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Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No: 66820-CN
PROJECT APPRAISAL DOCUMENT
ON A
PROPOSED LOAN
IN THE AMOUNT OF $100 MILLION
TO THE
PEOPLE’S REPUBLIC OF CHINA
FOR THE
GANSU QINGYANG URBAN INFRASTRUCTURE IMPROVEMENT PROJECT
April 30, 2012
China and Mongolia Sustainable Development Unit
Sustainable Development Department
East Asia and Pacific Region
This document has a restricted distribution and may be used by recipients only in the
performance of their official duties. Its contents may not otherwise be disclosed without World
Bank authorization.
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CURRENCY EQUIVALENTS
(Exchange Rate Effective Date: December 12, 2011)
Currency Unit = RMB (Yuan)
RMB Yuan 6.20 = US$1
FISCAL YEAR
July 1 – June 30
ABBREVIATIONS AND ACRONYMS
DA Designated Account PDO Project Development Objective
EIA Environment Impact
Assessment
PIU Project Implementation Unit
EMP Environmental Management
Plan
PLG Project Leading Group
FIRR Financial Internal Rate of
Return
PMO Project Management Office
FSR Feasibility Study Report PP Procurement Plan
GoC Government of China QMG Qingyang Municipal Government
GSFB Gansu Provincial Finance
Bureau
QUIIP Gansu Qingyang Urban
Infrastructure Improvement Project
IBRD International Bank for
Reconstruction and
Development
QWSSC Qingyang Municipal Water Supply
and Sewage Company
ICB International Competitive
Bidding
QYFB Qingyang Municipal Finance
Bureau
M & E Monitoring and Evaluation RAP Resettlement Action Plan
MOF Ministry of Finance TA Technical Assistance
NCB National Competitive Bidding WWTP Waste Water Treatment Plant
NPV Net Present Value WACC Weighted Average Cost of Capital
OP Operational Policy XDG Xifeng District Government
ORAF Operational Risk Assessment
Framework
XFFB Xifeng District Finance Bureau
Regional Vice President: Pamela Cox
Country Director: Klaus Rohland
Sector Director: John Roome
Sector Managers: Paul Kriss
Vijay Jagannathan
Task Team Leader: Ji You
TABLE OF CONTENTS
Page
I. STRATEGIC CONTEXT .................................................................................................... 1
A. COUNTRY CONTEXT............................................................................................................. 1
B. SECTORAL AND INSTITUTIONAL CONTEXT ........................................................................... 1
C. HIGHER LEVEL OBJECTIVES TO WHICH THE PROJECT CONTRIBUTES ................................... 3
II. PROJECT DEVELOPMENT OBJECTIVES ................................................................... 3
A. PDO..................................................................................................................................... 3
B. PROJECT BENEFICIARIES ...................................................................................................... 3
C. PDO LEVEL RESULTS INDICATORS ...................................................................................... 4
III. PROJECT DESCRIPTION ................................................................................................. 4
A. PROJECT COMPONENTS ........................................................................................................ 4
B. PROJECT FINANCING ............................................................................................................ 5
C. LESSONS LEARNED AND REFLECTED IN THE PROJECT DESIGN ............................................. 6
IV. IMPLEMENTATION .......................................................................................................... 6
A. INSTITUTIONAL AND IMPLEMENTATION ARRANGEMENTS .................................................... 6
B. RESULTS MONITORING AND EVALUATION ........................................................................... 6
C. SUSTAINABILITY .................................................................................................................. 6
V. KEY RISKS AND MITIGATION MEASURES ............................................................... 7
A. RISK RATINGS SUMMARY TABLE......................................................................................... 7
B. OVERALL RISK RATING EXPLANATION ................................................................................ 7
VI. APPRAISAL SUMMARY ................................................................................................... 8
A. ECONOMIC AND FINANCIAL ANALYSES ............................................................................... 8
B. TECHNICAL ........................................................................................................................ 10
C. FINANCIAL MANAGEMENT ................................................................................................. 11
D. PROCUREMENT .................................................................................................................. 11
E. SOCIAL (INCLUDING SAFEGUARDS) .................................................................................... 11
F. ENVIRONMENT (INCLUDING SAFEGUARDS) ........................................................................ 12
ANNEX 1: RESULTS FRAMEWORK AND MONITORING .............................................. 14
ANNEX 2: DETAILED PROJECT DESCRIPTION .............................................................. 16
ANNEX 3: IMPLEMENTATION ARRANGEMENTS ......................................................... 19
ANNEX 4: OPERATIONAL RISK ASSESSMENT FRAMEWORK (ORAF) ................... 29
ANNEX 5: IMPLEMENTATION SUPPORT PLAN ............................................................. 32
ANNEX 6: MAP .......................................................................................................................... 34
CHINA
GANSU QINGYANG URBAN INFRASTRUCTURE IMPROVEMENT
PROJECT APPRAISAL DOCUMENT
.
EAST ASIA AND PACIFIC REGION
(EASCS)
Basic Information
Date: April 30, 2012 Sectors: General Transport (60%)
and General
Water/Sanitation/Flood
(40%)
Country Director: Klaus Rohland Themes: Other Urban
Development
Sector Managers: Paul Kriss/Vijay
Jagannathan
EA Category: B
Sector Director: John Roome
Project ID: P123133
Lending Instrument: SIL
Team Leader(s): Ji You
Does the project include any CDD component? No
Joint IFC:
Borrower: People’s Republic of China
Responsible Agency: Qingyang Project Management Office, Qingyang Municipal Government
Contact: Zhihu Yan Title: PMO Director
Telephone no.: 86-0934 8888918 Email: [email protected]
Project Implementation
Period:
Start Date: July1, 2012 End Date: June 30, 2017
Expected Effectiveness
Date:
November 30, 2012
Expected Closing Date: December 31, 2017
Project Financing Data(US$M)
[X] Loan [ ] Grant [ ] Other
[ ] Credit [ ] Guarant
ee
For Loans/Credits/Others
Total Project
Cost : (US$M) 192.35
Total Bank
Financing : (US$M) 100
Total
Cofinancing : (US$M) 92.35 Financing Gap : (US$M) 0
Financing Source Amount(US$M)
BORROWER/RECIPIENT 92.35 million
IBRD 100 million
IDA: New
IDA: Recommitted
Others
Financing Gap
Total 192.35 million
Expected Disbursements (in USD Million)
Fiscal Year 2013 2014 2015 2016 2017 2018
Annual 3 15 30 25 15 12
Cumulative 3 18 48 73 88 100
Project Development Objective(s)
The proposed Project Development Objective (PDO) is to assist Qingyang Municipality to improve
selected urban infrastructure services including urban roads and urban environmental services.
Components
Component Name Base Cost (USD
Millions)
Component 1: Urban Infrastructure Improvement
Sub-component 1.1: Urban Bypass
163.68
82.26
Sub-component 1.2: Integrated Road Corridor 11.53
Sub-component 1.3: Drainage and Sewage 37.58
Sub-component 1.4: Wastewater Treatment Plant 32.31
Component 2: Institutional Strengthening and Capacity Building
3.30
Compliance
Policy
Does the project depart from the CAS in content or in other significant
respects?
Yes [ ] No [●]
Does the project require any exceptions from Bank policies? Yes [ ] No [●]
Have these been approved by Bank management? Yes [ ] No [●]
Is approval for any policy exception sought from the Board? Yes [ ] No [●]
Does the project meet the Regional criteria for readiness for implementation? Yes [●] No [ ]
Safeguard Policies Triggered by the Project Yes No
Environmental Assessment OP/BP 4.01 ●
Natural Habitats OP/BP 4.04 ●
Forests OP/BP 4.36 ●
Pest Management OP 4.09 ●
Physical Cultural Resources OP/BP 4.11 ●
Indigenous Peoples OP/BP 4.10 ●
Involuntary Resettlement OP/BP 4.12 ●
Safety of Dams OP/BP 4.37 ●
Projects on International Waters OP/BP 7.50 ●
Projects in Disputed Areas OP/BP 7.60 ●
Legal Covenants
Name
Execution of the QWSSC Agreement
Legal Opinion Confirming the Qingyang Agreement
Financial Performance Improvement Plan of QWSSC
Financial Covenant of QWSSC (break-even
requirement)
Project Management and Supervision Assistance
Recurrent
As condition of the
disbursement for
Part I. 4 of the
Project
As condition of the
disbursement for
Part I.4 of the
Project
N/A
Starting January 1,
2015
Due Date
December
31, 2012
Not more
than three
months after
the Effective
Frequency
N/A
N/A
N/A
N/A
N/A
Independent Monitoring of EMP and RAP
Transport Action Plans
N/A
N/A
N/A
Date or prior
to the
commencing
of the
bidding
process for
any works to
be procured
under the
Project,
whichever
occurs first
March 15,
2012
Not later
than twelve
(12) months
after the
Effective
Date
Semi
Annual
N/A
Description of Covenant
Disbursement Condition: For Part I. 4 of the Project (Wastewater Treatment Plant)
The QWSSC Agreement has been executed and delivered on behalf of Xifeng District and
QWSSC and is legally binding upon the parties thereto in accordance with its terms.
A legal opinion satisfactory to the Bank from counsel acceptable to the Bank has been received
by the Bank confirming that the QWSSC Agreement has been duly authorized or ratified by
Xifeng District and QWSSC, and is legally binding on such parties in accordance with its terms.
Financial Covenants for QWSSC:
Not later than December 31, 2013, submit a financial performance improvement plan of QWSSC
satisfactory to the Bank.
Except as the Bank shall otherwise agree, ensure that, commencing with the calendar year starting
January 1, 2015, the sum of QWSSC's operating revenues and non-operating revenues will be no
less than equal to the sum of its operating costs, including depreciation and taxes; debt service
requirements; and funds required for other necessary operating investments, calculated in a
manner satisfactory to the Bank.
Covenants Applicable to Project Implementation:
Project Management and Supervision: Gansu shall, not more than three months after the Effective
Date or prior to the commencing of the bidding process for any works to be procured under the
Project, whichever occurs first, employ or cause to be employed under terms of reference
satisfactory to the Bank, qualified consultants acceptable to the Bank to assist Qingyang
Municipality, Xifeng District and the Project participants in Project management and supervision.
Independent Monitoring of EMP and RAP: Qingyang shall maintain and cause to be maintained
policies and procedures adequate to enable it to monitor and evaluate, in accordance with
guidelines acceptable to the Bank, the implementation of the EMP and RAP and the achievement
of the objectives of said plans and by March 15 and September 15 of each year, commencing on
March 15, 2013, furnish to the Bank semi-annual reports of such monitoring and evaluation
activities with respect to the EMP and RAP, together with any revisions proposed to be
introduced into said plans in order to achieve their respective objectives.
