Document of The World Bank FOR OFFICIAL, USE ONLY Public Disclosure Authorized Report No: 41326-CN PROJECT APPRAISAL DOCUMENT ON A Public Disclosure Authorized PROPOSED LOAN IN THE AMOUNT OF US$l00 MILLION TO THE PEOPLE’S REPUBLIC OF CHINA FOR A BENGBU INTEGRATED ENVIRONMENT IMPROVEMENT PROJECT Public Disclosure Authorized February 4,2008 Urban Development Sector Unit Sustainable Development Department East Asia and Pacific Region This document has a restricted distribution and may be used by recipients only in the Public Disclosure Authorized performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective September 1,2007) Currency Unit = Renminbi (RMB) RMB 1.00 = US$0.132 US$l.OO = RMB 7.576 FISCAL YEAR January 1 - December31 ABBREVIATIONS AND ACRONYMS B3WTC Bengbu No. 3 Wastewater Treatment Limited Liability Company BDC Bengbu Drainage Co. Ltd. BEDZIC Bengbu Economic Development Zone Investment Co. Ltd. BHNDDC Bengbu Hebei New District Development Co. Ltd. BHNTIGC Bengbu High-New Tech Investment Group Co. Ltd. BMG Bengbu Municipal Government BMPMO Bengbu Municipal Project Management Office BOD Biochemical Oxygen Demand BOQ Bill of Quantities cc Construction Commission CNAO China National Audit Office COD Chemical Oxygen Demand DA Designated Account DI Design Institute DRC Development and Reform Commission EA Environmental Assessment EDZ Economic Development Zone EIA Environmental Impact Assessment EIRR Economic Internal Rate of Return EMP Environmental Management Plan EPB Environment Protection Bureau FB Finance Bureau GDP Gross Domestic Product GUIDC Guzhen County Urban Investment and Development Co. Ltd. HTDZ High Tech Development Zone HRPCP Huai River Pollution Control Project HWDIC Huaiyuan County Western Developmental Investment Limited Liability Corp. HZUIC Huaiyuan County Zhengda Urban Investment Co. Ltd. IBRD International Bank for Reconstruction and Development ICB International Competitive Bidding IDA International Development Association KPI Key Performance Indicator LAB Land Administration Bureau MBD Model Bidding Document FOR OFFICIAL USE ONLY MIZ Mohekou Industrial Zone MOF Ministry of Finance NCB National Competitive Bidding NDRC National Development and Reform Commission OA Operating Account O&M Operations and Maintenance PAP Project Affected Person PDO Project Development Objective PLG Project Leading Group PMO Project Management Office PPP Public-Private Partnership RAP Resettlement Action Plan SA Social Assessment SBD Standard Bidding Document SEPA State Environmental Protection Administration WA Withdrawal Application WCIC Wuhe County Construction Investment Co. Ltd. WRB Water Resources Bureau WTP Willingness To Pay WWTP Wastewater Treatment Plant Vice President: James W. Adams Country Director: David R. Dollar Sector Manager: Keshav Varma Task Team Leader: Shenhua Wang 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 Bengbu Integrated Environment Improvement Project CONTENTS Page A . STRATEGIC CONTEXT AND RATIONALE ................................................................. 1 1. Country and sector issues .................................................................................................... 1 2 . Rationale for Bank involvement ......................................................................................... 2 3 . Higher level objectives to which the project contributes .................................................... 3 B. PROJECT DESCRIPTION ................................................................................................. 3 1. Lending instrument ............................................................................................................. 3 2 . Program objective and phases ............................................................................................. 3 3 . Project development objective and key indicators.............................................................. 3 4 . Project components ............................................................................................................. 3 5 . Lessons learned and reflected in the project design ............................................................ 5 6 . Alternatives considered and reasons for rejection .............................................................. 6 C . IMPLEMENTATION.......................................................................................................... 7 1. Partnership arrangements .................................................................................................... 7 2 . Institutional and implementation arrangements .................................................................. 7 3 . Monitoring and evaluation of outcomes/results .................................................................. 9 4 . Sustainability.. ....................................................................................................................... 9 5 . Critical risks and possible controversial aspects ................................................................. 9 6 . Loadcredit conditions and covenants ............................................................................... 11 D. APPRAISAL SUMMARY ................................................................................................. 12 1. Economic and financial analyses ...................................................................................... 12 2 . Technical.. ......................................................................................................................... 13 3 . Fiduciary ........................................................................................................................... 14 4 . Social ................................................................................................................................. 15 5 . Environment...................................................................................................................... 15 6 . Safeguard policies ............................................................................................................. 16 7 . Policy Exceptions and Readiness ...................................................................................... 16 Annex 1: Country and Sector or Program Background......................................................... 18 Annex 2: Major Related Projects Financed by the Bank and/or other Agencies .................23 Annex 3: Results Framework and Monitoring ........................................................................ 24 Annex 4: Detailed Project Description...................................................................................... 30 Annex 5: Project Costs ............................................................................................................... 35 Annex 6: Implementation Arrangements ................................................................................. 37 Annex 7: Financial Management and Disbursement Arrangements..................................... 40 Annex 8: Procurement Arrangements ...................................................................................... 48 Annex 9: Economic and Financial Analysis ............................................................................. 53 Annex 10: Safeguard Policy Issues ............................................................................................ 68 Annex 11: Project Preparation and Supervision ..................................................................... 76 Annex 12: Documents in the Project File ................................................................................. 78 Annex 13: Statement of Loans and Credits .............................................................................. 79 Annex 14: Country at a Glance ................................................................................................. 84 Annex 15: Maps........................................................................................................................... 86 IBRDKHN 35665. 35666 CHINA BENGBU INTEGRATED ENVIRONMENT IMPROVEMENT PROJECT PROJECT APPRAISAL DOCUMENT EAST ASIA AND PACIFIC EASUR Date: February 4,2008 Team Leader: Shenhua Wang Country Director: David R. Dollar Sectors: General water, sanitation and flood Sector ManagerAIirector: Keshav Varma protection sector (80%); Roads and highways (10%); Water supply (5%); Sub-national government administration (5%) Themes: Pollution management and environmental health (P); Water resource management (S); Regional integration (S) Project ID: PO96925 Environmental screening category: Full Assessment Lending Instrument: Specific Investment Loan [XI Loan [ 3 Credit [ ]Grant [ ]Guarantee [ ]Other: For Loandcreditdothers: Total Bank financing (US$m.): 100.00 Proposed terms: The loan will be payable in 17 years, including a five-year grace period with level reDavments of DrinciDal. on standard terms for a single currencv variable mread loan. Source Local Foreign Total Borrower 101.02 23.61 124.63 International Bank for Reconstruction and 29.81 70.19 100.00 Development Total: 130.83 93.80 224.63 Borrower: People’s Republic of China Responsible Agency: Bengbu Municipal Development and Reform CommissiodProject Management Office Administrative Office