Project Administration Manual Project Number: 49021-002 and 49021-004 Loan Number: L3613 and Lxxxx (Additional Financing) September 2019 People’s Republic of China: Heilongjiang Green Urban and Economic Revitalization Project Investment Project Components (Section A) ABBREVIATIONS ADB – Asian Development Bank BDS – business development services CDM – capacity development module DMF – design and monitoring framework EIA – environmental impact assessment EIB – European Investment Bank EMP – environmental management plan EPB – environment protection bureau ESMS – environmental and social management system FIC – financial intermediation component FMA – financial management assessment FSR – feasibility study report GAP – gender action plan GHG – greenhouse gas GRM – grievance redress mechanism HFD – Heilongjiang Finance Department HMG – Hegang Municipal Government HPG – Heilongjiang Provincial Government ICB – international competitive bidding ICS – individual consultants selection ITS – intelligent transport system JMG – Jixi Municipal Government LAR – land acquisition and resettlement MOF – Ministry of Finance MOFA – Ministry of Foreign Affairs NCB – national competitive bidding NDRC – National Development and Reform Commission NMT – nonmotorized transport O&M – operation and maintenance PAM – project administration manual PCA – procurement capacity assessment PCC – project completion certificate PMC – project management consultant PMO – project management office PPMS – project performance management system PRC – People’s Republic of China QCBS – quality- and cost-based selection QMG – Qitaihe Municipal Government RRP – report and recommendation of the President SCADA – supervisory control and data acquisition SCS – startup consulting service SGAP – Social and Gender Action Plan SMEs – small and medium-sized enterprises SMG – Shuangyashan Municipal Government SOE – statement of expenditure SPS – Safeguard Policy Statement TVET – technical and vocational education and training WTP – water treatment plant WWTP – wastewater treatment plant WEIGHTS AND MEASURES ha – hectare km – kilometer m – meter m2 – square meter m3/d – cubic meter per day CONTENTS I. PROJECT DESCRIPTION 1 II. IMPLEMENTATION PLANS 9 A. Project Readiness Activities 9 B. Overall Project Implementation Plan 10 III. PROJECT MANAGEMENT ARRANGEMENTS 14 A. Project Implementation Organizations: Roles and Responsibilities 14 B. Key Persons Involved in Implementation 18 C. Project Organization Structure 19 IV. COSTS AND FINANCING 20 A. Cost Estimates Preparation and Revisions 20 B. Key Assumptions 20 C. Detailed Cost Estimates by Expenditure Category 24 D. Allocation and Withdrawal of Loan Proceeds 25 E. Detailed Cost Estimates by Financier 27 F. Detailed Cost Estimates by Outputs 29 G. Detailed Cost Estimates by Year 30 H. Contract and Disbursement S-curve 31 I. Fund Flow Diagram 33 V. FINANCIAL MANAGEMENT 34 A. Financial Management Assessment 34 B. Disbursement 35 C. Accounting 37 D. Auditing and Public Disclosure 37 VI. PROCUREMENT AND CONSULTING SERVICES 38 A. Advance Contracting and Retroactive Financing 38 B. Procurement of Goods, Works, and Consulting Services 39 C. Procurement Plan 40 D. Consultant's Terms of Reference 49 VII. SAFEGUARDS 86 VIII. GENDER AND SOCIAL DIMENSIONS 92 IX. PERFORMANCE MONITORING, EVALUATION, REPORTING, AND COMMUNICATION 98 A. Project Design and Monitoring Framework 98 B. Monitoring 103 C. Evaluation 105 D. Reporting 105 E. Stakeholder Communication Strategy 105 X. ANTICORRUPTION POLICY 106 XI. ACCOUNTABILITY MECHANISM 107 XII. RECORD OF CHANGES TO THE PROJECT ADMINISTRATION MANUAL 107 ANNEX Environmental Management Plan Project Administration Manual Purpose and Process The project administration manual (PAM) describes the essential administrative and management requirements to implement the project on time, within budget, and in accordance with the policies and procedures of the government and Asian Development Bank (ADB). The PAM should include references to all available templates and instructions either through linkages to relevant URLs or directly incorporated in the PAM. For this project two PAMs were developed to better serve the two distinct component types of the project and the respective parties involved: (i) Project Administration Manual: Investment Project Components (Section A) to be referred to as PAM (Section A), which is this PAM (Section A) and is now updated to include the additional financing loan (to cover the gap from originally planned cofinancing that did not materialize) which helps finance civil works and goods of outputs 3–5; and (ii) Project Administration Manual: Financial Intermediation Component and Business Development Services Subcomponent (Section B) to be referred to as PAM (Section B) for