Document of The World Bank
FOR OFFICIAL USE ONLY
Public Disclosure Authorized Report No: 71548-CN
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
PROJECT APPRAISAL DOCUMENT
ON A
PROPOSED LOAN
IN THE AMOUNT OF
Public Disclosure Authorized US$ 50 MILLION
TO THE
PEOPLE’S REPUBLIC OF CHINA
FOR A
JIANGXI SHANGRAO SANQINGSHAN AIRPORT PROJECT
April 16, 2013 Public Disclosure Authorized
China and Mongolia Sustainable Development Unit Sustainable Development Department
Public Disclosure Authorized East Asia and Pacific Region
This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS
(Exchange Rate Effective December 15, 2012)
Currency Unit = RMB RMB 6.30 = US$1.00
FISCAL YEAR January 1 – December 31
ABBREVIATIONS AND ACRONYMS
CAAC Civil Aviation Administration of China CPS Country Partnership Strategy DA Designated Account EIRR Economic Internal Return Rate MFB Shangrao Municipal Finance Bureau EMF Environmental Management Framework EMP Environmental Management Plan FEGP Fixed Electrical Ground Power FMM Financial Management Manual GDP Gross Domestic Products IFRs interim financial reports ISP Implementation Support Plan JPAO Jiangxi Provincial Audit Office JPFB Jiangxi Provincial Finance Bureau MDRC Shangrao Municipal Development and Reform Committee NPV Net Present Value LEED Leadership in Energy and Environmental Design PCA Pre-Conditioned Air PDO Project Development Objective PLG Project Leading Group PMM Procurement Management Manual PMO Project Management Office ORAF Operational Risk Assessment Framework RAP Resettlement Action Plan RPF Resettlement Policy Framework SIL Specific Investment Loan SMG Shangrao Municipal Government SSAC Shangrao Sanqingshan Airport Company Limited
Regional Vice President: Axel van Trotsenburg, EAPVP Country Director: Klaus Rohland, EACCF Sector Director: John A. Roome, EASSD Sector Manager: Mark R. Lundell, EASCS Task Team Leader: Binyam Reja, EASCS CHINA China: Jiangxi Shangrao Sanqingshan Airport Project
TABLE OF CONTENTS
Page
I. STRATEGIC CONTEXT ...... 1 A. Country Context ...... 1 B. Sectoral and Institutional Context ...... 1 C. Higher Level Objectives to which the Project Contributes ...... 4
II. PROJECT DEVELOPMENT OBJECTIVES ...... 4 A. PDO...... 4
III. PROJECT DESCRIPTION ...... 4 A. Project Components ...... 4 B. Project Financing ...... 5 C. Lessons Learned and Reflected in the Project Design ...... 6
IV. IMPLEMENTATION ...... 7 A. Institutional and Implementation Arrangements ...... 7 B. Results Monitoring and Evaluation ...... 7 C. Sustainability...... 7
V. KEY RISKS AND MITIGATION MEASURES ...... 8 A. Risk Ratings Summary Table ...... 8 B. Overall Risk Rating Explanation ...... 8
VI. APPRAISAL SUMMARY ...... 9 A. Economic and Financial Analyses ...... 9 B. Technical ...... 9 C. Financial Management ...... 11 D. Procurement ...... 11 E. Social (including Safeguards) ...... 12 F. Environment (including Safeguards) ...... 13
Annex 1: Results Framework and Monitoring ...... 16
Annex 2: Detailed Project Description ...... 18
Annex 3: Implementation Arrangements ...... 22 Annex 4 Operational Risk Assessment Framework (ORAF) ...... 36
Annex 5: Implementation Support Plan ...... 39
Annex 6: Economic and Financial Analysis ...... 41
Annex 7: Project Map ...... 48
. PAD DATA SHEET China China: Jiangxi Shangrao Sanqingshan Airport Project (P123729) PROJECT APPRAISAL DOCUMENT
. EAST ASIA AND PACIFIC EASCS
Report No.: PAD405
. Basic Information Project ID Lending Instrument EA Category Team Leader P123729 Specific Investment A - Full Assessment Binyam Reja Loan Project Implementation Start Date Project Implementation End Date 9-May-2013 30-Jun-2018 Expected Effectiveness Date Expected Closing Date 30-Sep-2013 31-Dec-2018 Joint IFC No Sector Manager Sector Director Country Director Regional Vice President Mark R. Lundell John A. Roome Klaus Rohland Axel van Trotsenburg
. Borrower: Ministry of Finance Responsible Agency: Shangrao Sanqingshan Airport Company Limited Contact: Yu Xiaobin Title: Chairman Telephone 86-793-816-3019 Email: [email protected] No.:
. Project Financing Data(US$M) [ X ] Loan [ ] Grant [ ] Other [ ] Credit [ ] Guarantee For Loans/Credits/Others Total Project Cost (US$M): 105.13 Total Bank Financing 50.00 (US$M):
. Financing Source Amount(US$M) Borrower 55.13 International Bank for Reconstruction and 50.00 Development Total 105.13 . Expected Disbursements (in USD Million) Fiscal 2014 2015 2016 2017 2018 2019 Year Annual 3.00 5.00 10.00 15.00 15.00 2.00 Cumulati 3.00 8.00 18.00 33.00 48.00 50.00 ve
. Project Development Objective(s) The Project Development Objective (PDO) is to improve airline connectivity in northeastern Jiangxi Province and demonstrate the environmental sustainability of the development and operation of the Shangrao Sanqingshan Airport.
. Components Component Name Cost (USD Millions) Airport Infrastructure Development Component 100.72 Institutional Development and Capacity Building Component 2.00
. Compliance Policy Does the project depart from the CAS in content or in other significant Yes [ ] No [ X ] respects?
. Does the project require any waivers of Bank policies? Yes [ ] No [ X ] Have these been approved by Bank management? Yes [ ] No [ X ] Is approval for any policy waiver sought from the Board? Yes [ ] No [ X ] Does the project meet the Regional criteria for readiness for implementation? Yes [ X ] No [ ]
. Safeguard Policies Triggered by the Project Yes No Environmental Assessment OP/BP 4.01 X Natural Habitats OP/BP 4.04 X Forests OP/BP 4.36 X Pest Management OP 4.09 X Physical Cultural Resources OP/BP 4.11 X Indigenous Peoples OP/BP 4.10 X Involuntary Resettlement OP/BP 4.12 X Safety of Dams OP/BP 4.37 X Projects on International Waterways OP/BP 7.50 X Projects in Disputed Areas OP/BP 7.60 X
. Legal Covenants Name Recurrent Due Date Frequency Implementation Arrangements X Description of Covenant The Borrower shall cause the Project Implementing Entity to maintain the implementation arrangements as described in Section 1 A (Institutional Arrangement) (Safeguards) of the Schedule to the Project Agreement. Name Recurrent Due Date Frequency Safeguards X Description of Covenant The Borrower shall take, and shall cause the Project Implementing Entity to take, all measures necessary to comply with, or all measures necessary to enable the Project Implementing Entity to comply with the provisions of Section I.C (Safeguards) of the Schedule to the Project Agreement. Name Recurrent Due Date Frequency Project Reports X Description of Covenant The Borrower shall cause the Project Implementing Entity to monitor and evaluate the progress of the Project and prepare Project Reports, audit reports, interim unaudited financial reports in a timely manner and in a format agreed with the Bank.
. Conditions Name Type No Conditions Team Composition Bank Staff Name Title Specialization Unit Shunong Hu Senior Water Engineer Senior Water Engineer EASCS Binyam Reja Lead Transport Task Team Leader EASCS Specialist Charles E. Schlumberger Lead Air Transport Lead Air Transport TWITR Specialist Specialist Feng Ji Senior Environmental Environmental Specialist EASCS Specialist Yi Geng Sr Financial Sr Financial EASFM Management Specialist Management Specialist Xuan Peng Program Assistant Program Assistant EACCF Jun Zeng Social Development Social Development EASCS Specialist Specialist Guoping Yu Procurement Specialist Procurement Specialist EASR2 Luquan Tian Sr Transport. Spec. Sr Transport. Spec. SASDT Yuhui Jiao Transport Specialist Transport Specialist EASCS Non Bank Staff Name Title Office Phone City Xi Zhao Urban Transport Beijing Consultant Jing Xiong Transport Specialist Beijing Li Qu Transport Consultant Beijing
. Locations Country First Location Planned Actual Comments Administrative Division China Jiangxi Sheng Shangrao X
. Institutional Data Sector Board Transport
. Sectors / Climate Change Sector (Maximum 5 and total % must equal 100) Major Sector Sector % Adaptation Mitigation Co-benefits % Co-benefits % Transportation Aviation 80 Public Administration, Law, and Public administration- 20 Justice Transportation Total 100 I certify that there is no Adaptation and Mitigation Climate Change Co-benefits information applicable to this project.
. Themes Theme (Maximum 5 and total % must equal 100) Major theme Theme % Urban development Other urban development 80 Trade and integration Regional integration 20 Total 100
I. STRATEGIC CONTEXT
A. Country Context
1. During the past few decades, China has expanded its transport infrastructure to support rapid economic growth and social transformation. By 2010, the end of China’s “Eleventh Five-Year Plan”, China had developed a multimodal transportation system with 3.98 million km highway network, 91,000 km railway network, 95 national ports, and 175 civil airports1. The greatest parts of the national investment in transportation, however, remain in the road and railway sectors; the air transport sector attracted only about 4.6 percent of the total investment during the last five years2.
2. The country has recognized air transport’s vital role in promoting economic and social development and reducing regional disparities. Despite the relatively small amount of investment and the recent global recession affecting the industry, China has become the world’s second largest market in air transport. The country is now increasing attention and investment in building and renovating airports, especially feeder airports. In the National Civil Airport Development Plan, the Civil Aviation Administration of China (CAAC) has envisioned 244 civil airports by end of 2020.
B. Sectoral and Institutional Context
3. Air transport is China’s fastest growing mode of transport. In 2011, China’s air passenger throughput reached 621 million and cargo tonnage reached 11.6 million tons. By the end of 2011, China had 47 airline companies, 38 state-owned and 9 privately owned. The total number of scheduled air routes had reached 2290, with 1847 domestic and 443 international routes; the domestic routes cover more than 175 cities3. China is now the world’s second largest air transportation market in traffic volume after the United States4. During the Eleventh Five-Year Plan (2005-2010), China’s civil aviation infrastructure received investment of RMB250 billion (USD38 billion), which is equivalent to the combined investment of the previous 25 years. As of 2010, China had 175 civil aviation airports, of which 33 were built in the last five years. International routes provide regular air service to 110 cities in 54 countries. Using the airport service radius standard of accessibility within 100 km or 1.5 hours of ground transport, the existing airport network can now serve 70 percent of counties, and their catchment area covers 76 percent of total population and 91 percent of the economy measured by total Gross Domestic Product (GDP). Decades of emphasis on safety has also paid off with China now recognized globally as a provider of safe air transport.5
4. CAAC is the administrative institution responsible for civil aviation in China. CAAC’s responsibility includes planning for airports, setting domestic and international aviation tariffs, managing airport construction fees, setting and monitoring safety and security standards, administering air traffic control and conducting civil aviation airspace
1 National Airport Statistical Bulletin of 2011, Civil Aviation Authority of China, March 2011. 2 Series of Reports on Economic and Social Achievements of the Eleventh Five-Year Plan: Outstanding Achievements of the Transport Industry, National Bureau of Statistics of China, March 2011. 3 Air Transport Sector 2011 Yearly Report, Civil Aviation Authority of China, May 7, 2012. 4 However, China’s civil airport network is still very sparse compared to the 567 Federal Aviation Administration certified airports in the USA. 5 The last serious air transport accident in China was in August 2010, with no serious accidents in the six previous years. 1 planning. In recent years, CAAC has carried out major administrative and regulatory reforms for better functioning and development of the civil aviation sector in China. In 2001, 10 major airlines were consolidated into 3 super carriers (Air China, China Eastern Airlines, and China Southern Airlines) to optimize resource allocation. Foreign investors were allowed in 2002 to invest in airport construction, including terminal buildings and runways, with up to 49% share of equity. Domestic airlines were allowed in 2004 to invest in airports to a maximum of 25% of total investment. Airport ownership has been transferred within the CAAC from the central to the provincial level since 2002.
5. China plans to build 69 additional airports bringing the total civil airports to 244 by 2020, which would require an investment of RMB450 billion. Once the investment program is completed, all provincial capitals, major cities, and major tourism destinations will be connected by a functional hub, trunk, and feeder airport network. The overall capacity of air transport infrastructure will be significantly improved. By that time, more than 80 percent of counties will be within 100 km or 1.5 hours by ground transport access to an airport, and the total air transport catchment area will account for 82 percent of total population and 96 percent of total GDP6.
6. Despite the large airport infrastructure development, the provision of efficient airport service is still lagging behind, in part because, (i) air transport resources and function between airports in some regions are not optimized, (ii) air transport is not integrated with local urban planning and surface transport planning. Further, while some large airports have reached their capacities, some feeder airports are underutilized. The number of feeder airports and feeder airlines is relatively small and geographical coverage is yet to be optimized. Issues such as poor connectivity with regional airports, poor operational efficiency, and low utilization of feeder airports are restraining China from building a mature and efficient air transportation network. The 12th Five Year Plan of China Civil Aviation recognizes these problems and aims to deepen the reform of airport operation to optimize service provision, and to integrate and configure capacities of airports.