Transport Action Plans including 1) Parking Action Plan; 2) Public Transportation Action Plan;
and 3) Traffic Safety, Education and Enforcement Action Plan should be prepared and furnished
to Bank for its comments not later than twelve (12) months after the Effective Date, and promptly
thereafter carry out such plans taking into account the comments if any made by the Bank in
accordance with schedule included in such plans.
Team Composition
Bank Staff
Name Title Specialization Unit UPI
Ji You Urban Specialist Task Team Leader EASCS 108727
Zhi Liu Lead Infrastructure
Specialist
Urban Planning
and Urban Road
EASTS 19222
Luquan Tian Transport Specialist Roads and Traffic
Engineering
EASCS 354488
Zhefu Liu Senior Social Development
Spec.
Social Safeguards EASCS 171201
Feng Ji Environmental Spec. Environmental
Safeguards
EASCS 252836
Haixia Li Senior Financial
Management Spec.
Financial
Management
EAPFM 259270
Jingrong He Procurement Analyst Procurement EAPPR 183511
Marta Elena Molares-
Halberg
Lead Counsel Project Lawyer LEGES 13064
Wenyan Dong Operations Analysis Risk Assessment EASCS 174039
Xin Chen Senior Program Assistant Operations
Administration
EASCS 77978
Vel Fernandes Program Assistant Document
Processing
EASIN 32562
Non Bank Staff
Name Title Office Phone City
Rufei Zhang Urban Planning and
Operations Specialist 86-021-53013701 Shanghai, China
Gladys Frame Urban Road and Traffic
Management Specialist +44-131-446-9528 Edinburgh, UK
Geoffrey Read Municipal Engineering
Specialst London, UK
Ning Wu Financial Analyst Beijing, China
Kezhi Dai Municipal Sanitation
Engineer Shanghai, China
Locations
Country First Administrative
Division
Location Planned Actu
al
Comme
nts
China Gansu Qingyang
1
I. STRATEGIC CONTEXT
A. Country Context
1. Over the last ten years, the Government of China (GoC) has made significant efforts to
address the disparity between the relatively developed coastal region and the lagging region of
western China. Implementation of the Western Regional Development Initiative has achieved
remarkable outcomes. There is an accelerating trend of the country’s manufacturing industries
shifting from coastal cities towards the western hinterland. Since 2008, there has been
unprecedented GDP growth in many western provinces, surpassing growth in coastal provinces.
2. Encouraged by these trends, GoC further upgraded the Western Regional Development
Initiative in the 12th
Five Year Plan to be a top priority national agenda in the country’s regional
development strategy. While implementation of this Initiative in the previous ten years was
largely concentrated in promoting the development of regional large city anchors in the western
region (such as Chengdu, Chongqing, and Xi’an), the focus under the 12th
FYP has been fine-
tuned to five sub-areas with rich oil and coal resources.
3. Most of these five sub-areas suffer from significant poverty, and so targeting them has an
additional benefit of poverty reduction. The central government plans to trigger the process of
industrialization, urbanization and urban-rural integration in these areas with a particular focus
on the central cities and selected large towns. The selected project city of Qingyang is of national
strategic importance as an energy production base, due to its rich oil and coal resources.
B. Sectoral and Institutional Context
4. To reduce the pressure of massive rural-urban migration towards the coastal cities, China
aims for cities in western China to accommodate local rural-urban migrants. Substantial urban
infrastructure developments are needed for western cities to fulfill this task. 2009 indicators
showed a significant gap in urban infrastructure services between western cities and coastal
cities, in terms of: urban road space per urban resident (western cities averaged of 11.6
m2/person, eastern cities averaged 14.1 m
2/person); length of drainage pipes per km
2 of urban
built-up area (western cities 6.8 km/km2, eastern cities 10.9 km/km
2); percentage of wastewater
treated (western cities 58.5%, eastern cities 72.6%); and percentage of solid waste collected and
treated (western cities 72.3%, eastern cities 81.4%). Moreover, this gap is still expanding. In
2009, investment in urban infrastructure per urban resident in western cities was 17% less than in
eastern cities. In response to this gap, the Government has assigned a high priority under the
Western Regional Development Initiative to the development of urban infrastructure in western
cities, particularly in medium and small cities.
5. While many coastal cities and large inland cities have had vast construction programs of
primary road infrastructure in the past, and have now shifted their investment priority towards
public transport and urban environmental infrastructure, cities in the west are still struggling for
adequate investment in basic road infrastructure. In 2009, investments in public transport
(subway/LRT) and in urban road construction accounted for 6% and 57% of total urban
infrastructure capital investment respectively in western cities (compared to 24% for public
transport and 41% for road constructions in coastal cities). Constrained by their limited funding
2
capacities, local governments of western cities consider road construction as a priority sector for
capital investment, and fail to address the far more pressing needs of environmental
infrastructure (drainage, wastewater, and solid waste). In 2009, per capita capital investment of
urban road construction in western cities actually was 16% higher than that in coastal cities
(western cities averaged RMB917/person, eastern cities averaged RMB788/person), but
investment of environmental infrastructure in western cities averaged 42% lower than in coastal
cities (western cities RMB141/person, eastern cities RMB244/person). Under-investment in
environmental infrastructure has resulted in severe deterioration of the urban environment in
China’s western cities, leading to the cities’ limited water resources being contaminated by
untreated wastewater in the northwest region.
6. Local governments in western areas are eager to build livable and competitive cities to
attract external investment. Urban infrastructure investments are usually at the core of the efforts
to achieve this goal. But experience in more developed Chinese cities has shown that: (a) livable
and competitive cities need to be supported by cross-sectoral, balanced urban infrastructures; and
(b) development of road infrastructure alone is not sufficient to avoid traffic problems and
achieve sustainable, equitable, and efficient transport. Bank experience in China’s western region
suggests that supporting cities to improve their urban infrastructure in a cross-sectoral balanced
manner and to improve the urban transport service through a comprehensive transport
management approach remains a considerable challenge.
7. Measured by per capita GDP, Gansu Province ranked almost at the bottom among the 31
provinces in mainland China. Constrained by a long narrow corridor shaped territory, Gansu
relies heavily on a few regional central cities along the corroder, including Qingyang, to drive its
economic development. Recently, Gansu Provincial Government further upgraded the
development profile of Qingyang in its provincial territory development strategy, and defined the
city as a provincial industrial base for energy supply and petrochemicals.
8. Qingyang Municipality is located in the eastern most part of Gansu Province on the Loess
Plateau and has a population of 2.64 million. Qingyang’s development has been held back by: (a)
its relative isolated location and limited access to strategic markets in the region; (b) the
monopoly of two key industries, petroleum exploitation and coal mining, by state-owned
enterprises; (c) the low level of urbanization; and (d) severe shortage of water resources. With its
abundant deposits of oil and coal resources, Qingyang is positioned by the central government as
an emerging energy base of national significance, and is targeted by the central government’s
initiatives of supporting and vitalizing the economies in the country’s western lagging areas.
9. Qingyang Municipality consists of one urban district and seven rural counties. The
proposed Qingyang project would be focused on the municipality’s capital of Xifeng District.
QMG’s efforts to improve the city’s livability and profile in order to attract and retain external
investments have been constrained by the shortage of essential urban infrastructure services in
Xifeng District. Public capital investments in Xifeng over the last few years have been
concentrated mainly on constructing roads and widening the major streets in the existing urban
area. Pressing needs for improving environmental infrastructure in the existing urban area have
not been addressed.
3
C. Higher Level Objectives to which the Project Contributes
10. The proposed Gansu Qingyang Urban Infrastructure Improvement Project is consistent
with the 2006-2010 Country Partnership Strategy (approved by the Board on May 23, 2006),
which seeks among other objectives, to improve the competitiveness of the various regions of
China and the overall investment climate, and to address the needs of disadvantaged groups and
underdeveloped areas by financing infrastructure. The project serves three of the five pillars
defined in the CPS: (a) reducing poverty, inequality, and social exclusion; (b) managing resource
scarcity and environmental challenges; and (c) improving public and market institutions.
11. The objectives of the project are also expected to be consistent with the new CPS for
FY2013-FY2016, which will be presented to the Board in 2012 in alignment with China’s 12th
Five Year Plan, covering 2011-2015, by focusing on infrastructure investments in small towns.
II. PROJECT DEVELOPMENT OBJECTIVES
A. Project Development Objective
12. The proposed Project Development Objective (PDO) is to assist Qingyang Municipality
to improve selected urban infrastructure services including urban roads and urban environmental
services.
B. Project Beneficiaries
13. Project beneficiaries include:
(a) About 190,000 residents in Xifeng’s old urban area (47.4 % of whom are women,
and 20 % are migrants), and 10,000 projected rural residents in Xifeng’s suburban
settlements will be served by adequate storm water and wastewater infrastructures.
(b) 21 % of urban residents in Xifeng’s urban area, and 5,000 rural residents who rely
on untreated groundwater from individual small wells for their water supply, will benefit
from the reduction of wastewater pollution to the city’s rivers and groundwater.
(c) 11,000 existing bus riders and 26,000 projected new public transport users
traveling on the three corridors that are likely to achieve significant improvement in
mobility and accessibility.
(d) 60,000 of users of all transport modes in Xifeng District who are likely to achieve
travel time savings.
4
C. PDO Level Results Indicators
14. Achievement of the PDO will be measured through a series of indicators, including: (a)
journey time saved for through traffic (freight); (b) share of through traffic (freight) on two
corridors increased; (c) service speed of buses during rush hour on Nan Bei Street corridor; (d)
percentage of built-up area serviced by storm water/wastewater networks increased; and (e)
wastewater pollution reduction (BOD, COD, SS).
III. PROJECT DESCRIPTION
A. Project Components
Component 1: Urban Infrastructure Improvements
(a) Sub-component 1: Urban Bypass (Total Base Cost: US$82.26 million), including (i)
construction of bypass roads of the southern section of Xifeng’s West Ring Road and the
northern section of Xifeng’s East Ring Road with installation of associated pipes; (ii)
construction of three connection roads to the two bypass corridors of West Ring Road
and East Ring Road (connection road from West Ring Road to Provincial Highway 202;
section of Anding Xi Road linking to West Ring Road; section of Guxiang Road linking
to East Ring Road) with installation of associated pipes.
(b) Sub-component 2: Integrated Road Corridor (Total Base Cost: US$11.53 million),
including: (i) improvement of three selected main road corridors (Nan Bei Street, Anding
Dong Xi Road, West Ring Road), including road pavement, traffic channelization, and
lighting and greening, along with drainage and sewage system improvements; (ii)
rehabilitation of three selected backstreets and small lanes for slow traffic (Nanyuan,
Tianhe and Xifeng lanes); and (iii) carrying out, as part of the design of the integrated
road corridor, the Parking Action Plan, the Public Transport Action Plan, and the Traffic
Safety, Education and Enforcement Action Plan.
