Document of The World Bank Public Disclosure Authorized Report No: 20153-CHA
Public Disclosure Authorized PROJECT APPRAISAL DOCUMENT
ON A
PROPOSED
IN THE AMOUNT OF US$200 MILLION
TO THE
PEOPLE'S REPUBLIC OF CHINA
Public Disclosure Authorized FORA
CHONGQING URBAN ENVIRONMENT PROJECT
May 22, 2000
Urban Development Sector Unit China Country Management Unit East Asia and Pacific Region Public Disclosure Authorized CURRENCY EQUIVALENTS
(Exchange Rate Effective May 1, 2000)
Currency Unit = Yuan (Y) Y 1.00 = US$ 0.12 US$ 1.00 = Y 8.3
FISCAL YEAR January 1 - December 31
ABBREVIATIONSAND ACRONYMS CAS Country Assistance Strategy CCC Chongqing Construction Commission CEPB Chongqing Environmental Protection Bureau CFB Chongqing Finance Bureau CM Chongqmg Municipality CMCB Chongqmg Municipal Cultural Bureau CMDC Chongqmg Municipal Drainage Corporation CMG Chongqing Municipal GovernTment CMMB Chongqing Municipal Management Bureau CNAO China National Audit Office CPMO Chongqing Project Management Office CSWMC Chongqing Solid Waste Management Company CUEP Chongqing Urban Environment Project DRA Design Review & Advisory (Consultancy) EA Environmental Assessment EMP Environmental Management Plan FMS Financial Management System FDC Fuling Drainage Company GDP Gross Domestic Product GPN General Procurement Notice ICB International Competitive Bidding IPCAP Industrial Pollution Control Action Plan IST Institutional Strengthening & Training MBD Model Bidding Documents MOC Ministry of Construction MOF Ministry of Finance NCB National Competitive Bidding OED Operations Evaluation Department PAP Project-Affected Persons PMO Project Management Office RAP Resettlement Action Plan REMAP Resettlement and Ethnic Minorities Action Plan SEPA State Environmental Protection Agency SMEDI Shanghai Municipal Engineering Design Institute SOE Statement of Expenditure SWSDC Shizhu City Construction Group Water Supply and Drainage Company TGP Three Gorges Project UMIS Urban Management Information System WTP Willingness to Pay WWSC Wanzhou Water Supply Company
Vice President: Jemal-ud-din Kassum, EAPVP Country Director: Yukon Huang, EACCF Sector Director: Keshav Varma, EASUR Task Team Leader: Geoffrey Read, EASUR CHINA CHONGQING URBAN ENVIRONMENT PROJECT
CONTENTS
A. Project Development Objective Page
1. Project development objective 2 2. Key performance indicators 2
B. Strategic Context
1. Sector-related Country Assistance Strategy (CAS) goal supported by the project 2 2. Main sector issues and Government strategy 2 3. Sector issues to be addressed by the project and strategic choices 4
C. Project Description Summary
1. Project components 5 2. Key policy and institutional reforms supported by the project 6 3. Benefits and target population 6 4. Institutional and implementation arrangements 7
D. Project Rationale
1. Project alternatives considered and reasons for rejection 8 2. Major related projects financed by the Bank and other development agencies 9 3. Lessons learned and reflected in proposed project design 11 4. Indications of borrower commitment and ownership 12 5. Value added of Bank support in this project 12
E. Summary Project Analysis
1. Economic 12 2. Financial 14 3. Technical 15 4. Institutional 15 5. Environment 16 6. Social 17 7. Safeguard Policies 19
F. Sustainability and Risks
1. Sustainability 20 2. Critical risks 20 3. Possible controversial aspects 20 G. Main Conditions
1. Effectiveness Condition 21 2. Other 21
H. Readiness for Implementation 22
I. Compliance with Bank Policies 23
Annexes
Annex 1: Project Design Summary 24 Annex 2: Project Description 26 Annex 3: Estimated Project Costs 32 Annex 4: Cost-Effectiveness Analysis Summary 41 Annex 5: Financial Summary 50 Annex 6: Procurement and Disbursement Arrangements 55 Annex 7: Project Processing Schedule 68 Annex 8: Documents in the Project File 69 Annex 9: Statement of Loans and Credits 72 Annex 10: Country at a Glance 74 Annex 11: Project Implementation Schedule 79 Annex 12: Environmental Assessment and Mitigation Measures Summary 80 Annex 13: Resettlement 95 Annex 14: Project Financial Management System 97
MAP(S) 30736 CHINA CHONGQING URBAN ENVIRONMENTPROJECT Project Appraisal Document
East Asia and Pacific Region EASUR Date: May 22, 2000 Team Leader: Geoffrey Read Country Manager/Director: Yukon Huang Sector Manager/Director: Keshav Varma Project ID: P049436 Sector(s): US -Urban Environment Lending Instrument: Specific Investment Loan (SIL) Theme(s): Urban Poverty Targeted Intervention: N ProjectFinancing Data LiLoan Li Credit Ol Grant El Guarantee Li Other(Specify)
For LoanslCredits/Others: Amount(US$m): 200.0 ProposedTerms: Variable Spread & Rate Single Currency Loan (VSCL) Graceperiod (years): 5 Years to maturity:20 Commitmentfee: 0.75% Frontend fee on Bank loan: 1.00% Finanching;Plan.- Source Local Foregn Toal- GOVERNMENT 306.80 29.10 335.90 IBRD 34.70 165.30 200.00 Total: 341.50 194.40 535.90 Borrower:PEOPLE'S REPUBLIC OF CHINA Responsibleagency: CHONGQING M7UNICIPALGOVERNMENT through the Chongqing Planning Commission Address: 248 Renmin Road, Chongqing, 400015, People's Republic of China Contact Person: Mr. Gan Yuping, Deputy Mayor, Chongqing Municipal Government Tel: 011 86 23 6387 7677 Fax: 011 86 23 6387 7822 Email: [email protected]
Estimateddisbursements (Bank FY/US$M): y.,.,. ., 1Y''" 2001A ~~~002 200~3 2004 20520-0 007 Annual 11.0 18.9 37.0 55.8 48.3 18.4 10.6 Cumulative 11.0 29.9 66.9 122.7 171.0 189.4 200.0 Projectimplementation period: April 2000 - December 2005 Expectedeffectiveness date: 10/01/2000 Expectedclosing date: 12/31/2006 OCS PAD Fovv Rev. Mad>, 200) A. Project Development Objective
1. Projectdevelopment objective: (see Annex 1) The developmentobjective of the proposedChongqing Urban Environment Project (CUEP) is to providea safe environmentalsetting for the sustainablelong-term economic growth of urban areas in Chongqing Municipality(CM). The project would support the Municipalityin implementingthe first phase of a long-termurban environmental improvement program to recoverfrom past environmentaldegradation of its water and land resources,provide an adequatesupply of safe water to its growingurban population and economy,and maintainwater qualityat levels that are compatiblewith the needs of the widerYangtze RiverBasin.
Progresstoward this objectivewould be measuredin terms of: (a) reductionof pollutionfrom the urban sectorthrough selective high-impact wastewater and solidwaste management improvements; (b) expansion of capacityfor supplyingsafe water in urbanareas; (c) enhancedcapacity for region-widewater quality monitoring;(d) improvedadministration, planning and managementof the existingbuilt environment;and (e) strengthenedfinancial viability and institutionalautonomy of municipalservice providers.
2. Key performanceindicators: (see Annex 1) Key performanceindicators would includequantified targets for reduced water pollutionfrom the urban areas into rivers,reduced water pollutionfrom the industrialsector, expanded supply of safe waterto meet urbandemand, increase in volumeand servicearea of solidwaste collected and disposedof, reducedlevel of subsidiesfor investmentsin urban environmnentalinfrastructure, and improvedawareness, management and controlin urbanplanning and environmentalprotection.
B. Strategic Context 1. Sector-relatedCountry Assistance Strategy (CAS)goal supported by the project: (seeAnnex 1) Documentnumber: 16321-CHA Dateof latestCAS discussion: 03/18/97 The project would support directlytwo of the five prioritiesexpressed in the most recent CAS: the safeguardingof the envirorunentand the reductionof infrastructurebottlenecks. Specifically, it would strengthenwater qualitymanagement capability and expandthe capacityof urban environmentalservices. The projectwould also supportthe use of tariffsto financeenvironment-related public services,and the Bank and China's growing focus on river basin pollutioncontrol. Discussionswith the central and municipalgovernments have laid the foundationfor long-termBank involvementin strengtheningthese services,with the proposedproject acting as the firststep in this process.
2. Mainsector issues and Governmentstrategy: SectorIssues: There are three major issuesfacing Chongqingwith regard to the urban enviromnent:(a) enviromnentaldegradation, (b) financialweakness of the municipalservice providers; and (c) inadequate frameworkfor waterresource management.
Chongqing'seconomic growth, in terms of population,industry, and agriculturalproduction, has come at the cost of increasedpollution of air, water, and land resources.Within China, Chongqingranks worst among23 large cities in air qualityin terms of concentrationsof sulfur dioxide and eighth for levels of suspendedparticulates (TSP); ChongqingCity is the largest source of organic water pollution in the YangtzeRiver Basin upstreamof the Three GorgesProject (TGP).The impacton water qualityin local rivers, however,has been uneven.Preliminary river modelingindicates that so far the YangtzeRiver has
-2 - been able to absorb urban, agricultural, and industrial pollution loads while maintaining acceptable water quality, due to its high flow and large assimilative capacity. However, pollution has severely deteriorated the water quality in its major tributaries, the Jialing and Wu. Health impacts due to the poor water quality in the Jialing and Wu have been substantial:intestinal infectious diseases such as hepatitis A and dysentery have incidence rates some 50 percent higher than national average, and numbers of E.coli bacteria are very high in some water sources, particularly the Jialing in urban Chongqing.
The completion of the TGP, some 600 kilometers (km) downstream of Chongqing City, will reduce the velocity of the Yangtze River, increase its water depth, and alter the flow regime. From a river basin perspective, Chongqing needs to be concerned with maintaining a level of water quality that will avoid eutrophication of the future reservoir. From a local perspective, Chongqing plans to ensure that its supply of safe water is not endangered by deteriorating surface water quality, in particular near water intakes, and the municipality proposes to adjust its urban environmentalinfrastructure to the heightened water level; two of Wanzhou's water supply plants would be submerged, parts of the sewer system and wastewater treatment plants would be flooded, and open solid waste dumpsites located near the river washed out. The proposed project is not involved in the TGP in any way.
Urban water supply has for the most part been adequate, but occasional localized shortages are likely to become increasingly severe, largely due to the limited capacity of the distribution system. Wastewater collection is, however, limited. Expansion of water and wastewater management capacity is hampered by the weak financial situation of the service providers, which are typically water supply companies and government departments for drainage and solid waste management. These entities find themselves in a transition phase where the traditional government subsidies have been reduced but the tariffs for municipal services do not yet cover the full cost of operation and investment. The municipality now encourages the creation of financially autonomous municipal companies, but such companies tend to lose money due to weak financial and operational management and relatively high per capita water demand, which in part is the result of low tariffs that do not induce efficient water use.
Government Strategy: To address the growing need for municipal services, the Chongqing Municipal Government (CMG) plans to curb pollution from urban and industrial sources and to expand and improve municipal water supply systems. Ambitious pollution control targets have been set for the year 2000, including a cap on the total amount of heavy metals in industrial wastewater at 1995 levels, and the improvement of surface water quality to meet national standards. Some 25 percent of domestic and about 50 percent of industrial wastewater discharges would be collected and treated in the first phase, far more than the present levels of less than 5 percent. To reach these targets, the municipality must tighten the enforcement of existing standards, in particular for industrial pollution control; expand the capacity of wastewater collection and treatment systems; and improve solid waste management. Water supply plans include the remodeling of existing systems and construction of new systems to provide water to urban residents. In order to finance the expansion of urban environmental infrastructure, CMG has created financially autonomous wastewater companies. Given shrinking public investment budgets and subsidies, these companies would, from now on, rely increasingly on user charges to finance their operational costs and debt service requirements.The already established financially autonomous water supply companieswould, through tariffs, finance their operational and debt service costs. These cost recovery objectives are consistent with central and provincial/municipal government objectives for utility companies and are supported by the Bank. Solid waste managementservices would be financed increasingly from user fees. The high cost of investment in urban environmental infrastructure calls for integrated water resource management. It is necessary to identify cost-effective solutions that would address water supply and
- 3- wastewater management simultaneously, and take into account the water quality needs of the entire river basin. To reach this goal, CMG must overcome the current institutional fragmentation in water resource management and build management support systems for forward-looking, long-term planning, making effective use of the large amount of data periodically generated by various agencies but not yet used in long-rangeplanning.
3. Sector issues to be addressedby the project and strategic choices: Environment and WastewaterManagement: The project would support CMG in implementingits water quality protection and environmentalrehabilitation strategy. Given the consistently high water quality of the Yangtze River and its large assimilativecapacity, efforts would focus on the Jialing River Basin.
During project preparation, it was important to determine the appropriate level of wastewater treatment. The initial government proposals, involving a high degree of treatment to only a minor proportion of wastewater flows, were too costly and did not achieve immediate-term water quality improvements commensurate with the level of expenditure. The project would assist in planning the most cost-effective long-term solution. The construction of link sewers and connections would be an integral part of the project, to ensure wastewater interception from water supply systems, and service level coverage. Treatment and disposal strategies would initially make use of the assimilative capacity of the Yangtze River, together with a least-cost economic analysis to determine longer-termtreatment proposals.
Industrial Pollution Control: There is also substantial pollution from industry, particularly in the Jialing River Basin. Without a significant effort to control industrial wastewater pollution, expected environmental benefits from municipal investmentswould be marginal. CMG has agreed to address this issue through the implementationof an Industrial Pollution Control Action Plan (IPCAP).
The IPCAP would reduce pollution loads discharged from the key polluting sectors: fertilizer, pulp and paper, food, chemicals, steel and mining, by means of a program of investments in wastewater treatment and clean technology, covering process improvementsand materials substitution. In the case of pulp/paper production, the IPCAP would adopt a sector-wide approach based on restructuring and rationalization to ensure affordability of pollution control and sustainability for the sector. The initial phase of the IPCAP would involve local investments at 16 large polluting enterprises in the fertilizer, chemicals, paper and steel sectors.
Water Supply: The project would support the expansion of water supply in Nanbin Town in Shizhu County and Wanzhou City. In additionto remodelingand building new capacity, the project would support demand management, in particular through increased tariffs. Current national and provincial/municipal development plans are based on an increase of water consumption from about 150 liters per capita per day (lcd) to about 210 lcd in the year 2000. Taking into consideration the large investment requirements for both water and wastewater infrastructure, this unit water demand appears high compared to other countries. The project investments would enable the towns to meet demand within expanding service areas through about 2010 while at the same time providing demand managementthrough the tariff structure.
Municipal Solid Waste Management:The project would support Chongqing city proposals to increase service coverage by about 16 percent, enhance operational efficiency, and provide for the environmentally safe disposal of municipal solid waste. Chongqing would also increase collection and landfill fees, aiming to recover a major portion of the service operating costs. The nightsoil management system would also be improved.
-4 - Region-wideWater Resource Management:CMG lacks analytic tools and management support systems to integrate the various data sources available on water quality and quantity. The project would support the development of urban management information systems (UMIS) for the government and for utilities to project demand for infrastructureand services, assess their impact on the environment, and monitor Wends. CMG would have the opportunity to link with a similar system currently under development with Bank assistance in neighboring Sichuan Province, allowing both governments to undertake more effective river basin-wide planning. C. ProjectDescription Summary 1. Project components (see Annex 2 for a detailed description and Annex 3 for a detailed cost breakdown):
Indicative %o0n- -Component Sector Cots %- . fna .if - Ba£k- u Totag I...... f.... Chongqing City Solid Waste Pollution Control 58.20 10.9 26.20 13.1 / Waste Management Chongqing City Wastewater PollutionControl 369.80 69.0 134.30 67.2 / Waste Management Fuling City Wastewater Pollution Control 26.30 4.9 9.30 4.7 / Waste Management Wanzhou City Water Supply Urban Water 18.90 3.5 7.60 3.8 Supply Nanbin Town, Shizhu County Water Urban Water 6.20 1.2 2.00 1.0 Supply Supply EnvironmentalWater Quality Natural 6.40 1.2 3.60 1.8 Monitoring Resources Management Urban ManagementInformation Urban 3.90 0.7 3.70 1.9 Systems Management EnvironmentalRehabilitation and Urban 4.90 0.9 0.90 0.5 Reconstruction Environment Institutional Strengtheningand Institutional 12.20 2.3 10.40 5.2 Training Development Total Project Costs 506.80 94.6 198.00 99.0 Interest during construction 27.10 5.1 0.00 0.0 Front-end fee 2.00 0.4 2.00 1.0 Total FinancingRequired 535.90 100.0 200.00 100.0
Note: Errors due to rounding.
-5- 2. Key policy and institutional reformssupported by the project: The policy and institutional reforms would concentrate on: (a) utility enterprise operational efficiency improvements; (b) resource mobilization and cost recovery measures; (c) underpinning of long-term financial and economic sustainability; and (d) industrial pollution control reduction through a focused industrial pollution control time-bound action plan, principally in connection with fertilizer, chemicals, paper and steel. The institutional strengthening and training (IST) component would enhance policies and operational experience in environmental protection and water, wastewater and municipal solid waste management. Support for these initiativeshas been grouped into a number of main composite packages for the various executing agencies, covering institutional development, financial management improvement, construction supervision and training. The component would also support municipal and sector agencies, master planning, future project preparationand other programs of assistance to be defined.
3. Benefits and target population: Benefits: The project would help CMG to put in place the policies, institutions, and infrastructure to sustain environmental quality and improve urban services in a period of strong growth. The proposed project would generate benefits in terms of improvements in environmental quality, health, municipal services and institutionalcapacity:
* Environmental Benefits: improved ambient water quality in rivers currently at risk, in particular the Jialing River, through reduced pollution loads from urban wastewater, municipal solid waste and industrial discharges; - Health Benefits: reduced risk of water pollution-relateddiseases as a result of improved water supply and wastewater systems and reduced surface water pollution near drinking water intakes; - Improved Municipal Services: expanded coverage of water distribution, wastewater collection and disposal, and solid waste disposal services for the urban population of the cities of Chongqing, Fuling, Wanzhou and the town of Nanbin; * Institutional Reforms: strengthened financial and management autonomy enabling utilities to sustain and expand the provision of essential urban services for a growing population. Support for institutional development to strengthen the long-term sustainability of the organizations and of the physical investments.
Target Population:The project targets the urban population of Chongqing Municipality (CM). Originally part of Sichuan Province, Chongqing was promoted to provincial rank in March 1997, giving it a status similar to the municipalities of Beijing, Shanghai, and Tianjin. CM is now the world's largest single metropolitan area, with nearly 35 million people, including 6 million urban residents. Chongqing City proper, located at the confluence of the Yangtze and Jialing Rivers, is home to 2.5 million people, followed by Wanzhou with 0.3 million, and Fuling with 0.2 million. The urban population in these three cities is expected to reach 3.3 million by 2010. The population of Nanbin Town of Shizhu County in Qianjiang DevelopmentZone is currently 30,000, and is expected to rise to about 57,000 by 2010.
Chongqing has become the largest economic center in Western China, growing at approximately 10 percent a year between 1980 and 1994. Between 1987 and 1992 the central govermment'spolicy of providing incentives for growth in coastal areas left inland cities behind, and Chongqing's per capita income has lagged 30-40 percent behind other major cities. With its recent promotion in status, Chongqing is now poised to catch up. Its location at the confluence of the Yangtze and the Jialing Rivers has made it a commercial hub for shipping; it also has a diverse industrial base that includes coal, iron, petroleum refning, metallurgical, chemical and petrochemical operations. The development of light industry and
-6 - manufacturing (automobiles,motorcycles, electronics, food processing, cosmetics) indicates an attempt to move toward higher-end production. Chongqing now forms part of an emerging urban industrial corridor that stretches northwest to Chengdu City in Sichuan Province, and is increasingly affected by construction of the Three Gorges Project and related resettlement and infrastructure investments to the northeast. The number of migrant workers, currently estimated informally at about 20 percent of the registered population, is likely to increaseand to put additional demand on urban environmentalinfrastructure.
4. Institutionaland implementationarrangements: A Leading Group, headed by a Deputy Mayor, was formed in 1998 to guide fonnulation and give policy direction for project preparation and, subsequently, project implementation. The Group designated the Chongqing Planning Commission as the agency responsible for managing the project. The Commission organized and staffed a Chongqing Municipal Project Management Office (CPMO) to prepare and execute the project. CPMO's responsibilitiesinclude: (a) overall project coordination, management and monitoring; (b) annual budget preparation; (c) project-wide quality assurance; (d) progress reporting to CMG and the Bank, including cost management, project impact and environmental improvement assessment; (e) interagency coordination and procurement support; and (f) training facilitation. The participating cities (Chongqing, Fuling and Wanzhou) and Nanbin Town have also established and staffed project management offices. The personnel skill mix of the CPMO and city project management offices would be adjusted from time to time to reflect the needs of the various phases of the project, including completion of preparation and implementation.
The water supply components of Nanbin and Wanzhou would be implemented by existing financially autonomous water supply companies. The wastewater components of Chongqing and Fuling would be implementedby the cities' recently created financiallyautonomous wastewater companies. The Chongqing solid waste management component would be implemented by the Chongqing Solid Waste Management Company Limited (CSWMC). The environmental water quality monitoring component would be implemented by CMG through the Chongqing Environmental Protection Bureau (CEPB), including the Chongqing Environmental Monitoring Research Institute. The urban management information system (UMIS) component would be managed by the Chongqing Construction Commission (CCC), in affiliation with CEPB. The environmentalprotection and rehabilitation component would be implemented by CMG through the Chongqing Municipal Cultural Bureau (CMCB), in collaboration with to-be-selected district governments.
The China National Technical Import & Export Corporation and the China National Instruments Import & Export Corporationwould be retained as the procurement agencies for all aspects of civil and electrical and mechanical works requiring bidding through international competitive bidding (ICB) procedures. Construction supervision services would be provided by an international firm using joint international/nationalsupervision teams.
Onlending Arrangements:The proposed loan of $200 million would be made to the People's Republic of China. The loan would be for 20 years, including 5 years of grace, at the Bank's standard interest rate for LIBOR-based US dollar single currency loans. The proceeds of the loan would be onlent to CM on the same terms and conditions as the Bank loan to China. CM would onlend the proceeds of the Bank loan to the participating utility companies for 15 years including 5 years of grace, at an interest rate and a commitment charge not less than the rate and charge applicableto the Bank loan to China.
Financial Management: Chongqing Municipality has the requisite systems and staff to carry out the financial management of the project. CM already has ongoing Bank-financed projects in other sectors and
-7- the Chongqing Finance Bureau (CFB) is familiar with the Bank's disbursement procedures. Chongqing prepared a Financial Management Systems (FMS) Manual, which was found satisfactory to the Bank, and which would be the basis for financial management during project implementation. To facilitate disbursements, a Special Account would be opened with an authorized allocation of $12.0 million, equivalent to the estimated average expenditures to be financed by the Bank over about a four-month period; the account would be opened in US dollars in a bank acceptable to the Bank and be managed by CFB.
FinancialManagement Requirements:During preparation, an assessment of the adequacy of the project financial management system was undertaken (see Annex 14). The assessment concluded that this project meets minimum Bank financial management requirements. The project entities would produce project financial managementreports in line with the format and content agreed to between the Bank and China. In addition, traditional disbursement methods would be used as opposed to the PMR-based disbursement systems.
No outstanding audits or audit issues exist with any of the executing agencies involved in the project. See Annex 14: Project Financial Management System, Section VII: Audit Arrangement for further information.
The Bank and China have agreed to a standard set of project financial statements and the frequency of submission. See Annex 14: Project Financial Management System, Section IV: Financial and Accounting System and Section VI: Reporting Requirementsfor details.
Auditing Arrangements:As with other Bank Group-financed projects in China, the Foreign Investment Audit Bureau of the China National Audit Office (CNAO), established in 1983 under the name of State Audit Administration, would have overall responsibility for auditing the accounts of the project. The actual auditing work would be conducted by the Chongqing Municipal Audit Bureau under CNAO's supervision. The Bank Group currently accepts audits performed under the responsibility of CNAO. Audits of the financial statements of implementingagencies and audit of the Special Account would be submitted to the Bank within six months after the end of the financial year. At negotiations, the Chinese delegation confirmed that it would request the auditors to include in the audit reports of the implementing agencies opinions on whether the agencies were in compliance with their respective financial covenants, and whether these agencies had taken out adequate insuranceon goods and works financed from loan proceeds.
Monitoring and Evaluation Arrangements: The project would be supervised through Bank missions scheduled for twice a year. Headquarters and country office staff would cooperate in this activity. During implementation,project performance, including the achievementof project outputs and progress toward the attainment of development objectives, would be monitored through the use of semiannual progress reports prepared by the CPMO. The first such monitoring report would be submitted by January 31, 2001, and the last by July 31, 2007. In addition, an implementationcompletion report, reviewing the planned objectives and the achievementsof the project, includingcosts and benefits derived, and performance and contribution of all parties associated with project execution, would be prepared by the CPMO and submitted to the Bank within six months of the closing date.
D. Project Rationale 1. Project alternatives consideredand reasons for rejection: Combined Project for Sichuan and Chongqing. Initially, one urban environmental project had been planned for Sichuan Province, which included Chongqing Municipality. However, after the 1997 separation
- 8 - of Chongqing as an independent municipality with provincial-level status, the new Government of Chongqing requested that a separate project be prepared supporting the new government in its urban environmental program. Maintaining a combined project under these circumstances would have been difficult in terms of decision-making and institutional coordination. Hence, separate Sichuan and Chongqing Urban EnvironmentalProjects were prepared.
Wastewater Treatment Alternatives. The original master plan which proposed constructing 21 sewage treatmnentplants in Chongqing with full secondary treatment was revised for the following reasons: (a) it was found to be more economical to construct fewer large plants to treat wastewater; (b) the earmarked treatment plant sites are now within the developed areas of the city; and (c) it was found to be no longer practical or appropriate to locate them in these locations. The wastewater treatment altemative first considered was full secondary treatment, which was also rejected because no significant irnprovement in river water quality would be achieved, and the cost would be high. For simnilarreasons, the option of full secondary treatment of wastewater for Fuling was rejected. The alternative selected for both cities is to intercept city wastewater and convey it to a point downstream of the city and provide preliminary treatment, planning the introduction of secondary treatment at an appropriate time in the future; effluent dischargewould be to the Yangtze River. See also details in Annex 4.
Water Supply Alternatives. A number of alternative river intakes were considered for Nanbin and Wanzhou, and rejected on account of poor raw water quality, high construction costs and/or excessive pumping costs.
2. Major related projects financed by the Bank and/or other developmentagencies (completed, ongoing and planned). Latest Supervision Sector Issue Project (PSR) Ratings (Bank-financedprojects only Implementation Development Bank-financed Progress(IP) Objective(DO) Urban environment:water, wastewater, China: Yunnan Environment S S sanitation, solid waste, industrial Project (Ln 4055/Cr 2892) pollution Urban environment:water, wastewater, China: Guangxi Urban S S sanitation, solid waste, industrial EnvironmentProject (Ln pollution 4348/Cr 3097 Wastewater and tariff reform policy China: Second Shanghai HS S Sewerage Project (Ln 3987) Formulation of multicomponent China: Shandong Environment U S interventionstrategy Project (Ln 4237) Delivery, managementand operation of China: Shanghai Environment S S large-scale urban water and wastewater Project (Ln 3711) systems. Environmentalpollution mitigationthrough time-bound action plans Provision and managementof basic China: Third Rural Water S S servicesto low-incomecommunities Supply and Sanitation (Cr N0270)
-9- Urban environment: water, wastewater, China: Sichuan Urban S S sanitation, solid waste, industrial EnvironmentProject (Ln pollution 4496/Cr 3251) Industrialpollution managementand China: Chongqing Industrial U U control Pollution Control and Reform Project (Ln 4045) Other development agencies The Asian Development Bank (ADB) Reported to have been generally has suported a range of investment successful investment programs in the urban sector of China, programs. Expansion of ADB mainly supportingurban environmental support to the urban sector is services, in provinces that do not underway. overlap with World Bank-supported program s Bilateral support from a number of These investments have sources including KfW and the generally been successfully Governments of Austria, Australia, implemented, though attention Finland and Denmark has financed has not been paid to equipment for urban water supply, institutional and financial wastewater and industrial waste matters. Finance has been treatment plants. available mainly to support equipment sourced (restrictively) from the lending country. The Department for International Performance has been reported Develop-ment-DFID (of the United to be satisfactory. Kingdom) has focused support on institutional and financial development needs of urban utilities, and on broad aspects of environmental management.
The Government of Japan remains a Performance is reported to be major source of international finance satisfactory. Meaningful for equipment for urban water supply, financial policies and wastewater and industrial waste conditionalityare not treatment plants, and air pollution developed, however. management.
IP/DORatings: HS (HighlySatisfactory), S (Satisfactory),U (Unsatisfactory),HU (HighlyUnsatisfactory)
- 1 0 - 3. Lessons learned and reflected in the project design: Greater reliance on user charges. The Operations Evaluation Department (OED) review of Bank Group-fnanced water and sanitationprojects has shown generally good achievement of physical targets but less success in sustaining the financial viability of municipal service providers. Recent sector work on China ("Urban Environmental Service Management," Report No. 13073-CHA) supports these findings, noting the need for greater reliance on user charges, which are presently levied at levels that do not sustain assets or institutions. The report concludes that adequate charges for water supply, wastewater and solid waste would be affordable, induce resource conservation and create a more dependable income stream. Hence, tariff reforms have been a centerpieceof the policy dialogue with CMG and adjustments of tariff levels are an integral part of the project design. Municipal solid waste user charges, for example, would have to triple from present levels to provide sufficient funding for sustainable collection and disposal services.
Timing of tariff increases. Previous urban environment projects in China have frequently encountered difficulties implementing agreed tariff increases in a timely manner, sometimes delaying project implementationby six months or more. Tariff increases often represent politically difficult decisions for local governments, but are critical for the sustainability of the project. To avoid such delays after loan effectiveness, and to ensure that changes meet the approval of all relevant authorities, this project design requires that tariff adjustments be implemented during the preparationstage, not later than appraisal. These tariff adjustments in both water supply and wastewater in the project cities were implemented in CM prior to appraisal.
Support for institutional management.The establishmentof financially autonomous utility enterprises to develop and manage urban services is a long-standing Chinese practice, and avoids many of the management difficulties of publicly owned utilities in other countries.However, wastewater collection and treatrnent have only recently been given the same autonomy, generally by absorbing the existing drainage bureaus and construction management units, already active in the sector, into separate enterprises. The prior experience of these bureaus would undoubtedly allow a smoother transition, but high levels of technical assistance would be needed to strengthen the new enterprises' financial, managerial, and technical capacities. Tariffs, charges, and reallocation of existing taxes and urban construction charges would help ensure adequate funds for operation and management. The establishment of fnancially autonomous utilities prior to project implementationhas provided additional time for management and operational issues to be clarified. During project formulation and preparation, detailed analyses of institutional strengthening and training (IST) needs were undertaken; this led to the design of a comprehensive IST component to be included in the project, which would assist the project utilities address the challenges described above. The Chongqing Industrial Pollution Control and Reform Project was not successful in developing strategies and mechanisms for industrial lending; these lessons have been specifically incorporated in CUEP through adopting municipal utility enterprises as the implementing agencies and incorporating the IPCAP as a policy device for industrialpollution control.
Sufficient preparationtime and budget. Experience in China has shown that first-time projects demand significantly greater time and monetary investments in the preparatory and initial implementation phases than those managed by experienced project management offices. As this would be the Bank's first involvement in the urban environmental services sector in CM, a longer lead time has been needed to develop clear understandingsof institutional and services delivery arrangements.Adequate resources have been allocated for preparation. The French and Japanese Governments provided key support during preparation; assistance was also provided in the project formulation stage by the Governments of Australia, Denmark, Italy and Switzerland. Technical assistance would be available for construction supervision and
- 1 1 - the building of strong institutions. The experience gained in this project would ensure smoother implementationfor later urban environmentinterventions in the municipality.