7. Generally, small and regional airports lack the critical volume of traffic to be commercially profitable. Recognizing that the availability of air transport is a catalyst for regional economic growth, governments finance shortfalls from public funds or provide financial cross-support from larger airports; some are maintained by industry (e.g., manufacturers) or the local private sector (e.g. chamber of commerce). This places even greater pressure to ensure that investments are appropriately sized and mechanisms for optimizing revenue generation are realized. In 2007 and 2008, CAAC introduced several subsidy policies to support small and medium airports and feeder airlines7. In addition, starting from 2011, passengers will be exempted from airport construction fees if their flight departs from or arrives at a feeder airport.8
6 See CAAC sector report of “Overall Arrangements of National Civil Airports, 2007”. The relationships between airport overall arrangements and the rapid expansion of high speed rail are not mentioned in the sector report and as such, once high speed rail access is taken into account it is possible that the number of airports constructed to be less. 7 “Measures of Subsidies for Small and Medium Civil Airports” and “Measures of Subsidies for Feeder Airlines”, CAAC, 2007. “Interim Measures of Subsidies for Small and Medium Civil Airports” and “Interim Measures of Subsidies for Feeder Airlines”, CAAC, 2008. 50% of the airport construction fee collected by CAAC is used as the funding of the subsidy grants. In 2007, 123 airports and 258 feeder air routes got the subsidy. 8 “Notice on the Airport Construction Fee and Tourism Development Fund Policy and other Related Issues”. Ministry Of Finance, 2011. 2
8. In a June 2009 workshop on innovation, the Ministry of Finance and the National Development and Reform Commission, identified, air transport as an area where the World Bank could bring value. Three principal areas of cooperation were identified: transport modal integration, environmentally friendly airport design and operation, and economic and financial sustainability. The Shangrao Sanqingshan Airport project was identified as the first Bank -financed air transport project in China.
9. The project involves various stakeholders including the government agencies from the national level, including CAAC and NDRC, and the local level, including the Shangrao Municipal Development and Reform Committee (MDRC), Shangrao Municipal Finance Bureau (MFB), Transport Bureau, and Municipal Planning Bureau. An airport management office was established in 2010 for the preparation of the project. In addition, the Shangrao Municipal Government (SMG) has recently established the Shangrao Sangqingshan Airport Corporation, which will be responsible for the operation of the airport airport once construction is completed.
10. Aside from the primary project development objective of improving air transport connectivity, the Bank’s involvement will bring value and innovation to China’s air transport sector in following four major areas described below. It is intended that the project will enhance operations by setting up a proper business model, improving the identification of targeted passenger groups, designing proper air routes, incorporating environmental sustainability to reduce carbon emissions as well as energy saving. If successful, it is anticipated that this project will become a demonstration project for the development of future feeder airport projects in China.
(a) Multimodal transport integration: the airport will be integrated into the transport network of Shangrao city and North Eastern Jiangxi region through the provision of technical support to develop an integrated transport plan for the region.
(b) Environment sustainability: the project will adopt the most environmentally sensible and practical decisions in airport design and operation with a view to developing a ‘green’ airport.
(c) Economically sustainability: the project scope is designed to ensure proper demand forecasts and appropriate airport sizing to meet the demand by taking into account the existence of high-speed trains and other modes that will compete or complement with air transport.
(d) Financially sustainability: an appropriate business and operational model will be adopted for the airport to make it a model of financial sustainability for China’s other feeder airports, including through identifying other non-operating revenues (such as commercial development and airport economic planning) to reduce the fiscal burden for SMG. In addition, the project will support key operational elements, like route design, environmental management during operations, targeted passenger groups, marketing and negotiating with airline companies to enhance the financial viability of the airport.
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C. Higher Level Objectives to which the Project Contributes
11. The World Bank’s China Country Partnership Strategy (CPS) for FY2013-16, discussed by the Board of Executive Directors on November 6, 2012, is aligned with China’s 12th FYP. The proposed project directly supports one of the three strategic themes of the CPS—supporting greener growth. The promotion of green airport technology and a sustainable financing and operational model will advance the CPS and 12th FYP objectives for green and inclusive growth.
II. PROJECT DEVELOPMENT OBJECTIVES
A. PDO
12. The Project Development Objective (PDO) is to improve airline connectivity in northeastern Jiangxi Province and demonstrate the environmental sustainability of the development and operation of the Shangrao Sanqingshan Airport.
Project Beneficiaries
13. The airport will serve 8.5 million people in the catchment area of Shangrao and Yingtan Municipalities, as well as some of the annual 29.15 million visits in 2011 visiting the tourist destinations of Sanqingshan, Wuyuan, Guifeng and Longhushan.
PDO Level Results Indicators
14. The PDO’s achievement will be monitored by the following indicators
(a) Travel time reduction between Shangrao and major destinations. (b) Shangrao Airport recognized as “Green Airport” through established recognition process.
III. PROJECT DESCRIPTION
A. Project Components
15. The proposed Project will have two components: (i) Airport Infrastructure Development, and (ii) Institutional Development and Capacity Building.
16. Component 1: The Airport Infrastructure Development component will include the construction and installation of the following activities:
(a) Airfield – construction of runway, taxiway, etc; (b) Terminal building; (c) Air traffic control; (d) Freight Facility; (e) Supporting Infrastructure Facility (fuel storage farm, water supply, power supply, fire stations, heating, storm/water management, parking, fence, etc);
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(f) Environmental Management Plan -- Implementation of the EIA/EMP recommendations including those related to access roads and re-routing of rural connectivity; (g) Land Acquisition and Resettlement and Rehabilitation of Project Affected Families (financed fully by government own funds). This also includes forest revegetation, accessibility restoration and replantation; (h) Auxiliary Facility (office building, staff quarters, etc); (i) Service vehicles; and (j) Storm water reuse system and ground aircraft auxiliary power unit.
17. Component 2: The Institutional Development and Capacity Building component will finance the following consultant services, studies and training:
(a) Project Management Consultant to provide advisory services to support the PMO and SSAC on project coordination and monitoring;
(b) Management Consultant services to (i) develop Airport Operation Model for SSAC, (ii) to prepare and implement Human Resource Development plan, operational and financial manual (in accordance China’s company’s law), (iii) assist SSAC to comply with CAAC regulations and international practices, and (iv) assist SSAC to develop marketing plan to attract airlines and assist in service agreement negotiations with airlines;
(c) Technical assistance to support the PMO to (i) document the lessons learned in developing Green Airport concept, (ii) to share their experience widely with other potential cities considering building green airport in China though wider dissemination and holding workshops and road shows in selected cities; and (iii) other civil aviation related studies;
(d) Training and study tours covering several aspects of airport construction and operations.
18. Linked Activities. The Shangrao Municipal Government (SMG) will construct a 4.65 km access road to link the proposed airport with the nearest main road, as well as other utility infrastructure along the same access road. The access road and related facilities will be fully financed by SMG outside of the proposed project description. Nonetheless, the safeguard policies agreed for the proposed project will apply for the access road, as well as to other non-bank financed civil works associated with the access road.
B. Project Financing
Lending Instrument
19. The proposed lending instrument is a Specific Investment Loan (SIL), as this is an infrastructure project financing discrete activities. The Loan terms are LIBOR with variable spread loan, repayable in level repayments of principal over a period of 25 years, inclusive of a 5-year grace period.
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20. The total cost of the project is US$105.13 million (RMB 662.30 million), and the IBRD loan is US$50 million. The domestic funds include central government grants to the airport from CAAC and NDRC.
Project Cost and Financing
Total Cost WB Financing Domestic Funds Project Million Million Million Million Million Million Components RMB USD RMB USD RMB USD 1. Airport Infrastructure 634.54 100.72 287.24 45.59 347.30 55.13 Development: Work and Goods 2. Institutional Development and 12.60 2.00 12.60 2.00 0.00 0.00 Capacity Building 3. Interest During 14.37 2.28 14.37 2.28 0.00 0.00 Construction 4. Front-end Fees 0.79 0.13 0.79 0.13 0.00 0.00
Total Project costs 662.30 105.13 315.00 50.00 347.30 55.13 and financing * exchange rate: 1 USD = 6.3 RMB
C. Lessons Learned and Reflected in the Project Design
21. The following lessons have been drawn from the preparation and implementation of the Bank’s airport projects experience in other countries, as well as broader transport projects experience in China:
(a) Full support and diligence of management within the implementation entity and a strong Project Management Office (PMO) are critical;
(b) Good collaboration with national and local authorities, including the CAAC and NDRC, are important to ensure that national government policies are reflected in project design and operation;
(c) Inclusion of the views of the public in the selection, planning and design of investments improves the quality of the completed infrastructure; and
(d) The quality, completeness, and relevance of the design, as well as a strong diligent construction supervision during construction, can contribute significantly to controlling final costs.
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IV. IMPLEMENTATION
A. Institutional and Implementation Arrangements
22. The Shangrao Municipal Government (SMG) has established a Project Leading Group (PLG) to provide strategic leadership, policy guidance and institutional coordination on project preparation and implementation. The PLG, headed by a Vice Mayor, is comprised of leaders and directors from relevant municipal government agencies, including the Shangrao Municipal Development and Reform Commission, Finance Bureau, Planning Bureau, and Environment Protection Bureau.
23. Under the leadership of the PLG, the Shangrao Municipality established the Project Management Office (PMO) for the day to day coordination of project implementation. It is responsible for the project proposal submission and clearance, and submission and clearance of the feasibility studies in liaison with the functional departments of the provincial government. It is also responsible for daily coordination during the project implementation.
24. The Shangrao Sanqingshan Airport Company Limited (SSAC) was established by Shangrao Municipal State-owned Assets Supervision and Administration Commission on 25 July 2011. The Director of the PMO is also the Chairman (Legal Representative) and the operating head of the SSAC. At the current moment the staffing of the PMO and SSAC are the same people. Currently, there are four divisions in the SSAC including (a) administration division (three persons); (b) engineering division (four persons); (c) financial division (two persons); and (d) audit office (one person). During airport operation, a fifth division, operation division, will be added, with four persons (air traffic control, navigation, weather, and business operation).
25. The PMO/SSAC will be responsible for the day-to-day project management, including procurement, contract management, resettlement, social and environmental safeguards, loan disbursement requests, fiduciary compliance and evaluation, results monitoring, and reporting. The PMO/SSAC will be the primary coordinating body responsible for communicating with the World Bank, ensuring that implementation is consistent with all relevant World Bank policies and procedures. The PMO/SSAC will also serve as the executing agency, responsible for implementing all TA studies.
B. Results Monitoring and Evaluation
26. Annex 1 lists the main outcome indicators for the project, as well as the principal results indicators for each component. The PMO will coordinate with relevant agencies in collecting data required for monitoring and evaluation of outcomes. The PMO will review the results on the basis of various progress reports, and take appropriate corrective actions as needed. The reduction of travel time between Shangrao and major cities after the airport’s opening will be monitored as one indicator. The detailed calculation methodology is presented in Annex 3.
C. Sustainability
27. Project design addresses two aspects of sustainability: environmental and financial sustainability. The airport design will introduce “Green Airport” design principles to China to ensure that airport construction and operation takes into account environmental matters
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and reduction in the use of energy. On the completion of airport construction, a local civil aviation bureau will assess whether the airport meets the expected Green Airport design and operation. In addition, CAAC has an incentive and award program for excellence in airport design.
28. The project will address financial sustainability in three ways: (a) establishing an operational model that would reduce costs and improve efficiency; (b) proactive marketing of services and negotiation with airline companies to attract more business to Shangrao; and (c) promoting non-operating revenues through commercial activities and airport economic zone planning from which additional revenues could be generated to support airport operations.
V. KEY RISKS AND MITIGATION MEASURES
A. Risk Ratings Summary Table
Stakeholder Risk L Implementing Agency Risk - Capacity S - Governance M Project Risk - Design M - Social and Environmental M - Program and Donor L - Delivery Monitoring and Sustainability M Overall Implementation Risk M
B. Overall Risk Rating Explanation
29. The project has an overall risk rating of Moderate. The main risk is the capacity of the PMO, which is new to airport construction, as well as to working with the Bank. To reduce this risk, the PMO has engaged several external agencies (design institutes, procurement agent, and environmental and social consultants). In addition, the project will finance a Project Management Consultant to assist the PMO in managing and coordinating various activities during construction. The second main risk is the coordination with other financing source, namely the CAAC and NDRC, which are expected to provide substantial counterpart funding. Both CAAC and NDRC are committed to the project, and both have already confirmed their commitment to provide funds for the airport development. In addition, there is a moderate risk that the Green Airport concept may not be fully implemented, and this will be mitigated through close follow up and dialogue with SMG to show the potential benefits of the concept.
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VI. APPRAISAL SUMMARY
A. Economic and Financial Analyses
30. The Shangrao airport is expected to serve the Shangrao Municipality and northeast Jiangxi Province region. It will carry 500,000 passengers in 2020 and connect Shangrao with other parts of China with the most efficient transport mode. The airport will substantially shorten the long distance travel time, provide job opportunity, facilitate trade and tourism, and support economic development in the region. It will also complement the planned high-speed construction in China, which will also serve Shangrao through two lines. The market segment analysis showed that airline services will continue to be competitive with long-distance travelers and people with high-value of time.
31. The project will have an economic internal rate of return of 17 percent and its economic return would likely be higher since the estimation of benefits is mainly based on the passenger travel time savings, and does not take into account the additional economic development activities to be generated from the project.
32. Financial Analysis was conducted for the operation phase of the airport, and found that the airport will have a positive NPV of net revenue, especially if depreciations are not included. It must be noted that due to various reasons, the majority of small airports in China cannot cover the operation cost and capital cost with the revenue. Government subsidy is required to ensure financial viability. Therefore, the municipal financial capacity needs to be assessed carefully to ensure that initial operating subsidies to the airport can actually be sustained.