(c) Sub-component 3: Drainage and Sewage (Total Base Cost: US$37.28 million),
including: (i) construction of drainage and sewer mains for a section each of the West
Ring Road, the Anding East Road and the Anding West Road; (ii) rehabilitation of
sewage collection pipes in Xifeng District and associated improvements of road
pavement, street lighting and greening along these roads.
(d) Sub-component 4: Wastewater Treatment Plant (Total Base Cost: US$32.31
million), including construction of (i) a new wastewater treatment plant in the eastern
area of Xifeng; (ii) a wastewater pumping station in Xifeng District’s northern area; and
(iii) wastewater trunks and collectors associated to the investments in (i) and (ii) above.
Component 2: Institutional Strengthening and Capacity Building (Total Base Cost: US$3.3 million)
Provision of technical assistance for: (a) carrying out of a water resource study covering,
among others, for water reuse, sub-basin water environment improvements and industrial
wastewater discharge licenses in Xifeng District that supports the ongoing investments of
5
wastewater management; (b) the improvement of the operation and maintenance capabilities
of QWSSC and Xifeng District’s Public Utility and Transportation Bureaus in the provision
of urban infrastructure services in the key sectors of drainage and wastewater, urban road
transport; (c) capacity building and training for Qingyang Municipality’s and Xifeng
District’s agencies involved in project implementation; and (d) strengthening of QWSSC’s
GIS-based system for the management of its drainage and wastewater pipes networks; and
(e) strengthening the Qingyang Municipality’s capacity for project management and
construction supervision of the Project.
B. Project Financing
Lending Instrument
15. The Project would be financed by an IBRD Specific Investment Loan (SIL) in the
amount of US$100 million. The Bank Loan will be a US Dollar denominated, variable spread
loan (VSL), based on six-month LIBOR, plus an additional variable spread, with a maturity of 25
years, including a five year grace period, and a front end fee of 0.25%.
Project Cost and Financing
16. Table below indicates the Project cost and the Bank’s financing by component.
Project Components Project cost
(US$ million)
IBRD Financing
(US$ million)
% IBRD
Financing
1. Urban Infrastructure Improvement
1.1 Urban Bypass Road Construction 82.26 41.27 50.17
1.2 Integrated Road Corridor Improvement 11.53 7.83 67.91
1.3 Drainage and Sewage Pipes 37.28 26.21 70.31
1.4 Wastewater Treatment Plant (WWTP) 32.31 21.14 65.43
2. Institutional Strengthening and Capacity
Building 3.30 3.30 100.0
Total Base Costs 166.68 99.75 59.85
Physical contingencies 12.09
Price contingencies 10.03
Total Project Costs 188.80 99.75 52.83
Interest During Implementation 3.30
Front-End Fees 0.25 0.25 100
Total Financing Required 192.35 100.00 51.99
6
C. Lessons Learned and Reflected in the Project Design
17. Project design incorporates lessons from the Bank’s urban infrastructure portfolio in
China, in particular: (a) capacity building for local stakeholders during project preparation to
address the challenge of preparing and implementing a Bank loan project of good quality in the
city, where local capacity is relatively weak and which has no experience with Bank projects and
procedures; (b) support for infrastructure investments of high impact that are selected and
prioritized based on the City’s Development Strategy and Master Plan; (c) focus on a balanced
package of investments in a people-oriented approach; (d) adding value through a practical yet
comprehensive approach; and (e) strengthening the city’s skills and practices for Operation,
Maintenance and Management (OMM) of urban roads and drainage/sewage.
IV. IMPLEMENTATION
A. Institutional and Implementation Arrangements
18. The Project will be implemented by Qingyang Municipal Government (QMG). A Project
Leading Group (PLG) was established by QMG in March 2010, to provide overall leadership,
policy guidance, and institutional coordination for project preparation and implementation. The
PLG is headed by the Executive Vice Mayor, and is composed of senior officials from the
Municipal Development and Reform Commission, Municipal Finance Bureau, Municipal
Construction Bureau, Municipal Land Bureau, Municipal Environment Protection Bureau,
Municipal Urban Planning Bureau, and the Director and Executive Vice Director of Xifeng
District Government. See Annex 3 for further details.
B. Results Monitoring and Evaluation
19. Annex 1 lists the main outcome indicators for the project, as well as the principal results
indicators for each component. Additional indicators are listed in the various documents in the
project files (for example, the Environmental Management Plan). While individual monitoring
data will be collected by project implementing agencies designated for each component (Xifeng
District Housing and Construction Bureau, Qingyang Municipal Water Supply and Sewage
Company, Xifeng District Transportation Bureau), the PMO has the overall responsibility for
coordinating collection of the data required for monitoring and evaluation, and the responsibility
for consolidated reporting to the Bank.
C. Sustainability
20. QMG and Xifeng District Government have provided assurances that the necessary
human and financial resources will be available for project implementation, and to operate and
maintain the assets created. However, long-term institutional, operational and financial
sustainability are critical challenges for this project. To address these issues, special attention
was paid during project preparation to ensure that the investments are in line with the city’s
Master Plan, urban transport and wastewater management sector plans, and the 12th
Five Year
Plan; appropriate technical designs (i.e., avoiding over design, selecting least cost solutions);
7
sustainable institutional arrangements (i.e., designated PIUs); and financing strategies (i.e.,
higher level government financial support both at the municipal and district level).
21. Component 2, Institutional Strengthening and Capacity Building, includes additional
support to the development of capacity in the PIUs for asset management, project management,
construction supervision, and plans to improve public parking, traffic safety and water resource
efficiency.
V. KEY RISKS AND MITIGATION MEASURES
A. Risk Ratings Summary Table
Risk Rating
Stakeholder Risk Moderate
Implementing Agency Risk
- Capacity Substantial
- Governance Substantial
Project Risk
- Design Substantial
- Social and Environmental Moderate
- Program and Donor Low
- Delivery Monitoring and Sustainability Moderate
Overall Implementation Risk Substantial
B. Overall Risk Rating Explanation
22. The overall risk of the Project is rated substantial. The most critical risks relate to: (a)
implementing agencies, which have no experience in implementing Bank financed projects,
especially on fiduciary aspects; (b) coordination among various municipal and district agencies
for the Integrated Road Corridor Improvement; and (c) engineering designs.
23. To mitigate these risks, the concept and design of each component has been adapted for
the Xifeng urban area. The city has also established a high level PLG chaired by the Executive
Vice Mayor to oversee the preparation and implementation of the Project. The Bank has also
initiated cross-dialogue and horizontal coordination among agencies and stakeholders, together
with technical training and capacity building throughout project preparation; this will continue
during project implementation. Construction management and supervision consultants will
provide quality control for final engineering designs and bidding documents.
8
VI. APPRAISAL SUMMARY
A. Economic and Financial Analyses
24. Economic Analysis. The main economic benefits of the project are related to transport
and environmental improvement. They include: savings in travel time and costs; productivity
increases; avoided loss of life and property from traffic accidents; better access to public
services; energy savings and associated pollution reduction due to improved road condition in
project areas; and increases in amenity and land value increase due to transportation and
environmental improvement. The economic costs of the project are capital investment costs and
O&M costs, including associated resettlement and environmental mitigation costs.
25. Cost-benefit analysis was used to evaluate the economic viability of each transport
related activity. The results of the cost-benefit analyses show that the EIRR of the three road sub-
components are 11.4%, 11.1%, and 24.7%, respectively. Sensitivity analyses (under the
assumption of a 10% decrease in economic benefit and a 10% increase in total costs or both)
show that the road investments are economically robust. The results of the economic analysis
are summarized in the table below.
Components
NPV
(RMB
million)
EIRR BCR
Sensitivity Analysis (10% cost increase and 10% benefit
reduction)
NPV (RMB
million ) EIRR BCR
Existing road upgrading 109.8 11.4% 1.43 47.3 9.5% 1.17
Urban bypass road
construction 164.6 11.1% 1.34 52.4 9.0% 1.10
Integrated traffic management 233.9 24.7% 3.15 188.8 21.5% 2.58
BCR: Benefit Cost Ratio
26. The wastewater treatment plant component aims to achieve the wastewater treatment
targets set in the local government’s development plan. These targets are based on the
importance of water pollution to public health and economic development. Due to the difficulty
in quantifying and monetizing the health benefits of the wastewater treatment, the cost-
effectiveness approach was used to select least-cost design options to achieve the wastewater
treatment targets. Table below presents a comparison between three alternatives and shows that
the unit cost of Alternative A is less than that of Alternatives B and C.
9
Alternative A Alternative B Alternative C
Eastern area
A new WWTP (oxidation
ditch process, capacity
20,000 t/d near term,
60,000 t/d long term)
A new WWTP (oxidation
ditch process, capacity
10,000t/d near term,
30,000t/d long term)
A new WWTP (modified
SBR process, capacity
20,000t/d near term,
60,000 t/d long term)
Associated trunk
wastewater collectors 12.63
km
Associated trunk
wastewater collectors 11.4
km
Associated trunk
wastewater collectors
12.63 km
Northern area
A new sewage pumping
station (capacity 8,000 t/d)
A new WWTP (capacity
10,000 t/d near term,
29,000 t/d long term)
A new sewage pumping
station (capacity 8,000 t/d)
Associated trunk
wastewater collectors 5.58
km
Associated trunk
wastewater collectors 5.58
km
Associated trunk
wastewater collectors 5.58
km
Associated wastewater pipe
14.6 km
Associated wastewater
pipe 14.6 km
Capital Investment
(RMB million) 286.5 287.5 297.1
O&M cost per cubic
meter (RMB) 3.86 3.97 4.15
Total O&M cost per
year (RMB million) 19.74 20.32 21.23
27. Financial Analysis at Municipal Level. In addition to the Bank loan, the project will be
financed by equity from Qingyang Municipal Government (QMG) and Xifeng District
Government (XDG); each will provide 50% of counterpart funds. To assess the fiscal impact on
QMG and XDG during the implementation of the project, revenues of QMG and XDG were
projected and compared with their financial contribution to the project. QMG’s highest
contribution to the project will be 1.6% of its revenue in 2014, while XDG’s highest contribution
to the project will be 2.2% of revenue in 2014.
28. Financial Analysis at Entity Level. Qingyang Municipal Water Supply and Sewage
Company (QWSSC), a legally autonomous agency wholly owned by the Xifeng District
Government, is the implementation agency of the wastewater treatment sub-component.
