Document of The World Bank Public Disclosure Authorized Report No. 14034-CRA STAFF APPRAISAL REPORT Public Disclosure Authorized CHINA SHANGHAI-ZHEJIANG HIGHWAYPROJECT Public Disclosure Authorized JULY 11, 1995 Public Disclosure Authorized Transport Operations Division China and Mongolia Department East Asia and Pacific Regional Office CURRENCYEQUIVALENTS (as of January 1995) Currency name = Renminbi Currency unit = Yuan (Y) = 100 Fen $1.00 = Y 8.50 $0.115 = Y 1.00 FISCAL YEAR January 1 - December 31 WEIGHTSAND MEASURES 1 meter (m) = 3.28 feet (ft) 1 kilometer (km) = 0.62 mile (mi) 1 square meter (m2) = 10.76 square feet (ft2) 1 square kilometer (kM2 ) = 0.4 square miles (mi2) 1 hectare (ha) = 0.01 (km 2 ) = 2.47 acres (ac) = 15 mu 1 mu = 666.7 m2 = 0.0667 ha 1 kilogram (kg) = 2.2046 pounds (lbs) 1 metric ton (m ton) = 2,204 pounds (lbs) PRINCIPAL ABBREVIATIONS AND ACRONYMS USED 6FYP - Sixth Five-Year Plan (1981-85) SAA - State Audit Administration 7FYP - Seventh Five-Year Plan (1986-90) SFB - ShanghaiFinance Bureau 8FYP - Eighth Five-Year Plan (1991-95) SITC - ShanghaiInternational Tendering 9FYP - Ninth Five-Year Plan (1996-2000) Company AADT - AnnualizedAverage Daily Traffic SM - ShanghaiMunicipality CRISPP - China Reform, InstitutionalSup- SMAB - ShanghaiMunicipal Audit port and PreinvestmentProject Bureau CTF - ConsultantTrust Funds SMCC - ShanghaiMunicipal Construction E&M - Electrical & Mechanical Commission EA - EnvironmentalAssessment SMEAB - ShanghaiMunicipal Engineering EAP - EnvironmentalAction Plan AdministrationBureau EIRR - Economic Internal Rate of Return SMEDI - ShanghaiMunicipal Engineering FYRR - First-Year Rate of Return Design Institute GDP - Gross DomesticProduct SMG - ShanghaiMunicipal Government GNP - Gross NationalProduct SOE - Statementsof Expense GOC - Governmentof China SPC - State Planning Commission GOVAI - Gross Output Value of Agriculture SRIEP - ShanghaiResearch Institute for and Industry EnvironmentalProtection HHEC - Hu-Hang (Shanghai-Hangzhou) TA - Technical Assistance ExpresswayEngineering Construc- TCU - TechnicalCoordinating Unit tion ExecutiveCommission TOR - Terms of Reference (Shanghai) vpd - Vehicles per day HPDI - Highway Planning and Design YEZTS - Yangtze EconomicZone Trans- Institute port Study HSRI - Highway ScientificResearch Insti- ZP - Zhejiang Province tute ZPCD - Zhejiang ProvincialCommunica- ICB - InternationalCompetitive Bidding tions Department JHAB - Jiaxing Highway Administration ZPCDI - Zhejiang Provincial Bureau CommunicationsDesign Institute JST - Joint SupervisionTeam ZPEPB - Zhejiang Provincial Environ- LCB - Local CompetitiveBidding mental ProtectionBureau MAAP - MicrocomputerAccident Analysis ZPEC - Zhejiang Provincial Shanghai- Package Hangzhou-NingboExpressway MOC - Ministry of Communications Project Executive Commission MOF - Ministry of Finance ZPG - Zhejiang ProvincialPeople's NPV - Net Present Value Government NR - NationalRoute ZPHAB - Zhejiang ProvincialHighway NTHS - NationalTrunk Highway System AdministrationBureau pcu - Passenger Car Unit ZPRIEP - Zhejiang ProvincialResearch PMS - Pavement ManagementSystem Institute of EnvironmentalPro- PRC - People's Republicof China tection RAP - ResettlementAction Plan ZPTD - Zhejiang ProvincialTransport RDB - Road Data Bank Department RMF - Road MaintenanceFee ZPTDI - Zhejiang ProvincialTransport RSP - Road Safety Program Design Institute CHINA SHANGHAI-ZHEJIANG HIGHWAY PROJECT Loan and Project Sunmnary Borrower: People's Republic of China Benefi'ciaries: Shanghai Municipalityand Zhejiang Province Poverty: Not Applicable Amount: $260 million equivalent Terms: 20 years, including5 years of grace, at the Bank's standard variable interest rate Commitment Fee: 0.75% on undisbursedloan balances, beginning60 days after signing, less any waiver Financing Plan: See para 3.60 EconomicRate of Return: 33 percent for the project overall 33 percent for the Shanghai-HangzhouExpressway 54 percent for the Road Safety Programn Maps: IBRD 25817, 25818 and 25819 Project Identification Number: CN-PA-3569 CONTENTS 1 Transport Bottlenecks and Reforms ....... 1 A. Background .................................. 1 B. Traffic ..................................... 1 C. Transport Reforms ........ .. .. .. 2 D. The Highway Subsector ........................... 4 E. Bank Group Participation .......................... 8 F. Lessons from Previous Bank Operations ...... 11 2 The Transport Sector in Shanghai and Zhejiang ..... 14 A. Situation and Economy ........ 14 B. Transport Network ......... .. .. 14 C. Traffic Characteristics and Growth ...... 16 D. The Vehicle Fleet ......... .. .. .. 17 E. Road Safety .......... .. .. .. .. .. .. .. .. 18 F. Highway Development ........ 19 3 The Project ........... .. .. .. .. .. .. .. .. .. .. .. .. 