33. Municipal financial capacity - The capital cost of the project will be financed through equity, national aviation and development grants, and the municipal government investment. It is expected that the airport will generate sufficient revenue to cover operational costs but the municipal government will bear the debt repayment (principal plus interest). According to the municipal financial data, in general Shangrao’s municipal finance capacity appeared appears to be sound, with the following highlights.
(a) Shangrao's economy performed well during the last four years (2008-2011). Its annual GDP growth was 13.6% a year and 13.1% in 2011. The Fiscal revenue also grow during the same period.
(b) Shangrao receives inter-government transfers from higher government to augment its own revenue; The airport project cost is about 1,050 million RMB (US$ 167 million equivalent), including 250 million RMB (US$ 40 million equivalent) in national grants and the funding by SMG. Therefore, the cost to the municipal government is approximately 800 million RMB (US$ 127 million equivalent). Assuming 4 years of implementation period, the annual investment would be 200 million RMB (US$ 32 equivalent), which is 0.18% of the 2010 GDP. As the annual municipal GDP will continue to increase in the next few years, this percentage would certainly be lower.
B. Technical
34. The Shangrao Municipal Government engaged the Design Institute of China Civil Aviation Authority, an institute with experience in Chinese airport design to design the
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Shangrao Sanqingshan Airport. The location of the airport was determined by CAAC and other Chinese relevant authorities based on terrain and operation airspace condition from several alternative proposals, as well as environmental and social considerations. The reserved land size can meet the requirement for mid-term and long-term airport development and the airport size, location and configuration were approved by the aforementioned agencies.
35. The proposed project will support the construction of a new Category 4C9 feeder airport in Shangrao, which can accommodate aircraft like A319 and B737; with the potentials to be upgraded10 to Category 4D11, which can accommodate A310 and B767 type aircraft. By then, Shangrao airport will be able to accommodate short-range and medium- range commercial aircrafts. The airport will include a runway of 2,400 meters, a terminal building, a precision approach Category I instrument landing system and airfield lighting system, and an apron area to hold 5 airplanes. The baseline traffic is 130,000 in 2010 and the traffic projection in 2020 is 500,000. An airport access road is also part of the project, although it will not be financed by the Bank. Implementation is proposed to commence in 2013 and will take 3 years to complete.
Green Airport Design
36. The technical design takes into account the requirements of a “green airport” design to reduce energy use and optimize resources. The following are key considerations included in the project design to ensure the airport is built to a “green airport” standard. Additional measures will be identified during detailed technical design that will be taken into account further during construction and operations:
37. Energy efficient architecture and airport layout design. The airport will be designed with energy efficient elements such as natural ventilation, double glass facades and large roof overhangs for solar shading, while energy efficient airport layout would provide the most direct route between runways and terminal gates to reduce taxiing time and delays.
38. Alternative power sources. Alternative energy sources would be used for selected facilities using solar-generated electricity, diesel or natural gas.
39. Ground Aircraft Auxiliary Power Unit: This system uses equipment on the ground and function as an external power resource to the aircraft for electricity and ventilation supply to reduce the fuel burn, the local air quality and noise in the apron area, including: (a) Fixed Electrical Ground Power located at the terminal gate to provide electricity power to the aircraft, and (b) Pre-Conditioned Ai unit to provide heated or cooled ventilation air to the aircraft.
40. Energy efficient equipment and infrastructure. Equipment and infrastructure will be designed to use energy efficient elements and materials, including LED for lighting, a self-contained drainage system for wastewater treatment, Fixed Electrical Ground Power (FEGP) and Pre-Conditioned Air (PCA) units for on-board power supply and ventilation,
9 4C airport, which has airfield area with airplane reference field length greater than 1,800 meters and can accommodate wing spans between 24m and 36m. (CAAC Technical Standards) 10The upgrading from 4C to 4D is predicted be after 2040 and is not part of this project. 11 4D airport, which has airfield area with airplane reference field length greater than 1,800m and can accommodate wing spans between 36m and 52m. (CAAC Technical Standards) 10 warm-mix asphalt or recycled content in pavement, hybrid or clean-energy fleet vehicles, intermittent functioning modes for elevators, escalators and pedestrian conveyors.
41. Storm Water Reuse System will be built to use the available storm water more optimally and to adjust the storm runoff volume, as well as clean the water used for washing the structure before it runs off. This system will include (a) storm water penetration collection system, which will be built using the storm water penetration ditch technique, and (b) storm water treatment and reuse, where by the polluted water will be treated and collected by a 3000 m3 water tank to built under the parking lot, which will then be used for washing the pavement, plant watering and restroom flushing
C. Financial Management
42. Jiangxi Provincial Finance Bureau (JPFB) will establish and manage the Designated Account and oversee the utilization of Bank loan proceeds. A financial management capacity assessment has been conducted by the Bank and actions to strengthen the Project’s financial management capacity have been agreed with the relevant implementing agencies. The FM assessment has concluded that with implementation of the proposed actions, the financial management arrangements will satisfy the Bank’s minimum requirements under OP/BP 10.02. Annex 3 provides additional information on financial management.
D. Procurement
43. The PMO/SSAC is responsible for the management of procurement including preparing the procurement plan, preparing all procurement documents such as bidding documents and, request for proposals. The PMO/SSAC is also responsible for all processing of procurement such as advertising, issuance of procurement documents, responding to requests for clarification, bid evaluation, handling complaints , and obtaining all domestic approvals and communications with the Bank including requests for Bank prior review. In addition, the PMO/SSAC will be responsible for contract management and for maintaining records on procurement and contract management. The key risks identified from the procurement capacity and risk assessment include: (i) the domestic practice of inviting bids on the basis of basic designs rather than detailed designs; (ii) inaccurate cost estimates; (iii) possible delays in processing procurement because of differences between Bank procurement guidelines and domestic procurement practice; and (iv) inadequate contract management practices. The assessment however concluded that the PMO/SSAC has adequate capacity to carry out procurement activities for the proposed Project. During project preparation, the Bank provided training in procurement under Bank-financed projects to officials who will be responsible for processing and approving procurement in the project. The PMO/SSAC has also employed a Procurement Agent with experience in procurement under Bank-financed projects. Measures to further strengthen the Implementing Agency’s procurement capacity and to mitigate potential procurement and contract management risks have been agreed and will be implemented during project implementation (see details in Annex 3). The PMO/SSAC has prepared a procurement plan for the project, which would be available on the Bank’s website, as well as the project website.
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E. Social (including Safeguards)
44. The project would require the acquisition of 150 hectares of village land (including 26 hectares of cultivated land) which will affect some 2500 people from 500 households. The project would also require the demolition of 5760 m2 of existing structures which will affect 76 people from 16 households. Project construction will also interrupt local rural roads and irrigation systems, and during airport operation, the noise impact to local people might not be avoidable. Following the relevant Chinese laws, regulations and World Bank OP 4.12 on Involuntary Resettlement, the PMO has prepared a Resettlement Action Plan (RAP) to address involuntary resettlement due to airport construction, rural roads and irrigation system restoration. A Resettlement Policy Framework (RPF) has also been prepared since the exact locations of the airport road and other facilities have not yet been finalized. The RAP and RPF were disclosed to the local people on September 20, 2012 and the English versions of the documents were sent to the Infoshop on October 30, 2012.
45. Consultation and participation. Resettlement planning followed a participatory process, which included at least 50% women in each consultation. Affected villagers and various government agencies participated in the socio-economic survey, impact census, inventory and formulation of the compensatory and livelihood rehabilitation plan. Project information, relevant government policies and regulations were broadly disseminated through village meetings in the project areas.
46. Gender Mainstreaming. Women’s views and concerns on resettlement were collected and analyzed through public consultation. Women were consulted about the rehabilitation of rural roads and irrigation systems; and the potential noise from the airport. It is anticipated that increased transportation, commerce and tourism development will create additional jobs for women in the area, as the nature of jobs created (supporting terminal operations and small business activities) will be attractive to the women in the area. In addition, as part of the “green airport” design, the travel needs of women and people with disability are explicitly being taken into account, including providing more and accessible toilets for women, as well as making the terminal and associated facilities accessible for people with disability.
47. Grievance redress. A mechanism has been established for grievance redress. Grievances can be filed both orally and in writing. Resettlement offices at all levels are required to hire at least one female staff person to handle grievances, from women in particular. Local government and non-governmental organizations such as the Department of Civil Affairs, Women’s Federation will also supervise the resettlement process to guarantee the rights and interests of the affected people, especially women. Starting at the village level, grievances can be elevated to the county/district or city level if they are not resolved at the lower level. The Affected People may also file cases in court. All grievances and their resolution will be recorded. The grievance redress mechanism has been disclosed to the local population and will be further disseminated through the Resettlement Information Booklet.
48. Monitoring and Evaluation. The resettlement offices will be responsible for internal monitoring. A team from Wuhan University has been appointed to undertake independent monitoring of the resettlement program. The monitoring scope, targets, indicators, procedures, methodology and reporting requirements are described in the RAP.
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49. A Resettlement Policy Framework has been developed in accordance with relevant local laws and regulations as well as World Bank OP 4.12 on Involuntary Resettlement for activities not fully identified, including the airport access road and associated facilities. The RPF describes the overall legal framework, planning principles, procedures, compensatory and rehabilitation approach, consultation and participatory requirements, grievance redress mechanisms, organization and monitoring arrangements.
F. Environment (including Safeguards)
50. Environmental Assessment: The Jiangxi Shangrao Sanqingshan Airport Project is classified as a “Category A” operation under the Bank OP 4.01. The project triggers two World Bank environmental safeguards policies: Environmental Assessment and Physical Cultural Resources.
Environmental Impacts of Construction
51. Construction will cause temporary impacts on the surrounding environment, including vegetation loss, soil erosion, noise of machinery and trucks, vibration, dust, wastewater, and land acquisition and resettlement issues. Construction impacts on neighborhoods and the natural environment will be minimized (or avoided) through better environmental planning and integration with civil works design. Environmental specifications have been prepared to mitigate construction related impacts, and will be incorporated into bidding documents and civil work contracts, and will be enforced by construction supervision.
52. Impacts on Surface Water. Construction of the airport will occupy 1.6 km2 of land and create an impervious surface. Impacts of rapid runoff from this impervious area would be minor because the land area for airport construction is limited compared to watershed area. Care will be taken during design not to disturb the hydrology of the area. The airport design will divert and pre-treat storm water drainage from areas of potential leaks and spills of fuels through use of oil/water separator, and contaminated water will be discharged to a wastewater treatment station in the airport. Therefore, the storm water discharge through the stormwater drainage network is not expected to negatively impact on aquatic environments.
53. Natural Habitats and Forestry. The project will not cause any significant conversion or degradation of natural forest or natural habitats. The project area consists of mainly brush, grassland, woodland, villages, farmland, and water ponds, has been deeply influenced by human activities. The project will occupy 104ha of second-growth trees where common species (e.g. camphor, pines, and firs) are found in the sub-tropical humid monsoon climate zone. Field surveys have confirmed that there is no endemic or unique vegetation, nor any endangered animal species. About 3,722 small camphor trees in the airport site need to be transplanted in accordance with the transplantation plan included in the EMP.
54. Physical Cultural Resources. Field surveys have found 137 household graves within the airport site. Compensation for the relocation of household graves is included in the RAP. Chance find procedures are included in the EMP.
55. Impact on Irrigation System. Within or in the vicinity of the airport site, there are 36 small water ponds, which are used for irrigation of paddy fields. About 20ha (300mu) paddy
13 farms will be affected by the project. Restoration measures for the affected irrigation system have been proposed, including: (a) land compensation (in the RAP); (b) renovation of existing irrigation ditches; (c) adding more storm water discharge outlets at the airport; and (d) change of crop patterns.
56. Re-routing Rural Roads and Power Electric Lines. The airport will interrupt two local rural roads and two existing power lines. Project design includes new routings for the interrupted roads and the electric lines. The EMP includes measures to mitigate the anticipated minor environmental impacts.
57. Airport Access Road, Associated Utility Infrastructure, Construction of Temporary Access Road, Burrow Pits, Disposal sites. Environmental screening shows that the construction of access road and associated utility pipelines will not affect any critical habitat or forestry area. The anticipated impacts are considered minor and general mitigation measures have been included in the EMP. Specific EMPs will be prepared based on the EMF after the precise alignments for these facilities are determined.
Environmental Impacts of Operation
58. Noise and Vibration Impacts. It is estimated that airport related noise will have a slight impact on 210 households and some moderate impact on seven households. Measures for noise management include: (a) alternative analysis for airport sites and avoidance of flight path over densely populated city areas; (ii) selection of flight equipment that are in compliance with international standards; (iii) sound insulation of buildings exposed to aircraft noise above acceptable levels; and (iv) restricting development of noise-sensitive buildings in the vicinity of the airport, i.e., approximately 3 km to each end of the runway, and 0.5 km to each side of the runway.
59. Air Emission. Assessment of air emission from airport related activities indicates that in 2020, aircrafts will discharge 1.02 tons of SO2, 19.83 tons of CO, 5.47 tons of Non- methane Hydrocarbon (NMHC), and 12.04 tons of NO2. The EA concludes that air emission from airport operation has insignificant impacts on the ambient air quality.
60. Waste and Wastewater Management. Airport operations will generate nonhazardous solid waste (268 tons/a), sludge (20 tons/a), spent oil (0.5tons/a), and wastewater (58m3/d). The solid waste and sludge will be sent to Shangrao municipal sanitary landfill for final disposal; and spent oil to a qualified company for treatment. Wastewater will be treated by a wastewater treatment station (10m3/h) at the airport. Due diligence has been conducted confirming that the performance of these waste and wastewater treatment facilities is compliance with the domestic requirements.