4. Indications of borrower commitmentand ownership: Chongqing Municipality has demonstrated its commitment to the proposed project through the following: (a) the formation of a leading group to give policy guidance; (b) the establishment of municipal, city and town project management offices to prepare and coordinate the proposed investments; (c) the investmentof substantial municipal resources in the preparation of feasibility studies; (d) the hiring of the Shanghai Municipal Engineering Design Institute (SMEDI) as lead consultant and engaging top-ranked independent national and international consultants to support all stages of strategy and project preparation; and (e) the high priority attached by the national and municipal governments to addressing the deteriorating water quality in the Jialing River and the regional impacts arising from the Three Gorges Project; and (f) adjustments to (i) water tariffs, and (ii) implementation of wastewater tariffs for both domestic and nondomesticusers prior to appraisal.
5. Value added of Bank support in this project: The Bank brings considerable international experience to assist in policy formulation and investment program design, in particular in economic and financial analysis and systematic consideration of alternatives. Bank assistance would also draw on its growing experience in addressing regional environmental issues, gained from urban environmental projects throughout China (including Hubei, Jiangsu, Jilin, Liaoning, Yunnan and Shandong Provinces, and in the megacities of Beijing, Shanghai and Tianjin). Bank assistance in the design phase has enabled CM to widen the scope of possible options and find more cost-effectivesolutions than the ones it originally considered.Bank involvement would enhance the design and construction quality control of the physical investments, accelerate institutional strengthening and training, and provide additional funds for sector needs. Through its involvement in Sichuan Province in a similar urban environmental project, the Bank can substantially contribute to the introductionof region-wide water resourcemanagement in the upper Yangtze River Basin.
E. Summary Project Analysis (Detailed assessmentsare in the project file, see Annex 8) 1. Economic (see Annex 4): O Cost benefit NPV=US$ million; ERR = % (see Annex 4) 3 Cost effectiveness O Other(specify)
The wastewaterinvestments in Chongqing provide a cost-effective first stage in a program to reduce the impacts of the urban area on the Yangtze River system. The wastewater and solid waste investments, together with institutional strengthening and the improved tariff levels, would also provide the foundation for more efficient and effectiveprovision of environmentalservices for the municipality in future. A number of specific benefits have been identifiedthat would result from the improvement of water quality in the rivers at Chongqing and also from the protection of the Yangtze River downstream, especially after the flow patterns have been changed. One major benefit is the protection of the existing water supply system, which has a number of intakes in and around the urban area. Further benefits include reduction of health costs, protection of tourism and amenity values, and improvement of water quality downstream. Estimates of the value of these benefits reach more than $482 million (NPV) over the life of the project but there are considerable uncertainties in the valuations, and in some cases (such as health), it is not possible to define precisely the relationship between the water quality improvements and the direct benefits.
- 12- Even if the absolute value of the benefits could be further refined, there is a time dimension that complicates efforts to estimate a benefit-cost ratio. The identified benefits relate to the eventual achievement of the water quality standards that have been mandated by State Environmental Protection Agency (SEPA). To reach these standards would require stronger and more effective management of activities by different departments of CMG; major changes in the regulation and responses of the industrial sector; and high levels of investment in pollution control and abatement, by both the private and public sectors. Experience in other major river basins has demonstrated that these changes take several decades. The size of the Yangtze River Basin only increasesthe scale of the efforts required. It is evident that the scale of the ultimate benefits justifies considerable investment of effort and resources in protecting and restoring river water quality but, given the uncertainties related to the benefits, it is not possible to define a marginal benefits curve. As a consequence, it is not appropriate to develop a benefit-cost analysis of these investmentsand the approach used in developing the current project, as a first step in a long-termprocess of protectingthe river, has been one of cost effectiveness. In spite of the high flows and assimilative capacities of the Yangtze and the Jialing, there is localized pollution as a consequence of inadequate dispersion of wastewater discharges. Wastewater management focuses on two categories of environmental standards, covering water quality standards for receiving watercourses and wastewater discharge standards. In the initial stages of project design, it was established by least-cost analysis that the optimum scheme layout was based on interception of existing outfalls to the Jialing and Yangtze and transport of these flows downstream to two discharge locations. This approach would achieve substantial water quality benefits in the Jialing, resulting in the achievement of the desired water quality objective. In addition, although there would be a minimal reduction in pollution load, it would still be possibleto comply with the required water quality objective for the Yangtze in terms of the principalwastewater pollutants. The project is, therefore, the first stage of a longer-term program on staged pollution load reductions to ensure sustained compliance with water quality objectives as wastewater discharges increase over time, with eventual compliance with numerical concentration-baseddischarge standards. Determination of water quality trends and of the impacts of different treatment options is a complicated exercise that has been undertaken by the project team. In addition, estimates have been made of the marginal and average costs of removal for key pollutants of interest (Annex 4). The present initial stage of wastewater management scheme development is based on the lowest acceptable level of treatment (preliminary), together with a carefully designed and located diffuser system in the Yangtze River. The marginal cost estimates that have been made would allow inforned decisions to be made about treatment requirements,when the next stages of scheme developmentare being considered. The proposed improvements in municipal solid waste management in Chongqing would improve the management of solid waste from the collection station through final disposal, functions that are still a municipal responsibility in most areas. There are existing local systems for taking solid waste to the collection stations, for which users already pay a fee. The public benefits of proper solid waste management are several but hard to quantify. They include the amenity value of better collection systems and transfer stations, avoidance of health risks and blockages of drainage systems by open dumps, and reductions in the pollution loads and the spreading of garbage associatedwith such dumps. Analysis of the solid waste proposals has therefore been based on identifying a least-cost approach for the provision of an acceptable level of service, at a cost that is affordable to the municipality. For the water supply components in Nanbin (Shizhu County) and Wanzhou, estimates have been made of the economic rate of return, based on the tariff levels proposed; the values are around 12 percent, which
- 13 - are acceptable. The existing town water supplies are polluted by random wastewater discharges. The inclusion of a wastewatercomponent in Fuling would eliminate this public health risk. The main interceptorand outfall would be installed simultaneously with the construction of a long-planned new river training wall. Simultaneous construction would significantly reduce the interceptor construction costs and avoid subsequent damage to the river wall; constructionof this wall has commenced. The opportunity costs of not carrying out the construction of both projects simultaneously are high. The wastewater system design is based on minimum levels of treatment, given the relative size of the effluent discharge and the Yangtze River flows at that point downstream of Fuling, thereby protecting the cities' water supply intakes.
2. Financial(see Annex 5): NPV=US$ million; FRR = % (see Annex 4) The FRR varies between 5.9 and 8.2 percent.
The base cost estimates of the project reflect preliminary engineering designs and price levels prevailing in December 1999. The unit prices were derived from the following sources: (a) quotations obtained from manufacturers and suppliers; (b) prices of goods and works from recent contracts; and (c) construction costs according to prices published by the Central and Chongqing governments, all adjusted for inflation. Physical contingencies have been applied to all base costs at the rate of 10 percent. Construction supervision services costs, estimated at 2.5 percent of the civil works and 1 percent of the materials and equipment costs of the water supply, wastewater and solid waste management components, have been included in the project cost estimates.Project managementand engineering overhead costs of 10 percent are also included. Price contingencieshave been applied to expenditures at projected global foreign and local inflation rates, as follows: local: 2 percent in 2000; 5 percent in 2001 and thereafter; foreign: 1.6 percent in 2000; 2.5 percent in 2001; 2.6 percent in 2002; and 2.5 percent thereafter. The dollar/yuan exchange rate has been assumed to vary in order to maintain purchasing power parity.
The financial objectives set by CMG for its water supply and wastewater utility companies are to achieve at least full cost recovery on their operations. The tariff adjustments required to meet these financial objectives were met prior to appraisal.Financial projections have been completed for each utility company indicating the levels of tariffs required annually to meet the stated objectives. However, in practice, water and wastewater companies' tariffs are adjusted only every two or three years, taking into account the tariff requirements of other utilities, e.g., power, gas and telephone. It is possible, therefore, that in the interveningyears between tariff adjustments, the agencies may not be able to meet their annual targets. In such eventualities, the agencies' operating revenues would need to be supplemented from the general revenues of the parent municipality in order to remain financially viable. Solid waste managementservices have traditionallybeen funded from the general revenues of local governments. However, where individual users of the services have been identified, local govemments have, as a policy matter, charged such users for the services provided. Local governmentsexpect to rely increasingly on user fees and charges to finance these services in the future. The government departments responsible for (a) environmental water quality monitoring, (b) urban management informationsystems, and (c) environmentalprotection and rehabilitation would rely on government subventionsto fund their capital and operating budgets.
Fiscal Impact: Chongqing municipal on- and off-budget receipts and expenditures in 1998 totaled about Y 12.0 billion ($1.5 billion equivalent) and Y 11.0 billion ($1.3 billion equivalent), respectively. Receipts and expenditures are projected to grow at about 10 percent and 8 percent per year in current terms, respectively. CMG expects to pass on about 89 percent of the Bank loan proceeds to the cities and their
- 14 - subborrowers. Should the cities and their subborrowers be unable to fulfill their obligations, CMG would have no difficulty ir covering debt service through its own resources as the debt service representedby the project is small compared to total municipal receipts. CMG would provide all funding not met by (a) the proceeds of the Bank loan; (b) city contributions;and (c) funds generated internally by the implementing agencies. CMG has independently assessed the cities' ability to generate their required counterpart funds from assured sources and found these satisfactory.
3. Technical: The proposed physical investments were designed by first-class Chinese design institutes, taking into account the latest Ministry of Construction (MOC) design standards. The engineering designs and bid documents were reviewed by international consultants and found to be satisfactory. The technologies involved are proven and within the capability of Chinese contractors and manufacturers if successful in winning bids.
4. Institutional:
4.1 Executing agencies: The water supply companies of Shizhu and Wanzhou are self-funding, self-accounting state-owned enterprises and have been in operation for some time. They have provided a satisfactory service to their customers in spite of not always having been pennitted to adjust tariffs to maintain financial viability. The self-funding,self-accounting, state-owned enterprise wastewater companies of Chongqing and Fuling were established during project preparation; this represents a major step in utility reform, consistent with stated national policy, and is a model for other provinces. The staff of these companies was transferred from the existing municipal engineering administrationdepartments responsiblefor sewerage and drainage services. Therefore, while the wastewater companies would start with operations experience, they as yet lack a "corporate" culture. CSWMC, also established during project preparation as a self-funding, self-accounting, state-owned enterprise, would implement the solid waste management component. All implementing agencies would benefit from technical assistance to be provided under the project to help them improve, as necessary, their accounting and management information systems, stressing the positive steps planned and taken by CMG in utility reform, and underpinning tangible moves to market pricing strategies for urban service provision.
At appraisal, the Fuling Drainage Company (FDC) stated it would take over the existing sewerage and drainage assets in its service area when it completed its CUEP-fmanced investments. At negotiations, the Chinese delegation confirmed it would cause FDC to take over, not later than completion of its CUEP project-related investments, the management of the existing sewerage and drainage networks within its jurisdiction, and thereafter operate and maintain them in a satisfactorymanner. 4.2 Project management: CPMO, working closely with CEPB and other interested agencies, has arranged for the project preparation work to be completed to the satisfactionof CMG and the Bank. CPMO is now being strengthenedand the personnel mix adjusted to reflect the needs of the implementationand construction phases of the project. Each city has formed, budgeted and staffed a project management office (PMO), which has been involved throughout project formnulationand preparation; it is expected these PMOs, with support from CPMO, would significantly enhance project launchand subsequent implementation. 4.3 Procurement issues: The ProcurementAssessment (see Project File, Annex 8) found no concems of substance.Attention would
- 15- be given to procurement matters during project supervision. 4.4 Financial management issues: None. 5. Environmental: Environmental Category: A (Full Assessment) 5.1 Summarizethe steps undertaken for environmentalassessment and EMP preparation(including consultation and disclosure)and the significant issues and their treatment emerging from this analysis. An extensive environmental assessment (EA) has been carried out for CUEP. During its preparation and evaluation, national procedures, including those indicated in the "Circular on StrengtheningEnvironmental Impact Assessment Management for Construction Projects Financed by International Financial Organizations (June 1993)" as well as those required by the Bank Group, were diligently followed. Comprehensive EA documents comprising an Environmental Assessment Report (EA) and Executive Summary have been prepared, incorporating Bank comments, have been reviewed and found to be satisfactory. The Environmental Management Plan (EMP) is an integral part of the EA. A detailed annex covering environmental assessment and impact, together with mitigation measures, has been prepared (Annex 12), which summarizes the findings of the Chinese EAs on the various componentsand reflects the appraisal and preparation mission findings. Rehabilitation or upgrading work under the Environmental Rehabilitationand Reconstructioncomponent, for which sites are yet to be finalized, would be implemented in accordance with the Bank's environmentalpractices and standards. Potential Impacts: The environmental impact of the project is, on balance, substantially positive and the benefits greatly outweigh the negative impacts. The Chongqing wastewater component would reduce pollution loads to the Jialing River (the source of drinking water for Chongqing) while meeting the proposed water quality objective for the Yangtze River. The Fuling wastewater component would improve the wastewater discharge arrangementsfor Fuling, protecting the quality of drinking water for the city. The Chongqing solid waste management component would greatly improve waste handling, transport and disposal practices. Major potential impacts during the construction phase include exc.avation,dust, noise, spoil disposal and disruption of urban services. These would not be significantwhen considered against the background of pollution caused by the extensive and rapid development of the city of Chongqing, which is currently under way. Impacts during the operational phase include poor water quality in the mixing zone of the wastewater discharges from Chongqing,noise, odors and generation of landfill gas and leachate. Mitigation Measures: The EA specified the appropriate mitigation measures, environmental monitoring plans, institutional arrangements and training and equipment requirements, and the cost estimate of implementationof the mitigationmeasures. Major mitigation measures include optimized design of diffuser configuration for the Chongqing wastewater discharges to minimize the mixing zone area, controls on constructionpractices, careful siting of facilities with appropriate buffer zones and controls on noise. Public Consultation and Feedback: During the EA work, local people were consulted. The following approaches were used for public consultation: (a) consultation meetings with local government representatives; and (b) questionnaire analysis of public opinion, supplemented by interviews. Major concerns from the public were resettlement-related issues and noise and air pollution during the construction phase. Consultations were carried out at various stages in accordance with the requirements of OP 4.01. Details of these activities with dates, participants, public notifications, and locations are provided in tabular form in Annex 12. InformationDisclosure: The EA and Executive Summary were submitted to the Bank in November 1999; draft Resettlement Action Plans (RAPs) and a Resettlement and Ethnic Minorities Action Plan (REMAP), were also submitted in November 1999. Both reports were reviewed, the RAPs were updated to reflect fresh information, and all were found to be satisfactory.Copies are in the Bank Group's Public Information
- 16 - Center (submitted November 28, 1999) and in the Project files--see Annex 8. Notice of availability of these reports was publicized in the local newspapers, and they were made available to the public locally in Chongqing and project cities before appraisal (Appraisal completion date: March 28, 2000). Details of documents,disclosure dates and locations are provided in tabular form in Annex 12. 5.2 What are the main features of the EMP and are they adequate? See Annex 12. 5.3 For Category A and B projects, timeline and status of EA: Date of receipt of final draft: November 1999 See Annex 12. 5.4 How have stakeholders been consultedat the stage of (a) environmentalscreening and (b) draft EA report on the environmentalimpacts and proposed environmentmanagement plan? Describe mechanisms of consultationthat were used and which groups were consulted? Consultationwas done in three ways: bulletins to the press, public opinion questionnairesand surveys. CMG published detailed environment and project information in the Chongqing Daily and Chongqing Evening papers. Surveys were undertaken of the public, the project-affectedpeople; willingness-to-pay surveys were also conducted. Further, a Public Opinion Questionnaire was carried out in seven districts in Chongqing City and in Fuling, Wanzhou and Shizhu, seeking stakeholders'opinions; and simultaneously informing them about the project, its benefits and implications.See Annex 12. 5.5 What mechanismshave been established to monitor and evaluate the impact of the project on the environment? Do the indicators reflect the objectivesand results of the EMP? Project environmentalimpact monitoring indicators(see Annex 1) have specificallybeen identifiedwithin the project, and investments(in equipmentand training) included for project financing to ensure attention to environmentalmatters. The Chongqing EnvironmentalProtection Bureau would be strengthened,as would the SEPA-supportednational environmentaldatabase, ensuring both data access and impact dissemination. See also Annex 12. 6. Social: 6.1 Summarizekey social issues relevantto the project objectives, and specify the project's social developmentoutcomes. Land acquisitionwould be needed for five subprojects(two water supply, two wastewater and one landfill), as well as temporary use of land. About 2,631 mu (175 hectares--ha) of land would need to be acquired for construction of the project components, and a total of about 16,000 persons would require resettlement. Details of the resettlement proposals are given in Annex 13. Resettlement impacts were identifiedthrough detailed census and socioeconomic surveys of the affected people. The surveys were conductedand updated as component identification and optimization was undertaken, variously from August 1998, in April 1999, July through September 1999 and updates in December 1999 through January 2000. The surveys and the process were undertaken and managed by experienced independent local, national and international consulting bureaus; university studentsassisted in some cases with the field work. Widespread consultation was done during these times. Based on the surveys, a project Resettlement Action Plan (RAP) and component RAPs, addressing issues related to entitlements of affected people in all categories of impacts, were prepared. A resettlement and ethnic minorities action plan (REMAP) was prepared for Nanbin. The RAPs and the REMAP contain descriptionsof the institutions responsible for resettlement implementation, the costs and sources of funding to completethe resettlement program, the mechanism for grievance redress and the arrangements for monitoring and evaluating the progress and results of the process. A detailed implementationschedule that would require the completion of all compensationand resettlement activities
- 17 - sufficiently before the proposed start of construction of each subproject was also prepared.
Land acquisition and involuntary resettlement, if required for the Environmental Rehabilitation and Reconstruction component, will be carried out in accordance with the principles and procedures described in the ResettlementAction Plans for the project towns.
There is adequate institutional capacity and commitment to complete resettlement successfully. Regular internal and external monitoring and supervision of resettlementwould ensure timely review of the progress of resettlement implementation.Further, the project has been designed to specifically improve the quality of urban services and the local environment (less water pollution; means of collecting and disposing of solid waste), providing direct social benefits to citizens.
Ethnic Minority People:
Nanbin is the smallest of the four project towns, with 30,000 population and a project investment of 3 percent of total project cost. Although Nanbin does not fall in the same category as the other towns in terms of adverse environmental conditions, the town was included in the project because CMG attached priority to provide basic services to this relatively poor and less developed part of the Shizhu Tujia Autonomous County with an ethnic minority.
The Shizhu Water Supply component will be carried out in Nanbin town located in Shizhu Tujia Autonomous County. The water treatment plant requires 28 mu of land (1.8 ha) of farmland. No relocation of persons is necessary. The land acquisition would affect 153 people in 36 households in one village, all of whom belong to the Tujia ethnic minority. A Resettlement and Ethnic Minorities Action Plan *(REMAP)for the affected ethnic minority people has been prepared in accordance with OD 4.20. Project and land requirement information were provided to the affected farmers through village meetings during resettlement planning. The REMAP was prepared with a full understanding of the socioeconomic characteristics of the affected Tujia people, and with their close participation. The REMAP, prepared as an action plan for their livelihood rehabilitation, and compensation and rehabilitation strategies, prepared in consultationwith these communities,were found to be acceptable. 6.2 Participatory Approach: How are key stakeholders participating in the project? The major beneficiaries would be the majority of the population of the cities of Chongqing, Fuling and Wanzhou and the town of Nanbin, who would enjoy enhanced water supply, a cleaner environmentthrough wastewater collection, treatment and disposal and improved collection of wastes and their environmental disposal. The implementing agencies would also benefit through the IST incorporated into the project. The cities would benefit, overall, through benefits emanating from improved city management, and from the implementationof cost-effectivetariffs and charges for these services. 6.3 How does the project involve consultationsor collaborationwith NGOs or other civil society organizations? Detailed and extensive surveys (see Annex 12, Part D) and consultationswith all concerned groups were undertaken during project preparation, as part of financial analyses and resettlement plan formulation. The findings of these surveys are incorporatedin the RAPs and the REMAP (see Project Files and the RAPs in the Bank's Information Center). A detailed Resettlement InformationBooklet (RIB) was prepared and distributedto all identified project-affectedpersons (PAPs), during project preparation, to ensure informationdissemination and to guide and assist implementation.See Annexes 12 and 13. 6.4 What institutionalarrangements have been provided to ensure the project achieves its social
- 18 - developmentoutcomes? Financiallyautonomous consumer/beneficiary-orientedentities have been fonned that will, in line with current China policy, be responsiblefor project implementationand urban service delivery. This will enable a strong customer orientation, since consumerswill be in direct contact with the service provider due to the regular payment of tariffs. 6.5 How will the project monitor performancein terms of social development outcomes? Solid waste and wastewater services improvementand river water quality will be regularly monitored, and reported through the project progress reporting arrangements.The public outreach program included in the project will be designedto respond to public perceptions of needs. The project includes investments for water quality monitoring. See Annex 12.
Project investments in cultural property would conform to a master plan for cultural heritage preservation, which is under finalization. Large scale excavations that risk damage to cultural property will be avoided. The Government will consult appropriateagencies, NGOs, or university departments. Specialistswill be engaged for reconnaissanceand advice.
7. SafeguardPolicies: 7.1 Do anyof the following safeguardpolicies apply to the proiect?
E[lEnvironmental Assessment (OP 4.01, BP 4.01. GP 4.01) [ Yes D No 10Natural habitats (OP_4.,_BP 4.04. GP 4.04) E Yes Z No | Forestry (OP 4.36, GP 4.36) Z Yes Z No PPest Management (OP 4.09) El Yes 1 No El Cultural Property (OPN 11.03) X Yes El No | Indigenous Peoples 'OD 4.20) Z Yes L No El InvoluntaryResettlement (OD4.30) Z YesD No EJ Safety of Dams (OP 4.37. BP 437) E Yes Z No O Projects in International Waters (OP 7.50, BP 7.50. GP 7.50) El Yes 1 No O Projects in Disputed Areas (OP 7.60, BP 7.60, GP 7.60) El Yes 1 No
7.2 Describe provisions made by the project to ensure compliance with applicable safeguard policies. ExtensiveEnvironmental Assessment and resettlement planning work has been undertaken to ensure the project takes full and comprehensiveaccount of these matters, responding to societal concerns. In addition, considerationof reputationalrisks, especiallywith respect to the ongoing Government of China-financed TGP were evaluated, and the conclusionwas that the proposed Chongqing Urban EnvironmentProject has no direct relationship to TGP, though all economic developmentin the Yangtze Basin will invariably be affected directly or indirectly by TGP over the long term.
- 19 - F. Sustainabilityand Risks 1. Sustainability: The project is expected to be sustainable in three respects: (a) financially; (b) institutionally; and (c) in achieving its development objectives. Tariff reforms would enhance the financial viability of municipal service providers. Institutionally, the creation of financially autonomous wastewater companies and continued technical assistance for the participating institutions would strengthen utility management and water quality monitoring capacity. Finally, the project addresses an issue of high priority to both the local and the national govemnments:vital self-interest in achieving environmental conditions necessary for sustained economic growth, which would be a strong motivation to continue implementingthe long-term water resource strategy.
2. CriticalRisks (reflectingassumptions in the fourth column of Annex 1): 0002000Ljj00t00t00 RiSk Risk0000=; Rating0i00000020 TLL0j0207Risk tM7ii#mition Measu7re i ;A;j FromOutputs to Objective Complementarypollution reduction in M Monitoring and resource management industry and agriculture delayed information system that clearly tracks sources of pollution and nonattainment of quality targets.
Pollution abatement action plan to be incorporated into the project.
Environmentaland social changes brought M No direct linkage between Project and TGP about by Three Gorges Project (TGP) found. Project agencies to ensure river regime changes taken into account in designs, and public to be kept informed of project progress through outreach programs.
FromComponents to Outputs Autonomyof wastewaterorganizations M Companies created before appraisal. Financial sustainabilityof water, M Tariffs and charges covenanted; financial wastewaterand solid waste services performance to be core activity of project supervision.
OverallRisk Rating M Risk Rating- H (HighRisk), S (SubstantialRisk), M (ModestRisk), N(Negligible or Low Risk)
3. Possible ControversialAspects: Public reaction to (a) water and wastewater tariff increases to maintain the financial viability of the water supply and wastewater companies; and (b) increases in fees and charges for solid waste collection and disposal. Since TGP is located 600 km. downstream and to the east of Chongqing, there may be concems that since three out of the four cities are situated on the Yangtze River, the proposed project investments may be supportingTGP. However, the project is an urban environment project for four cities, designed to improve quality of life and urban environment. Additionally, the proposed project is not necessary for the TGP to meet its environmentalmitigation requirements, and investments proposed under the project would have been required even without the TGP. Extensive reviews by the Bank managementconcluded that the proposed project investments would be needed to improve the urban environment, notwithstanding the TGP.
- 20 - G. Main Loan Conditions 1. Effectiveness Condition * Execution of subsidiary loan agreementsbetween Chongqing and Fuling cities and Nanbin town and their water and wastewater companies, satisfactoryto the Bank.
2. Other [classify according to covenant types used in the Legal Agreements.] Disbursementcondition: * The signing of contracts with consultant firms for (a) institutional and financial technical assistance, and (b) constructionsupervision services and quality control, as a condition of disbursementof the civil works category. * Execution of a subsidiary loan agreement between Wanzhou City and Wanzhou Water Supply Company, satisfactoryto the Bank, as a condition of disbursement of the loan amount allocated to the Wanzhou water supply component. Implementationcovenants: At negotiations,assurances were obtained from Chongqing Municipality (CM) that it would: * implement, or cause to be implemented,the Institutional Strengtheningand Training (IST) component in accordance with a schedule acceptable to the Bank and discuss and agree any revisions with the Bank; * carry out, or cause to be carried out, the resettlement of persons affected by the project in a manner and according to the Resettlement Action Plan (RAP) satisfactoryto the Bank; cause the project agencies to carry out, in a manner satisfactory to the Bank, the findings of the EnvironmentalAssessment (EA) and related implementationprogram; * maintain the Chongqing Project Management Office (CPMO) and the city project managementoffices (PMOs), and urban management information system (UMIS) centers throughout implementation,with functions and responsibilities satisfactory to the Bank, and with competent staff in adequate numbers for the duration of the project; * carry out, or cause to be carried out, the time-bound Industrial Pollution Control Action Plan (IPCAP) for the Jialing River Basin in accordancewith a schedule acceptable to the Bank and discuss and agree any revisions with the Bank; * arrange for each project city to carry out its time-bound investment program to strengthen its water supply distributionsystem and wastewater collection systems with respect to the project investments. * arrange for Chongqing Drainage Company (CDC) to carry out its time-bound investment program with respect to its wastewater collection system. * cause WWSC to begin construction of the Tongziyuan raw water treatment facility by June 30, 2005, in accordance with an implementationplan satisfactoryto the Bank. Financial covenants: At negotiations, assuranceswere obtained from CM that it would: * cause Chongqing, Fuling and Wanzhou cities and Nanbin town to onlend part of the loan proceeds to
- 21 - their respective water and wastewater companies, on terms and conditions satisfactory to the Bank; * operate financial matters in accordance with the guidelinesset out in the Financial Management System (FMS) Manual, and arrange for the following annual audits to be submitted to the Bank within six months after the end of the financial year, commencing with fiscal year 2000: (a) audit of the project accounts maintained by Chongqing Project Management Office (CPMO), Chongqing Environmental Protection Bureau (CEPB), Chongqing Solid Waste Management Company Limited (SCWMC), Shizhu City Construction Group Water Supply and Drainage Company Limited (SWSDC), Chongqing Municipal Cultural Bureau (CMCB), Urban Management Information System (UMIS) Center; (b) audit of the Special Account; (c) audit of statements of expenditures (SOEs); (d) audits of the financial statements of Chongqing Municipal Drainage Corporation Limited (CMDC), Fuling Drainage Company (FDC), and Wanzhou Water Supply Company Limited (WWSC); * commencing with fiscal year 2000, cause CMDC, FDC and WWSC to (a) produce revenues from their respective water supply and wastewater operations sufficient to cover operations and maintenance costs (includingdepreciation), and the amount by which debt service requirementsexceed the provision for depreciation; and (b) incur no additional debt without the Bank's agreement, unless a reasonable forecast shows that the entity would have a debt service coverage of at least 1.3 times; * cause CMDC, FDC and WWSC to prepare, before September 30, 2001, and in each of the following fiscal years, forecasts satisfactoryto the Bank, (a) to review whether they would meet the covenanted requirements set forth above in such year and the following fiscal year, and (b) to fumish the results of such reviews to the Bank; if any such reviews would show that the entity would not meet the requirements set out above, the entity would take all necessary measures, including adjustments to the structureof its tariffs and charges, in order to meet the requirements;and * cause Chongqing Solid Waste Management Company (CSWMC) to complete, not later than July 1, 2001, a study of the fees and charges needed for full cost recovery of solid waste collection and disposal services to nonresidential users, the report of that study shall include a detailed time-bound action plan acceptable to the Bank, enabling such recovery commencing January 1, 2002, and thereafter implementsuch action plan taking into account the Bank's comments. Reportingand Monitoring: At negotiations,assurances were obtained from CM that it would: * cause each implementing agency to prepare semiannual project progress reports; the CPMO would then send a consolidated report to the Bank by January 31 and July 31 of each year, beginning on January 31, 2001; and * carry out with the Bank a mid-term review of the project by December 31, 2003, and implement, or cause to be implemented,agreed recommendations.
H. Readiness for Implementation 1 1. a) The engineering design documents for the first year's activities are complete and ready for the start of project implementation. Cl 1. b) Not applicable.
Z 2. The procurementdocuments for the first year's activities are complete and ready for the start of project implementation. 1 3. The Project ImplementationPlan has been appraised and found to be realistic and of satisfactory
- 22 - quality. Cl 4. The following items are lacking and are discussed under loan conditions (Section G):
The procurement and disbursement arrangements,list of agreed contract packages and procurementplans are set out in Annex 6.
1. Compliance with Bank Policies Z 1. This project complies with all applicableBank policies. C 2. The following exceptionsto Bank policiesare recommendedfor approval. The project complies with all other applicable Bank policies.
Geoffrey Read Keshav Varma Team Leade _eo-agerIDir9tor CountryManagerlDirector
- 23 - Annex1: ProjectDesign Summary CHINA:CHONGQING URBAN ENVIRONMENT PROJECT
Sector-relatedCAS Goal: SectorIndicators: Sector/country reports: (fromGoal to BankMission) Safeguard the environment Ambient environment EPB statistics for and public health through conditions in Chongqing environmental quality alleviation of urban Municipality improved environmental infrastructure constraints Environment-related health Bureau of Public Health problems reduced Urban environmental Statistics of the Construction infrastructure supply meets Commission demand
ProjectDevelopment Outcome/ Impact Projectreports: (fromObjective to Goal) Objective: Indicators: Protect quality of Chongqing's Reduction of pollution load Statistics of CEPB Parallel efforts to manage rivers and provide safe water from urban sector industrial wastewater on a sustainable basis to its pollution are successfully growing population implemented Expansion of supply of safe Statistics of Water Supply Funds availability to finance water to meet urban demand Companies distribution network extensions Improvement of financial Audited financial statements, Timely authority to adjust viability of cities' service annual financial projections tariffs to maintain viability providers Outputfrom each OutputIndicators: Projectreports: (from Outputsto Objective) component: Market-oriented pricing and Ratio of actual tariff to Water Supply Company Government maintains tariffs financial management recommended cost recovery statistics; project supervision at cost recovery levels for all introduced in participating tariff increased missions utilities municipal service providers in Chongqing Municipality Infrastructure capacity for Volume increase for Chongqing and company Parallel collection systems wastewater, water supply, and wastewater collected, safe statistics and periodic reports implemented; connections waste management increased water supplied; and waste made to water supply network safely disposed Cost-effective wastewater Small and medium industries Statistics of Chongqing EPB. Pilot experience disseminated pollution abatement measures adopt clean technology, and IPCAP is implemented in and adopted throughout undertaken in industry implement end-of-pipe accordance with scope and Chongqing's industry sector; treatment timing agreed effective regulation Water quality monitoring and Long-term water quality Chongqing EPB; draft and Long-term strategy is being management capacity monitoring strategy developed final strategy documents implemented strengthened and staff trained in water quality monitoring
- 24 - Baseline data to be agreed at Project Launch Workshop (PLW) for the above. Thereafter, regular 6-monthly monitoring (through Progress Reports).