the original loan. The Heilongjiang Provincial Government (HPG), the executing agency; and the four implementing agencies: the Hegang Municipal Government (HMG), Jixi Municipal Government (JMG), Qitaihe Municipal Government (QMG), and Shuangyashan Municipal Government (SMG); are wholly responsible for the implementation of ADB-financed projects, as agreed jointly between the borrower and ADB, and in accordance with the policies and procedures of the government and ADB. ADB staff is responsible for supporting implementation including compliance by HPG, HMG, JMG, QMG, and SMG, of their obligations and responsibilities for project implementation in accordance with ADB’s policies and procedures. At loan negotiations, the borrower and ADB shall agree to the PAM and ensure consistency with the loan agreement. Such agreement shall be reflected in the minutes of the loan negotiations. In the event of any discrepancy or contradiction between the PAM and the loan agreement, the provisions of the loan agreement shall prevail. After ADB Board approval of the project's report and recommendations of the President (RRP), changes in implementation arrangements are subject to agreement and approval pursuant to relevant government and ADB administrative procedures (including the Project Administration Instructions) and upon such approval, they will be subsequently incorporated in the PAM. I. PROJECT DESCRIPTION A. Rationale 1. The project cities were important bases for coal mining and electricity production in the People's Republic of China (PRC), particularly between 1949 and 2013. 1 Their fundamental reliance on coal mining and related industries made their economies vulnerable, especially when coal prices dropped steeply in 2013. Changing global and domestic energy and climate change policies also contributed to rapid economic decline, wage reductions, unemployment, urban poverty, and population loss in the project cities.2 In 2014, the project cities had an average per capita gross domestic product of CNY26,600, 33% lower than the average rate in Heilongjiang Province, which in turn was about 16% below the national average. 2. The project cities suffer from environmental degradation (pollution of soil, water, and air) caused by more than 60 years of coal mining. This, along with inadequate urban infrastructure and services—e.g., water supply, wastewater management, drainage, and district heating systems—makes for poor livability. Project cities lack adequate road maintenance, public transport, bus lanes, bus stops, and sidewalks; and urgently need road rehabilitation. Some rivers, especially in Hegang and Jixi, flood during heavy storms, have narrow channels, and are polluted by sediments and untreated discharge of domestic and industrial wastewater. 3. Value added by the Asian Development Bank (ADB) assistance. ADB helped identify and comprehensively tackle key economic development challenges through non-coal diversification, sustainable and inclusive private sector development, and job creation. It enabled a holistic investment project that will generate cross-sector synergies. It prepared a diversification road map and small and medium-sized enterprise (SME) development and financing program to leverage ADB funds and strengthen the local finance sector. It contributes to regional public goods by preparing initial mining remediation strategies and identifying pilot projects that improve the environment and public health, and initiate a change of image from dirty coal cities to livable, clean, and green cities. ADB assessed the climate risk and proposed adaptation measures that are included in the overall project. 4. Strategic fit. The project builds on more than 20 years of partnership between ADB and Heilongjiang Province, including several strategic priority projects such as reducing pollution and flood risk in the Songhua River Basin with both public and private sector support.3 It supports government strategies to revitalize the PRC’s challenged northeastern region. Through its strategic and holistic approach, the project will support the (i) 13th five-year plans of the governments of the PRC, Heilongjiang Province, and project cities to transform the economy and improve financing of new industries and SMEs;4 (ii) Transformation Development Planning of Coal Cities in Heilongjiang Province, 2014–2020 by assisting SMEs in non-coal pillar industries such as green food processing, graphite high-tech materials and products, machinery, tourism, 1 Heilongjiang Provincial Government (HPG). 2016. Heilongjiang Statistical Yearbook, 2015. Harbin. 2 After 255,000 people out-migrated during 2010–2015, the population declined by 4.7%. 3 ADB. 2008. Report and Recommendation of the President to the Board of Directors: Proposed Loan to