61. Risk Management. The major risks associated with the project are the fuel storage facilities and the gas filling station which may lead to fire accidents and fuel leakage. The project has developed an emergency preparedness and response plan for potential accidents/risks which may be caused by airport operation (e.g. fire, explosion, plane crash, and safety breaches). Regular drill will be conducted, and hazardous materials will be managed to prevent accidental releases, fire, or explosions. EMP also presents an outline for the health and safety plan for the airport operations, and proposes specific measures to protect worker’s health and safety (see EMP Annex III).
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62. Environment Management Plan and Environmental Management Framework. A stand-alone EMP has been prepared addressing all issues identified in the EIA. The EMP includes mitigation measures, institutional arrangements, a budget for the implementation and environmental monitoring plan. An EMF has been prepared, setting out the guidelines and procedures to assess the environmental impacts associated with the airport access road and associated utility infrastructure. Based on the EMF, specific EMPs will be prepared after the precise sitting alignments for these facilities are determined. 63. Public Consultations and Information Disclosure: In accordance with Bank Safeguard policies and Chinese regulations, public consultations were conducted from January to September 2012, including public consultation meetings and questionnaire survey, with project affected persons and other stakeholders such as village associations, schools etc.. The consultation on the EIA TOR was conducted in January 2012, and consultation on the draft EA documents in September, 2012. Their opinions and concerns have been taken into account in the EA process and project design. The EA safeguards documents were locally disclosed at village associations on September 23, 2012 and at local websites on September 29, 2012 through announcements published on the local website and newspaper. The safeguard documents were sent to the Bank InfoShop for disclosure on October 30, 2012.
SAFEGUARDS POLICIES Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OP/BP 4.01) [X] [ ] Natural Habitats (OP/BP 4.04) [ ] [X] Pest Management (OP 4.09) [ ] [X] Indigenous Peoples (OP/BP 4.10) [ ] [X] Physical Cultural Resources (OP/BP 4.11) [X] [ ] Involuntary Resettlement (OP/BP 4.12) [X] [ ] Forests (OP/BP 4.36) [ ] [X] Safety of Dams (OP/BP 4.37) [ ] [X] Projects on International Waterways (OP/BP 7.50) [ ] [X] Projects in Disputed Areas (OP/BP 7.60)* [ ] [X]
* By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties' claims on the disputed areas 15
Annex 1: Results Framework and Monitoring CHINA: Jiangxi Shangrao Sanqingshan Airport Project
Project Development Objective (PDO): To improve airline connectivity in northeastern Jiangxi Province and demonstrate the environmental sustainability of the development and operation of the Shangrao Sanqingshan Airport.
Description Target Values Responsibilit Unit of Freque Data Source/ (indicator PDO Level Results Indicators Baseline y for Data
Core Core Measure ncy Methodology definition YR 1 YR 2 YR3 YR 4 YR5 Collection etc.) Organizatio nal Airport Air Line Structure Operational Service Measures and Staff training Agreement achievement Indicator One: Reduction in travel time Surveys Required and capacity Negotiated of PDO ravel time between Shangrao and reduction none 27% Annual /Periodic PMO t Staff and building with selected related to major cities. percentage Reporting Equipment program starts airline airline identified service connectivity and put in provides place; Indicator Two: Shangrao Airport Measures recognized as “Green Airport” achievement Green Award Recognition Final of PDO through established recognition None Application Annual PMO Received Assessment related to process. Submitted environment sustainability
INTERMEDIATE RESULTS
Intermediate Result (Component One): Construction of Shangrao airport. Intermediate Result indicator 1A: None Construction Measures Periodic Green airport design put in place Design Government carried out achievements Annual monitoring PMO and implemented. Carried out approval according to towards green and reporting design airport design Intermediate Result indicator 1B: None Construction Periodic 50 percent of Timely, cost-effective Plan and 100 percent monitoring Measures project construction of the airport Detailed Cost milestone Annual and PMO construction milestone estimate reached reporting/Prog progress reached Prepared and ress Report
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approved
Intermediate Result (Component Four): Institutional and capacity building.
Intermediate Result indicator 2: None Measures Airport operation model Study progress Recommendati developed and adopted by completed towards on Periodic Shangrao. and Annual PMO achieving the implementation monitoring endorsed by institutional started government development component
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Annex 2: Detailed Project Description CHINA: Jiangxi Shangrao Sanqingshan Airport Project
Background
1. Shangrao Sanqingshan Airport is included in the CAAC’s National Civil Airport Development Plan for 202012. The municipality of Shangrao is located at the junction of Jiangxi, Zhejiang, Fujian, and Anhui province, and it connects the Yangtze River Delta economic zone, the Pearl River Delta economic zone, and the Western Taiwan Straits economic zone. With famous tourism destinations such as Wuyuan, Sanqingshan (UNESCO Natural Heritage), and Poyang Lake, Shangrao accommodated 29.15 million domestic tourists and 170,000 international tourists in 2011, its tourism income was more than RMB 21.54 billion and tourism foreign exchange exceeded $63.78 million.
2. The proposed airport is located at Houmentang Village of Zunqiao Town, about 8 km south of Shangrao City. This location was selected from five candidate sites based on terrain, the length of construction of access road, operation airspace clearance requirement, earthwork, wind direction, utility supply convenience, and environmental and social considerations.
3. The catchment area for the airport will include the areas within 100 km of radius or 1.5 hours of ground transportation. In this area, the Shangrao and Yingtan municipalities are included, totaling a population of 8.5 million and a total area of 26,000 km2. In 2011, the Shangrao municipality GDP reached RMB 111 billion, a 13% increase from the previous year, and Yingtan had RMP 42 billion for a total catchment GDP of RMB 144 billion. Special agriculture, mineral resources and tourism are the mainstay of Shangrao’s economy, while non-ferrous metals, new energy, electrical and mechanical optics, new building materials have become the city’s four leading industries.
4. The proposed Shangrao Sanqingshan airport is of significant importance to the economic development of Shangrao Municipality and the northeastern Jiangxi Province. It will facilitate the growth of the region’s tourism resources and complement the comprehensive transport system. In the project’s pre-feasibility study, the passenger traffic13 for 2020 is estimated to be 500,000 with a 14% annual growth rate. Cargo tonnage is estimated to be 3,000 tons by 2020. Given the large population in the catchment area and the booming regional tourism that has reached 29.15 million visitors in 2011, the forecasted 500,000 passengers by 2020 appears reasonable. The pre-feasibility study concludes that the airport will be financially sustainable if the annual passenger flow is above 350,000. It is estimated that, during the early opening years after the airport becomes operational, financial subsidies from the municipal government will be needed to maintain the airport operation.
5. Although there are 4 civil airports located within about a 200 km radius of the project (Jingdezhen, Wuyishan, Huangshan and Quzhou), the accessibility to these other airports by the Shangrao targeted passengers is restricted by mountainous terrain which results in longer travel time than suggested by the “crow-fly” distance. Therefore the proposed airport will
12 The airport originally was planned as Gandong airport in the CAAC’s National Civil Airport Development Plan for 2020, airport location was set at Sanqingshan after site selection. 13 Terminal passenger traffic is the total of number of passengers arriving and departing through the terminal. 18 provide easier access to Shangrao residents and visitors, ensuring the airport will remain the preferred choice.
Project Components
6. The proposed Project will have two components: (a) Airport Infrastructure Development; and (b) Institutional Development and Capacity Building.
7. Component 1: Airport Infrastructure Development will include the construction and installation of the following:
(a) Airfield – construction of runway, taxiway, etc.: The airfield is 4C level with a newly built 2400 m long, 48 m wide runway and a vertical contact way. The taxiway is 208.5 meter long, 23 meter wide with 1.5 meter shoulder at each side. (b) Terminal and apron: The terminal building will accommodate the projected passenger traffic and the apron can park 5 Type C aircraft. (c) Air traffic control: There will be an 800 m2 air control building and a 200 m2 air control tower. It also includes navigation engineering, communication engineering, etc. (d) Freight Facility: A 400 m2 cargo warehouse will be built together with cargo facilities, parking and uploading field to handle expected cargo traffic. (e) Supporting Infrastructure Facility (fuel storage farm, water supply, power supply, fire stations, heating, storm/water management, parking, fence, patrol/maintenance road within airport right of way, etc): There will be a 500 m2 transformer substation building, a 2200 m2 fire protection and rescue building, and 300 m2 waste water treatment station. (f) Environmental Management Plan -- Implementation of the EIA/EMP for inside and outside the airport. (g) Land Acquisition and Resettlement and Rehabilitation of Project Affected Families (financed fully by government own funds). This also includes forest revegetation, accessibility restoration and replantation. (h) Auxiliary Facility: Office building is of 1350 m2 and staff houses is of 1080 m2. (i) Service vehicles: 34 special service vehicles will be financed. (j) Storm water reuse system and ground aircraft auxiliary power unit.
8. Component 2: The Institutional Development and Capacity Building Component will finance the following consultant services, studies and training:
(a) Project Management Consultant to provide advisory services to support the PMO/SSAC with project coordination and monitoring.
(b) Management Consultant to Develop Airport Operation Model and support SSAC to prepare and implement a Human Resource Development plan, an Operational and Financial Manual (in accordance China’s company’s law). The consultant will also help SSAC to comply with CAAC regulations and international
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practices, and to develop marketing plan to attract airlines and assist in service agreement negotiations with airlines .
(c) Technical assistance to the PMO (i) to document the lessons learned in developing the Green Airport concept, (ii) to share the experience widely with other potential cities considering building green airports in China though workshops; and (iii) other civil aviation related studies;
(d) Training and study tours.
9. The total cost of the project is US$105.13 million, to be financed by World Bank US$50 million and domestic fund equivalent of US$55.13 million (see Table A2-1). Domestic funds include central government grant from CAAC and NDRC.
Table A2-1 Total World Bank Domestic fund No. Component Million Million Million Million Million Million RMB USD RMB USD RMB USD
Airport Infrastructure 1 634.54 100.72 287.24 45.59 347.30 55.13 Development
(1) Air field 217.16 34.47 182.59 28.98 34.58 5.49 (2) Terminal 67.50 10.71 0.00 0.00 67.50 10.71 (3) Air control 49.00 7.78 5.30 0.84 43.70 6.94 (4) Oil supply 8.10 1.29 0.00 0.00 8.10 1.29 (5) Water supply 7.90 1.25 7.90 1.25 0.00 0.00 (6) Power supply 13.85 2.20 13.85 2.20 0.00 0.00 (7) Firefighting 5.78 0.92 5.78 0.92 0.00 0.00
(8) Cargo Freight station 2.45 0.39 1.25 0.20 1.20 0.19
(9) Heating 7.75 1.23 7.75 1.23 0.00 0.00
Rainwater and Sewage (10) 11.80 1.87 11.80 1.87 0.00 0.00 Treatment Facility
General Airport Facility (11) 6.23 0.99 6.23 0.99 0.00 0.00 not Occupied by Building
(12) Environment Protection 31.60 5.02 0.00 0.00 31.60 5.02
Domestic and Production (13) 7.14 1.13 7.14 1.13 0.00 0.00 Assistant Facility Purchase of Service (14) 21.08 3.35 21.08 3.35 0.00 0.00 Vehicles (15) Site Preparation Fee 85.31 13.54 0.00 0.00 85.31 13.54
(16) Construction Management 3.99 0.63 0.00 0.00 3.99 0.63
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(17) Temporary Facilities 5.49 0.87 0.00 0.00 5.49 0.87 (18) FSR Service 2.55 0.41 0.00 0.00 2.55 0.41 Dedicated Research and (19) 4.35 0.69 0.00 0.00 4.35 0.69 Experiment (20) Project Design 13.30 2.11 0.00 0.00 13.30 2.11 (21) Engineering Prospection 3.49 0.55 0.00 0.00 3.49 0.55 (22) Design Assessment 1.09 0.17 0.00 0.00 1.09 0.17 (23) Hiring Bidding Agency 0.90 0.14 0.00 0.00 0.90 0.14 Construction Supervising (24) 8.76 1.39 0.00 0.00 8.76 1.39 Service (25) Staff Training 0.34 0.05 0.00 0.00 0.34 0.05 Office and Domestic (26) 0.21 0.03 0.00 0.00 0.21 0.03 Facility Procurement Flight Inspection, Flight (27) 0.50 0.08 0.00 0.00 0.50 0.08 Testing and Operation (28) Flight Calibration 0.58 0.09 0.00 0.00 0.58 0.09 (29) Trial flight 0.50 0.08 0.00 0.00 0.50 0.08 (30) Monitoring 1.00 0.16 0.00 0.00 1.00 0.16 Soil And Water (31) 1.50 0.24 0.00 0.00 1.50 0.24 Conservation Monitoring Soil And Water Conservation Facilities (32) Completion Acceptance 0.33 0.05 0.00 0.00 0.33 0.05 Technical Evaluation Report Soil And Water (33) Conservation Facilities 1.06 0.17 0.00 0.00 1.06 0.17 Compensation (34) Contingencies 25.36 4.03 0.00 0.00 25.36 4.03 Storm water reuse system (35) and ground aircraft 16.57 2.63 16.57 2.63 0.00 0.00 auxiliary power unit. Institutional 2 Development and 12.60 2.00 12.60 2.00 0.00 0.00 Capacity Building Interest during 3 14.37 2.28 14.37 2.28 0.00 0.00 construction 4 Front-end Fees 0.79 0.13 0.79 0.13 0.00 0.00 Total 662.30 105.13 315.00 50.00 347.30 55.13
10. Linked Activity. The Shangrao Municipal Government (SMG) will be constructing an access road (4.65 km) to link the proposed airport with the nearest main road, as well as other utility infrastructure. The access road and related facilities will be fully financed by SMG outside of the proposed project description. Nonetheless, the safeguard policies agreed for the proposed project will apply for the access road, as well as the other civil works associated with the airport.