ProjectComponents / Inputs: (budgetfor each Projectreports: (fromComponents to Sub-components: component) Outputs) Wastewater management Achievement of planned Project Progress Reports, Wastewater companies are activities (see Annex 3) supervision missions, data of established and sustained companies and EPB Percent of sewage collected and treated, as required Water supply Supplies increased to meet Project Progress Reports, Distribution network demand, water quality supervision missions, data of extended, tariffs adjusted to improved companies and EPB maintain financial viability Solid waste management Service area extended, Project Progress Reports, Adequate funding through increased collection efficiency, supervision missions increased user fees and increased quantities of waste budgetary allocation collected, quantities of waste disposed at the landfill Environmental water quality Water quality to comply with Project Progress Reports, monitoring Chinese Drinking Water supervision missions, data of Standards companies and EPB Increase in level of Laboratory records for Laboratory staff resource monitoring: number of industrial wastewater and levels increased or sustained, sampling points, number of environmental quality analysis laboratory operating budgets samples analyzed, number of increased or sustained as parameters monitored required, training in use of equipment provided Urban management Development of operational Project Progress Reports, Interested agencies sharing information systems systems, improved base supervision missions data, avoidance of duplication mapping Environmental rehabilitation Implementation of Immediate Project Progress Reports, Availibility of sufficient and reconstruction Measures Action Plan of supervision missions counterpart funds on time Chongqing's Cultural Heritage Strategic Master Plan Institutional strengthening Improvements in accounting Project Progress Reports, Government commitment to and training and MIS, numbers of supervision missions financing "intangibles" management and staff trained in systems operations and financial management General Achievement vs Target Benchmarking to be reviewed through Progress undertaken, and agreed at Reports PLW.
- 25 - Annex 2: Project Description CHINA: CHONGQINGURBAN ENVIRONMENTPROJECT
The project would support the Chongqing Municipal Govermmentin implementing the first phase of a long-term urban environmental improvementprogram to recover from past environmental degradationof its water and land resources, to provide an adequate supply of safe water to its growing urban population and economy, and to maintain water quality at levels that are compatible with the needs of the wider Yangtze River Basin, and in rehabilitating heritage environmentsites in Chongqing City. The project would include the following components:(a) Urban Environmental Infrastructure comprising Chongqing and Fuling wastewater interception and treatment, solid waste management improvements in Chongqing, and water supply improvements in Wanzhou and Nanbin (Shizhu County); (b) Urban Management Information System for the Chongqing Construction Commission; (c) Environmental Rehabilitation and Reconstruction comprising improvements in urban planning, development control, and the practice of effective conservation through training, strategy development and planning for rehabilitation, renewal and reconstruction of heritage environment sites in Chongqing City; (d) Water Quality Monitoring in the Jialing and Yangtze Rivers; (e) Institutional Strengthening and Training for Chongqing Municipal Govemment and utility company staff; and (f) Construction Supervision and Management to facilitate project implementation.The total project cost estimate including all contingencies at December 1999 prices, is Y 4,206.8 million ($506.8 million).A detailed project description follows. The total estimated cost for each component below includes base costs plus contingenciesof (a) civil works, (b) goods, (c) component-specific costs of technical assistance and training, (d) land acquisition and resettlement,and (e) allocated costs for (i) construction supervision and quality control and (ii) engineering and management(overheads). By Component:
ProjectComponent 1 - US$428.00million Chongqing Municipal Solid Waste Management. (Estimated total cost $58.2 million). The project would provide a higher standard of collection and cleansing service through the gradual expansion of the solid waste collection service to areas that are presently underserved. The solid waste management strategy of the Chongqing Solid Waste ManagementCompany is to improve the service in the nine districts that make up Chongqing City (Yuzhong, Dadukou, Jiangbei, Shapingba, Jiulongpo, Nanan, Beibei, Yubei and Banan), with a total 1996 population of 3.1 million, rising to 5.5 million by 2020. Per capita waste generation has been assumed to rise from 0.95 kg/capita/day to 1.22 kg/capita/day in 2020. Based on this, the total estimated waste generation is expected to rise from the 1996 level of 3,000 tons/day to 6,700 tons/day in 2020. Overall, the coverage will increase by an average of 16 percent over the whole area. The long-termplan is to collect 95 percent of the waste generated by 2020. The strategy includes: primary collection by the community; secondary collection through a fleet of 5-ton and 8-ton vehicles capable of traveling longer distances, thus obviating the need for transfer stations; and constructing new sanitary landfills and phasing out four existing disposal sites. The coverage would be increased, and an additional 1.4 million people would benefit directly, to bring the total number of people served to 4.2 million. The project would finance the first phase of the above plan, and would include: (a) procurement of 5-ton and 8-ton solid waste tipcart and compacting collection trucks, and nightsoil tankers; (b) landfill operating equipment; (c) construction of facilities for capping, gas ventilation and leach control for closure of the existing dump sites at Qilongcun, Xinlong, Renjinwan and Jigongtai; (d) development of a new sanitary landfill with 1,500-ton/day capacity at Changshengqiao, including liner, solid waste dam, leachate
- 26 - collection and treatment, and gas disposal facilities. The landfill will be developed in two stages, with the liner installed for part of the site for the first phase. The capacity of this site will suffice for about 25 years of service; (e) monitoring and office equipment, and (f) technical assistance and training of personnel in Chongqing and other places. As the operation of the new landfill and improvedsystem will entail significant advances in techniquesand managementsystems over those currently in use, technical assistance and training would be included during implementationto assist the Chongqing Solid Waste Management Company to successfully carry out the proposed upgrading. The technical assistance will focus specificallyon the key areas of the program where experience is currently limited. At the managementlevel, this will include financial management in relation to maintaining performance criteria, and financing aspects of the proposed landfill development and operation, international practice relating to management and operation, and more general contract management. At the technical and operation level, technical assistance and training will cover surface water management, leachate and gas control systems, maintenance and repair of landfill liner system, and operation and maintenance of vehicles and equipmentto be acquired under the project. Chongqing Wastewater Management. (Estimated total cost $369.8 million). The main urban area of Chongqing, located on the confluence of the Yangtze and Jialing Rivers, has a population of about 2.2 million. Overall growth rates for the catchment area were about 0.6 percent a year from 1990 to 1994, acceleratingto 1.6 percent a year over the period 1994 to 1996. The economy of Chongqing has centered around a strong industrial base including steelworks, manufacturing and chemical industries. The rapid expansions have not been accompaniedby adequate environmental infrastructure,particularly in the fields of waste control and treatrnent (air, water and solid wastes). The 2020 wastewater flows from catchments in the Chongqing City are estimated to be 1.5 million cubic meters (m3) per day according to the revised Wastewater Master Plan. While the Three Gorges Project situated downstream of the Chongqing Municipality will provide a direct economic benefit to the province facilitating transport of industrial goods downstream to the eastern delta, Chongqing faces challenges due to social (resettlement)and environmental (water quality) impacts. The proposed investments in urban environmental infrastructure and management in the Chongqing Municipality would promote sustainable economic growth in Chongqing through improvement of urban environmentalinfrastructure and river water quality in the Jialing and Yangtze Rivers. The project would include interception of most of the municipal wastewater discharged from about 600 outfalls in the peninsular area of Chongqing. Interceptors would be constructed along both banks of the Jialing River and the left bank of Yangtze sized to collect the projected 2020 wastewater flows. Works to be financed under the project include (a) about 35 km of secondary network; (b) 70 km of primary interceptors, including about 7 km of tunnels, and a siphon under the Yangtze River (comprising Branch A on the left bank of the Jialing running from Zhongshutuo to Tangjiatuo, Branch B on the right bank of Jialing River running from Shapigba to Taipingmen, Branch C on the left bank of the Yangtze River running from Taohuaxi to Taipingmen, Branch D on the right bank of the Yangtze River from Yabadong to Haitangxi, inverted siphon under the Yangtze River between Taipingmen to Haitangxi, and a 3.7 km long tunnel from Haitangxi to the Jiguanshi pretreatment works); (c) pretreatment of wastewater upstream of the Yangtze crossing, treatment before discharge at the Jiguanshi (ultimate capacity 1,650,000 m3/d) site, and treatment before discharge at the Tangjiatuo (ultimate capacity 400,000 m3/d) site; and (e) tunnel or prefabricatedpipe/culvert with outfalls with diffusers designed to provide good initial mixing, to be determined following detailed studies of bathymetry, seismic refraction, soil investigations, sedimentation studies,traffic and damage from anchors. Continuous monitoring will be carried out to monitor river water quality, to determine prevailing water quality and the timing of the next level of treatment. At present, both Jialing and Yangtze Rivers receive
- 27 - significant volumes of municipal and industrial wastewater. Discharges from industries contain many pollutants that affect both the safety of drinking water supplies drawn from rivers, and the overall river water quality. The Chongqing Municipal Government (CMG) has adopted a plan to implement an Industrial Pollution Abatement Action Plan to undertake complementary pollution reduction activities to meet the required national dischargestandards by the deadline set by the State Council.
ProjectComponent 2 - US$26.30million Fuling Wastewater Management. Fuling is located 120 km downstream of Chongqing, at the confluence of the Yangtze and Wu Rivers. The service area, accounting for most of the Fuling city population of 200,000, is located in the area on the right bank of the Yangtze and the left bank of the Wu River. The total catchment of the main urban areas of Fuling (Nan'an and Jiangdong) comprises about 10 km2, with industrial wastewater representing about half the total wastewater flows. Average dry weather flows are estimated at about 146,400 m3/day, 182,500 m3/day and 207,600 m3/day in 2005, 2010 and 2010, respectively The proposed Fuling wastewater works aim to eliminate the large number of random wastewater discharges to the Yangtze River, by collecting wastewaterthrough a system of interceptors, conveying the wastewater to a downstream location for treatment and discharge. The first-phase works would include: secondary networks, link sewers and modification of outfalls; pipe and box culvert interceptors; pretreatment comprising screening and gritting; an inverted siphon at the Wu River crossing, treatment before discharging to outfall downstream of the city into the Yangtze River. Secondary treatment including nutrient removal will be implemented at a later stage, to be operational by 2009 to conform to national regulations. The main wastewater conveyor would be laid in a new embankment being constructed with separate CMG funding along the Yangtze and Wu Rivers as part of Fuling's long-term urban development plan. The embankmenthas been designedto take into account the changes in the local flow regime resulting from the Three Gorges Project (TGP); it would be about 5.0 km long, with an elevation of 177.5 meters above sea level--masl. The conveyance works would include about 5 km of primary interceptors (pipes and box culverts). Wastewater would be pretreated upstream of the Wu River crossing siphon, and would comprise screening and grit removal. The flow then traverses the Wu River by means of an inverted siphon dischargingto a 1.5 m by 1.5 m box culvert for a length of 1.5 km to the Hangliangzi treatment works, comprising screening and gritting, and pumping facilities. The wastewater will be discharged to the Yangtze River through 200 m long outfall pipe with diffusers arranged to provide good initial mixing.
ProjectComponent 3 - US$ 18.90million Wanzhou Water Supply. Wanzhou, situatedabout 320 km downstream of Chongqing on the Yangtze, has a current population of 280,000, which is expected to grow to 900,000 by the year 2020. A population growth of 8.6 percent is projected during the next decade, decreasing thereafter. Wanzhou is the second largest port after Chongqing on the upper Yangtze, with dominant industries including food processing and light industry. It is the town most affected by the TGP, with about two-thirds of the existing urban area expected to be ultimately submergedby the backwaters of the Three Gorges Reservoir. The three water intakes serving the treatment works serving the Longbao zone, with capacity of 110,000 m3/day, are currently affected by serious upstream pollution, one needs replacement, and one is likely to be affected by the TGP. The two other existing intakes for the Tiancheng and Wuqiao zones are small (12,000 m3/day and 5,000 m3/day), are seriously affected by pollution, and are likely to be flooded by the TGP. Water demand is estimated to rise from a current 94,000 m3/day to 244,000 m3/day in 2010 and 365,000 m3/day in 2020. The development plan includes the extension of the water treatment plant No. 3 by 40,000 m3/day, and construction of a new treatment plant of 50,000 m3/day capacity to serve both the Longbao
-28 - and Tiancheng zones. The works to be financed under the project include: (a) the Tongziyuan raw water intake and pumping station, situated 3 km upstream of the new bridge with capabilityto accommodate a rise in water level after impoundment of the TGP (CMG has assured the Bank that the first stage of the Tongziyuang water treatment plan of 50,000 m3/day capacity will commence construction before June 30, 2005), and a temporary intake at the existing level using submersible pumps; a new treatment works for a first-phase capacity of 50,000 m3/d (ultimately to 100,000 m3/d capacity); (b) extension of the No. 3 water treatment works from 40,000 m3/day to 100,000 m3/day, including construction of a new intake, upstream of the existing intakes, of 100,000 m3/day capacity to supply raw water to the existing water treatment works No. 1 and No. 3; (c) distribution system improvements including booster pumps and associates reservoirs; and (d) a wastewater interceptor culvert and outfall to collect a number of untreated wastewater discharges in the vicinity and upstream of the proposed intakes.
ProjectComponent 4 - US$6.20million Nanbin Water Supply. The proposed project aims to improve the water supply to the city of Nanbin of the Shizhu Prefecture to meet future demand of a 2020 estimated population of 70,000 (current population 30,000). The 2020 peak day demand is estimated at 29,300 m3/day. The present supply capacity is small, facilities are out of date, inappropriatelylocated and impossible to extend in their present location. The proposed works comprise construction of: a new water intake of capacity 30,000 m3/day upstream of the main urban area of Nanbin; a new water treatment works with an initial capacity of 18,000 m3/day, with extension to 33,000 m3/day at a later stage; new transmission lines from the new water treatment plant to the town of Nanbin; and reinforcement and replacement of existing water distribution systems.
ProjectComponent 5 - US$6.40million Water Quality Monitoring. The project would assist the Chongqing Environmental Protection Bureau to set up facilities to provide essential system performance data, to measure project impact, and to develop a future environment and wastewater strategy. In addition, it will monitor performance of the time-bound Industrial Pollution Control Action Plan (IPCAP) to be implemented by the Chongqing Municipal Government (CMG). Primarily, measurements would include levels of dissolved oxygen, ammonia, turbidity, and total organic carbon. The project would finance the establishmentof a water quality monitoring station in Chongqing under this component. The component would include investments in buildings, laboratory equipment, sampling equipment including automatic river water quality measuring equipment, and training of laboratory staff on the use of new equipment and on improvedmonitoring techniques.
ProjectComponent 6 - US$3.90million Urban Management Information Systems (UlTMS).The Urban ManagementInformation System (UMIS) would: support CMG to improve the management of urban construction and development by effectively using geographic information system (GIS) and inforrnation management technologies; improve infrastructure operation, maintenance, and asset management, particularly for the proposed CUEP investmnentin the Chongqing urban area: and achieve data sharingbetween agencies and avoid duplication. The project would finance development of the first phase of a citywide GIS, focusing on the Chongqing main urban area. These would include: base mapping information system including 1:500 digital base map, 1:500 comprehensiveutility map, 1:2,000 digital orthophotos and topographic maps in scales of 1:10,000, 1:50,000, and 1:250,000; the wastewater information system including management subsystem for water networks, hydraulic modeling tools, an operations subsystem, and an information subsystem; and the solid waste information system to assist management functions, to provide information on collection points,
-29 - trucks, loads and workers. Services and equipment to be financed under the project include: national and international advisory services, inhouse and overseas training, map preparationand data collection and updating, systems analysis and review, database design and software writing, support for application software development; database application writing and testing; expert technical advisors both national and international; and training, data collection and map preparation;office equipmentand computer hardware and software. A Chongqing UMIS Center would be established to (a) provide technical leadership, guidelines for data management, exchange and coordination with other bureaus; (b) develop and operate the data warehouse; and (c) develop and operate decision support systems for the ConstructionCommission.
ProjectComponent 7 - US$4.90million Environmental Rehabilitation and Reconstruction. The Environmental Rehabilitation and Reconstructioncomponent assessed the abilities of the CM administrationto take into account the qualities, values and significance of the existing built environment. The great volumes of new construction causes serious impacts of environmentaldegradation to the existing high-quality cultural and historic environment. Technical,financial and institutionaldeficiencies have been identified and these problems are identifiedand addressed. As part of overall environmental protection of cultural heritage sites under the jurisdiction of CMG, the project would support the implementationof a master plan to improve their management and conservation. The project would provide the basis for assessment of the indirect as well as the direct benefits to the local and to the wider community that are attributable to an existing built asset. The cultural heritage development plan would provide the framework for institutional policy development, conservation area planning, conservation architecture and technology, business planning for development and conservation viability, the promotion of interpretationand presentation of historic sites and museums for the benefit of education and tourism. The project has a strong educational component and would stimulate good practice. The project would benefit local economies, strengthen the management of built assets, and promote tourism and identity with a place and its culture. The project would finance portions of an immediate action plan for infrastructure rehabilitation and upgrading on a pilot basis to promote conservation, greater awareness of heritage, and national and international tourism. The works, equipment and services to be financed under the project would include: (a) infrastructurerehabilitation; (b) office and information technology equipment; and (c) training courses, awareness campaigns, and studies for minority culture preservation. The works would be carried out in accordance with sound environmental practices and standards satisfactory to the Bank. An inventory database system to be developed would be compatible with the proposed GIS system for the planning and control of development GIS compatibility is vital for an efficient municipality-wide planning program supported with all the data necessary for informed planning decisions.
ProjectComponent 8 - US$12.20million InstitutionalStrengthening and Training.The Institutional Strengthening and Training (IST) component supports CMG, participating city governments and implementing agencies in building capacity for (a) managing urban environment, specifically water, wastewater and solid waste; and (b) project and financial management and utility operations. The component finances a comprehensive technical assistance and training program for municipal government officials and utility companies' staff and managers. The program was prepared based on the needs assessment of all the participating agencies. It focuses on issues such as business planning, financial management, tariff pricing, operational skills and the provision of quality services. The program also provides financing for the utility companies' office management
- 30 - equipment. In addition to the focused capacity-buildingactivities, three distinct municipal-levelprograms in support of CMG are included in the component; namely, Policy Review Support Program, Public AwarenessProgram and Training Program for Finance Bureau staff. The Policy Review Support Program is intended for the municipal government to review policies and institutionalsetup concerning the water/wastewatersector and solid waste managementwith a view to establish better policies and regulation for the sectors as well as to establish clearer responsibilities for various government units involved in the sectors. The Program will include investigation tours, conferences and workshops, studies and short-term courses. The Public Awareness Program is to aid the governmnent'seffort to protect the urban environment and conserve natural resources. The program has two distinct but related objectives; one to raise the people's awareness of protecting the urban environment and the other to gain the public's support for the tariffs of public utilities' services. The government plans to use electric and paper media, publications, consultation workshops, site visits and other campaigns. The Finance Bureau Program will focus first on Bank procedures on financial management, disbursement, procurement and reporting, and at a later stage more broadly on municipal finance issues. The IST component further includes provisions for sewer mapping and updating, future project preparation, panel of experts' review of tunnel siphon and outfall, and a program to support the environmentalprotection bureau. Construction Supervision and Management. The project would finance national and international consultant support for construction supervision and project management. International experts would be engaged for assistance in project management, and supervision of complex rock excavation, tunneling and construction in deep excavation.
- 31 - Annex 3: Estimated Project Costs CHINA: CHONGQING URBAN ENVIRONMENTPROJECT
Project Component2--ChoFin g City 0.00 Chongqing Solid Waste 29.50 19.20 48.70 Chongqing Wastewater 214.40 94.90 309.30 Project Component2--Fuling Wastewater 16.30 5.70 22.00 Project Component 3--Wanzhou Water Supply 9.80 5.80 15.60 Project Component 4--Nanbin Water Supply 3.20 1.80 5.00 Project Component 5--EnvironmentalWater Quality Monitoring 2.40 2.90 5.30 Project Component 6--Urban ManagementInformation Systems 1.80 1.40 3.20 Project Component7--Environmental Rehabilitation and 3.00 1.00 4.00 Reconstruction Project Component 8--InstitutionalStrengthening, Training and 4.00 6.20 10.20 Construction Supervision Total BaselineCost 284.40 138.90 423.30 PhysicalContingencies 25.00 14.00 39.00 PriceContingencies 32.10 12.40 44.50 Total ProjectCosts 341.50 165.30 506.80 Interest during construction 27.10 27.10 Front-end fee 2.00 2.00 Total FinancingRequired 341.50 194.40 535.90
"I "111--m"g-gg~Loca 110 0tta
Goods 166.40 78.30 244.70 Works 32.40 73.00 105.40 Services 7.30 9.40 16.70 Landacquisition and resettlement 92.10 0.00 92.10 Constructionsupervision services 2.20 4.60 6.80 Engineeringand management 41.10 0.00 41.10 TotalProject Costs 341.50 165.30 506.80 Interest during construction 27.10 27.10 Front-end fee 2.00 2.00 Total FinancingRequired 341.50 194.40 535.90
- 32 - DETAILED COST ESTIMATES
Expenditure Accounts Project Cost Summary
% % Total Y Million $ Million Foreign Base Local Foreign Total Local Foreign Total Exchange Costs
1. Investment Costs
A. Civil Works 1,106.2 541.0 1,647.2 133.3 65.2 198.5 33 47 B. Equipment&Materials 206.2 509.9 716.1 24.8 61.4 86.3 71 20 C. Technical Assistance & Studies 50.3 64.7 115.0 6.1 7.8 13.9 56 3 D. Land Acquisition & Resettlement 684.3 - 684.3 82.4 - 82.4 - 19 E. Construction Supervision Services & 9.4 37.5 46.9 1.1 4.5 5.7 80 1 Quality Control F. Engineering & Management 304.8 - 304.8 36.7 - 36.7 - 9
Total BASELINE COSTS 2361.2 1,153.1 3,514.3 284.5 138.9 423.4 33 100
Physical Contingencies 207.2 116.3 323.5 25.0 14.0 39.0 36 9 Price Contingencies 266.4 102.6 369.0 32.1 12.4 44.5 28 10
Total PROJECT COSTS 2,834.7 1,372.1 4,206.8 341.5 165.3 506.8 33 120
Note: May not add due to rounding totals.
- 33 - Table 1: Detailed Costs-Chongqing City Wastewater (Y million)
7om 2En11 7flna0, 7 *WM004 7Ens Tnt3 *nnn 71 5002 7om 7004 2009 Tt,l
1. Investment Costs
A. Civil Works CQWW/2.01 Branch A: lnterceptor/MH 1-71,& - 107 178 214 14.2 71 71.2 122 212 266 18.5 9.6 S.2 MH 80-135 CQWW/2.02 Branch A: Interceptor/MH 71-80 I I 1.8 2.2 15 0 7 7 3 13 2 2 2 7 1 9 1 0 90 CQWW/2.03 Branch A: lnterceptor/MH 135-271 147 245 294 196 98 9.1 - 168 293 366 25.5 133 121 5 CQWW/2.04 Branch A: Counections of Outfalls to - 7 2 12.0 14 4 9 6 4 8 4 0 8.2 14.3 17 9 12 5 6 5 594 Interceptor CQWW/2.O5BranchB:lnterceptor/MH 1-49& - II8 197 237 158 79 789 - 135 23.5 295 205 107 977 MH55-160 CQWW/2.06 Branch B: Interceptor/MH 49-55 - 05 0.8 0.9 0 6 0 3 3 1 - 0.5 0 9 1 2 0.8 0.4 3.8 CQWW/2.O7BranchB:lnterceptor/MH 160-235 66 110 13.2 8.8 4.4 441 - 7.6 13.2 16.5 11.4 60 54.6 CQWW/2.08BranchB:ConnectionssofOutfdllsto - 61 101 122 S.1 41 405 - 70 121 151 105 55 502 Interceptor CQWW/2.09 Branch C: Interceptor/MH 1-141 - 16.7 27.9 33.4 223 11 1 111 4 - 19 1 332 41 6 28.9 15 1 137.9 CQWW/2.10BranchC:Interceptor/MH 141-212 - 69 115 13.7 92 4.6 45.8 - 79 137 171 11.9 62 567 CQWW/2.11 Branch C:ConnectionsofOutfallsto - 54 9.0 108 72 3.6 360 - 6.2 107 134 9.3 49 446 Interceptor CQWW/2.12BranchD: Interceptor/MH 1-165 - 93 155 186 12.4 62 62.0 - 10.6 18.5 231 16.1 8.4 768 CQWW/2.13BranchD: Interceptor/MH 165-254 - 98 163 195 130 6.5 650 112 19.4 243 16.9 8.8 805 CQWWI2.14 Branch D: Conections of Outfalls to - 4 5 7.5 9 0 6.0 3 0 30.0 - 5 2 9.0 11 2 7.8 4.1 37 1 Interceptor CQWWt3.01 Branch A: Tunnel/Liaojiatai - 3.3 5.6 6.7 45 22 223 - 38 6.6 82 57 30 27.3 CQWW/3.02 Branch B: Tunnel/Hongyandong - 3 7 6.1 7 4 4 9 2 5 24 5 4 2 7 3 9.0 6 3 3 2 30.0 CQWW/3.03Tunnel/Jiguanshi 113 188 225 150 75 751 - 12.9 222 277 192 99 919 CQWW/3.04TumteU/YangtzeCrossing(Inverted 105 174 209 13.9 7.0 697 - 11.9 206 257 17.8 92 S5.3 Siphon) CQWW/10.01TaipingmenPunmpStation& - 6.0 9.9 11 9 79 40 397 - 6.8 11. 148 103 5.4 492 Pretreatnent Plant CQWW/10.02 Tangjiatuo Pump Station & - 9 8 16 3 19 6 13 1 6 5 65 3 11 2 19 5 24 4 17 0 R R09 Pretreatment Plant CQWW/10.03TangjiatuoOutfall - 50 R3 99 66 33 33 1 5.7 99 12.4 86 45 41.0 CQWW/10.04JiguanshiPumpStation& - 177 294 353 235 11 8 1177 202 35.1 439 306 159 145.8 Pretreatnent Plant CQWW/10.05 liguanshi Outfall - 5 3 8 8 10 5 7 0 3 5 35 0 - 6 0 10 4 13 1 9.1 4.7 43 3 CQWW/10.06 Slope Stabilization Works - 60 100 120 80 40 400 - 6.9 11 9 149 10.4 5.4 495
Subtotal Civil Works - 189.6 316.0 379.1 252. 126.4 1-263.S 216.9 376.6 471.0 327.2 171.5 1,562.1
B. Equipment & Materials CQWW/20.01TaipingmenTreatnentPlant - 4.4 88 11.0 132 66 44.1 - 50 10.4 13.5 169 R8 54.7 Equipment CQWW/20.02TangjiatuoPumpStation& - 57 114 143 172 8.6 572 - 65 135 176 219 11.4 709 Pretreaminent Plant CQWW/20.03 Jiguanshi Pump Station & - 9.2 1.3 22.9 27.5 13 7 91 5 10 4 21.7 28.1 35 0 18.2 113 4 Pretreatment Plant C.OWW/20.04 Proiect Monitoring Svstem (SCADA - 39 78 97 11 6 58 3R8 - 44 92 11.9 14.8 7.7 48.1 CQWW/20.05SewerCleaning&SafetyEquipment - 11 23 28 34 1 7 11 3 - 1.3 2.7 3.5 4.3 22 14.0 COWW/20.06Miscellaneous Fnnjinment& Vehicleq - 1.0 2.0 2 5 3.0 1 5 100 - I 1 2.4 3 1 3 8 2.0 124 CQWW/20.07 Precast Pipes or Box Culverts - 2.0 4 0 5 0 6.0 3.0 20.0 - 2.3 4 7 6 1 7 7 4.0 24.8 CQWW/20.08ReinforcementSteel - 126 253 316 379 IS9 1263 - 143 29.3 37.6 462 23.7 151 1 CQWW/20.09Cement - 75 150 188 226 113 752 - 85 17.5 22.4 275 141 900 CQWW/30.01 PowerSupplytoJiguanshiPlant - 10 2.3 06 - 38 - - 1.1 2.8 07 - 47 CQWW/30.02 Power Supply to Tagjiatuo Plant - - 0.4 1 0 0 2 - 1 6 - - 0.5 1.2 0 3 - 2 0 CQWW/30.03 Power Supply to Taipingmen Plant - - 0 7 1.6 0.4 - 2 6 - - 0. 1.9 0.5 - 3 2
Subtotal Equipment & Materials - 47.4 96.9 123.4 143.5 71.2 4R2.4 53.9 113. 149.8 179.7 92.0 589.2
C. Land Acquisition & Resettlement 555.6 - - - - - S55.6 617.3 - - - - 617.3
D. Construction Supervision Services & Quality Control CivilWorks - 4.7 7.9 95 6.3 32 31.6 - 54 92 11.4 78 40 379 Equipment & Materials - 5 1 0 1 2 1 4 0 7 4 - 0.5 1 1 1 5 1 8 0 9 5 9
Subtotal Construction Supervision Services & - 5.2 R.9 10.7 7.s 3.9 36.4 5.9 115.4 12.9 9.6 5,ni 43.R Quality Control
E. Engineering & Management Civil Works - 19 0 31 6 37.9 25.3 12.6 126 4 - 19 8 34.7 43 7 30 6 161 144 9 Equipment&Materials - 47 97 12.3 144 7.1 482 - 50 106 142 174 9.0 56.2 Land Acquisition & Resettlement 55 6 - - - - - 55 6 56.1 - - - - - 56.1
Subtotal Engineering & Management 55.6 23.7 41.3 5n3 39.6 19.8 230.2 56.1 24.8 45.3 57.9 48.0 25.1 257.2
TOTAL 611.2 265.9 463.0 563.5 443.7 221.2 2.56S.4 673.4 301.5 546.1 691.6 564.5 292.6 3.169-6
- 34 - Table 2: Detailed Costs-Chongqing City Solid Waste Management (Y million)
Base Cost Totals Includine Contingencies 2000 2001 2002 2003 2004 2005 Total 2000 2001 2002 2003 2004 2005 Total
1.Investment Costs
A. Civil Works CQSW/1.01 Access Roads 3.2 7.4 - - - - 10.5 3.5 8.4 - - - - 11.9 CQSW/1.02 Site Periphery Road - 5.3 5.3 - - - 10.5 - 6.0 6.3 - - - 12.3 CQSW/1.03 Leachate Treatment Works - 0.9 1.5 1.8 1.2 0.6 6.0 - 1.0 1.8 2.2 1.6 0.8 7.4 CQSW/1.04 Flood Dam Works - 3.0 4.9 5.9 3.9 2.0 19.7 - 3.4 5.9 7.4 5.1 2.7 24.4 CQSW/1.05 Waste Dam Works - 1.0 1.7 2.1 1.4 0.7 6.9 1.2 2.1 2.6 1.8 0.9 8.5 CQSW/1.06 Earthworksat Landfill Site - 5.7 5.7 5.7 5.7 - 22.9 - 6.6 6.8 7.1 7.4 - 27.9 CQSW/1.07 Site Buildings - 4.0 4.0 - - - 8.0 - 4.6 4.8 - - - 9.4 COSW/1.09 Closure of Existing Dump - 1.4 1.4 1.4 1.4 - 5.4 - 1.6 1.7 1.8 1.8 - 6.9 Sites CQSW/1.10Landfill Works incl. Gas - 5.5 5.5 5.5 5.5 - 21.8 - 6.5 6.8 7.1 7.4 - 27.8 Disposal
Subtotal Civil Works 3.2 34.0 29.9 22.3 19.0 3.3 111.7 3.5 39.3 36.1 28.1 25.1 4.4 136.5
B. Equipment & Materials CQSW/20.01 Supply & Install Liner &HDPEPipeforGasCollection - 7.5 12.5 15.0 10.0 5.0 50.0 - 8.5 14.6 18.1 12.4 6.4 60.0 CQSW/20.02 Landfill Equipment - - - 7.2 16.8 - 24.0 - - - 8.7 20.9 - 29.5 CQSW/20.03 Transfer Vehicles & - - - 18.3 42.7 - 61.0 - - - 22.1 53.0 - 75.1 Equipment CQSW/20.03 Procurementof Cement - 2.5 2.5 2.5 2.5 - 10.0 - 2.8 2.9 3.0 3.1 - 11.9 CQSW/20.05 Procuremnentof Steel - 1.0 1.0 1.0 1.0 - 4.0 - 1.1 1.2 1.2 1.2 - 4.8 CQSW/20.06 Monitoring & Office - 0.7 0.7 0.7 0.7 - 2.7 - 0.8 0,8 0.8 0.9 - 3.3 Equipment COSW/30.01 Auxiliary Services incl. - - 2.2 5.2 1.3 8.7 - 2.6 6.5 1.7 10.8 Power Supply
Subtotal Equipment & Materials - 11.7 18.9 49.9 75.0 5.0 160.4 - 13.3 22.1 60.4 93.2 6.4 195.4
C. Land Acquisition & Resettlement 45.6 18.2 18.2 9.1 - 91.2 50.7 21.0 22.0 11.6 - - 105.2
D. Construction Supervision Services & Quality Control Civil Works 0.1 0.9 0.7 0.6 0.5 0.1 2.8 0.1 1.0 0.9 0.7 0.6 0.1 3.3 Equipment & Materials - 0.1 0.2 0.5 0.7 0.1 1.6 - 0.1 0,2 0.6 0.9 0.1 1.9
