The World Bank Public-private Partnership Project for Water Supply and Sanitation in Sichuan Province (P168025) Public Disclosure Authorized For Official Use Only Environmental and Social Review Summary Public Disclosure Authorized Concept Stage (ESRS Concept Stage) Date Prepared/Updated: 04/14/2019 | Report No: ESRSC00267 Public Disclosure Public Disclosure Authorized Public Disclosure Authorized Apr 23, 2019 Page 1 of 10 The World Bank Public-private Partnership Project for Water Supply and Sanitation in Sichuan Province (P168025) BASIC INFORMATION A. Basic Project Data Country Region Project ID Parent Project ID (if any) China EAST ASIA AND PACIFIC P168025 Project Name Public-private Partnership Project for Water Supply and Sanitation in Sichuan Province Practice Area (Lead) Financing Instrument Estimated Appraisal Date Estimated Board Date Water Investment Project 10/29/2019 3/16/2020 Financing For Official Use Only Borrower(s) Implementing Agency(ies) Jingyang Project Management Office Proposed Development Objective(s) The project development objective is to improve water supply and sanitation services through a public private partnership in selected areas of Deyang Municipality. Financing (in USD Million) Amount Public Disclosure Total Project Cost 200.00 B. Is the project being prepared in a Situation of Urgent Need of Assistance or Capacity Constraints, as per Bank IPF Policy, para. 12? No C. Summary Description of Proposed Project [including overview of Country, Sectoral & Institutional Contexts and Relationship to CPF] This project will be the first water sector PPP project supported by the World Bank Group in China. The approach developed under this project is intended to be replicated throughout China. The project will support the design and implementation of a PPP that establishes a modern utility in Jingyang that delivers a full range of WWS services, increases household connections for water supply and improved sanitation and reduces effluent pollution to the surrounding water courses. It will seek draw on global best practices for PPP to show how these can be applied in the rural WSS sector in China. The project has two components as outlined below. Component 1: Improving WSS Services in Peri-Urban and Rural Areas of Jingyang District (Estimated Cost: US$147 million; IBRD loan: US$97 million). This component has three key activity areas, being (1) Establishment of a modern WSS Utility: support the establishment Apr 23, 2019 Page 2 of 10 The World Bank Public-private Partnership Project for Water Supply and Sanitation in Sichuan Province (P168025) of systems and equipment to enable full service WSS delivery; (2) Support for Engineering Works: support of: (i) construction/ upgrading of nineteen sewage treatment plants to meet effluent discharge standards; (ii) consolidation and upgrading of 34 existing water supply plants into a smaller number of water supply plants with a total combined capacity of around 40,000 m3/day; (iii) construction of rain, sewage, and water supply pipe networks; (iv) protection of fifteen drinking water source sites and twenty-three water intakes/wells; and (v) one integrated smart water management platform for use by the PPP WSS Utility to monitor, manage, and operate the assets. The project will also finance (vi) the full cost of connecting households to the central water supply and sewer network; (3) Support for Citizen Engagement: Component 2: Technical Assistance (TA) for PPP Scale Up, Capacity Building, and Project Management (Estimated Cost: US$3 million; IBRD loan: US$3 million). This component has two key activity areas, namely: (1) Technical Assistance for Water Sector PPP Scale Up; and (2) Capacity Building and Project Management. D. Environmental and Social Overview For Official Use Only D.1. Project location(s) and salient characteristics relevant to the ES assessment [geographic, environmental, social] Jingyang District (Jingyang) is the main district of Deyang City, located in the northeast edge of the Chengdu Plain in Sichuan Province, about 70 kilometers northeast of Chengdu City, the capital city of Sichuan. The topography of Jingyang District slopes from the northwest to the southeast. The landform in the west is primarily formed by the alluvial plain, while the east has rolling terrain.This region is situated amidst the upper tributaries of the Yangtze River, and is a priority area for pollution control and water quality improvement. The total population of Jingyang is over 750,000, with about 250,000 living in rural areas. In 2016, the district had total economic output of RMB 298 billion. Despite some rural water and environmental protection projects in the 2000's, accelerating urban construction and development pose significant challenges to the local