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Annex 3: Implementation Arrangements CHINA: Jiangxi Shangrao Sanqingshan Airport Project
Project Institutional and Implementation Arrangements
1. Shangrao Municipal Government (SMG) has established an airport Project Leading Group (PLG), headed by the executive Vice Mayor, and consisting of three deputy heads and 27 committee members. The PLG members include Director Generals from SMG’s various Bureaus including Audit Office, Land Resource, Urban Planning, Transport, Construction Bureau, Property Management, Environment Protection, Urban Management, Water Resource, Forestry, Cultural, Science and Technology, Weather, Hydrology; as well Deputy Director Generals of DRC, Finance Bureau, Public Security bureau. The PMO/SSAC Director is also a member of PLG. 2. The PLG is responsible for the following duties, among others:
(a) To develop strategies and make decisions to effectively promote progress of the airport development project;
(b) To formulate overall objectives and implementation plans, mobilize relevant agencies and the public to support the project;
(c) To formulate management and operational approaches of the airport, and to review and clear the annual program and implementation plans of the airport development project;
(d) To review implementation progress reports, guide and make decisions on major issues, including proposals, justification, target-setting, financing management, and tendering process;
(e) To coordinate relevant city and county departments on land acquisition and resettlement, and associated issues;
(f) To be responsible for raising counterpart funds committed by SMG, and liaison with higher levels of government for committed grants;
(g) To review and clear major tendering (bidding) events; and
(h) To coordinate and solve other problems of the PMO/SSAC.
3. In order to manage the day to day implementation of the project and work directly with the World Bank, the SMG established the PMO/SSAC under the control of the Project Leading Group (PLG). The PMO/SSAC will be in charge of overseeing the preparation of the feasibility study and all technical, environmental and social studies, and supervising the implementation of the project and associated safeguard measures. It will also be responsible for coordinating and obtaining clearance and approval from the relevant central and provincial government agencies. As per SMG airport operation and management ordinance, the PMO/SSAC will also be responsible to put in place airport operation planning and airspace clearance preservation.
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4. The PMO/SSAC consists of one director and ten full-time staff. These staff are on deputation from various bureaus/departments of SMG. Each staff member is responsible for one of following described duties:
(a) To coordinate SMG’s bureaus, counties and districts, to be responsible for land acquisition and resettlement within the airport, to coordinate development projects of associated roads, power/water supply, petrol/gas supply, communication and wastewater facilities, to coordinate relocation of power utilities and camphor-trees within the airport.
(b) Management of site plan/area plan, control and management of aerial clearance/noise buffer zone, responsible for issues of country road realignment, drainage/irrigation outside the airport, issues of EA and airport economic zone planning;
(c) Land use control of the airport planning area, to address disputes in resettlement in collaboration with district/county public security bureaus, to formulate emergency response plans, to be responsible for maintaining the construction environment, and to cover issues on security/fire-fighting provisions of the airport;
(d) To set up an engineering section, to carry out implementation management, to coordinate with the design institutes/tendering agent;
(e) To be responsible for fund mobilization for resettlement/construction, and to supervise fund utilization;
(f) To formulate and explain land acquisition policies;
(g) To formulate and explain compensation policies for affected housing/land attachment;
(h) To be responsible for acquisition of forest land;
(i) To be responsible for land/resettlement activities of Shangrao county, particularly to collaborate with the township/towns as well as on supporting materials; and
(j) To be responsible for land/resettlement activities of Xinzhou District, particularly to collaborate with the township/towns as well as on supporting materials.
5. The SMG has established the Shangrao Sanqingshan Airport Corporation (SSAC) as the airport project owner. The company’s registered capital is RMB 50 million provided by Shangrao state-owned assets management committee. There will be five divisions in the company as below: Administration Division: 3 staff members; Engineering Division: 4 staff members; Financial Division: 2 staff members; Audit Office: 1 staff members Operations Division: 4 staff members
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6. The operations division will be responsible, among other things, for air traffic control, navigation, weather, and aircraft maintenance.
Results Monitoring and Evaluation
7. The PMO/SSAC will be responsible for collecting the data for reporting on the Results Framework in Annex 1. The Project Management Consultant to be hired under the project will assist the PMO/SSAC in collecting the data and coordinating with relevant agencies to gather the data required for monitoring, evaluation, and reporting of outcomes and intermediate outcomes indicators shown in the Results Framework.
8. For outcome indicators, data will be collected through surveys once construction is completed and airport starts operations, although the milestones during project implementation will be followed up during project supervision. For intermediate indicators, the Quarterly Progress Report will be used as a basis to update the Results Framework.
9. There will be two Outcome Indicators – travel time savings between Shangrao and major destinations and recognition of Shangrao Airport as “Green Airport”.
Calculation of the travel time reduction indicator
10. The reduction of travel time between Shangrao and major cities after the airport’s opening will be monitored as one indicator. The shortest travel time before the airport’s opening is defined as the elapsed travel time by the fastest travel options exist at present, which mainly is a combination of flight to the nearby airport and ground transport. The shortest travel time before the airport’s opening will be the direct flight time between Shangrao and the major cities.
11. However, since the airport is a type 4C airport, direct flight between Shangrao and major cities may not be available every day. Thus the shortest travel time after the airport’s opening can not be simply calculated as the direct flight time. Considering this situation, an index of weighted average travel time with the evaluation period unit of one week is proposed to evaluated the travel time as follows:
∑ 7 where is the weighted average travel time between Shangrao and a certain city, is the shortest travel time on day in one week (either by combination of flight to nearby city and ground transport, or by direct flight after the airport’s opening).
12. For further explanation of the index, the following will take the travel between Beijing and Shangrao as an example. Before the airport opens, the shortest travel time between Beijing and Shangrao is 5 hours which includes 2 hours flight to Nanchang and 3 hours ground transport of driving from Nanchang airport. After the airport opens, the shortest travel time between will be 2 hours by a direct flight when it is available. Assuming the flight between Beijing and Nanchang is available every day, and the flight between Beijing and Shangrao is available 3 days per week after the airport opens. In other words, 3 days in a week the shortest travel time is 2 hours, and on the other 4 days the shortest travel time will
24 be 5 hours. Thus the weighted average travel time between Beijing and Shangrao after the airport opens can be calculated as follows:
5 4 2 3 3.7 7
Comparing to the before the airport’s opening which is 5, the percentage of travel time reduction is 26%.
13. Therefore, the indicator for total travel time reduction between Shangrao and major cities is defined as follows:
∑ ∑ 100% ∑
where is the number of target cities, and are the between Shangrao and city before and after the airport’s opening, respectively.
14. It is expected that the initial services will be between Shangrao to Beijing, Guangzhou, Shenzhen and Haikou. The baseline and target value of this indicator, under the assumption that the direct flight to these destination cities will be available 3 days a week, are shown in the following table, which indicates the estimated target travel time reduction percentage is 27.3%. However, the cities could change before opening and, at which time, the target cities’ travel time and indicators will be adjusted accordingly. This will not affect the final outcome, as the baseline and targets would not change during the course of airport construction.
Travel Time Travel Time Travel Time Potential Weighted Travel before Airport after Airport Reduction Target Cities Time Opening Opening Percentage Beijing 5 2 3.7 26% Guangzhou 4.5 1.5 3.2 28% Shenzhen 4.5 1.5 3.2 28% Haikou 5 2 3.7 26% Total 19 7 13.8 27.3%
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Financial Management, Disbursements and Procurement
Financial Management 15. Risks and mitigation. The FM capacity assessment identified the following key risk: the project financial staff in the PMO do not have experience with a Bank financed project. The mitigation measures agreed include: (a) more experienced and capable financial staff to be hired; (b) FM Manual (FMM) prepared and issued to standardize project FM procedures and provide guidance to project financial management staff; and (c) Bank loan proceeds to be managed by Jiangxi Provincial Finance Bureau (JPFB), which has extensive experience with Bank-financed projects. The FM risk, both pre and post-mitigation, has been assessed as “Moderate”. 16. Budget. The PMO will prepare annual project implementation plan, including the available funding resources and budget. The budget for counterpart funds committed by SMG will be included in SMG’s annual sectoral budget. Grants from CAAC and NDRC will be provided through the finance channel based on the annual budget and actual implementation progress. Budget variance analysis will be conducted semi-annually by the PMO and necessary actions will be taken to implement the project as planned.
17. Funds flow. The Bank loan proceeds will flow from the Bank into the project Designated Account (DA) to be set up at and managed by JPFB. The JPFB will be directly responsible for the management, maintenance and reconciliation of DA activities. Supporting documents required for Bank disbursements will be prepared and submitted by the PMO through Shangrao Municipal Finance Bureau (SMFB) for review and verification before sending to JPFB for further disbursement processing.
18. Accounting and Financial Reporting. The administration, accounting and reporting of the project will be set up in accordance with Circular #13: “Accounting Regulations for World Bank Financed Projects” issued in January 2000 by MOF. The standard set of project financial statements has been agreed between the Bank and MOF. The PMO/SACC will be responsible for the overall project implementation, management, monitoring and coordination. Original accounting documents for project activities will be retained by the PMO. The PMO will prepare the project financial statements. The unaudited semi-annual project interim financial reports (IFRs) will be prepared and furnished to the Bank by the PMO no later than 45 days following each semester.
19. Internal Control. The related accounting policy, procedures and regulations were issued by MOF for World Bank financed projects. Based on this, Financial Management Manual has been prepared and issued to standardize and regularize financial management and disbursement requirements for the project.
20. Audit. Jiangxi Provincial Audit Office (JPAO) has been authorized by China National Audit Office as the auditor for the project. Annual audit reports will be issued by JPAO and will be due to the Bank within 6 months after the end of each calendar year. The World Bank will make the audited financial statements available to the public in accordance with the World Bank Policy on Access to Information.
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Disbursements
21. Four disbursement methods namely, advance, reimbursement, direct payment, and special commitment, will be available for the Project. Supporting documents required for the different disbursement methods are documented in the Disbursement Letter issued by the Bank. One Designated Account in US dollars will be opened at a commercial bank acceptable to the Bank and will be set up and managed by JPFB. Retroactive financing will be applied for this project. The effective date will be March.1, 2013 for a maximum amount of US$5 million.
22. The table below shows the loan amount allocated for each disbursement category and the percentage of financing for each category.
Category Amount of the Loan Percentage of Expenditures to Allocated be financed (expressed in USD) (inclusive of Taxes) (1) Works, Goods, Consultants’ 47,593,000 100% services, Training, Studies and Incremental Operating Costs
(2) Interest During Construction 2,282,000 Amount payable pursuant to Section 2.04 of this Agreement in accordance with Section 2.07 (c) of the General Conditions (3) Front-end Fee 125,000 Amount payable pursuant to Section 2.03 of this Agreement in accordance with Section 2.07 (b) of the General Conditions
(4) Interest Rate Cap or Interest 00 Amount due pursuant to Section Rate Collar premium 2.07(c) of this Agreement Total Amount 50,000,000
Procurement
23. Mitigation Measures for Procurement Risks. The procurement capacity and risk assessment noted that the Shangrao Sanqingshan Airport Project Management Office (PMO) and Shangrao Sanqingshan Airport Limited Company have no previous Bank-financed project experience. However, the Shangrao Municipality had previously participated in Bank- financed projects and has gained experience in handling procurement matters in Bank- financed projects. Two full-time procurement staff (including one with rich technical expertise in costing and civil works and abundant experience in procurement of projects financed by domestic funds) have been assigned for procurement under the project.
24. The PMO sent its staff to attend procurement workshop jointly sponsored by the Bank and the Ministry of Finance in November 2011. The Bank procurement specialist also delivered training sessions on Bank procurement requirements for the PMO and its Procurement Agent during project preparation. It is concluded that the PMO has adequate
27 capacity to carry out procurement activities for the proposed Project. Overall, the procurement risk rating is assessed as “moderate”.
25. In order to strengthen the procurement capacity of the PMO and to mitigate potential procurement risks, the following measures have been agreed: (a) The PMO has prepared a Procurement Management Manual (PMM) which is acceptable to the Bank. The PMM includes procedures on handling procurement of goods, works, non-consulting services, and selection of consultants. (b) A qualified Procurement Agent has been selected by the PMO. The selected Project Agent has rich experience in procurement under the Bank financed projects, and will provide support to the PMO for procurement of all ICB, NCB and consulting services contracts. The Agent’s assignments will include preparing commercial parts of bidding documents, publishing Specific Procurement Notices, hosting bid opening, organizing bid evaluation, and preparation of bid evaluation reports and contracts etc. (c) The PMO will continue to send its procurement staff to attend workshops on procurement of the Bank financed projects throughout project implementation. (d) The project will finance a Project Management Consultant to assist the PMO in contract administration and managing and coordinating construction activities. 26. Procurement for the Project will be carried out in accordance with the World Bank’s “Guidelines: Procurement of Goods, Works and Non-Consulting Services under IBRD Loans and IDA Credits & Grants” dated January 2011; “Guidelines: Selection and Employment of Consultants Services under IBRD Loans and IDA Credits & Grants by World Bank Borrowers” dated January 2011; and the provisions stipulated in the loan agreement.