Subtotal Construction Supervision Services 0.1 1.0 0.9 1.1 1.2 0.1 4.4 0.1 1.1 1.1 1.3 1.5 0.2 5.2 & Quality Control
E. Engineering & Management Civil Works 0.3 3.4 3.0 2.2 1.9 0.3 11.2 0.3 3.6 3.3 2.6 2.3 0.4 12.4 Equipment & Materials - 1.2 1.9 5.0 7.5 0.5 16.0 - 1.2 2.1 5.8 9.1 0.6 18.8 LandAcquisition&Resettlement 4.6 1.8 1.8 0.9 - - 9.1 4.6 1.9 2.0 1.1 - - 9.6
Subtotal Engineering& Management 4.9 6.4 6.7 8.1 9.4 0.8 36.3 4.9 6.7 7.4 9.4 11.4 1.0 40.8
TOTAL 53.7 71.3 74.7 90.5 104.7 9.2 404.0 59.2 81.3 88.7 110.7 131.3 12.0 483.2
- 35 - Table 3: Detailed Costs-Fuling City Wastewater (Y million)
Base Cost Totals Includine Contineencies 2000 2001 2002 2003 2004 2005 Total 2000 2001 2002 2003 2004 2005 Total
1. Investment Costs
A. Civil Works FWW/2.01 Interceptor& Secondary Sewers 0.8 2.3 3.8 3.8 3.8 0.8 15.1 0.8 2.6 4.5 4.7 4.9 1.0 18.6 FWW/2.02 Interceptor. Jiangdong Area 0.0 0.1 0.1 0.1 0.1 0.0 0.4 0.0 0.1 0.1 0.1 0.1 0.0 0.5 FWW/2.03 Modification to Existing 1.3 3.8 6.3 6.3 6.3 1.3 25.3 1.4 4.3 7.5 7.9 8.2 1.7 31.1 WastewaterChannels FWW/3.01 River Crossing: Wujiang Siphon 1.9 5.7 9.5 9.5 9.5 1.9 37.8 2.1 6.5 11.3 11.8 12.3 2.6 46.4 & Jiangdong Outfall FWW/5.01 Nan'anPretreatmentWorks& 0.4 1.2 2.0 2.0 2.0 0.4 7.8 0.4 1.3 2.3 2.4 2.5 0.5 9.6 Pump Station FWW/5.02 Foundation Preparation or 3.3 14.3 4.4 - - - 22.0 3.7 16.4 5.3 - - - 25.3 Laying Interceptor
Subtotal Civil Works 7.6 27.3 26.0 21.6 21.6 4.3 108.4 8.5 31.2 31.0 26.9 28.0 5.8 131.5
B. Equipment & Materials
FWW/20.01 Nan'amPretreatmentWorks& - - - 3.4 6.8 1.1 11.4 - - - 4.3 8.9 1.5 14.7 Pump Station Equipment FWW/20.02 Misc. Equipment (Sewer - - - 2.4 4.9 0.8 8.1 - - - 2.9 6.0 1.0 10.0 Cleaning etc.) FWW/30.01 Supply ofPipe - 1.2 2.4 0.4 - - 4.0 - 1.4 2.9 0.5 - - 4.7 FWW/40.01 Power Supply - 0.9 1.8 0.3 3.0 - - - 1.1 2.3 0.4 3.9
Subtotal Equipment& Materials - 1.2 2.4 7.2 13.5 2.3 26.5 - 1.4 2.9 8.8 17.2 3.0 33.3
C. Land Acquisition & Resettlement 14.1 14.1 - - - - 28.2 15.7 16.2 - - - - 31.9
D. ConstructionSupervision Services & Quality Control Civil Works 0.2 0.7 0.7 0.5 0.5 0.1 2.7 0.2 0.8 0.8 0.7 0.7 0.1 3.2 Equipment&Materials - 0.0 0.0 0.1 0.1 0.0 0.3 - 0.0 0.0 0.1 0.2 0.0 0.3
Subtotal Construction Supervision Services 0.2 0.7 0.7 0.6 0.7 0.1 3.0 0.2 0.8 0.8 0.7 0.8 0.2 3.5 & Quality Control
E. Engineering& Management Civil Works 0.8 2.7 2.6 2.2 2.2 0.4 10.8 0.8 2.9 2.9 2.5 2.6 0.5 12.1 Equipment&Materials - 0.1 0.2 0.7 1.4 0.2 2.7 - 0.1 0.3 0.8 1.6 0.3 3.1 Land Acquisition & Resettlement 1.4 1.4 - - - - 2.8 1.4 1.5 - - - - 2.9
Subtotal Engineering& Management 2.2 4.3 2.8 2.9 3.5 0.7 16.3 2.2 4.4 3.1 3.3 4.2 0.8 18.2
TOTAL 24.1 47.5 31.9 32.2 39.3 7.4 182.4 26.5 54.0 37.8 39.7 50.4 9.8 218.3
- 36 - Table 4: Detailed Costs-Wanzhou City Water Supply (Y million)
Hase Cost Totals Includine Contingenesd 2000 2001 2002 2003 2004 2005 Total 2000 2001 2002 2003 2004 2005 Total
1. Investment Costs
A. Civil Works WAWS/2.01 Clear Water Transmission 0.5 1.0 1.0 1.0 1.0 0.5 5.2 0.6 1.2 1.2 1.3 1.3 0.7 6.4 Mainn WAWS/2.02 Distribution Network 3.6 7.2 7.2 7.2 7.2 3.6 36.0 4.0 8.2 8.6 9.0 9.3 4.9 44.0 Improvements incl. Booster Pumps WAWS/2.03 Wastewater Interceptor and 1.3 2.6 2.6 2.6 2.6 1.3 13.1 1.5 3.0 3.1 3.3 3.4 1.8 16.0 Outfall WAWS/4.01 Tongzivaun Raw Water Intake 1.2 2.3 2.3 2.3 2.3 1.2 11.5 1.3 2.6 2.7 2.9 3.0 1.6 14.1 & Pump Station WAWS/4.02 Water Treatment Plant No. 3: 0.7 1.3 1.3 1.3 1.3 0.7 6.5 0.7 1.5 1.6 1.6 1.7 0.9 7.9 Intake WAWS/4.03 Water Treatment Plant No. 3: 0.6 1.3 1.3 1.3 1.3 0.6 6.3 0.7 1.4 1.5 1.6 1.6 0.9 7.7 Extension
Subtotal Civil Works 7.9 15.7 15.7 15.7 15.7 7.9 78.6 8.7 18.0 18.8 19.6 20.4 10.6 96.1
B. Equipment & Materials WAWS/20.01 Equipment for Water - - 2.5 14.7 6.1 1.2 24.5 - - 2.9 17.7 7.6 1.6 29.8 Treatment Plant No. 3: Intake & Extension WAWS/30.01 Power Supply - - - - 2.4 1.6 4.0 - - - - 3.0 2.0 5.0
Subtotal Equipment& Materials - 2.5 14.7 8.5 2.8 28.5 - - 2.9 17.7 10.6 3.6 34.8
C. Land Acquisition & Resettlement 8.8 - - - - - 8.8 9.8 - - - - - 9.8
D. Construction Supervision Services & Quality Control Civil Works 0.2 0.4 0.4 0.4 0.4 0.2 2.0 0.2 0.4 0.5 0.5 0.5 0.3 2.3 Equipment & Materials - - 0.0 0.1 0.1 0.0 0.3 - - 0.0 0.2 0.1 0.0 0.3
Subtotal Construction Supervision Services 0.2 0.4 0.4 0.5 0.5 0.2 2.3 0.2 0.4 0.5 0.7 0.6 0.3 2.7 & Quality Control
E. Engineering & Management Civil Works 0.8 1.6 1.6 1.6 1.6 0.8 7.9 0.8 1.6 1.7 1.8 1.9 1.0 8.9 Equipment & Materials - - 0.2 1.5 0.9 0.3 2.9 - - 0.3 1.7 1.0 0.4 3.4 Land Acquisition & Resettlement 0.9 - - - - - 0.9 0.9 . - - - 0.9Q
Subtotal Engineering & Management 1.7 1.6 1.8 3.0 2.4 1.1 11.6 1.7 1.6 2.0 3.5 2.9 1.4 13.1
TOTAL 18.5 17.7 20.4 34.0 27.1 12.0 129.7 20.4 20.1 24.1 41.4 34.5 15.9 156.5
- 37- Table 5: Detailed Costs-Nanbin Town Water Supply (Y million)
Base Cost Totals Includinn Contineencies 2000 2001 2002 2003 2004 2005 Total 2000 2001 2002 2003 2004 2005 Total
1. Investment Costs
A. Civil Works NWS/2.01 Distribution Network - 1.5 3.0 3.8 4.5 2.3 15.1 - 1.7 3.6 4.7 5.9 3.1 19.0 Improvements NWS/4.01 Intake Works & Raw Water - 0.2 0.4 0.5 0.6 0.3 2.1 - 0.2 0.5 0.7 0.8 0.4 2.6 Transmission NWS/10.01 Water Treatment Plant incl. - 1.8 3.6 4.5 5.4 2.7 18.1 - 2.1 4.3 5.6 6.9 3.6 22.4 Equipment
Subtotal Civil Works - 3.5 7.1 8.8 10.6 5.3 35.3 - 4.0 8.4 10.9 13.6 7.1 44.0
B. Equipment & Materials NWS/30.01Power Supply - - - 0.7 0.5 1.2 - - - - 0.9 0.6 1.6
C. Land Acquisition & Resettlement 0.5 - - - - - 0.5 0.6 - - - - - 0.6
D. Construction Supervision Services & Quality Control Civil Works - 0.1 0.2 0.2 0.3 0.1 0.9 - 0.1 0.2 0.3 0.3 0.2 1.1 Equipment&Materials - - - 0.0 0.0 0.0 - - - - 0.0 0.0 0.0
Subtotal Construction Supervision Services - 0.1 0.2 0.2 0.3 0.1 0.9 - 0.1 0.2 0.3 0.3 0.2 1.1 & Quality Control
E. Engineering & Management Civil Works - 0.4 0.7 0.9 1.1 0.5 3.5 - 0.4 0.8 1.0 1.3 0.7 4.1 Equipment& Materials - - - 0.1 0.0 0.1 - - - 0.1 0.1 0.1 Land Acquisition & Resettlement 0.1 - - - - - 0.1 0.1 - - - - - 0.1
Subtotal Engineering& Management 0.1 0.4 0.7 0.9 1.1 0.6 3.7 0.1 0.4 0.8 1.0 1.4 0.7 4.3
TOTAL 0.6 4.0 7.9 9.9 12.7 6.5 41.6 0.6 4.5 9.4 12.2 16.3 8.6 51.6
- 38 - Table 6: Detailed Costs-Environmental Water Quality Monitoring (Y million)
Base Cost Totals Including ContinEencies 2000 2001 2002 2003 2004 2005 Total 2000 2001 2002 2003 2004 2005 Total
1. Investment Costs
A. Civil Works EWQM/2.01Laboratory Building 2.4 7.3 7.3 7.3 - - 24.4 2.8 8.7 9.1 9.4 - - 30.0
B. Equipment& Materials EWQM/20.01 Environmental Monitoring - - 0.4 2.2 1.1 - 3.6 - - 0.4 2.6 1.4 - 4.4 Equipment EWQM/20.02 Analysis Equipment - - 0.6 3.5 1.8 - 5.9 - - 0.7 4.3 2.2 - 7.2
Subtotal Equipment & Materials - - 1.0 5.7 2.9 - 9.5 - - 1.1 6.9 3.6 - 11.6
C. Consultants' Services EWOMI40.01 Environmental Management - * - 1.7 1.2 - 2.9 - - - 2.1 1.5 - 3.6 Information System EWQM140.02 Advisory Services & - 4.0 * - - - 4.0 - 4.5 - - - - 4.5 Training
Subtotal Consultants' Services - 4.0 - 1.7 1.2 - 6.9 - 4.5 - 2.1 1.5 - 8.1
D. Engineering & Management Civil Works 0.2 0.7 0.7 0.7 - - 2.4 0.2 0.8 0.8 0.8 - - 2.7 Equipment & Materials - - 0.1 0.6 0.3 - 1.0 - - 0.1 0.7 0.3 - 1.1
Subtotal Engineering & Management 0.2 0.7 0.8 1.3 0.3 - 3.4 0.2 0.8 0.9 1.5 0.3 - 3.8
TOTAL 2.7 12.1 9.1 16.1 4.3 - 44.2 3.1 14.0 11.1 19.9 5.4 - 53.5
Table 7: Detailed Costs-Urban Management Information Systems (Y million)
Base Cost Totals Includino Continaencies 2000 2001 2002 2003 2004 2005 Total 2000 2001 2002 2003 2004 2005 Total
1. Investment Costs
A. Equipment & Materials tMIS/20.01 Information & Technologv - - 2.6 2.6 - - 5.1 - - 3.0 3.1 - - 6.1 Equipment UMIS/20.02 Office Equipment 0,5 - - - - - 0.5 0.6 - - - - - 0.6
Subtotal Equipment & Materials 0.5 - 2.6 2.6 - - 5.6 0.6 - 3.0 3.1 - - 6.6
B. Consultants' Services UMIS/40.01 Svstem Design & Development. 0.9 1.8 1.8 1.8 1.8 0.9 9.2 1.0 2.1 2.2 2.2 2.3 1.2 10.9 Training UMIS/40.02 Data Collection Services - - 4.4 4.4 2.2 - 11.1 - - 5.4 5.6 3.0 - 13.9
Subtotal Consultants' Services 0.9 1.8 6.3 6.3 4.1 0.9 20.3 1.0 2.1 7.5 7.8 5.2 1.2 24.9
C. Engineering & Management Equipment & Materials 0.1 - 0.3 0.3 - - 0.6 0,1 - 0.3 0.3 - - 0.6
TOTAL 1.5 1.8 9.1 9.1 4.1 0.9 26.5 1.6 2.1 10.8 11.2 5.2 1.2 32.1
- 39 - Table 8: Detailed Costs-Environmental Rehabilitation and Reconstruction (Y million)
Base Cost Totals Includine Contingencies 2000 2001 2002 2003 2004 2005 Total 2000 2001 2002 2003 2004 2005 Total
I. Investment Costs
A. Civil Works CI/2.01 Urban Services Rehabilitation & Upgrading (Pilot) - 1.5 2.5 3.0 2.0 1.0 10.0 1.7 3.0 3.7 2.6 1.4 12.4 CH/2.02UrbanUpgrading - 2.3 3.8 4.5 3.0 1.5 15.0 - 2.6 4.5 5.6 3.9 2.0 18.6
Subtotal Civil Works - 3.8 6.3 7.5 5.0 2.5 25.0 - 4.3 7.5 9.3 6.5 3.4 31.0
B. Equipment & Materials CH/20.01 MiscellaneousEquipment - 0.5 0.5 0.5 0.5 - 2.0 - 0.6 0.6 0.6 0.6 - 2.4
C. Consultants' Services & Training CR140.01 Training - 0.5 0.5 0.5 0.5 - 2.0 - 0.6 0.6 0.6 0.6 - 2.4 CH/40.02 Awareness Campaigns - 0.4 0.4 0.4 0.4 - 1.5 - 0.4 0.5 0.5 0.5 - 1.9
Subtotal Consultants' Services & Training 0.9 0.9 0.9 0.9 3.5 - 1.0 1.0 1.1 1.1 _ 4.3
D. Engineering & Management Civil Works - 0.4 0.6 0.8 0.5 0.3 2.5 - 0.4 0.7 0.9 0.6 0.3 2.9 Eqsipment&Materials - 0.1 0.1 0.1 0.1 - 0.2 - 0.1 0.1 0.1 0.1 - 0.2
TOTAL - 5.6 8.3 9.7 6.9 2.8 33.2 - 6.3 9.8 12.0 9.0 3.7 40.8
Table 9: Detailed Costs-Technical Assistance and Training (Y million)
Base Cost Totals Includine Contineencies 2000 2001 2002 2003 2004 2005 Total 2000 2001 2002 2003 2004 2005 Total
1. Investment Costs
A. ConsultancyServices & Training /a Package A - 9.7 9.7 6.5 3.2 3.2 32.3 - 11.0 11.3 7.8 4.0 4.1 38.3 Package B - 0.6 0.6 0.4 0.2 0.2 2.0 - 0.7 0.7 0.5 0.2 0.3 2.4 Package C IA: Industrial Pollution Control & - 3.8 3.8 2.5 1.3 1.3 12.5 - 4.3 4.4 3.0 1.6 1.6 14.8 Sewer Network & Condition Survey Package C IB: Industrial Pollution Control & - 3.8 3.8 2.5 1.3 1.3 12.5 - 4.3 4.5 3.2 1.7 1.7 15.4 Sewer Network & Condition Survey Package C 2 Support for Municipal - 1.5 1.5 1.0 0.5 0.5 5.0 1.7 1.8 1.2 0.6 0.7 6.1 Government Package C 3 Public Infomiation Program - 1.0 1.0 1.0 1.0 - 4.0 - 1.2 1.2 1.3 1.3 - 5.0 Package C 4: Future (Phase I) Proiect - - 2.5 2.5 2.5 2.5 10.0 - 2.9 3.0 3.1 3.2 12.2 Preparation Package C 5: Panel of Experts-Tunnel. 1.5 1.5 1.5 1.5 - 6.0 1.7 1.8 1.8 1.9 - 7.1 Siphon & Outfall Modeling Tests
TOTAL - 21.8 24.3 17.9 11.4 8.9 84.3 - 24.8 28.6 21.8 14.4 11.6 101.3
/a Package D (Construction Supervision & Quality Control) costs included in Utilities & Solid Waste Management Components.
-40 - Annex4: Cost EffectivenessAnalysis Summary CHINA:CHONGQING URBAN ENVIRONMENT PROJECT
1. Chongqing Municipality was created in 1997 from the old Chongqing urban district and a number of surrounding counties previously in Sichuan Province. The Municipality now comprises areas of former municipalitiesof Chongqing, Fuling and Wanzhou, and the Qianjiang Development Zone. The urban area of Chongqing is at the center of the municipality, at the confluence of the Jialing and Yangtze Rivers. The overall population of the Municipality is just over 30 million according to 1997 statistics, with around 2.3 million in the central urban area occupying 175 km2. 2. Chongqing has traditionally had a strong industrial base, although the government is promoting diversification. The municipal GDP in 1997 was Y 1,375 million (about $166 million). It has a very strategic location and the policy of both the national and municipal governments is to develop the area as a key commercial and industrial center for southwest China. 3. The Municipality and especially the central urban areas have been growing rapidly over recent years (although this has slowed at present). Annual levels of investment in infrastructure such as power, transport, telecommunications and water supply have been growing at rates of 30 percent a year or more but investment in pollution control has lagged behind. Investment in infrastructurein the Municipality was reported as Y 12 billion in 1997 (about $1.4 billion). 4. The overall objective of CUEP is to provide a sound environmental basis for the long-term sustainable economic growth of the urban areas of the municipality and to safeguard public health and the environment through the alleviation of urban infrastructure constraints. The major proposed investments relate to the upgrading of wastewater and solid waste management systems in the Chongqing urban area, with smaller levels of investments in water supply in three country towns. 5. The Municipality includes much of the area that will be affected by a rising water level behind the dam of the Three Gorges Project (TGP). The works proposed in this project are not related to the TGP or to the resettlement associated with the reservoir but new national environmental requirements for all discharges upstream of the dam have been addressed in the design of individual components. The most significant impact on the central urban area will be the new river regime in the winter (low flow) season, when the river level will be high but velocitieswill be low. Current Situation in the Urban Area 6. At present, there are 12 water treatment works proving water supply to the Chongqing main urban area, with six intakes abstracting raw water from the Yangtze and six others from Jialing River. These plants have a total capacity of 975,000 m3/day. In addition, there are 49 self-supply water works, with a total capacity of 1.3 million m3/day, mainly owned by industries. The proportion of domestic water use has been increasing steadily over the past six years, now consumingmore than half of the total water supply. In the meantime, industrial water consumption has decreased from 57 percent of total supply in 1993 to only 37 percent in 1997. 7. The wastewater/drainagesystem is much less advanced in comparison to water supply. The total length of the wastewater network in the main urban area is 408 km (compared to 1,565 km of water mains with diameters larger than 400 mm). Most of the population is serviced by septic systems that typically overflow into the surface-water drainage systems. Centralized wastewater treatment is limited only to the Tangjiaqiao catchment serving a population of approximately 74,000 (50,000 m3/day). Most of the wastewater is discharged directly into the river through various channels, including 239 outlets located along the banks of the Yangtze and Jialing. These outfalls are side by side with the water supply intakes, resulting in increased health risks, growing operating costs and occasional interruptions in the water
-41 - supply. A range of options for dealing with this situation have been under discussions by the authorities, including relocation of the water intakes and/or treatment plants, increasing water treatment levels, and wastewater treatment at the main sewer outfall points. 8. Total wastewater discharge from the municipal collection systems is 1.184 billion m3 in 1998. Currently, pollution loads from industrial sources are of the same order of magnitude but these would decline in relative terms as pollution control measures are put into effect and as municipal loads increase. Monitoring data show that the main pollutants in the two rivers are: coli bacteria, petroleum, NH3-N, phenols, heavy metal (Hg), and chemical oxygen demand (COD). The "WithoutProject" Scenario 9. The overall water quality of the major rivers in Chongqing cannot comply with their Water Quality Objectivesat present, with the smaller Jialing more heavily polluted than the main Yangtze. Water quality in the Chongqing urban area is expected to deteriorate significantly in the near future for two sets of reasons. First, as a result of the population increase in the urban center (expected to be 2.9 million in 2010 and 3.3 million in 2020), together with a rise in per capita consumption, water consumption in the main urban area is expected to increase from 1.1 million m3/day in 2000 to 1.6 million in 2010 and 1.9 million in 2020. Accordingly, municipal wastewater quantity is expected to increase from 0.85 million m3/day in 2000 to 1.2 million m3/day in 2010 and 1.5 million m3/day in 2020. Moreover, unit pollution loading rates will rise, mainly as a result of the gradual by-passing of septic tanks. Therefore total pollution loads to the rivers, such as biological oxygen demand (BOD), total nitrogen (N) and total phosphorus (P), will all increase. The highest increase is seen for BOD and nitrogen, which will rise by more than 80 percent between 2005 and 2020. 10. While total pollution loads will increase with economic development and population growth, the assimilative capacity of the rivers will decrease significantly, primarily as a result of the TGP, which will modify the hydraulic regime in the area. The impact of TGP is most serious during the dry season (October to February),when the Yangtze and Jialing will become wider, the water level will rise by as much as 15 meters, and the current velocities will be greatly reduced. Simulation shows that the present dry-season velocity in the Yangtze (between 1.0 to 2.0 meters per second--m/s,with a discharge of 3,000 m3/s) will be reduced to between 0.3 to 0.4 m/s. On the Jialing, the highest velocity will not exceed 0.1 to 0.2 m/s (with a discharge of 450 m3/d), down significantlyfrom the present level (between 0.4 and 1.4 m/s). 11. The combination of these two sets of factors will result in worsened water quality in the city, with the Jialing affected more strongly. For instance, the BOD level in the Jialing will exceed Class III standards by 2010 and exceed Class IV by 2020; ammonia will exceed Class IV by 2005; and both fecal coliforms and phosphorus will be noncompliant.For the Yangtze the situation is less serious. Except for phosphorus and fecal coliforms, all the parameters will be within the Class III limit. These classificationsare based on a cross-sectionalaverage of the parameters.More severe impact will be found at near-bank discharges. 12. The consequences of increasing deterioration of the water quality in the urban area will put more severe constraints on the water supply system, with growing risks of impacts on public health, as well as decreases in environmental quality below acceptable standards, with potential impacts on tourism, fishing and other uses of the river. CHONGQING WASTEWATER COMPONENT 13. The overall objective of CUEP is to provide a sound environmental basis for the long-term sustainable economic growth of the urban areas of the municipality.The largest single component and one that establishes a sound basis for future expansion and upgrading of environmental infrastructure is Chongqing wastewater. The specific objectives of this component are to improve the basic environmental infrastructureof the main urban area; to upgrade the water quality in the rivers in the area--in particular to
- 42 - reduce the levels of pollution along the shores of the Jialing River where several water intakes are located; and to protect the overall quality of the Yangtze upstream of TGP, in line with national governmentpolicy and regulations. 14. The need for rationalization and upgrading of the municipal infrastructure has been under consideration by the Municipal Government as urbanization increases, and increasing stress has been put on the water supply and wastewater collection systems. Problems with river water quality at the water supply intakeshave been increasing and shutdownsof some treatment plants have become more frequent. 15. An obvious technical approach would be to relocate the main water supply intakes upstream of the urban area but the topography of the area would make this a costly approach. (Experience in Shanghai has demonstratedthat the scale of investmentrequired can be in the order of hundreds of millionsof dollars--in a area with easier physical conditions.)Increasing the level of water treatment is possible but it is complex and also a costly approach. Examinationof long-term options for upgrading the water supply continues but the Chongqing Municipal Government (CMG) decided to initiate a program of wastewater management to reduce the local pollution levels and to provide cost-effectiveprotection for the water supply in the medium term. Overall Approach 16. In initial discussions with the CMG it was clear that a full wastewater collection and treatment system for the whole urban area was beyond what was affordable and feasible in the context of the proposed project. The practical objective therefore became to identify the most cost-effective first-stage investment in wastewater systems, to deal with the priority concerns and to provide the basis for the long-term development of an environmentalinfrastructure for the growing urban area. The identificationof the first-stage investments focused on two broad issues: the best long-term layout for the whole system, in terms of collectors and treatment sites; and the level of treatment to be provided at this first stage, consistent with achieving the required river water quality objectives in the medium term. System Layout 17. The initial scheme proposed for support by the Bank was based on a large number (more than 20) small wastewater treatment plants throughout the urban area, each dealing with a number of the existing discharges. A least-cost analysis that compared the economic costs of four scenarios involving different numbers of treatment plants demonstratedthat a better alternative for the treatment of wastewater from the urban area is to collect the existing discharges into a number of large interceptors and to provide treatment in one or two large plants downstream of the city. The final layout adopted involves two new treatment plants: the main one on the right bank of the Yangtze and a smaller one on the opposite bank at about the same location. The locations are based on availability of land and also on routing of the trunk sewer on the south bank to avoid a large limestone karst ridge, which presents potential serious tunneling problems. The proposed scheme utilizes both sites in order to minimize the number of river crossings to the one required to get from the peninsula area to the south bank of the Yangtze. 18. Eleven schemes were compared for the peninsular area in order to optimize network configuration for the wastewater interceptors along both the Yangtze and the Jialing. Following identification of the least-cost option for the peninsular area, based on NPV cost, the analysis was extended to the whole main urban area. The best solution was chosen from nine alternatives. The selected configurationconsists of four segments, along the four banks of the Yangtze and the Jialing (see Map 30736). 19. The proposed interception of existing municipal sewer outfalls to the rivers in the urban area will significantly improve local river water quality and will reduce the problems and risks facing the water supply system. At the same time, there will remain problems with the existing raw water intakes due to the industrial pollution and ongoing risks posed by accidents and spillages from industry and from the docks,
-43 - stormwater runoff, and the intermittentdischarges of combined sewer overflows. 20. At present there are also a large number of significant discharges of industrial wastewater to the rivers in the urban area, contributing about 30 percent of the point loads of BOD and 65 percent of the total phosphorous (TP) loads, as well as high levels of other pollutants such as oil, phenols and heavy metals. There is a program for the control of these discharges but it is not effective. The river quality modeling and the projections that derive from it are based on the assumption that industrial discharges are brought into compliance with effluent standards and that all new industries meet the required standards from the beginning of operation. The Municipal Government is developing an Industrial Action Plan to deal with the industrial discharges, through a combination of relocation of some plants away from the waterfront and the provision of pollution abatement and treatrnent facilities at others. This project will provide some support to this effort through the water quality monitoring and urban management information system components. 21. In principle, the project is interceptingand treating only domestic sewage. However, in practice it will be difficult to distinguish between domestic and industrial outfalls and it makes practical sense to intercept all sewer outfalls in the project area. This raises a number of technical problems, such as possible increased design flows, potential damage to sewers from industrial wastes, and problems with treatment processes. Selection of Treatment Levels 22. Interceptionof the municipal wastewater will result in improvements in the urban area, particularly for the Jialing River, but does not reduce the overall load in the system, unless treatment is provided before discharge back into the Yangtze (although a well-designed diffuser system can reduce the impacts of the overall load by reducing the concentrations at the discharge point and allowing better re-aeration). Considerable effort has been put into calculation of the impacts on the river and into the selection of treatment approaches, taking into account the present and longer-term environmental requirementsand the resources available under the project. The issues are further complicated by implications of pollution loads for the TGP. 23. The current water quality objective for the Yangtze and Jialing Rivers is Class III, under the national system of classification. This corresponds to "second-class protection areas for centralized domestic potable water sources, general fishing protection areas and swimming areas." In practice, there are minimal fishing and recreational uses of the rivers in the urban area. However, after the implementation of the TGP, the required objective for the rivers will rise to national Class II. 24. Environmental requirements for river water quality related to the TGP can be summarized as twofold: a total load approach, which can be implemented in stages, to bring down the loads; and a requirement for compliance with all relevant discharge standards (which are concentration related) for individual sources of pollution. These requirements are interpreted as supporting a strategy of load reduction in stages, working toward a goal of eventual compliance with the concentration-baseddischarge standards. Such a strategy allows a phased, economically sound pollution reduction plan to be implemented. 25. Determination of current water quality and trends, and prediction of the impacts of various interventions,is a highly complex task, which has been addressed by the PMO and their consultants.For the purposes of the economic analysis, however, the issues can be broadly simplified to identifying the optimum phased reduction of key pollutants discharged by the project. The key pollutants are BOD, which affects the oxygen levels and overall biological health of the river, and nutrients (nitrogen and phosphorus, in various chemical forms), which could contribute to eutrophication of the reservoir. The probability of eutrophicationproblems arising is difficult to predict but the nutrient levels are projected to
-44 - be above the thresholds at which problems may occur and therefore the authorities are requiring action to reduce loads. At present, phosphorus is seen as the controllingnutrient but it is probable that much of the phosphorus comes from agricultural and industrial sources as well as urban areas. 26. The set of possible treatment levels can be broadly defined as follows (the precise performance of each level has a certain amount of flexibility): * pretreatment (grit removal, screening); * primary settling,with sludge management(dewatering, etc.); * enhanced primary, using chemical dosing; * secondary biological; * secondary biological with enhanced nutrient removal; and * tertiary (various possibilities). 27. For each of these treatment levels, it is reasonably straightforwardto define performance, in terms of removal levels of different pollutants, and total costs (capital, operation). From this the average and marginal costs of pollutant removal can be estimated and these are summarized in Table 1, based on data provided in the StrategicPlanning Report. In the circumstanceof Chongqing, the controlling parametersfor treatment selection are oxygen demand (OD) and phosphorus (P). [Oxygen demand is a combination of BOD and NOD (mainly ammonia).] The engineering reports have addressed the impacts on river water quality of different levels of pollutantremoval and these can be combined with information such as Table 1 to select the most effective options. Table 1: Average and Marginal Costs of Pollutant Removal for Chongqing
Total COD BOD Total Nitrogen Total Phosphorus Cost Load AIC Load AIC Load AIC Load AIC Pretreatment 77 68 1,132 16 4,813 0 na 0 na Primary 184 341 540 193 953 7 26.3 2 92 treatment Enhanced 412 750 549 418 986 14 29.4 22 19 primary II_I_I_I_I__ Secondary 476 1,090 437 578 824 27 17.6 7 68 treatment Secondary + 545 1,226 445 610 893 123 4.4 22 25 nutrients Abbreviations: Total cost:NPV of process in $ million Load: NPV load of each pollutant remnoved(thousand tons) AIC: average incremental cost of pollutantremoval for each process ($/ton) COD: Chemical Oxygen Demand BOD: BiologicalOxygen Demand Staging 28. In terms of cost effectiveness,two options (enhanced primary treatment and secondary treatment with nutrient removal) stand out. These various processes, however, can be combined in a number of ways in order to meet the future requirements for wastewater treatment and control in Chongqing. In order to determine the staging of treatment process, the following three options were considered:
-45 - OptionI Option2 Option3
Phase I Preliminarytreatment (2003-09) Primarytreatment (2003-09) Prliminary treatment(2003-09)
Phase 2 Enhanced primary treatrment(2009-19) Secondary treatmentw/ nutrient removal Secondarytreatment w/ nutrient removal (2010 (2010-)
Phase 3 Secondary treatment w/ nutrient removal (2020 --)
29. Each of these schemes permits the Class II Water Quality Objective to be attained at 2010. Comparison of capital and operational costs showed that Option I is the least cost. The first stage of the project is therefore limited to the wastewaternetwork and preliminarytreatment only. 30. There are concernsthat nutrient levels in the TGP (especially P) may be above the point at which eutrophication may be a problem. After appropriate monitoring and analysis (not proposed under this project) the relevant authorities (SEPA) will have to determine acceptable P loads entering the TGP--in practical terms, this means at some point downstream of Chongqing.At present there is little understanding of the relative importance of the different contributors of P (municipal discharges, industrial discharges, agricultural run-off etc.). Once the need for load reduction has been established, estimates can be made of the relative costs of P removal from the different sources. Estimates from this project of the marginal costs of P removal by municipal treatment will provide a benchmark for the determination of the most cost-effective interventions to reduce overall P loads. Given the potential effectiveness of production efficiency changes and of pollution prevention measures in reducing P discharges from major industrial sources, it has been recommendedthat efforts should be put into dealing with these sources. Benefits of Reducing River Pollution 31. The works to be provided under this component will provide both immediate local benefits in the most polluted area of the city and also the basis for much longer-term and broader improvements in the environment of the middle Yangtze. A range of benefits has been identified that are related to the overall improvement in the water environment in Chongqing and in the Yangtze downstream. However, it is not possible to develop confident economic values for the benefits that will be achieved under this project and therefore specific estimates of cost-benefit ratios have not been made. The CUEP investments are only a first stage in what will be a long-term program to maintain and improve the water quality in the Yangtze upstream of TGP and therefore it is not possible to attribute to this first-stage project all the long-term benefits that would come from better river quality. 32. The immediate effect of the first-stage investmentswill be to reduce the high levels of pollution in the rivers in the city area, especially near the water supply intakes, by intercepting and diverting a large number of existing sewer outfalls. The first-stage works will provide preliminarytreatment, to reduce gross pollution, followed by an engineered discharge to the river at a location downstream of the city where the immediate impacts of the discharge can be minimized. These works also provide the basis for expansion of sewerage services in the city and create the foundation for further treatment stages, to deal with increasing loads from the city. 33. The use of tariff income (appropriatelyadjusted) as an economic benefit was considered, since this approach is used in the analysis of water supply projects. In principle, such an approach could be used, if the project results in complete internalizationof the environmentalcosts and if the tariff is based on the full costs of the scheme. This is broadly the case with water supply projects, where the tariff is assumed to represent the value placed on the service or the willingness to pay. However, in the case of domestic
