Completion Report Project Number: 33175 Loan Number: 1748 September 2007 People’s Republic of China: Hefei-Xi’an Railway Project CURRENCY EQUIVALENTS Currency Unit – yuan (CNY) At Appraisal At Project Completion 21 June 2000 31 October 2005 CNY1.00 = $0.1215 $0.1236 $1.00 = CNY8.2272 CNY8.0885 ABBREVIATIONS ADB – Asian Development Bank CDB – China Development Bank DMIS – dispatch management information system EA – executing agency EIA – environmental impact assessment EIRR – economic internal rate of return FIRR – financial internal rate of return HXR – Hefei-Xi’an Railway HXRCH – Hefei-Xi’an Railway Construction Headquarters ICB – international competitive bidding LAR – land acquisition and resettlement LCB – local competitive bidding M&E – monitoring and evaluation MOR – Ministry of Railways PCR – project completion report PPTA – project preparatory technical assistance PRC – People’s Republic of China RP – resettlement plan RRP – report and recommendation of the President RCMC – Railway Construction Management Center RCSO – Railway Construction Support Office SEIA – summary environmental impact assessment SEPA – State Environmental Protection Administration TA – technical assistance WACC – weighted average cost of capital WEIGHTS AND MEASURES km – kilometer m – meter mu – traditional land area measure t – ton NOTES (i) The fiscal year (FY) of the Government and its agencies ends on 31 December. (ii) In this report, "$" refers to US dollars. Vice President C. Lawrence Greenwood, Jr., Operations Group 2 Director General H. S. Rao, East Asia Department (EARD) Director N. C. Rayner, Transport Division, EARD Team leader S. H. Yoon, Transport Economist, EARD Team member T. S. Capati, Associate Project Analyst, EARD CONTENTS Page BASIC DATA ii MAPS vi I. PROJECT DESCRIPTION 1 II. EVALUATION OF DESIGN AND IMPLEMENTATION 1 A. Relevance of Design and Formulation 1 B. Project Outputs 2 C. Project Costs 3 D. Disbursements 4 E. Project Schedule 4 F. Implementation Arrangements 5 G. Conditions and Covenants 6 H. Consultant Recruitment and Procurement 6 I. Performance of Consultants, Contractors, and Suppliers 7 J. Performance of the Borrower and the Executing Agency 7 K. Performance of the Asian Development Bank 7 III. EVALUATION OF PERFORMANCE 7 A. Relevance 7 B. Effectiveness in Achieving Outcome 8 C. Efficiency in Achieving Outcome and Outputs 9 D. Preliminary Assessment of Sustainability 9 E. Impact 10 IV. OVERALL ASSESSMENT AND RECOMMENDATIONS 12 A. Overall Assessment 12 B. Lessons 12 C. Recommendations 13 APPENDIXES 1. Project Framework 14 2. Chronology of Major Events in the Project’s History 17 3. Project Cost and Financing Source 20 4. Projected and Actual Disbursements 22 5. Planned and Actual Implementation Schedule 23 6. Organization Chart 24 7. Evaluation of Land Acquisition and Resettlement Activities 25 8. Environmental Impact Analysis 33 9. Compliance with Loan Covenants 36 10. Contract Packages Financed by the Asian Development Bank 42 11. Traffic Forecast 50 12. Financial Reevaluation 52 13. Economic Reevaluation 56 14. Social Impact and Poverty Reduction in the Project Area 59 BASIC DATA A. Loan Identification 1. Country People’s Republic of China 2. Loan Number 1748 3. Project Title Hefei-Xi’an Railway Project 4. Borrower People’s Republic of China 5. Executing Agency Ministry of Railways 6. Amount of Loan $300,000,000 7. Project Completion Report Number PCR: PRC 991 B. Loan Data 1. Appraisal – Date Started 28 March 2000 – Date Completed 11 April 2000 2. Loan Negotiations – Date Started 19 June 2000 – Date Completed 21 June 2000 3. Date of Board Approval 17 August 2000 4. Date of Loan Agreement 4 December 2000 5. Date of Loan Effectiveness – In Loan Agreement 4 March 2001 – Actual 2 March 2001 – Number of Extensions none 6. Closing Date – In Loan Agreement 30 December 2005 – Actual 28 June 2007 – Number of Extensions 2 7. Terms of Loan – Interest Rate Pool-based variable lending rate system for US dollar loans – Maturity (number of years) 20 – Grace Period (number of years) 5 8. Terms of Relending Not Applicable – Interest Rate – Maturity (number of years) – Grace Period (number of years) – Second-Step Borrower iii 9. Disbursements a. Dates Initial Disbursement Final Disbursement Time Interval 2 March 2001 28 June 2007 76 months Effective Date Original Closing Date Time Interval 2 March 2001 30 December 2005 58 months b. Amount ($) Category Last or Original Revised Amount Net Amount Amount Undisbursed Subloan Allocation Allocation Canceled Available Disbursed Balance a 1 Civil Works 76,700,000 72,000,000 0 72,000,000 71,813,390 186,610 2 Equipment and Materials 200,620,000 224,800,000 0 224,800,000 215,124,957 9,675,043 3 Consulting Services 200,000 200,000 0 200,000 171,860 28,140 4 Front-End Fee 3,000,000 3,000,000 0 3,000,000 3,000,000 0 5 Unallocated 19,480,000 0 0 0 0 0 Total 300,000,000 300,000,000 0 300,000,000 290,110,207 9,889,793 IDC = interest during construction. a It was cancelled at loan closing on 28 June 2007. 