22 A. Origin and Formulation ........ 22 B. Objectives and Rationale for Bank Involvement ..... 23 C. Project Description ........ .. .. 25 D. Status of Project Preparation ....... 31 This report is based on the findings of a November 1993 appraisal mission led by Stephen Stares and consisting of Rita Pasi, George Mahoney, Katsunori Suzuki, Christopher Robson and Ruwani Jayewardene. Subsequent missions involved Maninder Gill, Zou Youlan, and Aly Ercelawn, who contributed to preparation for resettlement activities under this project. Jose Veniard, Liu E, Lyra Pinto, Richard Leonard, Bavani Krishnamurthi, and Ashraf Ghani also contributed to completion of this Staff Appraisal Report. Peer reviewers for the project were Christopher Hoban (Transport Engineer), Stein Lundebye (Senior Highway Construction Industry Specialist) and Nick Anderson (Environmental Specialist). The Task Manager is Rita Pasi, the Division Chief is Richard Scurfield and the Department Director is Nicholas C. Hope. E. Environmental Assessment ........ 32 F. Land Acquisition and Resettlement .................... 33 G. Cost Estimates ........... .. .. .. .. .. .. .. .. 37 H. Financing ............. .. .. .. ... .. .. .. ... .. .. 39 I. Project Implementation ........ .. 41 J. Procurement ........... .. .. .. .. .. .. .. .. .. .. 43 K. Disbursements ........... .. .. .. .. .. .. .. .. 46 L. Project Monitoring and Supervision ...... 47 4 Economic Evaluation .49 A. Main Benefits and Beneficiaries .49 B. Evaluation of the Shanghai-Hangzhou Expressway .50 C. Evaluation of the Road Safety Program .58 D. Summary of Evaluation and Assessment of Project Risks .60 5 Agreements Reached and Recommendation .62 TABLEs 1.1 Traffic Turnover by Mode, 1980-1993 .64 1.2 Road Accident Risks in Various Countries, 1993 .65 1.3 China: Bank Group-Financed Transport Projects ..... ........ 66 2.1 EconomiEconomicData, 1992 .68 2.2 Demographic and Transport Network atat, 992.69 2.3 Classification of Road Network in Shanghai and Zhejiang, 1981-93 ... 70 2.4 Shanghai and Zhejiang: Freight and Passenger Turnover by Mode, . 1982-92 .71 2.5 Shanghai: Comparison of Freight and Passenger Volume by Mode, 1985 and 1993 .72 2.6 Shanghai and Zhejiang: Freight and Passenger Traffic Volume by Mode, 1982-92 .73 2.7 Zhejiang: Comparison of Freight and Passenger Volume by Mode, 1985 and 1992 .74 2.8 Zhejiang Province: Transportation Services by Sector .75 2.9 Shanghai and Zhejiang: Vehicle Fleet, 1984-93 . 76 2.10 Road Safety in Shanghai Municipality and Zhejiang Province .77 2.11 Traffic Accidents in Shanghai Section of Project Corridor .78 2.12 Composition of Shanghai Road Network, 1985-2000 .79 2.13 Projected Composition of Zhejiang Road Network .79 2.14 Zhejiang: Major Road Works, 1993-2000. 80 2.15 Shanghai: Highway Development Program, 1986-2000 .81 2.16 Zhejiang: Highway Development Program. 82 2.17 Zhejiang: Transport Investments Planned for Improved Access to Hangzhou City .83 2.18 Shanghai: Highway Revenues and Expenditures, 1986-2000 .84 2.19 Zhejiang: Highway Revenues and Expenditures, 1986-2000 . ....... 85 - 111 - 3.1 China: Highway Design Standards ....................... 86 3.2 Staff Training Program - Shanghai Section ...... 87 3.3 Staff Training Program - Zhejiang Section ...... 89 3.4 Equipment To Be Procured - Shanghai Expressway Section ..... 91 3.5 Equipment To Be Procured - Zhejiang Expressway Section ..... 92 3.6 Equipment To Be Procured - Road Safety Program ..... 94 3.7 Summary of Equipment to be Procured Under the Project ..... 95 3.8 Estimated Disbursement Schedule . 96 4.1 Zhejiang: Traffic Growth on National Route 320 (AADT) ..... 97 4.2 Shanghai: Traffic Growth in Expressway Corridor ..... 98 4.3 Projected Traffic in the Shanghai-Hangzhou Corridor ..... 99 4.4 Shanghai-Hangzhou Corridor Estimated Travel Times and Speeds . .. 100 4.5 Vehicle Operating Costs ......... .. .. .. 101 4.6 Estimated Construction Costs ........ 102 4.7 Shanghai-Hangzhou Expressway: Economic Evaluation without Tolling 103 4.8 Shanghai-Hangzhou Expressway: Economic Evaluation with Tolling . 104 4.9 Shanghai-Hangzhou Expressway: Economic Evaluation with Tolling and with Road Safety Program Improvements .105 4.10 Shanghai-Hangzhou Expressway: Economic Evaluation with Tolling and Road Safety Improvements - Low Growth and Low Diversion Scenario 106 4.11 Shanghai-Hangzhou Expressway: Sensitivity Analysis .107 4.12 Road Safety Program: Economic Evaluation .108 4.13 Road Safety Program: Sensitivity Analysis ..... 109 4.14 Overall Economic Evaluation for Shanghai-Zhejiang Highway Project 110 ANNEXES 1. Management of the Highway Sector in Shanghai and Zhejiang ... 111 2. Road Safety Program ......... .. .. .. .. .. .. 122 3. Environmental Assessment and Action Plan Summary ..... 145 4.