-46 - wastewater systems, the evidence from experienceworldwide (includingwillingness-to- pay studies) is that users of the systems are prepared to pay some amount for the (private) benefit of sewage being removed from the house but that they are usually reluctant to pay the costs of main sewers and proper treatment. The "polluterpays" principle requires that the polluter (the household) should pay the full cost of protecting the environment but --except in some rich countries--thisprinciple is not fully applied and the govemment typically pays much of the cost of collection and treatment. 34. In order to justify consideration of the tariff as a benefit to a sewerage project, it would be necessary also to take into account the full costs of all the household connections and local sewers, since these are the elements of the sewerage system that provide the direct local benefit to the household. In the present case, where there is no informationon the value of the existing sewer network and where the project will not be investing in this part of the system, it is better to assume that tariff charged covers the cost of the basic local sewer and to base the project economic analysis on a comparison of the costs of the main sewers and treatment against the benefits of improving or protecting the environment. 35. The project team and the DRA Consultant have made considerable efforts to quantitatively estimate the overall benefits from the project. For a number of the benefits identified, the cause and effect links with the project are difficult to quantify and therefore the range of benefits will be uncertain. The most important categories identified are as follows. 36. (i) Reduction in the cost of water supply: Avoiding the costs of expanding or relocating the water supply works, in the "with project" case can be claimed as a major benefit for the wastewater project. The project team identified the least cost altemative to retain the current water supply capacity in the absence of the proposed wastewater component. The scheme involves a combination of deep treatment and relocation of some intakes and/or treatment plants to more upstream locations, and does not take into account the expectedfuture water supply expansion. The net present value of the investment and additional operation costs of the scheme is estimated to be over Y 1 billion, which can be considered as cost savings brought about by the project. 37. (ii) Reduction in health costs: It is a natural assumption, but difficult to prove, that poor water quality has an impact on health conditions in the local population. There has been observable increase in the recent years in the incidence of infectious diseases in Chongqing main urban area. Improvement in water supply quality--the benefits of which are captured in the previous paragraph--will have positive health impact, but there are also additional health benefits attributable to the project. The estimates have been made on the basis of opinions received from local medical experts of the impact of poor water quality on the incidence of a number of important types of disease. However, it is always difficult to demonstrate the real link between the water quality (with and without project) and health impacts. The uncertaintyin the benefits therefore needs to be stronglyemphasized. 38. (iii) Impacts on fisheries: The fishing industry in Chongqing currently has an annual output of nearly Y I billion, with around 30 percent from the Yangtze and Jialing Rivers. The production has been declining in recent years. A recovery of fisheries output as a result of the project would be a clear benefit. 39. (iv) Protection of river-basedtourism: Chongqing is currently the starting point for most of the tourism to the Three Gorges. It is not possible to predict exactly what will be the changes in tourism after the completion of the reservoir but it is probable--based on experience with other reservoirs worldwide--that tourism and recreational activity on the lake will increase. Once again, the impacts on tourism revenues of worse or better water quality in Chongqing are uncertain but the possible scale of the effects may be estimated. 40. (v) Amenity and waterfront developmentin Chongqing: the character of Chongqing is defined by its location at the confluence of two major rivers. There are already various works to improve the
-47 - riverfronts and to increase access for the public. Better quality of the water around the city will generate public benefits, some of which will eventually be captured by housing and land values near the river. 41. (vi) Protection of the water quality in the Three Gorges Reservoir: the Yangtze is a mighty river but cannot absorb ever-increasing pollution loads without impacts. The importance attached by the central government to the water quality is demonstrated by the State Environmental Protection Agency (SEPA) requirementsfor high levels of water protection.However, these more general benefits are difficult to estimate. 42. The initial estimates of these benefits has an NPV of about Y 4 billion ($482 million) over the life of the project. With all the uncertaintiessurrounding the estimation, this value should not be used as direct justification of this first stage investment. However, it is clear that protection and improvement of the water quality around Chongqing can provide large benefits. Short-TermInvestments for Long-Term Benefits 43. The economic effectiveness of these first-stage investmentshas to be considered in the context of the long-term protection and improvement in enviromnental quality, rather than just on the basis of immediatemeasurable benefits. 44. For any major river basin or similar water quality improvementproject, it is possible, theoretically at least, to determine an economicallyoptimum level of investment over a wide range of choices, in relation to the benefits of the improvementsin the environment.(In practice, this can usually only be done in broad terms, because of lack of data and uncertaintiesin outcomes.) However, for any sizable river basin project, the overall investment costs (and the institutional demands) are so high that the works have to be staged over long periods of time--typically decades rather than years. 45. The dynamics of water pollution control are such that the first stages of investment have high costs (building collectors, identifying and purchasingtreatment sites, construction of outfalls, etc.) and relatively limited overall benefits, while subsequent investmentstypically have lower costs and higher benefits. This represents a situation of decreasing marginal costs (until high levels of treatmnentare being considered), which is counter to the standard economic assumptionof increasingmarginal cost. The consequenceis that the first-stage investments may not have high benefit/cost ratios and the more appropriate criterion is cost-effectiveness in moving toward program objectives or mandated objectives. At the same time, all investments should be designed to maximize the local or immediate benefits, within the broader design requirements. 46. The justification of this first stage CUEP project is therefore the cost-effectivenessof the works in dealing with the immediate problems and in proving a basis for long term efforts to protect the Yangtze upstream of TGP. Water SupplyComponent 47. Cost-benefit analyses were carried out by the design team for the water supply components (Wanzhou and Nanbin), using the projected water tariff as the lower bound of the expected benefits. The willingness to pay (WTP) survey has confirmed that domestic and commercial users will accept the proposed tariffs. Economic rates of return were calculated to be around 12 percent. Chongqing Solid Waste Component 48. The proposed solid waste component for Chongqing comprises collection stations, vehicles, a transfer station, closure of existing dumps and the constructionof a new sanitary landfill. 49. There are a number of benefits to local households and businesses associated with improving the existing collection and waste disposal system. A majority of respondents to the Social Survey identified
- 48 - problems of rubbish in the neighborhoodsand of blocking of drainage channels and acknowledgedthe need for better solid waste management. There are already local collection charges, typically of the order of Y 3/ household/month(Y 36/ household/year),related to taking rubbish to primary collection points. 50. The proposed project will improve the management of solid waste from the collection station onward, which is traditionally a municipal responsibility in most urban areas. It includes collection systems, nightsoil management and a sanitary landfill. An estimated average cost of provision of all these services (based on AIC calculations)is about Y 145/ton.An average householdwould generate close to one ton per year, and therefore full cost recovery would require about Y 150 a year, which would put the total cost to a typical household at about five times the current local collection charge. 51. The public benefits of improved solid waste management are varied but hard to quantify. They include: amenity value from removal of waste from households and from neighborhoods; avoidance of blockages of drainage culverts and channels; reductions in biological loads on watercourse from drainage, leachate or direct wash-off; removal of health risk and pollution associated with open dumps; improvements in amenity and property values near open dumps. 52. There is normally some level of willingnessto pay for waste management services,as evidenced by payments to local collectors to haul away municipal solid waste and acceptance of tipping fees, but in China, as in most developing countries, the payments that can be recovered do not meet the costs of providing an environmentallysatisfactory service. (For example, even in the free-market,low-tax economy of Hong Kong, the Govermmentrecovers only a small portion of the total cost). Analysis of solid waste proposals therefore typically rests on identifying the least-cost approach for an acceptable service, so as to reduce the demands on the municipal budget. Summaryof benefits and costs: Default not applicable
Main Assumptions: Default not applicable
Cost-effectivenessindicators: Default not applicable
-49 - Annex5: FinancialSummary CHINA:CHONGQING URBAN ENVIRONMENT PROJECT
MAIN ASSUMPTIONS:
Provincial and Municipal Finances
1. Assumptions for Financial Projections. The assumptions made when calculating the projections of the on-budget and off-budget revenue and expenditure statements of Chongqing Municipality for the period 1999-2007 are set out below. On-budget revenues are those arising from taxes levied on enterprises operating in CM; off-budget revenues consist of special fees to enterprises and are used chiefly for capital expenditures.
2. Revenue Forecast. The actual (1998) on-budget and off-budget revenue figures have been derived from data provided by the Chongqing Finance Bureau. In March 1997, Chongqing became a municipality with provincial status (similar to Beijing, Shanghai and Tianjin) and data for 1998 are for the new Chongqing Municipality which encompasses the Prefectures of Chongqing, Fuling and Wanzhou, and Qianjiang DevelopmentZone. To estimate future revenues, an overall conservative average annual increase of about 10 percent in current terms has been assumed using 1998 as the base year.
3. Expenditure Forecast. Historically, on-budget and off-budget expenditures have registered between 90 and 95 percent of total revenues. To estimate future expenditures, an overall average annual increase of about 8 percent in current terms has been assumed using 1998 as the base year.
4. A comprehensive set of financial projections were prepared and updated as project components were agreed, costed and incorporated into the project. These are in the Project Files (Annex 8). The following tables summarize projected revenue and expenditure data from 1999 to 2007 for Chongqing Municipality.Projected project expendituresare also included.
Table 1: Chongqing Municipal Finances (Y billion, currentterms) Actual Projected 1998 1999 2000 2001 2002 2003 2004 2005 2006 Receipts 11.9 13.6 15.1 16.9 17.8 19.9 22.2 23.3 26.0 Expenditures 11.0 11.9 12.9 14.9 16.1 17.4 20.3 21.9 23.6 ProjectExpenditures 0.0 0.0 0.8 0.5 0.7 1.0 0.8 0.4 0.0 Projectas % of Receipts 0.0 0.0 5.3 3.0 3.9 5.0 3.6 1.7 0.0 CounterpartFunds 0.0 0.0 2.6 1.8 2.2 3.0 2.2 0.9 0.0 Requirementsas % of Receipts . The Projectinvestments are estimatedto representabout 5 percentof the capitalworks program in Chongqing Municipality,and is hence significantbut consideredaffordable.
Public Utility Financial Analysis
5. Water Supply. The financial position of Wanzhou Water Supply Company (WWSC) has been weak for some years. Between 1996 and 1998, real tariffs declined marginally while operating costs rose
- 50 - by nearly 18 percent. Wanzhou deferred paying its suppliers, including payments for electricity. Shortfalls were eventually rectified by taking out local bank loans. In May 1999, WWSC adjusted its water tariffs. There is a realization in WWSC and CM that tariffs need to be set at levels that would improve the revenue-earning capabilities of the entities. WWSC plans to limit increases in its administration budget; technical assistance proposed under the project would assist it to rationalize expenses, including administration expenses. The financial objective set for WWSC is to break even on its operations. Since a major portion of its existing assets is to be inundated by TGP, it was deemed unreasonable to expect Wanzhou consumers to bear a higher cost than necessary to reconstruct WWSC's assets. WWSC would incur no additional debt without the Bank's agreement unless reasonable forecasts show it would have a debt service coverage of at least 1.3 times. Projections made up to the year 2008 show that it would post surpluses if it is permitted to periodically adjust tariffs as shown in Table 2 and improve operating efficiency by limiting additional increasesin managementand staff.
6. The largest cost for WWSC is electricity, representing 42 percent of costs. Residential consumers provide the most revenue (60 percent). This trend is expected to continue. During the project implementation period, WWSC expects to contribute about 27 percent toward its capital investment program from internal sources; FDC expects to contribute 9 percent. Long-term debt and municipal equity contributionsmake up the balance in the following proportions: WWSC--39 and 38 percent; FDC--25 and 30 percent.
7. The actual and projected tariffs of WWSC over the implementationperiod of the project are given in Table 2. The assumptions used in the financial projections are given below. The projected financial statements and detailed operational and financial monitoring indicators are included in the project file (Annex 8).
8. The Nanbin water supply component is located in a low-income area. No formal financial cost recovery objective is therefore proposed in the project although the local government intends to recover costs through tariffs. The current tariffs are comparablewith major, and more wealthy, urban areas.
9. Wastewater. Prior to the establishment of the wastewater companies of Chongqing, and Fuling during project preparation, wastewater collection, treatment and disposal were the responsibility of the Municipal ManagementDepartments of the cities. Budgetary allocations were made to fund the service. As is the practice in departmental operations, no provision was made for depreciation.The financial objectives of Chongqing Municipality for its wastewater companies are that they should be permitted to set and maintain their tariffs at levels that, at the least, would permit them to break even (i.e., wastewater revenues to cover operating costs and the greater of depreciationand debt service). The wastewater companieswould incur no additional debt without the Bank's agreement unless reasonable forecasts show they would have a debt service coverage of at least 1.3 times.
10. Both CMDC and FDC have recently introduced wastewater tariffs, based in the case of CMDC on 100 percent of water consumption, and in the case of FDC, on 90 percent of water consumption,for both domestic and nondomestic consumers. An amount of Y 0.25/m3 has been added to water tariffs in Chongqing, representing a wastewater charge. Wastewater tariffs would be collected by the water supply companies and the proceeds passed to the wastewater companies, less handling charges. Industries with self-supplybut which dischargeto the sewer system would be billed by the water saving department in each city. The proceeds of the collections would be passed to the wastewater companies.
- 51 - 11. The actual and projected tariffs over the implementationperiod of the project are given in Table 2. The assumptions used in the financial projections are given below. The projected financial statements and detailed operational and financial monitoring indicatorsare included in the Project File (Annex 8).
Table 2: Actual and ProjectedTariffs (Y/m3, current prices) Actual Projected 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Chongqing WW/a 0.25 0.25 0.25 0.29 0.36 0.40 0.94 0.97 0.97 Fuling WW /a 0.25 0.25 0.25 0.40 0.40 0.65 1.30 1.30 1.30 WanzhouWS /a 0.66 0.82 0.82 1.15 1.15 1.15 1.32 1.32 1.58 1.98 1.98 1.98 /a Y/m3of water supplyconsumed and billed.
ASSUMPTIONS TO UTILITY FINANCIAL PROJECTIONS
A. Water Supply Companies
12. Assumptions to the projections of the main financial statements of the Wanzhou Water Supply Company (WWSC) for the period 1996-2008have been prepared.
13. Inflation and Exchange Rates. Yearly general domestic inflation rates used in the projections are 2.0 percent in 2000, 5.0 percent in 2001 and thereafter. Foreign price increases are estimated at 1.6 percent in 2000, 2.5 percent in 2001, 2.6 percent in 2002, 2.5 percent in 2003 and thereafter. The exchange rate used to convert foreign costs to local currency, where applicable, was Y 8.3 per $1.0. It is assumed that exchange rate adjustrnentswould, on average, maintain purchasing power parity over the projection period.
Income Statement
14. Water Sales. Projections of sales are based on "minimum demand" and maximum capacity figures. Unaccounted-for-water is estimated at 15 percent of production. It is assumed that whenever demand exceeds supply, the shortfall would be borne by both the domestic and nondomestic categories of consumers, proportionally.
15. Tariffs. Tariffs quoted are average tariffs and prices are expressed in yuan per m3.
16. Operating Costs. Salaries and wages are assumed to increase at the rates given in para. 13 above. Energy prices are assumed to increase in line with general inflation. Materials and other costs are assumed to increase at the general inflation rate. A composite depreciation rate of 4 percent has been applied to assets. The following sales and income taxes have been applied, respectively: 6.96 and 33 percent.
17. Interest and AmortizationExpenses. The proceeds of the IBRD loan are assumed to be onlent by the Chongqing Municipal Government to WWSC at 6.5 percent a year. Chongqing Municipality would provide some local capital counterpart funds as capital grants; the balance would come from the State Development Bank and grants from the Center for Relocation.
- 52 - Balance Sheet
18. Inventories. Inventories have been projected to take into account general inflation as well as any expandedlevels of operations and construction.
19. AccountsReceivable. Accounts receivablefrom water sales are assumed to be 29 days.
20. Fixed Assets. Fixed assets are valued at historic costs. In the projections, construction work-in-progressis assumed to be 100 percent accounted for upon completion.
Source and Applicationof Funds
21. Working Capital Needs. Working capital needs represent the excess, or otherwise, of the current year's current assets (net of cash), less the excess of the previous year's current assets (net of cash) over current liabilities.
22. Change in Cash. Change in cash (which includes short-term investments) calculates the balance sheet cash balance for the current year.
B. Wastewater Companies
23. Assumptions to the projections of the main financial statements of Chongqing Municipal Drainage Corporation(CMDC) and Fuling Drainage Company (FDC) for the period 1998-2008 have been prepared.
24. Inflation and Exchange Rates. Yearly general domestic inflation rates used in the projections are 2.0 percent in 2000, 5.0 percent in 2001 and thereafter. Foreign price increases are estimated at 1.6 percent in 2000, 2.5 percent in 2001, 2.6 percent in 2002, 2.5 percent in 2003 and thereafter. The exchange rate used to convert foreign costs to local currency, where applicable, was Y 8.3 per $1.0. It is assumed that exchange rate adjustmentswould, on average, maintain purchasing power parity over the projection period.
Income Statement
25. Sales. Projections of sewage quantities are based on "minimum demand" and maximum capacity figures, and at the equivalent of 90 percent of water bills for FDC and 100 percent for CMDC.
26. Tariffs. Tariffs quoted are average tariffs and prices are expressed in yuan per m3.
27. Operating Costs. Salaries, wages and staff benefits are assumed to increase at the rates given in para. 24 above. Energy, materials and other costs are assumed to increase in line with general inflation also. The following depreciationrates have been applied to (a) assets over 15 years, and (b) assets under 15 years, respectively: CMDC--5 and 4.8 percent; and FDC--5.3 and 4.8 percent. CMDC and FDC are each assumed to pay 3.45 percent in sales taxes. They would be exempt, for the time being, from paying income tax.
- 53 - 28. Interest and AmortizationExpenses. The proceeds of the IBRD loan are assumed to be onlent to CMDC, and FDC at 6.5 percent a year. Amortization of loans would be on the basis of equal payments of principal. The wastewater companies would bear the foreign exchange risk. The municipalities would provide the local capital counterpart funds as capital grants.
Balance Sheet
29. Inventories. Inventories have been projected to take into account general inflation as well as any expanded levels of operations and construction.
30. Accounts Receivable. Accounts receivable is assumed to be as follows: CMDC--37 days; and FDC--37 days.
Source and Applicationof Funds
31. Working Capital Needs. Working capital needs represent the excess, or otherwise, of the current year's current assets (net of cash), less the excess of the previous year's current assets (net of cash) over current liabilities.
32. Change in Cash. Change in cash (which includes short-term investments) calculates the balance sheet cash balance for the current year.
- 54 - Annex6: Procurementand DisbursementArrangements CHINA:CHONGQING URBAN ENVIRONMENT PROJECT
Procurement
Procurementmethods (Table A)
1. Findings of a procurement capacity assessment carried out as part of project preparation, are: (a) procurement procedures used for locally-financed procurement are reasonably satisfactory, and procurement administrationis being done efficiently, even though they are not in full conformitywith Bank ProcurementGuidelines; (b) past Bank-financed projects in China have been implemented satisfactorily using model bidding documents (MBDs) agreed between the Ministry of Finance (MOF) and the World Bank Group, sample biding documents, and other documents acceptable to the Bank; (c) the track record of procurement management in China is better than in most countries in the region; (d) the Chongqing Municipality had unreservedly agreed to follow Bank Procurement Guidelines in the Chongqing Urban Environment Project; (d) the Bank has introduced a number of revisions to Bank Procurement Guidelines since model bid documents agreed between the MOF and the Bank, and these have not yet been formally incorporated into the MBDs currently in use in China; (e) there is no specific procurement staff cadre in the Chongqing Municipal Government, but staff experienced in procurement management, available.
2. Through implementation of Bank-financed projects, the central and provincial governments have improved their capacity for procurement management using Bank Procurement Guidelines. It is expected that national procurement law will be formulated in the near future incorporating and rationalizing the many instructions, decrees, and bidding regulations that are currently in vogue. As in all Bank-financedprojects, and in the CUEP, there is full agreement that the MBDs (with appropriate revisions) agreed with the Bank, Sample Bidding Documetcs (SBDs), and other bid documents acceptable to the Bank will be used. The ChongqingMunicipal Govemment plans to undertake a number of steps to strengthen procurement management capacity of implementingagencies.
3. Based on procurement implementation and management, and the track record of the Chongqing Municipality, the risks on this project are considered average. The procurement arrangements in this project are the same as those agreed for the recently-approved Sichuan Urban Environment Project.
4. In order to reduce any likely risks, a number of actions have been agreed by the Chongqing Municipal Government. These include: (a) the Chongqing Project Management Office (CPMO) has appointed two experienced tendering companies (see para. 7 below) to assist implementingagencies, and undertake all ICB procurement; (b) all implementing agencies will be required to adopt the Bank procurement procedures and use the model bidding documents agreed between the Ministry of Finance and the World Bank, and other documents approved by the Bank; (c) the CPMO and the city PMOs will create subunits in each PMO, and appoint experienced staff dedicated for procurement activities; (d) the CPMO will ensure that the city
- 55 - PMOs would prepare procurement plans for their investment activities, and the CPMO would prepare a consolidated procurementimplementation plan; (e) the CPMO will appoint international project management consultants to assist both the CPMO an-d the city PMOs to carry out procurement activities; (f) the CPMO will prepare a Procurement Manual describing all the procurement procedures to be followed in Bank-financed procurement. The Manual would also cite common examples of procurement practices that are not acceptable under the Bank's procurement procedures; (g) the CPMO will organize periodically, procurement training seminars and workshops of procurement staff in the city PMOs; (h) the CPMO will collect procurement information from each implementingagency and create a comprehensivedatabase on procurement activities; and (i) the CPMO would prepare annual reports on procurement performance under the project.
Procurement methods (Table A)
5. Procurement procedures and arrangements satisfactory to the Bank, were agreed upon with Chongqing Project Management Office (CPMO) and the implementing agencies. All procurement would be undertaken in accordance with the Bank's Procurement Guidelines--"ProcurementUnder IBRD Loans and IDA Credits" d-atedJanuary 1995 and revised in January and August 1996, September 1997 and January 1999, and "Selection and Employment of Consultants by World Bank Borrowers" dated January 1997 and revised in September 1997 and January 1999. MBDs will be used as agreed between MOF and the Bank. Bank SBDs will be used for all procurement categories for which a corresponding MBD has not been prepared and approved. If none is available, procedures shall be consistent with Bank Guidelines and approved by the Bank.
6. The China NCB procedures for works have been reviewed by the World Bank Group and found some deviations in the internal procurement procedures, such as bracketing and merit point system used in prequalification and bid evaluation. The Implementing Agencies are fully committed to strictly comply with the Bank's procurement procedures/policies for the Bank-financed contracts. In case there are any discrepencies between local policy and the Bank's requirement, the Bank policy and guidelines will prevail. The Chongqing Municipal Government shall pay particular attention to ensure that the following procedures are followed:
(a) all invitations to prequalify or to bid shall be advertised in a newspaper of national circulation in the Borrower's country;
(b) such advertisement shall be made in sufficient time for prospective bidders to obtain prequalification or bidding documents and prepare and submit their responses; and in any event a minimum of 30 days shall be given to bidders between the date of advertisement in such newspaper and the deadline for submission of bids, and the advertisement and bidding documents shall specify the deadline for such submission;
(c) qualification requirements of bidders and the method of evaluating the qualification of each bidder shall be specified in detail in the bidding documents;
- 56 - (d) all bidders shall be required to provide security in an amount sufficient to protect the Project Municipalityin case of breach of contract by the contractor, and the bidding documents shall specify the required form and amount of such security;
(e) the time for opening of all bids shall be the same as the deadline for receipt of such bids;
(f) all bids shall be opened in public; all bidders shall be afforded an opportunity to be present (either in person or through their representatives) at the time of bid opening, but bidders shall not be required to be present at the bid opening;
(g) no bid may be rejected solely on the basis that the bid price falls outside any standard contract estimate, or margin or bracket of average bids established by the Project Municipality;and
(h) each contract shall be awarded to the lowest evaluated bidder, that is to say, the bidder who meets the appropriate standards of capability and resources and whose bid has been determined (i) to be substantially responsive to the bidding documents and (ii) to offer the lowest evaluated cost. The winning bidder shall not be required, as a condition of award, to undertake responsibilities for work not stipulated in the bidding documents or otherwise to modify the bid as originally submitted.
7. International tendering activities would be organized through two international tendering companies, which have been contracted by CPMO on behalf of the implementing agencies and Chongqing Municipality(CM), to carry out the work. The appointed tendering companies are: (i) China National Technical Import and Export Corporation will carry out procurement for the water supply and wastewater components in both in towns and counties, and (ii) the China National Instruments Import and Export Corporation will carry procurement of the solid waste and others components in CUEP. The selected international tendering companies will assist and/or act as agent for NCB procurement at beginning, assist in the preparation of a procurement manual and provide training in procurement administration to staff of the implementing agencies. Both tendering companies are experienced, competent in procurement activities, and are familiar with, and have had recent and relevant experience in, international competitive bidding (ICB) work on Bank Group-financed projects. The General Procurement Notice (GPN) was published in the UN Development Business, No. 502, dated January 16, 1999. Tender documents to be used for ICB would be those agreed between the World Bank and MOF, and other model bidding documents of the World Bank. The tender documents to be used in the project for national competitive bidding (NCB) would be based on the MBD for NCB (May 1997), agreed between the World Bank Group and MOF. All works contracts have been grouped whenever practical into bid packages estimated to cost the equivalent of $6.0 million or more each, and contracts for goods into packages estimated to cost the equivalent of $500,000 or more each, to attract maximum international competition. All civil works contracts estimated to cost the equivalent of $6.0 million or more, and goods contracts estimated to cost the equivalent of $500,000 or more, would be procured using ICB procedures, and would be advertised as Special Procurement Notices published in Development Business and/or well-known technical magazines, newspapers and trade publications of wide internationalcirculation.
- 57 - 8. Civil Works. The total value of civil works (including contingencies) is estimated at about $244.7 million, of which about $121.2 million (50 percent) would be procured using ICB procedures. Civil works that are small, scattered or scheduled too far apart to be packaged into larger contracts to be of interest to foreign firms, estimated to cost about $119.7 million (49 percent) would be awarded through NCB procedures, acceptable to the Bank. The NCB procedures recently adopted by the Government have been reviewed and approved by the World Bank Group. Interested foreign bidders would be allowed to bid for NCB contracts. Reserve procurement comprising: about $3.8 million for Chongqing wastewater interceptors and urban upgrading, and $91.5 million for land and resettlement, would be implemented by Chongqing Municipality using procedures applicable to locally-financed procurement, and would not be eligible for reimbursement under the loan.
9. Equipment and Materials. The total value of equipment and materials is estimated at about $105.4 million, of which about $91.2 million (87 percent) would be procured using ICB procedures. Equipment and materials contracts estimated to cost less than $500,000 equivalent would be procured using NCB procedures acceptable to the Bank, up to an aggregate amount of about $2.9 million. Contracts for water supply equipment, computer hardware and software, and miscellaneous equipment, costing $50,000 equivalent or less up to an aggregate amount of about $0.9 million, would be procured through national or international shopping procedures acceptable to the Bank, i.e., on the basis of comparison of price quotations solicited from at least three suppliers, or in the case of international shopping,price quotations solicited from three suppliers in two different countries. Reserve procurement of about $9.5 million would be undertaken for providing power supplies.