27. Frequency of Procurement Supervision. In addition to the prior review supervision to be carried out from the Bank offices, Bank procurement supervision missions will visit the field to carry out post review of procurement actions every 12 months, as well as to provide implementation support on procurement matters. The post review sampling ratio will be one out of five contracts.
28. Procurement Plan. The PMO/SACC has developed an acceptable Procurement Plan for project implementation. It is available at the Implementing Agency, and will also be available in the Project’s database and in the Bank’s external website during project implementation. The Procurement Plan will be updated in agreement with the Bank task team annually, or as required, to reflect actual project implementation needs and improvements in institutional capacity.
29. Selection and Procurement Methods and Prior Review Thresholds. Table below indicates the procurement and selection methods and prior review thresholds for goods, works, non-consulting services, and consulting services to be procured under the loan. Terms of reference for all consultant contracts, regardless of contract value, will be subject to Bank prior review.
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Thresholds for Procurement Methods and Bank Prior Review
Expenditure Contract Value Procurement Method Bank Prior Review Category (US$) >= 3 million ICB All ICB contracts < 3 million NCB First 2 NCB goods contracts Remarks: Where goods are irrespective of value and all Goods/IT not normally available from contracts >= USD 3 million. Systems and within China, the method of Non-Consulting procurement will be ICB Services even if the contract value is less than USD 3 million. < 100 K Shopping None N/A DC All DC contracts >=25 million ICB All ICB contracts < 25 million NCB First 2 NCB works contracts Works/ Supply irrespective of value and all & Installation contracts >= USD 15 million. < 200 K Shopping None N/A DC All DC contracts >= 300,000 QCBS, QBS Firms: First contract for each < 300,000 QCBS, QBS, CQS selection method and all contracts N/A SSS >=USD 300 K; Firms: All SSS contracts; Consultants N/A IC Individual Consultant: Only in Exceptional Cases; SSS for individual consultant: >=USD 20 K Notes: ICB: International Competitive Bidding NCB: National Competitive Bidding DC: Direct Contracting QCBS: Quality- and Cost-Based Selection QBS: Quality-Based Selection
30. Advance Contracting and Retroactive Financing. Contracts expected to be procured in advance of the loan signing date and financed under retroactive financing are included in the Procurement Plan and will be subject to prior review. Retroactive financing of up to US$ 5,000,000 equivalent would be available for payments made on or after March 1, 2013, for all Eligible Expenditures according to the requirements specified in the Loan Agreement and Project Agreement.
Environmental and Social (including safeguards)
31. The Jiangxi Shangrao Sanqingshan Airport Project is classified as a “Category A” operation under the Bank OP 4.01. The project triggers two Bank EA safeguards policies: Environmental Assessment (OP/BP 4.01); and Physical Cultural Resources (OP 4.11).
32. The package of EA safeguards documents for the project comprises four reports: (a) an EA report; (b) a stand-alone Environment Management Plan (EMP); (c) an Environmental Management Framework (EMF); and (d) an Executive Summary of the Environment Impact Assessment.
33. The EA report was prepared following relevant provisions specified in Chinese EA laws/regulations and technical guidelines, as well as Bank safeguard policies. Based on the
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EA, an EMP was prepared. It develops necessary mitigation measures to avoid, minimize, mitigate and compensate adverse impacts identified. Given that the alignments for the airport access road and associated utility infrastructures (see the table in Annex 3) can be determined only after detailed engineering design, an EMF has been prepared.
34. Analysis of Alternatives. Different alternatives were considered in the pre-feasibility and feasibility reports, as well as the EA, comparing them against technical, environmental and social criteria. The analysis includes alternatives for airport sites, storm water discharge, runway alignment, wastewater treatment, fuel for ground vehicles, and a “with and without project” scenario.
Environmental Impacts due to Construction
35. Construction will cause temporary impacts to the surrounding environment, including vegetation loss, noise of machinery and trucks, vibration, dust, wastewater, and land acquisition and resettlement issues. If properly planned, construction impacts to neighborhoods, and the natural environment can be avoided or minimized. Environmental mitigation measures have been prepared, and will be incorporated into the bidding documents and civil work contracts, and enforced by construction supervision.
36. Soil Erosion. Construction works will involve clearing of vegetation in areas that are needed for site works. After balancing cut and fill, the project will generate 80,000m3 spoil from airport construction. Spoils will be used to backfill low lying areas of the airport. As such, the project will not need any burrowing pits or extra disposal sites. Potential soil erosion during construction will be mitigated by the implementation of a water and soil conservation plan which specifies erosion and sedimentation mitigation measures such as (a) good site drainage system; (b) open cut areas promptly seeded or landscaped; (c) cut slope stabilized or protected; and (d) spoil materials deposited in a timely manner. Soil erosion will be monitored during and after construction.
37. Impacts on Surface Water. Airport construction will occupy 1.6 km2 of land and create an impervious surface (~0.28km2) in an area that is now covered mainly by grassland, some brush, woodlands and water ponds. Rapid runoff from this impervious area could have some impact on natural hydrology in the vicinity of the airport. However, the airport is located at the top of hills where the watersheds originate, and the area of land required for the airport construction is relatively limited compared to watershed area involved. Care will be taken during design to not disturb the hydrology of the area. The drainage design will include eight stormwater discharge outlets to distribute the runoff to three watersheds based on detailed storm-runoff routing.
38. Natural Habitats and Forestry. The project will not cause significant conversions or degradation of natural forest or natural habitats, as the project is not located within protected areas. Field surveys have confirmed that there is no endemic or unique vegetation, nor any endangered animal species. As such, the Natural Habitat (OP4.04) safeguard policy is not triggered by the project.
39. The project will occupy 104 ha of second-growth trees of common species such as camphor, pines, and firs. Compensation for re-vegetation is included in the project. The surveys have identified about 3,722 small camphor trees and cultivated saplings that need to be transplanted. Experienced institutions will be engaged to transplant the trees to a selected
30 nursery base, under guidance of local forestry technical intuitions and local forestry bureau. A transplantation plan has been prepared specifying the requirements for transplantation time, techniques, budget and monitoring.
40. Physical Cultural Resources. The cultural resources survey found that there are 137 household graves within the airport site, which need to be relocated in consultation with the affected families. Compensation for the relocation of these household graves is included in the RAP. Chance find procedures are included in the EMP.
41. Impact on Irrigation System. Within or in the vicinity of the airport site, there are 36 small water ponds which provide local farmers minor irrigation water for their paddy fields. Approximately 20 ha (300 mu) of paddy farms will be affected by the project. Restoration measures for the affected irrigation system have been included in the RAP and EMP: (a) land compensation; (b) renovation of existing irrigation ditches (i.e., lining and dredging for approximately 9 km of irrigation ditch); (c) adding more storm water discharge outlets at the airport; and (d) change of crop patterns . 42. Re-routing of Rural Roads and Power Electric Lines. The airport will interrupt two local rural roads and two existing electric lines. New routing for the interrupted roads and electric lines have been included in the project design. Mitigation measures for construction related impacts have been included in the EMP.
43. Environmental Impacts of Resettlement. One resettlement sites has been selected for 14 households to be relocated. The resettlement site will have adequate infrastructure, including roads, water, electricity, and drainage facilities; these will be designed and implemented during the resettlement process.
44. Airport Access Road, Associated Utility Pipelines, Construction of Temporary Access Road, Burrow Pits, Disposal sites. A 4.65 km urban road and associated utility pipelines (i.e. water, sewer, natural gas, and power lines) will be built to connect the airport with the nearest road in Shangrao downtown. Temporary access road, burrow pits, and disposal sites may be required for these activities. The anticipated environmental impacts are considered minor. General mitigation measures have been included in the EMF. Specific EMPs will be prepared based on the EMF after the precise alignments for these facilities are determined. Environmental Impact due to Operation
45. Noise and Vibration Impacts. The most significant sources of noise and vibration from airport operations are during landing and takeoff. Projected flights in 2020 are 13.2 sorties per day; 73 percent of takeoff and landing is during daytime (7:00-19:00); 15 percent of takeoff is in the evening (19:00-22:00) and 12 percent at night (22:00-7:00); 27 percent of the landing will be the evening (19:00-22:00), and none at night (22:00-7:00). The assessment considered both Chinese national standards and the World Bank Safeguards policies including the IFC EHS noise guidelines. To measure noise exposure in the airport vicinity, EA used two noise indexes: Lwepcn a noise index based on the Perceived Noise Level which is presented in Chinese standard, and LAeq, a noise index based on the equivalent continuous sound level which is presented in EHS guidelines. The project will achieve the more stringent noise index to meet both requirements.
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46. Measures for noise management which have been taken and will be taken include: (a) Alternative analysis for airport sites, and aircraft flight path to avoid densely populated city areas. (b) Flight equipment used by the airlines will be in compliance with international standards. (c) Sound insulation of buildings that are exposed to aircraft noise above noise limits, based on further monitoring. Sound insulation measures may also be needed for all 563 households at five villages in the vicinity of the airport. RMB19.95 million (equivalent to USD3.16 million) has been reserved for sound insulation. (d) Restrict development of noise-sensitive buildings in the vicinity of the airport, approximately 3 km at each end of the runway, and 0.5 km on each side of the runway. If construction of noise-sensitive buildings in the restricted becomes unavoidable, these buildings will be equipped with adequate sound insulation.
47. Air Emission. Assessment was conducted on the air emission from airport related activities including combustion exhaust from aircraft during landing and takeoff and ground operation, from ground service vehicles, vapors from fuel storage and handling, and emissions from local ground vehicles servicing passenger and the airport. It is estimated that in 2020, aircrafts will discharge 1.02 tons of SO2, 19.83 tons of CO, 5.47 tons of NMHC, and 12.04 tons of NO2. The ground vehicles will discharge 7.07 tons of CO, 0.3 ton of NO2, and 0.7 ton of NMHC. Fugitive mission of NMHC from fuel storage area is estimated to be 1.38 tons/a. These emissions will not significant impact on the ambient air quality. Measures to prevent, minimize, and control air emissions include: (s) close monitoring and timely maintenance of equipment; and (b) selecting cleaner fuel, i.e., natural gas for heat generation system.
48. Stormwater. Stormwater runoff may include pollutants associated with leaks and spills of oil and fuels during airport operation, and fuel storage and handling activities. Shangrao falls within the sub-tropical humid monsoon climate zone where aircraft de-icing /anti-icing fluids will not be used. The airport design will divert and pre-treat stormwater drainage from areas of potential leaks and spills of fuels through use of oil/water separator, and contaminated water will be discharged to the wastewater treatment station in the airport.
49. Waste and Wastewater Management. Airport operations will generate nonhazardous solid waste (268 tons/a), sludge (20 tons/a), spent oil (0.5 tons/a), and wastewater (58m3/d). Solid waste and sludge will be sent to Shangrao municipal sanitary landfill for final disposal, and spent oil to a qualified company for treatment. Wastewater will be treated by a wastewater treatment station (10m3/h) to be installed at the airport.
50. Risk Management. Major environmental risks associated with the project are the fuel storage facilities and the gas filling station which may lead to fire accidents and fuel leakage. The project has developed an emergency preparedness and response plan to address accidents/risks which may be caused by the airport operation (e.g., fire, explosion, plane crash, and safety breaches). The emergency monitoring plan has been prepared for monitoring accidents in fuel storage area, and includes monitoring locations, items, frequency and reporting procedure. Regular drill will be conducted, and hazardous materials will be managed to prevent accidental releases, fire, or explosions, as described in Chinese
32 regulations and the General EHS Guidelines. The EMP also presents an outline for the health and safety plan for the airport operations, and proposes measures to protect workers health and safety.
51. Cumulative Impacts. The project will improve airline connectivity in northeastern Jiangxi Province, boost local economy development by increasing trade and job opportunities. The rural area surrounding the airport would gradually be changed into an economic development area. The airport will attract half million passengers to Shangrao each year, imposing some pressure on the city’s infrastructure. However, the total number of tourists into the city was approximately 20 million in 2010. The incremental tourist number will likely have not significant impact on local infrastructure service, for which Shangrao has already formulated a tourism development plan. Environment Management Plan and Environmental Management Framework
52. A detailed Environmental Management Plan (EMP) has been prepared to address all issues identified in the EIA. The EMP proposes mitigation measures, establishes an organizational structure, procedures, institutional responsibilities for implementation, provides a budget and source of financing for each activity, and includes environmental monitoring and capacity building program. An EMF has been prepared, setting out the guidelines and procedures to assess the environmental impacts associated with the airport access road and associated utility infrastructure. Based on the EMF, specific EMPs will be prepared after the precise sitting alignments for these facilities are determined. Activities subject to EMP and EMF are summarized as below:
53. Mitigation Measures. The EMP proposes adequate measures to mitigate adverse impacts and enhance positive impacts during design, construction and operation. Environmental aspects have been taken into account in the project design. Green airport design guidelines have been developed in the EMP. Environmental friendly design includes balancing excavation and back filling earthworks, minimizing interruption of the natural drainage system in design, reuse of wastewater, rainwater storage for landscaping, irrigation and flush toilets in the airport, and use of clean fuel for ground vehicles at the airport. Environmental specifications will be used to minimize construction related impacts. Mitigation measures for operation have been included in the EMP.
54. Institutional Arrangement. Environmental management during construction will involve the PMO, civil work contractors, and Environmental Supervision Engineers. During construction, the PMO will appoint a full-time staff to coordinate EMP implementation. Environmental supervisors will be responsible for daily environmental supervision and management. During operation, the Airport Company will be in charge of environmental management and environmental monitoring under the guidance and supervision of Shangrao EPB. All personnel of the PMO Environmental Office, environmental supervisors and construction workers, and monitoring personnel will receive environmental training.
