation. These plans include public participation in (i) monitoring impacts and mitigation measures during the construction and operation stages, (ii) evaluating environmental and economic benefits and social impacts, and (iii) interviewing the public after the sub-components are completed.

29. Public participation plans are part of the project implementation and management plan. The IAs are responsible for public participation during project implementation. Costs for public participation activities during construction are included in the project funding. The unit costs are estimated as CNY 20,000 ($3,333) for each public investigation on a particular issue, CNY5,000 ($833) for each public workshop, and CNY6,000 ($1,000) for each press conference. The IAs will cover costs for public participation activities during operation.

Table A1.8: Consultation and Participation Plan Organizer Approach Times/Frequency Subjects Participants Project preparation EIA preparation Questionnaires and During field work for EIA Project priority, Residents within authors interviews effects, subproject areas and (Institutes) attitudes to the construction area Project/components, and suggestions TA Consultants, Site visits, and public Two rounds of formal Comments and Representatives of ADB consultations consultation recommendations of affected people and affected people and stakeholder agencies stakeholders TA Consultants, Establish Grievance Ongoing Pathway for APs, AP and SpPMOs Redress Mechanism complaints from and representatives and arrangements in resolution of other stakeholders each county environmental problems in construction and operation Construction IAs, SpPMOs Public consultation At least once a year Adjusting mitigation Work staff within and site visits measures if construction area; necessary, Residents within construction construction

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Organizer Approach Times/Frequency Subjects Participants impacts, area comments and suggestions Expert workshop or As needed, based on Comments and Experts from various press conference public consultation suggestions on sectors, media mitigation measures, public opinions; adjusting mitigation measures accordingly Public workshop At least once a year Adjusting mitigation Representatives of measures if residents and social necessary, sectors construction impacts, comments and suggestions Test Operation SpPMOs, IAs, Site visits Multiple, depending on Comments and Local residents and Operators results of Project suggestions on social sectors, EPBs completion operational impacts, environmental audit public suggestions on corrective actions Operation IAs Public consultation At least once Effects of mitigation Residents adjacent to and site visits measures, impacts project sites of operation, comments and suggestions Public workshop As needed based on Effects of mitigation Representatives of public consultation measures, impacts residents and social of operation, sectors comments and suggestions Public At least once Comments and Project beneficiaries satisfaction suggestions survey ADB = Asian Development Bank, AP = affected person, EIA = environmental impact assessment, EPB = Environmental Protection Bureau, IA = implementing agency, SpPMO = subproject project management office, TA = technical assistance. Source: PMO.

J. Institutional Strengthening and Training

30. It was recognized during project preparation and at inception that the project is addressing townships that have limited capacity for sustainable environmental management. While the larger PRC cities that have, for the most part, much longer and extensive experience with proposed project interventions in urban roads, waste water management, and heating, the smaller cities need assistance to meet the challenge posed by these developments. To ensure effective implementation of the EMP, the capacity of the PMO, IAs, CSCs, and contractors must be strengthened, and all parties involved in mitigation measures and monitoring of environmental performance must have an understanding of the goals, methods, and practices of

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project environmental management. It is apparent that the IAs and local EPBs carry a substantial responsibility and workload if they are to ensure the environmental soundness of their components. The largest part of the capacity building in environmental management has therefore been in this direction. During the course of the TA, IAs and their EIA Institutes have been assisted in EIA preparation through written critiques of their EIA drafts, training sessions, and workshops where specific environmental issues were examined. The IAs, contractors and operators will also be strengthened by environmental management training

31. The Liaoning EPB, local EPBs and LIEC shall offer EMP training that is specific to their roles for the project. However, the main training emphasis (>50% of training budget) will be to ensure that contractors are well versed in environmentally sound practices and are able to undertake all construction with the appropriate environmental safeguards. The institutional strengthening and training program is summarized in Table A1.9.

32. Supervisory staff in the SpPMOs, IAs (including EMUs), operators, local EPBs and contractors will receive training in environmental management, environmental monitoring and supervision, mitigation planning, emergency response, environmental policymaking, and other environmental management techniques. The IAs and local EPBs will be offered EMP training that is specific to their roles on the Project. However, the main training emphasis (>50% of training budget) will be to ensure that contractors are well versed in environmentally sound practices and are able to undertake all construction with the appropriate environmental safeguards (see Table A1.9 below).

33. Funding of this training will be included in the project budget and in the operation and maintenance budgets during operation phase. The estimated costs for the institutional strengthening and training are shown for each subproject administration at Items 1.2 (Pre- construction) and 3.7 (Operation) of Table A1.7.