10. Technical Assistance and Training. All consultants to be retained under the project would be recruited in accordance with the World Bank's "Guidelines for Selection and Employment of Consultants by World Bank Borrowers-January 1997," and revised in September 1997 and January 1999 (Table Al of this Annex). Consultant services contracts estimated to cost more than $200,000 will be advertised in the UN Development Business. For contracts estimated to cost less than $200,000 equivalent, CM may engage national consultants, using Quality and Cost-Based Selection (QCBS), Quality-Based Selection (QBS), or Least Cost Selection procedures, and may not exclude international consultants, if interest is expressed. For contracts estimated to cost less than $100,000 equivalent, CM may, with the Bank's prior agreement, use single-source selection of consultants. Single-source selection would be utilized for contracts for training related to staff training and studies costing less than $100,000 per contract in the case of firms, and less than $50,000 per contract in the case of individuals. Standard Request for Proposals, dated July 6, 1997, revised in April 1998 and July 1999, will be used to procure consultant services. Drafts of Letters of Invitation and Terms of Reference for institutional and financial technical assistance, construction supervision services, and sector institutional strengthening for (a) Package A--financial/institutionalsupport for the water supply and wastewater utility companies; and (b) Package D--construction supervision for the water supply and wastewater utility companies, and support for CPMO were reviewed at negotiations. Details of the institutionalstrengthening and training component are summarized in Annex 2. The signing of contracts between CM and consulting firms for such assistance under Packages A and
- 58 - D is a condition of disbursement for civil works. The Terms of Reference for the main consultancyassignments are in the Project File (Annex 8).
11. Engineering and management overhead of implementing agencies, not financed under the project, is estimated at $41.1 million equivalent, inclusiveof contingencies.
Prior-Review Thresholds (Table B)
12. Prior-review procedures would be used for (a) all civil works contracts (about 10 contracts, representing about 50 percent of value of works) estimated to cost $6.0 million or more each; (b) all equipment and materials contracts (about 17 contracts, representing about 87 percent of the value of equipment and materials) estimated to cost $500,000 or more each; and (c) consultant services contracts with an estimated contract cost of more than $200,000 for firms and $50,000 for individuals. In the case of consultant service contracts, all terms of reference and single-source selections, regardless of the value of the contract, would be subject to prior review. For contracts below the above-mentionedlimits, post-review procedures would be followed. An estimated 65 percent of the value of all contracts proposed to be financed by the Bank would be subject to prior review.
Procurement Contract Packaging and ProcurementPlan
13. The contract packaging for the project is provided in Table C, showing the goods, works and service contracts proposed for each component. A procurement plan, indicating detailed procurement activities for the first year, and indicative plan for the subsequent years is provided in the Project File (Annex 8).
Disbursement
14. Allocation of Loan Proceeds (Table E). Allocation of loan proceeds is shown in Table E.
15. Use of Statements of Expenditures (SOEs). Withdrawal from the loan account would be made on the basis of SOEs for expenditures for: (a) civil works under contracts costing less than $6.0 million, (b) goods under contracts costing less than $500,000; (c) training; (d) services provided by consulting firms under contracts costing less than $100,000, and (e) services provided by individual consultants under contracts costing less than $50,000.
16. Authorization, Allocation and Operation of Special Account. To facilitate disbursements, a Special Account would be opened with an authorized allocation of $12 million equivalent, the estimated average expenditures for about a four-month period.
17. Procurement Plan for Civil Works, Equipment and Materials (Table F). This plan is in the Project File (Annex 8).
- 59 - 18. Retroactive Financing. Retroactive financing of up to $5.0 million would be applied to expendituresmade after January 1, 2000 for (a) interceptor construction in Chongqing and Fuling; (b) civil works for infrastructure rehabilitation and upgrading; and (c) consultant services for physical modeling of the Chongqing Siphon across the Yangtze River.
TableA: ProjectCosts by ProcurementArrangements (US$million equivalent)
1. Works 121.20 119.70 0.00 3.80 244.70 (46.30) (44.00) (0.00) (0.00) (90.30) 2. Goods 92.10 2.90 0.90 9.50 105.40 (82.90) (2.60) (0.80) (0.00) (86.30) 3. Services 0.00 0.00 21.40 2.10 23.50 (0.00) (0.00) (21.40) (0.00) (21.40) 4. Miscellaneous 0.00 0.00 0.00 133.20 133.20 (0.00) (0.00) (0.00) (0.00) (0.00) 5. Interestduring 0.00 0.00 27.10 0.00 27.10 construction (0.00) (0.00) (0.00) (0.00) (0.00) 6. Front-endfee 0.00 0.00 2.00 0.00 2.00 (0.00) (0.00) (2.00) (0.00) (2.00) Total 213.30 122.60 51.40 148.60 535.90 (129.20) (46.60) (24.20) (0.00) (200.00)
Figures in parenthesisare the amountsto be financedby the BankLoan. All costs includecontingencies 21Includesgoods to be procuredthrough national shopping, consulting services, services of contractedstaff of the projectmanagement office, training, technical assistance services, and incrementaloperating costs relatedto (i) managingthe project,and (ii) re-lendingproject fundsto local goverunent units. NBF = Not Bank-financedincludes land acquisitionand resettlement,reserved procurement, design and administration,and interestduring construction.
-60 - Table Al: Consultant Selection Arrangements (optional) (US$ million equivalent)
. -uiltant S rn Methiod Ebq*u-re- -C$ QBS5 SFB LCS CQ --Other - F. TotalCost
i;a t-! '" ; _ __. ______A. Firms 17.10 2.60 0.00 0.00 0.00 0.00 2.10 21.80 (17.10) (2.60) (0.00) (0.00) (0.00) (0.00) (0.00) (19.70) B. Individuals 0.00 0.00 0.00 1.70 0.00 0.00 0.00 1.70 (0.00) (0.00) (0.00) (1.70) (0.00) (0.00) (0.00) (1.70) Total 17.10 2.60 0.00 1.70 0.00 0.00 2.10 23.50 (17.10) (2.60) (0.00) (1.70) (0.00) (0.00) (0.00) (21.40) 1\ Including contingencies
Note: QCBS = Quality- and Cost-Based Selection QBS = Quality-based Selection SFB = Selection under a Fixed Budget LCS = Least-Cost Selection CQ = Selection Based on Consultants' Qualifications Other = Selection of individual consultants (per Section V of Consultants Guidelines), Commercial Practices, etc.
N.B.F. = Not Bank-financed Figures in parenthesis are the amounts to be financed by the Bank Loan.
-61 - Priorreview thresholds (Table B)
Table B: Thresholds for Procurement Methods and Prior Review'
1. Works More than $6.0 million ICB 10 contracts, $98.1 million subject to prior review
(52 contracts, $97.4 million not subject to prior review) 2. Goods More than $0.5 million ICB 17 contracts, $75.7 million subject to prior review (Between $0.5 and $0°05 (NCB) (10 contracts, $2.1 million million) not subject to prior review)
(Up to $0.05 million) (National/International ($0.8 million not subject to Shopping) prior review) 3. Services More than $0.10 million for QCBS or QBS $17.8 million subject to firms, more than $0.05 prior review _ million for individuals
Total value of contracts subject to prior review: $191.6 million
Overall Procurement Risk Assessment
Average
Frequency of procurement supervision missions proposed: One every 6 months (includes special procurement supervision for post-review/audits)
Thresholdsgenerally differ by country and project. Consult OD 11.04 "Review of Procurement Documentation" and contact the Regional Procurement Adviser for guidance.
- 62 - Disbursement
Allocationof loan proceeds(Table C)
Table C: Allocation of Loan Proceeds
Epient4itte: CategOry A*04uht $iniii . / Civil Works 85.00 36% of expenditures Goods 83.00 100% of foreign expenditgures or 100% of local expendituresfor locally manufactured goods or 75% of local expenditures for other items procured locally Consultant Services & Training 20.00 100% of expenditures Unallocated 10.00
Total Project Costs 198.00 Interest during construction 0.00 Front-end fee 2.00 100%
Total 200.00
- 63 - Annex 6, Table D: Procurement Contract Pacaging Yuan Procure- fnntrsattPack2ges Million mentTvne Chongqing City Solid Waste Management Civil Works Contracts CQSW/1.01 Access Road 10.5 NCB CQSW/I.02 Site Periphery Road 10.5 NCB CQSW/1.03 Leachate Treatment Works 6.0 NCB CQSW/1.04 Flood darn works 19.7 NCB CQSW/1.05 Waste darn works 6.9 NCB CQSW/1.06 Earthworks at Landfill Site 22.9 NCB CQSW/1.07 Site buildings 8.0 NCB CQSW/1.08 Closure of Existing Dump Sites 5.4 NCB CQSW/1.09 Landfill Works including Gas Disposal 21.8 NCB (Subtotal civil works) (111.7) Materials and Equipment Contracts CQSW/20.01 Supply and Install Membrane/Liner and HDPE Pipe for Leachate Collection 50.0 ICB CQSW/20.02 Landfill Equipment 24.0 ICB CQSW/20.03 Transfer Vehicles and Equipment 61.0 ICB CQSW/20.04 Procurement of cement 10.0 ICB CQSW/20.05 Procurement of steel 4.0 ICB CQSW/20.06 Monitoring & Office Equipment 2.7 NCBINS (Subtotalmaterials and equipment) (151.7) Electrical "Supply & Erect" Contracts CQSW/30.01 Auxiliary Services including Power Supply 8.7 NBF Land Acquisition & Resettlement 91.2 NBF Total Contracts Cost 363.3
Chongqing City Wastewater Civil Works Contracts CQWW/2.01 Branch A: Interceptor: MHI-71, and MH80-135; (9 1 kmn) 71.2 ICB CQWW/2.02 Branch A: Interceptor: MH 71- 80, (0.70 km) 7.3 NBF CQWW/2.03 Branch A: Interceptor: MH 135-271 (11.6 km) 98.1 ICB CQWW/2.04 Branch A: Connections of outfalls to interceptor 48.0 NCB (Subtotal Branch A) (224.6) CQWW/2.05 Branch B: Interceptor: MH 1-49, and MH 55-160: 10.24km 78.9 ICB CQWW/2.06 Branch B: Interceptor: Mi 49-55, (0.43 k1m) 3.1 NBF CQWW/2.07 Branch B: Interceptor: MH 160-235 (4.63 kIn) 44.1 NCB CQWW/2.08 Branch B: Connections of outfalls to interceptor 40.5 NCB (Subtotal Branch B) (166.6) CQWW/2.09 Branch C: Interceptor: MH 1-141 (10.8kkm) 111.4 ICB CQWW/2.10 Branch C: Interceptor: MH 141-212 (4.94 km) 45.8 NCB CQWW/2.11 Branch C: Connections of outfalls to interceptor 36.0 NCB (Subtotal Branch C) (193.2) CQWW/2.12 Branch D: Interceptor: MH 1-165(8.2km) 62.0 ICB CQWW/2.13 Branch D: Interceptor: MH 165-254 (4.5 km) 65.0 ICB CQWW/2.14 Branch D: Connections of outfalls to interceptor 30.0 NCB (Subtotal Branch D) (157.0) CQWW/3.01 Branch A: Tunnel: Liaojiatai, length 0.99 km 22.3 NCB CQWW/3.02 Branch B: Tunnel Hongyandong (Peninsular crossing), 1.12km 24.5 NCB CQWW/3.03 Tunnel: Jiguanshi, .length 3.65 km 75.1 ICB CQWW/3.04 Tunnel: Yangtze Crossing (Inverted Siphon), length 0.935 km 69.7 ICB (Subtotal Tunnels) (191.61 CQWW/10.01 Taipingmen Pumping station and pretreatment plant 39.7 NCB CQWW/10.02 Tangjiatuo Pumping station and pretreatment plant 65.3 ICB CQWW/10.03 Tangjiatuo Outfall, length 0.80 km 33.1 NCB CQWW/10.04 Jiguanshi pumping station and pretreatment plant 117.7 ICB CQWW110.05 Jiguanshi Outfall, length 1.30 km 35.0 NCB CQWW/10.06 Slope Stabilization Works (stone pitching, etc.) 40.0 NCB (SiihtotalPn-mping St6tions - and iitfallq) (3RDX)
- 64 - Yuan Procure- Cnntruct Packages Millinn ment Tvne
Equipment Contracts CQWW/20.01 Taipingmen pretreatment facility equipment 44.1 ICB CQWW/20.02 Tangjiatuo pumping station and pretreatment plant 57.2 ICB CQWW/20.03 Jiguanshi pumping station and pretreatment plant 91.5 ICB CQWW/20.04 Project monitoring system (SCADA) 38.8 NBF CQWW/20.05 Sewer cleaning and safety equipment 11.3 ICB CQWW/20.06 Miscellaneous equipment and vehicles 10.0 ICB/NS (Subtotal equipment contracts) (252.9) Materials Contracts CQWW/20.07 Precast pipes or box culverts 20.0 ICB CQWW/20.08 Reinforcement steel 126.3 ICB CQWW/20.09 Cement 75.2 ICB (Subtotal Materials) (221.5) Electrical Supply and Erect Contracts CQWW/30.01 Power supply to Jiguanshi plant 3.8 NBF CQWW/30.02 Power supply to Tangjiatuo plant 1.6 NBF CQWW/30.03 Power supply to Taipingmen plant 2.6 NBF (Subtotal Supply and Erect Contracts) (8.0) Land Acquisition & Resettlement 555.6 NBF Total Contracts Cost 2,301.8
Fuling City Wastewater Civil Works Contracts FWW/2.01 Interceptor and Secondary Sewers 15.1 NCB FWW/2.02 Interceptor: Jiangdong area 0.4 NCB FWW/2.03 Modifications to Existing Wastewater Channels 25.3 NCB FWW/2.04 River crossing: Wujiang Siphon and Jingdong Outfall 37.8 NCB FWW/2.05 Nan'an Pretreatment Works and Pump Station 7.8 NCB FWW/2.06 Foundation preparation for laying interceptor 22.0 NCB (Subtotal civil works) (108.4) Equipment Supply Contracts FWW/20.02 Nan'an Pretreatment Works and Pump Station Equipment 11.4 ICB FWW/20.03 Miscellaneous equipment (sewer cleaning, etc.) 8.1 ICB/NCB (Subtotal equipment supply) (19.5) Materials Supply Contracts FWW/20.01 Supply of precast pipe 4.0 ICB Electrical Supply Contracts FWW/30.01 Power supply 3.0 NBF Land Acquisition & Resettlement 28.2 NBF Total Contracts Cost 163.1
Wanzhou City Water Supply Civil Works Contracts WAWS/2.01 Clear Water Transmission Main 5.2 NCB WAWS/2.02 Distribution Network Improvements incl. Booster Pumps 36.0 NCB WAWS/2.03 Wastewater Interceptor and Outfall 13.1 NCB WAWS/2.04 Tongziyuan Raw Water Intake and Pump Station 11.5 NCB WAWS/2.05 Water Treatment Plant No. 3: Intake 6.5 NCB WAWS/2.06 Water treatment Plant No. 3 Extension 6.3 NCB (Subtotal civil works) (78.6) Mechanical "Supply & Erect" Contracts WWS/20.01 Equipment for Water Treatment Plant No. 3: Intake & Extension 24.5 ICB WWS/30.01 Power supply 4.0 NBF (Subtotal mechanical contracts) (28.5) Land Acquisition & Resettlement 8.8 NBF -65:l -zontrsstc Vslue 11S.4
- 65 - Yuan Procure- Contract Packages Million ment Tvne
Nanbin Town Water Supply Civil Works Contracts NWS/2.01 Distribution Network Improvements 15.1 NCB NWS/2.02 Intake Works and Raw Water Transmission 2.1 NCB NWS/2.03 Water Treatment Plant including Equipment 18.1 NCB (Subtotal civil works) (35.3) Electrical "Supply & Erect" Contracts NWS/30.01 Power Supply 1.2 NBF Land Acquisition& Resettlement 0.5 NBF Total Contracts Cost 37.0
EnvironmentalWater Quality Monitoring Civil Works Contracts EWQM/2.01 Laboratory Building 24.4 NCB Supply Contracts EWQMN20.01 EnvirommentalMonitoring Equipment 3.6 NCB/NS EWQM/20.02 Analysis Equipment 5.9 NCB/NS Consultants' Services Contracts EWQM/40.01 Enviromnental Management Information System 2.9 QBS EWQM/40.02 Advisory Services and Training 4.0 QBS Total Contracts Cost 40.8
Urban Management Information Systems Supply Contracts UMIS/20.01 Information & Technology Equipment 5.1 NCB UMIS/20.02 Office Equipment 0.5 NS Consultants' Services Contracts UMIS/40.01 System Design & Development, Training 9.2 QBS UMIS/40.02 Data Collection Services 11.1 LCS Total Contracts Cost 25.9
Environmental Rehabilitation and Reconstruction Civil Works Contracts ERRJ2.01 Infrastructure Rehabilitation and Upgrading (Pilot) 10.0 NCB ERR/2.02 Urban Upgrading 15.0 NBF Supply Contracts ERR/20.01 Miscellaneous Equipment 2.0 NCB/NS Consultants' Services Contracts ERR/40.01 Training 2.0 QBS ERR140.02 Awareness Campaigns 1.5 NBF Total Contracts Cost 30.5
Construction Supervision Services & Quality Control Consultants' Services Contract Package D Construction Supervision & Quality Control for Water Supply, Wastewater, and Solid 47.3 QCBS Waste Management Total Contracts Cost 47.3
-66 - Annex 6, Table E: Procurement-Institutional Development, Construction Supervision and Quality Control, and Training
TA/ Training/ TA Ponson-man h.c Equipment Base Cost Ref: Degeriptinnof Assignment Nional nt9l .1millinn Y millimn A PACKAGEA: FINANCIAL/INSTITUTIONALSUPPORT/ TRAINING/EQUIPMENT Al: Chongqing Drainage Company 60 17 3.4 A2: Chongqing Solid Waste 24 6 1.3 A3: Fuling Wastewater Company 36 6 1.6 A4: Wanzhou Water Company 30 5 0.8 A5: Nanbin (Shizhu) Water Supply Company 13 3 0.4 A6: Chongqing Municipality & PMO 36 9 1.0 A7: Fuling Municipality & PMO 18 2 0.4 A8: Wanzhou Municipality & PMO 18 2 0.4 Subtotal Package A /a 235 50 9.3 23.1 Procurement: QCBS
Procurement of Eauioment bv cities to sunolement Packaee A AEI: Chongqing Drainage Company 1.8 AE2: Chongqing Solid Waste 1.1 AE3:Fuling Wastewater Company 2.6 AE5: Wanzhou Water Company 2.4 AE6: Nanbin (Shizhu) Water Company 1.3 Subtotal Package A lb 9.2 9.2 Procurement Type: ICB, NCB, Shopping
B. PACKAGEB: ENVIRONMENTAL PROTECTION BUREAU 2.0 Institutional Support & Equipment Subtotal Package B 2.0 2.0 Procurement Type: QCBS & Shopping
B PACKAGESCl- C5: OTHER ClA:lndustrial Pollution Control and Sewer Network & 12.5 Condition survey CIB: Industrial Pollution Control and Sewer Network & 12.5/b Conditional Survey C2: Support for Municipal Govemment on policy review, 5.0 govemment's role, tariff setting, private sector involvement C3: Public Information Program 4.0 C4: Future (Phase 11)Project Preparation 10.0 CS: Panel of Experts Tunnel, Siphon, & Outfall Modeling 6.0 Subtotal Package C 50.0 Total for Packages A - C 84.3 Procurement Type: QCBS (Each Package)
D PACKAGE D: CONSTRUCTION SUPERVISION Dl: Chongqing Drainage Company 600 D2: Chongqing Solid Waste 150 D3: Fuling Wastewater Company 120 D4: Wanzhou Water Company 150 D5: Nanbin (Shizhu) Water Company 150 D6: Provincial Project Management Office (SPPMO) Project Supervision Support and Equipment Chief Resident Engineer 60 Senior Municipal Engineer 28 Mechanical & Electrical Expert 15 SewerageCommissioning Expert 6 Control System Specialist 6 Subtotal Package D 1,170tc 115 Costed Procurement Type: QCBS elsewhere/b
/a The package would be managed by CPMO. The consultants to be retained would make their services available to each city according to the city's schedule of technical assistance, training and equipment procurement. /b NBF- Non-Bank financed /c Construction Supervision Services and Quality Control calculated as follows: Civil Works @ 2.5 percent of investment cost; and Equipment & Materials (a) 10.0 percent of investmentcost.
- 67 - Annex7: ProjectProcessing Schedule CHINA:CHONGQING URBAN ENVIRONMENT PROJECT
(At final PCD stage) Timetaken to preparethe project(months) 15 24 FirstBank mission (identification) 09/01/97 03/15/98 Appraisalmission departure 09/15/98 03/28/2000 Negotiations 04/24/2000 04/24/2000 PlannedDate of Effectiveness 09/30/2000
Preparedby: Chongqing Project ManagementOffice (CPMO), under the direction of the Chongqing Municipal Government Leading Group, and the Chongqing Construction Commission.
Preparationassistance: Trust funds, provided by the Governmentsof Denmark, France, Italy, Japan, Norway and Spain.
Bank staffwho workedon the projectincluded:
Paula Dematte EnvironmentalRehabilitation and Heritage Jack Fritz EnvironmentalAssessment Maninder Gill Resettlementand Social Safeguard Policies Chandra Godavitame MunicipalEngineering Donald Hankey EnvironmentalRehabilitation and Heritage David Hanrahan Project Economics Patrick McCarthy Financial Analysis Keiko Sato InstitutionalAnalysis Tore Semb Solid Waste Management Chongwu Sun EnvironmentalAssessment George Taylor Water Quality and Wastewater Treatment Youhua Yu Financial Management Chaohua Zhang Resettlement and Social Safeguard Policies Ming Zhang Urban Planning and Economics Zhang Zhun Water Supply and Institutional Methods Meredith Dearbom Information Processing Vellet Femandes Program Assistant Margaret Png Legal Counsel Geoffrey Read Team Leader/AccreditedProcurement Staff
- 68 - Annex 8: Documents in the Project File* CHINA: CHONGQINGURBAN ENVIRONMENTPROJECT
A. ProjectImplementation Plan Incorporatedas part of Item 23 (see below).
B. BankStaff Assessments Bank mission reports.
C. Other 1. Chongqing Urban Environmental Project (CUEP) Fuling drainage works (stage 1), by Shanghai Municipal Engineering Design & Research Institute (SMEDRI), December 1998. Preliminary Design Volume 1 Description of Design Volume 2 Table of Main Equipment & Materials Volume 3 Engineering Estimation 2. Preliminary Design of Urban Water Supply System Project of Wanzhou District, Chongqing City, by SMEDR, December 1998. 3. CUEP, Water Supply Subproject: Qianjiang Tujia and Miao Autonomous County Town, Chongqing Municipality (CM), Feasibility Study Report, by Chongqing Iron & Steel Designing Institute (CISDI), December 1998. 4. Preliminary Design of Water Supply Project in Nanbin Town, Shizhu, CM, by SMEDRI, January 1999. 5. CUEP, Feasibility Study Report of Fuling Urban Water Supply Project, by Central & Southern China MunicipalEngineering Design and Research Institute (CSCMEDRI),December 1998. 6. Volume 2 Engineering Economy, Feasibility Study Report of Fuling Urban Water Supply Project, by CSCMEDRI, December 1998. 7. CUEP, Chongqing Waste Water Project, Overall Description for Preliminary Design, by North China Municipal Engineering Design & Research Institute, Chongqing Municipal Reconnaissance Design & Research Institute, January 1999. 8. CUEP, Chongqing Urban Drainage Works (CUDW), Jiguanshi Sewage Treatment Plant & Nanan Sewage Interception (Trunk D) Engineering, Preliminary Design, Second Half: Nanan Sewage Interception (Trunk D) Engineering, by SMEDRI and Chongqing Design Institute, December 1998. Volume 1: Main Design Report Volume 2: Table of Main Equipment & Material 9. CUEP, CUDW Jiguanshi Sewage Treatment Plant & Nanan Sewage Interception (Trunk D) Engineering, by SMEDRI and CISDI, December 1998. Volume 1: Main Design Report Volume 2: Table of Main Equipment & Material
- 69 - 10. CUEP, CUDW, Bandao Wastewater Intercepting Sub-project (including Taipingmen Pretreatment Station, B&C Pipelines), by China Northwest Municipal Engineering Design & Research Institute, Chongqing Coal Mining Design and Research Institute (CCMDRI), December 1998. Preliminary Design Volume I :DetailedDesign Volume 2: List of Main Equipmentand Materials 11. CUEP, Chongqing Downtown Drainage Project, Jiangbei Sewage Intercepting(Line A) Project, by ChongqingMunicipal Engineering Surveyingand DesigningInstitute, January 1999. Preliminary Design Volume 1 IntroductionDesigning Volume 2 Main Equipmentand Materials Volume 3 Engineering Estimation 12. CUEP, Chongqing Master Wastewater Plan, Tangjiatuo Wastewater Treatment Plant & Jiangbei Interception Work (Branch A), by North China Municipal Engineering Design & Research, January 1999. Preliminary Design Part 1 Tangjiatuo Wastewater Treatment Plant Project No. 98-28 Chapter 1 Preliminary Design Description Chapter 2 Main Facilities & Materials List 13. CUEP, CUDW, Preliminary Design on Sub-river and Jiguanshi Tunnel Works, Project No: C9408, Volume 1: Design Report, by CCMDRI, January 1999. 14. Executive Summary, by ERM and Chongqing Investment Consulting Company (CICC), February 1999. 15. Action Plan Strategy, by ERM and CICC, February 1999. 16. Feasibility Study Report, by ERM and CICC, February 1999. 17. Environmental Assessment Report and Executive Summary, by Chongqing Environmentai Monitoring Research Institute (CEMRI) and SOGREAH, October 1999. 18. Resettlement Action Plan, by Shanghai Academy of Social Sciences (SASS) and SOGREAH, January 2000.
Volume I - Project Summary ResettlementPlan Volume II - Chongqing Wastewater Component (updated to March 2000) Volume III - ChongqingMunicipal Solid Waste Component(updated to March 2000) Volume IV - Fuling Wastewater Component (updated to March 2000) Volume VI - Wanzhou Water Supply Component Volume VII - Shizhu (County) Water Supply Component (updated to March 2000) 19. Willingness-to-PaySurvey, Chongqing PMO, October 1999. 20. CUEP Assessment Report on InstitutionalStrengthening and Training Needs, Tsinghua University, Beijing, June 1999.
- 70 - 21. Chongqing Urban Environment Project--FinancialProjections--as at December 1999/update as of May 2000. 22. Cultural Heritage Strategic Master Plan, by A.R.S. Progetti S.r.l. and C.Lotti & Associati, Januaty 2000. Volume I - Development Strategy Volume II - Analysis of Present Situation Volume III - The Cultural Heritage of Chongqing Volume IV - The Immediate Measures 23. Interim Engineering Report, by SOGREAH,December 1999.
Volume II - Chongqing Wastewater Volume III - Chongqing Municipal Solid Waste Volume IV - Fuling Wastewater Volume V - Fuling Water Supply Volume VI - Wanzhou Water Supply Volume VII - Nanbin (Shizhu County) Water Supply 24. CUEP, Industrial Pollution Control Action Plan (IPCAP), by Chongqing EnvironmentalProtection Bureau, December 1998, with subsequent February 2000 revision. 25. Draft Detailed Engineering Design and Draft Tender Documents (40 percent of project investments). 26. Financial Management Systems (FMS) Manual. 27. Draft Terms of Reference (TOR},Letters of Invitation (LOI) and Proposed Shortlists for Package A (Financial and Institutional Support, and Training) and Package D (Construction Supervision). 28. Procurement Plan as at May 2000; Procurement Assessment Report Update, April 2000. 29. Sichuan and Chongqing Urban Environment Projects. Urban Water and Wastewater Resources Strategy. COW/ Consult/ Danish Hydraulics Institute/ Sichuan Construction Commission/ Chongqing PMO. Main Report and Strategy Document - Final, August 1998. 30. Support Modeling Study for EA and Preliminary Wastewater Outfall Locations. Vols. 1 & 2. Danish Hydraulics Institute/ Chongqing PMO. December 1998.