55. Environmental Monitoring. An environmental monitoring plan has been developed for both the construction and operation phases, and incorporated into the EMP, which includes the monitoring location, monitoring parameters, methods, frequency and cost estimate. The PMO will be responsible for submitting the progress report on environmental management and for compiling the reports of environmental monitoring.
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56. Budget. In addition to the fund (RMB19.95 million) reserved for noise mitigation, other estimated cost for the environmental management is RMB42.49 million, covering mitigation measures and monitoring cost. Details of the cost estimate are presented in the EMP. Due Diligence
57. The EIA includes a due diligence review of the Shangrao Municipal Sanitary Landfill, Longteng Carbon Fuel Technology Company, and Shangrao Municipal Wastewater Treatment Plant which will receive either solid waste or wastewater generated by the project. The review confirms that the performance of these waste and wastewater treatment facilities is in compliance with relevant domestic requirements. Public Consultations and Information Disclosure
58. In accordance with Bank Safeguard policies and Chinese regulations, public consultations were conducted from January to September 2012, including public consultation meetings and questionnaire survey, with project affected persons (e.g. villagers) and other stakeholders (village associations, schools, local water resources bureau and local forestry bureau). Consultation on the EIA TOR was conducted in January 2012, and consultation on the draft EA documents in September 2012. Issues discussed during consultations included noise impacts, restoration of rural roads and local irrigation system. The opinions and concerns raised have been taken into account in the EA process and project design. The EA safeguard documents were locally disclosed at village associations on September 23, 2012 and at local websites on September 29, 2012 through announcements published on the local website and newspaper. The EA safeguard documents were sent to the InfoShop for disclosure on October 30, 2012. Resettlement Organization
59. The PMO will assume the overall responsibility for implementation of the resettlement program. It will work with the district and county government offices in this regard. These offices have competent and experienced staff. Their respective responsibilities and functions are detailed in the RAP. Additional training will be provided to project staff during project implementation.
60. The following were the guiding principles for developing the RAP/RPF for the project: (a) The original living standards of all affected people should be improved or at least be restored; (b) Resettlement plans, sites of new houses, standards and building areas should be determined after consultation with the affected people; (c) For all affected buildings, the compensation should be calculated on the basis of the current replacement cost without consideration of depreciation; (d) Compensation rates, location of new residential sites and areas should be formulated after consultation with the affected population; (e) All compensation funds should be paid before acquisition;
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(f) The function of interrupted rural roads and irrigation systems will be restored when needed; and (g) Special assistance will be provided to the vulnerable households identified during the detailed planning and implementation process.
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Annex 4 Operational Risk Assessment Framework (ORAF) China: Jiangxi Shangrao Sanqingshan Airport Project (P123729)
.
Project Stakeholder Risks Stakeholder Risk Rating Low Description: Risk Management: The support from national, provincial, and The airport development is in the 12th Five Year Plan, and has strong endorsement by all government parties. local governments, as well as from the private The private sector and community groups are fully behind the project as evidenced during consultation. Close sector and local communities may not be follow up with all stakeholders will be done during project implementation sustained because of changing priorities. Resp: Client Stage: Impleme Recurrent: Due Frequency: Status: In ntation Date: Progress Implementing Agency (IA) Risks (including Fiduciary Risks) Capacity Rating Substantial Description: Risk Management: (a) Inadequate capacity and limited experience During implementation, further training by Bank staff will continue. In addition, under the Capacity Building with World Bank, financial management, and Component, a Project Management Consultant will be hired to provide technical and managerial support to the safeguard policies and practices. Substantial PMO on all aspects of project management. Further, project supervision engineers will be hired to ensure capacity building has been provided during quality of works. project preparation by Bank’s procurement, financial management and safeguards Most of the national funding will come from NDRC and CAAC. As such SMG financial commitment is low specialists and can easily meet it.
Resp: Client Stage: Impleme Recurrent: Due Frequency: Status: In
ntation Date: Progress (b) Delays in project implementation and poor
36 quality works may occur because the low technical capacity of the local agencies directly involved in the project.
(c) Delays in counterpart funding may occur from the Shangrao Municipality Government Governance Rating Moderate Description: Risk Management: Uncertainty regarding the airport operational The project will finance a Management Consultant to support the PMO to put in place an operational model model after the construction is completed. before the airport opens. Resp: Client Stage: Impleme Recurrent: Due 31-Dec-2018 Frequency: Status: Not Yet ntation Date: Due Project Risks 3.1 Design Rating Moderate Description: Risk Management: The “Green airport” concept is not accepted or The Bank team will work with the PMO and government authorities to continue the environment and fully implemented because of high cost or lack economic benefits of a green airport design and ensure its implementation. of interest by authorities. Resp: Both Stage: Impleme Recurrent: Due Frequency: Status: In ntation Date: The PMO has engaged a design institutes and Progress an architect firm, who have already included the elements of a Green Airport concept in the preliminary engineering design of the airport. Social and Environmental Rating Moderate Description: Risk Management: The low capacity of the client might lead to EA, EMP and Resettlement Action Plan have been prepared by qualified consultant firms with assistance of project delays and possibly non-compliance the PMO and with advice from the Bank to ensure compliance with Bank safeguard policies. Necessary
37 with the Bank’s Safeguards policy. capacity building will be provided throughout the project implementation.
Bank will supervise the implementation of EA/EMP and RAP. Resp: Both Stage: Both Recurrent: Due Frequency: Status: Date: Program and Donor Rating Low Description: Risk Management: The project has already been approved and funding commitment has been secured. The airport is part of the national program for airport development, and is co-financed by Resp: Stage: Both Recurrent: Due Frequency: Status: CAAC and NDRC. They have already Date: committed funding for this project Delivery Monitoring and Sustainability Rating Moderate Description: Risk Management: The PMO is new to contract management and The project will hire a Project Management Consultant to help the PMO in project coordination, monitoring may not be able to monitor and report on and reporting. The project will also hire a management consultant to develop an operational model to progress. Also, once the operations start, the maximize operating and non-operating revenue. In addition, the SMG has ample fiscal space to provide initial airport may not have adequate financial subsidy if required revenue to support and SMG will need to Resp: Both Stage: Both Recurrent: Due Frequency: Status: provide initial subsidy. Date: Overall Risk Implementation Risk Rating: Moderate Description: The project risk is rated moderate in part because a number of activities have been carried out during project preparation to minimize risk. In addition, the above identified mitigation risks provide good risk management for implementation.
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Annex 5: Implementation Support Plan CHINA: Jiangxi Shangrao Sanqingshan Airport Project
Strategy and Approach for Implementation Support
61. The strategy for implementation support has been developed based on the nature of activities involved in the project and the commensurate risk profile in accordance with the ORAF. The key issues to be addressed during implementation are risks related to capacity of the PMO and green airport development. The Implementation Support Plan (ISP), as described below, will be a live document and will be reviewed regularly and revised as and when required during the implementation, at least on a half yearly basis.
62. Technical Support. The Bank will provide required technical support through sector specialist to finalize the technical aspects of the engineering and bidding documents. A key focus will be ensure green airport design is fully integrated in various stages of project design and construction through appropriate dialogue and implementation support with PMO and the consultants working with the PMO. The implementation support will be provided through at least two implementation support missions in a year and through continuous exchange of correspondence and regular communication. Frequent use of telecommunication and short interim visits conducted to maintain a close coordination among the Bank team and the project staff.
63. Procurement. Implementation support will include: (a) reviewing procurement documents and providing timely no objection; (b) providing detailed guidance on the Bank’s Procurement Guidelines to PMO staff; (c) monitoring procurement progress against the detailed Procurement Plan; and (d) identifying the capacity building/training needs of PMO staff on procurement processing and providing training if required. The support will be provided through regular interactions, half-yearly implementation support missions and thematic implementation support missions, if required.
64. Financial management. Implementation Support will review the project’s financial management system, including but not limited to, accounting, reporting and internal controls.
65. Environmental and Social Safeguards. The Bank safeguards specialists in the team will supervise various activities to ensure full compliance with the Bank’s operational policies / procedures and the agreed framework related to environment and social safeguards aspects. The implantation support will be provided through regular interactions, regular half- yearly implementation support missions and thematic review missions, if required and in full cooperation with the technical members in the Bank team.
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Implementation Support Plan
Table A5-1: Primary Focus of Implementation Support Time Focus Skills Needed Resource Partner Role Estimate First 12 Project design Technical 5-6 staff, Design, months TOR Safeguards one trip per procurement Procurement Financial management staff training and Procurement supervision
12-48 Procurement Technical (Construction and 5-6 staff, Procurement, months Project Operation arrangement ) Safeguards one trip per financial implementation Financial management staff management, Monitoring and Procurement implementation, supervision M&E
Table A5-2: Skills Mix Required Skills Needed Number of Staff Number Comments Weeks of Trips Airport Expert 1 staff members: 9 4 1 trip + 2 weeks per project year weeks + 1 extra week in the first year. Transport policy 2 staff member: 9 4 1 trip + 2 weeks per project year weeks + 1 extra week in the first year. Safeguards 1 staff member: 4 4 1 trip + 1 week per project year weeks Financial Management 1 staff member: 4 4 1 trip + 1 week per project year weeks Procurement 1 staff member: 4 4 weeks
66. Location of Staff Expertise. Team leadership, safeguards, financial management, and procurement contributions will be provided by the Bank’s country office-based staff. Airport expert will be based in Headquarters.
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Annex 6: Economic and Financial Analysis CHINA: Jiangxi Shangrao Sanqingshan Airport Project
ECONOMIC ANALYSIS
Air passengers – Demand Forecasting and Benefit Estimation
67. The economic benefits of this project will mainly come from the benefits of air passenger benefit since the connectivity to Shangrao will be enhanced.
68. Ridership of Shangrao Airport upon its opening will include the travelers who are now using Nanchang airport or other surrounding airport ( also called existing air passengers); those now traveling by train but will shift to air transport (train passengers); and those who are not travelling now but will travel by air using the Shangrao airport (induced demand).
69. In 2009, the passenger throughput of Nanchang airport was 3.93 million passengers. The passengers designated to Shangrao is calculated by distributing the total 3.93 million passengers to Shangrao, Nanchang, Jingdezheng and other six cities near Nanchang, by taking distance, population, wheather the city has an airport etc into consideration. Since Nanchang airport is a trunk airport, it has more destinations and more frequent services. Even with the opening of Shangrao airport, half of Shangrao passengers are assumed to stay with Nanchang airport. The benefit considers time and cost savings for both ground and in-flight trip. In addition, the scheduled delay is included because the Shangrao airport will have much lower frequency compared with the Nanchang airport. Then a value of time parameter is used to combine the time saving with cost saving. Table A6-1 summarizes the estimate of existing air passengers and their unit benefit. Table A6-1. Existing Air Passengers Assumed Travelers to Forecast proportion Benefit per Existing Air and from traffic for shift to Passenger in Passenger Shangrao in Shangrao Shangrao 2011 (RMB) 2009 airport in 2009 Airport Travelers currently use Nanchang 67389 0.5 33694 173.2 airport Travelers currently use other 33470 1 33470 250.515 surrounding airports14
70. The traffic weighted average user benefit is RMB211.7 for the existing air passengers from the above table. And the traffic from existing passengers is 67164 by adding up the distributed travelers from Nanchang and other airport.