QWSSC’s financial statements show that it ran a deficit over the last 5 years. In order to ensure
the financial sustainability of QWSSC and the wastewater investments under the project, the
following financial covenants have been included in the Project Agreement: QWSSC shall not
later than December 31, 2013, submit a financial performance improvement plan of QWSSC
satisfactory to Gansu, Qingyang Municipality, Xifeng District and the Bank; and QWSSC should
except as the Bank shall otherwise agree, ensure that, commencing with the calendar year
starting January 1, 2015, the sum of QWSSC's operating revenues and non-operating revenues
will be no less than equal to the sum of its operating costs, including depreciation and taxes; debt
10
service requirements; and funds required for other necessary operating investments, calculated in
a manner satisfactory to Gansu, Qingyang Muncipality, Xifeng District and the Bank.
29. Financial Analysis at Project Level. At full cost recovery, the FIRR of the wastewater
sub-component is estimated to be 7.41%, which is higher than the weighted average cost of
capital (WACC) of 2.40%.
B. Technical
30. The project design builds on the experience of similar Bank projects in China, as well as
on international good practice. Chinese design institutes have prepared detailed feasibility study
reports (FSR) for the investment components, which are technically sound.
31. Urban Bypass Road Construction Sub-Component. Technical standards adopted for
this sub-component follow national design and construction standards. Materials and techniques
applied in the project roads are widely used in the local context, including in the sections of the
two bypass roads that have already been constructed
32. Integrated Road Corridor Improvement Sub-Component. This sub-component
introduces an innovative concept to the city: addressing traffic issues from a car-centered
approach dominated by road engineering, to an integrated approach with an emphasis on moving
people, meeting the needs of different road users, road safety, and traffic management measures.
It is based on a comprehensive urban transport study, the participation of public transport
operators, the traffic police, and other related stakeholders, and provides an appropriate set of
integrated technical proposals. It will also rehabilitate selected backstreets and small lanes in the
densely populated city core, and will thus improve the traffic environment and safety for
pedestrians and cyclists. This will improve connectivity and accessibility to public transit and to
the integrated corridors for pedestrians and cyclists, and divert slow traffic away from the city’s
major road corridors.
33. Wastewater Treatment Plant (WWTP) Sub-Component. This sub-component
introduces a comprehensive approach to wastewater management, focusing on the planning,
budgeting and construction of a wastewater network and facilities. Based on an intensive review
of the city’s plan, a plant with sizable treatment capacity, supported by pumping stations in each
urban pocket, was chosen taking into account capital investment, O&M costs, service quality and
long-term environmental benefits for the city. The new WWTP will be able to treat wastewater
not only from the existing urban area, but also sewage from a planned new large-scale rural
settlement in Xifeng’s rural area. This sub-component also includes additional collection pipes
and facilities to enable full operation of the city’s existing underutilized WWTP. Technical
designs for rehabilitation of the existing drainage/wastewater pipe network, in particular for
connecting the fragmented drainage/wastewater mains into an integrated and efficient network,
are acceptable to the Bank.
34. Effluent from the proposed new WWTP will be discharged to dry gullies. As the project
cycle is too short to develop user markets for water reuse, the project includes technical
Assistance (TA) to explore the potential for water reuse.
11
C. Financial Management
35. The Bank loan proceeds, including the Designated Account (DA), will be managed by
Gansu Provincial Finance Bureau (GSFB). A financial management capacity assessment
conducted by the Bank identified the principal risk to be the lack of any experience with Bank-
financed projects on the part of the PMO and its financial staff. To address this risk, a detailed
project Financial Management Manual (FMM) will be prepared and issued, and
FM/Disbursement training will be provided to financial staff.
36. The FM assessment concluded that with the implementation of these actions, the
financial management arrangements will satisfy the Bank’s minimum requirements under OP/BP
10.02. Annex 3 provides additional information on financial management.
D. Procurement
37. Qingyang PMO, which will have overall responsibility for project implementation
including procurement, is a newly established PMO, with staff hired from the respective
government agencies responsible for the project components; more staff will be hired from the
local market. Various government agencies have been designated as the Project Implementing
Unit (PIU) for each project component. Institutionally and individually, Bank procurement
policies and requirements are new to them.
38. A Procurement Capacity Assessment (PCA) was carried out during appraisal. The
principal procurement risks are the lack of experience in Bank-financed project and procurement
requirements. The PMO and the PIUs have already attended and will continue to attend more
Bank procurement related training. In addition, a Procurement Management Manual (PMM)
governing project procurement cycle management has been developed and a procurement agent
with Bank project experience has been selected.
39. The PMO and the PIUs will implement the agreed measures to mitigate the identified
procurement risks (see Annex 3 and Annex 4 for details). A procurement plan covering the
initial 18 months of project implementation has been prepared in accordance with Bank
procurement policy; a summary of the plan is provided in Annex 3.
E. Social (including Safeguards)
40. The project will improve the quality of life of the local residents. Social impact analysis
conducted during project preparation identified the potential negative impacts caused by the
project, in particular the need for land acquisition and resettlement.
41. Resettlement and Land Acquisition. The project will need permanent land acquisition
of 740 mu (49 hectares) in eight villages, with 862 people affected (201 families). Structure
demolitions will affect 529 people (143 families). Some temporary land use will be required
during project implementation by contractors, and related mitigation measures will be taken by
them. The municipal resettlement office will supervise land acquisition and resettlement
activities.
12
42. Information Dissemination. The Resettlement Action Plan (RAP) was advertised in the
main local newspapers and posted on the Qingyang government website. Relevant project
information has been provided to the affected villages through newspaper reports, posters and
public meetings. A resettlement information booklet, with detailed descriptions of the key issues
(e.g., compensation rates, social security policies and other entitlement policies, and grievance
procedures) will be distributed to the affected people prior to their resettlement.
43. Participation Strategy. Focus group discussions and key informant interviews were held
to consult with the affected persons and to obtain their views and preferences on resettlement
impacts and mitigation measures, land compensation, and social security programs. These views
and preferences have been taken into the account during RAP preparation. The majority of the
affected persons agreed that the resettlement and rehabilitation measures proposed in the RAP
are adequate to address and mitigate adverse impacts.
44. Linked Projects. Construction of a section of the West Ring Road and a middle section
on the East Ring Road, financed by the local government, and two earth borrow pits have been
identified as linked projects. Resettlement for these linked projects was implemented in 2009.
Local resettlement policies implemented for these linked projects are consistent with Bank
requirements and the compensation paid to the displaced families is acceptable to the Bank.
F. Environment (including Safeguards)
45. This is a Category B project. It brings positive environmental benefits and contributes to
the improvement of urban roads and urban environmental services in Xifeng District. The
principal negative impacts include construction-related impacts as well as impacts during
operation (e.g., soil erosion, sludge disposal, and noise from the WWTP and improved roads).
Applicable environmental safeguard policies include: Environmental Assessment (OP4.01) and
Physical Cultural Resources (OP4.11).
46. Environmental Assessment (OP4.01). An Environmental Assessment was carried out
in accordance with Bank Operational Policy OP4.01. The assessment includes an analysis of the
potential positive and negative project impacts, alternative analysis, mitigation measures, and an
environmental monitoring plan. It documents the public consultation carried out during the
preparation of the project. The assessment concluded that the project is overall positive. The
identified negative impacts are not significant and are site-specific, and for which mitigation
measures can be designed readily. An EMP has been developed specifying mitigation measures,
monitoring plans, institutional arrangements, capacity building, and the estimated budget for
EMP implementation. Environmental Codes of Practice (ECOPs) have been developed to
address general construction-related impacts (refer to Annex 3).
47. Physical Cultural Resources (OP4.11). Road construction will cause the relocation of
35 household graves and the demolition of a farmer house (400m2) which is used as a church.
New sites have been selected for the graves, and auspicious dates for their relocation will be
agreed in advance. In addition, the church will be rebuilt in a site approximately two kilometers
away from the existing one. An auxiliary building will be installed first as a temporary place to
maintain the religious activities during the construction of the new church. Public consultation
13
has been conducted with the affected people and concerned parties, and concerns about the
proposed measures have been incorporated in the EMP.
48. Public Consultation and Disclosure. In accordance with Bank Safeguard policies and
Chinese regulations, public consultations were conducted from June to October 2011, including
public consultation meetings and questionnaire survey, with project affected persons and other
stakeholders. Their opinions and concerns have been taken into account in the EA process and
project design. The EA and the EMPs were disclosed locally in November 2011 through
announcements on the local website. The EA documents were sent to the Bank InfoShop for
disclosure on December 7, 2011.
14
Annex 1: Results Framework and Monitoring
CHINA
Gansu Qingyang Urban Infrastructure Improvement Project
RESULTS FRAMEWORK
Project Development Objective (PDO): is to assist Qingyang Municipality to improve selected urban infrastructure services including urban roads and urban
environmental services.