water environment in Jingyang. Jingyang District is in the region influenced by the subtropical humid and semi-humid climate characterized with distinct seasons and rich precipitation, which gives rich water resource to Jingyang. The total area of Jingyang District is 648 km2. The district is the main urbanized area of Deyang Municipality, including 4 urban communities namely Jingyang, Gongnong, Chengbei, and Chengnan, 10 towns by the name Huangxv, Xiaoquan, Bolong, Dexin, Yangjia, Tianyuan, Xiaogan, Public Disclosure Xinzhong, Shuangdong, and Hexinzhen and 1 township called Donghu Xiang. The project will be developed in the outskirts and rural area of the Jingyang District to provide service for the total population of 250,000, living in the 10 towns and 1 township. Citizens in the 4 urban communities already have sufficient water supply and will not be serviced by the project. People in Jingyang District are predominantly Han Chinese, with about 4,700 ethnic minority people belong to 35 different ethnic groups. However, no ethnic minority concentrated area is expected in Jingyang District. This is a traditional agricultural area, with recent industrial development, and expected to receive more industries moving from China’s more developed coastal regions in search of cheap labor and less cost related to land price. The first draft FSR has been prepared which determined the service scope and the demand. Following on the first draft, the second draft is being prepared with focuses on water resource availability study and the alternative study for water supply and wastewater discharge and treatment schemes as well as the service that private sector will provide to local people. According to the milestones of the project, the FSR will be completed by the appraisal by the Jingyang District Government, and the private entity will be responsible for completing the preliminary design and the final design during the implementation. According to the FSR, the alternative of water treatment plant with the largest capacity is in the northwest of Jingyang District, which is supposed to meet all the water demand of the project by taking water from the Renmin Canal. However, given the poor quality (irrigation water quality now) and the competing water demands in the Renmin Canal, this alternative seems not feasible. The other three alternatives propose to build several small drinking water treatment facilities in the project area by taking water from small reservoirs and the Renmin Canal which is under careful evaluation in terms of water quality, treatment technology Apr 23, 2019 Page 3 of 10 The World Bank Public-private Partnership Project for Water Supply and Sanitation in Sichuan Province (P168025) and establishment of protection zone. Thus, it is estimated that the size of each proposed water treatment facilities is much smaller than 50,000 m3/d. The effluent of the wastewater treatment facilities to be constructed under the project may flow into the Mianyuan River and the Shiting River, which are currently receiving rural and sub-urban wastewater from the project area where the wastewater treatment capacity is limited. D. 2. Borrower’s Institutional Capacity The Government of Jingyang District has very limited experience in managing projects financed by international financial institutions. The staff of the government has limited technical capacity themselves. Their capacity largely depends on the quality and capacity of the technical teams hired. For this project, the government of Jingyang District has allocated funds to hire technical institute, EA consultant and social consultants. A steering committee has been established within the district government, consisting of the directors from the water resources bureau, housing and urban-rural development bureau, Environmental Protection Bureau (EPB), planning (DRC), and finance bureau. The district EPB has good experience in regulating the environmental issues associated with the small-medium size wastewater and water facilities. Under the committee, a PMO has been established for daily work during the For Official Use Only preparation of the project. Four young staff from the EPB and the DRC are designated to work under the PMO and coordinate the ESIA preparation. Experienced EIA consultants have been engaged to prepare the ESIA. A social consultant team has been commissioned to assist PMO to undertake social assessment and stakeholder engagement. The social team has no previous experience working for Bank financed projects, and they have not been trained for ESF procedures. The Bank social specialist provided comments on the Terms of Reference for recruitment of social assessment team in the early stage when the project was expected to follow the pre-ESF safeguards