14 There are four small airports near Shangrao, Jingdezhen, Quzhou, Wuyishan, and Huangshan. The number of passengers designated to Shangrao is calculated by distributing the traffic at each airport to Shangrao, using the abovementioned method, and then summarize for all four. 15 The benefit from surrounding smaller airports is larger than the Nanchang airport is because the schedule delay is much less. 41
71. Table A6-2 summarizes the estimate of train passengers who will shift to use Shangrao airport and their unit benefit. Table A6-3 summarizes the estimate of induced demand and their unit benefit. Table A6-2. Train Passengers Train passengers will shift to use Benefit per passenger in 2011(RMB) Shangrao airport (in 2009) 50000 105.816
Table A6-3. Induced Demand Induced demand (in 2009) Benefit per passenger in 2011 (RMB) 23433 105.8
72. The air passenger traffic and unit benefit from above three categories are summarized in the Table 4. Table A6-4. Summary of traffic and unit benefit Unit benefit in Passenger in 2009 2011(RMB) Existing air passenger 67164 211.7 Shift from rail 50000 105.8 Induced demand 23433 105.8 Traffic weighted average 156.4 unit benefit
73. Given the value of time is increasing over years, the unit benefit is increasing. Taking the growth of unit benefit and traffic into account, the total benefit in the life cycle from 2010 to 2034 is listed in the Table A6-5. Notice that the year 2012 to 2015 benefit are not realized because the airport will not be open until 2016. Table A6-5. Passenger Benefit Unit benefit Yea Annual passenger Passenger Total Benefit of the (RMB per r growth throughput year (million RMB) passenger)
2010 12% 157469 2011 12% 176365 144.7 25.5 2012 12% 196832 147.5 29.0 2013 12% 219675 150.4 33.0 2014 12% 245168 153.4 37.6 2015 12% 273620 156.5 42.8 2016 10% 301228 159.7 48.1 2017 10% 331622 163.0 54.0 2018 10% 365083 166.3 60.7 2019 10% 401919 169.8 68.2 2020 10% 442473 173.3 76.7
16 ½ rule is used here. The traffic weighted average benefit is 211.7 for the existing air passengers. Therefore, 105.8 is used for both train users and induced demand. 42
2021 9% 480415 176.9 85.0 2022 9% 521611 180.6 94.2 2023 9% 566339 184.3 104.4 2024 9% 614902 188.0 115.6 2025 9% 667630 191.7 128.0 2026 7% 714765 195.3 139.6 2027 7% 765227 199.0 152.3 2028 7% 819253 202.7 166.1 2029 7% 877092 206.4 181.0 2030 7% 939014 210.1 197.2 2031 7% 1005309 226.9 228.1 2032 7% 1076284 243.8 262.4 2033 7% 1152269 260.7 300.4 2034 7% 1233619 277.6 342.5
74. Operation Cost of the Airport: The operation cost of the project mainly comes from the following three aspects: (a) labor; (b) utility and (c) maintenance. Table A6-6 summarizes the operation cost of the airport. Table A6-6. Operation Cost Labor Utility Maintenance Total Year (million RMB) (million RMB) (million RMB) (million RMB) 2009 2010 2011 2012 2013 2014 2.05 1.5 1.28 4.83 2015 2.15 2.58 1.28 6.01 2016 2.26 1.65 1.28 5.19 2017 2.38 1.74 1.28 5.4 2018 2.49 1.82 1.28 5.59 2019 2.62 1.91 1.28 5.81 2020 2.75 2.01 1.28 6.04 2021 2.75 2.01 1.28 6.04 2022 2.75 2.01 1.28 6.04 2023 2.75 2.01 1.28 6.04 2024 2.75 2.01 1.28 6.04 2025 2.75 2.01 1.28 6.04 2026 2.75 2.01 1.28 6.04 2027 2.75 2.01 1.28 6.04 2028 2.75 2.01 1.28 6.04 2029 2.75 2.01 1.28 6.04 2030 2.75 2.01 1.28 6.04 2031 2.75 2.01 1.28 6.04
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2032 2.75 2.01 1.28 6.04 2033 2.75 2.01 1.28 6.04 2034 2.75 2.01 1.28 6.04
75. Economic Indicators for the Project: The total investment of this project is 662.3 million RMB, in which 618 million RMB is for airport infrastructure, which is the subject of this analysis. The economic costs are calculated by reducing taxes and other transferable (roughly 15% of the financial cost), which comes RMB 525 million. Table A6-7 summarizes the benefit and cost flow for Shangrao Airport which indicates the Economic Internal Return Rate (EIRR) is 17.13% and the Net Present Value (NPV) at 12 percent discount rate is 172.5 million RMB. Table A6-7. Benefit over 20 years Passenger Capital cost Operation cost Grand Year benefit (million RMB) (million RMB) (million RMB) (million RMB) 2013 -100 2014 -100 -100.0 2012 -225 -100.0 2016 -5.2 48.1 -225.0 2017 -5.4 54.0 42.9 2018 -5.6 60.7 48.6 2019 -5.8 68.2 55.1 2020 -6.0 76.7 62.4 2021 -6.0 85.0 70.6 2022 -6.0 94.2 79.0 2023 -6.0 104.4 88.2 2024 -6.0 115.6 98.3 2025 -80.0 128.0 109.5 2026 -6.0 139.6 48.0 2027 -6.0 152.3 133.6 2028 -6.0 166.1 146.2 2029 -6.0 181.0 160.0 2030 -6.0 197.2 175.0 2031 -6.0 228.1 191.2 2032 -6.0 262.4 222.1 2033 -6.0 300.4 256.4 2034 250 -6.0 342.5 294.4 IRR 17.13% NPV 172.5
76. Sensitivity Analysis of the Project. The viability of several scenarios with respect to increase of cost and benefits has been assessed and the results are presented in Table A6-8. As indicated in the table, the EIRR will be above 12% for all the scenarios.
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Table A6-8. Sensitivity Analysis NPV Scenarios EIRR (million RMB) Base Scenario 172.5 17.13% 20% cost increase 164.1 16.89% 20% benefit decrease 74.5 14.36% 20% cost and 20% benefit increase 66.0 14.10%
FINANCIAL ANALYSIS
Airport Operating Income and Tax Calculation
77. The capital cost for the airport is borne by central government grants and the IBRD loan (which will be repaid by the Shangroa Municipal Government). Therefore, the Shangrao airport will not be responsible for the capital cost and is not expected to repay the debt. In any cases, given the small nature of the airport, it is not expected to have enough revenue to pay capital cost. Therefore, the financial analysis focuses on whether the Shangrao Airport will have adequate revenue to cover its operation cost.
78. According to “Implementation of Civil Airport Fees Reform” (issued by Civil Aviation [2007] No. 159), the airport operating income will mainly include aeronautical business revenues and non-aeronautical business revenues. Aeronautical business revenues include taking off and landing fees, parking fees, passenger service fees, security fees and boarding bridge fees. Non-aeronautical business revenues include grounding service fee, venue rental fee in the terminal building, agent ticketing, extension services, and other revenues. (a) Taking off and landing fee, parking fee, passenger service fee, security fee, and boarding bridge fee willbe calculated in accordance with the provisions of “Implementation of Civil Airport Fees Reform”. The boarding bridge feewillbe computed based on the assumption that sixty percent of the incoming flights will use the boarding bridge.
(b) Ground service fees and venue rental fee in the terminal building will be calculated in accordance with the relevant provisions of Implementation of Civil Airport Fees Reform.
(c) Revenuesfrom agent ticketing will be estimated atat twenty percent of the airport departure tickets.
(d) Revenues from other business mainly comptues advertising and is estimated at RMB450,000 for the first year withan annual growth of five percent.
(e) For the airport authorities, tax that can be directly deducted from the operating income include business tax (which accounts for three percent of the annual operating income), urban construction and maintenance fees (which accounts for five percent of the business tax), and extra charges of educational fees (which accounts for three percent of the business tax).
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Estimation of Total cost
79. The total cost includes depreciation fees, amortization fees, interest expenses, management fees, and operating costs.
80. The operating cost consists of wages and welfare costs, fuel, power, water and electricity fees, maintenance fees, and other operating costs.
(a) Wages and welfare costs: Wages is estimated by 40,000 RMB per capital one year, and welfare is calculated as fourteen percent of the wages; then the annual increase shall be of five percent, including the growth of wages and personnel.
(b) Fuel power water and electricity fees shall be estimated according to the actual situation of airports of the same scale.
(c) Maintenance fees shall be calculated at a certain percentage of the fixed assets, among which the buildings are 0.1% and the equipments are 1%.
(d) Depreciation Charge: It shall be depreciated according to the average depreciation period. The house and the building shall be depreciated for thirty five years, while the equipments shall be depreciated for ten years.
(e) Amortization Charge: Intangible assets shall be amortized over ten years.
Financial Analysis and Net Income
81. The revenue and expenditure, together with the net income stream are presented in Table A6-10. The viability of the scenarios without depreciation/amortization has been assessed and the result is presented in Table A6-9.
Table A6-9. Net Income Analysis NPV Scenarios (million RMB) Base Scenario -60.25 Without depreciation and amortization 209.50
82. Revenues of the majority of small airports in China similar to Shangrao in airport in scale cannot cover operation costs and capital costs. The Shangrao airport is not expected to cover capital cost, the government will take responsibility for renewing and compensation for the fixed and intangible assets of the airport. The Net Present Value without depreciation and amortization at discount rate of 8% is RMB209.50million (presented in Table A6-9) which is robust.
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Table A6-10 Estimated Stream of Revenue and Expenditure (Million RMB)
Year Operation period No. Project 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036
1 Revenue 17.43 20.94 23.47 26.33 29.56 29.56 29.35 29.35 29.35 29.35 29.35 28.93 28.93 28.93 28.93 28.93 28.93 28.93 28.93 28.93 205.94
1.1 Operating income 12.89 16.04 18.15 20.54 23.24 23.24 23.03 23.03 23.03 23.03 23.03 22.61 22.61 22.61 22.61 22.61 22.61 22.61 22.61 22.61 22.61
1.2 Subsidies 4.54 4.90 5.32 5.79 6.32 6.32 6.32 6.32 6.32 6.32 6.32 6.32 6.32 6.32 6.32 6.32 6.32 6.32 6.32 6.32 6.32 Recovery of the 1.3 residual value of 174.39 fixed assets Recovery of 1.4 2.62 liquidity 2 Expenditure 37.46 35.18 35.55 35.95 36.37 36.37 36.37 36.37 36.37 36.37 36.37 36.37 36.37 36.37 36.37 36.37 36.37 36.37 36.37 36.37 36.37
2.1 Liquidity 2.62
2.2 Operation costs 7.48 7.77 8.08 8.40 8.74 8.74 8.74 8.74 8.74 8.74 8.74 8.74 8.74 8.74 8.74 8.74 8.74 8.74 8.74 8.74 8.74 Business tax and 2.3 0.43 0.48 0.54 0.62 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 surcharges Depreciation 2.4 24.09 24.09 24.09 24.09 24.09 24.09 24.09 24.09 24.09 24.09 24.09 24.09 24.09 24.09 24.09 24.09 24.09 24.09 24.09 24.09 24.09 charges Amortization 2.5 2.84 2.84 2.84 2.84 2.84 2.84 2.84 2.84 2.84 2.84 2.84 2.84 2.84 2.84 2.84 2.84 2.84 2.84 2.84 2.84 2.84 charges 3 Net Income -20.03 -14.24 -12.08 -9.62 -6.81 -6.81 -7.02 -7.02 -7.02 -7.02 -7.02 -7.44 -7.44 -7.44 -7.44 -7.44 -7.44 -7.44 -7.44 -7.44 169.57 Net Income (without 4 6.90 12.69 14.85 17.31 20.12 20.12 19.91 19.91 19.91 19.91 19.91 19.49 19.49 19.49 19.49 19.49 19.49 19.49 19.49 19.49 196.50 depreciation and amortization)
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IBRD 39798 CHINA ANHUI HUBEI Pengze JIANGXI SHANGRAO SANQINGSHAN Hukou Ruichang Jiujiang Jiujiang AIRPORT PROJECT Xingxi Fuliang Dean Duchang JingdezhenWuyuan Wuning Poyang Hu ZHEJIANG Xiushui Leping Yongxiu R Dexing Boyang oa Jing'an He Xinjian Yugan Yushan HUNAN Fengxin Wannian Tonggu NANCHANG X in Shangrao J Hengfeng Gaoan ia Guangfeng Yifeng Jinxian n Yiyang g Shanggao Dongxiang Guixi Qianshan Area of Wanzai Fengcheng Yujiang Yingtan main map
Linchuan g Zhangshu Shangli Fenyi n i a J Jinxi
n Xinyu a Yichun G Xin'gan Chongren Zixi Luxi Pingxiang Xiajiang Nancheng Yinhuang Anfu Lean Lichuan
Yongfeng
Nanteng e
Jishui H Lianhua
u Ji'an Ji'an F To Nanping, Fuzhou Yongxin Guangchang Ninggang FUJIAN Jinggangshan Wan'an Ningdu SHANGRAO HUNAN Suichuan Xingguo Shicheng 0 25 50 75 Yudu KILOMETERS Ganzhou Ruijin To Longyan, Shangyou Ganxian Xiamen ng and ia Chongyi Zhangzhou J Nankang in NATIONAL HIGHWAYS X Huichang EXPRESSWAYS Xinfeng RAILROADS Anyuan SEAT OF COUNTY GOVERNMENT Longnan Xunwu PREFECTURE CAPITALS Dingnan PROVINCE CAPITAL Quannan GUANGDONG PREFECTURE BOUNDARIES PROVINCE BOUNDARIES To Guangzhou, Heyuan To Meizhou, Shantou and Shenzhen and Chaozhou
RUSSIAN FEDERATION KAZAKHSTAN
HEILONGJIANG Harbin MONGOLIA KYRGYZ Changchun REPUBLIC Urumqi JILIN TA JIKI Shenyang STA DEM. Sea N LIAONING PEOPLE'S of XINJIANG AFG. NEI MONGOLHohhot BEIJING BEIJING REP. OF Japan Tianjin KOREA TIANJIN Yinchuan Shijiazhuang HEBEI REP. OF Taiyuan KOREA
A Jinan I Xining X SHANXI PAKISTAN G SHANDONG N QINGHAI I Lanzhou N Zhengzhou JAPAN GANSU JIANGSU XIZANG Xi'an HENAN 0 300 Kilometers SHAANXI ANHUI Hefei Nanjing Shanghai HUBEI SHANGHAI 0 300 Miles SICHUAN Hangzhou NEPAL Lhasa Chengdu Wuhan PROJECT AIRPORT INDIA ZHEJIANG East Chongqing Nanchang China Shangrao PROJECT ACCESS ROADS BHUTAN CHONGQING Changsha Sea HUNAN JIANGXI GUIZHOU Fuzhou LOCAL ROADS Guiyang FUJIAN PROJECT CITY 0 1 2 BANGLADESH Kunming TAIWAN PROVINCIAL ROADS PROVINCE CAPITALS YUNNAN GUANGXI GUANGDONG GSDPM KILOMETERS Guangzhou Map Design Unit Nanning HONG KONG NATIONAL HIGHWAYS NATIONAL CAPITAL MACAO VIETNAM This map was produced by the Map Design Unit of The World Bank. LAO PROVINCE BOUNDARIES MYANMAR EXPRESSWAYS The boundaries, colors, denominations and any other information PEOPLE'S Haikou shown on this map do not imply, on the part of The World Bank INTERNATIONAL BOUNDARIES DEM. HAINAN PHILIPPINES RAILROADS Group, any judgment on the legal status of any territory, or any REP. endorsement or acceptance of such boundaries. THAILAND FEBRUARY 2013