Table A1.9: Institutional Strengthening and Training Capacity Building Organization Contents Timing CB1 Environmental SpPMOs, IAs Establishment of EMU Prior and during Management Capacity project implementation CB2 PPMO, SpPMOs Contracting and working Prior and during with LIEC and EEE project implementation CB3 PPMO, SpPMOs, IAs Establishment of PPCU. Prior and during Development and project implementation of GRM implementation CB4 SpPMOs and IAs Developing bidding Prior and during documents which project incorporate the provisions implementation of the EMP CB5 IAs Contracting and working Prior and during with CSCs and EMCs project implementation

Training Attendees Contents Timing T1 Environmental laws, PPMO, SpPMOs, (i) Environmental laws Prior to project regulations and policies IAs/Operators, and regulations implementation Contractors (ii) Environmental policies and plans (incl. ADB Safeguard Policy Statement [2009])

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(iii) Basic environmental management (iv) Emergency preparedness and response T2 EMP implementation PPMO, SpPMOs, IAs, (i) Responsibility and Prior and during Contractors duties for the project project construction, implementation management and environmental protection (ii) Task of environmental protection in the project construction (iii) Key environmental protection contents etc. in project construction (iv) Various environmental reporting (v) EMP improvement and corrective actions T3 Traffic management Road subproject IAs and (i) Selecting haulage Prior to and during contractors routes project (ii) Diverting traffic implementation (iii) Scheduling work periods with community needs T4 Environmental Health PPMO, SpPMOs, IAs EHS for the construction Prior to and during and safety and contractors of subprojects: project (i) Protective practices implementation and equipment (ii) Safe working environments (iii) Community safety T5 GRM Implementation PPMO, SpPMOs, (i) GRM structure, Prior to project PPCU, GRM access responsibilities, timeframe implementation points (ii) Types of grievances, eligibility assessment (iii) Gender responsive GRM (iv) Reporting procedures. T6 Crisis handling IAs/Operators, (i) Crisis handling Prior to project contractors methods implementation (ii) Environmental accident, crisis and mitigation measures; (iii) Emergency response team, procedure and actions Sub-total CNY 2.2 million (see Item 1.2 in Table A1.7) T7 Environmental Health IAs and facility operators EHS for the operation of Prior to and during and safety subprojects: project (i) Protective practices implementation and equipment (ii) Safe working environments (iii) Community safety T8 Environmental aspects IAs/operators, (i) Environmental Prior to and during of WWTP operation and “housekeeping” project maintenance (ii) Safety operation implementation

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regulations (iii) Operation of overflow holding tank (iv) Emergency preparedness and response procedures T9 Environmental IAs/operators, (i) Monitoring and Prior to project monitoring, inspection contractors, local EPBs, inspection methods, data implementation and reporting EMCs collection and processing, interpretation of data, reporting system (ii) Environmental reporting requirements Sub-total CNY 0.9 million (see Item 3.7 in Table A1.7) Total CNY 3.1 million ADB = Asian Development Bank, CSC = construction supervision companies, EEE = external environment expert, EHS = environmental health and safety, EMC = environment monitoring centers, EMP = environmental management plan, EMU = environmental management unit, EPB = Environment Protection Bureau, GRM = grievance redress mechanism, IA = implementing agency, LIEC = loan implementation environmental consultant, PPCU = project public complaints unit, SpPMO = subproject project management office, WWTP = wastewater treatment plant. Source: PMO.

K. Reporting and Supervision

34. Monthly reporting. The SpPMOs will collect environmental monitoring data and reports from the IAs, EMCs, and CSCs that are responsible for supervising the contractors’ implementation of mitigation measures. The data will be incorporated into monthly subproject progress reports. The reports will present: (i) project implementation status; (ii) environmental mitigation measures implemented; (iii) monitoring activities; (iv) monitoring data of air, noise and surface water; (v) analysis of monitoring data against relevant standards; (vi) violations of environmental regulations; (vii) any additional mitigation measures and corrective actions required; (viii) environmental training conducted; (ix) occupational health and safety reporting (e.g. accidents during construction); (x) major events or issues that happened during the reporting period and follow-up actions needed; and (xi) complaints received from the public and how these were resolved through the grievance redress mechanism (GRM). The monthly reports will be passed on to the local EPBs.

35. Semi-annual environmental monitoring report. Each SpPMO will consolidate their monthly reports and submit a semi-annual report of subproject performance to the PPMO. The PPMO will consolidate all the semi-annual subproject reports into a semi-annual environmental monitoring report and submit this to the ADB. The LIEC will help prepare the report. The report should describe the project’s compliance with the EMP and PRC legislated standards, identify any environment-related implementation issues and necessary corrective actions.