PDO Level Results Indicators*
Co
re
Unit of Measurement Baseline
Cumulative Target Values**
Frequency
Data
Source/
Method
ology
Responsible. for Data
Collection YR 1 YR 2 YR3 YR 4 YR5
Indicator 1: Journey time saved
for through traffic (freight) ■
minutes
(% change) 28.4
26.2 (-8%)
24.3 (-14%)
21.7 (-24%)
18.2 (-36%)
18.2 (-36%)
Reported
Annually Surveys
XF District Housing and
Construction Bureau
Indicator 2: Share of through
traffic (freight) on two corridors
increased
■ number of trucks 24
hrs, (%)
East:9.1
West: 66.2
9.1 (0%)
66.2 (0%)
9.1 (0%)
66.2 (0%)
15 (65%)
68 (3%)
20 (120%)
70 (6%)
22 (142%)
72 (9%)
Reported
Annually Surveys
XF District Housing and
Construction Bureau
Indicator 3: Service speed of
buses during rush hour on Nan Bei
Street corridor) ■ km/h (% change) 10.3
10.1 (-2%)
9.7 (-6%)
9.5 (-8%)
15.5 (50%)
15.5 (50%)
Reported
Annually Surveys PMO and Bus Company
Indicator 4: % of built-up area
serviced by storm water/wastewater
networks increased ■
% (km2 of serviced
area) 50.6 50.6 55.6 61 73.5 92
Reported
Annually Surveys
Municipal Water Supply and
Sewage Company
Indicator 5: Wastewater pollution
reduction (BOD, COD, SS) ■ ton/year
BOD: 0
COD: 0
SS: 0
0
0
0
0
0
0
0
0
0
365
802
693
1168
2569
2219
Reported Annually
Surveys Municipal Water Supply and Sewage Company
INTERMEDIATE RESULTS
Intermediate Results Component One, Sub-component 1: Urban Bypass Road Construction
% of Road Construction
Completed, by km □ % 0 0 0 100 100 100
Reported
every quarter
Field
Visits Xifeng District Trans. Bureau
15
Average annual number of
fatalities and severely injured in
project corridors over a three-year
period (relative to base year-
period)
□
number of fatalities
and severely injured
(persons)
14 14 14 14 9 9 Reported
Annually
Police
Reports Traffic Police
Intermediate Results Component One, Sub-component 2: Integrated Road Corridor Improvement
Passenger ridership of buses during
rush hour on Nan Bei Street
corridor increased □
number of
passengers for
12hrs, (% change)
5,845
(0) 6,100 (4%)
6,400 (9%)
6,700 (15%)
11,000 (88%)
12,000 (105%)
Reported
Annually Surveys PMO and Bus Company
Bus stops reconstructed/upgraded □ Number of bus stops 0 0 11 11 33 33 Reported
every quarter
Field
Visits
XF District Housing and
Construction Bureau
Number of unsignalized zebras
converted to signalized mid-block
crossings on the three corridors
□ Number of crossings 15 15 60 60 103 103 Reported
every quarter
Field
Visits
XF District Housing and
Construction Bureau
Number of intersections with
traffic channelized □
Number of
intersections 12 12 21 21 27 27
Reported
every quarter
Field
Visits
XF District Housing and
Construction Bureau
User satisfaction surveys (feedback
of public transport users, including
disabled and vulnerable groups,
through bus user surveys on Nan
Bei Street corridor)
□
% expressing
positive opinion on
the services
27 27 27 27 60 65 Reported
Annually Surveys PMO and Bus Company
Intermediate Results Component One, Sub-component 3: Drainage and Sewage Pipes
% of New Drainage/Sewage Pipe
Construction Completed, by km □ Cumulative % 0 5 20 35 65 100
Reported
every quarter
Field
Visits
XF District Housing and
Construction Bureau
% of Drainage/Sewage Pipe
Reconstruction Completed, by km □ Cumulative % 0 10 30 50 75 100
Reported every quarter
Field Visits
XF District Housing and Construction Bureau
Intermediate Results Component One, Sub-component 4: Wastewater Treatment Plant
% of Wastewater Treatment Plant
Investment Completed, by US$ □ Cumulative % 0 15 40 60 80 100
Reported every quarter
Field Visits Municipal Water Supply and Sewage Company
% of associated pipes construction
completed, by km □ Cumulative % 0 5 20 35 65 100
Reported
every quarter Field Visits
Municipal Water Supply
and Sewage Company
Intermediate Results Component Two: Institutional Strengthening and Capacity Building
Study Completed □ Cumulative Number
of studies 0 0 1 2 3 5
Reported
every quarter Surveys PMO
Staff Trained □ Cumulative Number
of staff 0 15 35 75 95 110
Reported every quarter
Surveys PMO
16
Annex 2: Detailed Project Description
A. Project Context
1. Measured by per capita GDP, Gansu Province ranked almost at the bottom among the 31
provinces in mainland China. Constrained by a long narrow corridor shaped territory, Gansu
relies heavily on a few regional central cities along the corridor, including Qingyang, to drive its
economic development. Recently, Gansu Provincial Government further upgraded the
development profile of Qingyang in its provincial territory development strategy, and defined the
city as a provincial industrial base for energy supply and petrochemicals.
2. Qingyang Municipality is located in the eastern most part of Gansu Province on the Loess
Plateau and has a population of 2.64 million. The per capita GDP in 2009 was RMB11,973
compared with the national average of RMB26,180. Qingyang is considered under-developed in
China, even in Gansu Province where the provincial average is RMB12,852. Qingyang’s
development has been held back by: (a) its relative isolated location and limited access to
strategic markets in the region; (b) the monopoly of two key industries, petroleum exploitation
and coal mining, by the state-owned enterprises; (c) the low level of urbanization (compared to
the national average of 45.7% in 2008, Gansu Province was 32.1% and Qingyang was 24.5%);
and (d) severe shortage of water resources (Qingyang’s per capita water resources are only
13.7% of the national average, and 26.3% of Gansu’s provincial average). With its abundant
deposits of oil and coal resources, Qingyang is positioned by the central government as an
emerging energy base of national significance, and is targeted by the central government’s
initiatives of supporting and revitalizing the economies in the country’s western lagging areas.
3. Qingyang Municipality consists of one urban district and seven rural counties. The
proposed Qingyang project would be focused on the municipality’s capital of Xifeng District.
Xifeng District was upgraded from a small town to an urban district to be the political and
economic center for Qingyang Municipality in 1985. It had a population of 200,000 in 2011 and
a small stock of urban infrastructure.
4. QMG’s efforts to improve the city’s livability and profile in order to attract and retain
external investments have been constrained by the shortage of essential urban infrastructure
services in Xifeng District. Public capital investments in Xifeng over the last few years have
been concentrated mainly on constructing roads and widening the major streets in the existing
urban area. Pressing needs for improving environmental infrastructure in the existing urban area
have not been addressed. For example, the lack of adequate drainage meant that parts of Xifeng
have been flooded repeatedly over the last decade.
5. The following infrastructure improvement and investment needs have been identified as
priorities in Xifeng District’s existing urban area, based on its urban master plan and needs
assessments:
(a) Improvement of the road network and transport management.
(b) Environmental infrastructure improvement, particularly storm drainage, sewage
collection and treatment.
17
(c) Capacity building and institutional strengthening to sustainably manage existing
urban infrastructure assets, as well as those to be created under the project.
B. Project Components
Component 1: Urban Infrastructure Improvement
Sub-component 1: Urban Bypass Road Construction (Total Base Cost: US$82.26 million)
6. This sub-component will support construction of some key segments of two bypass roads
in Xifeng District, including: (a) construction of bypass roads of the southern section of Xifeng’s
West Ring Road and the northern section of Xifeng’s East Ring Road (4.504 km) with
installation of associated pipes; and (b) construction of three connection roads to the two bypass
corridors of West Ring Road and East Ring Road (2.242 km) with installation of associated pipes.
7. The two bypass corridors for freight traffic (West Ring Road and East Ring Road) have
been planned to divert through traffic (especially oil tankers), improve the city’s mobility,
address the worsening traffic congestion in the central area, and improve road access to the two
industrial areas located in the southern and northern parts of Xifeng. Sections of these two
bypass roads have already been constructed or are under construction, except for the missing
sections to be constructed under the proposed project. Construction of three associated
connection roads will improve connectivity between the two bypass corridors and the city’s
existing road network.
Component 1: Urban Infrastructure Improvement
Sub-component 2: Integrated Road Corridor Improvement (Total Base Cost: US$11.53
million)
8. This sub-component will help improve traffic management, public transport services,
pedestrian and cyclist facilities, and road safety on three corridors in Xifeng’s existing urban area,
including: (a) improvement of three selected main road corridors (Nan Bei Street, Anding Dong
Xi Road, West Ring Road), including road pavement, traffic channelization, and lighting and
greening, along with drainage and sewage system improvements; (b) rehabilitation of three
selected backstreets and small lanes for slow traffic; and (c) carrying out the Parking Action Plan,
the Public Transport Action Plan, and the Traffic Safety, Education and Enforcement Action
Plan.
9. Rehabilitation of selected backstreets and small lanes in Xifeng’s densely populated city
core has the key objectives of : (a) improving the traffic environment and safety for pedestrians
and cyclists; (b) improving the connectivity and accessibility to public transit and integrated
corridors for pedestrians and cyclists, diverting slow traffic modes on city’s major road corridors,
and improving the traffic capacity and traffic efficiency of the road network in the city’s central
area; (c) scaling up the number of local residents (in particular the poor) who will benefit from
the proposed urban infrastructure improvements, with the focus not just on motor vehicles; and
(d) helping to build the missing last-kilometer pipe connections between households and the
storm water/wastewater network along major roads.
18
10. Transport Action Plans will be prepared and furnished to Bank for review within 12
months from the Loan Effectiveness Date, and thereafter carried out, taking into account any
comments made by the Bank.
Sub-component 3: Drainage and Sewage Pipes (Total Base Cost: US$37.28 million)
11. This sub-component focuses on expanding the service catchment of the existing drainage
and sewage networks by constructing trunk lines, connecting isolated networks, and filling in the
gaps in the collection pipe network. It will finance: (a) construction of drainage and sewer mains
for a section each of the West Ring Road, the Anding East Road and the Anding West Road
(4.702 km of pipes); (b) rehabilitation of 22.91 km of sewage collection pipes in the built-up area
and associated improvements of road pavement, street lighting and greening along these roads.
Component 1: Urban Infrastructure Improvement
Sub-component 4: Wastewater Treatment Plant (Total Base Cost: US$32.31 million)
12. This -subcomponent will finance the construction of a new wastewater treatment plant
and associated pumping stations and sewer mains in Xifeng District, including: (a) a new
wastewater and treatment plant in eastern Xifeng (capacity of 20,000m3/day); (b) a wastewater
pumping station in northern Xifeng; and (c) wastewater trunk mains and collectors associated
with (a) and (b).
Component 2: Institutional Strengthening and Capacity Building (Total Cost: US$3.30
million)
13. This component includes provision of technical assistance for: (a) carrying out a water
resource study covering, among others, water reuse, sub-basin water environment improvements
and industrial wastewater discharge licenses in Xifeng District that support the on-going
wastewater investments; (b) improvement of the operation and maintenance capabilities of
QWSSC, and the Public Utility and Transportation Bureaus; (c) capacity building and training
for QMG and Xifeng District agencies; and (d) strengthening of QWSSC’s GIS-based system for
the management of its drainage and wastewater pipe network, and (e) strengthening the
Qingyang Municipality’s capacity for project management and construction supervision of the
Project.
19
Annex 3: Implementation Arrangements
A. Summary of Institutional Responsibilities
Entity Project Responsibilities
PMO (established within Xifeng District
Government)
Oversee the progress of each component
Implement Capacity Building Component
Conduct overall monitoring & evaluation.
Xifeng District Housing and Construction Bureau Lead the implementation of two sub-components:
Drainage and Sewage Pipes; and Integrated Road
Corridor Improvement.
Qingyang Municipal Water Supply and Sewage
Company
Implement Wastewater Treatment Plant sub-
component.
Maintain and operate drainage/sewage facilities
(including pipes and WWTP) constructed under this
project.
Xifeng District Transportation Bureau
Implement Urban Bypass Road Construction sub-
component.
Maintain and operate the road assets and facilities
established under this project.