*Including electronic files
- 71 - Annex 9: Statementof Loans and Credits CHINA:CHONGQING URBAN ENVIRONMENT PROJECT
Difference between expected and actual Original Amount in US$ Millions disbursements' Project ID FY Borrower Purpose IBRD IDA Cancel. Undisb. Orig Frm Rev'd
P040513 1996 China 2ND HENAN PROV HWY 210.00 0.00 0.00 149.40 73.40 0.00 P003619 1998 China 2NDINLAND WATERWAYS 123.00 0.00 0.00 113.92 34.93 0.00 P003652 1996 China 2ND SHAANXI PROV HWY 210.00 0.00 0.00 92.41 49.41 0.00 POS1856 1999 China ACCNTGREFORM&DEV 27.40 5.61 0.00 30.88 11.29 0.00 P003559 1993 China AGRIC. SUPPORT SERVI 0.00 115.00 0.00 4.37 -3.55 0.00 P050036 1999 China ANHUI PROVINCIAL HWY 200.00 0.00 0.00 178.01 17.66 0.00 P003563 1996 China ANIMAL FEED 150.00 0.00 0.00 133.27 129.96 53.27 P049665 1999 China ANNING VALLEY AG.DEV 90.00 30.00 0.00 98.56 1.09 0.00 P003602 1996 China CH-HUBEI URBAN ENVIRONMENT 125.00 25.00 28.32 78.87 87.34 1.29 P003603 1995 China CHINA-ENTERPRISEHOUSING & SOC SEC REF 275.00 75.00 20.00 163.94 160.04 22.03 P057352 1999 China CHINA-FOURTH RURAL WATER SUPPLY PROJECT 16.00 30.00 0.00 44.84 2.99 0.00 P036414 1998 China CHINA-GUANGXI URBAN ENVIRONMENT PROJECT 72.00 20.00 0.00 88.11 12.48 0.00 P056491 1998 China CHINA-HEBEI EARTHQUAKEREHABILITATION 0.00 28.40 0.00 0.43 -8.44 0.00 P003598 1995 China CHINA-LiAONINGENVIRONMENT PROJECT 110.00 0.00 0.00 52.16 50.67 0.00 P003637 1997 China CHINA-NATIONAL RURAL WATER III 0.00 70.00 0.00 59.21 24.37 13.69 P040185 1998 China CHINA-SHANDONGENVIRONMENT PROJECT 95.00 0.00 0.00 79.99 39.19 0.00 P003586 1994 China CHINA-SHANGHAIENVIRONMENT PROJECT 160.00 0.00 0.00 54.64 53.93 0.00 P003648 1996 China CHINA-SHANGHAISEWERAGE PROJECT II 250.00 0.00 0.00 123.99 95.70 0.00 P043933 1999 China CHINA-SICHUAN URBAN ENVIRONMENTPROJECT 150.00 2.00 0.00 152.02 4.00 0.00 P003580 1993 China CHINA-SO.JIANGSU ENVMT PROTECTIONPROJ 250.00 0.00 0.00 3.25 2.45 0.00 P003568 1992 China CHINA-TIANJIN URBAN DEV & ENVMT PROJECT 0.00 100.00 0.00 9.46 6.44 2.98 P003599 1996 China CHINA-YUNNAN ENVIRONMENT PROJECT 125.00 25.00 0.00 132.17 49.33 -2.72 P003473 1993 China CHINA-ZHEJIANGMULTICITIES DEVELOPMENT 0.00 110.00 0.00 13.43 13.01 2.75 P036952 1997 China CN-BASIC ED. IV 0.00 85.00 0.00 23.90 -12.47 0.00 P036950 1996 China CN-BASIC ED. POOR III 0.00 100.00 0.00 1.03 0.84 0.00 P003636 1995 China CN-BASIC EDUC IN POOR & MINORITY AREAII 0.00 100.00 0.00 0.99 3.04 0.00 P003566 1998 China CN-BASIC HEALTH (HLTH8) 0.00 85.00 0.00 75.76 9.70 0.00 P003646 1996 China CN-CHONGQING INDPOLCT 170.00 0.00 153.99 15.61 139.60 5.60 P003589 1996 China CN-DISEASE PREVENTION(HLTH7) 0.00 100.00 0.00 40.55 45.61 0.00 P036953 1999 China CN-HEALTH IX 10.00 50.00 0.00 56.75 1.89 0.00 P046051 1999 China CN-HIGHEREDUC. REFORM 20.00 50.00 0.00 64.39 11.80 0.00 P003624 1992 China CN-INFECTIOUS DISEASES(HLTH5) 0.00 129.60 0.00 22.92 18.39 18.35 P037156 1995 China CN-IODINE DEFICIENCYDISORDERS CONTROL 7.00 20.00 7.00 0.31 9.98 2.98 P034618 1996 China CN-LABOR MARKET DEV. 10.00 20.00 0.00 21.33 23.10 0.00 P003634 1995 China CN-MATERNALCHILD HEALT(HLTH6) 0.00 90.00 0.00 12.53 15.30 0.00 P058308 1999 China CN-PENSION REFORM PJT 0.00 5.00 0.00 4.98 2.63 0.00 P003502 1994 China CN-RURAL HEALTH MANPOWER (HLTH4) 0.00 110.00 0.00 11.47 10.30 0.00 P003635 1997 China CN-VOC. ED. REFORM PROJ 10.00 20.00 0.00 5.57 -0.30 0.00 P003653 1999 China CONTAINERTRANSPORT 71.00 0.00 0.00 70.29 45.19 0.00 P051736 1998 China E. CHINAtJIANGSU PWR 250.00 0.00 0.00 234.74 185.74 46.34 P003647 1995 China ECONOMIC LAW REFORM 0.00 10.00 0.00 5.22 5.76 0.00 P003606 1998 China ENERGYCONSERVATION 63.00 0.00 0.00 61.20 6.29 0.00 P060270 1999 China ENTERPRISE REFORM LN 0.00 5.00 0.00 4.97 3.01 0.00 P003632 1993 China ENVIRONMENTTECH ASS 0.00 50.00 0.00 9.25 9.67 8.06
- 72 - Difference between expected Original Amount in US$ Millions and actual disbursements Project ID FY Borrower Purpose IBRD IDA Cancel. Undisb. Orig Frm Rev'd P003507 1996 China ERTANHYDRO II 400.00 0.00 0.00 11.64 -2.28 0.00 P003623 1993 China FINANCIALSECTOR T.A 0.00 60.00 0.00 17.41 19.33 12.61 P036041 1995 China FISCAL & TAX REF. & 25.00 25.00 0.00 40.04 41.95 1.81 P003557 1994 China FOREST RESOURCEDEV 0.00 200.00 0.00 16.81 4.51 -40.92 P046952 1998 China FOREST.DEV. POOR AR 100.00 100.00 0.00 177.75 0.28 23.16 P051705 1999 China FUJIAN II HWY 200.00 0.00 0.00 198.00 19.00 0.00 P003626 1994 China FWIAN PROV HIGHWAY 140.00 0.00 0.00 46.59 44.59 25.42 P003594 1996 China GANSU HEXI CORRIDOR 60.00 90.00 0.00 112.62 36.84 0.00 P003627 1993 China GRAINDISTRIBUTION P 325.00 165.00 0.00 252.25 252.92 34.72 P003518 1993 China GUANGDONGPROV.TRANSPORT 240.00 0.00 0.00 0.62 0.62 0.11 P058643 2000 China GUANGXI HWY Project 200.00 0.00 0.00 200.00 0.00 0.00 P003614 1996 China GUANGZ. CITY CRT.TRP 200.00 0.00 0.00 142.92 39.26 0.00 P051888 1999 China GUANZHONG IRRIGATION 80.00 20.00 0.00 94.98 16.31 0.00 P003504 1994 China HEBEI/HENAN NATIONAL 380.00 0.00 0.00 16.22 16.22 0.00 P038988 1997 China HEILONGJIANG ADP 120.00 0.00 0.00 6B.06 15.22 0.00 P003581 1993 China HENAN PROV. TRANSPORT 120.00 0.00 0.00 6.55 6.55 0.00 P035698 1998 China HUNAN POWER DEVELOP. 300.00 0.00 0.00 300.00 60.75 0.00 P003654 1997 China HUNAN/GUANGHWY2-NH2 400.00 0.00 0.00 266.32 116.32 0.00 P049700 1998 China IAIL-2 300.00 0.00 0.00 249.28 42.48 0.00 P003493 1995 China INLANDWATERWAYS 210.00 0.00 0.00 37.43 3.83 0.00 P041890 1999 China LIAONING URETRANSP 150.00 0.00 0.00 141.50 27.50 0.00 P003540 1994 China LOESS PLATEAU 0.00 150.00 0.00 14.16 -16.92 0.00 P056216 1999 China LOESS PLATEAU II 100.00 50.00 0.00 143.62 22.75 0.00 P036949 1998 China NAT.HWY 3-HUBEI 250.00 0.00 0.00 201.94 14.44 0.00 P041268 1999 China NAT.HWY4-HUBEI/HUNAN 350.00 0.00 0.00 338.50 13.25 0.00 P003590 1997 China QINBA MTS. POVTY RED 30.00 150.00 0.00 118.74 42.73 0.00 P003570 1993 China RAILWAY VI 420.00 0.00 0.00 44.56 44.56 -19.31 P003571 1995 China RAILWAYSVII 400.00 0.00 29.00 309.62 250.62 34.16 P003595 1994 China RED SOILS II DEVELOP 0.00 150.00 0.00 30.88 19.62 2.94 P003592 1993 China REF. INST'L.& PREINV 0.00 50.00 0.00 14.06 14.14 0.00 P046829 1999 China RENEWABLE ENERGY DEVELOPMENT 100.00 0.00 0.00 100.00 0.00 0.00 P003638 1996 China SEEDS SECTORCOMMER. 80.00 20.00 0.00 59.17 26.72 0.00 P003622 1994 China SHANGHAI MTP II 150.00 0.00 0.00 6.75 6.75 0.00 P044485 1997 China SHANGHAI WAIGAOQIAO 400.00 0.00 0.00 361.22 36.42 0.00 P003569 1996 China SHANGHAI-ZHEJIANGHi 260.00 0.00 7.75 78.35 50.61 42.60 P003649 1996 China SHANXI POVERTY ALLEV 0.00 100.00 0.00 25.87 5.96 0.00 P003585 1995 China SHENYANG IND. REFORM 175.00 0.00 0.00 66.21 47.61 0.00 P003609 1994 China SICHUAN GAS DEV & CONSERVATION 255.00 0.00 0.00 87.60 64.60 0.00 P036947 1995 China SICHUANTRANSMISSION 270.00 0.00 0.00 112.07 110.87 2.72 P045264 2000 China SMALLHLDR CATTLE DEV 93.50 0.00 0.00 93.50 4.35 0.00 P003593 1994 China SONGLIAO PLAIN ADP 0.00 205.00 0.00 14.37 -3.68 0.00 P003639 1995 China SOUTHWEST POV. REDUC 47.50 200.00 0.00 60.13 46.40 0.00 P003591 1998 China STATE FARMS COMMERCI 150.00 0.00 0.00 90.93 -7.47 0.00 P003539 1998 China SUST COAST RESDEV 100.00 0.00 0.00 83.18 3.18 0.00 P003597 1993 China TAIHU BASIN FLOOD CO 100.00 100.00 0.00 23.81 19.46 5.01
- 73 - Difference between expected Original Amount in US$ Millions and actual disbursements Project ID FY Borrower Purpose IBRD IDA Cancel, Undisb. Orig Frm Rev'd P046563 1998 China TARIM BASINII 90.00 60.00 0.00 130.42, 27.24 0.00 P042299 1999 China TECCOOPCREDITIV 10.00 35.00 0.00 44.42, -0.10 0.00 P003600 1995 China TECHNOLOGYDEVELOPME 200.00 0.00 0.00 89.92, 59.33 0.00 P003633 1994 China TELECOMMUNICATIONS 250.00 0.00 30.00 13.80, 43.80 5.40 P003616 1993 China TIANHUANGPINGHYDRO 300.00 0.00 0.00 62.05, 6.70, 53.35 0.00 P003533 1993 China TUANJININD. II 150.00 0.00 40.35 320.00, 44.55 4.44 P056424 2000 China TONGBAI PUMPED STORA 320.00 0.00 0.00 194.64, 0.00 0.00 P045788 1998 China TRI-PROVINCIALHWY 230.00 0.00 0.00 338.73, 55.34 0.00 P003650 1997 China TUOKETUOPOWER/INNER 400.00 0.00 24.00 280.10, 235.68 22.02 P036405 1997 China WANJIAZHAIWATER TRA 400.00 0.00 0.00 158.61, 67.10 0.00 P046564 1999 China WESTERNPOVERTY RED 60.00 100.00 0.00 219.17, 20.55 0.00 P034081 1997 China XiAOLANGDI MULTI. II 430.00 0.00 0.00 0.25,17.59, 125.60 0.00 P003562 1994 China XIAOLANGDI MULTIPURPOSE 460.00 0.00 0.00 20.67, 4.78 0.00 P003644 1994 China XIAOLANGDI RESETTLEMENT 0.00 110.00 0.00 211.52, 10.45 0.00 P003612 1995 China XINJUANGHIGHWAY I 150.00 000 0.00 926, 39.65, 20.67 0.00 P003643 1997 China XINJiANG HWY It 300.00 0.00 0.00 47.48, 110.52 0.00 P003596 1995 China YANGTZE BASIN WATER 100.00 110.00 0.00 103.68, -6.70 0.00 P063123 1999 China YANGTZE FLOOD EMERGY 40.00 40.00 0.00 12.88 15.39 0.39 P003641 1994 China YANGZHOUTHERMAL POW 350.00 0.00 0.00 47.18 0.00 P003642 1995 China ZHEJIANG POWER DEVT 400.00 0.00 0.00 12.68 0.00 P003534 1992 China ZHEJIANGPROVTRANSP 220.00 0.00 0.00 12.88 12.38
Total: 15790.40 3955.61 340.41 9799.06 3982.42 344.28
- 74 - CHINA STATEMENT OF IFC's Held and Disbursed Portfolio
In Millions US Dollars
Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic 1999 Bank of Shanghai 0.00 21.76 0.00 0.00 0.00 21.76 0.00 0.00 1996 Beijing Hormel 4.28 0.50 0.00 4.40 4.28 0.50 0.00 4.40 1998 CIG Port Holding 0.00 1.50 0.00 0.00 0.00 1.50 0.00 0.00 1998 Caltex Ocean 21.00 0.00 0.00 45.00 21.00 0.00 0.00 45.00 1998 Chengdu Chemical 0.00 3.20 0.00 0.00 0.00 0.00 0.00 0.00 1998 Chengxin-IBCA 0.00 0.36 0.00 0.00 0.00 0.36 0.00 0.00 1987/92/94 China Bicycles 0.00 0.95 0.00 0.00 0.00 0.95 0.00 0.00 1994 China Walden JV 0.00 4.63 0.00 0.00 0.00 4.63 0.00 0.00 1994 China Walden Mgt 0.00 0.01 0.00 0.00 0.00 0.01 0.00 0.00 1994 Dalian Glass 10.39 2.40 0.00 18.97 10.39 2.40 0.00 18.97 1999 Dujiangyan 25.59 0.00 0.00 30.00 0.00 0.00 0.00 0.00 1995 Dupont Suzhou 20.25 4.15 0.00 36.40 20.25 4.15 0.00 36.40 1994 Dynamic Fund 0.00 12.35 0.00 0.00 0.00 10.70 0.00 0.00 1999 Hansom 0.00 16.10 0.00 0.00 0.00 16.10 0.00 0.00 1996 Jingyang 40.00 0.00 0.00 100.00 40.00 0.00 0.00 100.00 1998 Leshan Scana 6.10 1.35 0.00 0.00 3.50 1.35 0.00 0.00 1996 NanjingKumho 11.68 3.81 0.00 33.22 11.68 3.81 0.00 33.22 1995 Newbridge Inv. 0.00 2.13 0.00 0.00 0.00 2.13 0.00 0.00 1997 Ningbo 0.00 2.00 0.00 0.00 0.00 2.00 0.00 0.00 1997 Orient Finance 13.33 0.00 0.00 16.67 13.33 0.00 0.00 16.67 1997 PTP Hubei 12.63 0.00 0.00 25.38 12.63 0.00 0.00 25.38 1994/97 PTP Leshan 3.60 0.00 0.00 0.00 3.60 0.00 0.00 0.00 1996 Pacific Ports 0.00 3.64 0.00 0.00 0.00 3.64 0.00 0.00 1998 Rabobank SHFC 2.03 0.00 0.00 2.03 2.03 0.00 0.00 2.03 1998 Shanghai Krupp 30.00 0.00 0.00 68.80 0.00 0.00 0.00 0.00 1999 Shanxi 19.00 0.00 0.00 0.00 4.50 0.00 0.00 0.00 1993 Shenzhen PCCP 3.76 0.99 0.00 0.00 3.76 0.99 0.00 0.00 1995 Suzhou PVC 20.17 2.48 0.00 20.35 20.17 2.48 0.00 20.35 1998 WIT 5.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1996 Weihai Weidongri 3.80 0.00 0.00 0.00 3.80 0.00 0.00 0.00 1993 YantaiCement 11.43 1.95 0.00 6.10 11.43 1.95 0.00 6.10 1998 Zhen Jing 0.00 2.00 0.00 0.00 0.00 2.00 0.00 0.00 Total Portfolio: 264.04 88.26 0.00 407.32 186.35 83.41 0.00 308.52
- 75 - Approvals Pending Commitment FY Approval Company Loan Equity Quasi Partic 2000 BOS RI 0.00 0.00 3841.37 0.00 2000 CIG Hld ltd 0.00 0.00 3000.00 0.00 2000 CIG Zhapu 6000.00 5000.00 0.00 0.00 1998 Chengdu Chemical 7400.00 0.00 0.00 8600.00 1997 Chinefarge 12800.00 0.00 0.00 20000.00 1998 Orient Fin A Inc 3333.33 0.00 0.00 0.00 1997 PTP Holdings 0.00 0.00 1500.00 0.00 1998 PTP Hubei BLINC 0.00 0.00 0.00 1500.00 2000 Shizuishan Carbn 6300.00 0.00 1700.00 6000.00 1998 XIB 50000.00 0.00 20000.00 0.00 1998 Zhen Jing 4500.00 0.00 0.00 0.00 Total Pending Commitment: 90333.33 5000.00 30041.37 36100.00
- 76 - Annex 10: Country at a Glance CHINA: CHONGQINGURBAN ENVIRONMENTPROJECT East POVERTY and SOCIAL Asia & Low. China Pacifk irncomre Development diamond 199S Pontilation. mid-vyRr (mittionsl 1 23R58 1 817 3 515 Life expectancy GNP oer caoita(Atlas method. USS) 750 990 520 G.NP(Atlas method, USSbillionsl 9I t021 1.844 Averaoe annual orowth. 1992.98
Paoulation (%t 1.0t 2 17 Labor force (%1 1.3 1.6 1.9 GNP Gross per primary Most recent e"tmate tbatastvear available. 1992.4S capita / nrnllmAnt Povertv (% of .oouletikn below national Dovertv lina) 6 t rban nontliation (%nflotal ooDuration) 33 35 31 I ife eyanetanev at birth Ivearsl : - 70 P9 W3 Infant morialitv (Otr 1.000 live births) 32 37 69 Child m3Initrition(% of dhildren under 5 1A 20 Access to safe water Access to safo water (% of o0oulationl 83 77 74 IllteranV y( of ooDulatlOn ace 15+i 17 15 V7 tGross nrimsrv anrollment (% of school-aso Oooulationl 120 117 105 China Low-incomegroup Male - 120 119 113 Femarl t170 1158 103 KEY ECONOMIC RATIOS and LONG-TERM TRENOS 1977 1987 1997 1998 Economic ratios' GOP USSbillions) 172.3 268.2 902.0 960.9 Gross domestie,invfestment/fGOP 25.5 38 1 38.7 38 f Trade Fvnorts of noods and sPrviceA/GrOP 4.R 13 6 23 0 19 1 Gross domrstic savinnsiR9 P 29 0 3f 7 42 A 43 4 ross nftinnat savinl(%nJ/P 29 0 3i 9 41.?5 4l 4
Current account balanceiGOP 02 0.1 3.8 3.4 Domestic ne fntaraetnavmrentsIGOP 0 4 0.8 0 7 SInvestment Total dsbt/GDP 13 2 16.3 16.2 Total dabt srrvicesnnortsi 9 f 9.8 9 5 Present value of debt/GDP .. . 1 4.9 Pres.nt val#ia of debf/Axnnrts 62 7 Indebtedness 1977.87 1188-91 1997 1998 1999-03 (averace annuial rowfh I GDP R'8 103 8R8 778 7.0 China Low-income group GN Pnor canita Ft55 85I 7 4 5 5 57 Fxcorts of ooods and services 18.4 14.4 23.1 4.6 4.4
STRUCTURE of the ECONOMY 1977 1987 1997 1998 Growthrates of output and investment(%) f% of GDPI 30 Acrirulture 29.4 26.8 18.7 18.0 Industrv 47 1 439 49.5 49 2 20 - Manufacturina 31.1 34.4 37.3 36.8 10- Services 23 4 29 3 32 1 32.8 -
Private consumotion 63.4 51.3 45.7 44.5 93 94 95 96 97 98 General oovarnment cnonsumntinn 7. 125 11 8 11.9 _GDI *GDP Imoorts of aoods and services 4.2 13.5 18.5 14.3
1977-87 1988-98 1997 1998 Growth rates of exports and imports (%) taveraae annualtarowth) Aarculture 8.4 4.4 3.5 3.5 40 Industrv 10 9 14.1 10 8 9.2 3a Manufactiurinn 11 4 13 4 9 A a9A Services 12.7 8.6 8 2 7.6 2. 10 Private consi,mntinn 9 7 8 f 7 7 6 7 General oovernment consumotion 9.0 9.9 8.2 8.4 o Grnss domestic invastmant 107 11 7 75i 7fi 93 94 96 96 97 98 Imoorts of aoods and services 19.2 12.5 12.7 1.5 Exports Imports Grnss national nrmdict 100 10 0 R 5 7 4
Note: 1998 data are preliminary estimates. The diamonds show four kev indicators in the countrv (in bold) comoaredwith its income-arouc averaae. If data are missina. the diamond will ba incomnlpte
- 77 - China
PRICES and GOVERNMENT FINANCE
Domestic prices 1977 1987 1997 1998 inflation (%) (% change) 30 Consumer prices .. 7.3 2.8 -0.8 20 Implicit GDP deflator 1.6 5.1 1.2 -1.3 10 Govemment finance n (% of GDP,includes current grants) 93 94 95 93 97 9s Current revenue .. 21.5 12.0 12.8 -10 Current budget balance .. 4.2 0.6 -2.2 GDPdeflator - CPI 1 Overall surplus/deficit .. -2.1 -1.5 -4.0
TRADE
(US$ millions) 197 1987 1997 1998 Exportand Importlevels (USSmillions) Total exports (fob) .. 39,437 182,792 183,757 200,000 Food .. 4,781 11,075 10,619 Fuel .. 4,544 6,987 5,181 190,000 Manufactures .. 26,206 158,838 163,157 Total imports (cif .. 43,216 142,370 140,166 100000-Maim Food .. 3,055 6,308 6,463 5,0 Fuel and energy 539 10,306 6,773 Capital goods .. 21,110 57,930 61,915 a _
ExDortoice index (1995=100) .. 75 95 89 Imnort orice index (1995=100) 75 92 89 *Exports * Imports Terms of trade (1995=100) .. 99 104 100
BALANCE of PAYMENTS
(USS millions) 1977 1987 1997 1998 Currentaccount balance to GDP ratio(%) Exports of goods and services 8,550 39,120 207,251 207,589 4 Imports of goods and services 8,148 38,880 166,754 165,900 Resource balance 402 240 40,497 41,689 2 Net income 82 -215 -11,097 -13,428 Netcurrent transfers -70 224 5,144 4,278 0924 95 9 97 8 92 94 90 9r 97 00 Current account balance 414 249 34,544 32,540 2 Financing items (net) -320 4,534 1,313 -26,114 Changes in net reserves -94 -4,783 -35,857 -6,426 4 Memo: Reserves includina aold /USS millions) .. 22.500 147.000 Conversion rate (DEC.local/USS) 1.9 4.5 8.3 8.3
EXTERNAL DEBT and RESOURCE FLOWS 1977 1987 1997 1998 (USS millions) Compositionof total debt, 1998(US$ millions) Total debt outstanding and disbursed .. 35,340 146,697 156,105 IBRD .. 1,427 8,239 9,610 IDA 1,330 7,830 8,693 G:129,473 A,0
Total debt service .. 3,852 18,445 13,009 D' 3,946 IBRD .. 208 858 940 IDA .. 12 81 97 _E:21,862 Composition of net resourceflows Official grants .. 209 228 Official creditors .. 626 4,315 2,282 Private creditors 5,462 8,134 916 Foreign direct investment .. 2,314 44,236 45,000 Portfolio equity 0 8,457 1,153 F: 82,521 Worid Bank program Commitments .. 1,306 2,425 2,636 A - IBRD E - Bilateral Disbursements . 702 2,275 2,061 B - IDA D - Other multilateral F - Private Principal repayments * 97 377 434 C - IMF G - Short-term Net flows .. 605 1,898 1,627 Interest payments .. 124 562 602 Net transfers .. 482 1,335 1,024
DevelopmentEconomics 9/2/99 - 78 - . . _ - CDa - +FF - B bY --
B 1 tR WSW<1,:Atiq lo -,I -,i Additional Annex No.: 12
EnvironmentalAssessment and Mitigation Measures Summary
A. Background
The Chongqing Institute of Environmental Sciences carried out the EnvironmentalAssessment (EA) of the proposed Chongqing Urban EnvironmentalProject (CUEP) in accordance with Chinese national procedures and Bank procedures, with support from independent international consulting specialists. Various drafts were reviewed and discussed in detail during project preparation. The draft EA documents were submitted to the Bank in August 1999 and revisions reviewed by the Bank during a mission in October 1999. The State Environrnental Protection Agency (SEPA) reviewed and agreed the Terms of Reference for the EA work; SEPA reviewed and commented on the EA while in progress, accepting the EA in late 1999. The final EA Report and Executive Summary (ES) were submitted to the Bank in November 1999, and found to be satisfactory. The EA Report was sent to the Bank's Information Center in late November 1999. During the EA work, the local people were consulted, and their opinions have been reflected in the project design and environmentalmitigation measures, as appropriate.
T'he policy and administrativerequirements for environmentalassessment of development projects in China were followed during preparation and evaluation of the EA, as well as the Bank's policies. Major laws and regulations in China applied to the EA are as follows: (a) Environmental Protection Law of the People's Republic of China; (b) Atmospheric Pollution Control Law; (c) Environmental Noise Control Law; (d) Water Pollution Control Law; (e) Cultural Heritage Protection Law; (f) Notice of Strengthening the EA Management Work of Construction Projects Financed by International Financial Organizations; and (g) Technical Guidelines for EnvironmentalImpact Assessment.
B. Brief Project Description
The Chongqing Urban EnvironmentProject includesthe following for which EAs have been completed: e Chongqing: - Wastewater managementand related urban services in Chongqing; and * Municipalsolid waste management in Chongqing;
* Fuling: * Wastewater managementin Fuling;
* Wanzhou * Water supply in Wanzhou; and
* QianjiangDevelopment Zone * Water supply in Nanbin (Shizhu County).
Central to the project are capacity- and institution-buildingmeasures, urban information systems development,training, and environmentaland water quality impact monitoring.
- 80 - C. Baseline EnvironmentalDescription
Natural Environment
Chongqing Municipality (CM), located in the center of southwest China, was created in March 1997, having formerly been part of Sichuan Province, and is the fourth municipalitywith status equivalent to that of a Province. CM covers an area of 82,000 km2 and is located along the central reaches of the Yangtze over a distance of 620 km between Zhutuo and the Three Gorges. It shares borders with four provinces in addition to Sichuan: Shaanxi to the north, Hubei and Hunan to the east and Guizhou to the south.
The main urban area of Chongqing is located at the confluence of the Yangtze and the Jialing Rivers and covers an area of about 600 km2. Fuling and Wanzhou are also located on the Yangtze, some 120 km and 270 km, respectively,downstream of Chongqing.Nanbin is on the Long River about 40 km from the right bank of the Yangtze.
The dominant trend in regional geology is a succession of broad synclines separated by narrow anticlines forming steep ridges in the landscape oriented roughly southwest-northeast.In the center of the syncline appear Jurassic formations mainly of mudstone and sandstone. Erosion of the anticline formed a local depression exposing Triassic limestone, which is prone to be affected by karstic features due to water infiltration.
The climate is characterized by mild winters and hot summers with much cloud cover and fog. Annual average temperatures are about 18 degrees Centigrade with average monthly maximum and minimum temperatures of 32.9 degrees Centigrade (in August) and 5.6 degrees Centigrade (in January) respectively. Absolute maximum and minimum recorded temperatures are 43 degrees Centigrade and -5.7 degrees Centigrade respectively. Wind speeds are low, with an annual average of 1.3 meters per second, and there is a high percentage (between 40 and 50 percent in Chongqing) of calm conditions. Annual rainfall in the project cities is in the order of 1,100 millimeters, with about 70 percent of rainfall occurring during the wet season from May to September.
SocioeconomicSituation
The total population of Chongqing Municipality in 1997 was approximately 30.2 million, of which 19.1 percent were urban. The population of Chongqing City is approximately3 million and those of Fuling and Wanzhou, the third and second largest population centers of the Municipality, are 0.2 million and 0.28 million, respectively.Nanbin, with a populationof 30,000 is the administrative center of Shizhu County.
Chongqing is one of the six old industrial centers of China, the most important industrial sectors being motor vehicle production, metallurgy and chemicals, and is the traffic hub of the Upper Yangtze and the southwest of China. Chongqing is also an important production base in China for commercial grain and a number of food crops.
The Chongqing Municipality GDP in 1996 was approximately Y 119 billion, equivalent to a per capita figure of about Y 3,900, of which the primary, secondary and tertiary sectors contributed 24.2, 41.8 and 34.0 percent, respectively. Growth in GDP in Chongqing has exceeded the national average consistently since 1993. In view of their proximity to the Three Gorges Dam Project (TGP) considerable further growth is expected in all project cities.
- 81 - Water Resources
Chongqing Municipality is traversed by the Yangtze, into which flow two major tributaries, the Jialing from the north and the Wu from the south. Chongqing is located at the confluence of the Yangtze with the Jialing, and Fuling at its confluence with the Wu. The mean and minimum monthly average flows in the rivers are shown in Table 1.
Table 1: Flow Characteristicsof Rivers in Project Area (cubic meters per second)
River Mean Minimum Monthly Average flow
Yangtze(at Zhutuo,upstream of the confluencewith Jialing) 8,450 2,131 Jialing 2,220 278 Wu 1,560 310
The Yangtze is the longest river in Asia and the third longest in the world. The estimated total runoff to the Yangtze from the catchment upstream of Wanzhou, a little more than half the total catchment area, is about 426 billion cubic meters (m3) a year. It may be seen from Table 1 that the Jialing and Wu are also substantial rivers; the annual average flows in these rivers are about 25 percent and 13 percent that of the Yangtze at their respective confluences.
As may also be seen from Table 1, the flows in all rivers vary substantiallyseasonally. The lowest flows in all rivers occur in February or March and the highest flows during the summer months (July to September). Flow variability in the Yangtze is lower than in its tributaries, reflectingthe relatively downstream location of Chongqing Municipality in the catchment area of a long river.
Water Quality and WastewaterManagement Strategies:Alternatives
The large flows in the Yangtze provide considerable dilution and assimilative capacity for polluting discharges.The present water quality objective for the Yangtze is Class III of the National Environmental Quality Standards for Surface Water, and water quality in the Yangtze is currently generally Class II for most parameters. However, there are frequently high concentrations of coliform bacteria and of total phosphorus, particularly under high flow conditions, implicating runoff from the largely agricultural catchment upstream as the most important pollution source in this context. A similar situation arises in respect of the Jialing and Wu.
The city of Chongqing and the other major urban centers in the municipality area, Fuling and Wanzhou, have obtained water supplies by abstraction from the Yangtze and/or the Jialing and the Wu. Municipal and industrialwastewater from these urban centers has been dischargedto these rivers and, where there is a multiplicity of discharge locations, some are upstream of and close to downstream abstractions. Although the flows and the assimilative capacity of the Yangtze and its tributaries are large, water quality in the area of some abstractions is poor as a consequence of inadequate local dispersion of nearby upstream wastewater discharges. Water quality in the Jialing generally declines in the Chongqing urban area as a consequence of the numerous wastewater discharges.
- 82 - A detailed analysis of Chongqing'swastewater management strategies and the consideration of alternatives is set out in Annex 4 (paras. 13 to 46). This analysis considers the environmental financial, economic and technical aspects of alternative strategies and scenarios. It draws on the Strategic Master Plan prepared earlier, and reflects findings of subsequent updates and extensive near and far-field water quality/impact modeling studies undertaken during project preparation.
Relationshipto the Three Gorges Project
The Three Gorges Project (TGP) is located in the Xiling Gorge of the Yangtze in Yichang county, Hubei Province, some 600 kilometers east of the city of Chongqing. The TGP will include a concrete gravity dam with ancillary structures across the Yangtze River, with a crest elevation of 185 meters (m) above sea level and a length of 2,300 m. At normal surface water level of 175 m the reservoir will have a surface area of about 1,080 km2, a mean width of 1,100 m (double the normal river width) and a mean depth of 70 m. The total reservoir volume will be approximately 40 billion m3, some 10 percent of the annual flow in the Yangtze.
Following commissioning of the TGP, the hydraulic and environmental conditions and the assimilative capacity of the Yangtze upstream of the dam will be altered as far upstream as Chongqing and possibly beyond. The increase in water depth at Chongqing during the months of lowest river flow (January to March) would be in the order of 15 m, and velocities would reduce from present levels of about 1 m/s to between 0.3 and 0.4 m/s. The Yangtze carries a substantial load of silt, particularly at high flows as a consequence of soil erosion, and the reduced velocity would result in sedimentation of considerable quantities of this silt.
The Three Gorges Project has been the subject of an in-depth environmental assessment process. Its main findings and recommendationshave been taken into considerationduring the preparation of this project but clearly CUEP had its own environmental assessment process. The mitigation and monitoring strategies outlined for CUEP are also consistent with those suggested in the EA for TGP. The investments proposed under CUEP will not exacerbate any negative impacts associated with TGP and will, in fact, improve the situation (case in point, treatment of wastewaters going into a somewhat quiescent reservoir that previously was a fast-moving river). A fmal point is that with or without TGP, the proposed environmental investments would be required. However, because of TGP, it is incumbent upon the Bank and Chinese planners to take into consideration whatever impact might occur with respect to CUEP. This was done during project preparation. There is no relationship between TGP and CUEP.
Air Quality
Air quality in all project cities and towns is poor, reflecting the combustion of coal, often of poor quality, with minimal emission controls. Concentrationsof major pollutants sulfur dioxide (S02), total suspended particulates (TSP) and nitrous oxide (NOx) are high, up to three times the maximum limit for air quality Class II, the present air quality objective.
- 83 - Municipal Solid Waste Management
An estimated 70 percent of municipal solid waste generated in Chongqing City is collected, the remainder being dumped indiscriminately.There are eight open dumping sites for solid waste that have problems of leachate pollution and frequent fires. CMG has developed nine facilities for recycling, composting and incineration, and there is also informal scavenging of components of waste. The total rate of recycling is not more than 10 percent of the waste collected. There are also many random dumps receiving municipal and industrial waste in the area that will be inundated by the TGP, resulting in considerable pollution problems. The arrangementsfor emptying of septic tanks and pit latrines are generally inadequate, resulting in pollution of ground and surface watercourses in Chongqing.
EnvironmentalBenefits
The requirements of the EA for the TGP in terms of water quality and water pollution control for Chongqing are that water quality in the Yangtze and Jialing should achieve Class II standards and that wastewater discharges should meet the appropriate discharge standard. However, the EA also states that water pollution control planning should be on a total load control basis and may be phased.
The CUEP wastewater management component intercepts municipal wastewater from the central areas of Chongqing that is currently discharged without treatment to the Jialing, and to a lesser degree the Yangtze. The intercepted wastewater would be discharged after preliminary treatment to the Yangtze at Jiguanshi and Tangjaituo,some 15 river km downstreamof the Jialing confluence.
Mathematical modeling of water quality in the Jialing and Yangtze has shown that until at least 2010 it would be possibleto meet the required Class II quality standards for BOD, dissolved oxygen and ammonia in both the Yangtze and the Jialing with only preliminary treatment of Chongqing wastewater. The environmentalbenefit of the Chongqing wastewater component in terms of BOD and dissolved oxygen are shown in Figures 1 and 2 below, which compares the "with project" and "no project" situations for 2010 conditions. Figure 2 highlights the importance of the project investments in protecting water quality in the Jialing River, Chongqing'smain water supply source.