36. External EMP compliance verification report. The EEE will review all reports, including internal and external monitoring reports and the semi-annual environment monitoring report, and prepare a semi-annual external EMP compliance verification report. The report should confirm the project’s compliance with the EMP and PRC legislated standards, identify any environment-related implementation issues and necessary corrective actions. The EEE will send the report to the PPMO, the IAs, and ADB.

37. Report of environmental acceptance monitoring and audit. No later than a month after completion of the construction work for each subproject, the IAs shall collect data/reports

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from all contractors and CSCs, and submit construction mitigation completion reports to the SpPMOs and local EPB. The reports will indicate the timing, extent, and effectiveness of completed mitigation and maintenance, as well as point out the needs for further mitigation measures and monitoring during operations. Moreover, within 2 months after project completion, environmental acceptance monitoring and audit reports of subproject completions will be (i) prepared in accordance with the PRC Regulation on Environmental Check-and-Acceptance of Project Completion (State Environmental Protection Agency, 2001); (ii) reviewed for approval by the Liaoning Provincial EPB; and (iii) finally reported to ADB by the PPMO.

38. Besides reviewing the semiannual environment monitoring reports from the PPMO and the semiannual EMP compliance verification reports from the EEE, ADB missions will inspect the project progress and implementation on site at least once a year. For environmental issues, inspections will focus mainly on (i) monitoring data; (ii) the implementation status of project performance indicators specified in the loan documents for the environment, environmental compliance, implementation of the EMP, and environmental institutional strengthening and training; (iii) the environmental performance of contractors, LIEC, and the IAs; and (iv) operation and performance of the project GRM. The performance of the contractors with respect to environmental protection and impact mitigation will be recorded and will be considered in future loan bid evaluations. The defined reporting plan is in line with OM Section F1/OP, which defines in para 27 that “The project team ensures that the borrower/client submits the following monitoring reports to ADB for review: (i) semiannual reports during project construction, and annual reports during project operation for environment category A projects.

Table A1.10: Reporting Plan Reports From To Frequency of Reporting Construction Phase Internal Internal monitoring reports by Contractors IAs Monthly monitoring and construction contractors inspection Monthly internal monitoring IAs SpPMOs and Monthly reports by IAs Local EPBs Semi-annual internal SpPMOs PPMO Twice a year environmental monitoring and inspection reports based on the monthly reports External Semi-annual external EMCs on behalf of Local EPBs, Quarterly environment environmental monitoring local EPBs (funded SpPMOs and effect monitoring reports by IAs) PPMO Semi-annual Semi-annual environment PPMO, LIEC ADB Twice a year environment monitoring reports monitoring consolidating all the internal reports and external reports EMP compliance Verification Reports of EMP EEE ADB, PPMO, IAs Twice a year verification compliance

Operation Internal Routine environmental IAs/Operators Local EPBs and Monthly monitoring monitoring reports SpPMOs External Semi-annual external EMCs on behalf of Local EPBs, Quarterly environment environmental monitoring local EPBs (funded SpPMOs and effect monitoring reports by operators) PPMO Annual Semi-annual environment PPMO, LIEC ADB Yearly for 3 years environment monitoring reports following monitoring consolidating all the internal commencement of reports and external reports operation) EMP compliance Verification Reports of EMP EEE ADB, PPMO, IAs Yearly for first year

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Reports From To Frequency of Reporting verification compliance of operation

ADB = Asian Development Bank, EEE = external environment expert, EMC = Environmental Monitoring Centers, EMP = environmental management plan, EPB = Environment Protection Bureau, IA = implementing agency, LIEC = loan implementation environmental consultant, PPMO = provincial project management office, SpPMO = subproject project management office.

L. Mechanism for Feedback and Adjustment

39. The effectiveness of mitigation measures and monitoring plans will be evaluated by a feedback reporting system. Adjustment to the EMP will be made, if necessary. The SpPMOs will play a critical role in the feedback and adjustment mechanism.

40. If during inspection and monitoring, substantial deviation from the EMP is observed or any changes are made to a subproject that may cause substantial adverse environmental impacts or increase the number of affected people, then the SpPMO should consult with the local EPB and ADB immediately and form an environmental assessment team to conduct additional environmental assessment and, if necessary, further public consultation. The revised EIA reports including a revised EMP should be submitted to the environment authorities for approval, and finally reported to ADB. The revised EMP will be passed to the contractor(s) and the IA for implementation. The mechanism for feedback and adjustment of the EMP is shown in Figure A1.1.

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PPMO, SpPMOs ADB

Local EPBs

IAs LIEC, EEE

CSC

Contractor IAs’ EMU

Implementation Feedback Comments and suggestions

Implementation of Mitigation Measures and Monitoring Programs

Figure A1.1: Mechanism for Feedback and Adjustment of EMP

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