B. Project administration mechanisms
1. Qingyang Municipal Government (QMG) will implement the Project. A Project Leading
Group (PLG) was established by QMG in March 2010 to provide overall leadership, policy
guidance, and institutional coordination for project preparation and implementation. The PLG is
headed by the Executive Vice Mayor of QMG and is comprised of senior officials from relevant
agencies of Qingyang Municipality and Xinfeng District.
2. QMG established a Project Management Office (PMO) for the proposed project in
Qingyang in March 2010. Stationed in the Xifeng District Government, the PMO is responsible
for daily management, supervision and coordination of project preparation and implementation.
The PMO will be the primary coordinating body responsible for communicating with the World
Bank, ensuring that implementation is consistent with all relevant World Bank policies and
procedures, and ensuring continuity and good coordination between the different implementing
entities.
3. Project Implementation Unit each in QWSSC and Xifeng District Housing and
Construction Bureau and Xifeng District Transportation Bureau shall be responsible for
implementing their respective components, including leading the engineering design,
procurement, signing and managing the contracts and authorizing disbursement for each
subcomponents accordingly.
(a) The Xifeng District Housing and Construction Bureau, a project development
agency and sectoral administrator for urban construction under the Xifeng District
Government, has been designated as the PIU for the sub-components of Drainage
and Sewage Pipes and Integrated Road Corridor Improvement.
20
(b ) The Qingyang Municipal Water Supply and Sewage Company (QWSSC), wholly
owned by the city, is the designated implementing agency and operating agency for
the wastewater sub-component.
(iii) The Xifeng District Transportation Bureau, a construction and operation agency of
urban roads and highways under Xifeng District Government, has been designated
as the implementing agency and operation agency for the Urban Bypass Road
Construction sub-component.
(iv) The Project Management Office (PMO) will be the implementing agency for the
Institutional Strengthening and Capacity Building sub-component.
C. Financial Management, Disbursements and Procurement
Financial Management
4. The FM assessment rated the residual financial management risk after mitigation as
Moderate.
5. Financial staff in the PMO does not have any experience with Bank-financed projects. To
address this, a detailed project Financial Management Manual (FMM) will be prepared and
issued and FM/Disbursement training will be provided to financial staff.
6. Funding sources for the project include the Bank loan and counterpart funds. The Bank
loan will be signed between the Bank and the People’s Republic of China (PRC) through MOF.
On-lending arrangements for the Bank loan will be signed between PRC, through MOF, and
Gansu Provincial Government (through GSFB); and between GSFB and Qingyang Municipal
Government, through Qingyang Municipal Finance Bureau (QYFB); and finally between QYFB
and Xifeng District Government, through Xifeng District Finance Bureau (XFFB). Loan
repayment will be borne by QYFB and XFFB. Counterpart funds will be from the municipal and
the district government budgets. Bank loan proceeds will flow from the Bank into a project
designated account (DA) to be set up at and managed by GSFB, and disbursed to PMO via
QYFB and XFFB based on withdrawal applications.
7. Budgeting. The annual project implementation plan, including the funding budget and
resources, will be prepared by the PMO. Budget for counterpart funds committed by the local
government will be reviewed and approved by the local People’s Congress and will be included
in their sectoral budget. Based on the approved budget and implementation progress, the related
finance bureau will provide government appropriations to the project. Budget variance analysis
will be conducted on a semi-annual basis by the PMO and necessary actions will be taken to
implement the project as planned. The Bank will work with the PMO in supervising the project
budgeting system to enhance the PMO’s budget preparation and execution for the project.
8. Funds Flow. The Bank loan proceeds will flow from the Bank into the project DA.
GSFB will be directly responsible for the management, maintenance and reconciliation of the
DA activities. Supporting documents required for Bank disbursements will be prepared and
21
submitted by the PMO through QYFB and XFFB for review and verification before sending to
GSFB for further disbursement processing.
9. Accounting and Reporting. The administration, accounting and reporting of the project
will be set up in accordance with Circular #13: “Accounting Regulations for World Bank-
financed Projects” issued in January 2000 by MOF. The standard set of project financial
statements has been agreed between the Bank and MOF, and includes the following: balance
sheet of the project; statement of sources and uses of fund by project components; statement of
implementation of loan agreement; statement of designated account; and Notes to the financial
statements (required only for annual financial statements).
10. The PMO and each PIU will manage, monitor and maintain project accounting records
for the activities they execute. Original supporting documents will be retained by the PMO and
each PIU. The PMO will work together with GSFB to prepare the project consolidated financial
statements. The unaudited semi-annual project interim financial reports (IFRs) will be prepared
and furnished to the Bank by the PMO no later than 75 days following each semester (the due
dates will be March 15 and September 15).
11. Internal Control. The related accounting policy, procedures and regulations were issued
by MOF to uniformly align the financial management and disbursement requirements for all
Bank financed projects. The project FMM will align project financial management policies and
procedures among PIUs.
12. Auditing. Gansu Provincial Audit Office (GSAO) has been identified as the auditor for
the project. The annual audit report will be issued by GSAO. The annual audit report of project
financial statements will be due to the Bank within six months after the end of each calendar
year.
Disbursements
13. Four disbursement methods are available for the project: advance, reimbursement, direct
payment and special commitment. Supporting documents required for Bank disbursement under
different disbursement methods are documented in the Disbursement Letter.
14. One DA in US dollar will be opened at a commercial bank acceptable to the Bank and
will be managed by GSFB. The ceiling of the DA is documented in the Disbursement Letter.
15. The Bank loan would be disbursed against eligible expenditures (taxes inclusive) as in
the following table:
22
Category
IBRD Loan
Allocated
Amount
Percentage of
Expenditures
to be financed
1) Works and non-consultant services for
Parts I.1, I.2.(a) and(b) and I.3.(a)
and(b) of the Project
75,130,000 80%
2) Works and non-consultant services for
Part I.4 of the Project 21,120,000 80%
3) Goods, Consultants’ Services, non-
consultant’s Services and Training for
Parts 1.2(c), and II of the project
3,500,000 100%
Front-end Fee 250,000
Total 100,000,000
16. Retroactive financing, up to a ceiling of $20 million, may be utilized for project
expenditures incurred on or after May 1, 2012.
17. For Part I. 4 of the Project (Wastewater Treatment Plant), the following disbursement
conditions are applied;
The QWSSC Agreement has been executed and delivered on behalf of Xifeng District
and QWSSC and is legally binding upon the parties thereto in accordance with its terms.
A legal opinion satisfactory to the Bank from counsel acceptable to the Bank has been
received by the Bank confirming that the QWSSC Agreement has been duly authorized
or ratified by Xifeng District and QWSSC, and is legally binding on such parties in
accordance with its terms.
D. Procurement
18. Following the procurement capacity assessment, the overall procurement risk for the
project is assessed as substantial. The principal risks are: (a) low capacity of PMO and PIU
procurement staff; (b) lack of a Procurement Management Manual to guide procurement cycle
management; and (c) differences in procurement policy and procedures between Bank
requirements and local government requirements.
19. The following measures will be taken to mitigate these risks:
Capacity strengthening of the PMO and PIUs’ Procurement Staff. A procurement
agent with qualifications and experience satisfactory to the Bank will be hired to
assist the PMO with project procurement. The PMO will ensure that qualified and
experienced key staff is assigned by the selected Procurement Agent. Depending on
need, the Procurement Agent will also update knowledge on Bank procurement
policies and procedures, and consult the Bank in advance.
23
PMO staff will attend annual procurement training organized by the Bank. In
addition, the Bank procurement specialist will provide project tailored procurement
training based on progress and issues identified.
Staff from the respective PIUs will strengthen their contract management capacity by
participating in relevant training provided by the Bank and other training agencies.
A Procurement Management Manual (PMM), acceptable to the Bank, will guide
procurement cycle management during the project.
Differences between Bank procurement requirements and the requirements of local
regulations have been addressed in the legal agreement and in the PMM.
20. Procurement under the project will be carried out in accordance with: the World Bank
“Guidelines: Procurement of Goods, Works and Non-Consulting Services under IBRD Loans
and IDA Credits & Grants by World Bank Borrowers” dated January 2011; “Guidelines:
Selection and Employment of Consultants by World Bank Borrowers” dated January 2011; and
the provisions stipulated in the Legal Agreement. NCB shall be carried out in accordance with
the Law on Tendering and Bidding of the People’s Republic of China promulgated by the order
of the President of the People’s Republic of China on August 30, 1999 subject to the
modifications stipulated in the Legal Agreement in order to ensure broad consistency with Bank
Procurement Guidelines.
21. Prior Review Thresholds and Procurement Methods. Prior review and procurement
method thresholds for the project are indicated in Table 2.
Table 2: Thresholds for Procurement Methods and Prior Review
Expenditure Category
Contract Value
Threshold
(US$ thousands)
Procurement Method Prior Review Threshold
(US$ thousands) 1/
1. Goods and Non-
Consulting Services
≥1,000
<1,000
<100
None
ICB
NCB
Shopping
Direct Contracting
All
≥300
1st Contract, irrespective of
value
All
2. Works and Supply and
Installation of Plant and
Equipment
≥20,000
<20,000
<200
None
ICB
NCB
Shopping
Direct Contracting
ALL
≥5,000
1st Contract, irrespective of
value
All
3. Consultants Services ≥300
<300
Para.3.6 of Consultant
Guidelines
Section V of Consultant
Guidelines
Para.3.8 of Consultant
Guidelines
QCBS/QBS
CQS
LCS
Individual Consultant
Single Source Selection
(firm)
All
≥100
All
≥50 and 1st contract,
irrespective of value
All
24
Section V of Consultant
Guidelines
Sole-Source Selection
(individual)
All
1/ All contracts to be financed through retroactive financing, irrespective of value, will be subject to prior review. A
contract whose cost estimate was below the Bank’s prior review threshold is subject to prior review if the price of
the lowest evaluated responsive bid (or, in the case of consulting services, the financial offer of the selected firm)
exceeds such threshold at the bid evaluation stage;
22. In addition to prior review, Bank missions will carry out procurement post reviews on an
annual basis, with a sampling rate of one in ten contracts.
23. Procurement Plan. The PMO has developed a procurement plan for the initial 18-month
period of project implementation, which has been agreed with the Bank; it includes contracts to
be procured under retro-active financing. The various items under different expenditure
categories are summarized in Table 3. The procurement plan will be updated annually or as
required to reflect project implementation needs. The procurement plan and its updates will be
published on the Bank’s external website in accordance with the Guidelines.
Table 3-Summary of Procurement Plan 1 2 3 4 5 6 7
Ref.
No.
