Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No: 40842-CN PROJECT APPRAISAL DOCUMENT ON A Public Disclosure Authorized PROPOSED LOAN IN THE AMOUNT OF US$300 MILLION TO THE PEOPLE’S REPUBLIC OF CHINA FOR A SHIZHENG RAILWAY PROJECT Public Disclosure Authorized May 29,2008 China and Mongolia Sustainable Development Unit Sustainable Development Department East Asia and Pacific Region Public Disclosure Authorized This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective 3 1 January 2008) Currency Unit = RMB (Chinese Yuan Renminbi) RMBl.00 = US$0.14 US$l.OO = RMB7.18 FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS ACSSNAO Audit Service Center of China National Audit Office for Foreign Loan and Assistance Projects ATP Automatic Train Protection CR China Railways CTC Centralized Train Control DA Designated Account EIA Environmental Impact Assessment EIRR Economic Internal Rate ofReturn EMP Environmental Management Plan EMU Electric Multiple Unit DPs Displaced Persons FCTIC Foreign Capital and Technical Import Center (of MOR) FIRR Financial Internal Rate ofReturn FM Financial Management FMS Financial Management Sector GDP Gross Domestic Product GSG Greenhouse Gas HSR High-speed Rail IBRD The International Bank for Reconstruction and Development ICR Implementation Completion and Results Report IDA International Development Association. JSC JingShi Dedicated Passenger Railway Company MOR Ministry ofRailway NDRC National Development and Reform Commission NPV Net Present Value PCN Project Concept Note PIC Public Information Center PID Project Information Document PMO Project Management Office RA Regional [Railway] Administration RAP Resettlement Action Plan RP Resettlement Plan SEPA State Environmental Protection Agency FOR OFFICIAL USE ONLY SOE Statements of Expenditure SOEs State-owned Enterprises swc ShiWu Dedicated Passenger Railway Company Vice President: Mr. James W. Adams, EAPVP Country Director: Mr. David R. Dollar, EACCF Sector Manager: Mr. Ede Jorge Ijjasz-Vasquez , EASCS Task Team Leader: Mr. John Scales, EASCS This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization. CHINA ShiZheng Railway Project CONTENTS Page I. STRATEGIC CONTEXT AND RATIONALE ............................................................. 1 A . Country and sector issues.................................................................................................... 1 B. Rationale for Bank involvement ......................................................................................... 2 C . Higher level objectives to which the project contributes .................................................... 3 I1. PROJECT DESCRIPTION ............................................................................................. 3 A . Lending instrument ............................................................................................................. 3 B. Project development objective and key indicators .............................................................. 4 C . Project component .............................................................................................................. 4 D. Lessons learned and reflected in the project design ............................................................ 5 E. Alternatives considered and reasons for rejection .............................................................. 5 I11. IMPLEMENTATION...................................................................................................... 5 A . Institutional and implementation arrangements .................................................................. 5 B. Monitoring and evaluation of outcomes and results ........................................................... 6 ... C . Sustainability ....................................................................................................................... 7 D. Critical risks and possible controversial aspects................................................................. 8 E. Loadcredit conditions and covenants................................................................................. 9 IV. APPRAISAL SUMMARY ............................................................................................. 10 A . Economic and financial analyses ...................................................................................... 10 B. Technical ........................................................................................................................... 12 C . Fiduciary ........................................................................................................................... 14 D. Social................................................................................................................................. 14 E. Environment ...................................................................................................................... 16 F. Safeguard policies ............................................................................................................. 17 G. Policy Exceptions and Readiness...................................................................................... 17 Annex 1: Country and Sector Background .............................................................................. 18 Annex 2: Major Related Projects Financed by the Bank and other Agencies ...................... 25 Annex 3: Results Framework and Monitoring ........................................................................ 27 Annex 4: Detailed Project Description...................................................................................... 29 Annex 5: Project Costs ............................................................................................................... 33 Annex 6: Implementation Arrangements ................................................................................. 34 Annex 7: Financial Management and Disbursement Arrangements ..................................... 36 Annex 8: Procurement Arrangements ...................................................................................... 44 Annex 9: Economic and Financial Analysis ............................................................................. 47 Annex 10: Safeguard Policy Issues ............................................................................................ 55 Annex 11: Project Preparation and Supervision ..................................................................... 66 Annex 12: Documents in the Project File ................................................................................. 67 Annex 13: Statement of Loans and Credits .............................................................................. 68 Annex 14: Country at a Glance ................................................................................................. 72 Annex 15: Maps........................................................................................................................... 74 CHINA SHIZHENG RAILWAY PROJECT PROJECT APPRAISAL DOCUMENT EAST ASIA AND PACIFIC EASCS Date: May 29,2008 Team Leader: John Scales Country Director: David R. Dollar Sectors: Railways (100%) Sector ManagedDirector: Ede Jorge Ijjasz- Themes: Public expenditure, financial Vasquez management and procurement (P) Project ID: PO99062 Environmental screening category: Full Assessment Lending Instrument: Specific Investment Loan Project Financing Data [XI Loan [ ] Credit [ ] Grant [ ] Guarantee [ ] Other: Source Local Foreign Total Borrower 6,200.00 0.00 6,200.00 International Bank for Reconstruction and 0.00 300.00 300.00 Development Total: 6,200.00 300.00 6,500.00 Borrower: Ministry ofFinance San Li He Lu Beijing China 100820 Tel: 86-10-68551 124 Fax: 86-10-68551 125 Responsible Agency: Ministry ofRailways, Foreign Capital & Technical ,nport Center 10 Fuxing Road Beijing China Tel: 86-10-51841895 Fax: 86-10-51841845 FY 9 10 11 12 13 4nnual 10.00 30.00 70.00 140.00 50.00 Cumulative 10.00 40.00 110.00 250.00 300.00 Project description [one-sentence summary of each component] Ref: PAD ILD., Technical Annex 4 The project consists ofa single component, which is the construction of a new 355 km dedicated high-speed passenger rail line between Shijiazhuang in Hebei province and Zhengzhou in Henan province (ShiZheng line). In addition to the physical construction ofthe ShiZheng line the component will include related technical assistance. Which safeguard policies are triggered, if any? Ref: PAD IKF., Technical Annex 10 Environmental Assessment(OP/BP4.0 1) and Involuntary Resettlement(OP/BP4.12) Significant, non-standard conditions, if any, for: Ref: PAD IILF. Board presentation: None Loadcredit effectiveness: No project specific conditions. Covenants applicable to project implementation: As a condition of disbursement, Resettlement Action Plan (RAP) Arrangements, acceptable to the Bank, will be finalized and provided to the Bank. (RAP Arrangements are the arrangements entered into between the Ministry ofRailways and, separately, Hebei Province and Henan Province for the purpose of causing the RAP to be carried out.) The Borrower shall carry out or cause to be carried out the Environmental