10. Local Costs (ADB-Financed): None C. Project Data 1. Project Cost ($ million) Cost Appraisal Estimate Actual Foreign Exchange Cost 913.0 844.9 Local Currency Cost 1,922.0 1,771.8 Total 2,835.0 2,616.7 2. Financing Source ($ million) Cost Appraisal Estimate Actual A. Implementation Costs Borrower Financed 2,354.9 2,061.8 ADB Financed 297.0 287.1 Other External Financing 0.0 0.0 Subtotal (A) 2,651.9 2,348.9 B. IDC Costs and Front-End Fee Borrower Financed 180.1 264.8 ADB Financed (Front-End Fee only) 3.0 3.0 Other External Financing 0.0 0.0 Subtotal (B) 183.1 267.8 Total 2,835.0 2,616.7 ADB = Asian Development Bank, IDC = interest during construction. iv 3. Cost Breakdown by Project Component ($ million) Component Appraisal Estimate Actual Civil Works 1,375.2 1,386.1 Equipment and Materials 611.8 613.9 Environmental Protection, Mitigation, and Monitoring 38.5 55.5 Land Acquisition, Compensation, and Resettlement 211.2 146.7 Administration, Consulting Services, and Miscellaneous Costs 122.1 146.7 Contingencies 293.1 0.0 Interest and Other Charges During 183.1 267.8 Construction and Front-End Fee Total 2,835.0 2,616.7 4. Project Schedule Item Appraisal Actual Estimate Date of Contract with Consultants: International (marketing and project management) November 2004 Domestic (construction supervision) October 2000 December 1999 Completion of Engineering Designs June 2001 September 2001 Civil Works Contract: Date of Award October 2000 April 2001 Completion of Work June 2005 December 2004 Equipment and Supplies: First Procurement November 2000 May 2001 Last Procurement June 2004 November 2006 Completion of Equipment Installation June 2004 March 2007 Start of Operations: Completion of Tests and Commissioning June 2005 January 2004 Beginning of Start-Up (Trial Operation) June 2005 January 2004 5. Project Performance Report Ratings Ratings Development Implementation Progress Implementation Period Objectives From August to December 2000 S S From January to December 2001 S S From January to December 2002 S S From January to December 2003 S S From January to August 2004 S S From September to December 2004 S HS From January to December 2005 S HS From January to August 2006 S HS From September to December 2006 S S From January to March 2007 S S HS = highly satisfactory, S = satisfactory. v D. Data on Asian Development Bank Missions No. of No. of Specialization of Name of Mission Date Persons Person- Members a Days Fact-Finding 1–18 December 1999 6 90 a, b, d, f, g, h Appraisal 28 March–11 April 2000 5 48 a, b, c, d, f Inception 7–16 December 2000 3 30 a, b, j Review 1 19–24 November 2002 3 18 a, e, j Review 2 21–27 November 2003 2 14 e, j Review 3 7–13 December 2004 2 7 e, j (concurrently with Loan 1850-PRC: Ganzhou-Longyan Railway) Review 4 8–12 December 2005 2 10 e, j Review 5 12–15 December 2006 2 8 d, j Project Completion Review 21–30 May 2007 4 40 a, d, i, j a a - engineer, b - financial specialist, c - counsel, d - economist, e - transport specialist, f - programs officer, g - environmental specialist, h - social development specialist, i - resettlement specialist, j - project analyst. b The project completion report was prepared by Seok-Hyun Yoon, Transport Economist/Mission Leader; and Teresita S. Capati, Associate Project Analyst, assisted by an international consultant (civil engineer) and a domestic consultant (resettlement specialist). Map 1 I. PROJECT DESCRIPTION 1. The national economy of the People’s Republic of China (PRC) has been expanding rapidly since the adoption of economic reform measures in 1978. However, the lack of cost- effective transportation in the western and central provinces of the PRC has impeded economic development and the people are poor. The Government’s ambitious Railway Development Plan for 1998–2004 gave priority to unserved areas, particularly railway lines that would improve links between the poor inland provinces in the western and central PRC and the more prosperous coastal areas. This plan was focused on (i) expanding the rail network and removing constraints; (ii) encouraging construction of joint venture railways to develop local economies; (iii) improving the efficiency of the existing system by using new technology and modern management tools; (iv) reducing subsidies for infrastructure through appropriate pricing and commercialization of services; (v) implementing institutional and structural reforms to provide autonomy to railway entities by linking responsibility and accountability; and (vi) encouraging nongovernment investment in infrastructure and related services.1 The Hefei-Xi’an Railway Project (the Project) is a direct outgrowth of these initiatives in an effort to promote economic growth and reduce poverty in the four inland provinces traversed by the Project.