Validation Report June 2021 People’s Republic of China: Lanzhou Sustainable Urban Transport Project Reference Number: PVR-783 Project Number: 40625-013 Loan Number: 2601 ABBREVIATIONS ADB – Asian Development Bank ADG – Anning district government ATCS – advanced traffic control system BRT – bus rapid transit BTOR – back-to-office report CDM – Clean Development Mechanism CER – certified emission reduction CO2 – carbon dioxide CPS – country partnership strategy DMF – design and monitoring framework EIRR – economic internal rate of return EMP – environmental management plan km – kilometer h – hour LAR – land acquisition and resettlement LMG – Lanzhou municipal government LRT – light rail transit m – meter MOT – Ministry of Transport NMT – non-motorized transport O&M – operation and maintenance PMO – project management office PPMS – project performance monitoring system PRC – People’s Republic of China PSC – project steering committee SDMAP – social development monitoring and action plan TA – technical assistance NOTE In this report, “$” refers to United States dollars. Director General Marvin Taylor-Dormond, Independent Evaluation Department (IED) Director Nathan Subramaniam, Sector and Project Division (IESP) Team Leader Sung Shin, Senior Evaluation Specialist, IESP The guidelines formally adopted by the Independent Evaluation Department (IED) on avoiding conflict of interest in its independent evaluations were observed in the preparation of this report. To the knowledge of IED management, there were no conflicts of interest of the persons preparing, reviewing, or approving this report. The final ratings are the ratings of IED and may or may not coincide with those originally proposed by the consultants engaged for this report. In preparing any evaluation report, or by making any designation of or reference to a particular territory or geographic area in this document, IED does not intend to make any judgments as to the legal or other status of any territory or area. PROJECT BASIC DATA Project number 40625-013 PCR circulation date 11 Dec 2020 Loan number 2601 PCR validation date Jun 2021 Project name Lanzhou Sustainable Urban Transport Project Sector and Transport Transport policies and institutional development subsector Urban public transport Urban roads and traffic management Strategic Environmentally sustainable growth agenda Inclusive economic growth Safeguard Environment A categories Involuntary resettlement A Indigenous peoples C Country People’s Republic of China Approved Actual ($ million) ($ million) ADB financing ADF: 0.00 Total project costsa 480.27 417.18 ($ million) OCR: 150.00 Loan 150.00 148.68 Borrower 89.96 268.50 Beneficiaries 0.00 0.00 Others 0.00 0.00 Cofinanciers Bank of China (Domestic) Total cofinancing 240.31 0.00 Approval date 11 Dec 2009 Effectiveness date 28 Jun 2010 14 Jul 2010 Signing date 30 Mar 2010 Loan closing date 30 Jun 2015 31 Dec 2018 Financial closing – 15 Jul 2019 Date Project officers Location From To S. Noda ADB headquarters 2009 2010 K. J. Kim ADB headquarters 2011 2016 A. Pettersson ADB headquarters 2017 2019 IED review Director N. Subramaniam, IESP b Team Leader S. Shin, Senior Evaluation Specialist, IESP ADB = Asian Development Bank, ADF = Asian Development Fund, IED = Independent Evaluation Department, IESP = Sector and Project Division, OCR = ordinary capital resources, PCR = project completion report. a Includes interest during construction cost. b Team members: H. Hettige (quality reviewer), F. De Guzman (Senior Evaluation Officer), J. Supangco and J. Eerikainen (consultants). I. PROJECT DESCRIPTION A. Rationale 1. Lanzhou, the capital of Gansu Province, is the regional hub between the eastern and western regions of the People’s Republic of China (PRC). The urban area stretches for about 40 kilometers (km) along the river from west to east with a population of 3.8 million as of 2019. Lanzhou has four distinct development zones—three on the south bank of the Yellow River where the commercial and government centers are located. Anning, the residential area and center for education, is situated on the north bank of the river. 2. The Lanzhou municipal government (LMG) adopted the "one river, two centers, seven groups" strategy as its focal urban master plan to optimize land use and economic and social functions. Since additional development along the south bank was limited, there was a high potential for developing Anning where 80% of the land was suitable for settlement and which 2 had a low population density. Anning was to be the political, administrative, economic, and cultural center of Lanzhou and was expected to undergo a substantial increase in transport demand. 