Description Estimated
Cost
US$ (million)
No of
Packages
Domestic
Preference
(yes/no)
Review*
by Bank
(Prior / Post)
Comments
(Prior Review
Contracts)
1 Summary of NCB (Works)
packages 125.50 12 N/A Prior /Post ≥US$5m
2 Summary of Shopping
(Goods) contracts 0.15 2 N/A Prior/Post
Fist contract
through
Shopping
3
Summary of number of
contract ≥US$0.2m , to be let
under QCBS/QBS
3.50 5 N/A Prior All
E. Environmental and Social (including safeguards)
Environmental Safeguards
24. This Category B project will bring positive environmental benefits and will contribute to
the improvement of urban roads and urban environmental services in Xifeng District. Applicable
environmental safeguard policies for the project include: Environmental Assessment (OP4.01)
and Physical Cultural Resources (OP4.11).
25. Environmental Assessment (OP4.01). Environmental Assessments (EAs) were
conducted by Lanzhou University in accordance with China’s legal and EA policy frameworks
as well as applicable Bank safeguard policies. The assessment concluded that the project will
have an overall positive environmental impact. The EIA identified some negative impacts,
which along with the corresponding mitigation measures are summarized below.
26. Soil Erosion. The EA includes an analysis of water and soil conservation in the project
area. The EMP specifies soil conservation measures for the construction activities. To minimize
the impacts of Chengdong WWTP effluent discharged to a nearby gully, mitigation measures
25
include: (a) proper selection of discharge points; and (b) control of effluent flow velocity along
the gully to avoid or minimize soil erosion.
27. Sludge Disposal. 19.5 tons/day of dewatered sludge (60% moisture content) will be
generated from the new Chengdong WWTP. Sludge cake will be sent for disposal to a nearby
sanitary landfill, which is equipped with lining and leachate collection and treatment facility.
The EA confirms that the sludge cakes can be disposed at the landfill in an environmentally
sound manner. Traffic impacts associated with the transport of dried sludge for off-site landfill
disposal will be minimized by restrictions on the times of day allowed for sludge transport.
28. Other Operational Impacts. Noise and odor from the operation of the wastewater
treatment plant and pumping stations will be minimized by proper siting and by the provision of
buffer zones and landscaping. The odor impact will be minimized by a bio-filter system which is
an integral part of the WWTP.
29. Traffic on the improved roads will increase the noise level to some extent. The sensitive
receptors have been identified. The noise impact will be reduced to the acceptable level by the
provision of acoustic barriers and noise insulation facilities.
30. Construction-related Impacts. General construction-related impacts will be site-
specific and reversible in nature, for which mitigation measures can be designed readily.
Environmental Codes of Practices (ECOPs) have been prepared to address these general impacts
(e.g., dust, spoil disposal, noise, wastewater, disturbance to local communities) and will be
included in bidding documents and civil works contracts.
31. Environmental Risks. Risk assessment, as part of the EA, has been conducted on the
potential for accidents during transportation of chemicals on project roads, and chlorine leakages
at the Chengdong WWTP. Preventive measures and emergency measures have been included in
the EMP to prevent/minimize these risks.
32. Physical Cultural Resources (OP4.11). Road construction will cause the relocation of
35 household graves and the demolition of a farmer house (400m2) which is used as a church.
New sites for these household graves have been selected and auspicious dates for the relocation
will be agreed in advance with the project affected people. The church will be rebuilt on a 7 mu
site (equivalent to 4,669m2) approximately two kilometers away from the current site. The new
site offers better access to the city road networks. An auxiliary building will be installed first as a
temporary place to maintain religious activities during the construction of the new church.
Public consultation with affected people (e.g., priest, farmers) and concerned parties (e.g., local
Religious Affair Bureau) has been conducted, and concerns about the proposed measures have
been incorporated into the EMP.
33. Alternative Analysis. Technical alternatives were considered for the investment
components during the feasibility study and the EA to minimize environmental impacts. The EA
and the feasibility study analyzed alternatives for WWTP configuration (two small WWTPs vs.
one large WWTP), WWTP sites, wastewater treatment technology, sludge treatment technology,
and road construction. The EA also includes the “without project” situation.
26
34. Environment Management Plan (EMP). An EMP has been developed for the project as
a stand-alone document. The EMP includes mitigation measures, monitoring plans, institutional
arrangements, capacity building, and estimated budget of the mitigation measures and
monitoring programs for both the construction and operation phases. The EMP specifies site-
specific mitigation measures, both for construction and engineering design; and remedial
measures in case of non-compliance by the contractors. Mitigation measures for the construction
phase will be entered into bidding documents and supervised by relevant institutions.
35. Public Consultations and Information Disclosure. In accordance with Bank Safeguard
policies and Chinese regulations, public consultations were conducted from June to October
2011, including public consultation meetings and questionnaire survey with project affected
persons and other stakeholders. Their opinions and concerns have been taken into account in the
EA process and project design. The EA and the EMPs were locally disclosed in November 2011
through announcements on the local website and the PMO. The EA safeguard documents were
sent to the Bank InfoShop for disclosure on December 7, 2011.
Social Safeguards
36. The project has significant social benefits as it supports the development of storm water
and waste water collection, construction of WWTP and related pipe facilities, road construction
and traffic management improvement. Social impact analysis during project preparation enabled
the project to identify and address the potential negative impacts caused by land acquisition and
structure demolition. Measures to mitigate these identified negative impacts have been taken in
the project. In some cases displaced people consider the housing demolition as an opportunity to
significantly improve their living conditions.
37. Resettlement and Land Acquisition. Eight villages in five townships in Xifeng’s peri-
urban area will be affected by the project. The project needs permanent land acquisition of 740
mu (49 hectares), whose land use is as follows: cultivated land (363 mu, or 24 hectares); forest
land (133 mu or 8.9 hectares); orchard land (110 mu or 7.3 hectares); housing lots (89 mu or 6
hectares); and unused land (45 mu, or 3 hectares). The dominant current landuse is for growing
corn and wheat (50 percent of the land area). Some temporary land use will be required during
project implementation by contractors, and related mitigation measures will be taken. The
municipal resettlement office will supervise the activities. The project will affect 201 families
(862 people) by land acquisition and 143 families (528 people) by structure demolition in peri-
urban areas.
38. The RAPs prepared by the project entities provide detailed descriptions of the key aspects
of the resettlement polices and regulations, compensation rates and budget, measures to restore
incomes, as well as necessary institutional and monitoring arrangements.
39. Indigenous People. A socio-economic impact survey found no indigenous people
community in the project area. OP 4.10 on Indigenous Peoples is therefore not triggered.
40. Information Dissemination. The survey identified all households and villages that will
be affected by the project. The RAP was advertised in the main local newspapers and posted on
the Qingyang government website. The RAP is available at the Qingyang Municipal Library free
27
of charge. Relevant project information has been provided to the affected villages through
newspaper reports, posters and public meetings. A resettlement information booklet with detailed
descriptions of the key issues (e.g., compensation rates, social security policies, other entitlement
policies and grievance procedures) will be distributed to the displaced people prior to their
resettlement.
41. Participation Strategy. Focus group discussions and key informant interviews were held
to consult with project affected persons to obtain their views and preferences on resettlement
impacts and mitigation measures, land compensation, and social security programs. These views
and preferences have been taken into the account during RAP preparation. The majority of
project affected persons agree that the resettlement and rehabilitation measures proposed in the
RAP are adequate to address and mitigate the adverse impacts. The affected villages played a
key role in determining and implementing the livelihood restoration programs. For example,
after land compensation amounts are calculated, each village will determine how the land
compensation funds can be best used to improve, or at least restore, income-earning potential in
the villages.
42. The project entity will set up procedures to supervise the use of land compensation funds,
and local banks will participate in resettlement monitoring. Both internal and independent
monitoring of the resettlement program would be conducted regularly during project
implementation.
43. Consultation with NGOs and Civil Society. Villages and farmer groups were consulted
and participated in the process of resettlement planning and project preparation, and their
feedback has been incorporated into the RAP. These consultations concluded that the
resettlement and rehabilitation measures proposed in the RAP are adequate to address and
mitigate the impacts of land acquisition and house demolition.
44. Institutional Arrangements. An experienced resettlement monitoring institute will be
contracted to serve as the independent monitoring agency of the resettlement program. The
project will be monitored and the living standards of the project-affected people will be
evaluated during project implementation; the results will be reported twice a year and, if needed,
remedial actions will be devised.
45. Linked Projects. Construction of a section of the West Ring Road and a middle section
on the East Ring Road (both financed by the local government) and two earth borrow pits have
been identified as linked projects to the proposed project. Resettlement work on these linked
projects was completed in 2009. Bank due diligence reviews of the compensation paid to the
affected persons indicated that these are acceptable to the Bank.
46. Resettlement Costs. The estimated cost of resettlement is about $25.51 million,
accounting for 13.3% of project costs. Qingyang municipality and Xifeing District will finance
resettlement costs and will compensate the affected entities and individuals.
28
F. Monitoring & Evaluation
47. Monitoring indictors to assess the achievement of the PDO were agreed at appraisal
between the Bank, QMG, and the Government at Project Appraisal. The agreed set of PDO
Level Result Indicators and Intermediate Outcome Indicators, details of indicator measurement,
frequency, and responsible agencies of data collection and reporting for these Indicators are
shown in Annex 1: Results Framework and Monitoring. Project agencies collected the baseline
data and defined the annual targets for each of these indicators for the five year construction
period.
48. Responsibility for progress monitoring rests with the PMO. The PMO will engage a
construction supervision agency or agent to carry out supervision. While individual monitoring
data will be collected by the implementing agency of each component/sub-component (Xifeng
District Housing and Construction Bureau, Qingyang Municipal Water Supply and Sewage
Company, Xifeng District Transportation Bureau), the PMO has the overall responsibility for
coordinating collection of the data required for monitoring and evaluation, as well as the
responsibility for ensuring timely progress reporting to the Bank, and for the accuracy of the
reports.
29
Annex 4: Operational Risk Assessment Framework (ORAF)
Project Stakeholder Risks Rating Moderate
Description :
The city government may sacrifice quality and the innovative concepts in order to speed up construction.
Risk Management :
Provision of information to the local government on good practices of comprehensive urban transport management and study tours to learn from other Chinese cities that have addressed the traffic issues in a cost-effective and sustainable way.
Resp: Qingyang
PMO/Bank
Stage: Preparation &
Implementation Due Date :On-going Status:
Resp: Stage: Due Date : Status:
Implementing Agency Risks (including fiduciary)
Capacity Rating: Substantial
Description :
The City and the PMO have no experience in preparing and implementing a Bank-financed project, especially on procurement and financial management requirements.
The technical capacity of the city is weak. PIU and Local consultants do not have adequate experience preparing and implementing the Bank financed comprehensive urban transport projects.
Financial capacity to provide the required counterpart funds may be lacking.