Water quality in the Jialing would continue to meet Class II standards because wastewater discharges have been diverted to the Yangtze. The timing of future provision of wastewater treatment facilities would depend upon the rate of buildup of pollution loads in Chongqing; in Figure 3, the 2020 scenario shown stresses the positive impact that treatment would have on water quality, and the need for a phased treatment policy (see details of the extensive modeling studies in the ProjectFiles).
The Fuling wastewater management and Wanzhou water supply components would improve the discharge arrangementsfor municipal wastewater, and would improve the quality of water abstracted for supply. The Nanbin water supply component would provide a new water intake replacing the existing intake that is at risk from pollution.
- 84 - Figure 1
Impact of the project on BOD- Yangtze River: Horizon 2010
10-
CO
8
7
6 ...... ___ __ .-- WithRoject
_m 75 ---- WithoutRoject O <. ------Yangtze River------> Class i o -Class III to 4 ------ClassIV
3
2
0~~~~~~~~~~~~. C~~~~~~~~
2150 2200 2250 2300 2350 2400 2450 2500 Chainage
Figure 2
Impact of the project on BOD Jialing River: Horizon 2010
10
9
_ ...... WihPrjc
E 5 t ~~~<-----Jialing <------>,- ----Yangtze River--->......
3- .
O-~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~lsI IIVI
2300 2310 2320 2330 2340 2350 2360 2370 Chainage
85 - Figure 3
Master Plan Scenario 2020
10
9
8
7
6 Wift Treatment _- Withouttreatment Es S___._ ClassII 0 -m ClassIlIl 4 o..... ClassIV
3 . _....___.._..__._...... _. 3------YangtzeRiver. 2
0
2150 2200 2250 2300 2350 2400 2450 2500 Chainage(km)
PotentialEnvironmental Impacts and Their Mitigation Measures
The project as a whole is substantially positive in environmental terms, with the benefits greatly outweighing the negative impacts. Nevertheless some negative impacts have been identified in the EA process for all components, and these require mitigation measures. The principal impacts and their appropriatemitigation measures are described below.
Near Field Impact of Chongqing Wastewater Discharge: Water quality would not comply with standards in the immediate mixing zone of the Chongqing wastewater discharge in the Yangtze. Two-dimensionalwater quality modeling has been used to optimize the diffuser discharge arrangementsto minimize the area of the mixing zone and the associated impact on water quality. The selected diffuser configurationwould ensure complete mixing over the river cross-section within 3 km downstream of the ouffall.
The impact would be minimized further by discharging the wastewater into deep water close to the center of the river to maximize dilution and reduce pollution of the river close to the banks. The discharges will be not less than 1,000 m upstream and 100 m downstream of water intakes. Some water intakes will relocated upstream of the discharges.
Construction Spoil. Substantial quantities of spoil would be generated as a result of excavation for pipeline installation and for the constructionof water and wastewater treatment plants. Most of the material would be reused on site, and detailed spoil disposal plans will be prepared for each project component where excess spoil would be generated.It is expected that all spoil would be beneficially used in other local constructionactivities and therefore spoil disposal would not be problematic.
-86 - Impact on Agriculture: Where the routes of pipelines crosses agricultural land, the fertility of land would be protected by the careful separate storage and stockpiling of topsoil and subsoil for subsequent replacement.
Other Construction Impacts. Other impacts of construction include noise from constructionmachinery, generation of dust and disruption of local traffic. These would be minimized by appropriaterestrictions on working hours and operational procedures of the contractors concerned.
Other Operational Impacts. The other significant potential impacts of the operation of water and wastewater treatment facilities and pumping stations are noise and, in the case of wastewater treatment facilities, odor. These impacts would be minimizedby the siting of the plants and by the provision of buffer zones and landscaping.Where there are sensitive noise receptors close to the facilities the noise emissions would be minimized by appropriateacoustic insulation of machinery.
Landfill Impacts. The principal impacts of landfill site operations are the generation of leachate and landfill gas. Pollution from leachate would be minimized by recirculating the leachate within the landfill and by a leachate treatment plant involving biological treatment to reduce the pollution load by more than 95 percent. Landfill gas would be collected using a system of extraction wells and would be flared. Depending upon future local demand it is hoped that in the longer term the gas may be recovered for beneficialuse.
D. Public Consultationand InformationDisclosure
The following approaches were adopted for public consultation;(a) meetings with city Project Management Offices (PMOs), utility companies, municipal EPBs, and other affected city departments; and (b) surveys to gauge the public perception of the positive and negative impacts of each of the proposed schemes. All schemesproposed were well received by the public.
The detailed aspect of this public participation for the project was undertaken in three forms: bulletin in the press, public opinion questionnaire and survey of the public. * Bulletins in the Press: The governmentof Chongqing City published bulletins in the Chongqing Daily and Chongqing Evening Paper, which containedthe pollution situation of Chongqing, the discharge of the main pollutants, the state of water supply and demand. It also publicized the loan amount, the general situation of this project, the control goal of the environment and the main measures of the pollutants. * The Willingness-to-Pay Surveys: These surveys were carried out at an early stage of project preparationto assess the overall acceptability of the project to the people of Chongqing in the light of increased tariffs. * Public Opinion Questionnaire (Poll) The poll was carried out separately in Yuzhong District, Jiangbei District, Nan'an District, Shapingba District, Dadukou District, Jiulongpo District, Banan District, Qianjiang, Fuling, Wanzhou and Shizhu, which are the influenced districts. The questionnaire obtained written opinions on the project of the individuals. * Survey of the Public: The survey invited many delegates of the people's conference of China, commissaries of the political conference of China, delegates of business associations,teachers, workers and farmers of the area, whose opinions were considered and whose inquirieswere answered.
- 87- * Survey of the Projected-AffectedPeople: These surveys were carried out specifically as part of the RAP and REMAP (for Nanbin). Various different surveys were conducted in the different project areas, depending on the complexity and impact of the component. Naturally, the most extensive and detailed surveys covered the two Chongqing componentsdue to the potential magnitude of their impact. For the Chongqing wastewatercomponent the following series of surveys were undertaken: * Initial Census Surveys during 1998; * Follow-up surveys during early 1999; * Survey of the Taipingmen pretreatmentsite during AugustlSeptember 1999; * Detailed socioeconomicand public participation exercise (as requested by the World Bank) from September6 to October 14, 1999. For the remaining components simpler surveys were conducted, except the Fuling wastewater componentwhere further surveys were also conductedduring October 1999 at the request of the World Bank.
The EA and ES were made public locally in Chongqing; this availability was advertised through the local press. Following submission to the Bank by Chongqing, the documents were sent to the Bank's Public Information Center.
Details pertaining to public consultations and information disclosure for each of the project towns, are provided in the following tables.
- 88 - Chongqing Wastewater
Public Consultation
Substance By whom and with whom When Where Bank's requirement
Interview during field social -sociologistsand resettlement 08/98 to all affected units, OD 4.30 & OP 4.01 economicsurvey experts from CRBCC; SASS 09/98 enterprisesand -PAPs households
RAP outline consultation -CRBCC; SASS; CPMO; 10/98 meetings in -PAPs CRBCC offices
Draft EA TOR consultation -EA team; CPMO 04/98 CPMO offices OP 4.01: consultation during TOR stage (their work done before OP requirement)
EA TOR consultation -EA team; CPMO 05/98 CPMO offices OP 4.0: consultationduring TOR stage (their work done before OP requirement)
Distributionof questionnaires -CRBCC; SASS; CPMO; CDC; 04/99 all urban and and key EA & RAP messages -PAPs rural areas in bulletin point format in first affectedby the public meetings project
Distribution of project -CRBCC; SASS; CPMO; CDC; 11/98 to all urban and OP 4.01: information and draft EA & -PAPs 12/99 rural areas Consultation prior to RAP in secondpublic (15 affectedby the finalizationof the draftreport meetings meetings) project
Final EA -CIESM -12/98
Final RAP -CRBCC/SASS -03/00
Information Disclosure
Document Date of disclosure Location Bank's requirement
Copies of EA TOR & RAP outline EA - 07/98 CPMO office; OP 4.01; OD RAP - 10/98 CPMO; CRBCC; CDC offices 4.30; BP 17.50
Questionnairesand key EA & RAP 04/99 all urban and rural areas affected by the messages project
Draft EA & RAP report EA - 10/98 CPMO; CIESM; CDC offices RAP - Ist draft 10/98 CPMO; CRBCC; CDC offices 4 further draft editions
Final EA report & RAP reports EA -12/98 CPMO; CIESM; CDC offices RAP - 03/00 CPMO; CRBCC; CDC offices Notice for availabilityof EA & RAP 20/10/99 Chongqing EconomicDaily reports at PMO and CDC 04/11/99 Chongqing Daily
Resettlementinformation booklet Draft completed;consultation Concemed agencies and PAP in progress representatives
For list of abbreviations see last page.
-89- Chongqing Urban Area Municipal Solid Waste Management Public Consultation
Substance By whom and with whom When Where Bank's requirement
Interview during field social -sociologistsand resettlement 03/98 to all affected units, enterprises OD 4.30 & economicsurvey expertsfrom CRBCC; SASS 03/98 and households OP 4.01 -PAPs 04/99
RAP outlineconsultation -CRBCC; SASS; CPMO; 05/98 meetings in CRBCC offices -PAPs
Draft EA TOR consultation -EA team; CPMO 04/98 CPMO offices OP 4.01: conTsultation during TOR stage (their work done before OP requirement)
EA TOR consultation -EA team; CPMO 05/98 CPMO offices OP 4.0: consultation during TOR stage (their work done before OP requirement)
Distributionof questionnaires -CRBCC; SASS; CPMO; CSWC; 03/98 to all areas affected by the and key EA & RAP messages -PAPs 04/98 project in bulletin point fomiat in first public meetings
Distribution of project -CRBCC; SASS; CPMO; 06/98 to all areas affected by the OP 4.01: information and draft EA CSWC; 11/99 project Consultation & RAP in second public -PAPs (8 prior to meetings meetings) finalization of the draft report
Final EA -CIESM -12/98
Final RAP -CRBCC/SASS -03/00
InformationDisclosure
Document Date of disclosure Location Bank's requirement
Copies of EA TOR & RAP outline EA - 07/98 CPMO office; OP 4.01; OD RAP - 05/98 CPMO; CRBCC; CSWC offices 4.30; BP 17.50
Questionnaires and key EA & RAP 03/98 to 04/98 all areas affected by the project messages
Draft EA & RAP reports EA - 10/98 CPMO; CIESM; CSWC offices RAP - Ist draft 05/98 CPMO; CRBCC; CSWC offices 4 further draft editions
Final EA & RAP reports EA - 12/98 CPMO; CIESM; CSWC offices RAP - 03/00 CPMO; CRBCC; CSWC offices
Notice for availability of EA & RAP 20/10/99 Chongqing Economic Daily reports at PMO and CSWC 04/11/99 Chongqing Daily
Resettlementinformation booklet Draft completed;consultation Concerned agencies and PAP in progress representatives For list of abbreviations see last page.
- 90 - Fuling Wastewater
Public Consultation
Substance By whom and withwhom When Where Bank's requirement
Interview during field social -sociologistsand resettlement 06/98 to all affected units, OD 4.30 & OP 4.01 economicsurvey expertsfrom SASS and FDC 09/98 enterprises and -PAPs households
RAP outline consultation - SASS; CPMO; '99 meetings in -PAPs project area
Draft EA TOR consultation -EA team; CPMO 04/98 CPMO offices OP 4.01: consultation during TOR stage (theirwork done before OP requirement)
EA TOR consultation -EA team; CPMO 05/98 CPMO offices OP 4.0: consultation during TOR stage (their work done before OP requirement)
Distributionof questionnaires - SASS; CPMO; FDC '99 all areas affected and key EA & RAP messages -PAPs by the project in bulletin point format in first public meetings
Distributionof project - SASS; CPMO; FDC Series of all areas affected OP 4.01: informnationand draft EA & -PAPs rmeetings by the project Consultation prior to RAP in second public through finalizationof the draftreport meetings RAP preparation period
Final EA -CIESM -12/98
Final RAP -CRBCC/SASS -03/00
InformationDisclosure
Document Date of disclosure Location Bank's requirement Copies of EA TOR & RAP outline EA - 07/98 CPMO office; OP 4.01; OD RAP - '99 CPMO; FDC offices 4.30; BP 17.50
Questionnaires and key EA & RAP '99 all areas affected by the project messages Draft EA & RAP reports EA - 10/98 CPMO; CIESM; FDC offices RAP - 06/99 CPMO; FDC offices 4 further draft editions
Final EA & RAP reports EA -12/98 CPMO; CIESM; FDC offices RAP - 03/00 CPMO; FDC offices
Notice for availabilityof EA & RAP 20/10/99 ChongqingEconomic Daily reports at PMO 04/11/99 Chongqing Daily
Resettlementinformation booklet Draft completed; consultation Concernedagencies and PAP in progress representatives For list of abbreviations see last page.
- 91 - WanzhouWater Supply
Public Consultation
Substance By whom and with whom When Where Bank's requirement
Interview during field social -sociologistsand resettlement 06/98 to all affected units, OD 4.30 & OP 4.01 economicsurvey expertsfrom SASS and WWSC 09/98 enterprises and -PAPs households
RAP outline consultation - SASS; CPMO; 07/98 meetings in -PAPs project area
Draft EA TOR consultation -EA team; CPMO 04/98 CPMO offices OP 4.01: consultation during TOR stage (their work done before OP requirement)
EA TOR consultation -EA team; CPMO 05/98 CPMO offices OP 4.0: consultation during TOR stage (their work done before OP requirement) Distributionof questionnaires - SASS; CPMO; WWSC 07/98 all areas affected and key EA & RAP messages -PAPs by the project in bulletin point format in first public meetings
Distributionof project - SASS; CPMO; WWSC Series of all areas affected OP 4.01: informationand draft EA & -PAPs meetings by the project Consultation prior to RAP in second public through finalizationof the draft report meetings RAP preparation period
Final EA -CIESM -12/98
Final RAP -CRBCC/SASS - 03/00
InformationDisclosure
Document Date of disclosure Location Bank's requirement
Copies of EA TOR & RAP outline EA - 07/98 CPMO office OP 4.01; OD RAP - 07/98 CPMO; WWSC offices 4.30; BP 17.50
Questionnaires and key EA & RAP 07/98 all areas affected by the project messages
Draft EA & RAP reports EA - 10/98 CPMO; CIESM; WWSC offices CPMO; WWSC offices RAP - 01/99 4 further draft editions
Final EA & RAP reports EA -12/98 CPMO; CIESM; WWSC offices CPMO; WWSC offices RAP - 03/00
Notice for availability of EA & RAP 20/10/99 Cbongqing Economic Daily reports at PMO and 04/11/99 Chongqing Daily
Resettlementinformation booklet Draft completed;consultation Concemed agenciesand PAP in progress representatives
For list of abbreviations see last page.
- 92 - Shizhu (Nanbin)Water Supply
Public Consultation
Substance By whom and with whom When Where Bank's requirement
Interview during field social -sociologistsand resettlement 06/98 to all affected units, OD 4.20, OD 4.30 & OP economicsurvey experts from SASS and 09/98 enterprisesand 4.01 SUDGWDC households -PAPs
REMAP outlineconsultation - SASS; CPMO; 07/98 mneetingsin -PAPs project area
Draft EA TOR consultation -EA team; CPMO 04/98 CPMO offices OP 4.01: consultation during TOR stage (their work done before OP requirement)
EA TOR consultation -EA team; CPMO 05/98 CPMO offices OP 4.0: consultationduring TOR stage (their work done before OP requiremnent)
Distributionof questionnaires - SASS;CPMO; SUDGWDC; 07/98 all areas affected and key EA & REMAP -PAPs by the project messagesin bulletin point format in first public meetings
Distribution of project - SASS;CPMO; SUDGWDC; Series of all areas affected OP 4.01: infornation and draft EA & -PAPs meetings by the project Consultation prior to REMAP in second public through finalizationof the draftreport meetings RAP preparaton period
Final EA -CIESM -12/98
Final REMAP -CRBCC/SASS - 03/00
InformationDisclosure
Document Date of disclosure Location Bank's requirement
Copies of EA TOR & REMAP outline EA - 07/98 CPMO office OP 4.01; OD RAP - 07/98 CPMO; SUDGWDCoffices 4.20, OD 4.30; BP 17.50
Questionnairesand key EA & REMAP 07/98 all areas affected by the project mnessages
Draft EA & RAP reports EA - 10/98 CPMO; CIESM; SUDGWDCoffices RAP - 0 1/99 CPMO; SUDGWDCoffices 4 further draft editions
Final EA & REMAP reports EA - 12/98 CPMO; CIESM; SUDGWDCoffices RAP - 03/00 CPMO; SUDGWDCoffices
Notice for availability of EA & REMAP 20/10/99 Chongqing Economic Daily reports at PMO and 04/11/99 Chongqing Daily
Final EA & REMAP reports As above As above
Resettlementinformation booklet Draft completed;consultation Concerned agencies and PAP in progress representatives For list of abbreviations see last page.
- 93 - Abbreviations
CDC Chongqing Drainage Company CIESM Chongqing Instituteof EnviromnentalScience and Monitoring CPMO Chongqing Project ManagementOffice CRBCC Chongqing Road and Bridge Construction Company CSWC Chongqing Solid Waste Company FDC Fuling Drainage Company PAPs People affected by the project SASS Shanghai Academy of Social Sciences SUDGWDC Shizhu Urban DevelopmentGroup Water and Drainage Company TOR Terms of Reference WWSC Wanzhou Water Supply Company
- 94 - Additional Annex No.: 13
Resettlement The Chongqing Urban EnvironmentProject (CUEP) includes five components in water supply, wastewater collection and pretreatment, and refuse treatment/disposal in four cities of Chongqing Municipality, together with institution strengthening,capacity building, urban information system enhancing, pilot urban environmental rehabilitation and reconstruction, and environmental and water quality monitoring. Land acquisition is necessary as well as the relocation and economic rehabilitation of people affected by the project. Resettlement would be undertaken in accordance with the individual Resettlement Action Plans (RAPs), which have been prepared for each component by specialists in Chongqing with technical assistance from institutes in Shanghai. An overall Summary Resettlement Report has also been prepared (see also Annex 8). Approximately 175.4 hectares (ha) of land would need to be acquired, and 3,483 households (about 15,869 persons) would be directly affected by the project, shown by the respective project component below:
Households Resettled/PAPs Project Component Land No. Persons Estimated Cost (ha) (Million Yuan) Chongqing Wastewater 105.6 2,905 12,585 666.6 Chongqing Solid Waste 63.5 215 667 92.2 Fuling Wastewater - 305 2,383 35.2 Wanzhou Water Supply 4.4 22 81 2.2 Nanbin Water Supply 1.9 36 153 0.5 Total 175.4 3,483 15,869 796.7 PAP = Project-affected person. Compensation for all affected structures would be paid at the replacement cost. Affected houses and enterprises would be provided with alternative plots of land for construction of structures. All affected labor would be reemployed in the same enterprises after reconstruction and would be paid a subsistence allowance for the duration of temporary unemployment.Compensation for land acquisitionwould be paid to either villages or collectives, which would be responsible for redistribution of land among affected families, or to affected farmers who prefer self-settlement with cash compensation. Temporary land acquisition would be compensated at rates equivalent to the productive value of affected land. Allowance would be paid to the affected people for moving to resettlement sites, and for facilitation transition to new houses and jobs. The lead group on land acquisition and resettlement in each project city would coordinate the resettlement program. Each city would establish its own land acquisition and resettlement offices. Internal monitoring and evaluation would be done by the municipal project offices. The total cost of the land acquisition and resettlement program, including physical and price contingencies,is Y 764.7 million (about $92.1 million). A detailed implementation schedule for the resettlement program has been drawn up. The specific compensationand relocation-relatedactivities, which need to be completed before construction,have been clearly listed in each RAP. The entire process of resettlement planning has been participatory. Census and socioeconomic surveys were conducted with the full participationof affected persons. The surveys and the process were undertaken and managed by experienced independent local, national and international consulting bureaus; university students assisted in some cases with the field work. Widespread consultation was done during these times. The municipal governments were fully involved in managing, directing and reviewing the process of RAP preparation. Implementation would involve municipal-level institutions and the representatives of the
- 95 - affected peoples. In order to ensure that each affected household is fully informed about the resettlement program,the municipal project offices have prepared and distributed Resettlement Information Booklets to all affected farmers and other affected people. External monitoring institutions would carry out independent monitoring and evaluation. The RAPs, with respective updates, have been lodged in the Bank's Public Information Center and in the project files (Annex 8). No other resettlement is currently expected to be caused by the proposed project investments. However, should this prove the case during implementation, the same procedures would be followedas describedabove.
- 96 - Additional Annex No.: 14
Project FinancialManagement System Introduction
The objective of the Chongqing Urban Environment Project (CUEP) is to provide a safe environmental setting for the sustainable long-term economic growth of urban areas in Chongqing Municipality. The project would support the Municipality in implementingthe first phase of a long tem urban environmental improvementprogramn to:
* recover from past environmentaldegradation of its water and land resources; * provide an adequate supply of safe water to its growing urban population and economy; and * maintain water quality at levels that are compatible with the needs of the wider Yangtze River Basin.
The main componentsof the project include:
* Urban environmentinfrastructure; - Environmentalwater quality monitoring; - Urban managementinformation system; - Environmentalrehabilitation & pilot restoration;and * Institutionaldevelopment strengthening,training and constructionsupervision.
The total estimatedproject cost is $506.8 million, funded in part by an IBRD loan of $200 million.
A. Background
A financial management review and analysis of the project determined that the project has in place an adequate financial management system as required by Bank OP/BP 10.02. The review was performed in accordancewith the following:
* The Guide for Review and Design of Accountingand Reporting System for World Bank Projects (Central Operational Services Unit, East Asia and Pacific Region, December 1997);
* Review of Financial Management System (Annex II, LACI ImplementationHandbook); and
* Project Financial Management Manual (Loan Department, The World Bank).
The review consequently included procedures considered necessary and appropriate to the project's circumstances. The following project agencies would be responsible for implementing procedures and guidelines for establishing a sound project financial management system, including staff/training, accounting,internal control, reporting requirements,auditing and budgeting:
* Chongqing Municipal and District Finance Bureaus, * Chongqing Municipal and District Project Management Offices, and * Project participating agencies
- 97 - B. Organizationof Project FinancialManagement
Structure of Project FinancialManagement
The Project covers Chongqing city and three districts (Fuling, Wanzhou, and Qianjiang) of Chongqing Municipality. Project implementation would be undertaken at the municipal and district levels. The Chongqing Project Management Office (CPMO) would report to a "Leading Group" headed by the Vice-Govemor of Chongqing Municipal Government and comprising seven officers representing seven agencies (Construction Commission, Planning Commission and the following five Bureaus: Finance, Environmental Protection, Program, Public Utility and Municipal Administration Management). CPMO would also assume overall responsibility for monitoring the project. The financial accounting and reporting aspects of the project are to be handled by the municipal and district PMOs and municipal and district Finance Bureaus.
Loan DisbursementArrangement
The project would be disbursed based on the traditional disbursement techniques and would not be using PMR-based disbursements, in accordance with the agreement reached between the Bank and the Ministry of Finance (MOF).
The Chongqing Municipal Finance Bureau (CFB) would be responsible for the monitoring, maintenance and reconciliation of the Special Account of the Project. Funds would flow from the Bank to municipal, district finance bureaus through onlending arrangement and then onto vendors/contractorsor participating agencies. District Finance Bureaus are in charge of reviewing and verifying payment requests made by District PMOs and participating agencies. Though CPMO would not be involved in the Bank fund flows, it would consolidate payment requests at the project level and after obtaining approval of payment requests, submit to CFB for further verification, approval and processingbefore submitting by CFB to the Bank for reimbursement.
The participating agencies would maintain the original supporting documentation and copies of each payment request. In addition, required copies would also be maintained at both Municipal and District level PMOs and Finance Bureaus for recordkeepingand reference.
Finance Bureaus and CPMO have had previous experience with Bank-financed projects and are familiar with existing disbursement, procurement, financial reporting and auditing requirements. However, the District PMOs and participating agencies are new to the Bank's project requirements and procedures. Training on financial management would therefore be arranged by CPMO for the staff from District PMOs and participating agencies.
To date, CFB has managed 14 Bank-financed projects (such as Chongqing Industrial Project, Sichuan Agriculture Development, Forestry II and Health Projects) and CPMO has managed two Bank projects (i.e., Chongqing Industrial Project and Sichuan Agriculture DevelopmentProject).
- 98 - C. Staffing and Training
The financial/accountingstaff at the PMOs and participating agencies do not have prior experience with Bank projects and accordingly are not familiar with Bank procedures and requirements. Consequently, well-designed and focused training has been scheduled to provide training by CFB and CPMO to all relevant staff to ensure personnel of quality commensurate with job responsibilities.In addition, the Bank would provide as and when needed training in project financial management. The respective PMOs and participating agencies would be staffed with qualified accountants with adequate experience and credentials in financial and accounting management.
To further facilitate the project, well-defined role, job description and operations procedures would be documented in a Project Financial Management Manual (the "Manual") and made easily accessible to all staff (in particular financial/accounting staff) involved to guide in accounting practices and financial preparation and reporting. CPMO would adapt the Manual as needed to the specific requirements of the project. The draft version of the Manual for the project would be ready for the Bank's review before appraisal and a final version available before negotiations.
D. Financial and Accounting System
The administration, accounting and reporting of the project would be set up in accordance with the following regulations/circularsissued by MOF:
* In line with other Bank-financed projects in China, the project would use "Temporary Regulations on Financial and Accounting Management for Projects Financed by the World Bank" (Circular #127 issued in 1993) by MOF as a basis for bookkeeping and preparation of project financial statements and managementreports. Accrual accounting and double entry bookkeeping basis would be adopted by the project.
* Circular #12: "Regulation for the Submission of Withdrawal Applications" issued in December 1996 includes detailed procedures for preparing and submitting withdrawal applications and retention of supporting documentation.
* A standard set of financial statements has been agreed with MOF to be used on World Bank-financed projects in China. This agreement outdates the previous MOF Circular #6: "TemporaryRegulations on Financial Management Reporting for Projects Financed by the World Bank" issued in January 1997. The format of the financial statements included in the MOF Agreement package is primarily based on accounting standards for construction-orientedprojects.
E. Internal and Other Controls
A well-designed intemal control system (both administration and accounting) is one of the key elements critical to the success of a project. The task team has advised that the Manual to be prepared by the Project be modeled after the sample copy provided by the team so that adequate control can be built into system for all major areas of operation with the following features:
* A system of authorization, verification, reconciliation, record procedures and project reporting adequate to provide reasonable control over project costs, security of assets, schedules and technical performance;
99 - * Delegationand segregation of duties; and
* Timely and accurate financial reporting.
F. Reporting Requirements
Clearance has been received from MOF on a standard set of project financial statements that would be utilized by the Project. In terms of reporting cycle, the project financial statements would be submitted biannually (no later than October 1 and April 1 respectively) to the Bank, in a project-consolidatedform, and include the following:
* Balance Sheet * Statement of Sources and Uses of Funds by Project Activity * Statementof Implementationof Loan Agreement * Statement of Special Account
Each of the participatingagencies would be managing, monitoring and maintaining their respective project accounts. The accountant at the CPMO would perform project level consolidation.
G. Audit Arrangements
The Bank requires the project to have its annual project financial statements audited in accordance with standards acceptable to the Bank. In line with other Bank-financed projects in China, the project would be audited in accordance with Government Auditing Standards of the People's Republic of China (1997 edition). The Chongqing Municipal Audit Bureau has been identified as auditors for the project.
Audit reports on annual consolidated project financial statements would be due to the Bank within six months after the end of each reporting year, with separate opinions on statements of expenses and special account.
H. Budgeting
Each year, detailed annual budgets would be prepared by participating agencies and submitted to the municipal/districtgovernment for review and approval. The municipal/district government would provide their share of contributionsto the project based on the budget. The budget would be used as a basis for cost control and performance monitoring. Comparison of budget versus actual would be performed by CPMO on a semiannualbasis and any subsequent major changes to the original plan has to be reviewed, evaluated and approved by the Bank.
Procedures used in the budgeting process would be documented in the Manual and used as a guide for all parties involved.
I. Follow-up
The Project and task team have addressed the following items:
- 100 - * ProjectFinancial ManagementManual
Final version was available before negotiations.
* Project Financial Statements
Project financial statementswere reviewed during negotiations.
J. Conclusion
The project will satisfy the Bank's financial management requirements as stipulated in OP/BP10.02. In the team's opinion, the project will have in place an adequate project financial management system that can provide, with reasonable assurance, accurate and timely information on the status of the project in the reporting format agreed with the project and as required by the Bank.
Report on the Assessmentof Projectfor PMR-BasedDisbursements Proiect Title:Chongqing Urban Environment Project ProjectID: CN-PE-49436
Ineligiblefor PMR-BasedDisbursements
Part I - Financial Manazement System:
I have reviewedthe financialmanagement system relating to this project.The objectiveof the reviewwas to determinewhether the projecthas in place an adequatefinancial management system as requiredby the Bank/IDA under OP/BP10.02.
Ourreview, which included visits to the projectimplementing agency, was basedon the Bank'sguidelines for "Reviewof FinancialManagement System", and focusedon the assessmentof the project'saccounting system, internalcontrol, planning, budgeting and financialreporting system, selection of an auditoras well as the format and contentsof the ProjectManagement Report (PMR) to be submittedby the Borrower.
I confirmthat the projectsatisfies the Bank'sminimum financial management requirements. In my opinion,the projecthas in placean adequateproject financialmanagement system that can provide,with reasonableassurance, accurateand timelyinformation on the statusof the projectin the reportingformat agreed with the Borrowerand as requiredby the Bank/IDA.
Theproject will notbe using PMR-baseddisbursements; traditional disbursement mechanisms will be used.
Signedby:
Ca-Chi (Tony) Shen Financi anagement Specialist (FMS-OPR), EACCF
- 101 - Part I - Procurement/Contract Management System
I have reviewed the procurement/contract management system relating to this project. The objective of the review was to determine whether the procurement/contract management system adopted by the project conforms to the Bank's guidelines for procurement in investment projects.
My review was based on the "Assessment of Agency's Capacity to Implement Project Procurement, Setting of Prior Review Thresholds and Procurement Supervision Plan" guidelines issued by the Bank.
I confirm that the project satisfies the Bank's minimum procurement management requirements. In my opinion, the project has in place an adequate procurement/contract management system that can provide the appropriate data on major procurement and contract management as required by the Bank/IDA.
And where applicable: [During my review, I observed some inadequacies in the system but they are not serious enough to withhold certification. I have detailed in the attachment these inadequacies together with an agreed action plan by the borrower to remedy the situation.]
Signed by: p ,//'\ b ProcurementSpecialist \V 2bv Name, Dept./IrDate
Part 111:Physical Monitorable Indicators and Overall Assessment
I have reviewed the project's system for monitoring physical implementation progress, including its monitorable indicators for major outputs. In my view, the system can provide the appropriate data on physical progress as required by the Bank/IDA.
And where applicable: [During my review, I observed some inadequacies in the system but they are not serious enough to withhold certification. I have detailed in the attachment these inadequacies together with an agreed action plan by the borrower to remedy the situation.]
I also certify that based on the assessments of the FMS-OPR and the Procurement Specialist given respectively in Parts I and II above, taken together with my own overall assessment of the project, and the wish expressed by the Borrower's Governmental authority, this project is ineligible for PMR-based disbursement procedures; traditional disbursement mechanisms will be used.
Signed by:
Name, Dept./Div. Date \ (
Part IV: Concurrence of LOA for Elii'ibilitv ofPro tfor PMR-Based Disbursements
I have conducted a reasonableness review of the process followed by the Task Team in assessing the project, and I concur with its recommendation that this project is ineligible for PMR-Based Disbursements; traditional disbursement mechanisms will be used.
Signed by: FMS-LOA/DO Name, Dept./Div. Date
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