3. The improved urban mass transport system was to address some of the increased transport demand and urban traffic congestion and allow more livable urban environment often associated with the development of a new city center. This project was Asian Development Bank’s (ADB) first support to urban mass transport system in the PRC. The rapid increases in passenger vehicle ownership and decline of non-motorized transport (NMT) was causing congestion and adverse environmental impacts in Lanzhou. A good quality, high-capacity public transport system was needed to support high density urban development, reduce land required for transport, and enable transit-oriented development. The project was to support the development of the urban road and mass transport system serving the new city center and contribute to the realization of the urban master plan. The project was to provide a sustainable urban transport system in Lanzhou, with focus on Anning. B. Expected Impacts, Outcomes, and Outputs 4. The envisaged project impact was achievement of sustainable economic growth, effective environmental improvement, and improved quality of urban life in Anning. The expected outcome was provision of an efficient, safe and clean urban transport system. The planned outputs were the construction of a bus rapid transit (BRT) and NMT network development; improvement in advanced traffic management; installation of environmental monitoring system; and strengthened institutional management capacity.1 C. Provision of Inputs 5. The loan was approved in December 2009 and became effective in July 2010. The project was completed in December 2018, four years later than expected. The delay was due to the difficulty in relocating the Gansu Disable Soldier Sanatorium, a family dormitory, the Lanhai Yeast Powder Plant, 38 households and nine other enterprises along Road 516. The relocation cost was higher than what was estimated and beyond LMG’s capacity. The project management office (PMO) explored options to resolve the issues but had to subsequently request ADB to cancel the specific road subproject.2,3 Alternative BRT alignment to a new corridor that was ready to accommodate the BRT facilities was identified and expected to yield higher passenger volume than the original corridor.4 Other resettlement issues were the relocation of an oil pipeline, 73 households, and one enterprise along Road 530, which were resolved. The relocation of five households and two enterprises along Road 578 required some time to resolve. Also, the local authorities found hard to resolve the relocation of 190 households along Road 580. 1 ADB (East Asia Department). 2010. Loan 2601: Lanzhou Sustainable Urban Transport Project Loan Inception Mission. Back-to-office report. 30 August - 3 September (internal). 2 ADB. 2020. Completion Report: Lanzhou Sustainable Urban Transport Project in People’s Republic of China. Manila. 3 ADB (East Asia Department). 2014. Loan 2601: Lanzhou Sustainable Urban Transport Project Midterm Review Mission Report (internal). 4 ADB (East Asia Department). 2016. Loan 2601: Lanzhou Sustainable Urban Transport Project Loan Review Mission Report. 12–13 October (internal). 3 6. At completion, the actual project cost was $417.18 million or 13.14% lower than at appraisal. The actual cost of some subcomponents exceeded the estimates by $22.12 million, with additional $13.89 million for civil works, $5.90 million for equipment, $0.99 million for resettlement and compensation, and $1.34 million for project administration. These additional costs were offset by the total reduction in cost of about $85.21 million, due to the decrease in consulting services by $2.25 million, capacity building by $0.29 million, physical and price contingencies by $46.26 million, financing charges during implementation by $20.65 million, and taxes and duties by $15.76 million. 7. The project experienced deficiencies in counterpart funding in 2013 due to the additional construction costs of six underground passages and four footbridges along the BRT corridor and the cancelled loan from a commercial bank.5 At appraisal, the project was expected to require 32 person-months of international and 2,558 person-months of national consulting services. Actual numbers of person-months used for consulting services were not indicated. 8. The project was categorized A for environment. A summary environmental impact assessment and an environmental management plan (EMP) were prepared, in accordance with ADB’s Environmental Policy (2002) and the Environmental Assessment Guidelines (2003). The project was also classified category A for involuntary resettlement. Related impacts were identified, and a resettlement plan was prepared in compliance with the PRC’s laws and regulations and ADB’s Involuntary Resettlement Policy (1995). The resettlement plan was approved by ADB and disclosed to affected