Risk Management :
A project financial management manual will be circulated to all project financial staff to guide their daily work; financial management and procurement training will be provided to furnish them required knowledge in managing project funds and procurement activities.
GSFB and QYFB, which have experience with Bank-financed operations and management of DA, will closely monitor the work of the PMO and the PIUs and provide guidance. A lower prior review threshold has been set and the Bank will prior review more contracts.
Bank will provide training/study tours to help city officials and PMO / PIUs to develop the necessary technical knowledge/skills. This will include organizing activities for Qingyang to learn from the experience of other more advanced Chinese cities.
Counterpart funds will be confirmed in the local government’s annual budget before and during project implementation.
Resp: WB and QMG Stage: Preparation &
Implementation Due Date :On-going Status:
Governance Rating: Substantial
Description
The city may lack the same degree of ownership and commitment to the project exhibited to date when its leadership changes overtime, in particular at the decision-making level of Municipal and District Government. The city government may implement its own financed
Risk Management :
Continuous and strengthened communication with Qingyang municipal and Xifeng district government particularly when the leaderships change.
Regular and on-demand supervision with particular focus on ownership, commitment, accountability and decision making.
The Bank team will also keep regular contact with GMG on its own financed infrastructure projects
30
infrastructure projects which may have certain impacts on the investments under the project without proper consultation with the Bank.
The profile of the Xifeng District Government PMO may be not high enough for coordinating with related government agencies of Qingyang Municipal level.
which are closely linked with the investment under the project.
A municipal-level leading group will oversee overall project implementation, provide policy guidance and institutional coordination.
Resp: WB and
QMG
Stage: Preparation &
Implementation Due Date: On-going Status:
Project Risks
Design Rating: Substantial
Description :
The city’s master plan and sectoral plans of road network, drainage and sewage infrastructure may be over-designed.
The integrated road improvement and traffic management component is new to the city.
Risk Management :
Continuous discussion with the city government and related sector agencies led to agreement on reasonable projections of service demand, construction phasing, and scales of related infrastructures for various timeframes. Reputable Chinese Design Institutes and an international consulting firm with extensive experiences on Bank projects in China prepared the technical documents and will provide support for preparing preliminary technical designs.
The Bank will provide support during implementation through the inclusion of appropriate technical experts in missions. Outreach has been made to the Traffic Police, a key agency for the operation of traffic management measures.
Resp: QMG and PMO Stage: Implementation Due Date: On-going Status:
Social & Environmental Rating: Moderate
Description :
Even though detailed arrangements for the implementation of the EMP and the RAP are part of these documents , the agreed EMPs and RMPs, may not be implemented properly.
Risk Management :
Project design includes internal and external monitoring of the implementation of safeguard instruments. Bank missions will review the monitoring reports and initiate remedial actions, where necessary.
Resp: PMO and Bank Stage: Implementation Due Date: On-going Status:
Program & Donor Rating: Low
Description :
This is a free standing project and no other donors are involved.
Risk Management :
Resp: Stage: Due Date: Status:
Delivery Monitoring & Sustainability Rating: Moderate
Description :
Limited skills and experience in project management, in particular, in procurement and contract management.
Undeveloped ability to reliably measure outcomes.
O&M of urban infrastructure are not adequately served in the city,
Risk Management :
Continuous training on procurement and financial management will be carried out. PMO and PIUs will recruit experienced procurement agents to assist procurement during the initial implementation phase.
The Bank team will monitor the implementation of agreed mechanisms for measuring delivery quality.
Carrying out specific TAs for knowledge transfer and skill strengthening to operating agencies of key
31
particularly with the urban roads. Low capacity and efficiency of O&M services may affect the performance of infrastructure assets delivered by the project.
urban infrastructure facilities in the city.
Resp: PMO and
Bank Stage: Implementation Due Date: On-going. Status:
Overall Risk Rating: Substantial
Comments: The key risks for the achievement of the PDO relate to design, governance, capacity of the PIUs. Risk management measures have been built into the project design and the Bank will monitor their implementation carefully during implementation support missions.
32
Annex 5: Implementation Support Plan
Strategy and approach
1. The strategy for implementation support is based on the ORAF, where the risks to
achieve the project development objective and the agreed mitigation measures have been
identified. The implementation plan will be reviewed and updated based on the periodic
assessments of risks and the appropriateness of the mitigation measures implemented.
2. Capacity. Weak implementation capacity of the PMO and related PIUs has been
identified as the key risk to project implementation. Bank implementation support will focus on
assisting the client in strengthening implementation capacity, particularly in financial
management and procurement, immediately following project start-up. Frequent supervision
early on during the first half of the implementation period is expected to assist with compliance
with Bank FM and procurement policies and procedures.
3. Procurement. Implementation support will focus on ensuring that: (a) the procurement
agent is performing effectively; (b) PMO and PIU staff are fully familiar with, and adheres to the
Procurement Management Manual (PMM); and (c) planned procurement training is provided to
all procurement staff in a timely manner. In addition, the Bank procurement specialist will carry
out prior and post reviews of procurement transactions and monitor the implementation and
updates of the procurement plan.
4. FM. The Bank will supervise the implementation of the identified and agreed actions for
strengthening PIUs’ financial management and pay specific attention to the timely provision of
the required counterpart funds. The FM specialist will ensure that counterpart funds committed
by the Qingyang Municipal Government as well as Xifeng District Government will be included
in their annual budgets. Standard provisions on interim financial reporting and external audit and
their compliance will be monitored.
5. Design. Specific technical expertise on road engineering and traffic management, civil
engineering and wastewater management, OMM, and financial aspects will be mobilized during
regular semi-annual supervision missions. The challenges associated with the detailed design
and implementation of traffic management measures under the integrated road corridor
improvement component will be monitored by the Bank’s technical specialists during routine
supervision.
6. Governance. Implementation support will focus on: (a) continuous and strengthened
communication with the city and district government to maintain a high degree of client
ownership and commitment to the project, particularly when the leadership changes; (b) regular
and on-demand supervision with particular emphasis on ownership, commitment, accountability
and decision making; (c) keeping regular contact with GMG on its own financed infrastructure
projects which are closely linked with the investments under the project.
7. Other risks. The team’s environmental specialist will monitor compliance with
environmental safeguards and adherence to the Environmental Monitoring Program, while the
33
social specialist will pay particular attention to the implementation of the RAP. They will make
field visits on a semi-annual basis. The task team leader and most of the team members are
based in Beijing and will provide timely and on-demand implementation support to the client
when needed.
8. An overview of the focus and timing of Bank support is presented in Table 1 and the
required skill mix in Table 2.
Table 1: Supervision Inputs
Time Focus Skills Needed
First 12 months Task and team leadership TTL
Technical support/Detailed designs Technical skills
FM and Procurement Bank policies
Safeguards Bank policies
M&E framework and baseline data Technical skills
12-60 months Task and team leadership TTL
Technical support/Project quality/sustainability Technical skills
FM and Procurement Bank policies
Safeguards Bank policies
M & E Technical skills
Table 2: Skill Mix
Skills Needed
Number of
Staff
Weeks
Number of
Trips Remarks
TTL/civil engineering 10 8 Bank staff
Urban Transport Planning & Traffic engineering 10 8 Bank staff / consultants
Urban Road Engineering 10 8 Bank staff / consultants
Wastewater Management 10 6 Bank staff / consultants
Storm Water Engineering 8 4 Bank staff / consultants
Bank Safeguard Policy 8 4 Country-office based
Bank FM Policy 4 2 Country-office based
Bank Procurement Policy 8 4 Country-office based
34
ANNEX 6: PROJECT LOCATON MAP
IBRD 39185
Jinchang
Wuwei
Dingxi
Wudu
Pingliang
Xifeng
Dongxiang
Xiahe Zhuen
Dunhuang JiuquanJiayuguan
Zhangye
LANZHOU
Tianshui
Baiyin
Aksay KazakzuZizhixian Subei Mongolza
Zizhixian
AnxiYumenzhen Jinta
Gaotai
Yongchang
Gulang
Yongden
Tianzhu ZangzaZizhixian
Minqin
Sunan YugurzuZizhixian
Linze
Shandan
Jingtai
Linxia
YongjinYuzhong
Hezheng
Luqu
Lintan Wushan
Li XianMin XianJone
ZhangXian
GanguQin´an
Zuanglang
TongweiLongxi
Lintao
HuiningJingning
WeiyuanKangle
Gaolan
TewoTanchang
Zhou Qu
KangXian
Hui XianLiangdang
Cheng Xian
Qingshui
ZhangjiachuanHuating
Zhenyuan
ChongxinJingchuan
Ning Xian
Heshui
HuachiHua XianJingyuan
Wen Xian
Maqu
Minle
Xihe
Qingyang
Zengning
LingtaiGuanghe
Dpmgxoamgzi Zizhixian
Hezuozhen
M O N G O L I A
Wei He
Yello
w R
. (H
uang
He)
Yellow R. (Huang He)
Shule He
Hei H e
Huan Jiang NI N
GX
I A
S ICHUAN
SHAANXI
QINGHAI
N E I M O N G O L
XINJIANG
To Xi'an
To Hanzhong
To Guangyuan
To Chengdu
To Ürümqi
To Xining
To Gonghe
To EjinQi
To Wuhai
To Wuhai
To TianjunTo Gölmud
40
38
110
36
34
10810610410210098
98
108106
110108106
104102100989694
9694
38
40
42
36
34
34
This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other informationshown on this map do not imply, on the part of The World BankGroup, any judgment on the legal status of any territory, or anyendorsement or acceptance of such boundaries.
CHINAGANSU QINGYANG
URBAN INFRASTRUCTUREIMPROVEMENT PROJECT
0 50 100 150
KILOMETERS
PROJECT MUNICIPALITY
HIGHWAYS
MAIN ROADS
RAILROADS
COUNTY (XIAN) CAPITALS
PREFECTURE CAPITALS
PROVINCE CAPITAL
COUNTY (XIAN) BOUNDARIES
PREFECTURE BOUNDARIES
PROVINCE BOUNDARIES
INTERNATIONAL BOUNDARY
IBRD 39185
MA
RCH
2012
B a y o fB e n g a l
P h i l i p p i n e
S e a
E a s t
C h i n a
S e a
Yel lowSea
Sea
of
Japan
BEIJING
MACAO
RUSSIANFEDERATION
MONGOLIA
KAZAKHSTAN
JAPAN
PHILIPPINES
VIETNAM
NEPAL
MYA
NM
AR
THAI-LAND
REP. OFKOREA
D.P.R. OFKOREA
LAOP.D.R.
KYRGYZREP.
National Capital
Province Boundaries
International Boundaries
HEILONGJIANG
JILIN
LIAONING
HEBEI
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CHINA
